UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

¨REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF

THE SECURITIES EXCHANGE ACT OF 1934

OR

x   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20142016

OR

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

OR

¨SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report……………………………

report ____________________

For the transition period from ______ to _______

Commission File Number 1-11414

BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A.

(Exact name of Registrant as specified in its charter)

Torre V, Business Park

Avenida La Rotonda, Urb. Costa del Este

P.O. Box 0819-08730

Panama City, Republic of Panama

(Address of principal executive offices)

Christopher Schech

Chief Financial Officer

+507 210-8500

Email address: cschech@bladex.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x   Yes                                ¨No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

¨Yes                                xNo

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x   Yes                                ¨No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

xYes                                 ¨No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and large accelerated filer”“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.      ¨

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

¨Item 17                               ¨Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨Yes                                   xNo

BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A.

TABLE OF CONTENTS

In this Annual Report on Form 20-F, or this Annual Report, references to the “Bank” or “Bladex” are to Banco Latinoamericano de Comercio Exterior, S.A., a specialized multinational bank incorporated under the laws of the Republic of Panama (“Panama”), and its consolidated subsidiaries.subsidiaries (as described in Item 4.A “Information on the Company – History and Development of the Company”). References to Bladex’s consolidated financial statements (the “Consolidated Financial Statements”) are to the financial statements of Banco Lationoamericano de Comercio Exterior, S.A., and its subsidiaries, with all intercompany balances and transactions having been eliminated for consolidating purposes. References to “Bladex Head Office” are to Banco Latinoamericano de Comercio Exterior, S.A. in its individual capacity. References to “U.S. dollars” or “$” are to United States (“U.S.”), dollars. References to the “Region” are to Latin America and the Caribbean. The Bank accepts deposits and raises funds principally in U.S. dollars, grants loans mostly in U.S. dollars and publishes its consolidated financial statementsConsolidated Financial Statements in U.S. dollars. The numbers and percentages set forth in this Annual Report have been rounded and, accordingly, may not total exactly.

Upon written or oral request, the Bank will provide without charge to each person to whom this Annual Report is delivered, a copy of any or all of the documents listed as exhibits to this Annual Report (other than exhibits to those documents, unless the exhibits are specifically incorporated by reference in the documents). Written requests for copies should be directed to the attention of Christopher Schech, Chief Financial Officer, Bladex, as follows: (1) if by regular mail, to P.O. Box 0819-08730, Panama City, Republic of Panama, and (2) if by courier, to Torre V, Business Park, Avenida La Rotonda, Urb. Costa del Este, Panama City, Republic of Panama. Telephone requests may be directed to Mr. Schech at +507 210-8630. Written requests may also be sent via e-mail to cschech@bladex.com.

Forward-Looking Statements

In addition to historical information, this Annual Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements may appear throughout this Annual Report. The Bank uses words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will,” “should,” “estimate,” “potential,” “project” and similar expressions to identify forward-looking statements. Such statements include, among others, those concerning the Bank’s expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from these forward-looking statements include the risks described in the section titled “Risk Factors.” Forward-looking statements include statements regarding:

In addition, the statements included under the headings “Item 4.B. Business Overview—Strategies for 20152017 and Subsequent Years” and “Item 5.D. Trend Information” are forward-looking statements. Given the risks and uncertainties surrounding forward-looking statements, undue reliance should not be placed on these statements. Many of these factors are beyond the Bank’s ability to control or predict. The Bank’s forward-looking statements speak only as of the date of this Annual Report. Other than as required by law, the Bank undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

PART I

Not required in this Annual Report.

Not required in this Annual Report.

The following table presents selected consolidated financial data for the Bank. The Consolidated Financial Statements were prepared and presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and Interpretations issued by the IFRS Interpretation Committee (formerly known as “IFRIC”). Because fiscal year 2015 was the first year the Bank prepared and presented its financial data presented below are atstatements in accordance with IFRS in adherence to a mandate of the Superintendency of Banks of Panama for fully licensed banks in Panama, the Bank did not include the historical financial information as of and for the years ended December 31, 2014, 2013 2012, 2011, and 2010,2012. The following selected financial data as of December 31, 2016 and are derived from the Bank’s consolidated financial statements2015, and for the years indicated, which were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are stated in U.S. dollars. The consolidated financial statements for thefiscal years ended December 31, 2016, December 31, 2015, and December 31, 2014 2013, 2012, 2011, and 2010have been derived from the Consolidated Financial Statements, which were audited by the independent registered public accounting firm Deloitte, Inc. (“Deloitte”). The consolidated financial statements of the Bank for each of the three years in the period ended December 31, 2014 (the “Consolidated Financial Statements”), and are included in this Annual Report beginning on page F-1, together with the report of the independent registered public accounting firm Deloitte. Information as of December 31, 2014 has been derived from the Bank’s audited financial statements included in the Bank’s Annual Report on Form 20-F for the year 2015 filed with the SEC on April 29, 2016. The information below is qualified in its entirety by the detailed information included elsewhere herein and should be read in conjunction with Item 4, “Information on the Company,” Item 5, “Operating and Financial Review and Prospects,” and the Consolidated Financial Statements and notes thereto included in this Annual Report.

Consolidated Selected Financial Information

Not required in this Annual Report.

Not required in this Annual Report.

Risks Relating to the Bank’s Business

Bladex faces liquidity risk, and its failure to adequately manage this risk could result in a liquidity shortage, which could adversely affect its financial condition, results of operations and cash flows.

Bladex, like all financial institutions, faces liquidity risk, being the risk of not being able to maintain adequate cash flow to repay its deposits and borrowings and fund its credit portfolioCredit Portfolio (as defined below) on a timely basis. Failure to adequately manage its liquidity risk could produce an available funds shortage as a result of which the Bank would not be able to repay its obligations as they become due.

As of December 31, 2014, 36%2016, 22% of the Bank’s funding represents short-term borrowings and debt from international private banks, which compete with the Bank in its credit extensionlending activity. If these international banks cease to provide funding to the Bank, the Bank would have to seek funding from other sources, which may not be available, or if available, may be at a higher cost.

Financial turmoil in the international markets could negatively impact liquidity in the financial markets, reducing the Bank’s access to credit or increasing its cost of funding, which could lead to tighter lending standards. An example of this situation is the liquidity constraint experienced in the second half of 2007 in the international financial markets, which intensified during the third quarter of 2008, driven first by the subprime mortgage crisis in the United States and then followed by the credit crisis, and in the ongoing European sovereign debt crisis. The reoccurrence of such unfavorable market conditions could have a material adverse effect on the Bank’s liquidity.

As of December 31, 2014, approximately 75%2016, 77% of the Bank’s total deposits represented deposits from central and state-owned banks and 16%or their designees (the Bank’s Class A shareholders), 10% of the Bank’s deposits represented deposits from private sector commercial banks and financial institutions.institutions, 7% of the Bank’s deposits represented deposits from state-owned banks, and 6% of the Bank’s deposits represented deposits from state-owned and private corporations.

As a U.S. dollar-based economy, Panama does not have a central bank, and there is no lender of last resort to the banking system in the country.

The credit ratings of Bladex are an important factor in maintaining the Bank’s liquidity. A reduction in the Bank’s credit rating could reduce the Bank’s access to debt markets or materially increase the cost of issuing debt, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing or permitted, contractually or otherwise, to do business with or lend to the Bank. This in turn could reduce the Bank’s liquidity and negatively impact its operating results and financial position.

The Bank’s allowancesallowance for expected credit losses (“ECL”) could be inadequate to cover credit losses mostly related to its loans, loan commitments and contingencies.financial guarantee contracts.

The Bank determines the appropriate level of allowances for credit lossesECL based on a forward-looking process that estimates the probable loss inherent in its portfolio, which is the result of a statistical analysis supported by the Bank’s historical portfolio performance, external sources, and the judgment of the Bank’s management. The latter reflects assumptions and estimates made in the context of changing political and economic conditions in the Region. The Bank’s commercial portfolio (the “Commercial Portfolio”) includes gross loans at amortized cost (the “Loan Portfolio”), loan commitments and financial guarantee contracts, such as confirmed and stand-by letters of credit, and guarantees covering commercial risk; and other assets consisting of customers’ liabilities under acceptances, and an equity investment. The Bank’s allowances for ECL could be inadequate to cover losses in its Commercial Portfolio due to exposure concentration or deterioration in certain sectors or countries, which in turn could have a material adverse effect on the Bank’s financial condition, results of operations and cash flows. As stated above, the Bank’s “Commercial Portfolio” includes the loan portfolio, selected deposits placed, customers’ liabilities under acceptances, and contingencies (including confirmed and stand-by letters of credit, guarantees covering commercial risk, and credit commitments).

The Bank’s businesses are subject to market risk.risk inherent to the Bank’s financial instruments, as fluctuations in different parameters may have adverse effects on its financial position.

Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions. Market risk is inherent in the financial instruments associated with many of the Bank’s operations and activities, including loans and securities at amortized cost, deposits, investmentfinancial instruments at fair value through profit or loss (“FVTPL”) and trading securities, short-at fair value through OCI (“FVOCI”), short-term and long-term borrowings and debt, derivatives and trading positions. Among many other market conditions thatThis risk may shiftresult from time to time are fluctuations in different parameters: interest rates, and currency exchange rates, inflation rates and changes in the implied volatility of interest rates and changes in securities prices, due to changes in either market perception or actual credit quality of either the relevant issuer or its country of origin. Accordingly, depending on the instruments or activities impacted, market risks can have wide ranging, complex adverse effects on the Bank’s financial condition, results of operations, cash flows and business.

See Item 11, “Quantitative and Qualitative Disclosures About Market Risk.”

The Bank faces interest rate risk that is caused by the mismatch in maturities of interest-earning assets and interest-bearing liabilities.  If not properly managed, this mismatch can reduce net interest income as interest rates fluctuate.

As a bank, Bladex faces interest rate risk because interest-bearing liabilities generally reprice at a different pace than interest-earning assets. Bladex’s exposure to financial instruments whose values vary with the level or volatility of interest rates contributes to its interest rate risk. Failure to adequately manage eventual mismatches may reduce the Bank’s net interest income during periods of fluctuating interest rates.

The Bank’s credit portfolioCommercial Portfolio may decrease or may not continue to grow at the present rate or at a similar rate.historical rates. Additionally, growth in the Bank’s credit portfolioCommercial Portfolio may expose the Bank to an increase in the allowance for loan losses.ECL.

It is difficult to predict whether the Bank’s credit portfolio,Commercial Portfolio, including the Bank’s foreign trade portfolio, will continue to grow in the future at historical rates. A reversal in the growth rate of the Region’s economy and trade volumes could adversely affect the growth rate of the Bank’s credit portfolio.Commercial Portfolio. Additionally, the future expansion of Bladex’s credit portfolioCommercial Portfolio may expose the Bank to higher levels of potential or actual losses and require an increase in credit risk reserves,the allowance for ECL, which could negatively impact the Bank’s operating results and financial position. Non-performing or low credit quality loans can negatively impact the Bank’s results of operations. The Bank may not be able to effectively control the level of the impaired loans in its total loan portfolio.Loan Portfolio. In particular, the amount of its reported non-performing and/or non-accruing loans may increase in the future as a result of growth in its loan portfolio,Loan Portfolio, including loan portfoliosloans that the Bank may acquire in the future, or factors beyond the Bank’s control, such as the impact of economies trends and political events affecting the Region, events affecting certain industries or events affecting financial markets and global economies.

Increased competition and banking industry consolidation could limit the Bank’s ability to grow and may adversely affect results of operations.

Most of the competition the Bank faces in the trade finance business comes from domestic and international banks, the majoritymainly comprised of which are European, and North American, and Asian institutions. Many of these banks have substantially greater resources than the Bank, may have better credit ratings, and enjoymay have access to less expensive funding than the Bank does. It is difficult to predict how increased competition will affect the Bank’s growth prospects and results of operations.

Over time, there has been substantial consolidation among companies in the financial services industry, and this trend continued acceleratingaccelerated in recent years as the credit crisis led to numerous mergers and asset acquisitions among industry participants and in certain cases reorganization, restructuring, or even bankruptcy. Merger activity in the financial services industry has produced companies that are capable of offering a wide array of financial products and services at competitive prices. In addition, whenever economic conditions and risk perception improve in the Region, competition from commercial banks, the securities markets and other new participantsmarket entrants generally increases.

Globalization of the capital markets and financial services industries exposes the Bank to further competition.  To the extent the Bank expands into new business areas and new geographic regions,markets, the Bank may face competitors with more experienceexperienced and more established relationships with clients, regulators and industry participants in the relevant market, which could adversely affect the Bank’s ability to compete. The Bank’s ability to grow its business and therefore, its earnings, ismay be affected by these competitive pressures.

The Bank’s businesses rely heavily on data collection, management and processing, and information systems, the failure of which could have a material adverse effect on the Bank, including the effectiveness of the Bank’s risk management and internal control systems.

All of the Bank’s principal businesses are highly dependent on the ability to timely collect and process a large amount of financial and other information across numerous and diverse markets, at a time when transaction processes have become increasingly complex with increasing volume. The proper functioning of financial control, accounting or other data collection and processing systems is critical to the Bank’s businesses and to its ability to compete effectively. A partial or complete failure of any of these primary systems could materially and adversely affect the Bank’s decision-making process, the Bank’s risk management and internal control systems, as well as the Bank’s ability to respond on a timely basis to changing market conditions. If the Bank cannot maintain an effective data collection, management and processing system, it may be materially and adversely affected.

The Bank is also dependent on information systems to operate its website, process transactions, respond to customer inquiries on a timely basis and maintain cost-efficient operations. The Bank may experience cyberattacks or operational problems with its information systems as a result of system defects and failures (including failure to update systems), viruses, worms, and other malicious software, from computer “hackers” or other causes.sources, which could unexpectedly interfere with the operation of the Bank’s system. The Bank’s ability to remain competitive depends in part on its ability to upgrade its information technology on a timely and cost-effective basis. The Bank continually makes investments and improvements in its information technology infrastructure in order to remain competitive. In the future, theThe Bank may not be able to maintain the level of capital expenditures necessary to support the improvement or upgrading of its information technology infrastructure. Any failure to effectively improve or upgrade its information technology infrastructure and management information systems in a timely manner could have a material adverse effect on the Bank.

Operational problems or errors can have a material adverse impact on the Bank’s business, financial condition, results of operations and cash flows.

Bladex, like all financial institutions, is exposed to operational risks, including the risk of fraud by employees and outsiders, failure to obtain proper internal authorizations, failure to properly document transactions, equipment failures, and errors by employees, and any failure, interruption or breach in the security or operation of the Bank’s information technology systems could result in interruptions in such activities. Operational problems or errors may occur, and their occurrence may have a material adverse impact on the Bank’s business, financial condition, results of operations and cash flows.

Any delays or failure to implement business initiatives that the Bank may undertake could prevent the Bank from realizing the anticipated revenues and benefits of thethese initiatives.

Part of the Bank’s strategy is to diversify income sources through business initiatives, including targeting new clients and developing new products and services. These initiatives may not be fully implemented within the time frame the Bank expects, or at all. In addition, even if such initiatives are fully implemented, they may not generate revenues as expected. Any delays in implementing these business initiatives could prevent the Bank from realizing the anticipated benefits of the initiatives, which could adversely affect the Bank’s business, results of operations and growth prospects.

Any failure to remain in compliance with applicable banking laws or other applicable regulations in the jurisdictions in which the Bank operates could harm its reputation and/or cause it to become subject to fines, sanctions or legal enforcement, which could have an adverse effect on the Bank’s business, financial condition and results of operations.

Bladex has adopted various policies and procedures to ensure compliance with applicable laws, including internal controls and “know-your-customer” procedures aimed at preventing money laundering and terrorism financing; however, the participation of multiple parties in any given trade finance transaction can makeincrease complexity and require additional time to the process of due diligence difficult. Further,process. Also, because trade finance can be more reliant on document-based information than other banking activities, it is susceptible to documentary fraud, which can be linked to money laundering, terrorism financing, illicit activities and/or the circumvention of sanctions or other restrictions (such as export prohibitions, licensing requirements, or other trade controls). While the Bank isremains alert to potentially high-risk transactions, it is also aware that efforts, such as forgery, double invoicing, partial shipments of goods and use of fictitious goods, may be used to evade applicable laws and regulations. If the Bank’s policies and procedures are ineffective in preventing third parties from using it as a conduit for money laundering or terrorism financing without its knowledge, the Bank’s reputation could suffer and/or it could become subject to fines, sanctions or legal action (including the being added to any “blacklists” that would prohibit certain parties from engaging in transactions with the Bank), which could have an adverse effect on the Bank’s business, financial condition and results of operations. In addition, amendments to applicable laws and regulations in Panama and other countries in which the Bank operates could impose additional compliance burdens on the Bank.

Panamanian lawsChanges in applicable law and regulations, including future government restrictions on interest rates or changes in reserves and capitalization requirements,regulation may have a material adverse effect on the Bank.

The Bank is subject to extensive laws and regulations regarding the Bank organization, operations, lending and funding activities, capitalization and other matters. The Bank has no control over applicable law and government regulations, which govern all aspects of its operations, including regulations that impose:

The regulatory structure governing financial institutions, such as the Bank, is continuously evolving. Disruptions and volatility in the global financial markets resulting in liquidity problems at major international financial institutions could lead the governments in jursidictions the Bank operates to change laws and regulations applicable to financial institutions based on such international developments.

In 2010,response to the global financial crisis, which began in late 2007, national and intergovernmental regulatory entities, such as the Basel Committee on Banking Regulations and Supervisory Practices (the “Basel Committee”) proposed comprehensive changesreforms to prevent the liquidity coverage ratio and liquidity risk monitoring tools, known asrecurrence of a similar crisis, including the Basel III.III framework, which creates new higher minimum regulatory capital requirements. On December 16, 2010 and January 13, 2011, the Basel Committee issued its original guidance (which was updated in 2013) on a number of regulatory reforms to the regulatory capital framework in order to strengthen minimum capital requirements, including the phasing out of innovative Tier 1 and 2 Capital instruments with incentive-based redemption clauses and implementing a leverage ratio on institutions in addition to current risk-based regulatory requirements. The Superintendency of Banks of Panama (“Superintendencia de Bancos de Panamá” or the “Superintendency”) is authorized to increase the minimum capital requirement percentage in Panama in the event that generally accepted international capitalization standards (the standards set by the Basel Committee on Banking Supervision) become more stringent. Non-compliance with this legal lending limit could result in the assessment of administrative sanctions by the Superintendency for such violations, taking into consideration the magnitude of the offense and any prior occurrences, and the magnitude of damages and prejudice caused to third parties. The Bank has adoptedfollows Basel III criteria to determine capitalization levels, and determined the Bank’s Tier 1 Basel III capital ratio to be 15.6%17.9% as of December 31, 2014.2016.

Legislation regarding the financial services industry may subject the Bank to significant and extensive regulation, which may have an impactBased on the Bank’s current regulatory capital ratios, as well as conservative assumptions on expected returns and asset growth, the Bank does not anticipate that additional regulatory capital will be required to support our operations. in the near future. However, depending on the effects of the rules that complete the implementation of the Basel III framework on Panamanian banks and particularly on other Bank’s operations, the Bank may need to reassess its ongoing funding strategy for regulatory capital.

On July 21, 2010,The Bank also has operations in countries outside of Panama, including the United States. Changes in the laws or regulations applicable to the Bank business in the countries in which it operates or adoption of new laws, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) in the United States, and the related rulemaking, may have a material adverse effect on the Bank’s business, financial condition, and results of operations. The Dodd-Frank Act was signed into law in the United States. The Dodd-Frank Act ison July 21, 2010 and was intended primarily to overhaul the financial regulatory framework in the United States following the global financial crisis and may impacthas substantially impacted all financial institutions including the Bank.that are subject to its requirements. The Dodd-Frank Act, among other things, imposes higher prudential standards, including more stringent risk-based capital, leverage, liquidity and risk-management requirements, establishes a Bureau of Consumer Financial Protection, establishes a systemic risk regulator, consolidates certain federal bank regulators, imposes additional requirements related to corporate governance and executive compensation and requires various U.S. federal agencies to adopt a broad range of new implementing rules and regulations, for which they are given broad discretion.

In 2014, the U.S. Federal Reserve Board issued a final rule strengthening supervision and regulation of large U.S. bank holding companies and foreign banking organizations (such as the Bank). The final rule establishes a number of enhanced prudential standards for large U.S. bank holding companies and foreign banking organizations to help increase the resiliency of their operations. These standards include liquidity, risk management, and capital. The final rule was required by section 165 of the Dodd-Frank Act. Under the final rule, foreign banking organizations with combined U.S. assets of $50 billion or more will be required to establish a U.S. risk committee and employ a U.S. chief risk officer to help ensure that the foreign bank understands and manages the risks of its combined U.S. operations. In addition, these foreign banking organizations will be required to meet enhanced liquidity risk-management standards, conduct liquidity stress tests, and hold a buffer of highly liquid assets based on projected funding needs during a 30-day stress event. Foreign banking organizations with total consolidated assets of $50 billion or more, but combined U.S. assets of less than $50 billion, are subject to enhanced prudential standards. However, the capital, liquidity, risk-management, and stress testing requirements applicable to these foreign banking organizations are substantially less than those applicable to foreign banking organizations with a larger U.S. presence. In addition, the final rule implements stress testing requirements for foreign banking organizations with total consolidated assets of more than $10 billion and risk committee requirements for foreign banking organizations that meet the asset threshold and are publicly traded. While the majority of these enhanced prudential standards are not currently applicable to the Bank, they could ultimately be as the Bank grows, its U.S. presence or assets increase or if the Dodd-Frank Act is closely monitoring this rulemaking process, and analyzing, the impact oflater amended, modified or supplemented with new rules on the Bank’s business.legislation.

On December 10, 2013, pursuant to the Dodd-Frank Act, federal banking and securities regulators issued final rules to implement Section 619 of the Dodd-Frank Act (the Volcker Rule)“Volcker Rule”). Generally, subject to a transition period and certain exceptions, the Volcker Rule restricts banks from: (i) short-term proprietary trading as principal in securities and other financial instruments, and (ii) sponsoring or acquiring or retaining an ownership interest in private equity and hedge funds. After the transition period, the Volcker Rule prohibitions and restrictions will apply to banking entities, including the Bank, unless an exception applies. Based on analysis of applicable regulations, the Bank has determined that its currentinvestmentactivities are not subject to the Volcker Rule restrictions.

The Dodd-Frank Act also will have an impact on the Bladex’s derivatives activities if it enters into swaps or security-based swaps with U.S. persons. In particular, Bladex may be subject to mandatory trade execution, mandatory clearing and mandatory posting of margin in connection with its swaps and security-based swaps with U.S. persons.

On March 18, 2010, the Hiring Incentives to Restore Employment Act of 2010, Pub. L. 111-147 (H.R. 2847), added sections 1471 through 1474 (collectively, FATCA)“FATCA”) to Subtitle A of the Internal Revenue Code of 1986, as amended (the Code)“Code”). FATCA requires withholding agents, including foreign financial institutions (FFIs)(“FFIs”), to withhold thirty percent (30%) of certain payments to a FFI unless the FFI has entered into an agreement with the U.S. Internal Revenue Service (IRS)(“IRS”) to, among other things, report certain information with respect to U.S. accounts. FATCA also imposes on withholding agents certain withholding, documentation, and reporting requirements with respect to certain payments made to certain non-financial foreign entities.

As of May 1,On June 30, 2014, Panama has been treated by the U.S. Department of the Treasury as has havingsigned a Model 1 intergovernmental agreement ("Panama IGA") in effect with the U.S. for purposes of FATCA. Under the Panama IGA, most Panamanian financial institutions are required to register with the IRS and comply with the requirements of the Panama IGA, including with respect to due diligence, reporting, and withholding.

To this end, the Bank registered with the IRS on April 23, 2014 as a Registered Deemed-Compliant Financial Institution (including a Reporting Financial Institution under a Model 1 IGA) and is required under the Panama IGA to identify U.S. persons and report certain information required by the IRS, through the tax authorities in Panama.

Adoption of IFRS affects the presentation of our financial information, which was prepared under United States Generally Accepted Accounting Principles (“U.S. GAAP”) prior to January 1, 2015.

On January 1, 2015, the Bank began preparing its financial statements in accordance with IFRS, in compliance with a Superintendency mandate applicable to all financial institutions registered under general license. Prior to and including the year ended December 31, 2014, the Bank prepared its financial statements in accordance with U.S. GAAP. Because IFRS differ in certain significant respects from U.S. GAAP, the Bank’s financial information prepared and presented in its previous annual reports under U.S. GAAP is not directly comparable to its IFRS financial data. The lack of comparability with historical financial data may make it difficult to gain a full and accurate understanding of its operations and financial condition.

The Bank’s status as a “foreign private issuer” allowed it to adopt IFRS accounting principles, which are different than accounting principles under U.S. GAAP, and are not currently subject to the SEC’s XBRL requirements which may provide less information to investors than is provided by filers utilizing XBRL.

IFRS is an internationally recognized body of accounting principles that are used by many companies outside of the United States to prepare their financial statements. The Securities and Exchange Commission (“SEC”) allows foreign private issuers such as the Bank to prepare and file their financial statements in accordance with IFRS rather than U.S. GAAP. SEC rules do not require the Bank to provide a reconciliation of IFRS accounting principles to those of U.S. GAAP. Accordingly, the readers of the Bank’s financial statements should familiarize themselves with the provisions of IFRS accounting principles in order to better understand the differences between these two sets of principles.

The SEC requires most reporting companies to provide financial statements in their periodic reports that include “XBRL tagging” – cross references that provide the reader with a greater understanding of the components of line items contained in financial statements. The SEC recently developed taxonomy to enable filers of IFRS financial statements, such as the Bank, to include XBRL tagging in their financial statements effective March 1, 2017. Currently, IFRS filers are relieved of the obligation to provide XBRL tagging with their financial statements, and readers will not have the benefit of XBRL tagging when reviewing our financial statements. The SEC has provided notice that such issuers may first submit financial data in XBRL with their first annual report on Form 20-F or 40-F for a fiscal period ending on or after December 15, 2017.

U.S. policy uncertainties, including trade and other restrictions, monetary tightening, higher interest rates and rising inflation, and the United Kindom (“U.K.”)’s “Brexit” referendum may have an adverse effect on the Bank.

Changes in U.S. political, regulatory, and economic conditions, or in its policies governing international trade and foreign investment in the U.S. stemming from the recent changes in the U.S. administration could have a material adverse effect on the Bank. Greater restrictions on trade and increased tariffs on goods imported into the U.S. may be implemented, particularly affecting exports coming from Latin America. Several Latin American currencies have recently devalued sharply against the dollar, on concerns of the post-election U.S. trade policy agenda, coupled with a trend of rate increases by the U.S. Federal Reserve Board. Asset risks may rise for banks that lend to exporters or high value-added manufacturers, particularly in the automotive supplier and technology sectors in the Region. U.S. monetary tightening and rising inflation could prompt central banks to tighten monetary policy in Latin American countries, with higher rates potentially leading to weaker asset quality. Rising rates may reduce borrower repayment capacity, leading to an increase in non-performing loan (NPL) ratios as loan growth decelerates.

In the U.K., a recent referendum was held in which voters approved an exit from the European Union (the “E.U.”), commonly referred to “Brexit” and has been passed into law, after which negotiations will commence to determine the future terms of the U.K.’s relationship with the E.U. As a result of the referendum, the global markets and currencies have been adversely impacted, including a sharp decline in the value of the British pound as compared to the U.S. dollar. The outcome of pending tariff, trade, regulatory and other negotiations could adversely affect the Bank.

Risks Relating to the Region

The Bank’s credit portfolio isactivities are concentrated in the Region. The Bank also faces borrower concentration. Adverse economic changes in the Region or in the condition of the Bank’s largest borrowers could adversely affect the Bank’s growth, asset quality, prospects, profitability, financial condition and financial results.

As a reflection of the Bank’s mission and strategy, the Bank’s credit activities are concentrated in the Region, which is a reflection of the Bank’s mission and strategy.Region. Historically, economies of countries in the Region have occasionally experienced significant volatility characterized,evidenced, in some cases, by political uncertainty, slow growth or recessions, declining investments, government and private sector debt defaults and restructurings, and significant inflation and/or currency devaluation.  Global economic changes, including fluctuations in oil prices, commodities prices, U.S. dollar interest rates and the U.S. dollar exchange rate,rates, and slower economic growth in industrialized countries, could have a significant adverse effecteffects on the economic condition of countries in the Region, including Panama, and the other countries wherein which the Bank operates. In turn, adverseAdverse changes affecting the economies of countries in the Region could have a significant adverse impact on the quality of the Bank’s credit portfolio,exposures, including increased loan loss provisions,allowance for ECL, debt restructuring,restructurings, and loan losses. As a result, thisIn turn, these effects could also have an adverse impact on the Bank’s asset growth, asset quality, prospects, profitability and financial condition.

The Bank’s credit activities are concentrated in a number of countries. The Bank’s credit portfolio (the “Credit Portfolio”) consists of the Commercial Portfolio and the Investment Securities Portfolio. The “Investment Securities Portfolio” consists of securities at amortized cost and financial instruments at FVOCI. Adverse changes affecting the economies in one or more of those countriesthese economies could have an adverse impact on the Bank’s credit portfolioCredit Portfolio and, as a result, its financial condition, growth, prospects, results of operations and financial condition. As of December 31, 2014, 66%2016, 61% of the Bank’s credit portfolioCredit Portfolio was outstanding to borrowers in the following five countries: Brazil ($2,0671,185 million, or 27%18%), Mexico ($1,030959 million, or 14%15%), Colombia ($869762 million, or 12%), PeruPanama ($632552 million, or 8%), and PanamaPeru ($387510 million, or 5%8%).

In addition, as of December 31, 2014,2016, of the Bank’s total credit portfolioCredit Portfolio balances, 7%6% were to five borrowers in Brazil, 5% were to five borrowers in each of Colombia, 4% were to five borrowers in Mexico 4% were to five borrowers inand Peru, and 3%4% were to five borrowers in Panama. A significant deterioration of the financial or economic condition of any of these countries or borrowers could have an adverse impact on the Bank’s credit portfolio,Credit Portfolio, potentially requiring the Bank to create additional allowances for credit losses,ECL, or suffer credit losses with the effect being accentuated because of this concentration.

See Item 4.B. “Information on the Company—Business Overview—Developments During 2014”2016”.

Local country foreign exchange controls or currency devaluation may harm the Bank’s borrowers’ ability to pay U.S. dollar-denominated obligations.

The Bank makes mostly U.S. dollar-denominated loans and investments.  As a result, the Bank faces the risk that local country foreign exchange controls willmay restrict the ability of the Bank’s borrowers even if they are exporters, to acquire dollars to repay loans on a timely basis, even if they are exporters, and/or that significant currency devaluation might occur, which could increase the cost, in local currency terms, to the Bank’s borrowers of acquiring dollars to repay loans.

Increased risk perception in countries in the Region where the Bank has large credit exposureexposures could have an adverse impact on the Bank’s credit ratings, funding activities and funding costs.

Increased risk perception in any country in the Region where the Bank has large exposures could trigger downgrades to the Bank’s credit ratings.  A credit rating downgrade would likely increase the Bank’s funding costs, and may reduce its deposit base and access to the debt capital markets.  In that case, the Bank’s ability to obtain the necessary funding to carry on its financing activities in the Region at meaningful levels could be affected in an important way.adversely.

For more information on the Bank’s Risk Management, see Item 18, “Financial Statements”, note 27.

The Bank, a corporation(sociedad anónima)organized under the laws of Panama and headquartered in Panama City, Panama, is a specialized multinational bank originally established by central banks of Latin American and Caribbean countries to promote foreign trade financeand economic integration in the Region. The legal name of the Bank is Banco Latinoamericano de Comercio Exterior, S.A. Translated into English, the Bank is also known as Foreign Trade Bank of Latin-America. The commercial name of the Bank is Bladex.  

The Bank was established pursuant to a May 1975 proposal presented to the Assembly of Governors of Central Banks in the Region, which recommended the creation of a multinational organization to increase foreign trade financing capacity of the Region. The Bank was organized in 1977, incorporated in 1978 as a corporation pursuant to the laws of the Republic of Panama, and officially began operations on January 2, 1979. Panama was selected as the location of the Bank’s headquarters because of the country’s importance as a banking center in the Region, the benefits of a fully U.S. dollar-based economy, the absence of foreign exchange controls, its geographic location, and the quality of its communications facilities.  Under a contract-law signed in 1978 between the Republic of Panama and Bladex, the Bank was granted certain privileges by the Republic of Panama, including an exemption from payment of income taxes in Panama.

The Bank offers its services through its head office in Panama City, its agency in New York City (“the New(the “New York Agency”), its subsidiaries in Brazil and Mexico, and its representative offices in Buenos Aires, Argentina,Argentina; Mexico City, D.F. and Monterrey, Mexico,Mexico; Sao Paulo, Brazil,Brazil; Lima, PeruPeru; and Bogotá, Colombia, as well as through a worldwide network of correspondent banks. The Bank’s international administrative office locatedOn April 3, 2017, through an official letter from the National Banking and Securities Commission of Mexico, was obtained the approval for the closing of the Representative Office in Miami, Florida (the “Florida Administrative Office”), ceased operations during the first quarter of 2015.Mexico, Monterrey.

Bladex’s headquarters office is located at Torre V, Business Park, Avenida La Rotonda, Urb. Costa del Este, Panama City, Republic of Panama, and its telephone number is +507 210-8500. Bladex’sThe New York Agency is located at 370 Lexington Avenue,10 Bank Street, Suite 500, New York,1220, White Plains, NY 10017,10606, and its telephone number is (212) 754-9191.+1 (914) 328-6640.

Bladex’s shares of Class E common stock are listed on the New York Stock Exchange Euronext (“NYSE”) under the symbol “BLX.”

The following is a description of the Bank’s subsidiaries:

Bladex Holdings had previously exercised control over Bladex Asset Management Inc. (“Bladex Asset Management”), incorporated on May 24, 2006 under the laws of the State of Delaware, USA, which, until its dissolution on September 18, 2013, provided investment management services to Bladex Offshore Feeder Fund and Bladex Capital Growth Fund, both incorporated under the laws of the Cayman Islands.

On April 2, 2013, Bladex reached a definitive agreement to sell its Asset Management Unit. The Asset Management Unit was sold to Alpha4X Asset Management, LLC (“Alpha4X”), a company majority-owned by former executives of the Asset Management Unit. The Bank has a commitment to remain an investor in these funds, net of annual contractual redemptions, until March 31, 2016. As part of the agreement, a subsidiary of XL Group plc will also become an anchor investor in the Bladex Capital Growth Fund under Alpha4X’s management. In connection with the sale: (i) Bladex Offshore Feeder Fund became Alpha4X Feeder Fund (the “Feeder”), (ii) Bladex Capital Growth Fund became Alpha4X Capital Growth Fund (the “Fund”), and (iii) Bladex Latam Fundo de Investimento Multimercado became Alpha4X Latam Fundo de Investimento Multimercado.

The sale agreement included, among other terms:

Bladex Head Office has a remaining participation of 49.61% in the Feeder, that invests substantially all its assets in the Fund. The Feeder is a VIE that was included in the consolidated financial statementschanges of the Bank until March 31, 2014. Due to its drop in participation to less than 50%, the Bank ceased to be the primary beneficiary of the Feeder, and therefore ceased to consolidate itsBank´s investment in the Feeder were recorded in the consolidated statement of profit or loss of that fund in the “Gain (loss) per financial instruments at fair value through profit or loss” line item. The Feeder was not consolidated in the Bank’s financial statements as a result of the evaluation of control as per IFRS 10 “Consolidated financial statements” according to which the existing rights in the fund did not give the Bank the ability to direct the relevant activities of the fund nor the ability to use its consolidated financial statements. Bothpower over the investee to affect its return. At December 31, 2015 and 2014, the Bank had a participation in the Feeder of 47.71% and 49.61%, respectively. At December 31, 2016, the Fund are registered withBank did not have any participation in the Cayman Island Monetary Authority (“CIMA”), underFeeder.

Bladex also reported the Mutual Funds Lawchanges in the net asset value of the Cayman Islands. The objectiveBrazilian Fund in the “Gain (loss) per financial instruments at fair value through profit and loss" line item, which the Bank did not consolidate, because the rights on this fund did not give the Bank the ability to direct its relevant activities nor the ability to use its power over the investee to affect its return. This investment was adjusted to recognize the Bank's participation in the profits or losses of these Funds is to achieve capital appreciation by investingthe fund in Latin American debt securities, stock indexes, currencies, and trading derivative instruments.the line “Gain (loss) per financial instruments at fair value through profit or loss” of the consolidated statement of profit or loss.

The Bank’s financial statements are preparedBank remained an investor in accordance with U.S. GAAP.these funds until March 31, 2016 redeeming its investments entirely on April 1^st, 2016.

See Item 18. “Financial Statements,” notes 1, 2(a), 32.1, and 6.5.2.

Overview

The Bank’s mission is to provide financial solutions of excellence to financial institutions, companies and investors doing business in Latin America, supporting trade and regional integration across the Region. The Bank’s lending and investing activities are funded by interbank deposits, primarily from central banks and financial institutions in the Region, by borrowings from international commercial banks, and by sales of the Bank’s debt securities to financial institutions and investors in Asia, Europe, North America and the Region. The Bank does not provide retail banking services to the general public, such as retail savings accounts or checking accounts, and does not take retail deposits.

Bladex participates in the financial and capital markets throughout the Region, through two business segments.

First, theThe Commercial Division is responsible forBusiness Segment encompasses the Bank’s core business of financial intermediation and fee generation activities relatingdeveloped to cater to corporations, financial institutions and investors in Latin America. These activities include the Commercial Portfolio. The Commercial Division’s portfolio includes the loan portfolio (bilateralorigination of bilateral and syndicated tradecredits, short-term and non-trade finance lending, short and medium term loans), selected deposits placed,medium-term loans, customers’ liabilities under acceptances, (“acceptances”),loan commitments and contingencies (including confirmed and stand-by letters of credit, guarantees covering commercial risk and credit commitments).financial guarantee contracts. The majority of the Bank’s loans are extended in connection with specifically identified foreign trade transactions. Through its revenue diversification strategy, the Bank’s Commercial DivisionBusiness Segment has introduced a broader range of products, services and solutions associated with foreign trade, including co-financing arrangements, underwriting of syndicated credit facilities, structured trade financing (in the form of factoring and vendor financing), and financial leasing.

Second, theThe Treasury DivisionBusiness Segment is responsible for the Bank’s funding and liquidity management, along with the management of its activities in investment securities, which comprise trading assets, securities available-for-sale, and securities held-to-maturity, as well as the management of the Bank’s interest rate, liquidity, price and currency risks. Following the sale of the Bladex Asset Management unit in April 2013,positions. Interest-earning assets managed by the Treasury DivisionBusiness Segment include liquidity positions (cash and cash equivalents), and financial instruments related to the investment management activities (consisting of investment funds at FVTPL, and securities at FVOCI and at amortized cost). The Treasury Business Segment also comprisesmanages the Bank’s remaining participation in the investment funds.interest-bearing liabilities, which constitute its funding sources (deposits, securities sold under repurchase agreement (“Repos”), and short- and long-term borrowings and debt).

Historically, trade finance has been afforded favorable treatment under Latin American debt restructurings. This has been, in part, due to the perceived importance that governments and other borrowers in the Region have attributed to maintaining access to trade finance. The Bank believes that, in the past, the combination of its focus on trade finance and the composition of its Class A shareholders has been instrumental in obtaining somecertain exceptions onregarding U.S. dollar convertibility and transfer limitations imposed on the servicing of external obligations, or preferred creditor status. Although the Bank maintains both its focus both on trade finance and its Class A shareholders,shareholders’ participation, it cannot guarantee that such exceptions will be granted in all future debt restructurings.

As of December 31, 2014,2016, the Bank had 6466 employees, or 33%31% of its total employees, across its offices responsible for marketing the Bank’s financial products and services to existing and potential customers.

Developments During 20142016

2014 was a2016 proved to be another challenging year for the global economy,markets in which experienced overall heightened volatility resulting fromthe Bank operates, as currency devaluations and adverse macroeconomic trends created a gradual decreasemore volatile business environment in several Latin American countries. These trends included the monetary stimuluscontinued deterioration of the U.S. Federal Reserve. World GDP growthterms-of-trade for commodity-exporting producers, in 2014 was similar to that of 2013, but growth performance differed among larger economies. The U.S. economy experienced an upturn, as did the eurozone. However, unlike the U.S.some cases impacting company balance sheets and parts of Europe, other larger globaloperations, a recessionary and inflationary environment in important economies such as JapanBrazil, a generally heightened perception of credit and China experienced a lower rate of growth in 2014.

The moderation of growth in the Chinese economy influenced other emerging economies, given the significance of Chinese demand in global commodity markets. The sustainability of growth in China continues to be of concern due to the negative impact lower growth rates could have on long-term trends in the raw materials markets and the negative impact that a general downturn in the Chinese economy could have on the global economy.

Similarly, the pace of growth of external aggregate demand for the principal products produced inmarket risk affecting Latin America, and an increased level of uncertainty regarding U.S. trade and monetary policies. Despite these challenges, Senior Management believes that the Caribbean has decreased. The Region sawBank’s financial results in 2016 demonstrated Bladex’s fairly resilient core earnings generation capacity, while the Bank’s exit from its participation in the investment funds, which was completed early in the second quarter of 2016, helped remove a significant slowdown in its 2014 average GDP growth rate, impacted by stagnating growth in its largest economy, Brazil, which had GDP growth in 2014element of 0.1%. Generally, the Region experienced a downward trend in prices for raw materials. In 2014, the Region’s overall exports decreased year-on-year. However, the performance of countries in the Region was not uniform. Those economies more heavily engaged in trade with the U.S. benefitted more than those with a greater dependence on trade relations with other parts of the world.

Despite the challenging nature of the 2014 economic backdrop, the Bank’s year-end 2014 financial results show improved earnings and operating performance. The Bank achieved a number of financial milestones in 2014, including: surpassing $100 million in total net income; achieving deposits of over $3 billion on several dates during the year, which increased average deposit levels by more than 8%; significantly improving core efficiency levels while maintaining cost discipline; more than doubling income derived from structuring and distribution activities; and achieving 12% return on average stockholders’ equity, and 14% total shareholders return (dividends and annual stock price appreciation).

Net income attributable to Bladex amounted to $106.9 million in 2014, an increase of $22 million, or 26%, compared to $84.8 million in 2013. This increase was driven by the positive performance of the Bank’s core business activities, with growth in the Commercial Portfolio, net margins and revenue, and improved efficiency on lower expenses, while maintaining strong asset quality. These factors were complemented by a positive trend in non-core results from the Bank’s participation in investment funds.

Net interest income rose by $18.0 million, or 15%, to $141.1 million in 2014 from $123.1 million in 2013. This growth was driven by a $12.2 million overall increase in net interest income due to the higher average balances of the Bank’s interest-earning assets (+7%), which was partially offset by higher average balances on the Bank’s interest-bearing liabilities (+8%), and a $5.8 million overall increase in net interest income on lower average funding costs (-26 basis points) which more than offset the 10 basis point decrease in the average yield of interest-earning assets. Net interest margin stood at 1.87% for 2014, compared to 1.75% for 2013.

Fees and other income includes the fee income associated with letters of credit and other off-balance sheet assets, such as guarantees and credit commitments, as well as fee income derived from two business streams: loan structuring and syndication, and loan intermediation and distribution. Fees and other income amounted to $21.8 million in 2014, compared to $15.9 million in 2013. The $5.9 million or 37% increase resulted from higher loan structuring and syndication fees, as well as fees and net gains associated with loan intermediation and distribution, along with higher fees and commissions from letters of credit and guarantees. The average balance of the Bank’s off-balance sheet portfolio (acceptances and contingencies) amounted to $0.5 billion in 2014, compared to $0.4 billion in 2013, an increase of 25%.market risk volatility.

See Item 5, “Operating and Financial Review and Prospects—Operating Results—Net Income Attributable to Bladex”Profit for the year and Trend Information” and Item 18, “Financial Statements,” note 27.17.

Strategies for 20152017 and Subsequent Years

Further extend the Bank’s business in politically and economically stable, high-growth markets

The Bank’s expertise in risk and capital management and extensive knowledge of the Region allows it to identify and strategically focus on stable and growth-oriented markets, including investment-grade countries in the Region. Bladex maintains strategically placed representative offices in order to provide focused products and services in markets that the Bank considers key to its continued growth.

Targeted growth in expanding and diversifying the Bank’s client base

The Bank’s strategy to participate in a broad range of activities and further diversify its client base includes targeting clients that offer the potential for longstanding relationships and a wider presence in the Region, such as financial institutions, corporations and upper middle-market companies. This may be achieved through the Bank’s participation in bilateral and co-financed transactions.transactions or trade services provided. The Bank intends to continue enhancing existing client relationships and establishingestablish new onesclient-relationships through its Region-wide expertise and client approach, its product knowledge, theits quality of the Bank’s servicesservice and the Bank’s agile decision-making process.

Efforts going forward will be focused on growing the Bank’s business with a larger number of clients along the trade value chain, as well as striving for a greater dispersion of risk in order to continue diversifying and mitigating the impact of potential losses, should they occur.

Enhance current products and services by providing relevant sector-specific solutionstargeting the main trade related and growth sectors in the Region

TheIn addition to its exposure to Latin American financial institutions, the Bank intends to continue enhancing its focus on the development of expertise in the sectors in which the Bank currently operates, while strategically targeting industries with significant growth potentialand participants in the value chain of international trade by offering sector-specific products and solutions to clientscountry within the Region. Targeted participants operating in these industries. These sectors include somemost of the most profitable industries in the Region, such asmain exporting sectors related to commodities (agribusiness, oil & gas, food processing, manufacturingmetals, and agribusiness commodities, as well as growth commercial flows such as Latin American intra-regional trade.petrochemicals, among others) and services (transportation and utilities, among others). Bladex also intends to continue exploring keystrong regional and local partnerships to bolster its range of services and increase its presence in key economic sectors throughout the Region.

Increase the range of products and services that the Bank offers

Due to the Bank’s relationships throughout, and knowledge of, the Region, the Bank is stronglywell positioned to strategically identify key additional products and services to offer to clients. The Bank’s Articles of Incorporation permit a broad scope of potential activities, encompassing all types of banking, investment, and financial and other businesses that support foreign trade flows and the development of trade and integration in the Region. This supports the Bank’s ongoing strategy to develop and expand products and services, such as factoring and vendor finance, leasing, debt intermediation in primary and secondary markets, and structured financing, including export insurance programs, that complement the Bank’s expertise in foreign trade finance and risk management.

Lending Policies

The Bank extends credit directly to financial institutions, corporations and upper middle-market companies within the Region. The distinction between corporations and upper middle-market companies is based on the particularrespective client’s volumes of annual sales, the borrower’s country of domicile and size of the market it operates in, as well as country risk, and certain other criteria. The Bank finances import and export transactions for all types of goods and products, excepting restricted items such as weapons, ammunition, military equipment, and hallucinogenic drugs or narcotics not utilized for medical purposes. Imports and exports financed by the Bank are destined for buyers/sellers in countries both inside and outside the Region. The Bank analyzes credit requests from eligible borrowers by applying its credit risk criteria, including economic and market conditions. The Bank maintains a consistent lending policy and applies the same credit criteria to all types of potential borrowers in evaluating creditworthiness.

Due to the nature of trade finance, the Bank’s loans are generally unsecured. However, in certain instances, based upon the Bank’s credit review of the borrower and the economic and political situation and trends in the borrower’s home country, the Bank may determine that the level of risk involved requires that a loan be secured by collateral.

Country Credit Limits

The Bank maintains a continual review of each country's risk profile evolution, supporting its analysis with various factors, both quantitative and qualitative, the main driving factors of which include: the evolution of macroeconomic policies (fiscal, monetary, and exchange rate policy), fiscal and external performance, price stability, level of liquidity in foreign currency, changes of legal and institutional framework, as well as material social and political events, among others, including industry analysis relevant to Bladex business activities.  

Bladex has a methodology for capital allocation by country and its risk weights for assets. The Risk Policy and Assessment Committee (the “CPER”) of the Bank’s Board of Directors (the “Board”) approves a level of “allocated capital” for each country, in addition to nominal exposure limits. These country capital limits are reviewed at least once a year by the CPER, and more often if necessary. The methodology helps to establish the capital equivalent of each transaction, based on the internal numeric rating assigned to each country, which is reviewed and approved by the CPER.

The amount of capital allocated to a transaction is based on customer type (sovereign, state-owned or private corporations, middle-market companies, corporate or financial institution)institutions), the type of transaction (trade or non-trade), and the average remaining term of the transaction (from one to 180 days, 181 days to a year, between one and three years, or longer than three years). Capital utilizations by the business units cannot exceed the Bank’s reported total stockholders’ equity.

Borrower Lending Limits

The Bank generally establishes lines of credit for each borrower according to the results of its risk analysis and potential business prospects; however, the Bank is not obligated to lend under these lines of credit. Once a line of credit has been established, credit generally is extended after receipt of a requestan application from the borrower for financing, usually related to foreign trade, which accounted for 56% of such credit as of December 31, 2014.trade. Loan pricing is determined in accordance with prevailing market conditions and the borrower’s creditworthiness.

For existing borrowers, the Bank’s management has authority to approve credit lines up to the legal lending limit prescribed by Panamanian law, provided that the credit lines comply fully with the country credit limits and conditions for the borrower’s country of domicile set by the Board. Approved borrower lending limits are reported to the CPER quarterly. Panamanian Law sets forth certain concentration limits, which are applicable and strictly adhered to by the Bank, including a 30% limit as a percentage of capital and reserves for any one borrower and borrower group, in the case of certain financial institutions, and a 25% limit as a percentage of capital and reserves for any one borrower and borrower group, in the case of corporate, sovereign and middle-market companies. As of December 31, 2014,2016, the legal lending limit prescribed by Panamanian law for corporations, sovereign borrowers and middle-market companies amounted to $225.8$253 million, and for financial institutions and financial groups amounted to $270.9$303 million. Non-compliance with this legal lending limit could result in the assessment of administrative sanctions by the Superintendency for such violations, taking into consideration the magnitude of the offense and any prior occurrences, and the magnitude of damages and prejudice caused to third parties. On a quarterly basis, the CPER reviews the impaired portfolio, if any, along with certain non-impaired credits. As of December 31, 2014,2016, the Bank was in compliance with regulatory legal lending limits.

See Item 4.B, “Information on the Company—Business Overview—Regulations—Supervision and Regulation—Panamanian Law.”

Credit Portfolio

The Bank’s credit portfolio, whichCredit Portfolio consists of the Commercial Portfolio and investmentthe Investment Securities Portfolio. The Bank’s Commercial Portfolio includes gross loans at amortized cost (the “Loan Portfolio”), loan commitments and financial guarantee contracts, such as confirmed and stand-by letters of credit, and guarantees covering commercial risk; and other assets consisting of customers’ liabilities under acceptances, and an equity investment. The Bank’s Investment Securities Portfolio consists of financial instruments at FVOCI and securities portfolio, increasedat amortized cost.

As of December 31, 2016, the Credit Portfolio amounted to $7,580$6,552 million, a decrease from $7,405 million as of December 31, 2014,2015, and from $6,998$7,581 million as of December 31, 2013, and from $6,170 million as of December 31, 2012.2014. The $582$853 million, or 8%12%, credit portfolio increasedecrease during 20142016 was largely attributable to increased business activity from the Bank’s established client base of corporations ($692Commercial Portfolio (which decreased by $711 million, or 19%10%), due to the Bank’s active and prudent risk management of credit exposures in the face of more challenging market conditions in the Region, along with stable credit balances from financial institutions, partially offsetreduced holdings in its Investment Securities Portfolio, which decreased by decreased exposures to middle-market companies ($125$142 million, or 20%).57% in order to reduce market risk.

Commercial Portfolio

The Commercial Portfolio includes the loan portfolio, selected deposits placed, customers’ liabilities under acceptances, and contingencies (including confirmed and stand-by letters of credit, guarantees covering commercial risk, and credit commitments).

The Bank’s Commercial Portfolio increasedamounted to $6,444 million as of December 31, 2016, a $711 million, or 10%, decrease from $7,155 million as of December 31, 2015, and a $743 million, or 10%, decrease from $7,187 million as of December 31, 2014, an 8% increase from $6,630 million as of December 31, 2013,the Bank reduced certain country, industry and a 21% increase from $5,953 million as of December 31, 2012. The increaseclient risk exposures in 2014 was largely attributableresponse to growing demand fromunfavorable market conditions in the Bank’s established client base of corporations (which grew by $607 million, or 17%)Region, and financial institutions (by $74 million, or 3%), which was partially offset by decreased activity in middle-market companies ($125 million, or 20%).instead focused on expanding its short-term trade finance exposures with more favorable risk-adjusted returns.

As of December 31, 2014, 56%2016, 77% of the Bank’s Commercial Portfolio consistedwas scheduled to mature within one year, compared to 72% as of trade-related credits,December 31, 2015 and 2014. Trade finance operations represented 66% of the Bank’s Commercial Portfolio, compared to 56% as of December 31, 2015 and 2014, while the remaining balance consisted primarily of lending to financial institutions and corporations involvedengaged in foreign trade. 57%56% of the Bank’s Commercial Portfolio iswas represented by corporations, of which 60% is74% was trade financing.

The following table sets forth the distribution of the Bank’s Commercial Portfolio, by product category, as of December 31 of each year:

Loan Portfolio

As of December 31, 2014,2016, the Bank’s total loansLoan Portfolio amounted to $6,686$6,021 million, compared to $6,148$6,692 million as of December 31, 20132015, and compared to $5,716$6,686 million as of December 31, 2012.2014. The $671 million, or 10%, Loan Portfolio decrease during 2016 was largely attributable to the Bank’s decision to reduce certain country, industry and client risk exposures in its portfolio. As of December 31, 2014, 72%2016, 76% of the Bank’s loans wereLoan Portfolio was scheduled to mature within one year.year, compared to 70% and 72%, as of December 31, 2015 and 2014, respectively.

As of December 31, 2014,2016, the Bank had non-accrualnon-performing loans of $65 million (or 1.09% of the Loan Portfolio), compared to $52 million (or 0.78% of the Loan Portfolio) as of December 31, 2015, and compared to $4 million (or 0.06% of the loan portfolio), compared to $3 million (or 0.05% of the loan portfolio)Loan Portfolio) as of December 31, 2013, and compared to zero non-accrual loans as of December 31, 2012.2014.

For more detailed information, see Item 5, “Operating and Financial Review and Prospects-Operating Results—Changes in Financial Condition”Position” and “Operating and Financial Review and Prospects—Operating Results—Asset Quality and Allowance for Credit Losses,ECL,” and Item 18, “Financial Statements,” notes 2(n), 73.5, and 8.5.6.

For more information about non-accrual loans, see Item 18 “Financial Statements,” notes 2(l) and 7.

LoansLoan Portfolio by Country Risk

The following table sets forth the distribution of the Bank’s loansLoan Portfolio by country risk at the dates indicated: