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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 (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 Statements in U.S. dollars. The numbers and percentages set forth in this Annual Report have been rounded and, accordingly, may not total exactly.

For years up to and including the year ended December 31, 2014, the Bank prepared its financial statements in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The Consolidated Financial Statements included in this Annual Report for the year ended December 31, 2015, are the first the Bank has prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), in adherence to a mandate of the Superintendency of Banks of Panama for fully licensed banks in Panama. Accordingly, the Bank has prepared financial statements which comply with IFRS applicable for years ending on or after December 31, 2015, together with the comparative period data as at and for the year ended December 31, 2014, as described in the accounting policies. In preparing these financial statements, the Bank’s opening statement of financial position was prepared as of January 1, 2014, the Bank’s date of transition to IFRS.

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.

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 ~~2016~~2017 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.

The following table presents selected consolidated financial data for the Bank. The Consolidated Financial Statements were prepared and presented in accordance with ~~IFRS,~~International Financial Reporting Standards (“IFRS”) as issued by the ~~IASB. In preparing these financial statements,~~International Accounting Standards Board (“IASB”), and Interpretations issued by the ~~Bank’s opening statement of financial position was prepared~~IFRS Interpretation Committee (formerly known as ~~of January 1, 2014, the Bank’s date of transition to IFRS.~~“IFRIC”). Because fiscal year 2015 iswas the first year the Bank ~~has~~ prepared and presented its financial statements 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, 2013 ~~2012~~ and ~~2011.~~2012. The following selected financial data as of December 31, 2016 and 2015, and for the fiscal years ended December 31, 2016, December 31, 2015, and December 31, 2014 have been derived from the Consolidated Financial Statements, ~~that are included in this report beginning on page F-1. The Consolidated Financial Statements for the years ended December 31, 2015, and 2014~~which were audited by the independent registered public accounting firm Deloitte, Inc. (“Deloitte”), 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.

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 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, ~~2015, 34%~~2016, 22% of the Bank’s funding represents short-term borrowings and debt from international private banks, which compete with the Bank in its lending 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, ~~2015, approximately 68%~~2016, 77% of the Bank’s total deposits represented deposits from central banks or their designees (the Bank’s Class A shareholders), ~~14%~~10% of the Bank’s deposits represented deposits from private sector commercial banks and financial institutions, ~~10%~~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, 6% of the Bank’s deposits represented deposits from state-owned banks, and 2% of the Bank’s deposits represented deposits from multilateral agencies.~~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 allowance 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 ~~expected credit losses~~ECL 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 ~~(or the~~(the “Loan Portfolio”), loan commitments and ~~“Contingencies and Other Assets.” Contingencies and Other Assets consist of selected instruments with off-balance sheet credit risk,~~financial guarantee contracts, such as confirmed and stand-by letters of credit, ~~credit commitments,~~ and guarantees covering commercial ~~risk,~~risk; and other assets consisting of customers’ liabilities under acceptances, and an equity investment. The Bank’s allowances for ~~expected credit losses~~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.

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, financial instruments at fair value through profit or loss (“FVTPL”) and at fair value through OCI (“FVOCI”), short-term and long-term borrowings and debt, derivatives and trading positions. ~~Among many other market conditions that~~This risk may ~~shift~~result 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.

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 Commercial 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 Commercial Portfolio may expose the Bank to an increase in the allowance for ~~expected credit losses.~~ECL.

It is difficult to predict whether the Bank’s 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 Commercial Portfolio. Additionally, the future expansion of Bladex’s Commercial Portfolio may expose the Bank to higher levels of potential or actual losses and require an increase in the allowance for ~~expected credit losses,~~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. In particular, the amount of its reported non-performing loans may increase in the future as a result of growth in its Loan Portfolio, including loans 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 majority~~mainly 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 ~~enjoy~~may 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 accelerating~~accelerated 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 ~~participants~~market 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 ~~experience~~experienced 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, the~~The 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 ~~the~~these 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 ~~make~~increase 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 laws~~Changes 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 changes~~reforms to prevent the ~~liquidity coverage ratio and liquidity risk monitoring tools, known as~~recurrence 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 follows Basel III criteria to determine capitalization levels, and determined the Bank’s Tier 1 Basel III capital ratio to be ~~16.1%~~17.9% as of December 31, ~~2015.~~

~~Legislation regarding the financial services industry may subject the Bank to significant and extensive regulation, which may have an impact~~Based 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 is~~on July 21, 2010 and was intended ~~primarily~~ to overhaul the financial regulatory framework in the United States following the global financial crisis and ~~may impact~~has 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 of~~later 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 currentinvestment~~activitiesare~~activities 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 having~~signed 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~~GAAP”) prior to January 1, 2015.

On January 1, 2015, the Bank began preparing its financial statements in accordance with ~~IFRS.~~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 ~~of the Bank’s recent and~~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” ~~allows~~allowed it to adopt IFRS accounting principles, which are different than accounting principles under U.S. ~~GAAP.~~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.

~~The Bank has adopted and presented its financial statements in accordance with IFRS accounting principles.~~ 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 ~~SEC~~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. ~~IFRS accounting principles are different from those of U.S. GAAP, and~~ 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.

~~Filers of financial statements under IFRS are not currently subject to the SEC’s XBRL requirements which may provide less information to investors than is provided by filers utilizing XBRL.~~

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. ~~However, the~~The SEC ~~has not yet~~recently developed taxonomy to enable filers of IFRS financial statements, such as the Bank, to include XBRL tagging in their financial ~~statements. Until such time as the SEC develops taxonomy to allow~~statements effective March 1, 2017. Currently, IFRS filers ~~to include XBRL tagging, IFRS filers will be~~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.

The Bank’s credit activities 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 rates, and slower economic growth in industrialized countries, could have ~~a significant~~ adverse ~~effect~~effects on the economic condition of countries in the Region, including Panama, and ~~the~~ other countries ~~where~~in which the Bank operates. ~~In turn, adverse~~Adverse changes affecting the economies ~~of countries~~ in the Region could have a significant adverse impact on the quality of the Bank’s credit exposures, including increased allowance for ~~expected credit losses,~~ECL, debt ~~restructuring,~~restructurings, and loan losses. ~~As a result, this~~In 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”) ~~includes~~consists of the Commercial Portfolio ~~plus~~and the Investment Securities Portfolio. The “Investment Securities Portfolio” consists of securities at amortized cost and financial instruments at ~~fair value through OCI.~~FVOCI. Adverse changes affecting ~~the economies in~~ one or more of ~~those countries~~these economies could have an adverse impact on the Bank’s Credit Portfolio and, as a result, its financial condition, growth, prospects, results of operations and financial condition. As of December 31, ~~2015,~~2016, 61% of the Bank’s Credit Portfolio was outstanding to borrowers in the following five countries: Brazil ($~~1,685~~1,185 million, or ~~23%~~18%), Mexico ($~~874~~959 million, or 15%), Colombia ($762 million, or 12%), ~~Colombia ($769 million, or 10%),~~ Panama ($~~625~~552 million, or 8%), and Peru ($~~538~~510 million, or 7%8%).

In addition, as of December 31, ~~2015,~~2016, of the Bank’s total Credit Portfolio balances, 6% were to five borrowers in Brazil, 5% were to five borrowers in each of Colombia, Mexico and Peru, and 4% were to five borrowers in ~~Panama, 3% were to five borrowers in Mexico, and 3% were to five borrowers in Peru.~~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, potentially requiring the Bank to create additional allowances for ~~expected 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 ~~2015”~~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 ~~will~~may 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 ~~exposure~~exposures 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 ~~26.~~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 ~~finance~~and 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 ~~(“the New~~(the “New York Agency”), its subsidiaries in Brazil and Mexico, and its representative offices in Buenos Aires, Argentina; Mexico City, ~~and Monterrey,~~ Mexico; Sao Paulo, Brazil; Lima, Peru; and Bogotá, Colombia, as well as through a worldwide network of correspondent banks. ~~The Bank’s international administrative office located~~On 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. The New York Agency is located at 10 Bank Street, Suite 1220, White Plains, NY 10606, and its telephone number is +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.”

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. ~~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.

~~Since January 2014, the~~ changes of the Bank´s investment in the Feeder ~~are~~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 iswas 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 dodid not give the Bank the ability to direct the relevant activities of the fund nor the ability to use its power over the investee to affect its return. At December 31, 2015 and 2014, ~~and January 1, 2014~~ the Bank had a participation in ~~that fund~~the Feeder of 47.71%, and 49.61% ~~and 55.87%~~, respectively. At December 31, 2016, the Bank did not have any participation in the Feeder.

Bladex also ~~reports~~reported the changes in the net asset value of the Brazilian Fund in the “Gain (loss) per financial instruments at fair value through profit and loss" line item, which the Bank ~~does~~did not consolidate, because the ~~existing~~ rights on this fund dodid 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 iswas adjusted to recognize the Bank's participation in the profits ~~and~~or losses of the fund in the line ~~“gain~~“Gain (loss) per financial instruments at fair value through profit or loss” of the consolidated statement of profit or loss.

The ~~Bank’s commitment to remain~~Bank remained an investor in these funds ~~expired~~until March 31, 2016 redeeming its investments entirely on April 1^st, ~~2016, and the Bank has since proceeded to redeem its entire interest in the funds.~~2016.

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, the~~The Commercial Business Segment encompasses the Bank’s core business of financial intermediation and fee generation activities ~~relating~~developed to ~~the Commercial Portfolio’s activities.~~cater to corporations, financial institutions and investors in Latin America. These activities include the origination of bilateral and syndicated credits, short-term and medium-term loans, customers’ liabilities under acceptances, loan commitments and ~~contingencies.~~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 Business 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, the~~The Treasury Business Segment is responsible for the Bank’s funding and liquidity management, along with the management of its activities in investment securities, ~~as well as the management of~~and the Bank’s interest rate, liquidity, price and currency ~~risks.~~positions. Interest-earning assets managed by the Treasury Business 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 ~~includes cash~~also manages the Bank’s interest-bearing liabilities, which constitute its funding sources (deposits, securities sold under repurchase agreement (“Repos”), and ~~cash equivalents, financial instruments at fair value through profit or loss~~short- and ~~at fair value through Other Comprehensive Income (Loss) Account,~~long-term borrowings and ~~securities at amortized cost.~~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 ~~some~~certain 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 on trade finance and its Class A shareholders’ participation, it cannot guarantee that such exceptions will be granted in all future debt restructurings.

As of December 31, ~~2015,~~2016, the Bank had 66 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.

~~2015 was a~~2016 proved to be another challenging year for the ~~global economy,~~markets in which ~~experienced heightened volatility resulting from expectations~~the Bank operates, as currency devaluations and adverse macroeconomic trends created a more volatile business environment in several Latin American countries. These trends included the continued deterioration of ~~(i) an imminent increase~~the terms-of-trade for commodity-exporting producers, in ~~interest rates by the U.S. Federal Reserve, (ii) concerns about China’s slower economic growth~~some cases impacting company balance sheets and ~~(iii) persistently high oil production levels~~operations, a recessionary and inflationary environment in the face of tepid demand. Global GDP growth decreased in 2015 compared to 2014, while growth and overall performance differed greatly among individual economies. The U.S. economy experienced moderate growth, as did the Eurozone and Japan. However, largerimportant economies ~~in emerging markets,~~ such as ~~China,~~ Brazil, a generally heightened perception of credit and ~~Russia experienced lower growth, or even outright recession in 2015.~~

~~The slowdown and rebalancing of the Chinese economy, lower commodity prices, and strains in certain large emerging~~ market ~~economies continued to weigh on global trade flows during 2015, with particular impact in the Region, as external aggregate demand for the principal products produced in~~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 decreased.~~

~~The Region experienced a decrease~~Bank’s financial results in 2016 demonstrated Bladex’s fairly resilient core earnings generation capacity, while the Bank’s exit from its ~~2015 average GDP growth rate, mainly impacted by its largest economy, Brazil,~~participation in the investment funds, which ~~registered a decrease of 3.8%~~was completed early in ~~its GDP. The Region’s overall exports decreased year-over-year, for~~ the second ~~consecutive year, in those economies with~~quarter of 2016, helped remove a ~~greater dependence on commodities exports, such as Brazil, Chile, Colombia, and Peru. However, Mexico, Central America and parts~~significant element of ~~the Caribbean and South America, managed to grow in this environment, adding to a pattern of divergent growth paths among countries in the Region.~~market risk volatility.

~~In this challenging macroeconomic environment, the Bank was able to deploy its specialized knowledge and well diversified presence throughout the Region to achieve:~~

See Item 5, “Operating and Financial Review and Prospects—Operating Results—Profit for the year and Trend Information” and Item 18, “Financial Statements,” note ~~16.~~17.

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.

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 or trade services provided. The Bank intends to continue enhancing existing client relationships and establish new client-relationships through its Region-wide expertise and client approach, its product knowledge, its quality of service and 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 targeting the main trade related and growth sectors in the Region

In addition to its ~~significant~~ exposure to Latin American financial institutions, the Bank intends to continue enhancing its expertise in the sectors in which the Bank currently operates, while strategically targeting industries and participants in the value chain of international trade by country within the Region. Targeted participants ~~include~~operating in most of the main exporting sectors related to commodities (agribusiness, oil & gas, metals, and petrochemicals, among others) and services (transportation and utilities, among others). Bladex also intends to continue exploring strong regional and local partnerships to bolster its range of services and increase its presence in key economic sectors throughout the Region.

Due to the Bank’s relationships throughout, and knowledge of, the Region, the Bank is ~~strongly~~well 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.

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 ~~particular~~respective client’s volumes of annual sales, ~~as well as~~the borrower’s country of domicile and size of the market it operates in, as well as 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.

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, or financial 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.

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 request~~an application from the borrower for financing, usually related to foreign ~~trade, which accounted for 56% of such credit as of December 31, 2015.~~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, ~~2015,~~2016, the legal lending limit prescribed by Panamanian law for corporations, sovereign borrowers and middle-market companies amounted to ~~$243.0~~$253 million, and for financial institutions and financial groups amounted to ~~$291.6~~$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, ~~2015,~~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.”

The Bank’s ~~“Credit Portfolio”~~Credit Portfolio consists of the ~~“Commercial Portfolio”~~Commercial Portfolio and the ~~“Investment~~Investment Securities ~~Portfolio”.~~Portfolio. The Bank’s ~~“Commercial Portfolio”~~Commercial Portfolio includes gross loans at amortized cost ~~(or the~~(the “Loan Portfolio”), loan commitments and ~~“Contingencies and Other Assets.” Contingencies and Other Assets consist of selected instruments with off-balance sheet credit risk,~~financial guarantee contracts, such as confirmed and stand-by letters of credit, ~~credit commitments~~ and guarantees covering commercial ~~risk,~~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 ~~fair value through OCI~~FVOCI and securities at amortized cost.

~~The~~As of December 31, 2016, the Credit Portfolio ~~decreased $176~~amounted to $6,552 million, ~~or 2%, to~~a decrease from $7,405 million as of December 31, 2015, and from $7,581 million as of December 31, ~~2014, primarily~~2014. The $853 million, or 12%, decrease during 2016 was largely attributable to the Bank’s Commercial Portfolio (which decreased by $711 million, or 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 reduced holdings ~~on the Bank’s financial instruments at fair value through OCI (-$197~~in its Investment Securities Portfolio, which decreased by $142 million, or ~~-59%).~~57% in order to reduce market risk.

The Bank’s Commercial Portfolio ~~remained relatively stable at~~amounted to $6,444 million as of December 31, 2016, a $711 million, or 10%, decrease from $7,155 million as of December 31, 2015, ~~compared to~~and a $743 million, or 10%, decrease from $7,187 million as of December 31, 2014, ~~a $32 million decrease largely attributable~~as the Bank reduced certain country, industry and client risk exposures in response to ~~stable demand from~~unfavorable market conditions in the ~~Bank’s established client base of corporations~~Region, and ~~financial institutions (up $70 million, or 1%, from December 31, 2014), which was~~instead focused on expanding its short-term trade finance exposures with more ~~than offset by decreased activity in middle-market companies ($102 million, or a 21% decrease from December 31, 2014).~~favorable risk-adjusted returns.

As of December 31, ~~2015, 56%~~2016, 77% of the Bank’s Commercial Portfolio ~~consisted~~was 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 ~~involved~~engaged in foreign trade. 56% of the Bank’s Commercial Portfolio iswas represented by corporations, of which ~~66% is~~74% 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:

As of December 31, ~~2015,~~2016, the Bank’s Loan Portfolio amounted to $6,021 million, compared to $6,692 million as of December 31, 2015, and compared to $6,686 million as of December 31, 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, ~~2015, 70%~~2016, 76% of the Bank’s Loan 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, ~~2015,~~2016, the Bank had non-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) as of December 31, 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 ~~Expected Credit Losses,~~ECL,” and Item 18, “Financial Statements,” notes ~~3.4,~~3.5, and 5.6.

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

The risk relating to countries outside the Region pertains to transactions carried out in the Region, with credit risk transferred outside the Region by way of legally binding and payable at first demand corporate guarantees. As of December 31, ~~2015,~~2016, the Bank’s combined Loan Portfolio ~~extended in~~associated with European ~~countries~~country risk represented $115 million or 1.91% of the total Loan Portfolio, compared to $160 million or 2.40% of the total Loan Portfolio as of December 31, 2015, and compared to $166 million or 2.49% as of December 31, 2014. ~~These loans consisted primarily of loans extended to subsidiaries of multinational corporations established in Latin America, and typically include head-office loan guarantees.~~

The following table sets forth the amounts of the Bank’s Loan Portfolio by type of borrower at the dates indicated:

The Bank did not have any exposure to European sovereign debt as of December 31, 2016, 2015 and 2014.

As of December 31, 2015, the Bank’s Loan Portfolio amounted to $6,692 million, an increase of $5 million from $6,686 million, as of December 31, 2014, due to a stable demand for the Bank’s lending products, as the Bank´s core competencies allowed it to compete effectively, despite less significant growth seen in the Region´s markets compared to previous years.

~~As of December 31, 2015,~~2016, the Bank’s Loan Portfolio industry exposure mainly included: (i) ~~39%~~38% in the financial institutions sector; (ii) ~~17%~~21% in the industrial sector, comprised of mostly of metal manufacturing, food and beverage, ~~petrochemical,~~electric power, plastics and packaging, and other manufacturing industries; (iii) 17% in the agricultural sector, mostly comprised of grains and oilseeds, ~~coffee~~ and ~~sugar;~~sugar, and; (iv) ~~12%~~13% in the oil and gas sector, which in turn was divided into ~~downstream (6%~~integrated (7%), ~~integrated~~downstream (5%), and upstream ~~(2%~~(1%)~~; and (v) 10% in the services sector, comprised mainly of airline and shipping activities, and other services.~~ subsegments. No other industry sector exceeded 10% exposure of the Loan Portfolio.

The following table sets forth the remaining term of the maturity profile of the Bank’s Loan Portfolio as of December 31, ~~2015,~~2016, by type of rate and type of borrower:

~~Contingencies~~Note: Scheduled amortization repayments fall into the maturity category in which the payment is due, rather than that of the final maturity of the loan.

The Bank, on behalf of its client base, advises and confirms letters of credit to facilitate foreign trade transactions. When confirming letters of credit, the Bank adds its own unqualified assurance that the issuing bank will pay, with the understanding that, if the issuing bank does not honor drafts drawn on the letter of credit, the Bank will. The Bank also provides stand-by letters of credit, guarantees, and commitments to extend credit, which are binding legal agreements to disburse or lend to ~~a customer,~~clients, subject to the customers compliance with customary conditions ~~precedent.~~precedent or other relevant documentation. Commitments generally have fixed expiration dates or other termination clauses and require payment of a fee to the Bank. As some commitments expire without being drawn down, the total commitment amounts do not necessarily represent future liquidity requirements.

The Bank applies the same credit policies used in its lending process to its evaluation of these instruments, and, once issued, the commitment is irrevocable and remains valid until its expiration. Credit risk arises from the Bank’s obligation to make payment in the event of a client’s contractual default to a third party.

AsLoan commitments and financial guarantee contracts and other assets in the Commercial Portfolio amounted to $423 million, or 7% of the total Commercial Portfolio, as of December 31, 2016, compared to $463 million, or 6% of the total Commercial Portfolio, as of December 31, 2015, and compared to $501 million, or 7% of the total Commercial Portfolio, as of December 31, 2014. Confirmed and stand-by letters of credit, and guarantees covering commercial risk represented 93% of the total loan commitments and financial guarantee contracts and other assets as of December 31, 2016, compared to 56%, and 45%, as of December 31, 2015 and 2014, total Contingencies and Other Assets in the Commercial Portfolio amounted to $463 million and $501 million, 6% and 7%, respectively, of the total Commercial Portfolio, of which 56% and 61% corresponded to letters of credit, respectively.

The following table presents the distribution of the Bank’s ~~Contingencies~~loan commitments and ~~Other Assets~~financial guarantee contracts and other assets by country risk and type of borrower, as of December 31 of each year:

For ~~Total Contingencies,~~total loan commitments and financial guarantee contracts, see Item 18, “Financial Statements,” note ~~5.7.~~6.

As part of its Credit Portfolio, the Bank holds an Investment Securities Portfolio, in the form of both securities at ~~fair value through OCI~~FVOCI and securities at amortized cost, consisting of investments in ~~issuers in the~~securities by Latin American ~~Region which are mainly purchased in the secondary markets.~~issuers.

In the normal course of business, the Bank utilizes interest rate swaps for hedging purposes associated with ~~respect to its asset~~assets (mainly its ~~investment securities)~~Investment Securities Portfolio) and ~~liability management activities.~~liabilities (mainly issuances) denominated in fixed rates.

The following table sets forth information regarding the carrying value of the Bank’s Investment Securities Portfolio, presented in gross amounts, at the dates indicated.

During the periods under review herein, the Bank did not hold instruments in obligations of the U.S. Treasury or other U.S. Government agencies or corporations, or in states of the U.S. or its subdivisions.

The following tables set forth the distribution of the Bank’s Investment Securities Portfolio, presented in gross amounts, by country risk, type of borrower and contractual maturity, at the dates indicated:

As of December 31, 2016, 2015 and 2014, securities held by the Bank of any single issuer did not exceed 10% of the Bank’s stockholders equity.

As of December 31, 2016, the Bank’s securities at FVOCI decreased to $30 million, from $142 million as of December 31, 2015, as the Bank sold $103 million and redeemed $107 million of financial instruments at FVOCI, while $84 million were purchased, resulting in a net loss of $0.4 million. As of December 31, 2016, securities at FVOCI consisted of investments in securities of issuers in the Region, of which 90% corresponded to multilateral, sovereign and state-owned issuers, and 10% corresponded to private banks and corporations. As of December 31, 2016, there were no securities at FVOCI guaranteeing repurchase transactions.

As of December 31, 2015, the Bank’s securities at ~~fair value through OCI~~FVOCI amounted to $142 million and consisted of investments in securities of issuers in the Region, of which 58% corresponded to multilateral, sovereign and state-owned issuers, and 42% corresponded to private banks and corporations. During the year ended December 31, 2015, the Bank redeemed $151 million and sold $118 million of investment securities at ~~fair value through OCI,~~FVOCI, which generated gains of $0.4 million, and purchased $87 million of investments. As of December 31, 2015, securities at ~~fair value through OCI~~FVOCI with a carrying value of $88 ~~million were pledged to secure repurchase transactions accounted for as secured financings.~~

As of December 31, 2014, the Bank’s securities at fair value through OCI amounted to $339 million and consisted of investments in securities of issuers in the Region, of which 74% corresponded to multilateral, sovereign and state-owned issuers, and 26% corresponded to private corporations and banks. During the year ended December 31, 2014, the Bank purchased $288 million of investments and sold $223 million (generating gains of $1.9 million), and redeemed $63 million of investment securities at fair value through OCI. As of December 31, 2014, securities at fair value through OCI with a carrying value of $308 million were pledged to secure repurchase transactions accounted for as secured financings.

As of December 31, 2016, the Bank’s securities at amortized cost decreased to $78 million, from $109 million as of December 31, 2015. The $31 million, or 28%, decrease during the year in the securities at amortized cost portfolio was mostly attributable to the redemption of $55 million of matured investment securities, net of the $25 million in investment securities acquired during 2016. As of December 31, 2016, there were no securities at amortized cost guaranteeing repurchase transactions.

The Bank’s securities at amortized cost amounted to $109 million as of December 31, 2015, compared to $55 million as of December 31, 2014. The $54 million increase in the securities at amortized cost portfolio mainly reflects the net effect of: (i) $56 million in bond reclassifications of securities at amortized cost formerly held as financial instruments at ~~fair value through OCI,~~FVOCI, (ii) the redemption of $45 million of matured investment securities, and (iii) the $37 million in investment securities acquired during 2015 (all amounts nominal). As of December 31, 2015 securities at amortized cost with a carrying value of $56 million, were pledged to secure repurchase transactions accounted for as secured financings.

The Bank’s securities at amortized cost amounted to $55 million as of December 31, 2014, compared to $34 million as of January 1, 2014. The $21 million increase in the securities at amortized cost portfolio reflects the net effect of: (i) $23 million in investment securities acquired during 2014, (ii) the redemption of $20 million of matured investment securities, and (iii) the $18 million bond reclassification as securities at amortized cost formerly held as financial instruments at fair value through OCI.

The Bank’s former investment funds ~~consist~~consisted of its investment in the Feeder and the Brazilian Funds, which ~~are~~were managed by a third party, Alpha4x Asset Management LLC, following the sale of the Bladex Asset Management Unit ~~which concluded~~ in the second quarter of 2013.

~~The~~As of December 31, 2016, the Bank had no participation in investment funds to report after remaining an investor of these funds until March 31, 2016, and subsequently redeeming on April 1^st, 2016, its interest entirely.

As of December 31, 2015, the investment funds’ net ~~assets are composed~~asset value (composed of cash, investments in equity, debt instruments, and derivative financial instruments, all of which ~~are~~were quoted and traded in active ~~markets. The funds report trading gains and losses from negotiation of these instruments as realized and unrealized gains and losses on investments.~~

~~As of December 31, 2015, the investment funds’ net asset value~~markets) totaled $53 million, compared to $58 million as of December 31, ~~2014, and compared to $69 million as of January 1,~~ 2014. The Bank’s participation in the Feeder was 47.71% as of December 31, 2015, compared to 49.61% as of December 31, ~~2014, and 55.87% as of January 1,~~ 2014, with the remaining balances owned by third party investors. The redemptions from the investment in the funds amounted to $8 million in 2015, and $14 million in ~~2014, and $36 million in 2013. The Bank’s commitment to remain an investor in these funds expired on April 1~~^st~~, 2016, and the Bank has since proceeded to redeem its entire interest in the funds.~~2014.

See Item 4.A. – “Information on the Company – History and Development of the Company”, and Item 18, “Financial Statements,” ~~notes 3.3.3, 5.2, and 17.~~note 5.2.

The following table sets forth the aggregate gross amount of the Bank’s cross-border outstandings, consisting of cash and due from banks, interest-bearing deposits in banks, financial instruments at ~~fair value through profit or loss,~~FVTPL, financial instruments at ~~fair value through OCI,~~FVOCI, securities and loans at amortized cost, and accrued interest receivable, ~~but not including contingencies~~ as of December 31 of each year:

In allocating country risk limits, the Bank applies a portfolio management approach that takes into consideration several factors, including the Bank’s perception of country risk levels, business opportunities, and economic and political risk analysis.

~~Overall~~As of December 31, 2016, overall cross border outstandings ~~have~~decreased to $7,242 million, from $8,341 million as of December 31, 2015, as some exposures in certain countries, most notably in Brazil, were reduced in accordance with the Bank’s perception of risks relating to that country.

As of December 31, 2015, overall cross border outstandings had increased year-over-year by $378 million, with the greatest increase in outstandings in the United States of America, where the Bank invests most of its liquid assets in the form of cash and cash equivalents, mainly with the Federal Reserve Bank. Some exposures in certain countries ~~have been~~were adjusted in accordance with the Bank’s ~~risk perception.~~perception of risks.

Cross-border ~~outstandings~~outstanding exposures in countries outside the Region correspond principally to the Bank’s liquidity placements, and credits ~~extended~~guaranteed related to ~~subsidiaries of multinational corporations established~~transactions carried out in the ~~Region, with the respective head office guarantee.~~Region. See Item 5, “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Liquidity.”

The following table sets forth the amount of the Bank’s cross-border outstandings by type of institution as of December 31 of each year:

The following table sets forth information regarding the Bank’s ~~net revenues~~total income by country at the dates indicated, with ~~net revenues~~total income calculated as the sum of net interest income plus net other income – which includes fees and commissions, net, derivative financial instruments and foreign currency exchange, gain (loss) per financial instrument at fair value through profit or loss, gain (loss) per financial instrument at fair value through OCI, gain on sale of loans at amortized cost, and other ~~income, net:~~income:

The above table provides a reconciliation of ~~net revenues (as previously defined)~~total income by country defined above to the Bank’s profit for the year. Net revenues, which are presented as total income in the Bank’s Consolidated Financial Statements, do not include the effects of impairment loss from expected credit losses on loans at amortized cost and off-balance sheet instruments, impairment loss from expected credit losses on investment securities, and operating expenses. The purpose of the aforementioned table is to show ~~net revenues~~total income, as it is presentend in the Bank’s Consolidated Financial Statements, before ~~operating~~ expenses generated from the Bank’s Commercial and Treasury Business Segments, on a by-country basis. Given that the Bank’s business segments generate ~~revenues~~income not only from net interest income, but from other sources generating net other income, the Bank adds those corresponding items to net interest income to show ~~net revenues~~total income earned before expenses. Impairment loss from ~~expected credit losses~~ECL on loans at amortized cost, loan commitments and ~~off-balance sheet instruments,~~financial guarantee contracts, and impairment loss from ~~expected credit losses~~ECL on investment securities, are not included as part of ~~net revenues,~~total income, as the Bank believes such items, which are based on management estimates and therefore do not necessarily constitute fully realized losses, may distort trend analysis. ~~Thus, the~~The Bank believes excluding such items from ~~net revenues~~total income provides a more accurate indicator of the Bank’s revenue generating performance within its two business segments for each country, and thus provides a better basis for analysis of the efficiency of the Bank.

As a multinational bank, Bladex is a truly regional bank operating in 23 countries focused on trade finance with an unrivaled commitment to Latin America. The Bank ~~also believes~~possesses extensive knowledge of business practices, understanding of the ~~presentation~~risk and regulatory environments, accumulated over decades of ~~net revenues helps facilitate comparisons~~doing business throughout the entire Region. Its network of ~~performance between periods. However, net revenues should not be considered~~correspondent banking institutions and access to capital markets spans the globe. Bladex provides foreign trade solutions to a ~~substitute~~select client base of premier Latin-American financial institutions and corporations. With its unique institutional backing, strong capitalization and prudent risk management, Bladex is recognized by counterparties in many jurisdictions as a bank with preferred creditor status. Bladex has an excellent reputational and financial track record, with strong brand name recognition in its market segment, thanks to its proven commitment to the Region, and its unique capabilities to respond effectively to clients’ needs. Bladex fosters long-term relationships with its clients: 67% of the client base has been with the Bank for ~~or superior to, financial measures calculated differently on a IFRS basis. Furthermore, net revenues may be calculated differently by other companies in the financial industry.~~

The Bank operates in a highly competitive environment in most of its markets, and faces competition principally from international banks, the majority of which are European or North American, or Asian, as well as Latin American regional banks, in making loans and providing fee-generating services. The Bank competes in its lending and deposit-taking activities with other banks and international financial institutions, many of which have greater financial resources, enjoy access to less expensive funding and offer sophisticated banking services. Whenever economic conditions and risk perception improve in the Region, competition from commercial banks, the securities markets and other new participants generally increases. Competition may have the effect of reducing the spreads of the Bank’s lending rates over its funding costs and constraining the Bank’s profitability.

Increased open account exports and new financing requirements from multinational corporations are changing the way banks intermediate foreign trade financing. Trade finance volumes are also dependent on global economic conditions.

The Bank also faces competition from investment banks and the local and international securities markets, which provide liquidity to the financial systems in certain countries in the Region, as well as non-bank specialized financial institutions. The Bank competes primarily on the basis of agility, pricing, and quality of service. See Item 3.D., “Key Information—Risk Factors.”

The Superintendency regulates, supervises and examines the Bank on a consolidated basis. The New York Agency is regulated, supervised and examined by the New York State Department of Financial Services and the Board of Governors of the Federal Reserve System (the “U.S. Federal Reserve Board” or “Federal Reserve”). The Florida International Administrative Office was regulated, supervised and examined by the Florida Office of Financial Regulation and the U.S. Federal Reserve Board until the Bank´s decision to close that office in early 2015. The Bank’s direct and indirect nonbanking subsidiaries doing business in the United States are subject to regulation by the U.S. Federal Reserve Board. The Bank is subject to regulations in each jurisdiction in which the Bank has a physical presence. The regulation of the Bank by relevant Panamanian authorities differs from the regulation generally imposed on banks, including foreign banks, in the United States by U.S. federal and state regulatory authorities.

The Superintendency of Banks has signed and executed agreements or letters of understanding with 2526 foreign supervisory authorities for the sharing of supervisory information under the principles of reciprocity, appropriateness, national agreement, and confidentiality. These 2526 entities include the ~~Board of the Governors of the~~ Federal Reserve, ~~System,~~ the Office of the Comptroller of the Currency of the Treasury Department or the OCC, the Federal Deposit Insurance Corporation and the Office of the Thrift Supervision. In addition, the Statement of Cooperation between the United States and Panama promotes cooperation between U.S. and Panamanian banking regulators and demonstrates the commitment of the U.S. regulators and the Superintendency to the principles of comprehensive and consolidated supervision.

The Bank operates in Panama under a General Banking License issued by the National Banking Commission, predecessor of the Superintendency of Banks. Banks operating under a General Banking License (“General License Banks”), may engage in all aspects of the banking business in Panama, including taking local and foreign deposits, as well as making local and international loans.

All banking institutions in Panama are governed by Decree-Law 9 of February 26, 1998, as amended, and banking regulations issued by the Superintendency pursuant thereto (the “Banking Law”).

Under the Banking Law, a bank’s capital composition includes primary, secondary and tertiary capital. Primary capital is made up of ordinary capital and additional capital. Primary ordinary capital includes paid-in capital, paid-in capital surplus, declared reserves, retained earnings, accumulated other comprehensive income, minority interests in consolidating subsidiaries, and certain reserves and adjustments authorized by the Superintendency. Primary additional capital includes certain perpetual, subordinated instruments of debt and equity, paid-in surpluses on these instruments, certain instrument issued by consolidated subsidiaries, and certain adjustments authorized by the Superintendency. Secondary capital is made up of reserves to absorb future unforeseen losses, certain subordinated debt instruments, paid-in surpluses on these instruments, certain instruments issued by subsidiaries, and certain adjustments authorized by the Superintendency. Tertiary capital is made up of short-term subordinated debt incurred for the management of market risk. Under the Banking Law, the sum of secondary and tertiary capital cannot exceed primary capital.

General License Banks must have paid-in capital of not less than $10 million. Additionally,~~they~~ ~~must maintain~~ a minimum total capital of 8% of ~~their~~ total risk-weighted assets and irrevocable contingencies pending disbursement must be maintained, the latter understood as being disbursements that the bank can not unilaterally halt or terminate, and a primary ordinary capital equal to or greater than 4.5% of ~~their~~ risk-weighted ~~assets.~~assets and irrevocable contingencies pending disbursement. In addition, total primary capital may not be less than 6% of the bank’s risk-weighted ~~assets. Some of these capital requirements will enter~~assets and irrevocable contingencies pending disbursement. A transitory adjustment period established by the Superintendency entered into effect on July 1, 2016 ~~and~~with above minimum requirements ~~set forth before will be~~ fully in place by January, 2019. The Superintendency is authorized to take into account market risks, operational risks and country risks, among others, to evaluate capital adequacy. In addition, the Superintendency is authorized to increase the minimum capital requirement percentage in Panama in the event that generally accepted international capitalization standards (such as the standards set by the Basel ~~Committee on Banking Supervision)~~Committee) become more stringent.

General License Banks are required to maintain 30% of their global deposits in liquid assets of the type prescribed by the Superintendency (which include short-term loans to other banks and other liquid assets) ~~of the type prescribed by the Superintendency.~~. Under the Banking Law, deposits from central banks and other similar depositories of the international reserves of sovereign states are ~~immune~~exempted from attachment or seizure proceedings.

Pursuant to the Banking Law, banks cannot grant loans or issue guarantees or any other obligation (“Credit Facilities”), to any one person or group of related persons in excess of 25% of the Bank’s total capital. Thislimitation also extends to Credit Facilities granted to parties related to the ultimate parent of the banking group. However, the Banking Law establishes that, in the case of Credit Facilities granted by mixed-capital banks with headquarters in Panama whose principal business is the granting of loans to other banks, the limit is 30% of thebank’s capital funds. As confirmed by the Superintendency, the Bank currently applies the limit of 30% of the Bank’s total capital with respect to the Bank’s Credit Facilities in favor of financial institutions and the limit of 25% of the Bank’s total capital with respect to the Bank’s Credit Facilities in favor of corporations, middle-market companies and sovereign borrowers.

Under the Banking Law, a bank and the ultimate parent of the banking group may not grant loans or issue guarantees or any other obligation to “related parties” that exceed (1) 5% of its total capital, in the case of unsecured transactions,and(2) 10% of its total capital, in the case of collateralized transactions (other than loans secured by deposits in the bank). For these purposes, a “related party” is (a) any one or more of the bank’s directors, (b) any stockholder of the bank who directly or indirectly owns 5% or more of the issued and outstanding capital stock of the bank, (c) any company of which one or more of the bank’s directors is a director or officer or where one or more of the bank’s directors is a guarantor of the loan or credit facility, (d) any company or entity in which the bank or any one of its directors or officers can exercise a controlling influence, (e) any company or entity in which the bank or any one of its directors or officers owns 20% or more of the issue and outstanding capital stock of the company or entity and (f) managers, officers and employees of the bank, or their respective spouses (other than home mortgage loans or guaranteed personal loans under general programs approved by the bank for employees).The Superintendency currently limits the total amount of secured and unsecured Credit Facilities (other than Credit Facilities secured by deposits in the bank) granted by a bank or the ultimate parent of a banking group to related parties to 25% of the total capital of the bank.

The Superintendency of Banks may authorize the total or partial exclusion of loans or credits from the computation of these limitations in cases of unsecured loans and other credits granted by mixed-capital banks with headquarters in Panama whose principal business is the granting of loans to other banks, which is the case of ~~the~~this Bank. This authorization is subject to the following conditions: (1) the ownership of shares in the debtor bank–directly or indirectly–by the shared director or shared officer, may not exceed 5% of the bank’s capital, or may not amount to any sum that would ensure his or her majority control over the decisions of the bank; (2) the ownership of shares in the creditor bank–directly or indirectly–by the debtor bank represented in any manner by the shared director or shared officer, may not exceed 5% of the shares outstanding of the creditor bank, or may not amount to any sum that would ensure his or her majority control over the decisions of the bank; (3) the shared director or shared officer must abstain from participating in the deliberations and in the voting ~~sessions held by the creditor bank~~process regarding the loan or credit request; and (4) the loan or credit must strictly comply with customary standards of discretion set by the grantor bank’s credit policy. The Superintendency will determine the amount of the exclusion in the case of each loan or credit submitted for its consideration.

The Banking Law contains additional limitations and restrictions with respect to related party loans and Credit Facilities. For instance, under the Banking Law,banks may not grant Credit Facilities to any employee in an amount that exceeds the employee’s annual compensation package, and all Credit Facilities to managers, officers, employees or stockholders who are owners of 5% or more of theissued and outstanding capital stockof the lending bank or the ultimate parent of the banking group,will be made on terms and conditions similar to those given by the bank to its clients in arm’s-length transactions and which reflect market conditions for a similar type of operation. Shares of a bank cannot be pledged or offered as security for loans or Credit Facilities issued by the bank.

In addition to the foregoing requirements, there are certain other requirements applicable to General License Banks, including (1) a requirement that a bank must notify the Superintendency before opening or closing a branch or office in Panama and obtain approval from the Superintendency before opening or closing a branch or subsidiary outside Panama, (2) a requirement that a bank obtain approval from the Superintendency before it liquidates its operations, merges or consolidates with another bank or sells all or substantially all of its assets, (3) a requirement that a bank must designate the certified public accounting firm that it wishes to contract to ~~carry out the duty of~~perform external ~~auditing~~audit duties for the new fiscal term, within the first three months of each fiscal term, and notify the Superintendency within 7 days of such designation, (4) a requirement that a bank obtain prior approval from the Superintendency of the rating agency it wishes to hire to perform the risk analysis and rating of the bank, (5) a requirement that a bank must publish in a local newspaper the risk rating issued by the rating agency and any risk rating update, and (6) a requirement that a bank must provide written affirmation of the Bank’s audited financial statements signed by the Bank’s Chairman of the Board, the Chief Executive Officer and Chief Financial Officer. The subsidiaries of Panamanian banks established in foreign jurisdictions must observe the legal and regulatory provisions applicable in Panama regarding the sufficiency of capital, as prescribed under the Banking Law.

The Banking Lawregulates banks and the entire “banking group” to which each bank belongs. Banking groups are defined as the holding company and all direct and indirect subsidiaries of the holding company, including the bank in question. Banking groups must comply with audit standards and various limitations set forth in the Banking Law, in addition to all compliance required of the bank in question. The Banking Law provides that banks and banking groups in Panama are subject to inspection by the Superintendency, which must take place at least once every two years. The Superintendency is empowered to request from any bank or any company that belongs to the economic group of which a bank in Panama is a member, the documents and reports pertaining to its operations and activities. Banks are required to file with the Superintendency weekly, monthly, quarterly and annual information, including financial statements, an analysis of their Credit Facilities and any other information requested by the Superintendency. In addition, banks are required to make available for inspection any reports or documents that are necessary for the Superintendency to ensure compliance with Panamanian banking laws and regulations. Banks subject to supervision may be fined by the Superintendency for violations of Panamanian banking laws and regulations.

Panamanian ~~Anti-Money Laundering~~ laws and regulations governing Anti Money Laundering, Terrorism Finance and the Prevention of the Proliferation of Weapons of Mass Destruction

In Panama, all banks and trust corporations must take necessary measures to prevent their operations and/or transactions from being used to commit the felony of money laundering, terrorism financing, proliferation of weapons of mass destruction or any other ~~illicit~~illegal activity, as contemplated in the applicable laws and ~~regulations addressing this matter.~~regulations.

The Bank operates a New York state-licensed agency in White Plains, New York ~~New~~(New York Agency) and maintains a direct wholly-owned non-banking subsidiary in Delaware, Bladex Holdings, which is not engaged in banking activities. On October 30, 2006, the Bank established the Florida International Administrative Office in Miami, Florida, which ceased operations during the first quarter of 2015. See Item 4.A “Information on the Company—History and Development of the Company.”

The U.S. banking industry is highly regulated under federal and state law. These regulations affect the operations of the Bank in the United States. Set forth below is a brief description of the bank regulatory framework that is or will be applicable to the New York ~~Agency and was applicable to the Florida International Administrative Office prior to its closure in early 2015.~~Agency. This description is not intended to describe all laws and regulations applicable to the New York ~~Agency and the Florida International Administrative Office.~~Agency. Banking statues, regulations and policies are continually under review by Congress and state legislatures and federal and state regulatory agencies, including changes in how they are interpreted or implemented, could have a material adverse impact on the New York Agency and its operations. In addition to laws and regulations, state and federal bank regulatory agencies (including the U.S. Federal Reserve ~~Board, the FDIC and the OCC)~~Board) may issue policy statements, interpretive letters and similar written guidance applicable to the New York Agency (including the Bank). These issuances also may affect the conduct of the New York Agency’s business or impose additional regulatory obligations. The brief description below is qualified in its entirety by reference to the full text of the statues, regulations, policies, interpretive letters and other written guidance that are described.

In addition to being subject to New York ~~and Florida~~ state laws and regulations, the New York Agency is ~~and the Florida International Administrative Office was,~~ subject to federal regulations, primarily under the International Banking Act of 1978, as amended (“IBA”). The New York Agency is subject to examination and supervision by the U.S. Federal Reserve Board. The IBA generally extends federal banking supervision and regulation to the U.S. offices of foreign banks and to the foreign bank itself. Under the IBA, the U.S. branches and agencies of foreign banks, including the New York Agency, are subject to reserve requirements on certain deposits. At present, the New York Agency has no deposits subject to such requirements. The New York Agency also is subject to reporting and examination requirements imposed by the U.S. Federal Reserve Board similar to those imposed on domestic banks that are members of the U.S. Federal Reserve System. The Foreign Bank Supervision Enhancement Act of 1991 (the “FBSEA”), amended the IBA to enhance the authority of the U.S. Federal Reserve Board to supervise the operations of foreign banks in the United States. In particular, the FBSEA expanded the U.S. Federal Reserve Board’s authority to regulate the entry of foreign banks into the United States, supervise their ongoing operations, conduct and coordinate examinations of their U.S. offices with state banking authorities, and terminate their activities in the United States for violations of law or for unsafe or unsound banking practices.

In addition, under the FBSEA, state-licensed branches and agencies of foreign banks may not engage in any activity that is not permissible for a “federal branch” (i.e., a branch of a foreign bank licensed by the federal government through the OCC, rather than by a state), unless the U.S. Federal Reserve Board has determined that such activity is consistent with sound banking practices.

The New York Agency does not engage in retail deposit-taking from persons in the United States. Under the FBSEA, the New York Agency may not obtain Federal Deposit Insurance Corporation (“FDIC”), insurance and generally may not accept deposits from persons in the United States, but may accept credit balances incidental to its lawful powers, from persons in the United States, and accept deposits from non-U.S. citizens who are non-U.S. residents, but must inform each customer that the deposits are not insured by the FDIC.

The IBA also restricts the ability of a foreign bank with a branch or agency in the United States to engage in non-banking activities in the United States, to the same extent as a U.S. bank holding company. Bladex is subject to ~~the~~certain provisions of the ~~Federal~~ Bank Holding Company Act of 1956 (the “BHCA”), because it maintains an agency in the United States. Generally, any nonbanking activity engaged in by Bladex directly or through a subsidiary in the United States is subject to certain limitations under the BHCA. Among other limitations, the provisions of the BHCA include the so-called "Volcker Rule," which may restrict proprietary trading activities conducted by Bladex and its affiliates with U.S. clients or counterparties, as well as certain private funds-related activities with US nexus. Under the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “GLB Act”), a foreign bank with a branch or agency in the United States may engage in a broader range of non-banking financial activities, provided it is qualified and has filed a declaration with the U.S. Federal Reserve Board to be a “financial holding company.” The application with the U.S. Federal Reserve Board to obtain financial holding company status, filed by the Bank on January 29, 2008, was withdrawn, effective March 2, 2012, as the Bank no longer considered the financial holding company status to be a necessary requirement in order to achieve its long-term strategic goals and objectives. At present, the Bank has ~~subsidiaries~~a subsidiary in the United States, Bladex Holdings, a wholly-owned corporation incorporated under Delaware law that is not presently engaged in any activity.

In addition, pursuant to the Financial Services Regulatory Relief Act of 2006, the SEC and the U.S. Federal Reserve Board finalized Regulation R. Regulation R defines the scope of exceptions provided for in the GLB Act for securities brokerage activities which banks may conduct without registering with the SEC as securities brokers or moving such activities to a broker-dealer affiliate. The “push out” rules exceptions contained in Regulation R enable banks, subject to certain conditions, to continue to conduct securities transactions for customers as part of the bank’s trust and fiduciary, custodial, and deposit “sweep” functions, and to refer customers to a securities broker-dealer pursuant to a networking arrangement with the broker-dealer. The New York Agency is subject to Regulation R with respect to its securities activities.

Finally, under the regulations of the Office of Foreign Asset Control (“OFAC”), the Bank is generally required to monitor and block or reject transactions with certain targeted foreign countries and “specially designated nationals” which OFAC has determined pose a risk to U.S. national security.

The New York Agency, established in 1989, is licensed by the Superintendent of Financial Services of the State of New York (the “Superintendent”), under the New York Banking Law. The New York Agency maintains an international banking facility that also is regulated by the Superintendent and the ~~U.S.~~ Federal Reserve Board. The New York Agency is examined by the Department of Financial Services and is subject to banking laws and regulations applicable to a foreign bank that operates a New York agency. New York agencies of foreign banks are regulated substantially the same as, and have similar powers to, New York state-chartered banks, ~~except~~subject to certain exceptions (including with respect to capital requirements and deposit-taking activities.

The Superintendent is empowered by law to require any branch or agency of a foreign bank to maintain in New York specified assets equal to a percentage of the branch’s or agency’s liabilities, as the Superintendent may designate. Under the current requirement, the New York Agency is required to maintain a pledge of a minimum of $2 million with respect to its total third-party liabilities and such pledge may be up to 1% of the agency’s third party liabilities, or upon meeting eligibility criteria, up to a maximum amount of $100 million. As of December 31, ~~2015,~~2016, the New York Agency maintained a pledge deposit with a carrying value of ~~$3.3~~$2.8 million with the New York State Department of Financial Services, ~~complying with~~above the minimum required amount.

In addition, the Superintendent retains the authority to impose specific asset maintenance requirements upon individual agencies of foreign banks on a case-by-case basis. ~~No special requirement has been prescribed for the New York Agency.~~

The New York Banking Law generally limits the amount of loans to any one person to ~~15 percent~~15% of the capital, surplus fund and undivided profits of a bank. For foreign bank agencies, the lending limits are based on the capital of the foreign bank and not that of the agency.

The Superintendent is authorized to take possession of the business and property of a New York agency of a foreign bank whenever an event occurs that would permit the Superintendent to take possession of the business and property of a state-chartered bank. These events include the violation of any law, unsafe business practices, an impairment of capital, and the suspension of payments of obligations. In liquidating or dealing with an agency’s business after taking possession of the agency, the New York Banking Law provides that the claims of creditors which arose out of transactions with the agency may be granted a priority with respect to the agency’s assets over other creditors of the foreign bank.

The Florida International Administrative Office, established in October 2006, ceased operations during the first quarter of 2015. Prior to that, the Florida Administrative Office was licensed and supervised by the Florida Office of Financial Regulation under the Florida Financial Institutions Codes. The activities of the Florida International Administrative Office were subject to the restrictions described below as well as to Florida banking laws and regulations that were applicable generally to foreign banks that operate offices in Florida. The Florida International Administrative Office was also subject to regulation by the U.S. ~~Federal Reserve Board under the IBA.~~

Pursuant to Florida law, the Florida International Administrative Office was authorized to conduct certain “back office” functions on behalf of the Bank, including administration of the Bank’s personnel and operations, data processing and record keeping activities, and negotiating and servicing loans or extensions of credit and investments. Under the provisions of the Florida Financial Institutions Codes, as well as the IBA and the regulations of the U.S. Federal Reserve Board, the Florida International Administrative Office was also permitted to function as a representative office of the Bank.

U.S. anti-money laundering laws, including the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970, as amended (commonly known as the “Bank Secrecy Act”), as amended by the ~~USA PATRIOT~~Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), impose significant compliance and due diligence obligations, on financial institutions doing business in the United ~~States. Both the~~States, including, among other things, requiring these financial institutions to maintain appropriate records, file certain reports involving currency transactions, conduct certain due diligence with respect to their customers and establish anti-money laundering compliance programs designed to detect and report suspicious or unusual activity. The New York Agency is ~~and the Florida International Administrative Office were,~~a “financial ~~institutions”~~institution” for these purposes. ~~Failure~~The failure of a financial institution to comply with the requirements of these laws and regulations could have serious legal, reputational, and ~~reputational~~financial consequences for ansuch institution. The New York Agency ~~and the Florida International Administrative Office have~~has adopted ~~comprehensive~~risk-based policies and procedures reasonably designed to ~~address~~promote compliane in all material respects with these laws and their implementing regulations.

The economic or financial sanctions, requirements or trade embargoes (collectively, the “Sanctions”) imposed, administered or enforced from time to time by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and other U.S. governmental authorities, require all U.S. persons, including U.S. branches or agencies of foreign banks operating in the U.S. (such as the New York Agency) to comply with these ~~requirements.~~sanctions, and require U.S. financial institutions to block accounts and other property of, or reject unlicensed trade and financial transactions with specified countries, entities, and individuals. Failure to comply with applicable Sanctions can have serious legal, reputational and financial consequences for an institution subject to these requirements and Sanctions, in general, may have a direct or indirect adverse impact on the business or operations of parties that engage in trade finance or international commerce. The New York Agency has adopted risk-based policies and procedures reasonably designed to promote compliance in all material respects with applicable Sanctions.

The New York Agency’s operations are also subject to federal or state laws and regulations applicable to financial institutions which relate to credit transactions and financial privacy. These laws, include, without limitation, the following:

For information regarding the Bank’s organizational structure, see Item 18, “Financial Statements,” note 1.

The Bank leases its headquarters, which comprises 4,990 square meters of office space, located at Business Park - Tower V, Costa del Este, Panama City, Panama. The Bank leases 11 square meters of computer equipment hosting located at Gavilan Street Balboa, Panama City, Panama and 21 square meters of office space and internet access, as a contingency, located at 75E Street San Francisco, Panama City, Panama.

In addition, the Bank leases office space for its representative offices in Mexico City and Monterrey (in connection with the former representative office), Mexico; Buenos Aires, Argentina; Lima, Peru; Bogotá, Colombia; São Paulo, Brazil; and its New York Agency in ~~New York City, New York, which recently moved and initiated business operations on April 25, 2016, at~~ White Plains, New York.

See Item 18, “Financial Statements” notes ~~3.10, 6~~1, 3.11, 7 and ~~24.~~25.

The following discussion and analysis of the Bank’s financial condition and results of operations should be read in conjunction with the Bank’s Consolidated Financial Statements and the related notes included elsewhere in this Annual Report. See Item 18, “Financial Statements.” Consolidated financia position as of December 31, 2014 should be read in conjunction with 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. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. The Bank’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this Annual Report. The Bank’s Consolidated Financial Statements and the financial information discussed below, have been prepared in accordance with IFRS. Since these are the Bank’s first Consolidated Financial Statements prepared in accordance with IFRS, pursuant to the transitional relief granted by the SEC in respect of the first time adoption of IFRS, the following is limited to a discussion of the Bank’s financial condition and results of operations for the years ended December 31, 2015 and 2014 and no comparative data for prior years has been included.

The Bank derives income from net interest income and net other income, – which includes fees and commissions, net, derivative financial instruments and foreign currency exchange, gain (loss) per financial ~~instruments~~instrument at fair value through profit or loss, gain (loss) per financial instrument at fair value through OCI, gain on sale of loans at amortized cost, and other ~~income, net.~~income. Net interest income, or the difference between the interest income the Bank receives on its interest-earning assets and the interest itexpense the Bank pays on interest-bearing liabilities, is generated principally by the Bank’s lending activities. The Bank generates fees and commissions mainly through the issuance, confirmation and negotiation of letters of credit, guarantees, and credit commitments, and through loan structuring and syndication activities, while other loan intermediation activities, such as sales in the secondary market and distribution in the primary market are registered as ~~net gains~~gain on ~~the~~ sale of ~~loans.~~loans at amortized cost.

The following table summarizes changes in components of the Bank’s profit for the year and performance for the periods indicated. ~~This information should be read together with the Bank’s Consolidated Financial Statements and related notes included elsewhere in this Annual Report.~~ The operating results in any period are not indicative of the results that may be expected for any future period.

The Bank’s profit for the year 2016 totaled $87.0 million, compared to $104.0 million in 2015. The $16.9 million, or 16%, decrease was primarily attributable to: (i) higher impairment loss from ECL on loans totaling $34.8 million, compared to $17.2 million in 2015, as the Bank recorded individually assessed lifetime ECL for certain exposures with increased credit risk undergoing restructuring and recovery efforts, along with (ii) a $9.5 million adverse swing in non-core trading results from the Bank’s former participation in the investment funds, with a $4.4 million loss recorded in 2016 compared to a $5.1 million gain in 2015, and (iii) a $4.9 million year-over-year decrease in fees and commissions, mainly due to reduced activity in letters of credit, financial guarantees and credit commitments, as well as slightly lower fees from the loan structuring and syndication business in the context of a significant volume decrease in the relevant Latin American debt capital markets during the year. These factors were partially compensated by (i) higher net interest income (which increased by $9.7 million, or 7%) mostly driven by increased financial margins (net interest margin increased by 24 basis points) that helped offset the effect of reduced average loan balances (which decreased by 4% year-over-year), primarily from the Bank’s efforts to reduce certain country, industry and client risk concentrations, and (ii) a $6.0 million, or 12%, decrease in operating expenses from both lower performance-based variable compensation expense and cost saving activities in other expense categories.

Profit for the year 2015 amounted to $104.0 million, an increase of $1.6 million or 2%, compared to $102.4 million in 2014. This increase was driven by the Bank’s core business activities, with growth in average Commercial Portfolio balances resulting in an increase in net interest income, higher fees and commissions, and lower operating expenses, while maintaining robust asset quality, partially offset by higher allowance and impairment loss for ECL on loans and investment securities. These factors were complemented by a positive trend in non-core results from the Bank’s participation in investment funds which contributed trading gains of $5.1 million for the year 2015 compared to $2.8 million for the year ended December 31, 2014.

The Bank’s activities are managed and executed in two business segments: Commercial and Treasury.

The business segment results are determined based on the Bank’s managerial accounting process as defined by IFRS 8 – Operating Segments, which assigns consolidated statement of financial positions, revenue and expense items to each business segment on a systemic basis.

The Bank’s net interest income represents the main driver of profits for the year. Interest income is generated by interest-earning assets which include loans at amortized cost, financial instruments at ~~fair value through profit or loss,~~FVTPL, securities at ~~fair value through OCI~~FVOCI and securities at amortized cost. Interest expense is allocated to interest-earning assets on a matched-funded basis, net of risk adjusted capital allocated by business segment. The operating expense allocation methodology assigns overhead expenses based on resource consumption by business segment. The following table summarizes the Bank’s profits, both by business segment and on a consolidated basis for the periods indicated:

For further information on the Bank’s operations by business segment, see Item 18, “Financial Statements,” note ~~16.~~17.

The Commercial Business Segment encompasses the Bank’s core business of financial intermediation and fee generation activities ~~relating~~catering to ~~the Commercial Portfolio’s activities.~~corporations, financial institutions and investors in Latin America. These activities include the origination of bilateral and syndicated credits, short-term and medium-term loans, customers’ liabilities under acceptances, loan commitments and ~~contingencies.~~financial guarantee contracts. See Item 4. “Information on the Company – Business Overview – Commercial Portfolio”.Profits from the Commercial Business Segment include (i) net interest income from loans; (ii) fees and other income from the issuance, confirmation and negotiation of letters of credit, guarantees and loan commitments, and through loan structuring and syndication activities; and (iii) gain on sale of loans generated ~~by other~~through loan intermediation activities, such as sales in the secondary market and distribution in the primary market; (iv) impairment loss from ~~expected credit losses~~ECL on loans at amortized cost, loan commitments and ~~off-balance sheet instruments;~~financial guarantee contracts; and (v) direct and allocated operating expenses.

The Commercial Business Segment’s profit for the year 2016 reached $87.0 million, an $8.4 million, or 9%, decrease compared to $95.4 million in 2015, mainly as a result of provision for higher impairment losses from ECL totaling $35.1 million, compared to $12.8 million in 2015, mainly associated with individually assessed lifetime ECL on certain exposures undergoing restructuring and recovery efforts. To a lesser extent, profits for the Commercial Business Segment were also impacted by a $5.2 million decrease in net other income, mainly due to lower fees and commissions from lesser activity in letters of credit, financial guarantees and credit commitments. These factors were partially offset by: (i) a $13.2 million, or 10%, increase in net interest income driven by higher net lending rates, which compensated for the effects of lower average lending balances (which decreased by 4% year-over-year), and (ii) a $5.8 million, or 14%, decrease in operating expenses mostly from lower performance-based variable compensation expense and cost savings in other expense categories.

As of December 31, 2016, the Commercial Portfolio stood at $6.4 billion, a $0.7 billion, or 10%, decrease compared to $7.2 billion as of December 31, 2015, as the Bank reduced certain country, industry and client risk concentrations in response to unfavorable market conditions affecting these markets, and instead focused on expanding its short-term trade finance exposures, with favorable risk-adjusted returns. The most significant portfolio reduction was in regard to credit exposures in Brazil. Efforts to reduce concentration in that market commenced several years ago, and continued throughout 2016 with a $0.5 billion portfolio reduction reducing its weight to 18% of the total Commercial Portfolio, at year-end 2016, compared to 23% at year-end 2015, and compared to a peak of 47% in 2008. Consequently, average Commercial Portfolio balances amounted to $6.8 billion in 2016, a $0.3 billion, or 5%, decrease year-over-year, compared to $7.1 billion in 2015.

As of December 31, 2016, 77%, of the Bank’s Commercial Portfolio was scheduled to mature within one year, compared to 72% as of December 31, 2015. Trade finance operations represented 66% of the Bank’s Commercial Portfolio, compared to 56% as of December 31, 2015, while the remaining balance consisted primarily of lending to financial institutions and corporations engaged in foreign trade.

The Commercial Business Segment’s asset quality and portfolio risk profile remained sound as of December 31, 2016, with a 1.09% ratio of non-performing loans to total Loan Portfolio and a 1.73% coverage ratio of total allowance for ECL on loans at amortized cost, loan commitments and financial guarantee contracts to total Commercial Portfolio, compared to 0.78% and 1.33%, respectively as of December 31, 2015.

The Commercial Business Segment’s profit for the year reached $95.4 million in 2015, a $5.3 million, or 6%, increase compared to $90.1 million in 2014, as a result of: (i) a $5.2 million, or 4%, increase in ~~net revenues,~~total income, mostly attributable to higher average Loan Portfolio balances (+(which increased by 4%) which resulted in a $4.7 million, or 4%, increase in net interest income, a $0.4 million, or 2%, increase in net other income from higher commissions from loan commitments and guarantees as well as higher fees from loan structuring and syndication activities, which was partially offset by lower gains on the sale of loans due to decreased loan distribution activity in the secondary market, and (ii) a $2.3 million, or 5%, decrease in operating expenses, which was partially offset by (iii) a $2.2 million increase in impairment loss from expected losses on loans at amortized cost, loan commitments and ~~off-balance sheet instruments.~~financial guarantee contracts.

As of December 31, 2015, the Commercial Portfolio stood at $7.2 billion, the same level as the prior year, as the Bank focused on increasing profitability through selective exposures to maintain credit quality balance growth. Average Commercial Portfolio balances for 2015 amounted to $7.1 billion, resulting in a $0.2 billion, or 3%, increase ~~year-on-year,~~year-over-year, compared to an average Commercial Portfolio balance of $6.9 billion for the year 2014, mainly attributable to higher business demand from the Bank’s client base of financial institutions (+(which increased by 10%), and corporations (+(which increased by 2%).

The Commercial Portfolio continued to be short-term and trade-related in nature, with ~~$5.1 billion, or~~ 72% of the Commercial Portfolio scheduled to mature within one ~~year.~~year, as of December 31, 2015, and 2014. Trade financing operations represented 56% of the Commercial Portfolio, as of December 31, 2015, and 2014, while the remaining balance consisted primarily of lending to financial institutions and corporations involved in foreign trade.

The Commercial Business Segment’s asset quality and portfolio risk profile remained sound with a 0.78% ratio of non-performing loans to total Loan Portfolio and a credit reserve coverage of 1.33% (allowance for ~~expected credit losses~~ECL on loans and ~~instruments with off-balance sheet credit risk~~loan commitments and financial guarantee contracts to Commercial Portfolio) as of December 31, 2015, compared to 0.06% and 1.22%, respectively as of December 31, 2014.

The Treasury Business Segment is responsible for the Bank’s funding and liquidity management, along with the management of its activities in investment securities, as well as the management of the Bank’s interest rate, liquidity, price and currency risks. Interest-earning assets managed by the Treasury Business Segment include liquidity positions in cash and cash equivalents, and financial instruments related to the investment management activities, ~~such as Investment Funds at fair value through profit or loss, and the Investment Securities Portfolio~~ consisting of ~~securities~~financial instruments at ~~fair value through OCI~~FVTPL, financial instruments at FVOCI, and securities at amortized cost. The Treasury Business Segment also manages the Bank’s interest-bearing liabilities which constitute its funding, ~~sources, namely: liability~~mainly deposits, ~~securities sold under repurchase agreement,~~Repos, and short- and long-term borrowings and debt.

Profits from the Treasury Business Segment include net interest income derived from the above mentioned treasury assets and liabilities, ~~as well as~~and related net other income ~~including net~~(net results from derivative financial instruments and foreign currency exchange, gain (loss) per financial instruments at FVTPL, gain (loss) per financial instruments at FVOCI, and other income), impairment loss from ECL on investment securities, and direct and allocated operating expenses. Until the Bank’s exit from its participation in investment funds in the first half 2016, the Treasury Business Segment also incorporated the Bank’s non-core results from its participation, which were shown in the other income line item “gain (loss) per financial instruments at fair value through profit or loss”.

The Treasury Business Segment reported a marginal profit of $47 thousand for the year 2016, compared to $8.6 million in 2015, a decrease mostly attributable to the $9.5 million adverse swing in non-core results from the Bank’s former participation in investment funds, with a $4.4 million loss recorded in 2016 compared to a $5.1 million gain ~~per financial instrument at fair value through OCI,~~in 2015. The Bank´s reduced holdings in its investment securities portfolio mainly accounted for a $3.5 million reduction in the Segment’s net interest income, which was compensated by a year-over-year reduction of impairment ~~loss~~losses from ~~expected credit losses~~ECL on investment securities, as the Bank recorded only marginal impairment in 2016, compared to a $5.3 million impairment in 2015.

As of December 31, 2016, treasury business assets totaled $1.2 billion, a $0.4 billion, or 27%, decrease, compared to $1.6 billion as of December 31, 2015, resulting from lower cash and ~~allocated operating expenses.~~cash equivalents balances, investment securities and the final redemption of the participation in the investment funds. Securities held at FVOCI decreased to $31 million as of December 31, 2016, from $142 million as of December 31, 2015, as the Bank continued to decrease its holdings in that category to reduce market risk. Similarly, the portfolio of securities at amortized cost decreased to $78 million as of December 31, 2016, from $109 million as of December 31, 2015. Both securities portfolio consisted of readily-quoted Latin American securities, 90% of which represented multilateral, sovereign or state-owned risk.

On the funding side, deposit balances remained stable at $2.8 billion as of December 31, 2016, the same level from a year ago, representing 45% of total liabilities in 2016, compared to 38% of total liabilities, as of December 31, 2015. Short-term borrowings and debt, including Repos, totaled $1.5 billion as of December 31, 2016, a 42% decrease compared to $2.5 billion as of December 31, 2015, while long-term borrowings and debt decreased 6% to $1.8 billion as of December 31, 2016, from $1.9 billion as of December 31, 2015, as the Bank relied primarily on deposits to cover its short-term funding needs, in response to the shift in the lending book mix moving toward shorter tenors, while continuing to increase overall funding stability with medium and long-term funding balances, which amounted to 29% of total funding in 2016, up from 26% in 2015.

The Treasury Business Segment reported profit for the year of $8.6 million in 2015, compared to profit for the year of $12.2 million in 2014, a $3.7 million, or 30%, ~~year-on-year~~year-over-year decrease which was mainly due to a $4.3 million increase in impairment loss from ~~expected credit losses~~ECL on investment securities related to an asset-specific credit allowance assigned to credit impaired securities at ~~fair value through OCI. Net revenues~~FVOCI. Total income increased $1.1 million, or 4%, to reach $25.2 million in 2015, as a result of a $1.7 million, or 32%, increase in net other income mainly driven by improved performance from the Bank’s participation in investment funds which was partially offset by a $0.6 million, or 3%, decrease in net interest income from lower average balances of investment securities, while average funding costs remained relatively stable at 1.08%.

The Bank’s liquid assets totaled $1.3 billion as of December 31, 2015, compared to $0.7 billion as of December 31, 2014, in line with the Bank’s long-standing approach to prudent and ~~proactive~~active liquidity management as the Region´s macroeconomic conditions deteriorated. As of December 31, 2015 and 2014, the liquid assets to total assets ratio was 15.3%, and 9.2%, respectively, while the liquid assets to total deposits ratio was 45.3%, and 29.6%, respectively.

The securities at ~~fair value through OCI~~FVOCI totaled $142 million at December 31, 2015, compared to $339 million as of December 31, 2014, as the Bank continued to reduce its holdings. The portfolio of securities at amortized cost stood at $108 million as of December 31, 2015, compared to $55 million as of December 31, 2014. Both securities portfolios consisted of readily-quoted Latin American securities, 66% of which represented multilateral, sovereign or state-owned risk.

Bladex’s participation in investment funds, reported as securities at ~~fair value through profit or loss,~~FVTPL, amounted to $53 million, representing a share of 47.7% as of December 31, 2015, compared to $58 million and 49.6%, respectively as of the end of year December 31, 2014.

On the funding side, deposit balances stood at $2.8 billion as of December 31, 2015, representing 38% of total liabilities, a $0.3 billion, or 4%, increase compared to $2.5 billion, or 35% of total liabilities, as of December 31, 2014. Short-term borrowings and debt, including ~~securities sold under repurchase agreements (“repos”),~~Repos, totaled $2.5 billion as of December 31, 2015, resulting in a 15% ~~year-on-year~~year-over-year decrease, while long-term borrowings and debt totaled $1.9 billion as of December 31, 2015, up 34% ~~year-on-year,~~year-over-year, as the Bank increased its long-term funding through capital markets issuances, loan syndications and bilateral finance transactions.

2015 proved to be a year of many challenges for the markets in which the Bank operates, especially during the second half of the year, when the economic environment took a turn for the worse, due to the strong impact of several adverse macroeconomic trends impacting Latin-American countries, including the deterioration of terms of trade for commodity-exporting producers, a recessionary and inflationary environment in important economies such as Brazil, and a heightened perception of credit risk. Despite these challenges, the results in 2015 demonstrated Bladex’s resilient earnings generation capacity.

The Bank’s profit for the year 2015 amounted to $104.0 million, an increase of $1.6 million or 2%, compared to $102.4 million in 2014. This increase was driven by the Bank’s core business activities, with growth in average Commercial Portfolio balances resulting in an increase in net interest income, higher fees and commissions, and lower operating expenses, while maintaining robust asset quality, partially offset by higher allowance and impairment loss for expected credit losses on loans and investment securities. These factors were complemented by a positive trend in non-core results from the Bank’s participation in investment funds which contributed $5.0 million for the year 2015 compared to $2.7 million for the year ended December 31, 2014.

Net Interest Income and Margins

The following table sets forth information regarding the Bank’s net interest income, net interest margin (net interest income divided by the average balance of interest-earning assets), and net interest spread (the average yield earned on interest-earning assets, less the average yield paid on interest-bearing liabilities) for the periods indicated:

	For the Year Ended December 31,						For the Year Ended December 31,
	2015			2014			2016			2015			2014
	(in $ million, except percentages)						(in $ millions, except percentages)
Net interest income (loss) by Business Segment
Commercial	$	127.2		$	122.4		$	140.4		$	127.2		$	122.4
Treasury		18.3			18.9			14.8			18.3			18.9
Total Net Interest Income	$	145.5		$	141.3		$	155.2		$	145.5		$	141.3
Net interest margin		1.84	%		1.88	%		2.08	%		1.84	%		1.88	%
Net interest spread		1.68	%		1.72	%		1.84	%		1.68	%		1.72	%

Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Differentials

The following table presents the distribution of consolidated average assets, liabilities and stockholders’ equity, as well as the total dollar amounts of interest income from average interest-earning assets and the resulting yields, the dollar amounts of interest expense and average interest-bearing liabilities, and corresponding information regarding rates. Average balances have been computed on the basis of consolidated ~~monthly~~ average balances:

	For the Year ended December 31,																For the Year ended December 31,
	2015								2014								2016								2015								2014
Description	Average balance			Interest		Average yield/rate			Average balance			Interest		Average yield/rate			Average balance			Interest		Average yield/rate			Average balance			Interest		Average yield/rate			Average balance			Interest		Average yield/rate
	(in $ million, except percentages)																(in $ millions, except percentages)
Interest-Earning Assets
Interest bearing deposits with banks	$	819		$	2.1		0.25	%	$	639		$	1.5		0.24	%	$	845		$	4.5		0.52	%	$	819		$	2.1		0.25	%	$	639		$	1.5		0.24	%
Financial instruments at fair value through profit or loss		56			0.0		0.00	%		59			0.0		0.00	%
Financial instruments at fair value through OCI⁽¹⁾		253			6.0		2.35	%		347			8.1		2.30	%
Financial instruments at FVTPL																		16			0.0		0.00	%		56			0.0		0.00	%		59			0.0		0.00	%
Financial instruments at FVOCI⁽¹⁾																		98			2.2		2.27	%		253			6.0		2.35	%		347			8.1		2.30	%
Securities at amortized cost⁽²⁾		83			2.4		2.83	%		42			1.1		2.69	%		99			2.8		2.75	%		83			2.4		2.83	%		42			1.1		2.69	%
Loans at amortized cost, net of unearned interest		6,688			209.9		3.09	%		6,441			202.1		3.09	%		6,421			236.4		3.62	%		6,688			209.9		3.09	%		6,441			202.1		3.09	%
Total interest-earning assets	$	7,899		$	220.3		2.75	%	$	7,528		$	212.9		2.79	%	$	7,479		$	245.9		3.23	%	$	7,899		$	220.3		2.75	%	$	7,528		$	212.9		2.79	%
Non-interest-earning assets		69								88								72								69								88
Allowance for expected credit losses on loans at amortized cost		(83	)							(72	)
Allowance for ECL on loans at amortized cost																		(96	)							(83	)							(72	)
Other assets		16								11								24								16								11
Total Assets	$	7,901							$	7,555							$	7,479							$	7,901							$	7,555
Interest-Bearing Liabilities
Demand deposits⁽³⁾	$	142		$	0.2		0.12	%	$	89		$	0.1		0.07	%	$	173		$	0.5		0.33	%	$	142		$	0.2		0.12	%	$	89		$	0.1		0.07	%
Time deposits⁽³⁾		2,655			11.6		0.43	%		2,634			11.2		0.42	%		2,907			19.6		0.66	%		2,655			11.6		0.43	%		2,634			11.2		0.42	%
Deposits⁽³⁾		2,797			11.8		0.42	%		2,723			11.3		0.41	%		3,080			20.1		0.64	%		2,797			11.8		0.42	%		2,723			11.3		0.41	%
Financial liabilities at fair value through profit or loss		0			0.0		0.00	%		0			0.0		0.00	%
Securities sold under repurchase agreements		218			1.8		0.80	%		280			2.1		0.75	%
Short-term borrowings and debt		2,267			21.2		0.92	%		2,191			21.8		0.98	%
Securities sold under repurchase agreements and short-term borrowings and debt																		1,449			16.5		1.12	%		2,484			23.0		0.91	%		2,472			23.9		0.95	%
Long-term borrowings and debt, net⁽⁴⁾		1,584			40.0		2.49	%		1,383			36.4		2.60	%		1,874			54.0		2.84	%		1,584			40.0		2.49	%		1,383			36.4		2.60	%
Total interest-bearing liabilities	$	6,865		$	74.8		1.08	%	$	6,578		$	71.6		1.07	%	$	6,403		$	90.7		1.39	%	$	6,865		$	74.8		1.08	%	$	6,578		$	71.6		1.07	%
Non-interest bearing liabilities and other liabilities		86								83								83								86								83
Total Liabilities	$	6,952							$	6,661							$	6,486							$	6,952							$	6,661
Total Stockholders’ equity		949								894								993								949								894
Total Liabilities and Stockholders’ Equity	$	7,901							$	7,555							$	7,479							$	7,901							$	7,555
Net interest spread							1.68	%							1.72	%							1.84	%							1.68	%						��	1.72	%
Net interest income and net interest margin				$	145.5		1.84	%				$	141.3		1.88	%				$	155.2		2.08	%				$	145.5		1.84	%				$	141.3		1.88	%

⁽¹⁾

The ~~average yield of the~~ financial instruments at ~~fair value through OCI~~FVOCI are non-taxable securities and the average yield using cost-based average balances, would have been 2.31%, 2.42%, and 2.43%, for 2016, 2015 and 2014, respectively.

⁽²⁾

The ~~average yield of~~ securities at amortized cost are non-taxable securities and the average yield using cost-based average balances, would have been 2.93%, 2.92%, and 2.69%, for ~~2015and~~2016, 2015 and 2014, respectively.

⁽³⁾

The Bank obtains deposits in the form of demand deposits and time deposits from its central bank shareholders, commercial banks and corporations.

⁽⁴⁾

Net of prepaid commissions.

Note: Interest income and/or expense includes the effect of derivative financial instruments used for hedging.

Changes in Net Interest Income — Volume and Rate Analysis

Net interest income is affected by changes in volume and changes in interest rates. Volume changes are caused by differences in the level of interest-earning assets and interest-bearing liabilities. Rate changes result from differences in yields earned on interest-earning assets and rates paid on interest-bearing liabilities. The following table sets forth a summary of the changes in net interest income of the Bank, resulting from changes in its interest-earning assets and interest-bearing liabilities’ average volume and average interest rate changes for ~~2015~~2016 compared to ~~2014.~~2015. Volume and rate variances have been calculated based on average balances and average interest rates over the periods presented.

	2015 vs. 2014									2016 vs. 2015									2015 vs. 2014
	*Volume^()**			*Rate^()**			Net Change			*Volume^()**			*Rate^()**			Net Change			*Volume^()**			*Rate^()**			Net Change
	(in $ thousand)									(in $ thousands)
Increase (decrease) in interest income
Interest bearing deposits with banks	$	450		$	55		$	505		$	141		$	2,281		$	2,422		$	450		$	55		$	505
Investment securities		(1,332	)		479			(853	)		(3,540	)		170			(3,370	)		(1,332	)		479			(853	)
Loans at amortized cost, net of unearned interest		7,636			126			7,762			(10,262	)		36,796			26,534			7,636			126			7,762
Total increase (decrease)	$	6,754		$	660		$	7,414		$	(13,661	)	$	39,247		$	25,586		$	6,754		$	660		$	7,414
Increase (decrease) in interest expense
Deposits		(311	)		(230	)		(541	)		(1,867	)		(6,477	)		(8,344	)		(311	)		(230	)		(541	)
Securities sold under repurchase agreement and Short-term borrowings and debt		(122	)		1,008			886
Long-term borrowings and debt		(5,059	)		1,443			(3,616	)
Securities sold under repurchase agreement and short-term borrowings and debt											11,789			(5,313	)		6,476			(122	)		1,008			886
Long-term borrowings and debt, net											(8,439	)		(5,549	)		(13,988	)		(5,059	)		1,443			(3,616	)
Total increase (decrease)	$	(5,492	)	$	2,221		$	(3,271	)	$	1,483		$	(17,339	)	$	(15,856	)	$	(5,492	)	$	2,221		$	(3,271	)
Increase (decrease) in net interest income	$	1,262		$	2,881		$	4,143		$	(12,178	)	$	21,908		$	9,730		$	1,262		$	2,881		$	4,143

^(*)

Volume variation effect in net interest income is calculated by multiplying the difference in average volumes by the current year’s average yield. Rate variation effect in net interest income is calculated by multiplying the difference in average yield by the prior year’s average volume.

Net Interest Income and Net Interest Margin Variation

2016 vs. 2015

For the year ended December 31, 2016, the Bank’s net interest income reached $155.2 million, compared to $145.5 million during the year ended December 31, 2015. The $9.7 million, or 7%, increase in net interest income was mainly driven by a 24 basis point increase in net interest margin to reach 2.08% in 2016, compared to 1.84% in 2015, as higher net lending spreads and the overall effect of increased market rates overcompensated the effects of lower average interest-earning asset balances, from the Bank’s efforts to reduce lending and investment portfolio risk concentrations.

2015 vs. 2014

For the year ended December 31, 2015, the Bank’s net interest income reached $145.5 million, compared to $141.3 million during the year ended December 31, 2014. The $4.2 million, or 3%, increase in net interest income was mainly driven by higher average balances of the Bank’s Loan Portfolio (+(which increased by 4%) and lower average rates on short- and long-term borrowings and debt, both of which were partially offset mainly by higher average balances on the Bank’s long-term borrowings and debt (+(which increased by 14%).

Net interest margin stood at 1.84% for the year ended December 31, 2015 compared to 1.88% for the year ended December 31, 2014. The 0.04% decrease in net interest margin was mainly attributable to lower yield on interest-earning assets, mainly due to increased average liquidity balances (+(which increased by 28%) carrying a 0.25% average interest rate reflecting its low risk level, while Loan Portfolio rates remained stable at 3.09%, and funding costs increased marginally to 1.08% in 2015 compared to 1.07% in 2014.

Fees and Commissions, net

The Bank generates fee and commission income primarily from letters of credit confirmations, the issuance of guarantees covering commercial risk, credit commitments, and loan origination, structuring and syndication activities. The following table shows the components of the Bank’s fees and commissions, net, for the periods indicated:

	For the Year Ended December 31,				For the Year Ended December 31,
	2015		2014		2016		2015		2014
	(in $ thousand)				(in $ thousands)
Loan commitments & guarantees⁽¹⁾	$	2,988	$	2,118
Letter of credits		9,332		9,275
Loans & commitments, net					$	1,126	$	2,988	$	2,118
Letters of credit						7,458		9,332		9,275
Arrangements		6,880		6,109		5,722		6,880		6,109
Fees and commissions, net	$	19,200	$	17,502	$	14,306	$	19,200	$	17,502

⁽¹⁾~~Net~~Fees and commissions amounted to $14.3 million for the year ended December 31, 2016, compared to $19.2 million for the year ended December 31, 2015. The $4.9 million, or 25%, decrease was primarily driven by lower business activity in letters of ~~commission expense.~~credit, loan commitments and other financial guarantee contracts, while commissions from the syndication business in the primary market were slightly lower, with an increased number of completed transactions despite overall volumes in the relevant Latin American debt capital markets suffering significant decreases.

During the year ended December 31, 2015, fees and commissions amounted to $19.2 million, compared to $17.5 million for the year ended December 31, 2014. The $1.7 million, or 10%, increase was primarily driven by higher commissions from loan commitments and guarantees and increased loan structuring and syndication arrangements (with seven transactions led and executed in 2015).

For more information, see Item 18, “Financial Statements,” notes ~~3.9,~~3.10, and ~~20.~~21.

Derivative Financial Instruments and Foreign Currency Exchange

As part of its interest rate and currency risk management, the Bank may from time to time enter into foreign exchange forwards, cross-currency contracts and interest rate swaps to hedge the risk associated with a portion of the notes issued under its various funding programs.

The Bank recorded a net loss of $0.5 million in 2016, compared to a nearly break-even result in 2015 (a net loss of $23 thousand), in derivative financial instruments and foreign currency exchange held for risk management hedging purposes.

The Bank recorded nearly break-even results in derivative financial instruments and foreign currency exchange in 2015, compared to net gain of $0.2 million in 2014.

For additional information, see Item 11, “Quantitative and Qualitative Disclosure about Market Risk,” and Item 18, “Financial Statements,” notes ~~3.6~~3.7 and ~~5.8.~~5.7.

(Loss) Gain per financial instrument at fair value through profit or loss

During the year ended December 31, 2016, the Bank recorded a net loss per financial instrument at FVTPL of $2.9 million, compared to a net gain of $5.7 million in the year ended December 31, 2015, mostly related to a swing in non-core trading results from the Bank’s former participation in the investment funds, which recorded a $4.4 million loss in 2016 compared to a $5.1 million gain in 2015, partialy offset by a $0.8 million increase in gains on financial liabilities at FVTPL.

Gains per financial ~~instruments~~instrument at ~~fair value through profit or loss~~FVTPL totaled $5.7 million in the year ended December 31, 2015, compared to $2.4 million in the year ended December 31, 2014, which were primarily related to improved performance of trading activities from the Bank’s ~~remaining~~former participation in the investment funds.

For additional information, see Item 18, “Financial Statements,” notes 3.3.5, 5.1, 5.2, 18 and ~~17.~~22.

(Loss) Gain per financial ~~instruments~~instrument at fair value through OCI

The Bank purchases debt instruments with the intention of selling them prior to maturity. These debt instruments are classified as financial instruments at ~~fair value through OCI~~FVOCI and are included as part of the Bank’s Credit Portfolio.

The ~~Bank’s~~Bank recorded a net ~~gain~~loss per financial ~~instruments~~instrument at ~~fair value through OCI was~~FVOCI of $0.4 million for the year ended December 31, ~~2015,~~2016, compared to gains of $0.4 million and $1.9 million for the ~~year~~years ended December 31, ~~2014. Detail~~2015 and 2014, respectively, primarily related to the sale of $103 million of its holdings, as the ~~net gains is as follows:~~Bank continued its effort to reduce its investment portfolio exposure.

For the year ended December 31,
2015 2014
(in $ millions)
Nominal amount $ 109.6 $ 218.1
Amortized cost $ (116.1 ) $ (228.2 )
Proceeds 116.4 230.1
Net effect of unwinding hedging derivatives of the financial instruments at fair value through OCI 0.0 0.0
Total gain per financial instrument at fair value through OCI $ 0.4 $ 1.9

For additional information, see Item 18, “Financial Statements,” ~~note~~notes 3.3.6 and 5.3.

Gain on Sale of Loans at amortized cost

The net gain on sale of loans at amortized cost corresponds to income derived from the Bank’s business stream of loan intermediation and distribution activities in the primary and secondary markets.

During the years ended December 31, 2016, 2015 and 2014, the Bank sold loans ~~on the secondary market~~ with a book value of ~~$92.4~~$235 million, $367 million and ~~$515.6~~$762 million, respectively, generating net gains on the sale of loans of ~~$0.4~~$0.8 million, $1.5 million and ~~$2.2~~$2.5 million, respectively. The lower levels of loan distribution business compared to previous years relates to decreased activity in the secondary markets as the Region and the ~~World~~world have experienced heightened volatility ~~throughout the year 2015.~~

~~During the years ended December 31, 2015~~ and ~~2014, the Bank assigned $275 million and $246 million, respectively, of originated loans to the International Finance Corporation (“IFC”), which generated a net gain of $0.4 million~~an increased risk profile in each year, as part of a risk-sharing facility agreement with the IFC of up to $350 million, established to expand access to trade finance for agribusiness in Latin America and to contribute to regional food security.recent years.

Impairment Loss from ~~Expected Credit Losses~~ECL on Loans at Amortized Cost

For the year ended December 31,
2015 2014
(in $ million)
Impairment loss from expected credit losses on credit-impaired loans (asset-specific) 24.2 1.6
Impairment loss (gain) from expected credit losses on performing loans (collective assessment basis), net of loan recoveries (7.0 ) 5.2
Impairment loss from expected credit losses on loans at amortized cost $ 17.2 $ 6.8

	For the year ended December 31,
	2016			2015			2014
	(in $ millions)
Impairment loss from ECL on credit-impaired loans (lifetime ECL)		33.0			24.2			1.6
Impairment loss (recovery) from ECL on performing loans (lifetime ECL)		32.0			(28.7	)		0.0
(Recovery) Impairment loss from ECL on performing loans (12-month ECL)		(30.2	)		21.7			5.2
Impairment loss from ECL on loans at amortized cost	$	34.8		$	17.2		$	6.8

For the year ended December 31, 2016, the impairment loss from ECL on loans at amortized cost amounted to $34.8 million, which was mainly attributable to higher allowances assigned to performing exposures based on lifetime ECL (IFRS Rule 9 Stage 2), and non-performing loans (IFRS Rule 9 Stage 3), partly offset by lower impairment from ECL on performing exposures assessed based on 12-month ECL (IFRS Rule 9 Stage 1), which resulted from both lower end-of-period portfolio balances, and the shift in the overall portfolio mix toward shorter-term trade exposures.

The impairment loss from ~~expected credit losses~~ECL on loans at amortized cost amounted to $17.2 million for the year ended December 31, 2015, which was mainly the result of a $24.2 million asset-specific credit allowance assigned to non-performing loans, which totaled $52 million (or 0.78% of the Loan Portfolio) at December 31, 2015. This impairment loss was partly offset by a $7.0 million ~~gain~~net recovery from ~~expected credit losses~~ECL on performing loans (calculated on a collective assessment basis), as a reflection of changes in the composition of the Bank’s Loan Portfolio and its impact in the Bank’s reserve model, while Loan Portfolio outstanding balances remaining relatively unchanged year-over-year at $6.7 billion at December 31, 2015.

For the year ended December 31, 2014, the impairment loss from ~~expected credit losses~~ECL on loans at amortized cost amounted to $6.8 million, mainly attributable to increased credit allowance on performing loans (calculated on a collective assessment basis) for $5.2 million – mostly resulting from the Bank’s Loan Portfolio growth during ~~the year (+$538~~2014 (which increased by $538 million, or ~~+9%~~9%). In addition, $1.6 million impairment loss on asset-specific credit allowances was assigned to non-performing loans – which totaled $4.0 million (or 0.06% of the Loan Portfolio) at December 31, 2014.

For more detailed information, see Item 5, “Operating and Financial Review and Prospects/Operating Results/Asset Quality and Allowance for ~~Expected Credit Losses,~~ECL,” and Item 18, “Financial Statements,” notes ~~3.4,~~ 3.5, 3.6 and 5.6.

Impairment ~~(Gain)~~ Loss from ~~Expected Credit Losses~~ECL on Investment Securities

For the year ended December 31, ~~2015,~~2016, the Bank recorded a minimal impairment loss from ECL on investment securities of $3 thousand, as the Bank continued to reduce its outstanding balances in the Investment Portfolio (which decreased by $142 million year-over-year).

The Bank recorded a $5.3 million impairment loss from ~~expected credit losses~~ECL on investment securities for the year ended December 31, 2015, mainly ~~the result of~~from a $6.7 million asset-specific credit allowance assigned to credit impaired securities at ~~fair value through OCI,~~FVOCI, with a fair value of $1.6 million at December 31, 2015. This impairment loss was partly offset by a $1.4 million impairment gain from ~~expected credit losses~~ECL on performing securities at ~~fair value through OCI~~FVOCI and at amortized cost (calculated on a collective assessment basis), mainly as a reflection of reduced outstanding balances in the Investment Portfolio at December 31, 2015 ~~(-$144~~(which decreased by $144 million ~~year-on-year)~~year-over-year).

The $1.0 million of impairment loss from ~~expected credit losses~~ECL on securities for the year 2014 was the result of increased credit allowance on performing securities (calculated on a collective assessment basis) mainly due to higher Investment Portfolio balances during ~~the year (+$26~~2014 (which increased by $26 million).

Impairment ~~(Gain)~~ Loss (Recovery) from ~~Expected Credit Losses~~ECL on ~~Off-Balance Sheet Instruments~~Loan Commitments and Financial Guarantee Contracts

Fort the year ended December 31, 2016, the Bank recorded a $0.4 million impairment loss from ECL on loan commitments and financial guarantee contracts, mostly due to a $2.1 million increase in credit allowance required for Stage 2 performing loan commitments and financial guarantee contracts, which was partly offset by a $1.8 million recovery from ECL collectively assessed as a result of lower overall end-of-period loan commitments and financial guarantee contracts volumes, mainly from credit commitments.

The Bank recorded a $4.4 million ~~impairment gain~~recovery from ~~expected credit losses~~ECL on ~~off-balance sheet instruments~~loan commitments and financial guarantee contracts for the year ended December 31, 2015, as a result of lower credit allowance on performing ~~off-balance sheet instruments~~loan commitments and financial guarantee contracts (calculated on a collective assessment basis), mostly driven by lower outstanding balances on confirmed letters of credits ~~(-$39~~(which decreased by $39 million) and customers’ liabilities under acceptances ~~(-$99~~(which decreased by $99 million), together with changes in the risk profile of the Bank’s ~~off-balance sheet~~loan commitments and financial guarantee contracts portfolio composition.

The $3.8 million of impairment loss from ~~expected credit losses~~ECL on ~~off-balance sheet instruments~~loan commitments and financial guarantee contracts for the year ended December 31, 2014 was mainly due to the change in composition of performing ~~off-balance sheet credit~~loan commitments and financial guarantee contracts exposures, and its impact in the Bank’s reserve model (calculated on a collective assessment basis).

Operating Expenses

Total operating expenses includes the following ~~expenses~~expense line items of the consolidated statements of profit or loss: salaries and other employee expenses, depreciation of equipment and leasehold improvements, amortization of intangible assets, professional services, maintenance and repairs, and other expenses. The following table shows a breakdown of the components of the Bank’s total operating expenses for the periods indicated:

For the Year Ended December 31,
2015 2014
(in $ thousand)
Total income 173,858 167,610

Expenses:
Impairment loss from expected credit losses on loans at amortized cost 17,248 6,782
Impairment loss from expected credit losses on investment securities 5,290 1,030
Impairment (gain) loss from expected credit losses on off-balance sheet instruments (4,448 ) 3,819

Operating Expenses:
Salaries and other employee expenses $ 30,435 $ 31,566
Depreciation of equipment and leasehold improvements 1,371 1,545
Amortization of intangible assets 596 942
Professional services 4,621 5,177
Maintenance and repairs 1,635 1,544
Other expenses 13,126 12,839
Total operating expenses $ 51,784 $ 53,613
Profit for the year $ 103,984 $ 102,366

	For the Year Ended December 31,
	2016		2015		2014
	(in $ thousands)
Salaries and other employee expenses	$	25,196	$	30,435	$	31,566
Depreciation of equipment and leasehold improvements		1,457		1,371		1,545
Amortization of intangible assets		629		596		942
Other expenses		18,532		19,382		19,560
Total operating expenses	$	45,814	$	51,784	$	53,613

~~The above table provides a reconciliation of total operating expenses (as previously defined) to the Bank’s profit for the year.~~ Operating expenses, which are presented as part of total expenses in the Bank’s consolidated statements of profit or loss, ~~does~~do not include the effects of impairment loss or recovery from expected credit losses on loans at amortized cost, and off-balance sheet instruments, and impairment loss from expected credit losses on investment securities. The purpose of the aforementioned table is to show expenses related to the Bank’s general and administrative expenses. Impairment loss from expected credit losses on loans at amortized cost and off-balance sheet instruments, and impairment loss from expected credit losses on investment securities, ~~are not included as part of operating expenses,~~and loan commitments and financial guarantee contracts, as the Bank believes such items, which are based on management estimates and are related to the expected credit losses of the Bank’s Credit Portfolio, may distort trend analysis. Thus, the Bank believes excluding such items from expenses provides a more accurate indicator of the Bank’s administrative and general expenses, and thus provides a better basis for analysis of the efficiency of the ~~Bank. The~~ Bank ~~also believes the presentation of operating expenses~~and helps facilitate comparisons between periods. However, operating expenses should not be considered a substitute for, or superior to, financial measures calculated differently on aan IFRS basis. Furthermore, operating expenses may be calculated differently by other companies in the financial industry.

The Bank’s operating expenses totaled $45.8 million for the year ended December 31, 2016, compared to $51.8 million operating expenses for the year ended December 31, 2015. The $6.0 million, or 12%, decrease year-over-year was mainly attributable to lower performance-based variable compensation expense, and other cost savings resulting from the Bank´s continued focus on process improvements to increase efficiency.

During the year ended December 31, 2015, the Bank’s operating expenses totaled $51.8 million, compared to $53.6 million for the year ended December 31, 2014. The $1.8 million, or 3%, decrease in operating expenses ~~over the year~~year-over-year was primarily attributable to a reduction in salaries and other employee expenses (a decrease of $1.1 million) and ~~professional services (a decrease of $0.6 million).~~other expenses.

For more information on salaries and other employee expenses, and other operating expenses, see Item 18, “Financial Statements”, notes 2223 and ~~23,~~24, respectively.

Changes in Financial Position

The following table presents components of the Bank’s consolidated statements of financial position at the dates indicated:

	As of December 31,						As of January 1,			As of December 31,
	2015			2014			2014			2016			2015			2014
	(in $ thousand)									(in $ thousands)
Assets
Cash and cash equivalents	$	1,299,966		$	780,515		$	839,718		$	1,069,538		$	1,299,966		$	780,515
Financial instruments at fair value through profit or loss		53,411			57,574			68,762			0			53,411			57,574
Financial instruments at fair value through OCI		141,803			338,973			334,368			30,607			141,803			338,973
Securities at amortized cost, net		108,215			54,738			33,570			77,214			108,215			54,738
Loans at amortized cost		6,691,749			6,686,244			6,148,298			6,020,731			6,691,749			6,686,244
Less:
Allowance for expected credit losses		89,974			77,687			70,876			105,988			89,974			77,687
Unearned interest and deferred fees		9,304			8,509			6,668			7,249			9,304			8,509
Loans at amortized cost, net		6,592,471			6,600,048			6,070,754			5,907,494			6,592,471			6,600,048

At fair value - Derivative financial instruments used for hedging - receivable		7,400			12,324			15,217			9,352			7,400			12,324
Property and equipment, net		6,173			6,961			8,432			8,549			6,173			6,961
Intangibles, net		427			1,024			1,890			2,909			427			1,024
Other assets:
Customers’ liabilities under acceptances		15,100			114,018			1,128			19,387			15,100			114,018
Accrued interest receivable		45,456			48,177			40,778			44,187			45,456			48,177
Other assets		15,794			8,056			3,491			11,546			15,794			8,056
Total of other assets											75,120			76,350			170,251
Total Assets	$	8,286,216		$	8,022,408		$	7,418,108		$	7,180,783		$	8,286,216		$	8,022,408

Liabilities and Stockholders’ Equity
Deposits	$	2,795,469		$	2,506,694		$	2,361,336		$	2,802,852		$	2,795,469		$	2,506,694
At fair value - Derivative financial instruments used for hedging - payable		29,889			40,287			8,572			59,686			29,889			40,287
Financial liabilities at fair value through profit or loss		89			52			72			24			89			52
Securities sold under repurchase agreement		114,084			300,519			286,162			0			114,084			300,519
Short-term borrowings and debt		2,430,357			2,692,537			2,705,365			1,470,075			2,430,357			2,692,537
Long-term borrowings and debt, net		1,881,813			1,399,656			1,148,684			1,776,738			1,881,813			1,399,656
Other liabilities:
Acceptances outstanding		15,100			114,018			1,128			19,387			15,100			114,018
Accrued interest payable		17,716			14,855			13,786			16,603			17,716			14,855
Allowance for expected credit losses on off-balance sheet credit risk		5,424			9,873			6,054
Allowance for expected credit losses on loan commitments and financial guarantee contracts											5,776			5,424			9,873
Other liabilities		24,344			32,878			27,947			18,328			24,344			32,878
Total of other liabilities											60,094			62,584			171,624
Total Liabilities	$	7,314,285		$	7,111,369		$	6,559,106		$	6,169,469		$	7,314,285		$	7,111,369

Stockholders’ Equity
Common stock		279,980			279,980			279,980		$	279,980		$	279,980		$	279,980
Treasury stock		(73,397	)		(77,627	)		(82,008	)		(69,176	)		(73,397	)		(77,627	)
Additional paid-in capital in excess of assigned value of common stock		120,177			119,644			120,624			120,594			120,177			119,644
Capital reserves		95,210			95,210			95,210			95,210			95,210			95,210
Retained earnings		560,642			501,669			454,896			587,507			560,642			501,669
Accumulated other comprehensive loss		(10,681	)		(7,837	)		(9,700	)		(2,801	)		(10,681	)		(7,837	)
Total Stockholders’ Equity	$	971,931		$	911,039		$	859,002		$	1,011,314		$	971,931		$	911,039
Total Liabilities and Stockholders’ Equity	$	8,286,216		$	8,022,408		$	7,418,108		$	7,180,783		$	8,286,216		$	8,022,408

2016 vs. 2015

As of December 31, 2016, total assets amounted to $7.2 billion, a 13% decrease, compared to $8.3 billion as of December 31, 2015, mainly attributable to lower interest-earning asset balances from the Loan Portfolio, Investment Securities Portfolio and liquidity position, which are detailed as follows:

The Bank’s cash and cash equivalents, most of which consisted of actively managed liquid assets, totaled $1.1 billion as of December 31, 2016, compared to $1.3 billion as of December 31, 2015, in line with the Bank’s historical levels and the requirements for internal liquidity management limits and policies based on the Basel III Liquidity Coverage Ratio (“LCR”). These liquidity guidelines ensure the Bank’s ability to maintain adequate cash flows to fund operations and meet obligations and other commitments on a timely basis, and complement the inherent liquidity of its short-term lending book. $0.6 billion, or 59%, of the Bank’s liquid assets were held in deposits with the Federal Reserve Bank of New York, with the remainder held with other highly rated financial institutions. The liquid assets to total assets ratio amounted to 14% at the end of 2016 compared to 15% at the end of 2015, while the liquid assets to total deposits ratios were 36% and 45% at the end of 2016 and 2015, respectively.

Investment Securities Portfolio (at FVOCI and at amortized cost) decreased by $142 million, or 57%, to $108 million, or 2%, of total assets, as of December 31, 2016, from $251 million, or 3% of total assets at December 31, 2015, as the Bank continued reducing its holdings in its securities portfolios to reduce market risk, which consisted of readily-quoted Latin American securities, 90% of which represented multilateral, sovereign or state-owned risk.

Loans at amortized cost amounted to $6.0 billion as of December 31, 2016, representing 84% of the Bank’s total assets, compared to $6.7 billion, or 81% of total assets at December 31, 2015. The $671 million, or 10%, decrease was largely attributable to the Bank’s decision to reduce certain country, industry and client risk concentrations in its portfolio. The 2016 Loan Portfolio had an average remaining maturity term of 279 days, of which 76% was scheduled to mature within one year, compared to an average remaining maturity of 343 days, or 70% short-term from a year ago. Trade finance operations represented 65% of the total Loan Portfolio and the remaining balance consisted primarily of lending to financial institutions and corporations engaged in foreign trade.

The decrease in assets during 2016 was accompanied by a $1.1 billion, or 16%, decrease in liabilities during 2016, mostly attributable to a $1.1 billion, or 25%, overall decrease in the Bank’s interest-bearing liabilities of short- and long-term borrowings and debt, while deposit balances remained at $2.8 billion, representing 45% of total liabilities as of December 31, 2016, compared to the same level, or 38% of total liabilities from a year ago.

2015 vs. 2014

The Bank’s total assets amounted to $8,286 million as of December 31, 2015, a $264 million, or 3% increase, compared to $8,022 million as of December 31, 2014, mainly attributable to higher balances in cash and cash equivalents totaling $1.3 billion ~~(+$519~~(an increase of $519 million), most of which consisted of actively managed liquid assets, ~~proactively managed~~ as the Region’s macroeconomic conditions worsened. Loans at amortized cost (net of unearned income, deferred fees and allowance for ~~expected credit losses~~ECL on loans) stood at $6.6 billion as of December 31, 2015, representing 80% of the Bank’s total assets, nearly unchanged from the balances as of December 31, 2014. Investment ~~securities~~Securities Portfolio (at ~~fair value through OCI~~FVOCI and at amortized cost) representing 3% of total assets at December 31, 2015, decreased by $144 million during the year, as the Bank continued to reduce its holdings of securities. Remaining assets consisted of the Bank’s remaining investment in Investment Fund for $53 million recorded as financial instruments at ~~fair value through profit or loss~~FVTPL (1% of total assets) and non-interest earning assets (1% of total assets).

The 2015 Loan Portfolio had an average remaining maturity term of 343 days, of which 70% was scheduled to mature within one year. Trade financing operations represented 56% of total Loan Portfolio and the remaining balance consisted primarily of lending to financial institutions and corporations engaged in foreign trade.

Liquid assets amounted to $1,267 million as of December 31, 2015, compared to $741 million as of December 31, 2014, in line with the Bank’s long-standing approach to prudent and ~~proactive~~active liquidity management and the requirements based on the Basel III Liquidity Coverage Ratio (“LCR”). Liquidity ensures the Bank’s ability to maintain adequate cash flows to fund operations and meet obligations and other commitments on a timely basis. The Bank maintains its liquid assets mainly in demand deposits, overnight funds and time deposits with well-known international banks. These liquid assets are adequate to cover 24-hour deposits from customers, which theoretically could be withdrawn on the same day.LCR. $1,213 million, or 96%, of the Bank’s liquid assets were deposited at the Federal Reserve Bank of New York, with the remainder deposited at other highly rated financial institutions. Liquid assets to total assets ratio amounted to 15% at the end of 2015 compared to 9% at the end of 2014, while the liquid assets to total deposits ratio was 45% and 30% at the end of 2015 and 2014, respectively.

The increase in assets during 2015 was accompanied by a $203 million increase in liabilities, which was mainly the result of (i) a $289 million, or 12%, increase in total deposits, primarily from central banks in the Region; (ii) a $482 million, or 34%, increase in long-term borrowings and debt, as the Bank increased its long-term funding through capital markets issuances, loan syndications and bilateral finance transactions, increasing tenors and diversifying funding sources while maintaining its total cost of funds relatively stable; partly offset by (iii) a $449 million reduction in short-term funds, including short-term borrowings and debt and ~~securities sold under repurchase agreements;~~Repos; and (iv) a net decrease of $119 million in non interest-bearing liabilities.

~~December 31, 2014 vs. January 1, 2014~~

The Bank’s total assets amounted to $8,022 million as of December 31, 2014, a $604 million, or 8% increase from $7,418 million as of January 1, 2014. This increase was primarily the result of a $538 million, or 9% increase in the Bank’s Loan Portfolio, and a $113 million increase in customers’ liabilities under acceptances, partially offset by lower interest-bearing deposits in banks (which decreased by $59 million).

As of December 31, 2014, the Bank’s Loan Portfolio amounted to $6,686 million, with an average remaining maturity term of 317 days, as 72% of the Loan Portfolio was scheduled to mature within one year. Trade financing operations represented 56% of the Loan Portfolio, while the remaining balance consisted primarily of lending to financial institutions and corporations engaged in foreign trade.

As of December 31, 2014, the Bank’s liquidity amounted to $741 million, compared to $831 million as of January 1, 2014, in line with the Bank’s long-standing approach to prudent and proactive liquidity management, with requirements determined according to the Basel III Liquidity Coverage Ratio (“LCR”) methodology. As of December 31, 2014, $616 million, or 83%, of liquid assets were deposited at the Federal Reserve Bank of New York, while the remaining liquid assets consisted of short-term funds deposited with other banks.

The increase in assets during 2014 was accompanied by a $552 million increase in liabilities, mainly as a result of a $251 million, or 22%, increase in long-term borrowings and debt, a $145 million, or 6%, increase in total deposits, and a $113 million increase in acceptances outstanding.

Asset Quality

The Bank believes that its fundamental asset quality is a function of its strong client base, the importance that governments and borrowers alike attribute to maintaining continued access to trade financing, its preferred creditor status, and its strict adherence to commercial criteria in its credit activities. The Bank’s management and the CPER periodically review a report of all loan delinquencies. The Bank’s collection policies include rapid internal notification of any delinquency and prompt initiation of collection efforts, usually involving senior management.

The Bank maintains a system of internal credit quality indicators. These indicators are assigned depending on several factors which include: profitability, quality of assets, liquidity and cash flows, capitalization and indebtedness, economic environment and positioning, regulatory framework and/or industry, sensitivity scenarios and the quality of borrower’s management and shareholders, among others. A description of these indicators is as follows:

Rating		Description
1 to 4		Clients with payment ability to satisfy their financial commitments.
5 to 6		Clients with payment ability to satisfy their financial commitments, but with more frequent reviews.
7		Clients exposed to systemic risks specific to the country or the industry in which they are located, facing adverse situations in their operation or financial condition. At this level, access to new funding is uncertain.
8		Clients whose primary source of payment (operating cash flow) is inadequate and who show evidence of deterioration in their working capital that does not allow them to satisfy payments on the agreed terms, endangering recovery of unpaid balances.
9		Clients whose operating cash flow continuously shows insufficiency to service the debt on the originally agreed terms. Due to the fact that the borrower presents an impaired financial and economic situation, the likelihood of recovery is low.
10		Clients with operating cash flow that does not cover their costs, are in suspension of payments, presumably will also have difficulties fulfilling possible restructuring agreements, are in a state of insolvency, or have filed for bankruptcy, among others.

In order to maintain periodical monitoring of the quality of the portfolio, clients are reviewed within a frequency of time between 3 and 12 months, depending on the risk rating.

Impairment of Financial Assets ~~and Contingencies~~

The Bank’s assets that ~~are~~may be subject to impairment consist mainly of loans and investment securities. For more information on ~~impaired~~impairment of loans at amortized cost, see Item 18, “Financial Statements”, Notes ~~3.4, 3.21~~3.5, 3.22 and 5.6. For information on ~~impaired~~impairment of investment securities, see Item 18, “Financial Statements,” notes ~~3.3.6, 3.21~~3.3.9, 3.22, 5.3 and 5.3. For more information on contingencies, see Item 18, “Financial Statements”, note 5.7, and see Item 5, “Operating and Financial Review and Prospects—Operating Results—Allowance for expected credit losses”5.4.

The Bank ~~identifies loans as delinquent~~considers a financial asset to be non-performing when ~~no debt service and/or interest payment has been received for 30 days after such payments were due. The outstanding balance~~it presents any of ~~a loan is considered past due when~~ the total principal balance with one single balloon payment has not been received within 30 days after such payment was due, or when no agreed-upon periodical payment has been received for a period of 90 days after the agreed-upon date.following characteristics:

The debtor is past due for more than 90 days in any of its obligations to the Bank, either in the loan principal or interest; or when the principal balance with one single balloon payment was past due for more than 30 days;

Deterioration in the financial condition of the client, or the existence of other factors with the administration to estimate the possibility that the balance of principal and interest on customer loans is not fully recovered.

The above presumptions regarding past due loans may be rebuttable if the Bank has reasonable and supportable information that is available without undue cost or effort, that demonstrates that the credit risk has not increased significantly since initial recognition even though the contractual payments are more than 30 or 90 days past due.

In assessing whether a borrower is non-performing, the Bank considers indicators that are qualitative and quantitative based on data developed internally and obtained from external sources. Inputs into the assessment of whether a financial instrument is non-performing and their significance may vary over time to reflect changes in circumstances.

A modified or renegotiated loan is a loan whose borrower is experiencing financial difficulties and the renegotiation constitutes a concession to the borrower. A concession may include modification of terms such as an extension of maturity date, reduction in the stated interest rate, rescheduling of future cash flows, and reduction in the face amount of the loan or reduction of accrued interest, among others.

In the renegotiation or modification of the contractual cash flows of the loan, the Bank shall:

Continue with its current accounting treatment for the existing loan that has been modified.

Record a modification gain or loss by recalculating the gross carrying amount of the financial asset as the present value of the renegotiated or modified contractual cash flows, discounted at the loan’s original effective interest rate.

Assess whether there has been a significant increase in the credit risk of the financial instrument, by comparing the risk of a default occurring at the reporting date (based on the modified contractual terms) and the risk of a default occurring at initial recognition (based on the original, unmodified contractual terms). The loan that is modified is not automatically considered to have a lower credit risk. The assessment should consider credit risk over the expected life of the asset based on historical and forward-looking information, including information about the circumstances that led to the modification. Evidence that the criteria for the recognition of lifetime ~~expected credit losses~~ECL are subsequently no longer met may include a history of up-to-date and timely payment in subsequent periods. A minimum period of observation will be necessary before a financial asset may qualify to return to a 12-month expected credit loss measurement.

Make the appropriate quantitative and qualitative disclosures required for renegotiated or modified assets to reflect the nature and effect of such modifications (including the effect on the measurement of ~~expected credit losses)~~ECL) and how the Bank monitors these loans that have been modified.

The Bank recognizes a loss allowance for expected credit losses on a loan that is measured at amortized cost at each reporting date at an amount equal to the lifetime expected credit losses if the credit risk on that loan has increased significantly since initial recognition. If at the reporting date, the credit risk of that loan has not increased significantly since initial recognition, an entity shall measure the loss allowance for that loan at an amount equal to 12-month expected credit losses.

The Bank reviews its individually significant loans ~~and advances~~ at amortized cost at each ~~statement-of-financial-position~~consolidated statement of financial position date to assess whether an impairment loss should be recorded in the consolidated statement of profit or loss. In particular, management’s judgment is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance. Loans ~~and advances~~ at amortized cost that have been assessed individually (and found not to be impaired) are assessed together with all individually insignificant loans and advances in groups of assets with similar risk characteristics. This is to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident.

The collective assessment takes account of data from the Loan Portfolio (such as levels of arrears, credit utilization, loan-to-collateral ratios, etc.), and judgments on the effect of concentrations of risks and economic data (including levels of unemployment, real estate prices indices, country risk and the performance of different individual groups).

The Bank conducts periodic reviews for all of its securities. The Bank recognizes a loss allowance for ~~expected credit losses~~ECL on ~~financial assets~~investment securities measured at ~~fair value through other comprehensive income~~FVOCI and investment securities at amortized cost. If at the reporting date, the credit risk of these financial instruments has not increased significantly since initial recognition, the Bank will measure the loss allowance for those financial instruments at an amount equal to 12- month ~~expected credit losses.~~ECL. However, if the Bank determines that the credit risk of those financial instruments has increased significantly since initial recognition, then it measures a loss allowance at an amount equal to the lifetime ~~expected credit losses~~ECL. If the Bank has measured a loss allowance for a financial instrument at an amount equal to lifetime ~~expected credit losses~~ECL in the previous reporting year because of a significant increase in credit risk, but determines at the current reporting date that this presumption is no longer met; then it will measure the loss allowance at an amount equal to 12-month ~~expected credit losses~~ECL at the current reporting date. The Bank recognizes in the consolidated statement of profit or loss, as an impairment gain or loss, the amount of ~~expected credit losses~~ECL (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized at the reporting date.

Impairment on securities is evaluated considering numerous factors, and their relative significance varies case by case. Factors considered in determining whether a detrimental impact on the estimated future cash flows of a financial asset has occurred include, but are not limited to: significant financial difficulty of the issuer; high probability of bankruptcy; granting a concession to the issuer; disappearance of an active market because of financial difficulties; breach of contract, such as default or delinquency in interest or principal; and, observable data indicating there is a measureable decrease in the estimated future cash flows since initial recognition.

If a security is no longer publicly traded or the entity’s credit rating is downgraded, this is not, by itself, evidence of impairment, but should be considered for impairment together with other information. A decline in the fair value of ~~a debt instrument~~an investment security below its amortized cost is not necessarily evidence of impairment, as it may be due to an increase in market interest rates. Whether a decline in fair value below cost is considered significant or prolonged, must be assessed on an instrument-by-instrument basis and should be based on both qualitative and quantitative factors. However, the assessment of prolonged decline should not be compared to the entire period that the investment has been or is expected to be held.

The following table sets forth information regarding the Bank’s non-performing assets, and ~~contingencies~~loan commitments and financial guarantee contracts at the dates indicated:

As of December 31, As of January 1,
2015 2014 2014
(in $ million, except percentages)
Non-performing loans $ 52 $ 4 $ 3
Asset-specific allocation from the allowance for expected credit losses on loans 21 3 1
Non-performing loans as a percentage of Loan Portfolio 0.8 % 0.1 % 0.1 %
Non-performing contingencies $ 0 $ 0 $ 0
Asset-specific allocation from the allowance for expected credit losses on off balance-sheet credit risks 0 0 0
Non-performing contingencies as a percentage of total contingencies 0.0 % 0.0 % 0.0 %
Impaired securities (par value) $ 8 $ 0 $ 0
Asset-specific allocation from the allowance for expected credit losses on securities (6 ) 0 0
Estimated fair value of impaired securities $ 1 $ 0 $ 0
Impaired securities as a percentage of Investment Securities Portfolio 0.6 % 0.0 % 0.0 %
Non-performing assets and contingencies as a percentage of total Credit Portfolio 0.7 % 0.1 % 0.0 %

~~The~~

	As of December 31,
	2016			2015			2014
	(in $ millions, except percentages)
Non-performing loans	$	65		$	52		$	4
Asset-specific allocation from the allowance for ECL on loans		35			21			3
Non-performing loans as a percentage of Loan Portfolio		1.1	%		0.8	%		0.1	%
Non-performing loan commitments and financial guarantee contracts		0			0			0
Asset-specific allocation from the allowance for ECL on loan commitments and financial guarantee contracts		0			0			0
Non-performing loan commitments and financial guarantee contracts as a percentage of total loan commitments and financial guarantee contracts and other assets		0.0	%		0.0	%		0.0	%
Impaired securities (par value)		0			8			0
Asset-specific allocation from the allowance for ECL on securities		0			(6	)		0
Estimated fair value of impaired securities	$	0		$	1		$	0
Impaired securities as a percentage of Investment Securities Portfolio		0.0	%		0.6	%		0.0	%
Non-performing financial assets and loan commitments and financial guarantee contracts as a percentage of total Credit Portfolio		1.0	%		0.7	%		0.1	%

As of the end of each reported period, the Bank did not have impaired loans in its Loan Portfolio without related ~~allowances as of December 31, 2015, or 2014.~~allowances.

The following table sets forth the distribution of the Bank’s loans charged-off against the allowance for ~~expected credit losses~~ECL on loans at amortized cost by country as of the dates indicated:

	As of December 31,										As of January 1,					As of December 31,
	2015		%			2014		%			2014		%			2016		%			2015		%			2014		%
	(in $ million, except percentages)															(in $ millions, except percentages)
Brazil	$	6		100	%	$	0		0	%	$	0		0	%	$	0		0	%	$	6		100	%	$	0		0	%
Colombia																	18		95	%		0		0	%		0		0	%
Mexico																	1		5	%		0		0	%		0		0	%
Total	$	6		100	%	$	0		0	%	$	0		0	%	$	19		100	%	$	6		100	%	$	0		0	%

During the year ended December 31, ~~2015,~~2016, the Bank had charge-offs against the allowance for ~~expected credit losses~~ECL on loans at amortized cost totaling $19 million, representing 0.31% of the Loan Portfolio, along with an $8 million nominal amount of bonds charged-off against the allowance for ECL on investment securities, compared to $6 million, ~~representing~~or 0.09% ~~of gross Loan Portfolio, compared to~~, in 2015, and no loans charged-off against the allowance for ~~expected credit losses~~ECL on loans at amortized cost in 2014.

In the ~~two-year~~three-year period ended December 31, ~~2015,~~2016, the Bank disbursed ~~$26~~$38 billion in credits and had charged-off credits for $6$32 million, representing ~~0.02%~~0.09% of total credits disbursed.

The following table summarizes information regarding non-performing loans ~~and interest amounts recognized on an effective interest basis~~ on net carrying amount for those financial assets as of the dates indicated:

	For the year ended December 31,				As of January 1,		For the year ended December 31,
	2015		2014		2014		2016		2015		2014
	(in $ thousands)						(in $ thousands)
Non-performing loans:
Brazil:
Private corporations	$	51,422	$	3,125	$	3,125	$	14,364	$	4,706	$	3,125
Private middle-market companies		907		909		0		35,000		0		0
Sub-total Brazil								49,364		4,706		3,125
Colombia:
Private corporations								0		46,716		0
Mexico:
Private middle-market companies								0		907		909
Panama:
Private corporations								12,000		0		0
Uruguay:
Private corporations								4,000		0		0
Total non-performing loans	$	52,329	$	4,034	$	3,125	$	65,364	$	52,329	$	4,034

As of the end of each reported period, the Bank did not have, other than those specified above, accrual loans with principal or interest payments contractually past due by 90 days or more.

Allowance for ~~Expected Credit Losses~~ECL

The allowance for ~~expected credit losses~~ECL is provided for losses derived from the credit extension process, inherent in the Loan Portfolio and ~~off-balance sheet instruments,~~loan commitments and financial guarantee contracts, using the reserve methodology to determine ~~expected credit losses.~~ECL. Additions to the allowance for ~~expected credit losses~~ECL are made by debiting earnings. Credit losses are deducted from the allowance, and subsequent recoveries are added. The allowance is also decreased by reversals of the allowance back to earnings. The allowance ~~attributable to~~for expected credit losses for loans at amortized cost is reported as a deduction of loans and, as a liability, the allowance for expected credit losses on ~~off-balance sheet credit risk,~~loan commitments and financial guarantee contracts, such as letters of credit and ~~guarantees,~~guarantees.

The Bank measures ECL in a way that reflects: (a) an unbiased and probability-weighted amount that is ~~reported~~determined by evaluating a range of possible outcomes; (b) the time value of money; and (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecast of future economic conditions.

The expected credit loss model reflects the general pattern of deterioration or improvement in the credit quality of the loans. The amount of ECL recognized as a ~~liability.~~loss allowance or provision depends on the extent of credit deterioration since initial recognition. There are two measurement bases:

12-month ECL (Stage 1), which applies to all loans (from initial recognition) as long as there is no significant deterioration in credit quality,

Lifetime ECL (Stages 2 and 3), which applies when a significant increase in credit risk has occurred on an individual or collective basis. In Stages 2 and 3 interest revenue is recognized. Under Stage 2 (as under Stage 1), there is a full decoupling between interest recognition and impairment and interest revenue is calculated on the gross carrying amount. Under Stage 3, when a loan subsequently becomes credit impaired (when a credit event has occurred), interest revenue is calculated on the amortized cost, net of impairment, i.e. the gross carrying amount after deducting the impairment allowance. In subsequent reporting years, if the credit quality of the financial asset improves so that the financial asset is no longer credit-impaired and the improvement can be related objectively to the occurrence of an event (such as an improvement in the borrower’s credit rating), then the entity will once again calculate the interest revenue on a gross basis.

The allowance for ~~expected credit losses~~ECL includes an asset-specific component and a formula-based component. The asset-specific component, or specific allowance, relates to the provision for losses on credits considered impaired and measured individually case-by-case. A specific allowance is established when the discounted cash flows (or observable fair value of collateral) of the credit is lower than the carrying value of that credit. The formula-based component (collective assessment basis), covers the Bank’s performing Credit Portfolio and it is established based in a process that estimates the probable loss inherent in the portfolio, based on statistical analysis and management’s qualitative judgment. This analysis considers comprehensive information that incorporates not only past-due data, but other relevant credit information, such as forward looking macro-economic information.

The classification of the Bank’s Credit Portfolio for allowances for credit losses under IFRS is determined by risk management guidelines and approved by the CPER of the Bank’s Board through statistical ~~calculation is a product of~~modeling, internal risk ~~classifications, probabilities of default~~ratings and ~~loss given default. The~~estimates. Informed judgments must be made when identifying impaired loans, the probability of default, ~~is supported by Bladex’s historical portfolio performance, complemented by probabilities~~the expected loss, the value of ~~default provided by external sources,~~collateral and current economic conditions. Even though the Bank’s management considers its allowances for ECL to be adequate, the use of different estimates and assumptions could produce different allowances for ECL, and amendments to the allowances may be required in ~~view~~the future due to changes in the value of collateral, the ~~greater robustness~~amount of ~~this external data~~cash expected to be received or other economic events. In addition, risk management has established and maintains allowances for ~~some cases. The loss given default is based on Bladex’s historical losses experience~~ECL related to the Bank’s loan commitments and ~~best practices.~~financial guarantee contracts.

~~The reserve balances, for both on and off-balance sheet credit exposures, are calculated applying the following formula:~~

~~Reserves =~~S~~(E x PD x LGD); where:~~

~~Exposure (E) = the total accounting balance (on and off-balance sheet) at the end of the period under review.~~

Probabilities of Default (PD) = one-year probability of default applied to the portfolio to account for 12-month expected credit losses and lifetime probability of default to account for more than 12-month. Default rates are based on the Bank’s historical portfolio performance per rating category, complemented by an International Rating Agency’s probabilities of default for categories 6, 7 and 8, in view of the greater robustness of data for such cases.

Loss Given Default (LGD) = a factor is utilized, based on historical information, same as based on best practices in the banking industry. Management applies judgment and historical loss experience. Management also applies complementary judgment to capture elements of prospective nature or loss expectations based on risks identified in the environment that are not necessarily reflected in the historical data. The allowance policy is applicable to all classes of loans and off-balance sheet instruments of the Bank.

For additional information regarding allowance for ~~expected credit losses,~~ECL, see Item 18, “Financial Statements,” notes ~~3.5,~~3.6, 3.22, 5.6 and ~~5.7.~~6.

The following table sets forth information regarding the Bank’s allowance for ~~expected credit losses~~ECL with respect to the total Commercial Portfolio outstanding as of December 31 of each year:

As of December 31,
2015 2014
(in $ million, except
percentages)
Components of the allowance for expected credit losses
Allowance for expected credit losses on loans at amortized cost:
Balance at beginning of the year $ 77.7 $ 70.9
Impairment loss for expected credit losses 17.2 6.8
Recoveries 0.7 0.0
Loans charged-off (5.7 ) 0.0
Balance at the end of the year $ 90.0 $ 77.7
Allowance for expected credit losses on off-balance sheet credit risk:
Balance at beginning of the year $ 9.9 $ 6.1
Impairment (gain) loss for expected credit losses (4.4 ) 3.8
Balance at end of the year $ 5.4 $ 9.9
Total allowance for expected credit losses $ 95.4 $ 87.6
Allowance for expected credit losses to total Commercial Portfolio 1.33 % 1.22 %
Charge-offs to Loan Portfolio 0.09 % 0.00 %

	As of December 31,
	2016			2015			2014
	(in $ millions, except percentages)
Components of the allowance for ECL
Allowance for ECL on loans at amortized cost:
Balance at beginning of the year	$	90.0		$	77.7		$	70.9
Impairment loss for ECL		34.7			17.2			6.8
Recoveries		0.1			0.7			0.0
Loans charged-off		(18.8	)		(5.7	)		0.0
Balance at the end of the year	$	106.0		$	90.0		$	77.7
Allowance for ECL on loan commitments and financial guarantee contracts:
Balance at beginning of the year	$	5.4		$	9.9		$	6.1
Impairment loss (recovery) for ECL		0.4			(4.4	)		3.8
Balance at end of the year	$	5.8		$	5.4		$	9.9
Total allowance for ECL	$	111.8		$	95.4		$	87.6
Allowance for ECL to total Commercial Portfolio		1.73	%		1.33	%		1.22	%
Charge-offs to Loan Portfolio		0.31	%		0.09	%		0.00	%

The total allowance for ~~expected credit losses~~ECL amounted to ~~$95.4~~$111.8 million atas of December 31, ~~2015,~~2016, representing ~~1.33%~~1.73% of total Commercial Portfolio, compared to $95.4 million and 1.33%, respectively, as of December 31, 2015, and compared to $87.6 million and 1.22%, respectively, as of December 31, 2014. The ~~year-on-year~~2016 year-over-year increase of $16.4 million in credit allowances and 40 basis points in total reserve coverage was primarily associated with higher allowances assigned to performing exposures based on lifetime ECL (IFRS Rule 9 Stage 2), and NPL (IFRS Rule 9 Stage 3), partly offset by lower impairment from ECL on performing exposures assessed based on 12-month ECL (IFRS Rule 9 Stage 1), which resulted from both lower end-of-period portfolio balances, and the overall portfolio mix shift towards shorter term trade exposures. The 2015 year-over-year increase of $7.8 million in credit allowances and 11 basis points in total reserve coverage was mainly associated with asset-specific credit allowance assigned to non-performing loans, which was partly offset by ~~gains~~recoveries or reversals from ~~expected credit losses~~ECL on performing loans, and ~~off-balance sheet instruments~~loan commitments and financial guarantee contracts (calculated on a collective assessment basis), as a reflection of changes in the risk profile of the Bank’s Commercial Portfolio composition and its impact in the Bank’s reserve model.

The following table sets forth information regarding the Bank’s allowance for ~~expected credit losses~~ECL allocated by country of exposure as of the dates indicated:

As of December 31, As of January 1,
2015 2014 2014
Total % Total % Total %
(in $ million, except percentages)
Allowance for expected credit losses on loans at amortized cost
Argentina $ 14.5 16.1 $ 17.9 23.0 $ 18.2 25.7
Brazil 10.9 12.1 12.4 15.9 11.5 16.3
Chile 0.5 0.6 0.5 0.6 1.7 2.4
Colombia 24.7 27.5 13.2 17.0 4.2 5.9
Costa Rica 2.9 3.2 6.5 8.3 4.2 5.9
Dominican Republic 9.0 10.0 7.2 9.3 6.0 8.4
Ecuador 6.9 7.7 3.6 4.7 4.0 5.7
El Salvador 3.0 3.3 3.8 4.9 4.4 6.2
Germany 0.9 1.0 1.0 1.3 0.0 0.0
Guatemala 2.6 2.9 1.1 1.4 3.2 4.5
Honduras 5.1 5.7 3.0 3.9 2.6 3.7
Jamaica 0.6 0.7 0.4 0.6 5.3 7.5
Mexico 3.1 3.5 3.2 4.1 2.1 3.0
Panama 1.0 1.1 1.1 1.4 0.7 0.9
Paraguay 0.9 1.0 1.1 1.3 0.8 1.1
Peru 0.8 0.9 0.8 1.0 1.0 1.4
Other⁽¹⁾ 2.6 2.8 1.0 1.3 0.9 1.3
Total Allowance for expected credit losses on loans at amortized cost $ 90.0 100.0 % $ 77.7 100.0 % $ 70.8 100.0 %

Allowance for expected credit losses on off-balance sheet credit risk
Argentina $ 1.0 19.2 $ 0.0 0.0 $ 0.0 0.3
Colombia 2.8 51.9 2.9 29.1 0.2 2.8
Ecuador 0.8 15.4 5.6 56.8 4.7 77.9
Other⁽¹⁾ 0.8 13.5 1.4 14.1 1.1 18.9
Total allowance for expected credit losses on off-balance sheet credit risk $ 5.4 100.0 % $ 9.9 100.0 % $ 6.0 100.0 %

Total allowance for expected credit losses
Argentina $ 15.5 16.3 $ 17.9 20.4 $ 18.3 23.7
Brazil 11.0 11.5 12.4 14.2 11.6 15.1
Chile 0.5 0.6 0.6 0.7 1.7 2.2
Colombia 27.5 28.9 16.1 18.4 4.3 5.6
Costa Rica 2.9 3.0 6.5 7.4 4.2 5.4
Dominican Republic 9.0 9.4 7.7 8.8 6.0 7.8
Ecuador 7.7 8.1 9.2 10.5 8.7 11.4
El Salvador 3.0 3.1 3.8 4.3 4.4 5.7
Germany 0.9 1.0 1.0 1.2 0.0 0.0
Guatemala 2.6 2.7 1.2 1.4 3.4 4.4
Honduras 5.2 5.4 3.0 3.5 2.6 3.4
Jamaica 0.6 0.6 0.5 0.5 5.3 6.9
Mexico 3.3 3.4 3.4 3.9 2.2 2.9
Panama 1.4 1.5 1.1 1.3 1.1 1.4
Paraguay 0.9 0.9 1.1 1.2 0.8 1.0
Peru 0.9 0.9 0.9 1.0 1.1 1.5
Uruguay 0.7 0.8 0.5 0.6 0.6 0.8
Other⁽¹⁾ 1.8 1.9 0.7 0.8 0.6 0.8
Total Allowance for expected credit losses $ 95.4 100.0 % $ 87.6 100.0 % $ 76.9 100.0 %

	As of December 31,
	2016						2015					2014
	Total			%			Total		%			Total		%
	(in $ millions, except percentages)
Allowance for ECL on loans at amortized cost
Argentina	$	7.3			6.9		$	14.5		16.1		$	17.9		23.0
Brazil		49.1			46.4			10.9		12.1			12.4		15.9
Chile		1.1			1.1			0.5		0.6			0.5		0.6
Colombia		6.7			6.3			24.7		27.5			13.2		17.0
Costa Rica		1.7			1.6			2.9		3.2			6.5		8.3
Dominican Republic		4.6			4.3			9.0		10.0			7.2		9.3
Ecuador		2.3			2.2			6.9		7.7			3.6		4.7
El Salvador		2.5			2.3			3.0		3.3			3.8		4.9
Germany		0.4			0.4			0.9		1.0			1.0		1.3
Guatemala		1.2			1.1			2.6		2.9			1.1		1.4
Honduras		1.7			1.6			5.1		5.7			3.0		3.9
Mexico		6.7			6.3			3.1		3.5			3.2		4.1
Panama		9.8			9.3			1.0		1.1			1.1		1.4
Paraguay		6.4			6.0			0.9		1.0			1.1		1.3
Peru		0.6			0.5			0.8		0.9			0.8		1.0
Uruguay		2.2			2.1			0.7		0.8			0.4		0.5
Other⁽¹⁾		1.7			1.6			2.5		2.7			1.0		1.4
Total Allowance for ECL on loans at amortized cost	$	106.0			100.0	%	$	90.0		100.0	%	$	77.7		100.0	%

Allowance for ECL on loan commitments and financial guarantee contracts
Argentina	$	0.0			0.0		$	1.0		19.2		$	0.0		0.0
Colombia		4.7			82.2			2.8		51.9			2.9		29.1
Dominican Republic		0.1			1.9			0.0		0.8			0.5		4.9
Ecuador		0.8			13.2			0.8		15.4			5.6		56.8
Panama		0.1			1.3			0.4		7.3			0.0		0.6
Other⁽¹⁾		0.1			1.4			0.4		5.4			0.9		8.6
Total allowance for ECL on loan commitments and financial guarantee contracts	$	5.8			100.0	%	$	5.4		100.0	%	$	9.9		100.0	%

Total allowance for ECL
Argentina	$	7.3			6.5		$	15.5		16.3		$	17.9		20.4
Brazil		49.1			44.0			11.0		11.5			12.4		14.2
Chile		1.1	��		1.0			0.5		0.6			0.6		0.7
Colombia		11.4			10.2			27.5		28.9			16.1		18.4
Costa Rica		1.7			1.5			2.9		3.0			6.5		7.4
Dominican Republic		4.7			4.2			9.0		9.4			7.7		8.8
Ecuador		3.1			2.8			7.7		8.1			9.2		10.5
El Salvador		2.5			2.2			3.0		3.1			3.8		4.3
Germany		0.4			0.4			0.9		1.0			1.0		1.2
Guatemala		1.2			1.0			2.6		2.7			1.2		1.4
Honduras		1.7			1.5			5.2		5.4			3.0		3.5
Mexico		6.7			6.0			3.3		3.4			3.4		3.9
Panama		9.9			8.9			1.4		1.5			1.1		1.3
Paraguay		6.4			5.7			0.9		0.9			1.1		1.2
Peru		0.6			0.5			0.9		0.9			0.9		1.0
Uruguay		2.2			2.0			0.7		0.8			0.5		0.6
Other⁽¹⁾		1.8			1.6			2.4		2.6			1.2		1.4
Total Allowance for ECL	$	111.8			100.0	%	$	95.4		100.0	%	$	87.6		100.0	%

⁽¹⁾

Other consists of allowances for ~~expected credit losses~~ECL allocated to countries in which allowances for ~~expected credit losses~~ECL outstanding did not exceed $1 million for any of the periods.

The following table sets forth information regarding the Bank’s allowance for ~~expected credit losses~~ECL on loans at amortized cost, and ~~off-balance sheet instruments~~loan commitments and financial guarantee contracts, by type of borrower as of the dates indicated:

	As of December 31,								As of January 1,				As of December 31,
	2015				2014				2014				2016				2015				2014
	Total		%		Total		%		Total		%		Total		%		Total		%		Total		%
	(in $ million, except percentages)												(in $ millions, except percentages)
Private sector commercial banks and Financial Institutions	$	16.5		17.3	$	17.6		20.1	$	16.8		21.9	$	11.3		10.1	$	16.5		17.3	$	17.6		20.1
State-owned commercial banks		13.6		14.2		13.1		15.0		17.3		22.5		6.7		6.0		13.6		14.2		13.1		15.0
Central banks		0		0.0		1.3		1.4		1.1		1.4		0.7		0.6		0		0.0		1.3		1.4
State-owned organization		10.7		11.2		14.3		16.4		7.4		9.6		3.9		3.5		10.7		11.2		14.3		16.4
Private middle - market companies		5.0		5.3		4.7		5.4		6.5		8.5		17.8		15.9		5.0		5.3		4.7		5.4
Private corporations		49.6		52.0		36.6		41.7		27.8		36.1		71.4		63.9		49.6		52.0		36.6		41.7
Total	$	95.4		100.0	$	87.6		100.0	$	76.9		100.0	$	111.8		100.0	$	95.4		100.0	$	87.6		100.0

Critical Accounting Policies

General

The Bank prepares its Consolidated Financial Statements in conformity with IFRS as issued by the ~~IASB. The Consolidated Financial Statements for~~IASB and Interpretations issued by the IFRIC. For years up to and including the year ended December 31, ~~2015 are the first the Bank has prepared in accordance with IFRS, and were prepared in accordance with IFRS 1 – First Time Adoption of IFRS. In prior years,~~2014, the Bank prepared its financial statements in accordance with U.S. GAAP.

The consolidated financial statements have been prepared on the basis of fair value for financial assets and liabilities through profit or loss, derivative financial instruments, investments and other financial assets at ~~fair value through other comprehensive income.~~FVOCI. The carrying values of recognized assets and liabilities that are designated as hedged items in fair value hedges, that would otherwise be carried at amortized cost are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships. Other financial assets and liabilities and other non-financial assets and liabilities are presented at amortized cost or on a historical cost basis.

The preparation of the Consolidated Financial Statements requires management to make estimates and use assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the year. Material estimates that are particularly susceptible to significant changes relate to the determination of the allowances for ~~expected credit losses,~~ECL, impairment of securities, and the fair value of financial instruments. Actual results could differ from those estimates. Management believes these estimates are adequate.

For information regarding the Bank’s significant accounting policies, see Item 18, “Financial Statements,” notes 2 and ~~3, and~~3. Additionally, for information ~~concerning first time adoption of IFRS, see Item 18, “Financial Statements,” note 27.~~

~~Fair Value of Financial Instruments~~

The Bank determines the fair value of its financial instruments using the fair value hierarchy established in IFRS 13 – Fair Value Measurements and Disclosure, which requires the Bank to maximize the use of observable inputs (those that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market information obtained from sources independent of the reporting entity) and to minimize the use of unobservable inputs (those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances) when measuring fair value. Fair value is used on a recurring basis to measure assets and liabilities in which fair value is the primary basis of accounting. Additionally, fair value is used on a non-recurring basis to evaluate assets and liabilities for impairment or for disclosure purposes. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Bank uses some valuation techniques and assumptions when estimating fair value.

~~The Bank applied the following fair value hierarchy:~~

~~Level 1 – Assets or liabilities for which an identical instrument is traded in an active market, such as publicly-traded instruments or futures contracts.~~

Level 2 – Assets or liabilities valued based on observable market data for similar instruments, quoted prices in markets that are not active, or other observable inputs that can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments measured based on the best available information, which might include some internally-developed data, and considers risk premiums that a market participant would require.

When determining the fair value measurements for assets and liabilities that are required or permitted to be recorded at fair value, the Bank considers the principal or most advantageous market in which it would transact and considers the assumptions that market participants would use when pricing the asset or liability. When possible, the Bank uses active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Bank uses observable market information for similar assets and liabilities. However, certain assets and liabilities are not actively traded in observable markets and the Bank must use alternative valuation techniques to determine the fair value measurement. The frequency of transactions, the size of the bid-ask spread and the size of the investment are factors considered in determining the liquidity of markets and the relevance of observed prices in those markets.

When there has been a significant decrease in the volume or level of activity for a financial asset or liability, the Bank uses the present value technique which considers market information to determine a representative fair value in usual market conditions.

~~Additionally, as of December 31, 2015, 1.61% of~~regarding the Bank’s ~~assets were accounted for at fair value using quoted market prices in an active market, and 0.84%~~discussion on principal policies on impairment of ~~total assets were accounted for at fair value using internally developed models with significant observable market information.~~

The Bank’s management uses its best judgment in estimating the fair value of the Bank’s financial instruments; however, there are limitations in any estimation technique. The estimated fair value amounts have been measured as of their respective year-ends, and have not been re-expressed or updated subsequent to the dates of these Consolidated Financial Statements. As a result, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year-end.

~~Fair value calculations are only provided for a limited portion of the Bank’s~~ financial assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparison of fair value information of the Bank and other companies may not be meaningful for comparative analysis.

A description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, including the general classification of such assets and liabilities under the fair value hierarchy is presented below:

~~Trading assets and liabilities and securities at fair value through OCI~~

Financial instruments at fair value through profit or loss are carried at fair value, which is based upon quoted prices when available, or if quoted market prices are not available, on discounted expected cash flows using market rates commensurate with the credit quality and maturity of the security.

Financial instruments at fair value through OCI are carried at fair value, based on quoted market prices when available, or if quoted market prices are not available, based on discounted expected cash flows using market rates commensurate with the credit quality and maturity of the security.

When quoted prices are available in an active market, financial instruments at fair value through OCI and financial instruments at fair value through profit or loss are classified in level 1 of the fair value hierarchy. If quoted market prices are not available or they are available in markets that are not active, then fair values are estimated based upon quoted prices of similar instruments, or where these are not available, by using internal valuation techniques, principally discounted cash flows models. Such securities are classified within level 2 of the fair value hierarchy.

~~Investment funds~~

The investment funds invest in trading assets and liabilities that are carried at fair value, which is based upon quoted market prices when available. For financial instruments for which quoted prices are not available, the investment funds use independent valuations from pricing providers that use their own proprietary valuation models that take into consideration discounted expected cash flows, using market rates commensurate with the credit quality and maturity of the security. These prices are compared to independent valuations from counterparties.

The investment funds are not traded in an active market and, therefore, representative market quotes are not readily available. Their fair value is adjusted on a monthly basis based on its financial results, its operating performance, its liquidity and the fair value of its long and short investment portfolio that are quoted and traded in active markets. Such investments are classified within level 2 of the fair value hierarchy.

~~Derivative financial instruments~~

The valuation techniques and inputs depend on the type of derivative and the nature of the underlying instrument. Exchange-traded derivatives that are valued using quoted prices are classified within level 1 of the fair value hierarchy.

For those derivative contracts without quoted market prices, fair value is based on internal valuation techniques using inputs that are readily observable and that can be validated by information available in the market. The principal technique used to value these instruments is the discounted cash flows model and the key inputs considered in this technique include interest rate yield curves and foreign exchange rates. These derivatives are classified within level 2 of the fair value hierarchy.

The fair value adjustments applied by the Bank to its derivative carrying values include credit valuation adjustments (“CVA”) which are applied to over-the-counter derivative instruments, in which the base valuation generally discounts expected cash flows using the Overnight Index Swap (“OIS”) interest rate curves. Because not all counterparties have the same credit risk as that implied by the relevant OIS curve, a CVA is necessary to incorporate the market view of both, counterparty credit risk and the Bank’s own credit risk, in the valuation.

Own-credit and counterparty CVA is determined using a fair value curve consistent with the Bank’s or counterparty credit rating. The CVA is designed to incorporate a market view of the credit risk inherent in the derivative portfolio. However, most of the Bank’s derivative instruments are negotiated bilateral contracts and are not commonly transferred to third parties. Derivative instruments are normally settled contractually, or if terminated early, are terminated at a value negotiated bilaterally between the counterparties. Therefore, the CVA (both counterparty and own-credit) may not be realized upon a settlement or termination in the normal course of business. In addition, all or a portion of the CVA may be reversed or otherwise adjusted in future periods in the event of changes in the credit risk of the Bank or its counterparties or due to the anticipated termination of the transactions.

Notwithstanding the level of subjectivity inherent in determining fair value, the Bank’s management believes that its estimates of fair value are adequate. The use of different models or assumptions could lead to changes in the Bank’s reported results. See Item 18, “Financial Statements,” note 17.

~~Allowance for Expected Credit Losses~~

The classification of the Bank’s Credit Portfolio for allowances for credit losses under IFRS is determined by risk management and approved by the CPER of the Bank’s Board through statistical modeling, internal risk ratings and estimates. Informed judgments must be made when identifying impaired loans, the probability of default, the expected loss, the value of collateral and current economic conditions. Even though the Bank’s management considers its allowances for expected credit losses to be adequate, the use of different estimates and assumptions could produce different allowances for expected credit losses, and amendments to the allowances may be required in the future due to changes in the value of collateral, the amount of cash expected to be received or other economic events. In addition, risk management has established and maintains allowances for expected credit losses related to the Bank’s off-balance sheet exposures. See Item 18, “Financial Statements,” notes 3.5 and 3.21.

The estimates of the inherent risks of the Bank’s portfolio and overall recovery vary with changes in the economy, individual industries or sectors, and countries and individual borrowers’ or counterparties’ concentrations, ability, capacity and willingness to repay their obligations. The degree to which any particular assumption affects the allowance for ~~expected credit losses depends on the severity of the change and its relationship to the other assumptions. See~~ECL, see Item 5, “Operating and Financial Review and Prospects/Operating Results/Asset Quality and Allowance for ~~Expected Credit Losses”~~

~~Early adoption~~ECL,” and for the Bank’s fair value of ~~accounting policies~~

~~IFRS 9 Financial Instruments~~

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments to replace IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together the three aspects of accounting financial instruments, ~~project: Classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual years beginning on or after January 1, 2018, with early application permitted.~~

These financial statements reflect the Bank’s decision to early-adopt IFRS 9. The Bank conducted an impact assessment of the three aspects of IFRS 9. Overall, the Bank has not determined any significant impact on its consolidated statement of financial position as a result of early adoption of IFRS 9 as compared to U.S. GAAP.

~~Classification and measurement~~

The Bank did not observe any significant impact on its consolidated statement of financial position or consolidated statement of changes in equity in the application of the classification and measurement requirements of IFRS 9 as compared to U.S. GAAP. The Bank continues with the measurement of all financial assets at fair value except for those measured at amortized cost. Investments in securities held both for collecting contractual cash flows and selling financial assets continue to be measured at fair value through OCI. For investments in foreign exchange, the effect of the foreign exchange is recorded in the consolidated statement of profit or loss.

Loans and trade receivables generate contractual cash flows expected to represent only payments of principal and interest. Therefore, these instruments are recorded at amortized cost under IFRS 9. The Bank analyzed the characteristics of contractual cash flow of these instruments in detail before concluding whether all these instruments meet the criteria for measurement at amortized cost under IFRS 9.

~~Impairment~~

IFRS 9 requires the Bank’s expected credit losses to be recorded in all of its financial instruments, either on the basis of 12 months or for the life of the asset. The Bank applied the three-stage model of expected credit losses on all financial instruments. The Bank assessed the impact of its current model and the model required by IFRS 9, and determined no significant impact, mainly due to the nature of its business, which focuses on predominantly short-term credit exposures.

~~Hedge accounting~~

All existing hedging relationships that are currently designated in effective hedging relationships qualify for hedge accounting under IFRS 9. Bank did not determine any significant impact as a result of the application of IFRS 9 as compared to U.S. GAAP.

~~Future changes in applicable accounting policies~~

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Bank financial statements are disclosed below. The Bank intends to adopt these standards, if applicable, when they become effective.

~~IFRS 15 Revenue from Contracts with Customers~~

IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018, when the IASB finalizes their amendments to defer the effective date of IFRS 15 by one year. Early adoption is permitted. The Bank plans to adopt the new standard on the required effective date using the full retrospective method. During 2015, the Bank performed a preliminary assessment of IFRS 15, which is subject to changes arising from a more detailed ongoing analysis. Furthermore, the Bank is considering the clarifications issued by the IASB in an exposure draft in July 2015 and will monitor any further developments.

~~IFRS 16 Leases~~

IFRS 16 was issued in January 2016 and sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.

IFRS 16 is effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted for entities that apply IFRS 15 Revenue from Contracts with Customers at or before the date of initial application of IFRS 16. IFRS 16 supersedes IAS 17 – Leases. The Bank is evaluating the potential impact of this new standard in its Consolidated Financial Statements.

~~See~~see Item 18, “Financial Statements,” ~~notes 3.21 and 3.22~~note 18.

B.58

~~Liquidity and Capital Resources~~

B. Liquidity and Capital Resources

Liquidity

Liquidity refers to the Bank’s ability to maintain adequate cash flows to fund operations and meet obligations and other commitments on a timely basis. The Bank maintains its liquid assets mainly in demand deposits, overnight funds and time deposits with well-known international banks. These liquid assets are adequate to cover 24-hour deposits from customers, which theoretically could be withdrawn on the same day. As of December 31, 2015, the Bank’s 24-hour deposits from customers (demand deposit accounts and call deposits) amounted to $244 million, representing 9% of the Bank’s total deposits. The liquidity requirement resulting from these maturities is satisfied by the Bank’s liquid assets, which as of December 31, 2015 were $1,267 million (representing 45% of total deposits) of which $50 million corresponds to time deposits.

As established by the Bank’s liquidity policy, the Bank’s liquid assets are held in overnight deposits with the Federal Reserve Bank of New York or in the form of interbank deposits with reputable international banks that have A1, P1, or F1 ratings from two of the major internationally – recognized rating agencies and are primarily located outside of the Region. ~~These banks must have a correspondent relationship with the Bank.~~ In addition, the Bank’s liquidity policy allows for investing in negotiable money market instruments, including Euro certificates of deposit, commercial paper, ~~bankers’ acceptances~~ and other liquid instruments with maturities of up to three years. These instruments must be of investment grade quality A or better, ~~and~~ must have a liquid secondary ~~market.~~market and be considered as such according to Basel III rules.

The Bank performs daily reviews, controls and periodic stress tests on its liquidity position, including the application of a series of limits to restrict its overall liquidity risk and to monitor the liquidity level according to the macroeconomic environment. The Bank determines the level of liquid assets to be held on a daily basis, adopting a ~~Liquidity Coverage Ratio~~LCR methodology referencing the Basel Committee guidelines. ~~Additionally, specific limits have been~~The Bank also monitors the stability of its funding base in alignment with the principles established ~~to control (1)~~by Basel’s Net Stable Funding Ratio.

In addition, the Bank monitors cumulative maturity “gaps” between assets and liabilities, for each maturity classification presented in the Bank’s internal liquidity reports and ~~(2)~~maintains limits for concentrations of deposits taken from any client or economic group ~~maturing in one day~~ and total maximum deposits maturing in one day.

The Bank ~~follows~~maintains a Contingent Liquidity Plan. The plan contemplates the regular monitoring of several quantified internal and external reference benchmarks (such as deposit level, ~~quality of assets,~~ Emerging Markets Bonds Index Plus, ~~cost of funds,~~ LIBOR-OIS spread and market interest rates), which in cases of high volatility would trigger implementation of a series of precautionary measures to reinforce the Bank’s liquidity position. In the Bank’s opinion, its liquidity position is adequate for the Bank’s present requirements.

The following table shows the Bank’s liquid assets, by principal geographic area as of December 31 of each year:

As of December 31,
2015 2014
(in $ million)
United States of America 1,215 719
Other O.E.C.D. 11 1
Multilateral 40 20
Other 1 1
Total $ 1,267 $ 741

	As of December 31,
	2016		2015		2014
	(in $ millions)
United States of America	$	591	$	1,215	$	719
Other O.E.C.D.		409		11		1
Multilateral		0		40		20
Latin America		8		1		1
Total	$	1,008	$	1,267	$	741

As of December 31, 2016 and 2015, ~~liquidity~~the Bank’s 24-hour deposits from customers (demand deposit accounts and call deposits) amounted to $227 million, and $244 million, respectively; representing 8% and 9% of the Bank’s total deposits, for each year reported. The liquidity requirement resulting from these maturities is satisfied by the Bank’s liquid assets, which as of December 31, 2016 and 2015 were $1,008 million and $1,267 ~~million.~~million, respectively (representing 36% and 45% of total deposits, respectively) of which $591 million, or 59%, and $1,213 million, or 96%, ~~of liquid assets~~respectively, were deposited at the Federal Reserve Bank of New York. The remaining liquid assets consisted of short-term funds deposited with other banks.

While the Bank’s liabilities generally mature over somewhat shorter periods than its assets, the associated liquidity risk is diminished by the short-term nature of the Loan Portfolio, as the Bank is engaged primarily in the financing of foreign trade. As of December 31, 2016 and 2015, the Bank’s short-term loan and Investment Securities Portfolio (maturing within one year based on original contractual term) totaled $3,577 million and $3,189 million, ~~(which comprised $23 million~~respectively. As of ~~investment securities~~December 31, 2016 and ~~the remaining $3,166 million of loans) and~~2015, it had an average original term to maturity of 184 and 198 days, respectively, and an average remaining term to maturity of 89 and 90 ~~days.~~days, respectively.

Medium-term assets (loans and investment securities maturing beyond one year based on original contractual term) totaled $2,552 million and $3,753 million as of December 31, ~~2015.~~2016 and 2015, respectively. Of that amount, $105 million and $228 million corresponded to the Bank’s investment securities ~~($86~~as of December 31, 2016 and 2015. The remaining $2,447 million ~~in securities at amortized cost~~ and ~~$142 million corresponded to securities at fair value through OCI). The remaining~~ $3,525 million in medium-term assets corresponded to the Bank’s Loan ~~Portfolio.~~Portfolio as of December 31, 2016 and 2015. As of December 31, 2016 and 2015, the medium-term assets had an average original term to maturity of three years and ten months, and three years and seven months, respectively; and an average remaining term to maturity of one year and seven months (588 days), and one year and eight months (618 days)., respectively.

Credit Ratings

The cost and availability of financing for the Bank are influenced by its credit ratings, among other factors. The credit ratings of the Bank as of December 31, ~~2015,~~2016, were as follows:

	As of December 31, ~~2015~~2016
	Fitch	Moody’s	Standard & Poor’s
Short-Term	F2	P-2	A-2
Long-Term	BBB+	Baa2	BBB
Rating Outlook	Stable	Stable	~~Stable~~Negative

Credit Rating from Fitch Ratings Ltd.

On July ~~27, 2015,~~25, 2016, Fitch Ratings Ltd. (“Fitch”), confirmed the Bank’s Issuer Default Rating (“IDR”), at “BBB+”, which had been upgraded on July 31, 2012, with a stable outlook.

Credit Rating from Moody’s Investor Service, Inc.

The Bank’s credit ratings from Moody’s Investor Service, Inc. (“Moody’s”), have been unchanged since December 19, 2007, with the most recent affirmation of the Bank’s credit ratings and stable outlook having been issued by Moody’s on November 12, 2014, together with a follow-up ~~Credit Opinion~~semiannual credit opinion on ~~December 17, 2015.~~January 16, 2017.

Credit Rating from Standard & Poor’s

The credit ratings from Standard & Poor’s (“S&P”), have been unchanged since May 13, 2008, ~~and on July 20, 2015, S&P confirmed~~with the Bank’s credit ratings ~~with~~last confirmed on June 28, 2016. On October 28, 2016, S&P revised Panama’s Banking Industry Risk Assessment (“BICRA”) outlook to negative from stable, citing vulnerabilities in the country’s regulatory framework, and prompting a ~~stable outlook.~~methodology-driven change in the Bank’s outlook to negative from stable.

Critical factors supporting the Bank’s investment-grade credit ratings include a substantial and continuous expansion in its core earnings, its historically solid asset quality, and strong tier one capitalization. Although the Bank closely monitors and manages factors influencing its credit ratings, there is no assurance that such ratings will not be lowered in the future.

Funding Sources

The Bank’s principal sources of funds are deposits and, to a lesser extent borrowed funds and floating and fixed rate placements of securities. While these sources are expected to continue providing the majority of the funds required by the Bank in the future, the exact composition of the Bank’s funding sources, as well as the possible use of other sources of funds, will depend ~~upon future~~on economic and market conditions. The following table shows the Bank’s funding distribution as of the dates indicated:

As of December 31, As of January 1,
2015 2014 2014
(in percentages)
Interbank deposits 38.2 % 35.3 % 36.0 %
Securities sold under repurchase agreements 1.6 4.2 4.4
Borrowings and debts 59.0 57.5 58.8
Other liabilities 1.2 3.0 0.9
Total liabilities 100.0 % 100.0 % 100.0 %

	As of December 31,
	2016			2015			2014
	(in percentages)
Deposits		46.3	%		38.7	%		36.3	%
Securities sold under repurchase agreements		0.0			1.6			4.4
Short-term borrowings and debts		24.3			33.6			39.0
Long-term borrowings and debts, net		29.4			26.1			20.3
Total interest-bearing liabilities		100.0	%		100.0	%		100.0	%

~~Short- and long-term borrowings and~~The Bank has issued debt ~~are important funding sources for~~in the Bank’s Loan Portfolio because they allow the Bank to diversify its funding sources outside the Region, and because the Bank uses these borrowings and placements, which generally have longer maturities than deposits, to manage its asset and liability positions. See “Cash—Asset—Liability Management.”

~~The Bank’s short- and medium-term borrowings mainly come from international correspondent banks from~~public markets of the United States ~~Japan, Canada~~of America, Mexico and, ~~Europe. Among those European banks with credit lines~~ in ~~favor of Bladex,~~2016, the ~~largest country concentrations are from banks located~~Bank issued debt in the ~~United Kingdom, Germany~~public markets of Japan for the first time. The Bank has also placed private issuances in different markets of Asia, Europe and ~~Switzerland.~~Latin America.

Deposits

The Bank obtains deposits principally from central and commercial banks primarily located in the Region. As of December 31, ~~2015, 71%~~2016, 81% of the deposits held by the Bank were deposits made by central and state owned banks in the Region, and ~~14%~~10% of the Bank’s deposits represented deposits from private sector commercial banks and financial institutions. ~~Many of these banks deposit a portion of their dollar reserves with the Bank.~~ The average term remaining to maturity of deposits from the Region’s central and state owned banks as of December 31, 2016, 2015 and 2014, ~~and January 1, 2014,~~ was 72 days, 63 days, ~~54 days,~~ and 4554 days, respectively. As of December 31, ~~2015,~~2016, deposits from the Bank’s five largest depositors, all of which were central and state-owned banks in the Region, represented ~~43%~~57% of the Bank’s total ~~deposits.~~deposits, compared to 43% as of December 31, 2015. See Item 18, “Financial Statements,” note 9.10.

The following table analyzes the Bank’s deposits by country as of the dates indicated below:

	As of December 31,				January 1,		As of December 31,
	2015		2014		2014		2016		2015		2014
			(in $ million)				(in $ millions)
Argentina	$	70	$	68	$	60	$	135	$	70	$	68
Bahamas		0		2		2		0		0		2
Barbados		17		15		30		0		17		15
Bermuda		6		0		0		0		6		0
Bolivia		1		1		1		1		1		1
Brazil		457		254		371		151		457		254
Cayman Island		7		20		19		25		7		20
Colombia		9		19		23		3		9		19
Costa Rica		116		20		18		130		116		20
Dominican Republic		51		6		0		72		51		6
Ecuador		213		567		598		804		213		567
El Salvador		22		30		25		24		22		30
France		0		0		1		0		0		0
Germany		77		53		50		77		77		53
Guatemala		50		70		70		71		50		70
Haiti		50		44		44		70		50		44
Honduras		157		161		138		153		157		161
Jamaica		1		1		1		0		1		1
Mexico		101		100		50		100		101		100
Multilateral		18		57		32		0		18		57
Netherlands		15		0		0		15		15		0
Nicaragua		90		76		72		98		90		76
Panama		435		406		372		404		435		406
Paraguay		433		269		274		400		433		269
Peru		142		17		0		0		142		17
Switzerland								1		0		0
Trinidad and Tobago		19		19		19		19		19		19
United Kingdom		1		0		0		1		1		0
United States of America		64		38		1		2		64		38
Venezuela		173		193		91		47		173		193
Total	$	2,795	$	2,507	$	2,361	$	2,803	$	2,795	$	2,507

~~Securities Sold Under Repurchase Agreements and~~ Short-Term Borrowings and Debt, and Repos

The Bank enters into ~~repos~~financing transaction under repurchase agreements (“Repos”) with international banks, utilizing its Investment Securities Portfolio as collateral to secure cost-effective funding. Repos are ~~accounted~~reported as secured financings in the financial statements. As of December 31, ~~2015, repos amounted~~2016, the Bank did not have Repos, compared to Repos of $114.1 million, ~~a decrease of $186.4 million from~~and $300.5 million as of December 31, 2015 and 2014, ~~and a decrease of $172.1 million from $286.2 million as of January 1, 2014.~~respectively. See Item 18, “Financial Statements,” note ~~10.~~11.

Short- and long-term borrowings and debt provide a global diversification of the Bank’s funding sources. The Bank uses these borrowings and debt placements, which generally have longer maturities than deposits, to manage its asset and liability positions.

The Bank’s short-term borrowings and debt consist of borrowings from banks ~~that have maturities of up to 365 days,~~ and debt instruments from notes issued under the Bank’s Euro Medium-Term Note ~~Program.~~ Program that have maturities of up to 365 days.

Short-term borrowings are made available to the Bank on an uncommitted basis for the financing of trade-related ~~loans. Approximately ten European~~loans as well as for general business purposes. The Bank’s short- and medium-term borrowings mainly come from international correspondent banks ~~seven North American banks, three Asian banks, one Latin American Bank,~~from the United States, Japan, Canada and ~~one multilateral bank provide these short-term borrowings to the Bank.~~

During 2015, the Bank issued short-term private placements through its Euro Medium-Term Note Program. As of December 31, 2015, short-term issuances under the program amounted to $576 million, placed primarily in Asia, Japan, and Latin America.Europe.

As of December 31, ~~2015,~~2016, short-term borrowings and debt ~~amounted~~totaled $1,470 million, a 40% decrease compared to $2,430 ~~million, a decrease of $262 million compared to $2,692~~ million as of December 31, ~~2014.~~2015, as the Bank relied primarily on deposits to cover its short-term funding needs, in response to the shift in the lending book mix moving toward shorter tenors. The average term remaining to maturity of short-term borrowings and debt as of December 31, ~~2015~~2016 was 96115 days. See Item 18, “Financial Statements,” notes ~~11.1~~12.1 and ~~17.~~18.

The following table presents information regarding the amounts outstanding under, and interest rates on, the Bank’s short-term borrowings and ~~repos~~Repos at the dates and during the periods indicated.

	As of and for the Year Ended December 31,
	2016			2015			2014
	(in $ millions, except percentages)
Short-term borrowings, debt and Repos
Advances from banks and financial institutions	$	1,470		$	2,430		$	2,693
Securities sold under repurchase agreements		0			114			300
Total short-term borrowings, debt and Repos	$	1,470		$	2,544		$	2,993

Maximum amount outstanding at any month-end	$	1,984		$	3,152		$	2,993
Amount outstanding at year-end	$	1,470		$	2,544		$	2,993
Average amount outstanding	$	1,449		$	2,484		$	2,471
Weighted average interest rate on average amount outstanding		1.12	%		0.91	%		0.95	%
Weighted average interest rate on amount outstanding at year end		1.11	%		0.89	%		0.79	%

As of and for the Year Ended
December 31,
January 1,
2015 2014 2014
(in $ million, except percentages)
Short-term borrowings, debt and securities sold under repurchase agreements
Advances from banks and financial institutions $ 2,430 $ 2,693 $ 2,705
Securities sold under repurchase agreements 114 300 286
Total short-term borrowings, debt and securities sold under repurchase agreements $ 2,544 $ 2,993 $ 2,991

Maximum amount outstanding at any month-end $ 3,152 $ 2,993 $ 2,991
Amount outstanding at year-end $ 2,544 $ 2,993 $ 2,991
Average amount outstanding $ 2,484 $ 2,471 $ 2,275
Weighted average interest rate on average amount outstanding 0.91 % 0.95 % 1.17 %
Weighted average interest rate on amount outstanding at year end 0.89 % 0.79 % 0.89 %

Long-term borrowings and debt

~~Borrowings~~Long-term borrowings consist of long-term bilateral and syndicated loans obtained from international banks. Debt instruments consist of ~~public and~~ private issuances under the Bank’s Euro Medium-Term Note Program, as well as public issuances in the ~~Mexican market.~~United States of America, Japan and Mexico.

Interest rates on most long-term borrowings and issuances are adjusted monthly, quarterly or semi-annually based on short-term LIBOR rates plus a credit spread. The credit spread is defined according to several factors, including credit ratings, risk perception, and the original contractual term to maturity. The Bank uses these funds primarily to finance its medium-term and long-term Loan ~~Portfolio.~~Portfolio, as well as to further enhance the stability of its overall funding base. At year-end 2016, gross long-term borrowings and debt decreased 6% to $1,782 million, from $1,889 million the year before, while continuing to increase overall funding stability with medium and long-term funding balances, which amounted to 29% of total funding in 2016, up from 26% in 2015. As of December 31, ~~2015,~~2016, the average term remaining to maturity of the Bank’s medium and long-term borrowing and debt was ~~two years~~a year and ~~five~~eleven months ~~(896~~(720 days).

The following table presents information regarding the gross amounts outstanding under, and interest rates on, the Bank’s long-term borrowings and debt at the dates and during the periods indicated. See Item 18, “Financial Statements,” notes ~~11.2~~12.2 and ~~17,~~18, and Item 11, “Quantitative and Qualitative Disclosure About Market Risk.”

	As of and for the Year Ended December 31,						January 1,			As of and for the Year Ended December 31,
	2015			2014			2014			2016			2015			2014
	(in $ million, except percentages)									(in $ millions, except percentages)
*Borrowings and long-term debt^()**
*Long-term borrowings and debt^()**
Amount outstanding at year-end	$	1,889		$	1,405		$	1,154		$	1,782		$	1,889		$	1,405
Maximum amount outstanding at any month-end	$	1,889		$	1,587		$	1,893		$	2,054		$	1,889		$	1,587
Average amount outstanding	$	1,589		$	1,389		$	1,318		$	1,881		$	1,589		$	1,389
Weighted average interest rate on average amount outstanding		2.65	%		2.86	%		3.08	%		2.84	%		2.65	%		2.86	%
Weighted average interest rate on amount outstanding at year end		2.62	%		2.71	%		3.06	%		2.98	%		2.62	%		2.71	%

^(*) Gross of prepaid commissions of $5.1 million, $7.0 million, ~~$5.6 million~~ and ~~$5.0~~$5.6 million as of December 31, 2016, 2015, ~~2014~~ and ~~as of January 1,~~ 2014, respectively.

~~As part~~In February 2016, the Bank increased the amount and extended the maturity of its ~~interest rate and currency risk management,~~Global Syndicated Loan launched in 2014. In April 2016, the Bank ~~may from time to time enter into foreign exchange forwards, cross-currency contracts~~launched its third public issuance in Mexico in the amount of MXN1.5 billion (one and ~~interest rate swaps to hedge~~a half billion Mexican Pesos), and in June 2016, the ~~risk associated with a portion~~Bank issued its first bond in the Tokyo Pro-bond market for the amount of ~~the notes issued under its various programs.~~JPY8 billion (eight billion Japanese Yen).

On September 2, 2015, the Bank announced the successful closing of a $175 million three-year syndicated loan. The facility consisted of two tranches: a two-year extension of Bladex’s $103 million syndicated loan previously arranged in 2013 and a $72 million three-year tranche of funding provided by new lenders. Banks from Japan, Taiwan and China participated in the transaction as arrangers and lead arrangers as well, further enhancing the Bank’s presence in Asian markets.

On May 7, 2014, the Bank successfully closed a $250 million three-and-a-half year global syndicated loan. This transaction further enhanced the Bank’s successful track record of global syndications in support of the Bank’s medium-term lending activities.

~~On October 1, 2013, the Bank successfully closed a $103 million three-year syndicated loan structured placed in the Asian financial markets.~~

Some borrowing agreements include various events of default and covenants related to minimum capital adequacy ratios, incurrence of additional liens, and asset sales, as well as other customary covenants, representations and warranties. As of December 31, ~~2015,~~2016, the Bank was in compliance with all covenants.

Debt Capital Markets

Program in Mexico

In 2012, the Bank established a short- and long-term notes program, (“Mexico Program”), in the Mexican local market, registered with “Mexican National Registry of Securities”(Registro Nacional de Valores) maintained by the “National Banking and Securities Commission”(Comisión Nacional Bancaria y de Valores), for an authorized aggregate principal amount of 10 billion Mexican Pesos or its equivalent in “Investment Unit”(Unidades de Inversión),U.S. dollars or Euros and with maturities from one day to 30 years. As of December 31, ~~2015,~~2016, the total amount outstanding under this program ~~was one issuance~~comprised of two issuances of “certificados bursátiles” in the Mexican capital ~~markets of~~markets: Bladex14 in the principal amount of ~~Pesos 2.0~~MXN2.0 billion (two billion Mexican ~~pesos) or approximately $115 million U.S. dollar equivalent,~~Pesos) issued in July 2014, and due in January ~~2018.~~2018, and Bladex16 in the principal amount of MXN1.5 billion (one and a half billion Mexican Pesos) issued in April 2016 and due in April 2019.

Euro Medium Term Note Program

The Bank has established a Euro Medium-Term Note Program, which is primarily targeted at non-bank institutional investors and includes multiple placements with short-, medium-, and long-term tenors.

~~On April 30, 2015,~~During 2016, the Bank ~~announced the issuance of a $350~~issued $435 million in ~~bonds,~~new private placements; and as of December 31, 2016, private issuances through its Euro Medium-Term Note Program amounted to $146 million, placed in Asia, Europe and Latin America. In addition, the ~~Bank’s second Rule 144A/ Regulation S bond transaction. The~~Bank has two outstanding bonds ~~which mature in 2020, pay a fixed rate coupon of 3.25%. The bond offering was placed with global institutional and retail investors, reinforcing the Bank’s medium-term funding base. The bonds were~~ issued pursuant to ~~the Bank’s Euro Medium-Term Note Program.~~Rule 144A/Regulation S, in a total principal amount of $750 million, of which $400 million mature in April 2017 and $350 million mature in May 2020.

~~As of December 31,~~Tokyo Pro-Bond Program

In October 2015, ~~total outstanding amount under~~ the Euro Medium-Term Note Program was ~~$1,541 million, which included~~listed on the Tokyo Stock Exchange under the Tokyo Pro-Bond Market. This market offers the possibility of flexible and timely issuances of bonds to a ~~Rule 144A/Regulation S offering with an aggregate~~broad base of Japanese investors. The Bank was successful at placing its first public issuance listed on this market on June 9, 2016 in a principal amount of ~~$400 million~~JPY8 billion (eight billion Japanese Yen) and due in 2017, and $348 million in bonds due in 2020. During 2015, the Bank issued short-term private placements through its Euro Medium-Term Note Program. As of December 31, 2015, short-term issuances under the program amounted to $576 million, placed primarily in Asia, Japan, and Latin America.on June 10, 2019.

Cost and Maturity Profile of Borrowed Funds and Floating-Rate and Fixed-Rate Placements

The following table sets forth certain information regarding the weighted average cost and the remaining maturities of the Bank’s gross borrowed funds and floating and fixed-rate placements ~~(including repos)~~ as of December 31, ~~2015:~~2016:

	*Amount^()**		Weighted Average Cost			*Amount^()**		Weighted Average Cost
	(in $ million, except percentage)					(in $ millions, except percentage)
Short-term borrowings and Securities sold under repurchase agreements at fixed interest rate
Short-term borrowings at fixed interest rate
Due in 0 to 30 days	$	358		0.82	%	$	215		1.25	%
Due in 31 to 90 days		403		0.83	%		470		1.27	%
Due in 91 to 180 days		261		1.02	%		0		6.16	%
Due in 181 to 365 days		75		1.04	%		103		1.39	%
Total	$	1,097		0.89	%	$	788		1.28	%

Short-term borrowings at floating interest rate
Due in 0 to 30 days	$	25		0.67	%
Due in 31 to 90 days		334		1.02	%	$	145		1.26	%
Due in 91 to 180 days		368		0.94	%		327		1.35	%
Due in 181 to 365 days		145		0.96	%		185		1.35	%
Total	$	872		0.97	%	$	657		1.33	%

Short-term fixed-rate placements
Due in 0 to 30 days	$	44		0.86	%	$	15		1.05	%
Due in 31 to 90 days		227		0.87	%		10		1.20	%
Due in 91 to 180 days		216		0.92	%
Due in 181 to 365 days		38		1.05	%
Total	$	525		0.90	%	$	25		1.11	%

Short-term floating-rate placements
Due in 31 to 90 days	$	50		1.07	%
Total	$	50		1.07	%

Medium and long-term borrowings at fixed interest rate
Due in 0 to 30 days	$	1		5.28	%
Due in 31 to 90 days		1		5.30	%
Due in 91 to 180 days		2		5.30	%
Due in 181 to 365 days		44		1.86	%
Due in 1 through 6 years		65		2.87	%
Total	$	113		2.56	%

Medium and long-term borrowings at floating interest rate
Due in 91 to 180 days	$	1		3.71	%
Due in 181 to 365 days		26		1.60	%
Due in 1 through 6 years		669		1.76	%
Total	$	696		1.76	%

Medium and long-term fixed-rate placements
Due in 0 to 30 days	$	10		1.16	%
Due in 181 to 365 days		89		0.65	%
Due in 1 through 6 years		774		3.43	%
Due in 7 through 12 years		57		3.75	%
Total	$	930		3.16	%

Medium and long-term floating-rate placements
Due in 181 to 365 days	$	35		1.62	%
Due in 1 through 6 years		115		3.93	%
Total	$	150		3.39	%
Grand Total	$	4,433		1.65	%

	*Amount^()**		Weighted Average Cost
	(in $ millions, except percentage)
Medium and long-term borrowings at fixed interest rate
Due in 0 to 30 days	$	1		5.91	%
Due in 31 to 90 days		2		5.91	%
Due in 91 to 180 days		2		5.91	%
Due in 181 to 365 days		30		2.28	%
Due in 1 through 6 years		26		6.55	%
Total	$	61		4.39	%

Medium and long-term borrowings at floating interest rate
Due in 91 to 180 days	$	0		1.66	%
Due in 181 to 365 days		25		1.84	%
Due in 1 through 6 years		606		2.13	%
Total	$	631		2.12	%

Medium and long-term fixed-rate placements
Due in 91 to 180 days	$	400		3.75	%
Due in 1 through 6 years		469		2.70	%
Due in 7 through 12 years		53		3.75	%
Total	$	922		3.21	%

Medium and long-term floating-rate placements
Due in 1 through 6 years	$	168		6.36	%
Total	$	168		6.36	%
Grand Total	$	3,252		2.32	%

^(*) ~~Gross of prepaid commissions of $7.0 million as of December 31, 2015.~~

^(*)

Gross of prepaid commissions of $5.1 million as of December 31, 2016.

Cash flows

Management believes that cash flows from operations, including the Bank’s adequate reserve coverage levels, and its ability to generate cash through its financing activities (such as ~~deposits and~~ short- and long-term borrowings and debt) are sufficient to fund its investing activities ~~(which are mainly comprised of the Bank’s~~and core lending ~~activities),~~activities, as well as the Bank’s operating liquidity needs.

The following discussion highlights the major activities and transactions that affected the Bank’s cash flows during 2016, 2015 and 2014.

Cash flows from operating activities

The Bank’s operating activities mainly include cash generated by profit for the year, adjustments ~~converting~~to reconcile profit for the ~~items reported on the income statement from the accrual basis of accounting~~year to net cash provided by operating activities, net changes in ~~non-interest-earning~~operating assets, ~~or operating assets,~~which predominantly include loans originated by the Bank, and net changes in ~~non-interest-bearing~~operating liabilities, orprimarily from raising deposits from central banks as well as state-owned and private banks and corporations in the Region.

For the year ended December 31, 2016, net cash provided by operating ~~liabilities.~~activities was $829 million, mainly attributable to a net decrease of $650 million in loans at amortized cost, along with an overall net increase of $161 million in operating liabilities and the $87 million of profit for the year.

For the year ended December 31, 2015, net cash provided by operating activities was $419 million, resulting primarily from the net increase of $446 million in operating liabilities, along with the profit for the year of $104 million, partially offset by $125 million adjustments to reconcile profit for the year to net cash provided by operating activities.

For the year ended December 31, 2014, net cash used in operating activities was $267 million, resulting from: (i) a net increase of $560 million in operating assets, mainly from financial instruments at ~~fair value through profit or loss~~FVTPL and (ii) a $93 million adjustments to reconcile profit for the year to net cash provided by operating activities, partially offset by (i) a net increase of $284 million in operating liabilities and (ii) profit for the year of $102 million during the year 2014.

Cash flows from investing activities

The Bank’s investing activities ~~predominantly~~ include ~~loans originated by the Bank, as well as~~ the portfolio of financial instruments at ~~fair value through OCI~~FVOCI and at amortized ~~cost.~~cost, as well as the cash used on acquisition or proceeds from disposal of equipment and leasehold improvements, and intangible assets, respectively. Investing activities can vary significantly in the normal course of business due to the amount and timing of cash flows, which are affected by client-driven activities and demand, market conditions, and business strategies.

For the year ended December 31, 2016, net cash provided by investing activities was $149 million, primarily from $210 million in proceeds from the sale and redemptions of financial instruments at FVOCI, and $55 million in proceeds from the maturity of financial instruments at amortized cost, partially offset by purchases of $84 million, and $25 million, of financial instruments at FVOCI and at amortized cost, respectively.

For the year ended December 31, 2015, net cash provided by investing activities was $130 million, mainly from $269 million in cash received from the sale and redemptions of financial instruments at ~~fair value through OCI,~~FVOCI, and $45 million in proceeds received from the maturity of financial instruments at amortized cost, partially offset by purchases of $87 million, and $97 million, of financial instruments at ~~fair value through OCI~~FVOCI and at amortized cost, respectively.

For the year ended December 31, 2014, net cash of $23 million was used in investing activities, mainly from purchases of $288 million of financial instruments at ~~fair value through OCI,~~FVOCI, partially offset by inflows from the sale of financial instruments at ~~fair value through OCI~~FVOCI of $223 million.

Cash flows from financing activities

The Bank’s financing activities primarily reflect cash flows related to raising ~~deposits~~funds from ~~central banks as well as state-owned and private banks and corporations in the Region,~~ short-term borrowings and debt from international correspondent banks, secured financing from ~~repos,~~Repos, and proceeds from, and repayments of, long-term borrowings and debt through bilateral or syndicated borrowing facilities, as well as issuances in the capital markets.

For the year ended December 31, 2016, net cash of $1,238 million was used in financing activities, mostly the result of a $1,074 million net decrease in short-term borrowings and debt and Repos, the $105 million net cash flow that resulted from the repayments of and proceeds from long-term borrowings and debt, and the $60 million paid as cash dividends.

For the year ended December 31, 2015, net cash of $24 million was used in financing activities, which was primarily the result of net repayments of $463 million in long-term borrowings and debt, a net decrease of $449 million in short-term borrowing and debt and ~~repos,~~Repos, and $60 million paid as cash dividends, partially offset by a net cash increase of $946 million on proceeds from long-term borrowings and debt.

For the year ended December 31, 2014, net cash provided by financing activities was $200 million, which was primarily the result of a net cash increase of $641 million on proceeds from long-term borrowings and debt, which was partially offset by net repayments of $389 million in long-term borrowings and debt and $54 million paid as cash dividends.

Asset/Liability Management

The Bank seeks to manage its assets and liabilities to reduce the potential adverse impact on net interest income that could result from interest rate changes. The Bank controls interest rate risk through systematic monitoring of ~~maturity~~maturities and repricing mismatches. The Bank’s investment decision-making takes into account not only the rates of return and the respective underlying degrees of risk, but also liquidity requirements, including minimum cash reserves, withdrawal and maturity of deposits and additional demand for funds. For any given period, a matched pricing structure exists when an equal amount of assets and liabilities are repriced. An excess of assets or liabilities over these matched items results in a “gap” or “mismatch,” as shown in the table under “Interest Rate Sensitivity” below. A negative gap denotes liability sensitivity and normally means that a decline in interest rates would have a positive effect on net interest income, while an increase in interest rates would have a negative effect on net interest income. Most of the Bank’s assets and most of its liabilities are denominated in U.S. dollars and, therefore, the Bank has no material foreign exchange risk. The foreign exchange risk is mitigated by the use of derivatives, which, though economically perfectly hedged, might give rise to some accounting volatility.

Interest Rate Sensitivity

The Bank ~~actively~~ uses interest rate swaps as part of its interest rate risk management. Interest rate swaps are contracted either in a single currency or cross-currency for a prescribed period in order to exchange a series of interest payment flows ~~which generally involve swapping fixed for floating-rate.~~and hedge the risk associated with a portion of the notes issued under its various programs and the funds borrowed through bilateral loans and syndications.

The following table presents the projected maturities and interest rate adjustment periods of the Bank’s total assets, liabilities and stockholders’ equity based upon the contractual maturities and rate-adjustment (repricing) dates as of December 31, ~~2015.~~2016. The Bank’s interest-earning assets and interest-bearing liabilities and the related interest rate sensitivity gap shown in the following table may not reflect positions in subsequent periods.

	Total		0-30 Days			31-90 Days			91-180 Days			181-365 Days			More than 365 Days			Non-Interest Sensitive / without maturity			Total			0-30 Days			31-90 Days			91-180 Days			181-365 Days			More than 365 Days			Non-Interest Sensitive / without maturity
	(in $ million, except percentages)																				(in $ millions, except percentages)
Interest-earning assets
Cash, due from banks & interest-bearing deposits with banks	$	1,300	$	1,300		$	0		$	0		$	0		$	0		$	0		$	1,070		$	1,070		$	0		$	0		$	0		$	0		$	0
Financial instruments at fair value through OCI		142		13			26			29			6			67			0
Financial instruments at FVOCI																						31			0			10			13			0			8			0
Securities at amortized cost		108		14			6			10			6			72			0			77			7			1			3			0			66			0
Loans at amortized cost, net		6,682		1,878			2,728			1,720			273			92			(9	)
Loans at amortized cost																						6,021			1,935			2,432			1,449			140			65			0
Total interest-earning assets		8,232		3,205			2,760			1,759			285			231			(9	)		7,198			3,012			2,442			1,465			140			139			0
Non-interest earning assets, allowance for expected credit losses and other asset		54		0			0			0			0			0			54
Non-interest earning assets, allowance for ECL and other asset																						(17	)		0			0			0			0			0			(17	)
Total assets		8,286		3,205			2,760			1,759			285			231			45			7,181			3,012			2,442			1,465			140			139			(17	)

Interest-bearing liabilities
Deposits		2,795		1,736			476			320			264			0			0			2,803			1,669			637			173			276			48			0
Securities sold under repurchase agreements		114		7			96			11			0			0			0
Borrowings and debt, net		4,312		753			1,590			1,433			354			189			(7	)
Borrowings and debt⁽¹⁾																						3,252			794			1,270			730			293			165			0
Total interest-bearing liabilities		7,221		2,496			2,162			1,765			618			189			(7	)		6,055			2,463			1,907			903			569			213			0
Non-interest-bearing liabilities		93		0			0			0			0			0			93			115			0			0			0			0			0			115
Total liabilities		7,314		2,496			2,162			1,765			618			189			86			6,170			2,463			1,907			903			569			213			115
Total Stockholders’ equity		972		0			0			0			0			0			972			1,011			0			0			0			0			0			1,011
Total liabilities and stockholders’ equity	$	8,286	$	2,496		$	2,162		$	1,765		$	618		$	189		$	1,058		$	7,181		$	2,463		$	1,907		$	903		$	569		$	213		$	1,126
Interest rate sensitivity gap		0		709			599			(5	)		(332	)		43			(1,013	)		0			549			535			562			(429	)		(74	)		(1,143	)
Cumulative interest rate sensitivity gap				709			1,308			1,303			970			1,013			0						549			1,084			1,646			1,217			1,143			0
Cumulative gap as a % of total interest-earning assets				9	%		16	%		16	%		12	%		12	%		0	%					8	%		15	%		23	%		17	%		16	%		0	%

⁽¹⁾

Gross of prepaid commissions of $5.1 million as of the December 31, 2016.

The Bank’s interest rate risk is the exposure of earnings (current and potential) and capital to ~~adverse~~ changes in interest ~~rates and is managed by attempting~~rates. Due to ~~match~~ the ~~term and repricing characteristics~~fact that the significant majority of the Bank’s interest rate sensitive assets and liabilities. The Bank’s interest rate risk typically arises from the Bank’s liability sensitive short-term position, which means that the Bank’s interest-bearing liabilities tend to reprice more quickly than the Bank’s interest-earning assets. This is offset by the short-term nature of the Bank’s interest-earning assets and interest-bearing liabilities, and the fact that most of the assets and liabilities ~~pricing is~~are either short-term or have short-term US-LIBOR based ~~on short-term market rates (LIBOR-based) with contractual re-pricing~~repricing schedules, ~~for longer term transactions. As~~the Bank has a ~~result, there is a potential adverse impact on the Bank’s net interest income from~~relatively low exposure to interest rate ~~increases~~volatility, with most interest rate sensitivity being short-term in nature (up to six months). Through an active interest rate management strategy, the ~~very short term.~~Bank has aligned this moderate exposure to profit from an increase in short-term LIBOR rates. The Bank’s policy with respect to interest rate risk provides that the Bank establishes limits with regards to: (1) changes in net interest income due to a potential impact, given certain movements in interest rates and (2) changes in the amount of available equity funds of the Bank, given a one basis point movement in interest rates.

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

Stockholders’ Equity

The following table presents information concerning the Bank’s capital position at the dates indicated:

	As of December 31,						January 1,			As of December 31,
	2015			2014			2014			2016			2015			2014
	(in $ thousand)									(in $ thousands)
Common stock	$	279,980		$	279,980		$	279,980		$	279,980		$	279,980		$	279,980
Treasury stock		(73,397	)		(77,627	)		(82,008	)		(69,176	)		(73,397	)		(77,627	)
Additional paid-in capital in excess of assigned value of common stock		120,177			119,644			120,624			120,594			120,177			119,644
Capital reserves		95,210			95,210			95,210			95,210			95,210			95,210
Retained earnings		560,642			501,669			454,896			587,507			560,642			501,669
Accumulated other comprehensive loss		(10,681	)		(7,837	)		(9,700	)		(2,801	)		(10,681	)		(7,837	)
Total stockholders’ equity	$	971,931		$	911,038		$	859,002		$	1,011,314		$	971,931		$	911,039

As of December 31, ~~2015,~~2016, total stockholders’ equity amounted to $1,011 million, compared to $972 million as of December 31, 2015 and compared to $911 million as of December 31, ~~2014~~2014. The Bank’ equity consists of issued and ~~compared~~fully paid ordinary common stock and retained earnings.

Total stockholders’ equity increased $39 million during the year ended December 31, 2016, primarily due to: (i) a $27 million increase in retained earnings as a result of an $87 million profit for the year ended December 31, 2016, which was partially offset by a $60 million cash dividend declared in 2016, and (ii) an $8 million decrease in accumulated other comprehensive loss attributable to ~~$859 million as~~net unrealized gain arising from improved mark-to-market conditions in 2016, and reclassification adjustments for losses on the sale of ~~January 1, 2014.~~financial instruments at FVOCI.

During 2015, total stockholders’ equity increased by $61 million compared to 2014. This increase was primarily due to a $59 million increase in retained earnings as a result of profit of $104 million for the year ended December 31, 2015, which was partially offset by $45 ~~million declared as cash dividends.~~

During 2014, total stockholders’ equity increased $52 million compared to January 1, 2014. This increase was primarily due to a $47 million increase in retained earnings as a result of profit for the year of $102 million for the year ended December 31, 2014, which was partially offset by $56 million declared as cash dividends.

Capital reserves are established as an appropriation of retained earnings and, as such, are a form of retained earnings. Capital reserves are intended to strengthen the Bank’s capital position. Reductions of these reserves, for purposes such as the payment of dividends, require the approval of the Board and Panamanian banking authorities.

As of December 31, ~~2015,~~2016, the capital ratio of total stockholders’ equity to total assets was ~~11.7%~~14.1%, and the Bank’s Tier 1 capital ratio calculated according to Basel III capital adequacy guidelines was ~~16.1%~~17.9%, compared to ~~11.4%~~11.7% and ~~15.5%~~16.1%, respectively, as of December 31, ~~2014.~~ 2015. The 2016 leverage ratio was 7.1x compared to 8.5x in 2015.

As of December 31, ~~2015,~~2016, the Bank’s total capital to risk-weighted asset ratio, calculated according to the guidelines of the Banking Law, was 16.6%, compared to 16.3%. as of December 31, 2015.

See Item 4, “Information on the Company—Business Overview—~~Regulations,~~Supervision and Regulation,” and Item 18, “Financial Statements,” notes 14, 15, 16, 19 and ~~26.~~27.4.

Research and Development, Patents and Licenses, etc.

Not applicable.

Trend Information

The following are the most important trends, uncertainties and events that the Bank’s management believes are likely to materially affect the Bank or that could cause the financial information disclosed herein not to be indicative of the Bank’s future operating results or financial condition:

The Bank’s results may be affected by changes in global economic conditions, including the prices of oil and other commodities, uncertainties regarding U.S. policies affecting the ~~U.S.~~ dollar exchange rate, interest rates, slower economic growth in developed countries and trading partners, and the effect that these changes may have on the economic condition of countries in the Region, including the Region’s foreign trade growth, and, therefore, the growth of the Bank’s trade financing business;

The Region may be impacted by weaker currencies against the U.S. dollar given concerns about continual rate increases by ~~slower~~the Federal Reserve and the new administration U.S. policy agenda. Any U.S. monetary tightening, in conjunction with rising inflation, could prompt many of the Region’s central banks to tighten monetary policy. The resulting increased interest rates ~~of growth in economies that have exhibited high growth in recent years,~~would lead to weaker asset quality because borrowers’ repayment capacity might be reduced, which could ~~affect the Region’s growth prospects~~likely lead to an increase in ~~export industries;~~non-performing loans;

The outlook still assumes ~~a protracted decline in the~~subdued prices of raw materials, mainly driven by reduced global demand and a relatively strong U.S. dollar. ~~The moderation of growth~~Global headwinds, including an economic slowdown in ~~the Chinese economy~~China and continued ~~weakness~~low growth in the European economies ~~continue~~are expected to ~~impact other emerging economies,~~prevent a strong rebound in commodity prices and regional economic activity, in particular the former, given the significance of Chinese demand in global commodities markets. The ~~sustainability~~prospect of ~~elevated~~reduced growth in China continues to be of a concern because of the negative impact ~~decreased levels of growth~~it could have on long-term trends in the markets for commodities and raw materials, as well as the negative impact that a general slowdown in the Chinese economy could have on the global economy.

Diverging monetary stimulus policies in certain important global economies, most importantly any policy shift that may disrupt trade, remittances, or foreign restrictions derived from the new administration in the U.S., could result in greater disparity inof global interest rates, leading to possible changes in global capital flows. As a result, capital flows to the Region could be significantly curtailed. A slowdown in capital flows could potentially destabilize exchange rates and the financing of current account balances, which may cause inflationary pressures and tighter monetary policies. A resulting economic slowdown or related political events in the Region could have an adverse effect on the growth prospects in the Region, and on the Bank’s asset quality and operations.

Changes of risk perception in the markets in which the Bank operates could lead to increased or decreased competition, and impact the availability of U.S. dollar liquidity, which could affect spreads over the cost of funds on the Bank’s Loan Portfolio and, consequently, impact the Bank’s net interest spreads.

A ~~continued~~prolonged downturn in global debt capital markets stemming from credit risk, anti-money laundering, or other economic or political concerns pertaining to the Region, or a continued downturn in investor confidence, could affect the Bank’s access to cross border funding or increase its cost of funding. Furthermore, de-risking by global banks may reduce lender access to cross border payment processing, and to lower fund inflows into the Region.

Year ~~2015~~2016

~~During 2015,~~The Bank’s profit for the year ~~amounted~~2016 totaled $87.0 million, compared to $104.0 million ~~an increase of $1.6~~in 2015. The $16.9 million, or 2%16%, decrease was primarily attributable to: (i) higher impairment loss from ECL on loans totaling $34.8 million, compared to ~~$102.4~~$17.2 million in ~~2014. This increase was~~2015, as the Bank recorded individually assessed lifetime ECL for certain exposures with increased credit risk undergoing restructuring and recovery efforts, along with (ii) a $9.5 million adverse swing in non-core trading results from the Bank’s former participation in the investment funds, with a $4.4 million loss recorded in 2016 compared to a $5.1 million gain in 2015, and (iii) a $4.9 million year-over-year decrease in fees and commissions, mainly due to reduced activity in letters of credit, financial guarantees and credit commitments, as well as slightly lower fees from the loan structuring and syndication business in the context of a significant volume decrease in the relevant Latin American debt capital markets during the year. These factors were partially compensated by (i) higher net interest income (which increased by $9.7 million, or 7%) mostly driven by increased financial margins (net interest margin increased by 24 basis points) that helped offset the effect of reduced average loan balances (which decreased by 4% year-over-year), primarily from the Bank’s ~~core business~~efforts to reduce certain country, industry and client risk concentrations, and (ii) a $6.0 million or 12% decrease in operating expenses from both lower performance-based variable compensation expense and cost saving activities ~~including growth~~ in ~~average Commercial Portfolio balances and a resulting~~other expense categories.

The Bank’s 2016 net interest income reached $155.2 million, compared to $145.5 million in 2015. The $9.7 million, or 7%, increase in net interest income was mainly driven by a 24 basis points increase in net interest margin to 2.08% in 2016, compared to 1.84% in 2015, as higher ~~fees~~net lending spreads and ~~commissions, and~~the overall effects of increased market rates overcompensated the effects of lower ~~operating expenses, while maintaining robust~~average interest-earning asset ~~quality, partially offset by higher allowance and impairment loss for expected credit losses on loans~~balances, from the Bank´s efforts to reduce lending and investment securities. These factors were complemented by a positive trend in non-core results from the Bank’s participation in investment funds which contributed $5.0 million for the year 2015 compared to $2.7 million for the year ended December 31, 2014.

Net interest income rose by $4.1 million, or 3%, to $145.5 million in 2015 from $141.3 million in 2014. The increase in 2015 was driven by higher average balances of the Bank’s interest-earning assets (+5%) and higher average London Interbank Offered Rates (“LIBOR”), which were partially offset by higher average balances on the Bank’s interest-bearing liabilities (+4%). Net interest margin stood at 1.84% for 2015 compared to 1.88% for 2014 and funding costs remained at 1.08% in 2015 compared to 1.07% in 2014.portfolio risk concentrations.

Fees and ~~other income~~Other Income includes the fee income associated with letters of credit and other ~~off-balance sheet assets,~~contingent credits, such as guarantees and credit commitments, as well as fee income derived from ~~two business streams:~~ loan structuring and syndication ~~and~~activities, together with loan intermediation and ~~distribution.~~distribution activities in the primary and secondary markets. Fees and ~~other income~~Other Income amounted to $16.5 million for the year ended December 31, 2016, compared to $22.3 million ~~in 2015 compared to $21.8 million in 2014.~~for the year ended December 31, 2015. The ~~$0.5~~$5.8 million, or ~~2% increase resulted from higher fee income from~~26%, decrease was mostly driven by lower business activity in letters of credit, loan commitments and other financial guarantees contracts, and ~~higher fees~~lower market activity in secondary market transactions, while commissions from ~~loan structuring and~~the syndication ~~activity (with seven~~business in the primary market were slightly lower, with an increased number of completed transactions ~~led and executed during~~despite overall volumes in the ~~year), which were partially offset by a lower net gain~~relevant Latin American debt capital markets suffering significant decreases.

Return on ~~sale of loans at amortized cost~~average equity (“ROAE”) reached 8.8% for 2016, compared to 11.0% for the year 2015, as a result of largely stable total income on lower ~~activity in~~earning asset balances, higher impairment losses from ECL, and adverse non-core results.

The 2016 efficiency ratio improved to 27%, from 30% for the ~~loan distribution activities in the secondary market.~~

year 2015, as operating expenses decreased by 12% while total income decreased only 3%. The Bank’s operating expenses ~~totaled $51.8 million~~to average assets ratio improved to 61 basis points in 2016 from 66 basis points in 2015.

The weighted average funding cost for the year ~~2015,~~ended December 31, 2016 was 1.39%, compared to $53.6 million for the year 2014. The $1.8 million or 3% decrease in operating expenses in 2015 was primarily attributable to a reduction in the salaries and other employee expenses line item (-$1.1 million), and lower expenses from professional services (-$0.6 million).

The Bank’s Commercial Portfolio remained relatively stable at $7,155 million as of December 31, 2015, compared to $7,187 million as of December 31, 2014, a $32 million decrease which was largely attributable to stable demand from the Bank’s established client base of corporations and financial institutions (up $70 million, or 1%), which was more than offset by decreased activity related to middle-market companies ($102 million, or 21%).

Deposit balances stood at $2.8 billion as of December 31, 2015, representing 38% of total liabilities, a $0.3 billion, or 4%, increase compared to $2.5 billion, or 35% of total liabilities, as of December 31, 2014. Short-term borrowings and debt, including securities sold under repurchase agreements (“repos”), totaled $2.5 billion as of December 31, 2015, resulting in a 14% year-on-year decrease, while long-term borrowings and debt totaled $1.9 billion as of December 31, 2015, up 34% year-on-year, as the Bank increased its long-term funding through capital markets issuances, loan syndications and bilateral finance transactions. Weighted average funding costs1.08% for the year ended December 31, 2015, ~~was 1.08%, compared to 1.07% for~~a 31 basis points increase as the ~~year ended December 31, 2014.~~Bank strengthened the overall funding mix, while compensating the effects of increased underlying market rates which increased 33 basis points over the same period.

In addition, see Item 3.D. “Key Information—Risk Factors,” for a discussion of the risks the Bank faces, which could affect the Bank’s business, results of operations and/or financial ~~condition.~~condition, and Item 5.A. “Operating Results,” for a discussion of the Bank’s financial results.

Off-Balance Sheet Arrangements

In the normal course of business, in order to meet the financing needs of its customers, the Bank is party to ~~instruments with off-balance sheet credit risk.~~loan commitments and financial guarantee contracts. These instruments involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the consolidated statement of financial position. Credit risk represents the possibility of loss resulting from the failure of a customer to perform in accordance with the terms of a contract. The contractual amount of these instruments represents the maximum possible credit risk should the counterparty draw down the commitment or the Bank fulfill the obligation under the guarantee, and the counterparty subsequently fails to perform according to the terms of the contract. Most of these commitments and guarantees expire without the counterparty drawing on the credit line or a default occurring. As a result, the total contractual amount of these instruments does not represent our future credit exposure or funding requirements.

As of December 31, ~~2015,~~2016, the Bank’s off-balance sheet arrangements, as defined in the Instructions to Item 5.E. of Form 20-F, included confirmed letters of credit, stand-by letters of credit, and guarantees (covering commercial risk). These arrangements are kept off-balance sheet as long as the Bank does not incur an obligation relating to them or itself become entitled to an asset.

The Bank’s outstanding off-balance sheet arrangements and total ~~off-balance sheet credit risk~~loan commitments and financial guarantee contracts are as follows:

	As of December 31,				As of January 1,		As of December 31,
	2015		2014		2014		2016		2015		2014
			(in $ thousand)				(in $ thousands)
Confirmed letters of credit	$	99,031	$	137,817	$	221,963	$	216,608	$	99,031	$	137,817
Stand-by letters of credit and guaranteed – Commercial risk		158,599		89,752		137,285
Stand-by letters of credit and guarantees – Commercial risk								176,177		158,599		89,752
Total off-balance sheet arrangements		257,630		227,569		359,248		392,785		257,630		227,569
Credit commitments		189,820		158,549		121,175		10,250		189,820		158,549
Total off-balance sheet credit risk	$	447,450	$	386,118	$	480,423
Total loan commitments and financial guarantee contracts							$	403,035	$	447,450	$	386,118

Fees and commission income from ~~off-balance sheet credit risk~~loan commitments and financial guarantee contracts amounted to ~~$12~~$9 million for the year ended December 31, ~~2015,~~2016, compared to $12 million and $11 million for the ~~year~~years ended December 31, ~~2014.~~2015, and 2014, respectively.

The allowance for ~~expected credit losses~~ECL on ~~off-balance sheet credit risk~~loan commitments and financial guarantee contracts is recognized on the consolidated statement of financial position, with the resulting impairment recorded in the consolidated statement of profit or loss. As of December 31, ~~2015,~~2016, total allowance for ~~expected credit losses~~ECL on ~~off-balance sheet credit risk~~loan commitments and financial guarantee contracts amounted to $6 million, compared to $5 million ~~compared to~~as of December 31, 2015 and $10 million as of December 31, ~~2014 and $6 million as of January 1,~~ 2014.

For additional information, see Item 5 “Operating and Financial Review and Prospects—Operating Results—Fees and Commissions, net.” and Item 18, “Financial Statements,” note ~~5.7.~~6 and 21.

Tabular Disclosure of Contractual Obligations

The following tables set forth information regarding the Bank’s contractual obligations and commercial commitments as of December 31, ~~2015.~~2016.

Payments Due by Period
Contractual Obligations Total Less than 1
year 1 – 3 years 3 – 5 years More than 5
years
(in $ million)
Deposits $ 2,795 $ 2,795 $ 0 $ 0 $ 0
Securities sold under repurchase agreement 114 114 0 0 0
Short-term borrowings and debt 2,430 2,430 0 0 0
Long-term borrowings and debt⁽¹⁾ 1,889 209 1,268 355 57
Accrued interest payable 18 18 0 0 0
Future contractual interest payable, not yet accrued⁽²⁾ 131 12 62 40 17
Leasehold obligations⁽³⁾ 23 2 5 2 14
Total contractual obligations $ 7,400 $ 5,580 $ 1,335 $ 397 $ 88

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
	(in $ millions)
Deposits	$	2,803	$	2,755	$	48	$	0	$	0
Short-term borrowings and debt		1,470		1,470		0		0		0
Long-term borrowings and debt⁽¹⁾		1,782		460		887		382		53
Accrued interest payable		17		17		0		0		0
Future contractual interest payable, not yet accrued⁽²⁾		117		15		45		39		18
Leasehold obligations⁽³⁾		20		2		3		4		11
Total contractual obligations	$	6,209	$	4,719	$	983	$	425	$	82

⁽¹⁾

Gross of prepaid commissions of ~~$7.0~~$5.1 million as of December 31, ~~2015.~~2016. Certain debt obligations are subject to covenants that could accelerate the payment of these obligations.

⁽²⁾

Consists of future interest payable on interest-bearing liabilities and their hedges, calculated on the basis of their respective interest rates as of December 31, ~~2015~~2016 for the days remaining to maturity. Some of these obligations have floating interest rates which could fluctuate in the future and hence change the value of interest payable accordingly.

⁽³⁾

Operating lease commitments result primarily from non-cancellable rental agreements for properties; the amounts in the above table are calculated based on current rental agreements. The total amount of expenses recognized in connection with such leases in ~~2015 and 2014 are $2.9 million and $2.2 million, respectively.~~2016 is $2.6 million.

	Amount of Commitment Expiration by Period										Amount of Commitment Expiration by Period
Other Commercial Commitments	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years		Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
	(in $ million)										(in $ millions)
Letters of credit⁽⁴⁾	$	114	$	114	$	0	$	0	$	0	$	236	$	236	$	0	$	0	$	0
Stand-by letters of credit		145		145		0		0		0		167		167		0		0		0
Guarantees		14		14		0		0		0		9		9		0		0		0
Other commercial commitments		190		167		22		0		1		10		6		3		0		1
Total Commercial Commitments	$	463	$	440	$	22	$	0	$	1	$	422	$	418	$	3	$	0	$	1

⁽⁴⁾

Includes customers’ liabilities underacceptances outstanding (on-balance sheet assets) for a total amount of ~~$15~~$19 million as of December 31, ~~2015.~~2016.

The covenants included in some of the Bank’s liabilities contracts are standard market covenants. Bladex has been and expects to continue to be in compliance with ~~regards~~regard to these covenants.

See Item 18, “Financial Statements,” notes ~~5.7~~6, 10, 11, 12, 13 and ~~24.~~25.

Item 6.

Directors, Executive Officers and Employees

Directors and Executive Officers

Directors

The following table sets forth certain information concerning the Directors of the Bank as of the date of this Annual Report.

Name
Country of
Citizenship

Position Held with
The Bank
Year Term
Expires Director
Since Age
CLASS A
Facundo Martínez Maino
Director
Banco de la Nación Argentina, Argentina Argentina Director 2017 2016 44
Roland Holst
Director
Banco Central de Paraguay, Paraguay Paraguay Director 2017 2014 46
João Carlos de Nóbrega Pecego
Chief Executive Officer
Banco Patagonia, Argentina
Brazil Director 2019 2010 52

CLASS E
Mario Covo
Founding Partner
DanaMar LLC, U.S.A. U.S.A. Director 2017 1999 58
Miguel Heras
Executive Director
Inversiones Bahia Ltd., Panama
Panama Director 2018 2015 47
Herminio A. Blanco
Founder and President
IQOM, Mexico Mexico Director 2019 2004 65
Maria da Graça França
Brazil Brazil Director 2019 2004 67
Ricardo M. Arango
Senior Partner
Arias, Fábrega & Fábrega, Panama Panama Director 2019 2016 55

ALL CLASSES OF COMMON STOCK⁽¹⁾
Gonzalo Menéndez Duque
Chairman of the
Board

Director
Banco de Chile, Chile Chile 2018 1990 67
Rubens V. Amaral Jr.
Chief Executive Officer
Bladex, Panama Brazil Director 2018 2012 56

Name	Country of Citizenship	Position Held with The Bank	Year Term Expires	Director Since	Age
CLASS A
Javier González Fraga
Chairman
Banco de la Nación Argentina, Argentina	Argentina	Director	2020	2017	68
José Alberto Garzón
Legal Vice President – General Secretary
Banco Central de Paraguay, Paraguay	Colombia	Director	2020	2017	46
João Carlos de Nóbrega Pecego
Chief Executive Officer Banco Patagonia, Argentina	Brazil	Director	2019	2010	53

CLASS E
Mario Covo
Founding Partner
DanaMar LLC, U.S.A.	U.S.A.	Director	2020	1999	59
Miguel Heras
Executive Director Inversiones Bahia Ltd., Panama	Panama	Director	2018	2015	48
Herminio A. Blanco
President
IQOM Inteligencia Comercial, Mexico	Mexico	Director	2019	2004	66
Maria da Graça França
Brazil	Brazil	Director	2019	2004	68
Ricardo Manuel Arango
Senior Partner
Arias, Fábrega & Fábrega, Panama	Panama	Director	2019	2016	56

ALL CLASSES OF COMMON STOCK⁽¹⁾
Gonzalo Menéndez Duque		Director
Director
Banco de Chile, Chile	Chile		2018	1990	68
Rubens V. Amaral Jr.
Chief Executive Officer
Bladex, Panama	Brazil	Director	2018	2012	57

⁽¹⁾~~Denotes class(es) of common stock of the Bank that elect the directors listed.~~

⁽¹⁾

Denotes class(es) of common stock of the Bank that elect the directors listed.

~~Facundo Martínez Maino~~Javier González Fragahas served as a Director of the Board since ~~2016, when he was designated to fill~~2017. Mr. González Fraga is the ~~vacancy created by the resignation of Esteban Alejandro Acerbo from Banco de la Nación Argentina. Mr. Martínez Maino has served as Director~~Chairman of Banco de la Nación Argentina since ~~2015.~~2017. He was ~~Chief Economist~~Candidate to the Vice Presidency of ~~MS Consultores,~~Argentina in 2011. Mr. González Fraga served as Chairman of the Central Bank of Argentina in two occasions, between 1989 and 1991 and as Vice President of the Buenos Aires Stock Exchange from 1994 to 1999. Mr. González Fraga was a Director of the Argentine Institute of Capital Markets from 1992 to 1999 and member of the Board of Public Companies in Argentina in 1987. In 1998, Mr. González Fraga was recognized by Konex as Best SMES Entrepreneur of the Decade, for his capacity as Founder of the dairy company La Salamandra S.A., Argentina. He was Professor at UCA Pontificia Universidad Católica Argentina from ~~2000~~1973 to 2015 and Financial Analyst of the Centre for the Studies of Productivity of the Ministry of Industry, Commerce and Mining of the Republic of Argentina from 1997 to 1999. In 1996 he worked in the Secretariat of Planning of the Council of Ministers of the Republic of Argentina.2000. Mr. ~~Martínez Maino was a professor of Economics in the University of Buenos Aires from 1996 to 2003. Mr. Martinez Maino~~González Fraga holds a Bachelor ofdegree in Economics from ~~the School of Economic Sciences of the National University of Rio Cuarto, Cordoba, Argentina~~UCA and ~~in 1997 pursued studies on economic development~~is a Ph.D. candidate, having various papers and ~~trade in Taiwan on a scholarship granted by the International Cooperation~~books published. Mr. González Fraga’s business background and ~~Development Fund. Mr. Martínez Maino´s professional experience in the field of economics and his academic skills~~financial expertise qualify him to serve on the Board.

~~Roland Holst~~José Alberto Garzónhas served as a Director of the Board since ~~2014. Dr. Holst~~2017. Mr. Garzón has served as Administrative Vice President of Banco de Comercio Exterior de Colombia, S.A. (Bancoldex), Colombia since 2015 and Legal Vice President and General Secretary of Banco de Comercio Exterior de Colombia, S.A. (Bancoldex), Colombia since 2003 and in various capacities with Banco de Comercio Exterior de Colombia, S.A. (Bancoldex) since 1995, holding the positions of Director of the Legal Department from 2000 to 2003 and Attorney of the Legal Department from 1995 to 2000. Mr. Garzón has served as member of the Board of ~~Banco Central del Paraguay~~Directors of Fiduciaria Colombiana de Comercio Exterior S.A. –Fiducoldex, Colombia since ~~2012. He~~2016, Leasing Bancoldex S.A. Compañía de Financiamiento, Colombia since 2015 and Seguroexpo de Colombia, S.A. Aseguradora de Crédito, Colombia since 2000. Previously Mr. Garzón was ~~Head of Fixed Income Research~~Attorney at ~~State Street Global Markets~~Legis Editores, Colombia in Boston, MA from 2007 to 2011 and Quantitative Analyst at Starmine Corp. in San Francisco, CA from 2006 to 2007. He was Teaching Assistant of Econometrics, Public Finance, Finance, Program Evaluation, Macroeconomics and Labor Economics at the University of Chicago from 2003 to 2006. Dr. Holst worked at Garantia PFP, a pension fund, as Investment Manager from 1997 to 20011995 and General Manager of ~~Bolsa de Valores de Asunción, Paraguay~~Servibolsa Ltda. Servicios Inmobiliarios from ~~1995~~1993 to ~~1997.~~1995. He is ~~the author~~currently Professor of ~~Social Security~~Credit Insurance, Insurance Law Program at Pontificia Universidad Javeriana, Colombia and ~~Policy Risk: Evidence~~taught History of ~~its effects on welfare costs~~Political Ideas and ~~savings published in 2007. Dr. Holst~~Insurance at Fundación Universitaria Jorge Tadeo Lozano, Colombia. Mr. Garzón holds a ~~Ph.D. in Public Policy~~Law degree and a ~~Master~~Master’s degree in ~~Economics~~Financial Law from ~~the University of Chicago. He~~Universidad del Rosario, Colombia. Mr. Garzón also holds ~~a Master~~Master’s degrees in ~~Economics~~Commercial Law from Universidad ~~Católica~~ de ~~Asunció~~Los Andes, Colombia and Insurance Law from Pontificia Universidad Javeriana, Colombia. Mr. Garzón ~~Paraguay, degrees~~is a graduate of Transformative Business Leadership at Centro de Liderazgo y Gestión and of Leading Economic Growth at Harvard Kennedy School. Mr. Garzón’s first-hand experience and vast knowledge of administrative, legal and regulatory matters relating to the banking industry and, in ~~Economics and Agronomy from Universidad Nacional de Asunción, Paraguay and a Financial Risk Manager (FRM) certification. Mr. Holst’s professional experience~~particular, in ~~the fields of~~trade finance ~~and economics and his academic skills~~ qualify him to serve on the Board.

João Carlos de Nóbrega Pecego has served as a Director of the Board since 2010. Mr. Pecego has served as Chief Executive Officer of Banco Patagonia, Argentina since 2014. Mr. Pecego has served as ~~Director~~President of Grupo Brasil since 2015, Director of Visa Argentina since 2012, Vice President of GPAT Compañía Financiera since 2016, Director of Patagonia Valores since 2011, and Director of Banco Patagonia Uruguay since 2011. Mr. Pecego was Vice President of Banco Patagonia, Argentina from 2011 to 2014. Mr. Pecego was ~~previously~~ Regional General Manager – Head of Latin America of Banco do Brasil based in Argentina from 2009 to 2011. He has been employed by Banco do Brasil in various capacities since 1978, holding the positions of Commercial Superintendent ~~of the South Region of Brazil (Rio Grande do Sul, Santa Catarina and Parana)~~ from 2006 to 2009, Executive Manager responsible for Corporate and Project Finance from 2003 to 2006, Executive Manager of the Corporate Area of Banco do Brasil in ~~Sao~~São Paulo from 2000 to 2003, Regional Superintendent of the ~~Sao~~São Paulo Unit from 1995 to 2000, General Manager of the main agencies of Banco do Brasil in ~~Sao~~São Paulo from 1990 to 1995, and in various other capacities from 1978 to 1990. Mr. Pecego holds a degree in Business Administration from Universidad Costa Braga, ~~Sao~~São Paulo, a postgraduate degree in Business Management from Instituto San Luiz, ~~Sao~~São Paulo and an MBA in International Business from Fundación Don Cabral, Minais Gerais and in Marketing from Pontificia Universidade Católica do Rio de Janeiro –PUC-, Rio de Janeiro. Mr. Pecego’s professional experience in and related to the banking industry qualifies him to serve on the Board.

Mario Covo has served as a Director of the Board since 1999. Dr. Covo is the Founding Partner of DanaMar LLC in New York, a financial consulting ~~corporation~~firm established in 2013. He was Founding Partner of Helios Advisors in 2003, Founding Partner of Finaccess International, Inc. in 2000 and of Columbus Advisors in 1995, in New York. Dr. Covo worked at Merrill Lynch from 1989 to 1995, where he was Head of Emerging Markets-Capital Markets. Prior to working for Merrill Lynch, Dr. Covo worked at Bankers Trust Company of New York from 1985 to 1989 as Vice President in the Latin American Merchant Banking Group, focusing on corporate finance and debt-for-equity swaps. Prior to that Dr. Covo was an International Economist for Chase Econometrics from 1984 to 1985, focusing primarily on ~~Venezuela and Colombia.~~Latin America. Dr. Covo holds a Ph.D. in Economics from Rice University and a B.A. with honors from Instituto Tecnológico Autónomo de Mexico. Dr. Covo’s extensive background and experience in the financial services industry, and his exposure to the markets ~~where~~in which the Bank operates qualify him to serve on the Board.

Herminio A. Blanco has served as a Director of the Board since 2004. Dr. Blanco is ~~founder and president~~the President of IQOM ~~a consulting corporation~~Inteligencia Comercial since 2005 and ~~a daily analytical electronic newspaper specializing in~~IQOM Strategic Advisors since 2015. IQOM Inteligencia Comercial offers business solutions on international trade, ~~in Latin America. IQOM has been the chief advisor~~investment and regulatory affairs and provides access to the most complete database of international trade flows and regulations. IQOM Strategic Advisors is a subsidiary that supports foreign corporations interested in operating in the Mexican ~~private sector during the negotiations of the TPP (Trans-Pacific Partnership Agreement).~~energy market. Dr. Blanco is ~~a corporate advisor to corporations throughout the world and is a~~ member of the ~~boards~~board of directors for CYDSA ~~Arcelor Mittal U.S.~~since 2004, Arcelor-Mittal Mexico since 2005, and ~~Mexico and FUNO, the largest REIT (real estate investment trust) in Mexico. Dr. Blanco is~~Fibra Uno since 2011. He has also been a member of the International Advisory Committee of Mitsubishi Corporation and the Trilateral Commission ~~and was the~~since 2001. Dr. Blanco served as Secretary of Trade and Industry of Mexico from 1994 to 2000, Undersecretary for International Trade and ~~Mexico’s~~Negotiations, and Chief Negotiator of the North American Free Trade Agreement (NAFTA) from 1990 to 1993. ~~Dr. Blanco~~He was also responsible for the negotiation of the free trade agreement with the ~~European Union and~~E.U., the European Free Trade Area, ~~and~~with various ~~agreements with~~ Latin American countries and with ~~Israel. Dr. Blanco contributed~~Israel from 1994 to 2003, and he launched the process that led to the ~~launching of negotiations~~negotiation of the free trade agreement with Japan. ~~He was Assistant Professor of Economics at Rice University, in Houston, Texas from 1980 to 1985.~~ Dr. Blanco holds a B.A. in Economics from Instituto Tecnológico de Estudios Superiores de Monterrey, an M.A. and a Ph.D. in Economics from University of ~~Chicago.~~Chicago, and a Doctor Honoris Causa from Rikkyo University in Japan. Dr. Blanco’s extensive experience and background in foreign trade and finance, along with his academic and consulting skills, qualify him to serve on the Board.

Maria da Graça França has served as a Director of the Board since 2004. Ms. França served as Director of Internal Control of Banco do Brasil from 2006 to 2007. ~~She~~Since 1971, she also served in various other capacities during her tenure with Banco do ~~Brasil, since 1971,~~Brasil: as Head of North America and General Manager of Banco do Brasil, New York Branch from 2004 to ~~2005,~~2005; Executive General Manager of the International Division in Brasilia, Brazil from 2002 to ~~2003,~~2003; Regional Manager for the operations of the Bank in South America based in Argentina in ~~2002,~~2002; General Manager of Banco do Brasil, Paris Branch from 1999 to ~~2002,~~2002; Deputy General Manager of Banco do Brasil, Miami Branch from 1993 to ~~1999,~~1999; General Manager of the department responsible for Banco do Brasil’s foreign network from 1992 to ~~1993,~~1993; Deputy General Manager for foreign exchange from 1989 to ~~1992,~~1992; Assistant Manager within the Risk Management Area from 1988 to ~~1989,~~1989; Assistant Manager for foreign exchange internal controls from 1984 to ~~1987~~1987; and employee in the Foreign Exchange Department from 1971 to 1984. Ms. França holds a degree in Economics and Accounting from Universidad Federal de Uberlandia-Minais Gerais, Brazil. Ms. França’s experience managing operations and internal controls in international banking, as well as her extensive tenure with Banco do Brasil, provide her unique insight and qualify her to serve on the Board.

Miguel Herashas served as a Director of the Board since 2015. Since 1999, Mr. Heras has served as Executive Director and as a member of the board of Inversiones Bahia, Ltd. in Panama, the largest investment group in Central America, focusing inon the financial, infrastructure, real estate, and communications ~~areas.~~markets. He currently leads the private equity and venture capital efforts of the group. Mr. Heras also serves on various other boards throughout Latin America including Cable Onda since 2009, Sistemas de Generación S.A. (SIGSA) ~~and the Biodiversity Museum since 2008,~~, Televisora Nacional and Bahia Motors since 2007, and Industrias Panama Boston since 1999. Mr. Heras has served as Director of the Biodiversity Museum from 2008 to 2014, and Banco Continental de Panama from 2002 to 2007 and was also a member of its ALCO Committee. Mr. Heras was the negotiator for the acquisition of several banking institutions, and in 2007 led the negotiation for the merger of Banco Continental with Banco General to create one of the largest banks in Central America. Mr. Heras was also a member of the board of directors of Amnet Telecommunications Holdings, the leading provider of pay TV and triple play services in Central America from 2005 to 2008, Tricom from 2009 to 2014, Vice Chairman of the board of Cable and Wireless (Panama) Inc. from 1997 to 1999 and a member of the board of the Panamanian Stock Exchange from 1999 to 2005. Mr. Heras was Minister of the Treasury of the Republic of Panama from 1996 to 1998 and President of the Council on Foreign Trade. He served as Vice Minister of the Treasury from 1994 to 1996. Mr. Heras holds a Bachelor Degree in Economics from the Wharton School of Commerce and Finance of the University of Pennsylvania. Mr. Heras’ professional expertise in economics, finance and private equity and his experience as a board member of different companies, qualify him to serve on the Board.

Ricardo M.Manuel Arango has served as Director of the Board since 2016. Mr. Arango is a senior partner of Arias, Fábrega & Fábrega in Panama. ~~From~~Since 2004, ~~to date,~~ Mr. Arango has held several management and leadership positions ~~within~~in the firm, contributing to shape the organization into a leading Latin-American law firm, with offices in eight countries. Mr. Arango has served as a member of the board of directors of the Panama Canal Authority since 2016, ~~director and~~as a member of the ~~Audit Committee~~board of directors and audit committee of Banco General since 2012, and as a member of the board of directors of MHC Holdings since 2002. Mr. Arango served as a member of the board of directors of Corporación La Prensa from 2002 to 2016 and as Chairman of its Editorial Committee from 2011 to 2016. He also served as ~~Chairman~~a member of the board of directors of the Panama Stock Exchange from 1999 to 2016 and as its Chairman from 2007 to ~~2011 and as a member of its board of directors from 1999 to 2016.~~2011. He also served as ~~the~~ Secretary of the Bank from 2002 ~~until~~to 2016. From 2011 to 2015, Mr. Arango served as a member of the managing partners committee of Lex Mundi, the largest network of independent law firms in the world. Mr. Arango is a member of the Latin American Business Council. From 1987 to 1995, Mr. Arango was an associate with Arias, Fábrega & Fábrega in Panama, becoming a partner in 1995. Mr. Arango’s practice focuses on banking, capital markets, corporate governance, and mergers and acquisitions. He has acted as lead counsel in some of the most complex and largest financial transactions and acquisitions in Panama and Central ~~America, including the initial public offering of several foreign companies listed on the NYSE.~~America. From 1998 to 1999, Mr. Arango headed the Presidential Commission that drafted Panama’s current securities act. Mr. Arango holds a Bachelor’s degree in Law and Political Science from the University of Panama, a Master of Laws degree from Harvard Law School, and a Master of Laws degree from Yale Law School. He was a Fulbright ~~scholar~~Scholar from 1985 to 1987. Mr. Arango is admitted to practice law in New York and Panama. Mr. Arango´s strong knowledge of the regulatory frameworks ~~where~~under which the Bank operates; skills in managing legal, compliance, operational and credit risks of the banking industry; diversified perspective based on his combined legal-business acumen; in-depth understanding of the Bank´s business and operations; and experience as board member in different companies, qualify him to serve on the Board.

Gonzalo Menéndez Duque has served as a Director of the Board since ~~1990 and~~1990. In addition, he has served as Chairman of the Board in two different terms, from 1995 to 1998 and again since 2002. Mr. Menéndez Duque is a ~~senior director~~Senior Director of the Luksic companies in Chile and serves as Director of the following Luksic group holding companies: Banco de Chile since 2001, Banchile Asesoria Financiera S.A. since 2006, Banchile Seguros de Vida S.A. since the year 2000, Compañía Sudamericana de Vapores S.A. since 2011, SegChile Seguros Generales S.A. since 2017, Mining Group Antofagasta Minerals, S.A. since 1997, Antofagasta PLC since 1985, Empresa Nacional de Energia Enex S.A. since 2013, Andsberg Investment Ltd. and Andsberg Ltd. since 2007, ~~Antofagasta Group~~Inmobiliaria e Inversiones Rio Claro S.A. since ~~1997, Antofagasta PLC since 1985,~~2013, Holdings Quiñenco since 1996, Socofin S.A. since 2010, ~~Compañía Sudamericana de Vapores~~and Inversiones Vita Bis, S.A. since ~~2011 and Empresa Nacional de Energia Enex S.A. since 2013.~~the year 2000. In addition, he ~~has served~~serves as ~~President~~Chairman of the Board of Inversiones Vita S.A. and ~~Director of Inversiones Vita Bis since 2000, both Luksic group companies. He~~is also ~~serves as~~the Vice Chairman of Fundación Andrónico Luksic A. and Fundación Educacional Luksic since ~~2005 and Director of Inmobiliaria e Inversiones Rio Claro S.A. since 2013.~~2005. Previously, Mr. Menéndez Duque served as Director and President of several companies related to Grupo Luksic since 1985, including the following: Banco de A. Edwards and related companies, Banco Santiago, Empresas Lucchetti, S.A., Banco O’Higgins, Banchile Corredores de Bolsa S.A. and Banchile Administradora General de Fondos. Mr. Menéndez Duque was ~~previously~~distinguished in 2008 by the ~~Chairman~~Faculty of Economics and Business of Universidad de Chile, as the most outstanding graduate, in recognition of his career and contributions to society in the business and entrepreneurial sectors of Chile and also was awarded by América Economía magazine in 1990 with the prize Excelencia 90 as the most distinguished businessman of the ~~Board of Bladex from 1995 to 1997.~~year in Chile. Mr. Menéndez Duque holds a degree in ~~Business Administration~~Commercial Engineering and Accounting Auditor with honors from Universidad de Chile. Mr. Menéndez Duque’s skills, leadership and managerial experience in large complex organizations in various extensively regulated industries, and his experience as a board member in different companies, qualify him to serve on the Board.

Rubens V. Amaral Jr. has served as a Director of the Board and Chief Executive Officer of the Bank since August 2012. Prior to his appointment as the Chief Executive Officer, Mr. Amaral was Executive Vice President, Chief Commercial Officer of the Bank, and the alternate to the Chief Executive Officer since April 2004. He previously served as General Manager and Managing Director for North America at Banco do Brasil, New York Branch, and a Director of the Board of ~~Bladex~~the Bank from 2000 to 2004. Mr. Amaral has served in various capacities with Banco do Brasil since 1975, holding the positions of Managing Director of the International Division and alternate member of the board of directors in 1998, among others. Mr. Amaral also served as a representative in banking supervision for the Central Bank of Brazil from 1982 to 1988, and in various roles at institutions in the banking industry, including Honorary President of the Global Network of Exim Banks and Development Finance Institutions (G-Nexid), Trustee of the Board of Trustees of the Institute of International Bankers - IIB, a member of the Advisory Board of the Center for Latin America Studies at the George Washington University, a member of the International Advisory Council at the Bankers Association for Finance and Trade - BAFT, and a Director of the Brazilian American Chamber of Commerce, in New York. ~~He is~~Mr. Amaral has a ~~graduate~~degree in Economics, and he holds a special certification from the Association of Alumni of the Brazilian Superior School of War in Political and Economic Affairs. Mr. Amaral’s extensive knowledge of ~~Bladex~~the Bank in different capacities, his expertise in the financial services industry, as well as his managerial experience and strong leadership skills qualify him to serve on the Board.

See Item 10, “Additional Information – Memorandum and Articles of Association” for a description of the stockholders’ voting rights with respect to the election of directors.

Executive Officers

The following table and information below sets forth the names of the executive officers of the Bank, their respective positions at the date hereof and positions held by them with the Bank and other entities in prior years:

Name	Position Held with ~~The~~the Bank	Country of Citizenship	Age
Rubens V. Amaral Jr.	Chief Executive Officer	Brazil	5657
Ulysses Marciano Jr.	Executive Vice President Chief Commercial Officer	Brazil	4849
Miguel Moreno	Executive Vice President Chief Operating Officer	Colombia	63
Christopher Schech	Executive Vice President Chief Financial Officer	Germany	52
Alejandro Tizzoni	Executive Vice President Chief Risk Officer	Argentina	39
~~Miguel Moreno~~	~~Executive Vice President~~ ~~Chief Operating Officer~~	~~Colombia~~	62
~~Christopher Schech~~	~~Executive Vice President~~ ~~Chief Financial Officer~~	~~Germany~~	5140
Gustavo Díaz	Executive Vice President Chief Audit Officer	Colombia	5354
Jorge Luis Real	Senior Vice President Chief Legal Officer and Secretary of the Board of Directors	Panama	44

Presented below is a brief biographical description of each executive officer that is not a member of the Bank’s Board:

Rubens V. Amaral Jr. A summary of Mr. Amaral Jr.’s experience is set forth above under “Directors”. Mr. Rubens V. Amaral Jr. is the only executive officer who serves as a member of the Board.

Ulysses Marciano Jr. has served as Executive Vice President, Chief Commercial Officer of the Bank since May ~~2012. Mr. Marciano~~2012 and previously served as Director of Corporate Banking & Governments of the Bank from 2008 to 2011. ~~Prior to his reincorporation to Bladex, he~~He was Executive Director of Corporate Banking of BBVA Representative Office, São Paulo, ~~Brazil.~~Brazil from 2011 to 2012. He has served in various capacities with Banco Santander Brasil S/A since 2003, holding the positions of Senior Banker – Corporate & Investment Banking from 2006 to 2008, Senior Relationship Manager – Corporate & Investment Banking Group from 2004 to 2006. Mr. Marciano has an MBA degree from Instituto Brasileiro de Mercado de Capitais - IBMEC, a Post Graduate in Business Administration from Escola de Administração de Empresas da Fundação Getulio Vargas - FGV, and a B.S. degree in Economics from Oswaldo Cruz – São Paulo.

Miguel Moreno has served as Executive Vice President, Chief Operating Officer of the Bank since July 2007. He previously served as Senior Vice President and Controller of the Bank ~~since~~from September ~~2001.~~2001 to June 2007. He was a Management Consulting Partner for PricewaterhouseCoopers LLP, Bogotá, Colombia, from 1988 to 2001, and served as Vice President of Information Technology and Operations for Banco de Crédito, Bogotá, Colombia, from 1987 to 1988. Mr. Moreno served as Chief Executive Officer of TM Ingeniería, Bogotá, Colombia, from 1983 to 1987, and as Head of Industrial Engineering Department, Universidad de Los Andes, Colombia, from 1982 to 1984. Mr. Moreno was employed by SENA, Colombia, as Chief of the Organization and Systems Office, from 1977 to 1981, and served as Advisor to the Minister for the Finance and Public Credit Ministry of Colombia, from 1976 to 1977. Mr. Moreno holds a B.S. degree and aan M.S. degree in Industrial Engineering, both from Universidad de Los Andes, in Colombia.

~~Alejandro Tizzoni~~ has served as Executive Vice President, Chief Risk Officer of the Bank since April 2016. He previously served as Senior Vice President of Risk Management, and also held other positions within Bladex's Risk Department over the past ten years. Mr. Tizzoni previously served for nine years in different roles in the credit risk area in banking and the international private sector in Argentina. Mr. Tizzoni holds a Master's Degree in Risk Management from the NYU Stern School of Business, an MBA from the University of Louisville, and a Bachelor's Degree in Business Administration and Certified Public Accountant, both from the University of Buenos Aires.

Christopher Schech has served as Executive Vice President, Chief Financial Officer of the Bank since June 2012, and as Senior Vice President and Chief Financial Officer of the Bank ~~since~~from September ~~2009.~~2009 to May 2012. Previously, Mr. Schech served as Chief Financial Officer in the Region International division at Volvo Financial Services, part of AB Volvo Group based in Gothenburg, Sweden, covering operations in Latin America, Eastern Europe, Asia and Australia. Prior to that, Mr. Schech served in various capacities in Audit, Finance, and Business Development at General Electric Company, ~~(GE),~~ from 1996 to 2008. Mr. Schech’s background also includes serving in various positions in the Financial Services Audit Division at Coopers & Lybrand Deutsche Revision in Frankfurt, Germany, from 1990 to 1996. Mr. Schech is a certified Public Tax Advisor, and holds aan M.S. degree in Economic Studies from the University of Konstanz, Germany.

Alejandro Tizzoni has served as Executive Vice President, Chief Risk Officer of the Bank since May 2016. He also served in various capacities within the Risk Management department of the Bank since 2006, as Senior Vice President from 2012 to 2016, Vice President from 2008 to 2012 and Senior Analyst from 2006 to 2008. Mr. Tizzoni served in different capacities in the credit risk area in banking, and in the international private sector in Argentina from 1997 to 2006. Mr. Tizzoni holds a Master's Degree in Risk Management from the NYU Stern School of Business, an MBA from the University of Louisville, and a Bachelor's Degree in Business Administration and Certified Public Accounting, both from the University of Buenos Aires in Argentina.

Gustavo Díaz has served as Executive Vice President, Chief Audit Officer of the Bank since February 2014. He previously served as Senior Vice President and Controller of the Bank ~~since~~from September ~~2009.~~2009 to January 2014. Prior to joining the Bank, he served as Chief Audit Executive for Central American Bank for Economic Integration ~~(CABEI)~~ in Honduras covering operations in Central America, from 2000 to 2009. Prior to that, he served as Director of Internal Audit and Chief Compliance Officer for Corporación Financiera del Valle ~~(Corfivalle)~~ in Colombia, from 1994 to 2000. Mr. Díaz served in various capacities with KPMG Colombia and KPMG Chile, from 1985 to 1994 specializing in the financial industry. Mr. Díaz has an MBA and aan M.S. degree in Professional Management, both from the University of Miami, a Postgraduate in Finance with a specialization in International Business from Universidad ICESI, Colombia, and B.S. degree in Accounting from Universidad Jorge Tadeo Lozano, Colombia. Mr. Díaz has CIA, CFSA, and CCSA certifications, granted by The Institute of Internal Auditors, ~~(IIA),~~ and AML/CA certification granted by Florida International Bankers Association ~~(FIBA)~~ and Florida International ~~University (FIU).~~University.

Jorge Luis Real has served as Senior Vice President, Chief Legal Officer of the Bank since December 2016, and was appointed Secretary of the Board of Directors in April of 2016. He previously served as Vice President, Head of Legal Risk of the Bank from 2014 to 2016. Before joining the Bank, he was Coordinator of Latin American Legal Affairs at BNP Paribas, New York from 2010 to 2014, Head of Legal Department at BNP Paribas Panama from 2005 to 2010, Head of Legal Department Panama Group of BBVA from 2000 to 2005 and he was a lawyer at Mauad & Mauad in Panama in 2000. Mr. Real was admitted to practice law in Panama by the Panamanian Supreme Court of Justice – 1998. Mr. Real holds a Master’s degree in Commercial and Corporate Law from Université Panthéon-Assas (Paris II) and a Bachelor’s degree in Law and Political Science from Universidad Católica Santa María La Antigua in Panama.

Compensation

Compensation Consultant

The Nomination and Compensation Committee has authority to retain compensation consulting firms to assist it in the evaluation of executive officer and employee compensation and benefit programs. During 2015, the Bank retained the services of McLagan, an international management consulting firm, to provide advice in connection with the compensation of the Bank´s executive officers and other employees. The advice was limited to statistical data regarding compensation, including trends and best practices in the industry. McLagan did not provide separate additional services for management. No conflict of interest exists that would prevent McLagan from independently representing2016, the Nomination and Compensation ~~Committee.~~Committee did not retain or obtain the advice of any compensation consultant.

Cash and Stock-Based Compensation

Executive Officers Compensation

Annually, in order to incentivize the alignment and collaboration of all areas of the Bank, the Bank pays to its executive officers variable compensation, based on the extent to which each officer meets certain individual and corporate objectives which are defined by the Board of Directors. This variable compensation is paid in both cash and in stock options and/or restricted stock units.

~~The~~During the fiscal year ended December 31, 2016, the aggregate amount of cash compensation paid by the Bank ~~during the year ended December 31, 2015,~~ to the executive officers employed in the Bank’s Corporate Headquarters for their services was $2,779,391. During the fiscal year ended December 31, 2015, the Bank accrued, and paid on February 26, 2016, performance-based bonuses to the Bank’s executive officers in the aggregate amount of $980,000.$2,591,800.

In February 2008, the Board approved the 2008 Stock Incentive Plan (as amended, the “2008 Plan”), which allows the Bank, from time to time, to grant restricted shares, restricted stock units, stock options and/or other stock-based awards to the directors, executive officers and non-executive employees of the Bank. This plan was revised in October 2015, and amended and restated as the 2015 Stock Incentive Plan (the “2015 Plan”).

On February ~~10, 2015,~~16, 2016, the Bank granted to current executive officers ~~63,244~~80,775 restricted stock units ~~and 233,418 stock options.~~corresponding to 2015 performance. These ~~stock options have an exercise price of $29.25 and an expiration date of February 10, 2022. The~~ restricted stock units ~~vest 25% of the amount granted per year, measured from the award date, on each anniversary of the award date. The options~~ vest 25% of the amount granted per year, measured from the award date, on each anniversary of the award date. As of December 31, ~~2015,~~2016, the compensation cost charged against the Bank’s ~~2015~~2016 income in connection with these restricted stock units ~~and stock options~~ was ~~$888,670.~~$694,428. The total remaining compensation cost of ~~$911,330~~$780,572 will be charged over a period of 3.1 years.

On February 14, 2017, the Bank granted to current executive officers 25,289 restricted stock units corresponding to 2016 performance. These restricted stock units vest 25% of the amount granted per year, with the first vesting on June 15, 2017.

The Bank sponsors a defined contribution plan for its expatriate officers. The Bank’s contributions are determined as a percentage of the eligible officer’s annual salary, with each officer contributing an additional amount withheld from his salary. All contributions are administered by a trust through an independent third party. During ~~2015,~~2016, the Bank charged to salaries expense ~~$169,081~~$121,399 with respect to the contribution plan. As of December 31, ~~2015,~~2016, the total amount set aside or accrued by the Bank under this plan amounted to ~~$245,784.~~$340,738.

~~2015~~

2016 Chief Executive Officer Compensation

The ~~2015~~ compensation corresponding to 2016 of the Bank's Chief Executive Officer included an annual base salary of $350,000, ~~a performance-based cash bonus of $431,270,~~and a performance-based restricted stock units grant with a value of ~~$710,000,~~$400,000, an aggregate of $14,000 from the Bank to the Chief Executive Officer’s contribution plan, and limited perquisites and other benefits amounting to ~~$14,155.~~$13,750. In addition, the Chief Executive Officer has a contractual severance payment of $350,000 in the event of his termination without cause.

Results of the ~~2015~~2016 Advisory Vote on Compensation of Executive Officers

At the Company’s annual meeting of shareholders held on April ~~16, 2015,~~13, 2016, our shareholders were asked to approve, on an advisory basis, the Bank's fiscal ~~2014~~2015 executive officers’ compensation programs (commonly referred to as “say on pay” proposal). A substantial majority ~~(93.36%~~(93.92%) of the votes cast on the ~~say on pay~~say-on-pay proposal at that meeting were voted in favor of the proposal. The Nomination and Compensation Committee believes that these results affirm our shareholders’ support for the Bank’s approach to executive compensation, and therefore did not change its approach in ~~2015.~~2016. The Nomination and Compensation Committee will continue working to ensure that the design of the Bank’s executive officers’ compensation program is focused on long-term shareholder value creation and emphasizes pay for performance.

Compensation and Risk

The Bank reviews and monitors the extent to which compensation practices and programs for senior executives and employees whose activities, individually or as a group, may create incentives for excessive risk taking.

In light of the actions referred to above, the Bank and the Board have not identified any risks arising from the Bank’s compensation policies and practices that are reasonably likely to have a material adverse effect on the Bank. Furthermore, certain aspects of the Bank’s executive compensation programs, such as the combination of performance-based short-term cash bonuses and performance-based long-term equity awards, reduce the likelihood of excessive risk-taking, and instead create incentives for senior executives to work for long-term growth of the Bank.

Board of Directors Compensation

Each non-employee director of the Bank receives an annual cash retainer of $85,000 for his or her services as a director and the Chairman of the Board receives an annual cash retainer in the amount of $135,000.

The Chairman of the Audit and Compliance Committee receives an additional annual retainer of $8,500 and the Chairmen of each of the Nomination and Compensation Committee, Risk Policy and Assessment Committee, and Finance and Business Committee each receives an additional annual retainer of $5,000. The non-Chairman members of the Audit and Compliance Committee receive an additional annual retainer of $3,000.

The aggregate amount of cash compensation paid by the Bank during the year ended December 31, ~~2015~~2016 to the directors of the Bank as a group for their services as directors was ~~$948,725.~~$879,512.

As approved by the Board of Directors on December 9, 2014, each non-employee director of the Bank receives an annual equity compensation of 6,000 restricted shares and the Chairman of the Board receives an annual equity compensation of 9,000 restricted shares, granted once a year under the ~~2008~~2015 Plan.

~~The~~

During the fiscal year ended December 31, 2016, the aggregate number of restricted shares awarded ~~during the year ended December 31, 2015,~~ to non-employee directors of the Bank as a group under the ~~2008~~2015 Plan was 57,000 ~~class~~Class E shares. These restricted shares vest 35% on the first and second anniversary of the award date, and 30% on the third anniversary of the award date. As of December 31, ~~2015,~~2016, the total cost for these restricted shares amounted to ~~$1,925,460~~$1,375,980, of which ~~$852,170~~$617,306 was registered during ~~2015,~~2016, and the remaining compensation cost of ~~$1,073,290~~$758,674 for these restricted shares will be charged against income over a period of 2.3 years.

Beneficial Ownership

As of December 31, ~~2015,~~2016, the Bank’s executive officers and directors, as a group, beneficially owned an aggregate of ~~483,886 class~~596,426 Class E shares, representing approximately ~~1.6%~~1.96% (based on ~~30,152,247 class~~30,343,390 Class E shares outstanding as of December 31, ~~2015)~~2016) of all issued and outstanding ~~class~~Class E shares as of such date. “Beneficial ~~ownership”~~Ownership”, as the term is used in this section, means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. A person is deemed to be the beneficial owner of securities that can be acquired within 60 days from December 31, ~~2015~~2016 through the exercise of any option or through the vesting of any restricted stock or restricted stock units. Ordinary shares subject to options that are currently exercisable or exercisable within 60 days, or that constitute restricted stock or restricted stock units that will vest within 60 days, are deemed outstanding for computing the ~~beneficial ownership~~Beneficial Ownership percentage of the person holding such options, restricted stock or restricted stock units, but are not deemed outstanding for computing the ownership percentage of any other person.

The following table sets forth information regarding ~~beneficial ownership~~Beneficial Ownership of the Bank’s ~~class~~Class E shares, including stock options and restricted stock units and holdings of unvested stock options and unvested restricted stock units by the Bank’s executive officers as of December 31, ~~2015.~~2016. Except where noted, all holders listed below have sole voting power and investment power over the shares beneficially owned by them. Unless otherwise noted, the address of each person listed below is c/o Torre V, Business Park, Avenida La Rotonda, Urb. Costa del Este, Panama, Republic of Panama.

Name and Position of Executive Officer	Number of Shares Owned as of Dec. 31, 2015 ⁽¹⁾		Number of Shares that may be acquired within 60 days of Dec. 31, 2015⁽²⁾		Total Number of Shares Beneficially Owned		Percent of Class Beneficially Owned		Stock Options ⁽³⁾		Unvested Restricted Stock Units (2008 Stock Incentive Plan) ⁽⁴⁾		Number of Shares Owned as of Dec. 31, 2016⁽¹⁾		Number of Shares that may be acquired within 60 days of Dec. 31, 2016 ⁽²⁾		Total Number of Shares Beneficially Owned		Percent of Class Beneficially Owned		Stock Options⁽³⁾		Unvested Restricted Stock Units (2008 Stock Incentive Plan)⁽⁴⁾
Rubens V. Amaral Jr. Chief Executive Officer		97,000		162,080		259,080		*		257,838		24,982		83,000		229,417		312,417		*		151,803		52,071
Ulysses Marciano Jr. Executive Vice President Chief Commercial Officer		0		13,863		13,863		*		0		30,146		13,863		19,601		33,464		*		0		31,355
Miguel Moreno Executive Vice President Chief Operating Officer		5,650		22,549		28,199		*		26,178		14,086		13,170		27,428		40,598		*		17,271		17,600
Daniel Otero⁽⁵⁾ Executive Vice President Chief Risk Officer		0		4,377		4,377		*		0		9,763
Christopher Schech Executive Vice President Chief Financial Officer		680		27,523		28,203		*		54,414		10,827		1,020		48,829		49,849		*		33,959		14,267
Alejandro Tizzoni Executive Vice President Chief Risk Officer														1,117		0		1,117		*		0		3,501
Gustavo Díaz Executive Vice President Chief Audit Officer		2,000		4,083		6,083		*		0		6,620		1,083		4,438		5,521		*		0		8,666
Jorge Luis Real Senior Vice President Chief Legal Officer														0		0		0		*		0		0
Total		105,330		234,475		339,805				338,430		96,424		113,253		329,713		442,966				203,033		127,460

Less than one percent of the outstanding class E shares.

⁽¹⁾

Includes shares purchased by the executive and restricted stock units vested and transferred to the executive as of such date.

⁽²⁾

Includes vested traditional stock options, as well as options, restricted stock units that will vest within 60 days of December 31, ~~2015.~~2016.

⁽³⁾

Includes ~~180,443~~124,038 and ~~157,987~~78,995 stock options granted to ~~executives~~executive officers on February 10, 2015 and February 11, 2014, respectively, under the 2008 Plan. The exercise price and expiration date of these stock options are as follows: Grant of February 10, 2015, exercise price of $29.25 and expiration date of February 10, 2022, grant of February 11, 2014, exercise price of $25.15 and expiration date of February 11, 2021. Any unvested portion of the grants referenced above that will not vest within 60 days of December 31, ~~2015,~~2016, is not deemed to be beneficially owned by the individuals listed in the table.

⁽⁴⁾

Includes ~~49,860, 23,873~~25,289, 60,581, 31,144 and ~~22,691~~10,446 unvested restricted stock units granted to executive officers on February 14, 2017, February 16, 2016, under the 2015 Plan, February 10, 2015 and February 11, 2014, ~~and February 5, 2013,~~ respectively, under the 2008 Plan; these restricted stock units vest 25% each year on the relevant grant date’s ~~anniversary.~~anniversary, except for the 2017 grant, for which first vesting will be on June 15, 2017. Any unvested portion of the grants referenced above that will not vest within 60 days of December 31, ~~2015,~~2016, is not deemed to be beneficially owned by the individuals listed in the table.

⁽⁵⁾

~~Mr. Otero submitted his resignation as Executive Vice President, Chief Risk Officer, effective April 9, 2016.~~

The following table sets forth information regarding ~~beneficial ownership~~Beneficial Ownership of the Bank’s ~~class~~Class E shares, including restricted shares and stock options and holdings of unvested restricted shares and unvested stock options by members of the Bank’s Board, as of December 31, ~~2015:~~2016:

Name of
Director Number of
Shares Owned
as of Dec. 31,
2015 ⁽¹⁾ Number of Shares
that may be acquired
within 60 days of Dec.
31, 2015 ⁽²⁾ Total Number
of Shares
Beneficially
Owned Percent of Class
Beneficially
Owned Restricted
Shares ⁽³⁾
Facundo Martínez Maino⁽⁴⁾ 0 0 0 0 0
João Carlos de Nóbrega Pecego⁽⁵⁾ . 0 0 0 * 0
Roland Holst 1,650 0 1,650 * 7,950
Mario Covo 25,972 0 25,972 * 10,155
Herminio Blanco 55,627 0 55,627 * 10,155
Maria da Graça França 18,247 0 18,247 * 10,155
William D. Hayes⁽⁶⁾ 6,434 0 6,434 * 10,155
Miguel Heras 0 0 6,000
Gonzalo Menéndez Duque 36,151 0 36,151
*
15,230
Total 144,081 0 144,081 69,800

Name of Director	Number of Shares Owned as of Dec. 31, 2016⁽¹⁾		Number of Shares that may be acquired within 60 days as of Dec. 31, 2016⁽²⁾		Total Number of Shares Benefically Owned		Percent of Class Benefically Owned		Restricted Shares⁽³⁾
João Carlos de Nóbrega Pecego⁽⁴⁾		0		0		0		*		0
Roland Holst⁽⁵⁾		4,200		0		4,200		*		10,800
Ricardo Manuel Arango		875		0		875		*		6,000
Herminio A. Blanco		57,175		0		57,175		*		10,800
Mario Covo		31,327		0		31,327		*		10,800
Maria da Graça França		13,602		0		13,602		*		10,800
Miguel Heras		2,100		0		2,100		*		9,900
Gonzalo Menéndez Duque		44,181		0		44,181		*		16,200
Total		153,460		0		153,460				75,300

Less than one percent of the outstanding ~~class~~Class E shares.

⁽¹⁾

Includes ~~class~~Class E shares purchased by the director or restricted shares vested and transferred to the director pursuant to the 2003 Restricted Stock Plan, the 2008 Plan and the ~~2008~~2015 Plan as of such date.

⁽²⁾

Includes vested / unexercised traditional stock options.

⁽³⁾

Includes unvested restricted ~~class~~Class E shares granted under the Bank’s 2008 Plan, and 2015 Plan. An aggregate amount of 57,000 restricted shares were granted to directors on April ~~16, 2015;~~13, 2016; these restricted shares vest 35% in the first and second year and 30% in the third year on the relevant grant date’s anniversary.

⁽⁴⁾

17,767 class E shares corresponding to Mr. Esteban Alejandro Acerbo who was replaced by Mr. Martínez Maino's. Entitlements to both individuals, under the 2008 Plan have been issued to Banco de la Nación Argentina.

⁽⁵⁾

~~17,767 class~~27,779 Class E shares corresponding to Mr. Pecego's entitlement under the 2008 Plan, and 2015 Plan have been issued to his employer, Banco do Brasil.

⁽⁶⁾⁽⁵⁾

Mr. ~~Hayes~~Holst ceased serving as a director, effective on April ~~13, 2016.~~19, 2017.

Stock Ownership Policy for Directors and Executive Officers

Since October 2013, the Board of Directors has adopted share ownership guidelines for directors and executive officers. This policy enables the Bank to meet its objective of aligning directors’ and executives’ interests with those of the shareholders.

Under these guidelines, each director within three years of joining the Board, is required to accumulate 9,000 shares (13,500 for the Chairman of the Board), and to maintain at least this ownership level while serving as a member of the Board. Presently, all Board members are in compliance with the guidelines as they apply to them.

The Chief Executive Officer is required to own shares of the Bank’s common stock worth at least two and a half times his annual base salary. Other executive officers are required to own stock equal to one time their annual base salary. These executive officers have up to seven years to comply with this share ownership requirement, measured from the later of the date of adoption of these guidelines or the date that they became subject to the guidelines. All executive officers named in the Beneficial Ownership table in this Annual Report Form 20-F are in compliance with the guidelines as they apply to them.

The following elements are included in determining the ~~director’s~~directors’ and ~~executive’s~~executive officers’ share ownership for purposes of these guidelines: shares owned individually and by minor dependents or spouses; unvested restricted shares and restricted stock ~~units,~~units; and vested or unvested stock options.

For additional information regarding stock options granted to executive officers and directors, see Item 18, “Financial Statements,” note ~~15.~~16.

Board Practices

Board Leadership Structure

The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide an independent and adequate oversight of management.

The Bank currently separates the positions of Chief Executive Officer and Chairman of the Board. Rubens V. Amaral Jr. has served as Chief Executive Officer since August 1, 2012. Mr. Gonzalo Menéndez Duque qualifies as an “audit committee financial expert,” as defined by the SEC in Item 407 of Regulation S-K. Mr. Gonzalo Menéndez Duque has served as Chairman of the Board since 2002 and from 1995 to 1998.

In compliance with the Sarbanes-Oxley Act, Section 303A of the New York Stock Exchange Listed Company Manual, the Rules of the Superintendency of Banks of Panama, the Bank´s organizational documents and charters of each of the following Board committees, a majority of the members of the Board of Directors, all members of the Audit and Compliance Committee, and all members of the Nomination and Compensation Committee of the Bank are independent directors.

Our Board believes that its leadership structure promotes an effective board that supports and challenges management appropriately.

Committees of the Board

During the fiscal year ended December 31, ~~2015,~~2016, the Board held ~~nine~~twelve meetings. Directors attended an average of ~~95%~~94% of the total number of Board meetings held during the fiscal year ended December 31, ~~2015.~~2016.

~~The committees of the Board are composed of directors and executive officers of the Bank.~~ The following table sets forth the ~~four committees, established by the Board, the number of director members of each committee, the total number of participants of each committee~~membership and ~~the total~~ number of meetings ~~held by~~for each ~~committee~~of the four committees of the Board during the fiscal year ended December 31, ~~2015:~~2016:

Committee Number of director
members Total number of
participants^(*) Total number of
meetings held
Audit and Compliance Committee 3 5 6
Risk Policy and Assessment Committee 5 9 5
Finance and Business Committee 5 7 6
Nomination and Compensation Committee 3 4 7

^(*)~~In addition to director members, each committee is comprised of certain non-member participants, as described with respect to each committee below.~~

	Audit and Compliance	Risk Policy and Assessment	Finance and Business	Nomination and Compensation
Ricardo Manuel Arango		Member	Member
Herminio A. Blanco	Member	Chair
Mario Covo		Member	Chair
Maria da Graça França	Chair			Member
Miguel Heras		Member	Member
Roland Holst⁽¹⁾			Member	Member
Gonzalo Menéndez Duque	Member	Member
João Carlos de Nóbrega Pecego			Member	Chair

Number of Committee Meetings Held in 2016	6	5	5	6

⁽¹⁾

Mr. Holst ceased serving as a director, effective on April 19, 2017.

Audit and Compliance Committee

The Audit and Compliance Committee is a standing committee of the Board. According to its Charter, the Audit and Compliance Committee must be comprised of at least three directors. The current members of the Audit and Compliance Committee are Mrs. Maria da Graça França ~~(Chairman)~~(Chair), Mr. Gonzalo Menéndez Duque, and Mr. Herminio Blanco and Facundo Martínez Maino. The current non-member participants of the Audit and Compliance Committee are Rubens V. Amaral Jr., Chief Executive Officer, and Gustavo Díaz, Executive Vice President, Chief Audit Officer.A. Blanco.

~~As established in the Charter, the~~The Board has determined that all members of the Audit and Compliance Committee are independent directors under the terms defined by applicable laws and regulations, including rules promulgated by the SEC under the Sarbanes-Oxley Act, Section 303A of NYSE Listed Company Manual, and Rules No. 05-2011 and 05-2014 of the Superintendency of Banks of Panama. In addition, at least one of the members of the Audit and Compliance Committee is an “audit committee financial expert,” as defined by the SEC in Item 407 of Regulation S-K. The Audit and Compliance Committee’s financial expert is Gonzalo Menéndez Duque.

The purpose of the Audit and Compliance Committee is to provide assistance to the Board in fulfilling its oversight responsibilities regarding the processing of the Bank’s financial information, the integrity of the Bank’s financial statements, the Bank’s system of internal controls over financial reporting, the performance of both the internal audit and the independent registered public accounting firm, the Bank’s corporate governance, compliance with legal and regulatory requirements and the Bank’s Code of Ethics. The Audit and Compliance Committee meets with each of the internal and independent auditors and the Bank’s management to discuss the Bank’s audited ~~Consolidated Financial Statements~~consolidated financial statements and management’s discussion and analysis of financial condition and results of operations.

The Audit and Compliance Committee meets at least six times per year, as required by the Superintendency of Banks of Panama and the committee charter, or more often if the circumstances so require. During the fiscal year ended December 31, ~~2015,~~2016, the committee met six times.

The Audit and Compliance Committee, in its capacity as a committee of the Board, is directly responsible for recommending to the shareholders the renewal or replacement of the Bank’s independent auditors at the Annual Shareholders’ Meeting, the compensation of the independent auditors (including the pre-approval of all audit and non-audit services) and oversight of the independent auditors, including the resolution of disagreements regarding financial reporting between the Bank’s management and the independent auditors. The Bank’s independent auditors are required to report directly to the committee.

The Charter of the Audit and Compliance Committee requires an annual self-evaluation of the committee’s performance.

The Audit and Compliance Committee pre-approved all audit and ~~non-audit~~non audit services of the Bank’s independent auditors in ~~2015.~~2016.

The Audit and Compliance Committee’s Charter may be found on the Bank’s website at http://bladex.com/en/investors/committees-board.

Risk Policy and Assessment Committee

The Risk Policy and Assessment Committee is a standing committee of the Board. The current members of the Risk Policy and Assessment Committee are Mr. Herminio A. Blanco ~~(Chairman)~~(Chair), Mr. Gonzalo Menéndez Duque, Mr. Ricardo M.Manuel Arango, Mr. Mario Covo and Mr. Miguel Heras. The current non-member participants of the Risk Policy and Assessment Committee are Rubens V. Amaral Jr., Chief Executive Officer, Ulysses Marciano Jr., Executive Vice President, Chief Commercial Officer, Alejandro Tizzoni, Executive Vice President, Chief Risk Officer, and Christopher Schech, Executive Vice President, Chief Financial Officer.

The Risk Policy and Assessment Committee is responsible for reviewing and recommending to the Board, for ~~their~~its approval, all policies related to the prudent enterprise risk management. The committee also reviews and assesses exposures to the risks facing the Bank’s business within the risk levels the Bank is willing to take in accordance with its applicable policies, including the review and assessment of the quality and profile of the Bank’s credit facilities, the exposure to market risks and the analysis of operational risks, which take into account the legal risks associated with the Bank’s products.

The Risk Policy and Assessment Committee performs its duties through the review of reports received regularly from management and through its interactions with the ~~Enterprise~~ Risk Management area and other members of the Bank’s management. The Risk Policy and Assessment Committee ~~meets~~charter requires the committee to meet at least four times per year. During the fiscal period ended December 31, ~~2015,~~2016, the Risk Policy and Assessment Committee held five meetings.

The Risk Policy and Assessment Committee Charter may be found on the Bank’s website at http://bladex.com/en/investors/committees-board.

Finance and Business Committee

The Finance and Business Committee is a standing committee of the Board. The current members of the Finance and Business Committee are Mr. Mario Covo ~~(Chairman)~~(Chair), Mr. Ricardo M.Manuel Arango, Mr. Miguel Heras, ~~Roland Holst~~ and Mr. João Carlos de Nóbrega Pecego. The current non-member participants of the Finance and Business Committee are Ulysses Marciano Jr., Executive Vice President, Chief Commercial Officer, and Christopher Schech, Executive Vice President, Chief Financial Officer.

~~The Finance and Business Committee meets at least five times per year. During the fiscal year ended December 31, 2015, the Finance and Business Committee held six meetings.~~

The fundamental role of the Finance and Business Committee is to review and analyze all issues related to the development and execution of the Bank’s business and its financial management including, among others, capital management, portfolio management (assets and liabilities), liquidity management, gap and funding management, tax related matters and, the financial performance of the Bank in general. The Finance and Business Committee charter requires the committee to meet at least five times per year. During the fiscal year ended December 31, 2016, the committee held five meetings.

The Finance and Business Committee Charter may be found on the Bank’s website at http://bladex.com/en/investors/committees-board.

Nomination and Compensation Committee

The Nomination and Compensation Committee is a standing committee of the Board. The current members of the Nomination and Compensation Committee are Mr. João Carlos de Nóbrega Pecego (Chair), and Mrs. Maria da Graça França.

The Charter of the Nomination and Compensation Committee requires that all members of the Committee be independent directors. No member of the Nomination and Compensation Committee can be an employee of the Bank. The Board has determined that all members of the Nomination and Compensation Committee are independent under the terms defined by applicable laws and regulations, including rules promulgated by the SEC under the Sarbanes-Oxley Act, Section 303A of the Manual for Companies listed on the NYSE, and Rules No. 05-2011 and 05-2014 of the Superintendency of Banks of Panama. The ~~current members of the~~ Nomination and Compensation Committee ~~are João Carlos de Nóbrega Pecego (Chairman), Maria da Graça França, Roland Holst and Facundo Martínez Maino. The current non-member participant of~~charter requires the ~~Nomination and Compensation Committee is Miguel Moreno, Executive Vice President, Chief Operating Officer.~~

~~The Nomination and Compensation Committee meets~~committee to meet at least five times per year. During the fiscal year ended December 31, ~~2015,~~2016, the Nomination and Compensation Committee held ~~seven~~six meetings.

The Nomination and Compensation Committee’s primary responsibilities are to assist the Board byby: identifying candidates to become Board members and recommending nominees for the annual meetings of shareholders; by making recommendations to the Board concerning candidates for Chief Executive Officer and counseling on succession planning for executive officers; by recommending compensation for Board members and committee members, including cash and equity compensation; by recommending compensation policies for executive officers and employees of the Bank, including cash and equity compensation, policies for senior management and employee benefit programs and plans; by reviewing and recommending changes to the Bank’s Code of Ethics; and by advising executive officers on issues related to the Bank’s personnel.

The Nomination and Compensation Committee will consider qualified director candidates recommended by shareholders. All director candidates will be evaluated in the same manner regardless of how they are recommended, including recommendations by shareholders. For the current director nominees, the committee considers candidate qualifications and other factors, including, but not limited to, diversity in background and experience, industry knowledge, educational level and the needs of the Bank. Shareholders can mail any recommendations and an explanation of the qualifications of the candidates to the Secretary of the Bank at Torre V, Business Park, P.O. Box 0819-08730, Panama City, Republic of Panama.

Although the Bank does not have a formal policy or specific guidelines for the consideration of diversity by the Nomination and Compensation Committee in identifying nominees for director, diversity is one of the factors the Nomination and Compensation Committee considers. The Nomination and Compensation Committee generally views and values diversity from the perspective of professional and life experiences, and recognizes that diversity in professional and life experiences may include considerations of gender, race, national origin or other characteristics in identifying individuals who possess the qualifications that the Committee believes are important to be represented on the Board. The ~~current composition of the Bank’s Board of Directors, where~~fact that out of a total of ten members, seven different nationalities are represented, reflects the importance given to diversity by the ~~Nomination and Compensation Committee.~~Board of Directors

The Charter of the Nomination and Compensation Committee requires an annual self-evaluation of the committee’s performance.

The Nomination and Compensation Committee Charter may be found on the Bank’s website at http://bladex.com/en/investors/committees-board.

~~Mr. Rubens V. Amaral Jr. is the only executive officer who serves as a member of the Board.~~ None of the Bank’s executive officers serve as a director or a member of the Nomination and Compensation Committee, or any other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of the Board or the Nomination and Compensation Committee. None of the members of the Nomination and Compensation Committee has ever been an employee of the Bank.

Corporate Governance Practices

The Board has decided not to establish a corporate governance committee. Given the importance that corporate governance has for the Bank, the Board decided to address all matters related to corporate governance at the Board level. Further, the Audit and Compliance Committee is responsible for promoting continued improvement in the Bank’s corporate governance and verifying compliance with all applicable policies.

The Bank has included the information regarding its corporate governance practices necessary to comply with Section 303A of the NYSE’s Listed Company Manual/Corporate Governance Rules on ~~its~~“Investors Relations / Corporate Governance” section of the Bank’s website at http://~~www.bladex.com.~~www.bladex.com/en/investors.

Shareholders, employees of the Bank, and other interested parties may communicate directly with the Board by corresponding to the address below:

Board of Directors of Banco Latinoamericano de Comercio Exterior, S.A.

c/o Mr. Gonzalo Menéndez Duque

Director and Chairman of the Board of Directors

Torre V, Business Park

Avenida La Rotonda, Urb. Costa del Este

P.O. Box 0819-08730

Panama City, Republic of Panama

In addition, the Bank has selected EthicsPoint, an on-line reporting system, to provide shareholders, employees of the Bank, and other interested parties with an alternative channel to report anonymously, any actual or possible violations of the Bank’s Code of Ethics, as well as other work-related situations or irregular or suspicious transactions, accounting matters, internal audit or accounting controls. In order to file a report, a link is provided on the Bank’s website athttp://www.bladex.com.

Employees

The following table presents the total number of permanent employees, geographically distributed, at the dates indicated:

As of December 31,
2015 2014 2013
Bladex Head Office in Panama 151 140 136
New York Agency 5 4 4
Representative Office in Argentina 8 6 6
Representative Office in Brazil 13 14 15
Representative Office in Mexico 13 14 13
Florida International Administrative Office^(*) 0 6 7
Representative Office in Colombia 4 4 4
Representative Office in Peru 8 7 6
Total Number of Permanent Employees 202 195 191

	As of December 31,
	2016		2015		2014
Bladex Head Office in Panama		157		151		140
New York Agency		5		5		4
Representative Office in Argentina		8		8		6
Representative Office in Brazil		13		13		14
Representative Offices in Mexico⁽¹⁾		13		13		14
Florida International Administrative Office⁽²⁾		0		0		6
Representative Office in Colombia		6		4		4
Representative Office in Peru		7		8		7
Total Number of Permanent Employees		209		202		195

^(*) ~~The Bank’s international administrative office located in Miami ceased operations during the first quarter of 2015.~~

⁽¹⁾

On 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 Mexico, Monterrey.

⁽²⁾

The Bank’s international administrative office located in Miami ceased operations during the first quarter of 2015.

Share Ownership

See Item 6.B, “Directors, Executive Officers and Employees/Compensation/Beneficial Ownership.”

Item 7.

Major Stockholders and Related Party Transactions

Major Stockholders

As of December 31, ~~2015,~~2016, the Bank was not directly or indirectly owned or controlled by another corporation or any foreign government, and no person was the registered owner of more than ~~4.9%~~6.1% of the total outstanding shares of voting capital stock of the Bank.

The following table sets forth information regarding the Bank’s shareholders that are the beneficial owners of 5% or more of any one class of the Bank’s voting stock, on December 31, ~~2015:~~2016:

As of December 31, 2015
Number of Shares % of Class % of Total Common
Stock
Class A Common Stock
Banco de la Nación Argentina⁽¹⁾
Bartolomé Mitre 326
CP 1036 AAF Buenos Aires, Argentina
1,045,348 16.5 2.7
Banco do Brasil⁽²⁾
SBS Ed. Sede III
CEP 70073-900
Brasilia, Brazil
974,551 15.4 2.5
Banco de Comercio Exterior de Colombia
Edif. Centro de Comercio Internacional
Calle 28 No. 13A-15
C.P. 110311 Bogotá, Colombia 488,547 7.7 1.3
Banco de la Nación (Perú)
Ave. República de Panamá 3664
San Isidro, Lima, Perú 446,556 7.0 1.1
Banco Central del Paraguay
Federación Rusa y Augusto Roa Bastos
Asunción, Paraguay 434,658 6.9 1.1
Banco Central del Ecuador
Ave. 10 de Agosto N11- 409 y Briceño
Quito, Ecuador 431,217 6.8 1.1
Banco del Estado de Chile
Ave. Libertador Bernardo O’Higgins No.1111
Santiago, Chile 323,413 5.1 0.8
Sub-total shares of Class A Common Stock 4,144,290 65.4 10.6
Total Shares of Class A Common Stock 6,342,189 100.0 16.3

As of December 31, 2015
Class B Common Stock Number of Shares % of Class % of Total Common
Stock
Banco de la Provincia de Buenos Aires
San Martin 137
C1004AAC Buenos Aires, Argentina 884,461 35.7 2.3
Banco de la Nación Argentina
Bartolomé Mitre 326
CP 1036AAF Buenos Aires, Argentina 295,945 12.0 0.8
The Korea Exchange Bank
181, Euljiro 2-ga
Jun-gu, Seoul 100-793, Korea 147,173 5.9 0.4
Sub-total shares of Class B Common Stock 1,327,579 53.6 3.5
Total Shares of Class B Common Stock 2,474,469 100.0 6.3

Class E Common Stock
Number of Shares

% of Class

% of Total Common
Stock

First TrustPortfolios L.P.⁽³⁾
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187, United States
1,918,769 6.4 4.9
Columbia Wanger Asset Management, LLC⁽⁴⁾
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606-5016, United States
1,653,400 5.5 4.2
Edge Asset Management, Inc.⁽⁴⁾
601 Union Street #2200
Seattle, Washington 98101, United States
1,641,090 5.4 4.2
LSV Asset Management⁽⁵⁾
155 N. Wacker Drive, Suite 4600
Chicago, Illinois 60606, United States
1,582,093 5.2 4.1
Sub-total shares of Class E Common Stock 6,795,352 22.5 17.4
Total Shares of Class E Common Stock 30,152,247 100.0 77.4

Class F Common Stock
Number of Shares

% of Class

% of Total Common
Stock

Total Shares of Class F Common Stock 0 0.0 0.0
Total Shares of Common Stock 38,968,905 100.0

	As of December 31, 2016
	Number of Shares		% of Class		% of Total Common Stock
Class A Common Stock
Banco de la Nación Argentina⁽¹⁾ Bartolomé Mitre 326 CP 1036 AAF Buenos Aires, Argentina		1,045,348		16.5		2.7
Banco do Brasil⁽²⁾ SAUN Qd 5, Lote B, Torre 1, 15 Andar Edificio Banco do Brasil CEP 70040-912 Brasilia, DF - Brazil		974,551		15.4		2.5
Banco de Comercio Exterior de Colombia Edif. Centro de Comercio Internacional Calle 28 No. 13A-15 C.P. 110311 Bogotá, Colombia		488,547		7.7		1.3
Banco de la Nación (Perú) Ave. República de Panamá 3664 San Isidro, Lima, Perú		446,556		7.0		1.1
Banco Central del Paraguay Federación Rusa y Augusto Roa Bastos Asunción, Paraguay		434,658		6.9		1.1
Banco Central del Ecuador Ave. 10 de Agosto N11- 409 y Briceño Quito, Ecuador		431,217		6.8		1.1
Banco del Estado de Chile Ave. Libertador Bernardo O’Higgins No.1111 Santiago, Chile		323,413		5.1		0.8
Sub-total shares of Class A Common Stock		4,144,290		65.4		10.6
Total Shares of Class A Common Stock		6,342,189		100.0		16.2

Class B Common Stock	Number of Shares	% of Class	% of Total Common Stock
Banco de la Provincia de Buenos Aires San Martin 137 C1004AAC Buenos Aires, Argentina	884,461	35.7	2.3
Banco de la Nación Argentina Bartolomé Mitre 326 CP 1036AAF Buenos Aires, Argentina	295,945	12.0	0.8
The Korea Exchange Bank 181, Euljiro 2-ga Jun-gu, Seoul 100-793, Korea	147,173	5.9	0.4
Sub-total shares of Class B Common Stock	1,327,579	53.6	3.5
Total Shares of Class B Common Stock	2,474,469	100.0	6.3

Class E Common Stock

Number of Shares

% of Class

% of Total Common
Stock

Edge Asset Management, Inc.⁽³⁾

601 Union Street #2200

Seattle, Washington 98101, United States

2,382,971

7.9

6.1

LSV Asset Management⁽⁴⁾

155 N. Wacker Drive, Suite 4600

Chicago, Illinois 60606, United States

1,772,059

5.8

4.5

All common shares have the same rights and privileges regardless of their class, except that:

Set forth below are the number of shares of each class of the Bank’s stock issued and outstanding as of the dates hereto:

As of December 31, ~~2015,~~2016, the Bank’s Class A and Class B common shares outstanding stood at the same level as of December 31, ~~2014. Class B common shares were nearly unchanged from 2014 except for minor conversions to Class E common shares during~~ 2015. Class E common shares outstanding increased by 0.2 million shares during the same period mostly as a result of exercised of stock options of Bank’s executive officers and directors.

As of ~~February 29,~~December 31, 2016, there were a total of 6153 holders of record of our Class E shares, of which 1716 were registered with addresses in the United States. Such United States record holders were, as of such date, the holders of record of approximately ~~99.77%~~99.26% of our outstanding Class E shares. The number of record holders in the United States is not representative of the number of beneficial holders nor is it representative of where such beneficial holders are resident since many of these ordinary shares were held of record by brokers or other nominees. None of our Class A shares or Class B shares are held in the United States.

The Bank had no preferred stock issued and outstanding as of December 31, ~~2015.~~2016.

Certain directors of the Bank are also directors and executive officers of banks and/or other companies located in Latin America, the Caribbean and elsewhere. Some of these banks and/or other companies own shares of the Bank’s common stock and have entered into loan transactions with the Bank in the ordinary course of business, in compliance with Panamanian regulatory related party limits set forth above in Item 4.B, “Information on the Company—Business Overview—~~Regulations—~~Supervision and Regulation—Panamanian Law.”

As of December 31, ~~2015,~~2016, the Bank had extended loans, in the ordinary course of business, to ~~four~~three entities whose directors and/or executive officers are also directors of the Bank. These entities were:

i) Banco de la Nación Argentina, in which the Bank’s director Facundo Martínez Maino is also a director. The loan was made on August 24, 2015, with an outstanding amount of $24 million and an interest rate of 0.93%, as of December 31, 2015. The largest amount outstanding granted at any month-end during 2015 was $144 million.

ii) Arrendadora y Factor Banorte, in which the Bank’s director Herminio Blanco is also a director of its parent holding. Two loans were made to Arrendadora y Factor Banorte on December 8 and 17, 2015, respectively, with total outstanding amount of $27 million, and a weighted average interest rate of 3.54%, as of December 31, 2015. The largest amount outstanding granted at any month-end during 2015 was $42 million.

~~iii)~~ Valores Quimicos, S.A., in which the Bank’s director Herminio A. Blanco is also a director of one of the borrower’s parent companies. Two loans were made to Valores Quimicos, S.A. on December 9, 2014, and April 16, 2015, respectively, with total outstanding amount of ~~$21~~$19 million, and a weighted average interest rate of ~~2.82%~~3.37%, as of December 31, ~~2015.~~2016. The largest amount outstanding granted at any month-end during ~~2015~~2016 was ~~$22~~$21 million.

~~iv)~~ii) Banco General S.A. – Costa Rica, in which the Bank’s director Ricardo M.Manuel Arango is also a director of its parent company. ~~Three~~Four loans were made to Banco General Costa Rica on September ~~9, 2013; September~~ 30, ~~2014~~2014; December 22, 2015; and December ~~22, 2015,~~23, 2016, respectively, with total outstanding amount of $13 million, and a weighted average interest rate of ~~3.74%~~3.70%, as of December 31, ~~2015.~~2016. The largest amount outstanding granted at any month-end during ~~2015~~2016 was ~~$15~~$13 million. ~~Mr. Arango was not a member of~~

iii) Banco Patagonia, S.A., in which the Bank’s ~~Board when these~~director João Carlos de Nóbrega Pecego is also President of Banco Patagonia, S.A.. Several loans were ~~disbursed~~made to Banco ~~General,~~Patagonia, S.A. ~~– Costa Rica.~~during the year 2016, with total outstanding amount of $21 million, and a weighted average interest rate of 3.67%, as of December 31, 2016. The largest amount outstanding granted at any month-end during 2016 was $24 million.

All of the abovementioned loans were granted for commercial business purposes. The terms and conditions of the loan transactions, including interest rates and collateral requirements, are substantially the same as the terms and conditions of comparable loan transactions entered into with other persons under similar market conditions. ~~As a matter~~The loan transactions did not involve more than the normal risk of ~~policy,~~collectibility or present other unfavorable features. In accordance with the Risk Policy and Assesment Committee’s charter, directors of the Bank doshall not participate in the approval process for ~~Credit Facilities~~credit facilities extended to institutions in which they are executive officers or directors, nor do they participate with respect to decisions regarding country exposure limits in countries in which the institutions are domiciled.

As of December 31, ~~2015, 2014~~2016 and ~~January 1, 2014,~~2015 the Bank had credit transactions in the normal course of business with 16%, ~~15% and 20%,~~for both periods, respectively, of its Class ~~“A”~~A and ~~“B”~~B stockholders. All transactions were made based on arm’s-length terms and subject to prevailing commercial criteria and market rates and were subject to all of the Bank’s Corporate Governance and control procedures. As of December 31, 2016 and 2015, ~~2014~~approximately 10% and ~~January 1, 2014, approximately~~ 9%~~, 8% and 12%~~, respectively, of the outstanding Loan Portfolio was placed with the Bank’s Class ~~“A”~~A and “B” stockholders and their related parties. As of December 31, ~~2015,~~2016, the Bank was not directly or indirectly owned or controlled by another corporation or any foreign government, and no Class ~~“A”~~A or ~~“B”~~B shareholder was the registered owner of more than 3.5% of the total outstanding shares of the voting capital stock of the Bank.

The information included in Item 18 of this Annual Report is referred to and incorporated by reference into this Item 8.A.

There have been no legal or arbitration proceedings, which may have, or have had in the recent past, significant effects on the Bank’s financial position or profitability, including proceedings pending or known to be contemplated.

The Board’s policy is to declare and distribute quarterly cash dividends on the Bank’s common stock. Dividends are declared at the Board’s discretion and, from time to time, the Bank has declared special dividends.

On January ~~28, 2016,~~17, 2017, the ~~Bank announced~~Bank’s Board, approved a quarterly cash dividend of $0.385 per common share corresponding to the fourth quarter 2015. The cash dividend was approved by the Board of Directors and was paid on February 23, 2016 to the Bank’s stockholders registered as of February 10, 2016 record date. In accordance with IAS 10 - “Events after the date of the consolidated statements of financial position”, if an entity declares dividends after such date, it cannot recognize the amount of these dividends as a liability in the year-end Consolidated Financial Statements.

~~On December 8, 2014, the Bank’s Board, approved an increase in quarterly dividends~~ distributed to holders of common shares ~~from $0.35 to~~of $0.385 per share pertaining to the fourth quarter of ~~2014. This $0.035 or 10%, increase in quarterly dividends underlined the Board’s commitment~~2016. The cash dividend was announced on January 18, 2017 and was paid on February 16, 2017 to ~~continue its established dividend approach that reflects the development and growth of~~ the Bank’s ~~core business.~~stockholders registered as of February 1, 2017.

No special dividends were declared during ~~2015 and 2014.~~three-year period ended December 31, 2016.

The following table presents information about common dividends paid on the dates indicated:

The Bank has no preferred shares issued and outstanding as of December 31, ~~2015.~~2016.

~~Not applicable.~~On 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 Mexico, Monterrey.

The Bank’s Class E shares are listed on the NYSE under the symbol ~~“BLX.”~~BLX. The following table shows the high and low market prices of the Class E shares on the NYSE for the periods indicated:

⁽¹⁾ ~~Corresponds to the highest and lowest sales price of the stock at any time during any given trading day. Source from NYSE Connect.~~

The Bank’s Class A shares and Class B shares were sold in private placements or sold in connection with the Bank’s 2003 rights offering, are not listed on any exchange and are not publicly traded. The Bank’s Class E shares, which constitute the only class of shares publicly traded (listed on the NYSE), represent ~~77.4%~~77.5% of the total shares of the Bank’s common stock issued and outstanding as of December 31, ~~2015.~~2016. The Bank’s Class B shares are convertible into Class E shares on a one-to-one basis. There are no issued or outstanding shares regarding the Class F shares.

Bladex is a bank organized under the laws of the Republic of Panama, and its Articles of Incorporation are recorded in the Public Registry Office of Panama, Republic of Panama, Section of Mercantile Persons, at microjacket 021666, roll 1050 and frame 0002.

Article 2 of Bladex’s Articles of Incorporation states that the purpose of the Bank is to promote the economic development and foreign trade of Latin American countries. To achieve this purpose, the Bank may engage in any banking or financial business, investment or other activity intended to promote the foreign trade and economic development of countries in Latin America. The Articles of Incorporation provide that Bladex may engage in activities beyond those described above provided that it has obtained stockholder approval in a resolution adopted upon the affirmative majority vote of the common shares, either present or represented, in a meeting of stockholders called to obtain such authorization, including the affirmative vote of the holders of three-fourths (3/4) of the Class A shares issued and outstanding.

Bladex’s Articles of Incorporation provide that the Board shall direct and control the business and management of the assets of the Bank, except for those matters specifically reserved to stockholders by law or the Articles of Incorporation. The Board, however, may grant general and special powers of attorney authorizing directors, officers and employees of the Bank or other persons to transact such business and affairs within the competence of the Board, as the Board may deem convenient to entrust to such persons.

The Articles of Incorporation of Bladex do not contain provisions limiting the ability of the Board to approve a proposal, arrangement or contract in which a Director is materially interested, or limiting the ability of the Board to fix the compensation of its members. In addition, the Articles of Incorporation of Bladex do not contain provisions requiring the mandatory retirement of a Director at any prescribed age, or requiring a person to own a certain number of shares to qualify as a Director.

The Board consists of ten members: three Directors elected by the holders of the Class A common shares; five Directors elected by the holders of the Class E common shares; and two Directors elected by the holders of all common shares. For so long as the number of Class F common shares issued and outstanding is equal to or greater than fifteen percent (15%) of the total number of common shares issued and outstanding, the holders of the Class F common shares will have the right to elect one director and the Board will consist of eleven members. As of December 31, ~~2015,~~2016, no Class F shares or preferred shares were issued and outstanding.

The Directors are elected by stockholders for periods of three (3) years and they may be re-elected. The holders of the Class A, Class E and Class F shares vote separately as a class in the election of Directors representing their respective class. In the election of Directors, each stockholder of each class electing a Director has a number of votes equal to the number of shares of such class held by such stockholder multiplied by the number of Directors to be elected by such class. The stockholder may cast all votes in favor of one candidate or distribute them among two or more of the Directors to be elected, as the shareholder may decide.

All common shares have the same rights and privileges regardless of their class, except that:

Under the Bank’s Articles of Incorporation, preferred shares have no voting rights, except in accordance with their certificate of designation mentioned above. Holders of preferred shares will have the right to elect one Director only upon a default in the terms of such preferred shares and only if contemplated in the certificate of designation. In the event the holders of the preferred shares are entitled to elect a Director, the total number of Directors in the Board will be increased by one. The rights of the holders of the common shares may be changed by an amendment to the Articles of Incorporation of the Bank.

Amendments to the Articles of Incorporation may be adopted by the affirmative majority vote of the common shares represented at the respective meeting, except for the following amendments which require, in addition, the affirmative vote of three-quarters (3/4) of all issued and outstanding Class A shares: (i) any amendment to the Bank’s purposes or powers, (ii) any amendment to the capital structure of the Bank and the qualifications to become a holder of any particular class of shares, (iii) any amendment to the provisions relating to the notice, quorum and voting at stockholders’ meetings, (iv) any amendment to the composition and election of the Board, as well as notices, quorum and voting at meetings of Directors, (v) any amendments to the powers of the Chief Executive Officer of the Bank and (vi) any amendments to the fundamental financial policies of the Bank.

The Articles of Incorporation of Bladex provide that there will be a general meeting of holders of the common shares every year, on such date and in such place as may be determined by resolution of the Board, to elect Directors and transact any other business duly submitted to the meeting by the Board. In addition, extraordinary meetings of holders of the common shares may be called by the Board, as it deems necessary. The Board or the Chairman of the Board must call an extraordinary meeting of holders of the common shares when requested in writing by one or more holders of common shares representing at least one-twentieth (1/20) of the issued and outstanding capital.

Notice of meetings of stockholders, whether ordinary or extraordinary, are personally delivered to each registered shareholder or sent by fax, telex, courier, air mail or any other means authorized by the Board of the Directors, at least 30 days before the date of the meeting, counted from the date that the notice is sent. The notice of the meeting must include the agenda of the meeting. At any meeting of stockholders, stockholders with a right to vote may be represented by a proxy, who need not be a shareholder and who may be appointed by public or private document, with or without power of substitution.

Upon request to the Board or the Chairman of the Board, stockholders representing at least one-twentieth (1/20) of the issued and outstanding shares of any given class may hold a meeting separately as a class for the purpose of considering any matter which, in accordance with the provisions of the Articles of Incorporation and the By-laws, is within their competence. In order to have a quorum at any meeting of stockholders, a majority of the common shares issued and outstanding must be represented at the meeting. Whenever a quorum is not obtained at a meeting of stockholders, the meeting shall be held on the second date set forth in the notice of the meeting. All resolutions of stockholders shall be adopted by the affirmative majority vote of the common shares represented at the meeting where the resolution was adopted, except where a super-majority vote of the Class A shareholders is required, as described above.

Class A shares may be issued only as registered shares in the name of the following entities in Latin American countries: (i) central banks, (ii) banks in which the State is the majority shareholder or (iii) other government agencies. Class B shares may be issued only in the name of banks or financial institutions.�� Class E shares and preferred shares may be issued in the name of any person, whether a natural person or a legal entity. Class F shares may be issued only (i) in the name of state entities or agencies of countries that are not Latin American countries, including central banks and banks in which the State is the majority shareholder or (ii) in the name of multilateral financial institutions, whether international or regional.

Neither Bladex’s Articles of Incorporation nor its By-laws contain any provision requiring disclosure with respect to a shareholder’s ownership above a certain threshold.

The Amended and Restated Articles of Incorporation were filed as an exhibit to the Form 20-F for the fiscal year ended December 31, 2008 filed with the SEC on June 26, 2009 and the By-Laws were filed as an exhibit to the Form 20-F for the fiscal year ended December 31, 2009 filed with the SEC on June 11, 2010.

The Bank has not entered into any material contract outside the ordinary course of business during the two-year period immediately preceding the date of this Annual Report.

Currently, there are no restrictions or limitations under Panamanian law on the export or import of capital, including foreign exchange controls, the payment of dividends or interest, or the rights of foreign stockholders to hold or vote stock.

The following is a summary of certain U.S. federal and Panamanian tax matters that may be relevant with respect to the acquisition, ownership and disposition of the Bank’s Class E shares. Prospective purchasers of Class E shares should consult their own tax advisors as to the United States, Panamanian or other tax consequences of the acquisition, ownership and disposition of Class E shares. The Bank may be subject to the tax regime of other countries or jurisdictions due to its operations.

This summary does not address the consequences of the acquisition, ownership or disposition of the Bank’s Class A or Class B shares.

This summary describes the material U.S. federal income tax consequences of the ownership and disposition of the Class E shares, but does not purport to be a comprehensive description of all of the tax considerations that may be relevant to holders of Class E shares. This summary applies only to current holders that hold Class E shares as capital assets for U.S. federal income tax purposes and does not address classes of holders that are subject to special treatment under the United States Internal Revenue Code of 1986, as amended (the “Code”) such as dealers in securities or currencies, financial institutions, tax-exempt entities, regulated investment companies, insurance companies, securities traders that elect mark-to-market tax accounting, persons subject to the alternative minimum tax, certain U.S. expatriates, persons holding Class E shares as part of a hedging, constructive ownership or conversion transaction or a straddle, holders whose functional currency is not the U.S. dollar, or a holder that owns 10% or more (directly, indirectly or constructively) of the voting shares of the Bank.

This summary is based upon the Code, existing, temporary and proposed regulations promulgated thereunder, judicial decisions and administrative pronouncements, all as in effect on the date of this Annual Report and which are subject to change (possibly on a retroactive basis) and to differing interpretations. Purchasers or holders of Class E shares should consult their own tax advisors as to the U.S. federal, state and local, and foreign tax consequences of the ownership and disposition of Class E shares in their particular circumstances.

As used herein, a “U.S. Holder” refers to a beneficial holder of Class E shares that is, for U.S. federal income tax purposes, (1) an individual citizen or resident of the United States, (2) a corporation, or an entity treated as a corporation, organized or created in or under the laws of the United States or any political subdivision thereof, (3) an estate the income of which is subject to U.S. federal income taxation without regard to the source of its income, (4) a trust, if both (A) a court within the United States is able to exercise primary supervision over the administration of the trust and (B) one or more U.S. persons (as defined in the Code) have the authority to control all substantial decisions of the trust, or a trust that has made a valid election under U.S. Treasury Regulations to be treated as a domestic trust, and (5) any holder otherwise subject to U.S. federal income taxation on a net income basis with respect to Class E shares (including a non-resident alien individual or foreign corporation that holds, or is deemed to hold, any Class E share in connection with the conduct of a U.S. trade or business). If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of Class E shares, the U.S. federal income tax consequences to a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. A holder of Class E shares that is a partnership and the partners in such partnership should consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of Class E shares.

Subject to the “Passive Foreign Investment Company Status” discussion below, to the extent paid out of current or accumulated earnings and profits of the Bank as determined under U.S. federal income tax principles (“earnings and profits”), distributions made with respect to Class E shares (other than certain pro rata distributions of capital stock of the Bank or rights to subscribe for shares of capital stock of the Bank) will be includable in income of a U.S. Holder as ordinary dividend income in accordance with the U.S. Holder’s regular method of accounting for U.S. federal income tax purposes whether paid in cash or Class E shares. To the extent that a distribution exceeds the Bank’s earnings and profits, such distribution will be treated, first, as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in the Class E shares and will reduce the U.S. Holder’s tax basis in such shares, and thereafter as a capital gain from the sale or disposition of Class E shares. See Item 10, “Additional Information/Taxation/United States Taxes-Taxation of Capital Gains.” The amount of the distribution will equal the gross amount of the distribution received by the U.S. Holder, including any Panamanian taxes withheld from such distribution.

Distributions made with respect to Class E shares out of earnings and profits generally will be treated as dividend income from sources outside the United States. U.S. Holders that are corporations will not be entitled to the “dividends received deduction” under Section 243 of the Code with respect to such dividends. Dividends may be eligible for special rates applicable to “qualified dividend income” received by an individual, provided, that (1) the Bank is not a “passive foreign investment company” (“PFIC”) in the year in which the dividend is paid nor in the immediately preceding year, (2) the class of stock with respect to which the dividend is paid is readily tradable on an established securities market in the United States, and (3) the U.S. Holder held his shares for more than 60 days during the 121-day period beginning 60 days prior to the ex-dividend date and meets other holding period requirements. Subject to certain conditions and limitations, Panamanian tax withheld from dividends will be treated as a foreign income tax eligible for deduction from taxable income or as a credit against a U.S. Holder’s U.S. federal income tax liability. Distributions of dividend income made with respect to Class E shares generally will be treated as “passive” income or, in the case of certain U.S. Holders, “general category income,” for purposes of computing a U.S. Holder’s U.S. foreign tax credit.

Less than 25% of the Bank’s gross income is effectively connected with the conduct of a trade or business in the United States, and the Bank expects this to remain true. If this remains the case, a holder of Class E shares that is not a U.S. Holder (“non-U.S. Holder”) generally will not be subject to U.S. federal income tax or withholding tax on distributions received on Class E shares that are treated as dividend income for U.S. federal income tax purposes. Special rules may apply in the case of non-U.S. Holders (1) that are engaged in a U.S. trade or business, (2) that are former citizens or long-term residents of the United States, “controlled foreign corporations,” corporations that accumulate earnings to avoid U.S. federal income tax, and certain foreign charitable organizations, each within the meaning of the Code, or (3) certain non-resident alien individuals who are present in the United States for 183 days or more during a taxable year. Such persons should consult their own tax advisors as to the U.S. federal income or other tax consequences of the ownership and disposition of Class E shares.

Subject to the “Passive Foreign Investment Company Status” discussion below, gain or loss realized by a U.S. Holder on the sale or other disposition of Class E shares generally will be subject to U.S. federal income tax as capital gain or loss in an amount equal to the difference between the U.S. Holder’s tax basis in the Class E shares and the amount realized on the disposition. Such gain will be treated as long-term capital gain if the Class E shares are held by the U.S. Holder for more than one year at the time of the sale or other disposition. Otherwise, the gain will be treated as a short-term capital gain. Gain realized by a U.S. Holder on the sale or other disposition of Class E shares generally will be treated as U.S. source income for U.S. foreign tax credit purposes, unless the gain is attributable to an office or fixed place of business maintained by the U.S. Holder outside the United States or is recognized by an individual whose tax home is outside the United States, and certain other conditions are met. For U.S. federal income tax purposes, capital losses are subject to limitations on deductibility. As a general rule, U.S. Holders that are corporations can use capital losses for a taxable year only to offset capital gains in that year. A corporation may be entitled to carry back unused capital losses to the three preceding tax years and to carry over losses to the five following tax years. In the case of non-corporate U.S. Holders, capital losses in a taxable year are deductible to the extent of any capital gains plus ordinary income of up to $3,000. Unused capital losses of non-corporate U.S. Holders may be carried over indefinitely.

A non-U.S. Holder of Class E shares will generally not be subject to U.S. federal income tax or withholding tax on gain realized on the sale or other disposition of Class E shares. However, special rules may apply in the case of non-U.S. Holders (1) that are engaged in a U.S. trade or business, (2) that are former citizens or long-term residents of the United States, “controlled foreign corporations,” corporations which accumulate earnings to avoid U.S. federal income tax, and certain foreign charitable organizations, each within the meaning of the Code, or (3) certain non-resident alien individuals who are present in the United States for 183 days or more during a taxable year. Such persons should consult their own tax advisors as to the United States or other tax consequences of the purchase, ownership and disposition of the Class E shares.

Under the Code, certain rules apply to an entity classified as a ~~“passive foreign investment company” (“PFIC”).~~PFIC. A PFIC is defined as any foreign (i.e., non-U.S.) corporation if either (1) 75% or more of its gross income for the taxable year is passive income (generally including, among other types of income, dividends, interest and gains from the sale of stock and securities) or (2) 50% or more of its assets (by value) produce, or are held for the production of, passive income. The application of the PFIC rules to banks is not entirely clear under present U.S. federal income tax law. Banks generally derive a substantial part of their income from assets that are interest bearing or that otherwise could be considered passive under the PFIC rules. The Internal Revenue Service (“IRS”) issued a notice in 1989 (the “Notice”), and has proposed regulations ~~the Proposed Regulations,~~(the “Proposed Regulations”), that exclude from passive income any income derived in the active conduct of a banking business by a qualifying foreign bank, or the “active bank exception”. The Notice and the Proposed Regulations have different requirements for qualifying as an active foreign bank, and for determining the banking income that may be excluded from passive income under the active bank exception. Moreover, the Proposed Regulations have been outstanding since 1994 and will not be effective unless finalized.

While the Bank conducts, and intends to continue to conduct, a significant banking business, there can be no assurance that the Bank will satisfy the specific requirements for the active bank exception under either the Notice or the Proposed Regulations. However, based on certain estimates of the Bank’s gross income and gross assets and the nature of its business, the Bank ~~does~~did not qualify as a PFIC for the taxable year ending December 31, ~~2015.~~2016.

If the Bank were to become a PFIC for purposes of the Code, unless a U.S. Holder makes one of the elections described below, a U.S. Holder generally will be subject to a special tax charge with respect to (a) any gain realized on the sale or other disposition of Class E shares and (b) any “excess distribution” by the Bank to the U.S. Holder (generally, any distributions including return of capital distributions, received by the U.S. Holder on the Class E shares in a taxable year that are greater than 125% of the average annual distributions received by the U.S. Holder in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period). Under these rules (1) the gain or excess distribution would be allocated ratably over the U.S. Holder’s holding period for the Class E shares, (2) the amount allocated to the current taxable year would be treated as ordinary income, (3) the amount allocated to each prior taxable year generally would be subject to tax at the highest rate in effect for that year, and (4) an interest charge at the rate generally applicable to underpayments of tax would be imposed with respect to the resulting tax attributable to each such prior taxable year. For purposes of the foregoing rules, a U.S. Holder of Class E shares that uses such stock as security for a loan will be treated as having disposed of such stock.

If the Bank were to become a PFIC, U.S. Holders of interests in a holder of Class E shares may be treated as indirect holders of their proportionate share of the Class E shares and may be taxed on their proportionate share of any excess distributions or gain attributable to the Class E shares. An indirect holder also must treat an appropriate portion of its gain on the sale or disposition of its interest in the actual holder as gain on the sale of Class E shares.

If the Bank were to become a PFIC, a U.S. Holder could make an election, provided the Bank complies with certain reporting requirements, to have the Bank treated, with respect to such U.S. Holder, as a “qualified electing fund”, hereinafter referred to as a QEF election, in which case, the electing U.S. Holder would be required to include annually in gross income the U.S. Holder’s proportionate share of the Bank’s ordinary earnings and net capital gains, whether or not such amounts are actually distributed. If the Bank were to become a PFIC, the Bank intends to so notify each U.S. Holder and to comply with all reporting requirements necessary for a U.S. Holder to make a QEF election and will provide to record U.S. Holders of Class E shares such information as may be required to make such QEF election.

If the Bank were to become a PFIC in any year, a U.S. Holder that beneficially owns Class E shares during such year must make an annual return on IRS Form 8621, which describes the income received (or deemed to be received if a QEF election is in effect) from the Bank. The Bank will, if applicable, provide all information necessary for a U.S. Holder of record to make an annual return on IRS Form 8621.

A U.S. Holder that owns certain “marketable stock” in a PFIC may elect to mark-to-market such stock and, subject to certain exceptions, include in income any gain (increases in market value) or loss (decreases in market value to the extent of prior gains recognized) realized as ordinary income or loss to avoid the adverse consequences described above. U.S. Holders of Class E shares are urged to consult their own tax advisors as to the consequences of owning stock in a PFIC and whether such U.S. Holder would be eligible to make either of the aforementioned elections to mitigate the adverse effects of such consequences.

Each U.S. payor making payments in respect of Class E shares will generally be required to provide the IRS with certain information, including the name, address and taxpayer identification number of the beneficial owner of Class E shares, and the aggregate amount of dividends paid to such beneficial owner during the calendar year. Under the backup withholding rules, a holder may be subject to backup withholding at a current rate of 28% with respect to proceeds received on the sale or exchange of Class E shares within the United States by non-corporate U.S. Holders and to dividends paid, unless such holder (1) is a corporation or comes within certain other exempt categories (including securities broker-dealers, other financial institutions, tax-exempt organizations, qualified pension and profit sharing trusts and individual retirement accounts), and, when required, demonstrates this fact or (2) provides a taxpayer identification number, certifies as to no loss of exemption and otherwise complies with the applicable requirements of the backup withholding rules. Non-U.S. Holders generally are exempt from information reporting and backup withholding, but may be required to provide a properly completed IRS Form W-8BEN or W-8BEN-E (or other similar form) or otherwise comply with applicable certification and identification procedures in order to prove their exemption. Backup withholding is not an additional tax and any amounts withheld from a payment to a holder of Class E shares will be refunded (or credited against such holder’s U.S. federal income tax liability, if any) provided that the required information is timely furnished to the IRS.

Certain U.S. Holders who are individuals, estates or trusts may be required to pay an additional 3.8% tax on, among other things, dividends and capital gains from the sale or other disposition of Class E shares.

Certain U.S. Holders who are individuals are required to reportinformation relating to an interest in the Bank’s Class E shares, subject to certain exceptions (including anexception for Class E shares held in custodial accounts maintained by United States financial institutions) by filing IRS Form 8938 with their annual U.S. federal income tax return. U.S. Holders areurged to consult their tax advisors regarding their information reporting obligations with respect to their ownership and disposition of the Class E shares.

The above description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of the Class E shares. Prospective purchasers should consult their own tax advisors to determine the tax consequences of their particular situations.

The following is a summary of the principal Panamanian tax consequences arising in connection with the ownership and disposition of the Bank’s Class E shares. This summary is based upon the laws and regulations of Panama, as well as court precedents and interpretative rulings, in effect as of the date of this Annual Report, all of which are subject to prospective and retroactive change.

The Bank is exempt from income tax in Panama under a special exemption granted to the Bank pursuant to Contract Law 103-78 of July 25, 1978 between Panama and Bladex. In addition, under general rules of income tax in Panama, only income that is deemed to be Panamanian source income is subject to taxation in Panama. Accordingly, since the Bank’s income is derived primarily from sources outside of Panama and is not deemed to be Panamanian source income, even in the absence of the special exemption, the Bank would have limited income tax liability in Panama.

Dividends, whether cash or in kind, paid by the Bank in respect of its shares are also exempt from dividend tax or other withholding under the special exemption described above. In the absence of this special exemption, there would be a 10% withholding tax on dividends or distributions paid in respect of the Bank’s registered shares to the extent the dividends were paid from income derived by the Bank from Panamanian sources, and a 5% withholding tax on dividends or distributions paid from income derived by the Bank from non-Panamanian sources.

Since the Class E shares are listed on the NYSE, any capital gains realized by an individual or a corporation, regardless of its nationality or residency, on the sale or other disposition of such shares on the NYSE would be exempted from capital gains taxes in Panama.

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 Mr. 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. Information is also available on the Bank’s website at: http://www.bladex.com.

The Bank’s risk management policies, as approved by the Board from time to time, are designed to identify and control the Bank’s credit and market risks by establishing and monitoring appropriate limits on the Bank’s credit and market exposures. Certain members of the Board constitute the Finance and Business Committee, which meets on a regular basis and monitors and controls the risks in each specific area. At the management level, the Bank has a Risk Management Department that measures and controls overall risk management of the Bank (credit, operational and market risk).

The Bank’s businesses are subject to market risk. The components of this market risk are interest rate risk inherent in the Bank’s ~~balance sheet,~~financial position, foreign exchange risk, and the price risk in the Bank’s ~~investment portfolio and in the Bank’s trading portfolios.~~Investment Securities Portfolio.

For quantitative information relating to the Bank’s interest rate risk and information relating to the Bank’s management of interest rate risk, see Item 5, “Operating and Financial Review and Prospects/Liquidity and Capital Resources.”

For information regarding derivative financial instruments, see Item 18, “Financial Statements,” notes ~~3.6,~~3.7, 5.7, 5.8 and 18. For information regarding financial instruments, see Item 4, “Information on the Company/Business Overview/Financial instruments,” and Item 18, “Financial Statements,” note 5.

The table below lists for each of the years from ~~2016~~2017 to ~~2020~~2021 the notional amounts and weighted interest rates, as of December 31, ~~2015,~~2016, for derivative financial instruments and other financial instruments that are sensitive to changes in interest rates, including the Bank’s investment securities, loans, borrowings and placements, interest rate swaps, cross currency swaps, forward currency exchange agreements, and trading ~~assets and~~ liabilities.

⁽¹⁾ ~~Borrowings and placements include repos and short and long-term borrowings and debt.~~

Although certain assets and liabilities may have similar maturities or periods of re-pricing, they may be impacted in varying degrees to changes in market interest rates. The maturity of certain types of assets and liabilities may fluctuate in advance of changes in market rates, while the maturity of other types of assets and liabilities may lag behind changes in market rates. In the event of a change in interest rates, prepayment and early withdrawal levels could deviate significantly from the maturities assumed in calculating the table above.

For information regarding the fair value disclosure of financial instruments, see Item 18, “Financial Statements,” note ~~17.~~18.

The Bank accepts deposits and raises funds principally in U.S. dollars, and makes loans mostly in U.S. dollars. Currency exchange risk arises when the Bank accepts deposits or raises funds in one currency and lends or invests the proceeds in another. In general, foreign currency-denominated assets are funded with liability instruments denominated in the same currency. In those cases where assets are funded in different currencies, forward foreign exchange or cross-currency swap contracts are used to fully hedge the risk resulting from this cross currency ~~funding. During 2015,~~funding, which, though economically hedged, might give rise to some accounting volatility.

The Bank does not run any foreign exchange trading business nor does it maintain open positions in any currencies beyond the minimum operational balances required to run the business of its representative offices.

Most of the Bank’s assets and most of its liabilities are denominated in U.S. dollars and, therefore, the Bank ~~did not~~has no material foreign exchange risk, nor does it hold significant open foreign exchange positions. As of December 31, ~~2015,~~2016, the Bank had an equivalent of ~~$482~~$528 million in non-U.S. dollar financial assets and ~~$481~~$529 million of non-U.S. dollar financial liabilities.

The ~~following table details~~Bank maintains a Mexican pesos loan book, which as of December 31, 2016 amounted to the ~~maximum~~equivalent of US$296 million. This book is entirely funded with liabilities denominated in the same currency in order to ~~foreign~~avoid any currency ~~where all assets and liabilities are presented based on their book value, except for derivatives, which are included within other assets and other liabilities based on its nominal value.~~mismatch.

For more information regarding the Risk Management, Market Risk, and Currency Risk, see Item 18, “Financial Statements,” notes 2627, 27.1 and ~~26.3.~~27.3.

Price risk corresponds to the risk that arises from the volatility in the price of the financial instruments held by the Bank, which may result from observed transaction prices that fluctuate freely according to supply and demand or from changes in the risk factors used for determining prices (interest rates, exchange rates, credit risk spreads, etc.).

The table below lists the carrying amount and fair value of the Investment Securities Portfolio and the interest rate swaps associated with this portfolio as of the dates below:

For additional information regarding derivative financial instruments, see Item 18, “Financial Statements,” notes ~~3.6, 5.8~~3.7, 5.7 and 18, and for information regarding financial instruments, see Item 18, “Financial Statements,” notes 5.3, 5.4 and 18.

~~The following tables details the changes of the market value of the underlying item in the statement of financial position related to fair value hedges:~~

~~The following tables details the profile of the timing ot the nominal amount of the hedging instrument:~~

~~The following tables details the sources of ineffectiveness for our cash flow hedge positions:~~

The Bank maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Such controls include those designed to ensure that information for disclosure is accumulated and communicated to the members of the Board and management, as appropriate to allow timely decisions regarding required disclosure.

The Chief Executive Officer (“CEO”), and the Chief Financial Officer (“CFO”), evaluated the effectiveness of the Bank’s disclosure controls and procedures as of December 31, ~~2015,~~2016, and concluded that they were effective as of December 31, ~~2015.~~2016.

~~b) Management’s Annual Report on Internal Control Over Financial Reporting~~

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) or 15d-15(f). Management, with the participation and supervision of the Bank’s CEO and CFO, has evaluated the effectiveness of its internal control over financial reporting as of December 31, ~~2015.~~2016. Such evaluation included (i) the documentation and understanding of the Bank’s internal control over financial reporting and (ii) a test of the design and the operating effectiveness of internal controls over financial reporting. This evaluation was the basis of management’s conclusions.

Management’s evaluation was based on the criteria set forth by the Internal Control-Integrated Framework 2013 of the Committee of Sponsoring Organizations of the Treadway Commission.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Bank’s internal control over financial reporting includes policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Bank’s transactions and dispositions of its assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that the Bank’s receipts and expenditures are being made only in accordance with authorizations of the Bank’s management and the Board; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Bank’s assets that could have a material effect on its financial statements.

Because of its inherent limitations, internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the assessment and criteria described above, the Bank’s management concluded that, as of December 31, ~~2015,~~2016, the Bank’s internal control over financial reporting was effective.

The Company’s independent registered public accounting firm, Deloitte, has issued an attestation report on the effectiveness of the Bank’s internal control over financial reporting.

We have audited the internal control over financial reporting of Banco Latinoamericano de Comercio Exterior, S.A. and ~~Subsidiaries~~subsidiaries (the "Bank") as of December 31, ~~2015,~~2016, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Bank's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Bank's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with ~~generally accepted accounting principles.~~International Financial Reporting Standards, as issued by the International Accounting Standards Board (IFRS). A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with ~~generally accepted accounting principles,~~IFRS, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Bank maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2015,~~2016, based on the criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, ~~2015~~2016 of the Bank and our report dated April ~~29, 2016,~~28, 2017, expressed an unqualified opinion on those financial statements.

There has been no change in the Bank’s internal control over financial reporting during the fiscal year ended December 31, ~~2015~~2016 that has materially affected, or is reasonably likely to materially affect, the Bank’s internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

The Board has determined that at least one member of the Audit and Compliance Committee is an “audit committee financial expert,” as defined in the rules enacted by the SEC under the Sarbanes-Oxley Act. The Audit and Compliance Committee’s financial expert is Gonzalo Menéndez Duque. Mr. Menéndez Duque is independent as defined by the NYSE Listed Company ~~Manual.~~Manual and Item 407 of Regulation S-K.

The Bank has adopted a Code of Ethics that applies to the Bank’s principal executive officer, principal financial and principal accounting officers. The Bank’s Code of Ethics includes the information regarding its corporate governance practices necessary to comply with Section 303A of the NYSE Rules.

A copy of the Bank’s amended Code of Ethics, approved by the Nomination and Compensation Committee in its meeting held on July 13, 2015, ~~is being~~was filed with the SEC as an Exhibit to ~~this~~the Annual Report on Form 20-F for the fiscal year ended December 31, 2015, on April 29, 2016, and may also be found on the Bank’s website at http://www.bladex.com/en/investors/governance-documents ~~(For~~(for purposes of Section 406 of the Sarbanes-Oxley Act of 2002). Written requests for copies should be directed to the attention of Christopher Schech, Chief Financial Officer, via e-mail tocschech@bladex.com. A copy of the Bank’s amended Code of Ethics will be provided to any person without charge upon request.

The following table summarizes the fees paid or accrued by the Bank for audit and other services provided by Deloitte, the Bank’s independent registered public accounting firm, for each of the ~~years ended December 31, 2015 and 2014:~~last two fiscal years:

The following is a description of the type of services included within the categories listed above:

The Audit and Compliance Committee pre-approves all audit and non-audit services to be ~~providedto~~provided to the Bank by the Bank’s independent accounting firm. All of the services related to the audit fees, audit-related fees, tax fees and all other fees described above were approved by the Audit and Compliance Committee.

The corporate governance practices of the Bank and those required by the NYSE for domestic companies in the United States differ in two significant ways:

First, under Section 303A.04 of the NYSE Rules, a listed company must have a nomination/corporate governance committee comprised entirely of independent directors. However, it is common practice among public companies in Panama not to have a corporate governance committee. The Bank addresses all corporate governance matters in plenary meetings of the Board, and the Audit and Compliance Committee has been given the responsibility of improving the Bank’s corporate governance practices and monitoring compliance with such practices.

Second, under Section 303A.08 of the NYSE Rules, stockholders must approve all equity compensation plans and material revisions to such plans, subject to limited exceptions. However, under Panamanian law, any contracts, agreements and transactions between the Bank and one or more of its directors or officers, or companies in which they have an interest, only need to be approved by the Board, including equity compensation plans. The Board must inform stockholders of the equity compensation plans and/or material revisions to such plans at the next stockholders’ meeting and stockholders may revoke the Board’s approval of the equity compensation plans and/or material revisions to such plans at such meeting.

The Bank is providing the financial statements and related information specified in Item 18.

* Filed as an exhibit to the Form 20-F for the fiscal year ended December 31, 2008 filed with the SEC on June 26, 2009.

** Filed as an exhibit to the Form 20-F for the fiscal year ended December 31, 2009 filed with the SEC on June 11, 2010.

**** Filed as an exhibit to the Form 20-F for the fiscal year ended December 31, 2015 filed with the SEC on April 29, 2016.

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.


~~April 29, 2016~~113

We have audited the accompanying consolidated statements of financial position ofBanco Latinoamericano de Comercio Exterior, S.A. and subsidiaries (the "Bank") as of December 31, ~~2015, 2014~~2016 and ~~January 1, 2014,~~2015, and the related consolidated statements of profit or loss, profit or loss and other comprehensive income, changes in equity, and cash flows for each of the ~~two~~three years in the period ended December 31, ~~2015.~~2016. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position ofBanco Latinoamericano de Comercio Exterior, S.A. and subsidiaries as of December 31, ~~2015, 2014~~2016 and ~~January 1, 2014,~~2015, and the results of their operations and their cash flows for each of the ~~two~~three years in the period ended December 31, ~~2015,~~2016, in conformity with International Financial Reporting Standards, as issued by the International Accounting Standards Board.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Bank's internal control over financial reporting as of December 31, ~~2015,~~2016, based on the criteria established inInternal Control - Integrated Framework 2013issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April ~~29, 2016~~28, 2017 expressed an unqualified opinion on the Bank's internal control over financial reporting.

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial ~~statements~~statements.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Banco Latinoamericano de Comercio Exterior, S. A. (“Bladex Head Office” and together with its subsidiaries “Bladex” or the “Bank”), headquartered in Panama City, Republic of Panama, is a specialized multinational bank established to support the financing of trade and economic integration in Latin America and the Caribbean (the “Region”). 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 the 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 initiated operations on January 2, 1979. 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 operates under a general banking license issued by the National Banking Commission of Panama, predecessor of the Superintendency of Banks of Panama (the “SBP”).

In the Republic of Panama, banks are regulated by the SBP through Executive Decree No. 52 of April 30, 2008, which adopts the unique text of the Law Decree No. 9 of February 26, 1998, modified by the Law Decree No. 2 of February 22, 2008. Banks are also regulated by resolutions and agreements issued by this entity. The main aspects of this law and its regulations include: the authorization of banking licenses, minimum capital and liquidity requirements, consolidated supervision, procedures for management of credit and market risks, measures to prevent money laundering, the financing of terrorism and related illicit activities, and procedures for banking intervention and liquidation, among others.

Bladex Head Office has an agency in New York City, USA (the “New York Agency”), which began operations on March 27, 1989. The New York Agency is principally engaged in financing transactions related to international trade, mostly the confirmation and financing of letters of credit for customers in the Region. The New York Agency also has authorization to book transactions through an International Banking Facility (“IBF”).

The Bank has representative offices in Buenos Aires, Argentina; in Mexico City, and Monterrey, Mexico; in Lima, Peru; and in Bogota, Colombia.

The consolidated financial statements have been authorized for issue by resolution of the Board of Directors dated ~~April 11, 2016.~~February 14, 2017.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

The consolidated financial statements of Banco Latinoamericano de Comercio Exterior, S. A. and its subsidiaries have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and Interpretations issued by the ~~International Financial Reporting~~IFRS Interpretation Committee ~~(IFRIC)~~(formerly known as IFRIC).

These consolidated financial statements for the year ended December 31, 2015 are the first the Bank has prepared in accordance with IFRS, and IFRS 1 – First Time Adoption of International Financial Reporting Standards (“IFRS”) has been applied. In prior years, the Bank prepared its financial statements in accordance with United States Generally Accepted Accounting Principles (US-GAAP). Refer to Note 27 for information on how the Bank adopted IFRS.

The consolidated financial statements have been prepared on the basis of fair value for financial assets and liabilities through profit or loss, derivative financial instruments, investments and other financial assets at fair value through other comprehensive income. The carrying values of recognized assets and liabilities that are designated as hedged items in fair value hedges, that would otherwise be carried at amortized cost, are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships. Other financial assets and liabilities and other non-financial assets and liabilities are presented at amortized cost or on a historical cost basis.

All amounts presented in the consolidated financial statements and notes are expressed in United States of America dollars ~~(“$”)~~(US dollar), which is the functional currency of the Bank.

Financial assets and liabilities are offset and the net amount are reported in the consolidated statement of financial position only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. Income and expenses are not offset in the consolidated statement of profit or loss unless required or permitted by any accounting standard or interpretation.

The consolidated financial statements comprise the financial statements of Bladex and its subsidiaries. Bladex consolidates its subsidiaries from the date on which control is transferred to the Bank. All intercompany balances and transactions have been eliminated for consolidation purposes. ~~Control is achieved when the Bank is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.~~ Specifically, the Bank controls an investee if, and only if, the Bank has:

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Bank has less than the majority of the voting or similar rights of an investee, the Bank considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

The Bank re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Bank obtains control over the subsidiary and ceases when the Bank loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Bank gains control until the date the Bank ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders of the parent of the Bank and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Bank’s accounting policies. ~~All intra-group assets~~

Banco Latinoamericano de Comercio Exterior, S. A. and ~~liabilities, equity, income, expenses~~Subsidiaries

For the years ended December 31, 2016, 2015 and ~~cash flows relating to transactions between members~~2014

(Amounts expressed in thousands of ~~the Bank are eliminated in full on consolidation.~~U.S. dollars, except when otherwise indicated)

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Bank loses control over a subsidiary, it derecognizes the related assets, liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognized in the consolidated statement of profit or loss. Any investment retained is recognized at fair value.

In the event of a loss of control of a controlled subsidiary, the Bank applies the following procedures to remove the subsidiary from consolidation:

The following are the significant accounting policies applied consistently by the Bank to all years presented in these consolidated financial ~~statements and in the preparation of opening balances under IFRS consolidated statement of financial position as of January 1, 2014, for purposes of the transition to IFRS.~~statements.

For each entity, the Bank determines the functional currency, and items included in the consolidated financial statements of each entity are measured using the functional currency.

Assets and liabilities of foreign subsidiaries, whose local currency is considered their functional currency, are translated into the reporting currency, US dollars, using ~~year-end~~month-end spot foreign exchange rates. The Bank uses monthly-averaged exchange rates to translate revenues and expenses from local functional currency into US dollars. The effects of those translations adjustments are reported as a component of the accumulated other comprehensive income (loss) in the consolidated statement of changes in equity.

Transactions whose terms are denominated in a currency other than the functional currency, including transactions denominated in local currency of the foreign entity with the US dollar as their functional currency, are recorded at the exchange rate prevailing at the date of the transaction. Assets and liabilities in foreign currency are translated into US dollar using ~~year-end~~month-end spot foreign exchange rates. The effects of translation of monetary assets and liabilities into US dollar are included in current year’s earnings in the gain (loss) on foreign currency exchange line item.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Differences arising on settlement or translation of monetary items are recognized in the consolidated statement of profit or loss with the exception of monetary items that are designated as part of the hedge of the Bank’s net investment in a foreign operation. These are recognized in consolidated statements of other comprehensive income until the net investment is disposed of, at which time, the cumulative amount is classified to the consolidated statement of profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in consolidated statements of other comprehensive income, if applicable.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the spot exchange rate at the date on which the fair value is determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction.

Cash equivalents include demand deposits in banks and interest-bearing deposits in banks with original maturities of three months or less, excluding pledged deposits.

All financial assets and liabilities are initially recognized on the trade date, the date that the Bank becomes a party to the contractual provisions of the instrument. This includes regular way trades: purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place.

The Bank classifies its financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of the Bank’s business model for managing the financial assets and the contractual cash flow characteristics of these financial assets. The Bank classifies all financial liabilities as subsequently measured at amortized costs, except for those liabilities measured at fair value through profit or loss as a result of hedge accounting, as well as liabilities measured at fair value in the case of undesignated derivatives.

The Bank makes an assessment of the objective of the business model in which the financial asset is held at a portfolio level, because this reflects the way the business is managed and information is provided to management. The information considers the following:

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs as well as profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Bank considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Bank considers the following:

Financial assets and liabilities at fair value through profit or loss include ~~bonds~~financial instruments acquired for trading purposes, and receivables (unrealized gains) and payables (unrealized losses) related to derivative financial instruments which are not designated as hedges or which do not qualify for hedge accounting.

Unrealized and realized gains and losses on assets and liabilities at FVTPL are recorded in the consolidated statement of profit or loss as net gain (loss) from financial instruments at FVTPL.

These securities consist of debt instruments not classified as either securities at FVTPL or securities at amortized cost, and are subject to the same approval criteria as the rest of the credit portfolio. These securities are carried at fair value if both of the following conditions are met:

Unrealized gains and losses are reported as net increases or decreases to accumulated other comprehensive income (loss) (“OCI”) in the consolidated statement of changes in equity until they are realized. Realized gains and losses from the sale of securities which are included in net gain on sale of securities are determined using the specific identification method.

~~Securities~~Financial assets classified at amortized cost represent securities and loans whose objective is to hold ~~assets~~them in order to collect contractual cash flows over the life of the instrument. These securities and loans are measured at amortized cost if both of the following conditions are met:

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Bank changes its business model for managing financial assets.

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when:

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Bank could be required to repay.

The Bank enters into transactions whereby it transfers assets recognized on its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred asset or portion of them. In such cases, the transferred assets are not derecognized. Examples of such transactions are securities lending and sale-and-repurchase transactions.

A financial liability is derecognized when the obligation under the liability is extinguished, when the obligation specified in the contract is discharged or cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a an extinguishment of the original liability and the recognition of a new liability.

The difference between the carrying value of the original financial liability and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in the consolidated statements of profit or loss.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

The Bank conducts periodic reviews for all of its securities. The Bank recognizes a loss allowance for expected credit losses on ~~financial assets~~investment securities measured at fair value through other comprehensive income and investment securities measured at amortized cost. If at the reporting date, the credit risk of these financial instruments has not increased significantly since initial recognition, the Bank will measure the loss allowance for those financial instruments at an amount equal to 12-month expected credit losses. However, if the Bank determines that the credit risk of those financial instruments has increased significantly since initial recognition, then it measures a loss allowance at an amount equal to the lifetime expected credit ~~losses~~losses. If the Bank has measured a loss allowance for a financial instrument at an amount equal to lifetime expected credit losses in the previous reporting year because of a significant increase in credit risk, but determines at the current reporting date that this presumption is no longer met; then it will measure the loss allowance at an amount equal to 12-month expected credit losses at the current reporting date. The Bank recognizes in the consolidated statement of profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized at the reporting date.

For financial instruments measured at fair value through OCI, the expected credit losses do not reduce the carrying amount in the consolidated statement of financial position, which remains at fair value. Instead, an amount equal to the allowance that would arise if the asset was measured at amortized cost is recognized in the consolidated statement of profit or loss and other comprehensive income as the accumulated impairment amount. Impairment gains or losses are accounted for as an adjustment of the revaluation reserve in the accumulated other comprehensive income, with a corresponding charge to the consolidated statement of profit or loss.

If a security is no longer publicly traded or the entity´s credit rating is downgraded, this is not, by itself, evidence of impairment, but should be considered for impairment together with other information. A decline in the fair value of ~~a debt instrument~~an investment security below its amortized cost is not necessarily evidence of impairment, as it may be due to an increase in market interest rates. Whether a decline in fair value below cost is considered significant or prolonged, must be assessed on an instrument-by-instrument basis and should be based on both qualitative and quantitative factors. However, the assessment of prolonged decline should not be compared to the entire period that the investment has been or is expected to be ~~held~~held.

A non-financial asset is an asset with a physical or intangible value and it is subject to the impairment guidelines prescribed in IAS 36 –Impairment ~~losses~~ of ~~continuing operations are recognized~~assets.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

A non-financial asset is impaired when an entity will not be able to recover that asset’s carrying value, either through using it or selling it. If circumstances arise which indicate that a non-financial asset might be impaired, a review should be undertaken of its cash generating abilities through use or sale. This review will produce an amount which should be compared with the assets’s carrying value, and if the carrying value is higher, the difference must be written off as an impairment in the consolidated statement of profit or ~~loss in those expense categories consistent with~~loss. On the ~~function of the impaired asset. For~~ other ~~non-financial assets, an assessment is made at each reporting date as to whether~~hand, if there is any indication that previously recognized impairment losses may no longer exists or may have ~~decreased. If such indication exists,~~decreased, the Bank makes an estimate of the recoverable amount. In that case, the carrying amount of the asset is increased to its recoverable amount. This increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement of profit or loss.

Loans are reported at their amortized cost considering the principal outstanding amounts net of unearned interest, and deferred fees and allowance for expected credit losses. Interest income is recognized using the effective interest rate method. This shall be calculated by applying the effective interest rate to the gross carrying amount of the loan, except for: a) purchased or originated credit-impaired loans. For these financial assets, the Bank applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition; and b) loans that have subsequently become credit-impaired financial assets. For these loans, the Bank shall apply the effective interest rate to the amortized cost of the financial asset in subsequent reporting years.

The amortization of net unearned interest and deferred fees are recognized as an adjustment to the related loan yield using the effective interest rate method.

Purchased loans are recorded at acquisition cost. The difference between the principal and the acquisition cost of loans, the premiums and discounts, is amortized over the life of the loan as an adjustment to the yield. All other costs related to acquisition of loans are expensed when incurred.

The Bank ~~identifies loans as delinquent~~considers a financial asset to be in default when ~~no debt service and/or interest payment has been received for 30 days after such payments were due. The outstanding balance~~it presents any of ~~a loan is considered past due when~~ the total principal balance with one single balloon payment has not been received within 30 days after such payment was due, or when no agreed-upon periodical payment has been received for a period of 90 days after the agreed-upon date.following characteristics:

The above presumptions regarding past due loans may be rebuttable if the Bank has reasonable and supportable information that is available without undue cost or effort, that demonstrate that the credit risk has not increased significantly since initial recognition even though the contractual payments are more than 30 or 90 days past due.

In assessing whether a borrower is in default, the Bank considers indicators that are qualitative and quantitative based on data developed internally and obtained from external sources. Inputs into the assessment of whether a financial instrument is in default and their significance may vary over time to reflect changes in circumstances.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

In the renegotiation or modification of the contractual cash flows of the loan, the Bank shall:

The Bank recognizes a loss allowance for expected credit losses (ECL) on a loan that is measured at amortized cost at each reporting date at an amount equal to the lifetime expected credit losses if the credit risk on that loan has increased significantly since initial recognition. If at the reporting date, the credit risk of that loan has not increased significantly since initial recognition, an entity shall measure the loss allowance for that loan at an amount equal to 12-month expected credit losses.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

In order to maintain periodical monitoring of the quality of the portfolio, clients are reviewed within a frequency of time between 3 and 12 months, depending on the risk rating.

The Bank's lending portfolio is comprised of the following segments: corporations, sovereign, middle-market companies and banking and financial institutions. The distinction between corporations and middle-market companies depends on the client’s level of annual sales in relation to the country risk, among other criteria. Except for the sovereign segment, segments are broken down into state-owned and private.

The allowance for expected credit losses is provided for losses derived from the credit extension process, inherent in the loan portfolio and ~~off-balance sheet instruments,~~loan commitments and financial guarantee contracts, using the reserve methodology to determine expected credit losses. Additions to the allowance for expected credit losses are made by debiting earnings. Credit losses are deducted from the allowance, and subsequent recoveries are added. The allowance is also decreased by reversals of the allowance back to earnings. The allowance ~~attributable to~~for expected credit losses for loans at amortized cost is reported as a deduction of loans and, as a liability, the allowance for ~~off-balance sheet~~expected credit ~~risk,~~losses on loan commitments and financial guarantee contracts, such as, letters of credit and ~~guarantees, is reported as a liability.~~guarantees.

The Bank measures expected credit losses (ECLs) in a way that reflects: a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; b) the time value of money; and c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecast of future economic conditions.

The expected credit loss model reflects the general pattern of deterioration or improvement in the credit quality of ~~financial instruments.~~the loans. The amount of ECLs recognized as a loss allowance or provision depends on the extent of credit deterioration since initial recognition. There are two measurement bases:

The allowance for expected credit losses includes an asset-specific component and a formula-based component. The asset-specific component, or specific allowance, relates to the provision for losses on credits considered impaired and measured individually case-by-case. A specific allowance is established when the discounted cash flows (or observable fair value of collateral) of the credit is lower than the carrying value of that credit. The formula-based component (collective assessment basis), covers the Bank’s performing credit portfolio and it is established based in a process that estimates the probable loss inherent in the portfolio, based on statistical analysis and management’s qualitative judgment. This analysis considers comprehensive information that incorporates not only past-due data, but other relevant credit information, such as forward looking macro-economic information.

(Amounts expressed in thousands of ~~internal~~U.S. dollars, except when otherwise indicated)

Significant increase in credit risk classifications, probabilities of default and loss given default. The probability of default is supported by Bladex’s historical portfolio performance, complemented by probabilities of default provided by external sources, in view of the greater robustness of this external data for some cases. The loss given default is based on Bladex’s historical losses experience and best practices.

When assessing whether the credit risk on a loan has increased significantly, the Bank considers the change in the risk of default occurring since initial recognition. For a loan to be considered in “default”, management considers criteria used in the internal credit risk model and qualitative factors, such as financial covenants, when appropriate.

At each reporting date, the Bank assesses significant increases in credit risk based on the change in the risk of a default occurring over the expected life of the ~~financial~~credit instrument. In order to make the assessment of whether there has been significant credit deterioration, the Bank considers reasonable and supportable information that is available without undue cost or effort and comparing:

For loan commitments, the Bank considers changes in the risk of a default occurring on the ‘potential’ loan to which a loan commitment relates, and for financial guarantee contracts, changes in the risk that the specified debtor will default, are taken into consideration.

In order to determine whether there has been a significant increase in the credit risk of the financial instrument, the assessment is based on quantitative information and qualitative information. The Bank considers the following factors though not exhaustive, when measuring significant increase in credit risk:

a) Significant changes in internal price indicators of credit risk as a result of a change in credit risk since inception; b) Significant changes in external market indicators of credit risk for a particular financial instrument or similar financial instruments with the same expected life; c) An actual or expected significant change in the financial instrument’s external credit rating; d) Existing or forecast adverse changes in business, financial or economic conditions; e) An actual or expected significant change in the operating results of the borrower; f) An actual or expected significant adverse change in the regulatory environment; g) economic, or technological environment of the borrower; h) Significant changes in the value of the collateral supporting the obligation; i) Significant changes, such as reductions, in financial support from a parent entity or other affiliate or an actual or expected significant change in the quality of credit enhancements, among other factors incorporated in the Bank’s ECLs model.

The reserve balances, for ~~both~~exposures on loans at amortized cost and ~~off-balance sheet credit exposures,~~loan commitments and financial guarantees contracts, are calculated applying the following formula:

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

When the Bank has no reasonable expectations of recovering the loan, then the gross carrying amount of the loan is directly reduced in its entirety; thus, constituting a derecognition event. This is generally the case when the Bank determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, the financial assets that are written off could still be subject to enforcement activities in order to comply with the Bank’s procedures for recovery of amounts due.

If the amount of loss on write-off is greater than the accumulated loss allowance, the differences will be recognized as an additional impairment loss.

Derivatives held for risk management purposes include all derivative assets and liabilities that are not classified as trading assets or liabilities. Derivatives held for risk management purposes are measured at fair value in the statement of financial position.

On initial designation of the hedge, the Bank formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objective and strategy in undertaking the hedge, together with the method that will be used to assess the effectiveness of the hedging relationship. The Bank makes an assessment, both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s) is(are) expected to be highly effective in offsetting the changes in the fair value or cash flows of the respective hedged item(s) during the period for which the hedge is designated.

The Bank uses derivative financial instruments for its management of interest rate and foreign exchange risks. Interest rate swap contracts, cross-currency swap contracts and foreign exchange forward contracts have been used to manage interest rate and foreign exchange risks respectively associated with debt securities and borrowings with fixed and floating rates, and loans and borrowings in foreign currency.

These derivatives contracts can be classified as fair value and cash flow hedges. In addition, foreign exchange forward contracts are used to hedge exposures to changes in foreign currency in subsidiary companies with functional currencies other than the US dollar. These contracts are classified as net investment hedges.

The accounting for changes in value of a derivative depends on whether the contract is for trading purposes or has been designated and qualifies for hedge accounting.

Derivatives held for trading purposes include interest rate swap, cross-currency swap, foreign exchange forward and future contracts used for risk management purposes that do not qualify for hedge accounting. These derivatives are reported as asset or liabilities, as applicable. Changes in realized and unrealized gains and losses and interest from these financial instruments are included in gain or loss per financial instrument at fair value through profit or loss.

Derivatives for hedging purposes primarily include foreign exchange forward contracts and interest rate swap contracts in US dollar and cross-currency swaps. Derivative contracts designated and qualifying for hedge accounting are reported in the consolidated statement of financial position as derivative financial instruments used for hedging - receivable and payable, as applicable, and hedge accounting is applied. In order to qualify for hedge accounting, a derivative must be considered highly effective at reducing the risk associated with the exposure being hedged. Each derivative must be designated as a hedge, with documentation of the risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, as well as how effectiveness will be assessed prospectively. The extent to which a hedging instrument is effective at achieving offsetting changes in fair value or cash flows must be assessed at least quarterly. Any ineffectiveness must be reported in current-year earnings.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

As the Bank enters into a hedging relationship, the first requirement is that the hedging instrument and the hedged item must be expected to move in the opposite direction as a result of the change in the hedged risk. This should be based on an economic ~~rational,~~rationale, as could be the case if the relationship is based only on a statistical correlation. This requirement is fulfilled for many of the hedging relationships carried by the Bank as the underlying of the hedging instrument matches, or is closely aligned with the hedged risk. Even when there are differences between the hedged item and the hedging instrument, the economic relationship will often be capable of being demonstrated using a qualitative assessment. The assessment considers, whether qualitative or quantitative, the following: a) maturity; b) nominal amount; c) cash flow dates; d) interest rate basis; and e) credit risk, including the effect of collateral, among others.

The hedge ratio is the ratio between the amount of hedged item and the amount of the hedging instrument. For most of the hedging relationships, the hedge ratio is 1:1 as the underlying of the hedging instrument perfectly matches the designated hedged risk. For a hedging relationship with a correlation between the hedged item and the hedging instrument that is not 1:1 relationship, ~~the Treasury front office will~~ generally set the hedge ratio so as to adjust for the type of relation in order to improve effectiveness.

The Bank discontinues hedge accounting prospectively in the following situations:

The Bank carries all derivative financial instruments in the consolidated statement of financial position at fair value.

When a derivative is designated as the hedging instrument in a hedge of the change in fair value of a recognized asset or liability or a firm commitment that could affect profit or loss, changes in the fair value of the derivative are recognized in the consolidated statement of profit or loss together with changes in the fair value of the ~~hedge~~hedged item that are attributable to the hedged risk. If the hedge relationship is terminated or exercised, or the hedge no longer meets the criteria for fair value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively and the fair value adjustment to the hedged item continues to be reported as part of the basis of the item and it is amortized to earnings as a yield adjustment.

When a derivative is designated as the hedging instrument in a hedge of variability in cash flows attributable to a particular risk associated with a recognized asset or liability that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in OCI and it is presented in the hedging reserve within equity and recognized in the consolidated statement of profit or loss when the hedged cash flows affect earnings. The ineffective portion is recognized in the consolidated statement of profit or loss as activities of derivative financial instruments and hedging. If the cash flow hedge relationship is terminated or exercised, or the hedge no longer meets the criteria for fair value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively and the related amounts in OCI are reclassified into earnings when hedged cash flows occur.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

When a derivative instrument or a non-derivative financial liability is designated as the hedging instrument in a hedge of a net investment in a foreign operation, the effective portion of changes in the fair value of the hedging instrument is recognized in OCI and presented in the translation reserve within equity. Any ineffective portion of the changes in the fair value of the derivative is recognized in the consolidated statement of profit or loss. The amount recognized in OCI is reclassified to profit or loss as a reclassification adjustment on disposal of the foreign operation.

Repurchase agreements are transactions in which the Bank sells a security and simultaneously agrees to repurchase it (or an asset that is substantially the same) at a fixed price on a future date. The Bank continues to recognize the securities in their entirety in the statement of financial position because it retains substantially all of the risks and rewards of ownership. The cash consideration received is recognized as a financial asset and a financial liability is recognized for the obligation to pay the repurchase price. Because the Bank sells the contractual rights to the cash flows of the securities, it does not have the ability to use the transferred assets during the term of the arrangement.

The Bank earns fee and commission income from a diverse range of services it provides to its customers.

Income is recognized to the extent that is probable that the economic benefits will flow to the Bank and it is reliably measured, regardless of when the payment is made. This income is measured at fair value of the consideration received or receivable, taking into account contractually defined terms of payment an excluding taxes or duty.

Fees arising from negotiating or participating in the negotiation of a transaction for a third party, are recognized on completion of the underlying transaction. Fees or components of fees that are linked to a certain performance are recognized after fulfilling the corresponding criteria.

Results arising from trading activities include all gains and losses from changes in fair value and related interest income or expense and dividends for financial assets and financial liabilities held for trading.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Loan commitment fees for loans that are likely to be drawn down and other credit related fees are deferred (together with any incremental costs) and recognized as an adjustment to the effective interest rate on the loan. When it is unlikely that a loan will be drawn down, the loan commitment fees are recognized over the commitment period on an effective interest rate basis. These fees are regarded as compensation for an ongoing involvement with the acquisition of a financial instrument. If the commitment expires without the Bank making the loan, the fee is recognized as revenue on expiration.

Loan origination fees, net of direct loan origination costs, are deferred, and the net amount is recognized as revenue over the contractual term of the loans as an adjustment to the ~~yield.~~yield. When there are concerns about the realization of loan principal or interest, these net fees are recognized as revenue at thecredit-adjusted effective interest rate for credit-impaired financial ~~assets.~~assets. Underwriting fees are recognized as revenue when the Bank has rendered all services to the issuer and is entitled to collect the fee from the issuer, when there are no contingencies related to the fee. Underwriting fees are recognized net of syndicate expenses. In addition, the Bank recognizes credit arrangement and syndication fees as revenue after satisfying certain retention, timing and yield criteria.

Fees received in connection with a modification of terms of a loan at amortized cost are applied as a reduction of the recorded investment in the loan. Fees earned on letters of credit, financial guarantees and other commitments are amortized using the straight-line method over the life of such instruments.

Property and equipment is stated at cost excluding the costs of day–to–day servicing, less accumulated depreciation and accumulated impairment in value. Changes in the expected useful life are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates.

Depreciation is calculated using the straight–line method to write down the cost of property and equipment to their residual values over their estimated useful lives. Land is not depreciated. The estimated useful lives are as follows:

Improvements to leased properties, under operating leases are amortized on a straight line calculated without exceeding the length of the respective lease contracts.

Property and equipment is derecognized on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in other income or other expenses in the consolidated statement of profit or loss in the year that the asset is derecognized.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

An intangible asset is recognized only when its cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to it will flow to the Bank.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite useful life are amortized using the straight-line method over the estimated useful lives of assets which are reviewed annually by the Bank. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and they are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is presented as a separate line item in the consolidated statement of profit or loss.

Bank’s intangible assets include the value of computer software. Amortization is calculated using the straight–line method to write down the cost of intangible assets to their residual values over their estimated useful lives of 5 years. Gains or losses arising from the derecognition of an intangible asset is determined by the Bank as the difference between proceeds from the sale or disposal and the net carrying amount of the intangible asset and recognizing them in the results for the year in which the transaction occurs.

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. This is generally not the case with master netting agreements; therefore, the related assets and liabilities are presented gross in the consolidated statement of financial position.

The determination of whether an arrangement is a lease, or contains a lease, is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Leases where the lessor do not transfer to the Bank substantially all the risks and benefits incidental to ownership of the leased items are classified as operating leases. Operating lease payments are recognized as an expense in the consolidated statement of profit or loss on a straight-line basis over the lease term. Contingent rental payable is recognized as an expense in the period in which they are incurred.

Leases where the Bank does not transfer substantially all of the risk and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the year in which they are earned. In the event that the contract is cancelable, they are recognized as income over the term of the lease.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Provisions are recognized when the Bank has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the consolidated statement of profit or loss, net of any reimbursement.

Capital reserves are established as an appropriation of retained earnings and are, as such, a form of retained earnings. Reductions of capital reserves require the approval of the Bank’s Board of Directors and the SBP. Other capital reserves include:

The Bank applies IFRS 2 for share–based payment transactions to account for compensation costs on restricted stock, restricted stock units and stock option plans. Compensation cost is based on the grant date fair value of both stock and options and is recognized over the requisite service period of the employee, using the accelerated method. The fair value of each option is estimated at the grant date using a binomial option-pricing model. When stocks options and restricted stock units vested are exercised, the Bank’s policy is to reissue shares from treasury stock.

Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax ~~rates~~laws and ~~tax laws~~regulations used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Deferred tax is calculated based on the liability method, on temporary differences between the carrying amounts of assets and liabilities reported for financial purposes and the amounts used for taxation purposes. The amount of deferred tax is based on the embodiment of assets and liabilities using the rate of income tax in effect on the date of the consolidated statement of financial position.

(Amounts expressed in thousands of ~~deferred income taxes has been immaterial to-date.~~U.S. dollars, except when otherwise indicated)

Basic earnings per share is computed by dividing the profit for the year (the numerator) by the weighted average number of common shares outstanding (the denominator) during the year. Diluted earnings per share measure performance incorporating the effect that potential common shares, such as stock options and restricted stock units outstanding during the same period, would have on net earnings per share. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except for the denominator, which is increased to include the number of additional common shares that would have been issued if the beneficiaries of stock purchase options and ~~other~~restricted stock units plans could exercise their options. The number of potential common shares that would be issued is determined using the treasury stock method.

The own equity instruments of the Bank which are acquired by it or by any of its subsidiaries (treasury shares) are deducted from equity and accounted for at weighted average cost. Consideration paid or received on the purchase, sale, issue or cancellation of the Bank’s own equity instruments is recognized directly in equity.

No gain or loss is recognized in the consolidated statement of profit or loss on the purchase, sale, issue or cancellation of own equity instruments.

The Bank’s segment reporting is based on the following business segments: Commercial, which incorporates the Bank’s core business of financial intermediation and fee generation activities relating to the Bank’s Commercial Portfolio; and Treasury, which is responsible for the Bank’s funding and liquidity management, along with the management of its activities in investment securities, as well as the management of the Bank’s interest rate, liquidity, price, and currency risks.

The preparation of the consolidated financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Material estimates that are particularly susceptible to significant changes relate to the determination of the allowances for expected credit losses, impairment of securities, and the fair value of financial instruments. Actual results could differ from those estimates. Management believes these estimates are adequate.

In the process of applying the Bank’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

When determining the reserve for expected credit losses, management’s judgment is required for evaluating the amount and timing of future cash flows in order to determine whether credit risk has increased significantly since initial recognition, considering the characteristics of the loans and the default patterns in the past for comparable financial instruments. Changes in the risk of a default occurring over the next 12 months may be a reasonable approximation of the changes in the lifetime risk of a default occurring. The Bank uses changes in the risk of a default occurring over the next 12 months to determine whether credit risk has increased significantly since initial recognition, unless circumstances indicate that a lifetime assessment is necessary.

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

When the fair values of financial assets and financial liabilities recorded on the consolidated statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are derived from observable market data where possible, but if this is not available, judgment is required to establish fair values. The judgments include considerations of liquidity and model inputs such as volatility for longer–dated derivatives and discount rates, prepayment rates and default rate assumptions for asset-backed securities. The valuation of financial instruments is described in more detail in Note ~~17.~~18.

The key assumptions concerning the future and other key sources of estimating uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Bank based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments; however, may change due to market changes or circumstances beyond the control of the Bank. Such changes are reflected in the assumptions when they occur.

The Bank’s management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Bank’s ability to continue as a going concern. Therefore, the consolidated financial statements continue to be prepared on a going concern basis.

The collective assessment takes account of data from the loan portfolio (such as levels of arrears, credit utilization, loan-to-collateral ratios, etc.), and judgments on the effect of concentrations of risks and economic data (including levels of unemployment, real estate prices indices, country risk and the performance of different individual groups).

Impairment of investments securities measured at fair value through OCI and investment securities at amortized cost

The Bank reviews its debt securities classified as investments at fair value through OCI and investments at amortized cost at each reporting date to assess whether they are impaired. This requires similar judgment as applied to the individual assessment of ~~loans and advances.~~the investment securities. The Bank records impairment charges when there has been a significant or prolonged decline in the fair value below their cost. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. In making this judgment, the Bank evaluates, among other factors, historical price movements and duration and extent to which the fair value of an investment is less than its cost.

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments to replace IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together the three aspects of accounting financial instruments project: Classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual years beginning on or after January 1, 2018, with early application permitted.

~~(a)~~F-27

~~Classification and measurement~~

The Bank did not observed any significant impact on its consolidated statement of financial position or consolidated statement of changes in equity in the application of the classification and measurement requirements of IFRS 9 as compared to US GAAP. The Bank continues with the measurement of all financial assets at fair value except for those measured at amortized cost. Investments in securities held both for collecting contractual cash flows and selling financial assets continue to be measured at fair value through OCI. For investments in foreign exchange, the effect of the foreign exchange is recorded in the consolidated statement of profit or loss.

~~(b)~~

~~Impairment~~

IFRS 9 requires the Bank’s expected credit losses to be recorded in all of its financial instruments, either on the basis of 12 months or for the life of the asset. The Bank applied the three-stage model of ECLs on all financial instruments. The Bank assessed the impact of its current model and the model required by IFRS 9, and determined no significant impact, mainly due to the nature of its business, which focuses on predominantly short-term credit exposures.

~~F-29~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Summary of significant accounting policies (continued)

~~3.21~~

~~Judgments, estimates and significant accounting assumptions (continued)~~

~~Early adoption of accounting policies (continued)~~

~~IFRS 9 Financial Instruments (continued)~~

~~(c)~~

~~Hedge accounting~~

~~3.22~~3.23

Future changes in applicable accounting policies

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the ~~Bank~~consolidated financial statements are disclosed below. The Bank intends to adopt these standards, if applicable, when they become effective.

~~IFRS 15 Revenue from Contracts with Customers~~

IFRS 16 Leases

The Bank has started an initial assessment of the potential impact on its consolidated financial statements. So far, the most significant impact identified is that the Bank will recognize new assets and liabilities for its operating leases of its Headquarter in Panama and its New York office premises. In addition, the nature of expenses related to those leases will now change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. The Bank will use the optional exemptions with regards to short-term leases and leases for which the underlying asset is of low value. No significant impact is expected for the Bank’s finance leases.

As a lessee, the Bank is evaluating using the modified retrospective approach. The Bank will use the election consistently to all of its leases. The Bank currently plans to apply IFRS 16 initially on 1 January 2019. The Bank is evaluating, as a practical expedient for the ~~potential~~transition approach, to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4. The Bank is not required to make any adjustments for leases in which it is a lessor except where it is an intermediate lessor in a sub-lease. For the portion of the Head office premises that are being sub-leased, this sublease will be classified as a finance lease with reference to the right-of-use asset arising from the head lease. If the interest rate implicit on the sublease cannot be readily determined, the Bank will use the discount rate used for the head lease to measure the net investment in the sublease.

The Bank has not yet quantified the impact on its reported assets and liabilities for the adoption of ~~this new standard in~~IFRS 16. The quantitative effect will depend on, the transition method chosen, the extent to which the Bank uses the practical expedients and recognition exemptions, and any additional leases that the Bank enters into. The Bank expects to disclose its ~~consolidated financial statements.~~transition approach and quantitative information before adoption. The Bank expects that the adoption of IFRS 16 will not impact its ability to comply with the minimum regulatory capital requirements

~~F-30~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~F-28

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Cash and cash equivalents

	December 31 2015		December 31 2014		January 1 2014		December 31, 2016		December 31, 2015

Cash and due from banks		2,601		4,985		2,161		598,027		2,601
Interest-bearing deposits in banks		1,297,365		775,530		837,557		471,511		1,297,365
Total		1,299,966		780,515		839,718		1,069,538		1,299,966

Less:
Pledged deposits		32,664		39,210		9,032		61,812		32,664
Total cash and cash equivalents		1,267,302		741,305		830,686		1,007,726		1,267,302

Interest-bearing deposits in banks

Demand deposits

As of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014,~~2015, cash in banks balances correspond to bank deposits, bearing interest based on the daily rates determined by banks for between 0.01% and ~~0.27%; 0.05%~~0.77% and 0.01% to ~~0.25% and 0.09% to 0.25%~~0.35%, respectively.

Time deposits

As of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014,~~2015, cash equivalents balances correspond to demand deposits (overnight), bearing an average interest rate of ~~0.20%~~0.83% to ~~0.35%; 0.13%~~0.88% and 0.40% to ~~0.20% and 0.08% to 0.20%~~0.52%, respectively.

On December 31, 2015 and 2014 and January 1, 2014 the New York Agency had a pledged deposit with a carrying value of $3.3 million, $3.0 million and $3.0 million, respectively, with the New York State Banking Department, as required by law since March 1994. As of December 31, 2015 and 2014 and January 1, 2014, the Bank had pledgedPledged deposits ~~with a carrying value of $29.3 million, $36.2 million and $6.0 million, respectively, to secure derivative financial instruments transactions and repurchase agreements.~~

	December 31, 2016		December 31, 2015
Pledged deposits:
New York⁽¹⁾		2,800		3,300
Panama⁽²⁾		59,012		29,364
Total		61,812		32,664

⁽¹⁾

The New York Agency had a pledged deposit with the New York State Banking Department, as required by law since March 1994.

⁽²⁾

The Bank had pledged deposits to secure derivative financial instruments transactions and repurchase agreements.

Financial instruments

~~5.1~~

~~Financial liabilities at FVTPL~~

5.1 Financial instruments at FVTPL – Fair value through profit or loss

The fair value of financial liabilities at FVTPL is as follows:

	December 31 2015		December 31 2014		January 1 2014		December 31, 2016		December 31, 2015
Liabilities
Interest rate swaps		15		52		65		-		15
Forward foreign exchange		74		-		-
Cross currency swaps		-		-		7
Foreign exchange forward								24		74
Total		89		52		72		24		89

~~F-31~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~F-29

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Financial instruments (continued)

~~5.1~~

~~Financial liabilities at FVTPL (continued)~~

5.1 Financial instruments at FVTPL – Fair value through profit or loss (continued)

~~As of December 31, 2015 and 2014, and January 2014,~~The information on the nominal amounts of derivative financial instruments at FVTPL is as follows:

December 31, 2015 December 31, 2014 January 1, 2014
Nominal Fair Value Nominal Fair Value Nominal Fair Value
Amount Asset Liability Amount Asset Liability Amount Asset Liability
Interest rate swaps 14,000 - 15 14,000 - 52 14,000 - 65
Forward foreign exchange 1,675 - 74 - - - - - -
Cross currency swaps - - - - - - 600 - 7
Total 15,675 - 89 14,000 - 52 14,600 - 72

	December 31, 2016						December 31, 2015
	Nominal		Fair Value				Nominal		Fair Value
	Amount		Asset		Liability		Amount		Asset		Liability
Interest rate swaps		-		-		-		14,000		-		15
Forward foreign exchange		1,274		-		24		1,675		-		74
Total		1,274		-		24		15,675		-		89

~~5.2~~

~~Investment Funds at FVTPL~~

5.2 Investment Funds at FVTPL – Fair value through profit or loss

The Bank ~~maintains~~maintained an investment in the Alpha4X Feeder Fund (the “Feeder”) which iswas organized under a “Feeder-Master” structure. Under this structure, the Feeder ~~invests~~invested all of its assets in the Master which in turn ~~invests~~invested in various assets on behalf of its investor. ~~The~~At December 31, 2015, the investment funds ~~consist~~consisted of the net asset value (NAV) of Bladex’s investment in the Feeder and in the Brazilian Fund.

~~Since January 2014, the~~The changes of the Bank´s investment in the Feeder iswere recorded in the consolidated statement of profit or loss of that fund in the “Gain (loss) per financial instruments at fair value through profit and loss” line item. The Feeder iswas 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 on the fund dodid not give the Bank the ability to direct the relevant activities of the fund nor the ability to use its power over the investee to affect its return. At December 31, 2015 ~~and 2014, and January 1, 2014~~ the Bank ~~has~~had a participation in that fund of 47.71%~~, 49.61% and 55.87%, respectively.~~.

Bladex also ~~reports~~reported the changes in the NAV of the Brazilian Fund in the “Gain (loss) per financial instruments at fair value through profit and loss" line item, which the Bank ~~does~~did not consolidate, because the existing rights on this fund dodid 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 iswas adjusted to recognize the Bank's participation in the profits ~~and~~or losses of the fund in the line “gain (loss) per financial instruments at fair value through profit or loss” of the consolidated statement of profit or loss.

~~F-32~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

~~Financial instruments (continued)~~

~~5.2~~

~~Investment Funds at FVTPL (continued)~~

The following table summarizes the balances of investments in investment funds:

December 31
2015 December 31
2014 January 1
2014
Alpha4X Feeder Fund 49,585 52,472 63,170
Alpha4X Latam Fundo de Investimento Multimercado 3,826 5,102 5,592
53,411 57,574 68,762

	December 31, 2016		December 31, 2015
Alpha4X Feeder Fund		-		49,585
Alpha4X Latam Fundo de Investimento Multimercado		-		3,826
		-		53,411

~~On February, May and November 2015, the Bank redeemed a total of $8.0 million of its investment in the Fund.~~ The Bank ~~has a commitment~~remained committed to ~~remain as~~being an investor inof these funds ~~with possibility of contractual redemptions,~~ until March 31, ~~2016.~~2016 and was later redeemed completely.

F-30

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Financial instruments (continued)

5.3

Securities at fair value through other comprehensive income

The amortized cost, related unrealized gross gain (loss) and fair value of securities at fair value through other comprehensive income by country risk and type of debt are as follows:

	December 31, 2015								December 31, 2016
			Unrealized								Unrealized
	Amortized Cost		Gain		Loss		Fair Value		Amortized Cost		Gain		Loss		Fair Value
Corporate debt:
Brazil		31,831		-		3,000		28,831		3,144		-		62		3,082
Chile		8,205		-		209		7,996
Colombia		17,815		-		7,110		10,705
Honduras		7,195		-		61		7,134
Panama		4,648		-		73		4,575
Peru		7,339		-		64		7,275
Venezuela		18,392		-		93		18,299		10,810		20		3		10,827
		95,425		-		10,610		84,815
										13,954		20		65		13,909
Sovereign debt:
Brazil		11,625		-		1,285		10,340		2,926		-		140		2,786
Chile		10,536		-		323		10,213		5,229		-		59		5,170
Colombia		12,046		-		670		11,376
Mexico		17,272		-		681		16,591
Trinidad and Tobago		9,705		-		1,237		8,468		9,283		-		541		8,742
		61,184		-		4,196		56,988		17,438		-		740		16,698
		156,609		-		14,806		141,803		31,392		20		805		30,607

~~F-33~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~F-31

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Financial instruments (continued)

5.3

Securities at fair value through other comprehensive income (continued)

December 31, 2014
Amortized Unrealized
Cost Gain Loss Fair Value
Corporate debt:
Brazil 36,575 - 848 35,727
Colombia 24,139 - 1,828 22,311
Chile 12,215 - 201 12,014
Honduras 7,325 - 33 7,292
Panama 4,701 - 56 4,645
Peru 16,911 - 129 16,782
Venezuela 20,299 34 9 20,324
122,165 34 3,104 119,095

Sovereign debt:
Brazil 21,899 94 444 21,549
Colombia 55,415 1 1,239 54,177
Chile 11,669 - 398 11,271
Mexico 98,430 4 1,587 96,847
Panama 17,692 10 306 17,396
Peru 9,052 2 14 9,040
Trinidad and Tobago 10,113 - 515 9,598
224,270 111 4,503 219,878
346,435 145 7,607 338,973

~~F-34~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

~~Financial instruments (continued)~~

~~5.3~~

~~Securities at fair value through other comprehensive income (continued)~~

	January 1, 2014								December 31, 2015
	Amortized		Unrealized								Unrealized
	Cost		Gain		Loss		Fair Value		Amortized Cost		Gain		Loss		Fair Value
Corporate debt:
Brazil		41,439		11		778		40,672		31,831		-		3,000		28,831
Chile										8,205		-		209		7,996
Colombia		44,536		65		1,351		43,250		17,815		-		7,110		10,705
Chile		21,807		15		751		21,071
Honduras		9,400		-		136		9,264		7,195		-		61		7,134
Panama		7,159		-		78		7,081		4,648		-		73		4,575
Peru		29,439		42		674		28,807		7,339		-		64		7,275
Venezuela		29,871		-		1,848		28,023		18,392		-		93		18,299
		183,651		133		5,616		178,168		95,425		-		10,610		84,815

Sovereign debt:
Brazil		32,751		936		645		33,042		11,625		-		1,285		10,340
Chile										10,536		-		323		10,213
Colombia		42,776		-		1,125		41,651		12,046		-		670		11,376
Chile		20,772		12		610		20,174
Mexico		35,730		-		2,445		33,285		17,272		-		681		16,591
Panama		12,485		71		553		12,003
Peru		11,589		-		65		11,524
Trinidad and Tobago		4,665		-		144		4,521		9,705		-		1,237		8,468
		160,768		1,019		5,587		156,200		61,184		-		4,196		56,988
		344,419		1,152		11,203		334,368		156,609		-		14,806		141,803

As of December 31, 2016, there were no securities at fair value through OCI guaranteeing repurchase transactions.

As of December 31, 2015, ~~and 2014, and January 1, 2014~~ securities at fair value through OCI with a carrying value of $87.6 million ~~$307.5 million and $296.8 million, respectively,~~ were pledged to secure repurchase transactions accounted for as secured financings.

F-32

~~As of~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014 ~~securities at fair value through OCI with a carrying value~~

(Amounts expressed in thousands of $56.0 million and $18.0 million, respectively, were reclassified into securities at amortized cost as part of the overall investment portfolio management strategy. The securities transferred maintained the same business model and cash flow characteristics that meet the SPPI (sole purpose of principal and interest collection) criterion, so they can be subsequently measured at amortized cost.U.S. dollars, except when otherwise indicated)

~~F-35~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

Financial instruments (continued)

5.3

Securities at fair value through other comprehensive income (continued)

The following table discloses those securities that have had unrealized losses for a period less than 12 months and for 12 months or longer:

													December 31, 2016
	December 31, 2015												Less than 12 months				12 months or longer				Total
	Less than 12 months				12 months or longer				Total				Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses
	Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses
Corporate debt		63,611		1,010		21,204		9,600		84,815		10,610		1,805		3		3,082		62		4,887		65
Sovereign debt		23,468		846		33,520		3,350		56,988		4,196		5,170		59		11,528		681		16,698		740
Total		87,079		1,856		54,724		12,950		141,803		14,806		6,975		62		14,610		743		21,585		805

													December 31, 2015
	December 31, 2014												Less than 12 months				12 months or longer				Total
	Less than 12 months				12 months or longer				Total				Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses
	Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses
Corporate debt		89,014		2,544		13,334		560		100,411		3,104		63,611		1,010		21,204		9,600		84,815		10,610
Sovereign debt		99,852		1,571		77,199		2,932		178,988		4,503		23,468		846		33,520		3,350		56,988		4,196
Total		188,866		4,115		90,533		3,492		279,399		7,607		87,079		1,856		54,724		12,950		141,803		14,806

January 1, 2014
Less than 12 months 12 months or longer Total
Fair
Value Unrealized
Gross Losses Fair
Value Unrealized
Gross Losses Fair
Value Unrealized
Gross Losses
Corporate debt 136,895 5,113 6,866 503 143,761 5,616
Sovereign debt 107,239 5,210 18,557 377 125,796 5,587
Total 244,134 10,323 25,423 880 269,557 11,203

The following table presents the realized gains and losses on sale of securities at fair value through other comprehensive income:

	December 31, 2016			December 31, 2015			December 31, 2014
Realized gain on sale of securities		221			469			1,891
Realized loss on sale of securities		(577	)		(106	)		(20	)
Net (loss) gain on sale of securities at fair value through other comprehensive income		(356	)		363			1,871

~~F-36~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~F-33

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Financial instruments (continued)

5.3

Securities at fair value through other comprehensive income (continued)

~~The following table presents the realized gains and losses on sale of securities at fair value through other comprehensive income:~~

December 31
2015 December 31
2014
Realized gain on sale of securities 469 1,891
Realized loss on sale of securities (106 ) (20 )
Net gain (loss) on sale of securities at fair value through other comprehensive income 363 1,871

Securities at fair value through other comprehensive income classified by issuer’s credit quality indicators are as ~~follows~~follows:

Rating⁽¹⁾	December 31 2015		December 31 2014		January 1 2014		December 31, 2016		December 31, 2015
1-4		133,989		338,973		236,595		30,607		133,989
5-6		6,224		-		97,773		-		6,224
7		1,590		-		-		-		1,590
8		-		-		-		-		-
9		-		-		-		-		-
10		-		-		-		-		-
Total		141,803		338,973		334,368		30,607		141,803

⁽¹⁾ Current ratings as of December 31, 2016 and 2015, ~~and 2014, and January 1, 2014,~~ respectively.

~~F-37~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

~~Financial instruments (continued)~~

~~5.3~~

~~Securities at fair value through other comprehensive income (continued)~~

The amortized cost and fair value of securities at fair value through other comprehensive income by contractual maturity ~~as of December 31, 2015 and 2014, and January 1, 2014~~ are shown in the following tables:

December 31, 2015
Amortized Cost Fair Value
Due within 1 year 21,068 20,212
After 1 year but within 5 years 79,689 69,625
After 5 years but within 10 years 55,852 51,966
156,609 141,803

December 31, 2014
Amortized Cost Fair Value
Due within 1 year 85,496 85,579
After 1 year but within 5 years 139,547 135,662
After 5 years but within 10 years 121,392 117,732
346,435 338,973

					December 31, 2016				December 31, 2015
	January 1, 2014				Amortized Cost		Fair Value		Amortized Cost		Fair Value
	Amortized Cost		Fair Value
Due within 1 year		25,970		26,257		-		-		21,068		20,212
After 1 year but within 5 years		177,810		176,622		17,656		16,994		79,689		69,625
After 5 years but within 10 years		140,639		131,489		13,736		13,613		55,852		51,966
		344,419		334,368		31,392		30,607		156,609		141,803

~~F-38~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~F-34

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Financial instruments (continued)

5.3

Securities at fair value through other comprehensive income (continued)

The allowance for expected credit losses relating to securities at fair value through other comprehensive income is as follow:

	12-month expected credit losses			Lifetime expected credit losses (collectively assessed)			Lifetime expected credit losses (individually assessed)		Credit- impaired financial assets (lifetime expected credit losses)		Total			Stage 1⁽¹⁾			Stage 2⁽²⁾			Stage 3⁽³⁾			Total
Allowance for expected credit losses as of December 31, 2014		701			1,408			-		-		2,109
Allowance for expected credit losses as of December 31, 2015															234			178			6,737			7,149
Transfer to lifetime expected credit losses		(5,507	)		5,507			-		-		-			(31	)		456			-			425
Transfer to credit-impaired financial assets		-			(6,737	)		-		6,737		-			-			-			-			-
Transfer to 12-month expected credit losses		-			-			-		-		-			-			-			-			-
Net effect of changes in reserve for expected credit losses															(15	)		(168	)		-			(183	)
Financial assets that have been derecognized during the year		(277	)		-			-		-		(277	)		(174	)		(203	)		-			(377	)
Changes due to financial instruments recognized as of December 31, 2014		(5,784	)		(1,230	)		-		6,737		(277	)
Changes due to financial instruments recognized as of December 31, 2015:															(220	)		85			-			(135	)
New financial assets originated or purchased		5,317			-			-		-		5,317			28			-			-			28
Write-offs		-			-			-		-		-			-			-			(6,737	)		(6,737	)
Changes in models/risk parameters		-			-			-		-		-
Foreign exchange and other movements		-			-			-		-		-
Allowance for expected credit losses as of December 31, 2015		234			178			-		6,737		7,149
Allowance for expected credit losses as of December 31, 2016															42			263			-			305

~~F-39~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

	Stage 1⁽¹⁾			Stage 2⁽²⁾			Stage 3⁽³⁾		Total
Allowance for expected credit losses as of December 31, 2014		701			1,408			-		2,109
Transfer to lifetime expected credit losses		(5,507	)		5,507			-		-
Transfer to credit-impaired financial assets		-			(6,737	)		6,737		-
Transfer to 12-month expected credit losses		-			-			-		-
Financial assets that have been derecognized during the year		(277	)		-			-		(277	)
Changes due to financial instruments recognized as of December 31, 2014:		(5,784	)		(1,230	)		6,737		(277	)
New financial assets originated or purchased		5,317			-			-		5,317
Allowance for expected credit losses as of December 31, 2015		234			178			6,737		7,149

5.⁽¹⁾

~~Financial instruments (continued)~~12-month expected credit losses.

⁽²⁾

Lifetime expected credit losses.

⁽³⁾

Credit-impaired financial assets (lifetime expected credit losses).

~~5.3~~F-35

~~Securities at fair value through other comprehensive income (continued)~~

12-month
expected
credit losses Lifetime
expected credit
losses
(collectively
assessed) Lifetime
expected credit
losses
(individually
assessed) Credit-
impaired
financial
assets (lifetime
expected
credit losses) Total
Allowance for expected credit losses as of January 1, 2014 841 325 - - 1,166
Transfer to lifetime expected credit losses (1,408 ) 1,408 - - -
Transfer to credit-impaired financial assets - - - - -
Transfer to 12-month expected credit losses 17 (17 ) - - -
Financial assets that have been derecognized during the year (443 ) (308 ) - - (751 )
Changes due to financial instruments recognized as of January 1, 2014 (1,834 ) 1,083 - - (751 )
New financial assets originated or purchased 1,694 - - - 1,694
Write-offs - - - - -
Changes in models/risk parameters - - - - -
Foreign exchange and other movements - - - - -
Allowance for expected credit losses as of December 31, 2014 701 1,408 - - 2,109

~~F-40~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014

(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

Financial instruments (continued)

5.4

Securities at amortized cost

The amortized cost, related unrealized gross gain (loss) and fair value of these securities by country risk and type of debt are as follows:

	December 31, 2015								December 31, 2016
	Amortized		Unrealized								Unrealized
	Cost⁽¹⁾		Gross Gain		Gross Loss		Fair Value		Amortized Cost⁽¹⁾		Gross Gain		Gross Loss		Fair Value
Corporate debt:
Brazil		1,484		-		383		1,101		4,614		-		146		4,468
Costa Rica		5,000		-		-		5,000
Panama		20,008		45		-		20,053		3,000		-		-		3,000
		26,492		45		383		26,154		7,614		-		146		7,468

Sovereign debt:
Brazil		21,903		-		3,260		18,643		11,179		37		194		11,022
Colombia		30,599		-		1,530		29,069		29,812		34		280		29,566
Mexico		20,871		-		1,684		19,187		20,541		-		1,059		19,482
Panama		8,876		4		-		8,880		8,670		198		-		8,868
		82,249		4		6,474		75,779		70,202		269		1,533		68,938
		108,741		49		6,857		101,933		77,816		269		1,679		76,406

	December 31, 2014								December 31, 2015
	Amortized		Unrealized								Unrealized
	Cost⁽²⁾		Gross Gain		Gross Loss		Fair Value		Amortized Cost⁽²⁾		Gross Gain		Gross Loss		Fair Value
Corporate debt:
Brazil		18,660		-		1,794		16,866		1,484		-		383		1,101
Costa Rica										5,000		-		-		5,000
Panama		23,351		35		-		23,386		20,008		45		-		20,053
		42,011		35		1,794		40,252		26,492		45		383		26,154

Sovereign debt:
Brazil										21,903		-		3,260		18,643
Colombia		13,003		40		-		13,043		30,599		-		1,530		29,069
Mexico										20,871		-		1,684		19,187
Panama										8,876		4		-		8,880
		13,003		40		-		13,043		82,249		4		6,474		75,779
		55,014		75		1,794		53,295		108,741		49		6,857		101,933

⁽¹⁾

Amounts do not include allowance for expected credit losses of ~~US$526.~~$602.

⁽²⁾

Amounts do not include allowance for expected credit losses of ~~US$276.~~$526.

~~F-41~~

~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~F-36

~~December 31, 2015 and 2014~~

~~(Amounts expressed in thousands of U.S. dollars)~~

~~Financial instruments (continued)~~

~~5.4~~

~~Securities at amortized cost (continued)~~

January 1, 2014
Amortized Unrealized
Cost⁽¹⁾ Gross Gain Gross Loss Fair Value
Corporate debt:
Costa Rica 2,000 - - 2,000
Honduras 4,118 - - 4,118
Panama 14,634 8 18 14,624
20,752 8 18 20,742
Sovereign debt:
Colombia 13,007 - 115 12,892
13,007 - 115 12,892
33,759 8 133 33,364

⁽¹⁾

~~Amounts does not include allowance for expected credit losses of US$189~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

~~The amortized cost and fair value of securities at amortized cost by contractual maturity as of~~Notes to the Consolidated Financial Statements

For the years ended December 31, 2016, 2015 and 2014 ~~and January 1, 2014 are shown~~

(Amounts expressed in ~~the following tables:~~

December 31, 2015
Amortized
Cost Fair
Value

Due within 1 year 28,454 28,474
After 1 year but within 5 years 43,236 39,206
After 5 years but within 10 years 37,051 34,253
108,741 101,933
~~F-42~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

5.4 Securities at amortized cost (continued)

December 31, 2014
Amortized
Cost Fair
Value
Due within 1 year 34,324 34,376
After 1 year but within 5 years 20,690 18,919
55,014 53,295
The amortized cost and fair value of securities at amortized cost by contractual maturity are shown in the following tables:

December 31, 2016 December 31, 2015
January 1, 2014
Amortized
Cost

Fair
Value

Amortized
Cost

Fair
Value

Amortized
Cost Fair
Value
Due within 1 year 18,701 18,709 3,988 4,025 28,454 28,474
After 1 year but within 5 years 15,058 14,925 68,537 67,358 43,236 39,206
After 5 years but within 10 years 5,291 5,023 37,051 34,253
33,759 33,634 77,816 76,406 108,741 101,933

As of December 31, 2016, there were no securities at amortized cost, guaranteeing repurchase transactions. As of December 31, 2015, ~~and 2014, and January 1, 2014~~ securities at amortized cost with a carrying value of $56.3 million, ~~$13.0 million and $13.0 million, respectively,~~ were pledged to secure repurchase transactions accounted for as secured ~~financings.~~
~~Securities~~financings.Securities at amortized cost classified by issuer’s credit quality indicators are as follows:

Rating⁽¹⁾ December 31
2015 December 31
2014 January 1
2014 December 31,
2016 December 31,
2015
1-4 94,257 46,114 8,169 76,333 94,257
5-6 14,484 8,900 25,590 1,483 14,484
7 - - - - -
8 - - - - -
9 - - - - -
10 - - - - -
Total 108,741 55,014 33,759 77,816 108,741

⁽¹⁾ Current ratings as of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014,~~2015, respectively.

~~F-43~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-37
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

5.4 Securities at amortized cost (continued)

The allowance for expected credit losses relating to securities at amortized cost is as follow:

12-month
expected
credit losses Lifetime
expected
credit losses
(collectively
assessed) Lifetime
expected credit
losses
(individually
assessed) Credit-
impaired
financial assets
(lifetime
expected credit
losses) Total
Allowance for expected credit losses as of December 31, 2014 276 - - - 276
Transfer to lifetime expected credit losses (178 ) 178 - - -
Transfer to credit-impaired financial assets - - - - -
Transfer to 12-month expected credit losses - - - - -
Financial assets that have been derecognized during the year (207 ) - - - (207 )
Changes due to financial instruments recognized as of December 31, 2014 (385 ) 178 - - (207 )
New financial assets originated or purchased 457 - - - 457
Write-offs - - - - -
Changes in models/risk parameters - - - - -
Foreign exchange and other movements - - - - -
Allowance for expected credit losses as of December 31, 2015 348 178 - - 526
Stage 1⁽¹⁾ Stage 2⁽²⁾ Stage 3⁽³⁾ Total
Allowance for expected credit losses as of December 31, 2015 348 178 - 526
Transfer to lifetime expected  credit losses (43 ) 444 - 401
Transfer to credit-impaired financial assets - - - -
Transfer to 12-month expected credit losses - - - -
Net effect of changes in reserve for expected credit losses (5 ) (91 ) - (96 )
Financial assets that have been derecognized during the year (317 ) (28 ) - (345 )
Changes due to financial instruments recognized as of December 31, 2015: (365 ) 325 - (40 )
New financial assets originated or purchased 116 - - 116
Allowance for expected credit losses as of December 31, 2016 99 503 - 602

~~F-44~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
Stage 1⁽¹⁾ Stage 2⁽²⁾ Stage 3⁽³⁾ Total
Allowance for expected credit losses as of December 31, 2014 276 - - 276
Transfer to lifetime expected  credit losses (178 ) 178 - -
Transfer to credit-impaired financial assets - - - -
Transfer to 12-month expected credit losses - - - -
Financial assets that have been derecognized during the year (207 ) - - (207 )
Changes due to financial instruments recognized as of December 31, 2014: (385 ) 178 - (207 )
New financial assets originated or purchased 457 - - 457
Allowance for expected credit losses as of December 31, 2015 348 178 - 526

5.⁽¹⁾ ~~Financial instruments (continued)~~12-month expected credit losses.
⁽²⁾ Lifetime expected credit losses.
⁽³⁾ Credit-impaired financial assets (lifetime expected credit losses).

~~5.4~~F-38 ~~Securities at amortized cost (continued)~~
12-month
expected
credit losses Lifetime
expected credit
losses
(collectively
assessed) Lifetime
expected credit
losses
(individually
assessed) Credit-
impaired
financial assets
(lifetime
expected credit
losses) Total
Allowance for expected credit losses as of January 1, 2014 189 - - - 189
Transfer to lifetime expected credit losses - - - - -
Transfer to credit-impaired financial assets - - - - -
Transfer to 12-month expected credit losses - - - - -
Financial assets that have been derecognized during the year (128 ) - - - (128 )
Changes due to financial instruments recognized as of January 1, 2014 (128 ) - - - (128 )
New financial assets originated or purchased 215 - - - 215
Write-offs - - - -
Changes in models/risk parameters - - - - -
Foreign exchange and other movements - - - - -
Allowance for expected credit losses as of December 31, 2014 276 - - - 276
~~F-45~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

5.5 Recognition and derecognition of financial assets

During the ~~year~~years ended December 31, 2016, 2015 and 2014, the Bank sold certain financial instruments in the secondary market measured at amortized cost. These sales were made on the basis of compliance with the Bank's strategy to optimize the loan portfolio.

The amounts and gains arising from the derecognition of these financial instruments are presented in the following table. These gains are presented within the line “gain on sale of ~~loans”~~loans at amortized cost” in the consolidated statement of profit or loss.

Assignments and
Participations Gains Assignments and
Participations Gains

For the year ended December 31, 2016 157,242 724
For the year ended December 31, 2015 92,438 422 92,438 422
For the year ended December 31, 2014 515,552 2,169 515,552 2,169

~~5.6~~ ~~Loans – at amortized cost~~
5.6 Loans – at amortized cost

The following table set forth details of the Bank’s gross loan portfolio:

December 31
2015 December 31
2014 January 1
2014
December 31,
2016
December 31,
2015
Corporations:
Private 3,254,792 3,120,005 2,375,178 2,655,910 3,254,792
State-owned 461,573 711,955 938,878 786,900 461,573
Banking and financial institutions:
Private 1,974,960 1,890,605 1,785,798 1,738,999 1,974,960
State-owned 612,677 480,331 474,193 544,877 612,677
Middle-market companies:
Private 387,747 483,348 574,107 294,045 387,747
Sovereign - - 144
Total 6,691,749 6,686,244 6,148,298 6,020,731 6,691,749

The composition of the gross loan portfolio by industry is as follows:

December 31
2015 December 31
2014 January 1
2014
December 31,
2016
December 31,
2015
Banking and financial institutions 2,587,637 2,370,936 2,259,991 2,283,876 2,587,637
Industrial 1,142,385 1,325,091 936,290 1,242,441 1,142,385
Oil and petroleum derived products 828,355 1,013,324 1,170,684 788,186 828,355
Agricultural 1,140,124 1,132,330 924,251 1,007,139 1,140,124
Services 670,013 617,366 398,736 419,440 670,013
Mining 110,655 38,572 10,000 54,000 110,655
Sovereign - - 144
Others 212,580 188,625 448,202 225,649 212,580
Total 6,691,749 6,686,244 6,148,298 6,020,731 6,691,749

~~F-46~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-39
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

5.6 Loans – at amortized cost (continued)

Loans are reported at their amortized cost considering the principal outstanding amounts net of unearned interest, deferred fees and allowance for expected credit losses.

The amortization of net unearned interest and deferred fees are recognized as an adjustment to the related loan yield using the effective interest rate method.

The unearned discount interest and deferred commission amounted to ~~$9,304, $8,509~~$7,249 and ~~$6,668~~$9,304 at December 31, 2016 and 2015, ~~and 2014, and January 1, 2014, respectively~~respectively.

Loans classified by borrower’s credit quality indicators are as follows:

December 31, 2015
December 31, 2016 December 31, 2016
Corporations Banking and financial
institutions Middle-
market
companies Corporations Banking and financial
institutions Middle-market
companies
Rating⁽¹⁾ Private State-
owned Private State-
owned Private Sovereign Total Private State-owned Private State-owned Private Total
1-4 2,644,758 351,216 1,757,668 309,559 212,746 - 5,275,947 1,714,936 646,797 1,457,984 259,981 174,107 4,253,805
5-6 558,612 110,357 217,292 303,118 174,094 - 1,363,473 863,937 140,103 281,015 284,896 84,938 1,654,889
7 46,716 - - - - - 46,716 58,673 - - - - 58,673
8 - - - - - - - 4,000 - - - - 4,000
9 - - - - - - - - - - - 35,000 35,000
10 4,706 - - - 907 - 5,613 14,364 - - - - 14,364
Total 3,254,792 461,573 1,974,960 612,677 387,747 - 6,691,749 2,655,910 786,900 1,738,999 544,877 294,045 6,020,731

December 31, 2014
December 31, 2015 December 31, 2015
Corporations Banking and financial
institutions Middle-
market
companies Corporations Banking and financial
institutions Middle-market
companies
Rating⁽¹⁾ Private State-
owned Private State-
owned Private Sovereign Total Private State-owned Private State-owned Private Total
1-4 2,666,140 563,822 1,594,961 232,429 345,492 - 5,402,844 2,644,758 351,216 1,757,668 309,559 212,746 5,275,947
5-6 445,939 148,133 295,644 247,902 136,947 1,274,565 558,612 110,357 217,292 303,118 174,094 1,363,473
7 4,801 - - - - - 4,801 46,716 - - - - 46,716
8 - - - - 909 - 909 - - - - - -
9 - - - - - - - - - - - - -
10 3,125 - - - - - 3,125 4,706 - - - 907 5,613
Total 3,120,005 711,955 1,890,605 480,331 483,348 - 6,686,244 3,254,792 461,573 1,974,960 612,677 387,747 6,691,749

¹⁾ ~~Current ratings as of December 31, 2015 and 2014, and January 1, 2014, respectively.~~
⁽¹⁾Current ratings as of December 31, 2016 and 2015, respectively.

~~F-47~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-40
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

5. ~~Financial instruments (continued)~~
~~5.6~~ ~~Loans – at amortized cost (continued)~~
January 1, 2014
Corporations Banking and
financial institutions Middle-
market
companies
Rating⁽¹⁾ Private State-
owned Private State-
owned Private Sovereign Total
1-4 526,940 605,529 657,924 54,563 14,392 144 1,859,492
5-6 1,845,113 333,349 1,127,874 419,630 559,715 4,285,681
7 - - - - - - -
8 3,125 - - - - - 3,125
9 - - - - - - -
10 - - - - - - -
Total 2,375,178 938,878 1,785,798 474,193 574,107 144 6,148,298
¹⁾ ~~Current ratings as of December 31, 2015 and 2014, and January 1, 2014, respectively.~~
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
~~The remaining loan maturities are summarized as follows:~~Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
December 31
2015 December 31
2014 January 1
2014
Current:
Up to 1 month 1,031,608 947,624 1,017,794
From 1 month to 3 months 1,336,901 1,502,905 1,749,348
From 3 months to 6 months 1,094,885 1,268,478 949,364
From 6 months to 1 year 1,170,114 1,067,073 774,803
From 1 year to 2 years 1,000,553 989,805 942,327
From 2 years to 5 years 967,416 870,163 711,537
More than 5 years 37,943 31,361 -
6,639,420 6,677,409 6,145,173

Delinquent - 4,801 -

Impaired 52,329 4,034 3,125
Total 6,691,749 6,686,244 6,148,298
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
~~F-48~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

5. Financial instruments (continued)

5.6 Loans – at amortized cost (continued)

The following table provides a breakdown of gross loans by country risk:

December 31
2015 December 31
2014 January 1
2014
December 31,
2016

December 31,
2015

Country:
Argentina 142,437 184,882 189,828 325,321 142,437
Belgium 12,629 - - 4,180 12,629
Bermuda 19,600 - - - 19,600
Bolivia 19,911 10,000 - 18,318 19,911
Brazil 1,605,497 1,971,776 1,708,592 1,163,825 1,605,497
Chile 195,290 157,309 490,869 69,372 195,290
Colombia 620,547 726,085 701,577 653,012 620,547
Costa Rica 341,490 320,832 410,295 400,371 341,490
Dominican Republic 384,353 243,038 190,589 243,696 384,353
Ecuador 169,164 120,010 126,001 129,269 169,164
El Salvador 68,465 115,830 123,076 104,723 68,465
France 6,000 6,000 101,006 - 6,000
Germany 97,000 100,000 - 50,000 97,000
Guatemala 457,700 262,733 199,873 315,911 457,700
Honduras 118,109 93,008 73,524 72,319 118,109
Jamaica 16,520 15,512 60,784 7,399 16,520
Luxembourg 14,722 -
Mexico 788,893 868,045 517,278 927,041 788,893
Netherlands - 10,455 14,867
Nicaragua 16,820 7,856 7,823 36,949 16,820
Panama 455,405 320,758 223,505 498,651 455,405
Paraguay 116,348 132,479 102,244 108,068 116,348
Peru 511,250 589,724 580,881 467,408 511,250
Singapore 11,655 - - 70,204 11,655
Switzerland 44,650 50,000 - 46,000 44,650
Trinidad and Tobago 200,000 165,042 142,642 184,389 200,000
United States of America 53,516 55,370 28,283 73,083 53,516
Uruguay 218,500 159,500 154,761 36,500 218,500
Total 6,691,749 6,686,244 6,148,298 6,020,731 6,691,749

~~F-49~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-41
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

5.6 Loans – at amortized cost (continued)

The remaining loan maturities are summarized as follows:

December 31,
2016

December 31,
2015

Current:
Up to 1 month 896,310 1,031,608
From 1 month to 3 months 1,300,675 1,336,901
From 3 months to 6 months 1,267,194 1,094,885
From 6 months to 1 year 551,794 1,170,114
From 1 year to 2 years 631,629 1,000,553
From 2 years to 5 years 1,211,847 967,416
More than 5 years 95,918 37,943
5,955,367 6,639,420

Impaired 65,364 52,329
Total 6,020,731 6,691,749
As of December 31, 2016, the range of annual interest rates on loans fluctuates from 1.21% to 12.69% (2015: 0.92% to 12.35%).
The fixed and floating interest rate distribution of the loan portfolio is as follows:

December 31
2015 December 31
2014 January 1
2014
December 31,
2016

December 31,
2015

Fixed interest rates 3,177,147 3,322,817 3,252,331 2,709,555 3,177,147
Floating interest rates 3,514,602 3,363,427 2,895,967 3,311,176 3,514,602
Total 6,691,749 6,686,244 6,148,298 6,020,731 6,691,749

As of December 31, 2016 and 2015, 93% and ~~2014, and January 1, 2014,~~ 90%, ~~89%, and 92%~~ respectively, of the loan portfolio at fixed interest rates has remaining maturities of less than 180 days.

An analysis of ~~credit- impaired~~credit-impaired balances ~~as of December 31, 2015 and 2014~~ is detailed as follows:

December 31, 2015 2015 December 31, 2016 2016
Recorded
investment Past due
principal
balance Related
allowance
Stage 3 Average
principal
loan
balance Interest
income
recognized

Recorded
investment

Past due
principal
balance

Related
allowance
Stage 3
Average
principal
loan
balance Interest
income
recognized
With an allowance recorded:
Private corporations 51,422 4,706 20,703 9,946 230 30,364 18,364 23,174 12,500 408
Middle-market companies 907 907 448 7,472 49 35,000 35,000 12,179 17,705 1,679
Total 52,329 5,613 21,151 17,418 279 65,364 53,364 35,353 30,205 2,087

December 31, 2014 2014
Recorded
investment Past due
principal
balance Related
allowance
Stage 3 Average
principal
loan
balance Interest
income
recognized
With an allowance recorded:
Private corporations 3,125 2,813 2,497 3,125 97
Middle-market companies 909 40 157 339 91
Total 4,034 2,853 2,654 3,464 188
F-42

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
~~F-50~~Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

~~5.6~~ ~~Loans – at amortized cost (continued)~~
5.6 Loans – at amortized cost (continued)

January 1, 2014 December 31, 2015 2015
Recorded
investment Past due
principal
balance Related
allowance
Stage 3 Recorded
investment Past due
principal
balance
Related
allowance
Stage 3
Average
principal
loan
balance Interest
income
recognized
With an allowance recorded:
Private corporations 3,125 3,125 1,005 51,422 4,706 20,703 9,946 230
Middle-market companies 907 907 448 7,472 49
Total 3,125 3,125 1,005 52,329 5,613 21,151 17,418 279

The following is a summary of information of interest amounts recognized on an effective interest basis on net carrying amount for those financial assets in Stage 3:

December 31
2015 December 31
2014
Interest revenue calculated on the net carrying amount(net of credit allowance) 279 188

December 31,
2016

December 31,
2015

December 31,
2014

Interest revenue calculated on the net carrying amount(net of credit allowance) 2,087 279 188

The following table presents an aging analysis of the loan portfolio:

December 31, 2015
December 31, 2016 December 31, 2016
91-120
days 121-
150
days 151-
180
days Greater
than
180
days Total
Past
due Delinquent Current Total
Loans 91-120
days 121-150
days 151-180
days
Greater
than 180
days
Total
Past
due Delinquent Current Total
Corporations - - - 4,706 4,706 - 3,711,659 3,716,365 - - 4,000 14,364 18,364 - 3,424,446 3,442,810
Banking and financial institutions - - - - - - 2,587,637 2,587,637 - - - - - - 2,283,876 2,283,876
Middle-market companies - - - 907 907 - 386,840 387,747 - - - 35,000 35,000 - 259,045 294,045
Sovereign - - - - - - - -
Total - - - 5,613 5,613 - 6,686,136 6,691,749 - - 4,000 49,364 53,364 - 5,967,367 6,020,731
December 31, 2015
91-120
days 121-150
days 151-180
days
Greater
than 180
days
Total
Past
due Delinquent Current Total
Corporations - - - 4,706 4,706 - 3,711,659 3,716,365
Banking and financial institutions - - - - - - 2,587,637 2,587,637
Middle-market companies - - - 907 907 - 386,840 387,747
Total - - - 5,613 5,613 - 6,686,136 6,691,749

~~F-51~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-43
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
5. Financial instruments (continued)

5.6 Loans – at amortized cost (continued)

December 31, 2014
91-
120
days 121-
150
days 151-
180
days Greater
than
180
days Total
Past
due Delinquent Current Total
Loans
Corporations - - - 3,125 3,125 4,801 3,824,034 3,831,960
Banking and financial institutions - - - - - - 2,370,936 2,370,936
Middle-market companies 909 - - - 909 - 482,439 483,348
Sovereign - - - - - - - -
Total 909 - - 3,125 4,034 4,801 6,677,409 6,686,244
January 1, 2014
91-
120
days 121-
150
days 151-
180
days
Greater
than
180
days
Total
Past
due Delinquent Current Total
Loans
Corporations - - - - - 3,125 3,310,931 3,314,056
Banking and financial institutions - - - - - - 2,259,991 2,259,991
Middle-market companies - - - - - - 574,107 574,107
Sovereign - - - - - - 144 144
Total - - - - - 3,125 6,145,173 6,148,298
As of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014~~2015 the Bank had credit transactions in the normal course of business with 16%, ~~15% and 20%,~~for both periods, respectively, of its Class “A” and “B” stockholders. All transactions were made based on arm’s-length terms and subject to prevailing commercial criteria and market rates and were subject to all of the Bank’s Corporate Governance and control procedures. As of December 31, 2016 and 2015, approximately 10% and ~~2014, and January 1, 2014, approximately~~ 9%~~, 8%, and 12%~~, respectively, of the outstanding loan portfolio was placed with the Bank’s Class “A” and “B” stockholders and their related parties. As of December 31, ~~2015,~~2016, the Bank was not directly or indirectly owned or controlled by another corporation or any foreign government, and no Class “A” or “B” shareholder was the registered owner of more than 3.5% of the total outstanding shares of the voting capital stock of the Bank.

~~F-52~~The allowances for expected credit losses related to loans at amortized cost are as follows:
Stage 1⁽¹⁾ Stage 2⁽²⁾ Stage 3⁽³⁾ Total
Allowance for expected credit losses as of December 31, 2015 59,214 9,609 21,151 89,974
Transfer to lifetime expected  credit losses (9,117 ) 9,119 - 2
Transfer to credit-impaired financial assets (7 ) (6,317 ) 6,324 -
Transfer to 12-month expected credit losses 2,038 (2,077 ) 38 (1 )
Net effect of changes in reserve for expected credit losses (39,621 ) 48,021 26,491 34,891
Financial assets that have been derecognized during the year (65,640 ) (16,756 ) - (82,396 )
Changes due to financial instruments recognized as of December 31, 2015: (112,347 ) 31,990 32,853 (47,504 )
New financial assets originated or purchased 82,169 - - 82,169
Write-offs - - (18,807 ) (18,807 )
Recoveries of amounts previously written off - - 156 156
Allowance for expected credit losses as of December 31, 2016 29,036 41,599 35,353 105,988
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~ ⁽¹⁾ 12-month expected credit losses.
~~Notes to the Consolidated Financial Statements~~ ⁽²⁾ Lifetime expected credit losses.
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~⁽³⁾ Credit-impaired financial assets (lifetime expected credit losses).

F-44
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

5.6 Loans – at amortized cost (continued)

~~The allowances for expected credit losses related to loans at amortized cost at December 31, 2015 and 2014 as follows:~~
12-month
expected
credit losses Lifetime
expected
credit losses
(collectively
assessed) Lifetime expected
credit losses
(individually
assessed) Credit-
impaired
financial
assets
(lifetime
expected
credit losses) Total
Allowance for expected credit losses as of December 31, 2014 37,469 37,564 - 2,654 77,687
Transfer to lifetime expected credit losses (9,147 ) 9,147 - - -
Transfer to credit-impaired financial assets - (24,186 ) - 24,186 -
Transfer to 12-month expected credit losses 101 (101 ) - - -

Financial assets that have been derecognized during the year (31,774 ) (12,815 ) - - (44,589 )
Changes due to financial instruments recognized as of December 31, 2014 (40,820 ) (27,955 ) - 24,186 (44,589 )
New financial assets originated or purchased 62,565 - - - 62,565
Write-offs - - - (5,689 ) (5,689 )
Changes in models/risk parameters - - - - -
Foreign exchange and other movements - - - - -
Allowance for expected credit losses as of December 31, 2015 59,214 9,609 - 21,151 89,974
~~F-53~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
Stage 1⁽¹⁾ Stage 2⁽²⁾ Stage 3⁽³⁾ Total
Allowance for expected credit losses as of December 31, 2014 37,469 37,564 2,654 77,687
Transfer to lifetime expected  credit losses (9,147 ) 9,147 - -
Transfer to credit-impaired financial assets - (24,186 ) 24,186 -
Transfer to 12-month expected credit losses 101 (812 ) - (711 )
Financial assets that have been derecognized during the year (31,774 ) (12,815 ) - (44,589 )
Changes due to financial instruments recognized as of December 31, 2014: (40,820 ) (28,666 ) 24,186 (45,300 )
New financial assets originated or purchased 62,565 - - 62,565
Write-offs - - (5,689 ) (5,689 )
Recoveries of amounts previously written off - 711 - 711
Allowance for expected credit losses as of December 31, 2015 59,214 9,609 21,151 89,974

5.⁽¹⁾ ~~Financial instruments (continued)~~12-month expected credit losses.
⁽²⁾ Lifetime expected credit losses.
⁽³⁾ Credit-impaired financial assets (lifetime expected credit losses).

~~5.6~~F-45 ~~Loans – at amortized cost (continued)~~
12-month
expected
credit losses Lifetime
expected
credit losses
(collectively
assessed) Lifetime expected
credit losses
(individually
assessed) Credit-
impaired
financial
assets
(lifetime
expected
credit losses) Total
Allowance for expected credit losses as of January 1, 2014 55,979 13,892 - 1,005 70,876
Transfer to lifetime expected credit losses (36,478 ) 36,478 - - -
Transfer to credit-impaired financial assets - (1,649 ) - 1,649 -
Transfer to 12-month expected credit losses 263 (263 ) - - -
Financial assets that have been derecognized during the year (50,467 ) (10,894 ) - - (61,361 )
Changes due to financial instruments recognized as of January 1, 2014 (86,682 ) 23,672 - 1,649 (61,361 )
New financial assets originated or purchased 68,172 - - - 68,172

Write-offs - - - - -
Changes in models/risk parameters - - - - -
Foreign exchange and other movements - - - - -

Allowance for expected credit losses as of December 31, 2014 37,469 37,564 - 2,654 77,687
~~F-54~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

5.7 ~~Instruments with off-balance sheet credit risk~~Derivative financial instruments for hedging purposes

~~In the normal course of business, to meet the financing needs of its customers, the Bank is party to~~Quantitative information on derivative financial instruments with off-balance sheet credit risk. These instruments involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the consolidated statement of financial position. Credit risk represents the possibility of loss resulting from the failure of a customer to perform in accordance with the terms of a contract.
~~The Bank’s outstanding instruments with off-balance sheet credit risk are as follows:~~
December 31
2015 December 31
2014
January 1
2014

Confirmed letters of credit 99,031 137,817 221,963
Stand-by letters of credit and guaranteed – Commercial risk 158,599 89,752 137,285
Credit commitments 189,820 158,549 121,175
  Total 447,450 386,118 480,423
~~As of December 31, 2015 and 2014, and January 1, 2014 the remaining maturity profile of the Bank’s outstanding instruments with off-balance sheet credit risk~~held for hedging purposes is as follows:

Maturities December 31
2015 December 31
2014
January 1
2014

Up to 1 year 424,687 292,720 353,721
From 1 to 2 years 22,185 41,269 93,175
From 2 to 5 years - 51,551 32,905
More than 5 years 578 578 622
447,450 386,118 480,423
December 31, 2016
Carrying amount of the
hedging instrument Changes in fair
value used for
Nominal
Amount Asset Liability calculating
hedge
ineffectiveness
Fair value hedges:
Interest rate swaps 796,202 40 (2,005 ) (2,199 )
Cross-currency interest rate swaps 291,065 2,561 (44,944 ) (19,316 )
Cash flow hedges:
Interest rate swaps 752,000 323 (1,699 ) 696
Cross-currency interest rate swaps 23,025 - (1,254 ) (1,313 )
Foreign exchange forward 352,553 6,428 (9,653 ) (5,093 )
Net investment hedges:
Foreign exchange forward 3,780 - (131 ) (415 )
Total 2,218,625 9,352 (59,686 ) (27,640 )
December 31, 2015
Carrying amount of the
hedging instrument Changes in fair
value used for
Nominal
Amount Asset Liability calculating
hedge
ineffectiveness
Fair value hedges:
  Interest rate swaps 886,631 2,549 (1,444 ) 647
  Cross-currency interest rate swaps 214,067 322 (23,710 ) 14,731
Cash flow hedges:
  Interest rate swaps 870,000 230 (2,254 ) (258 )
  Cross-currency interest rate swaps 75,889 374 (395 ) 215
  Foreign exchange forward 247,869 3,925 (2,058 ) 1,867
Net investment hedges:
  Foreign exchange forward 3,818 - (28 ) 28
Total 2,298,274 7,400 (29,889 ) 17,230

~~Instruments with off-balance sheet credit risk classified by issuer’s credit quality indicators~~The hedging instruments presented in the tables above are ~~as follows:~~located in the line item in the statement of financial position at fair value - Derivative financial instruments used for hedging – receivable or at fair value – Derivative financial instruments used for hedging – payable.

Rating ⁽¹⁾ December 31
2015 December 31
2014 January 1
2014
1-4 276,860 256,717 51,175
5-6 170,590 129,401 429,248
7 - - -
8 - - -
9 - - -
10 - - -
Total 447,450 386,118 480,423
F-46

⁽¹⁾~~Current ratings as of~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014 ~~and January 1, 2014, respectively.~~
~~F-55~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

5.7 ~~Instruments with off-balance sheet credit risk (continued)~~
~~As of December 31, 2015 and 2014, and January 1, 2014 the breakdown of the Bank’s off-balance sheet exposure by country risk is as follows:~~
December 31
2015 December 31
2014 January 1
2014
Country:
Argentina 10,145 - 295
Bolivia 1,261 - 80
Brazil 17,291 19,698 22,567
Chile - 27,802 -
Colombia 96,085 53,874 38,545
Costa Rica - - 897
Dominican Republic 4,527 14,806 108
Ecuador 88,585 86,436 153,072
El Salvador 145 25 25
Guatemala - 37,988 43,548
Honduras 876 412 412
Jamaica - 415 338
Mexico 46,994 64,324 20,969
Netherlands - - 17,833
Panama 136,022 20,675 96,943
Paraguay 43 418 2
Peru 19,018 16,225 41,063
Singapore 25,000 - -
Switzerland 1,000 1,000 1,000
United Kingdom 70 - 70
Uruguay 388 40,946 40,946
Venezuela - 1,074 1,710
Total 447,450 386,118 480,423
~~F-56~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.7~~ ~~Instruments with off-balance sheet credit risk (continued)~~
~~Letters of credit and guarantees~~
The Bank, on behalf of its clients base, advises and confirms letters of credit to facilitate foreign trade transactions. When confirming letters of credit, the Bank adds its own unqualified assurance that the issuing bank will pay and that if the issuing bank does not honor drafts drawn on the letter of credit, the Bank will. The Bank provides stand-by letters of credit and guarantees, which are issued on behalf of institutional clients in connection with financing between its clients and third parties. The Bank applies the same credit policies used in its lending process, and once issued the commitment is irrevocable and remains valid until its expiration. Credit risk arises from the Bank's obligation to make payment in the event of a client’s contractual default to a third party. Risks associated with stand-by letters of credit and guarantees are included in the evaluation of the Bank’s overall credit risk.
~~Credit commitments~~
Commitments to extend credit are binding legal agreements to lend to clients. Commitments generally have fixed expiration dates or other termination clauses and require payment of a fee to the Bank. As some commitments expire without being drawn down, the total commitment amounts do not necessarily represent future cash requirements.
~~F-57~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.7~~ ~~Instruments with off-balance sheet credit risk (continued)~~
~~The allowances for credit losses related to Instruments with off-balance sheet credit risk at December 31, 2015 and 2014 as follows:~~
12-month
expected
credit losses
Lifetime expected
credit losses
(collectively
assessed)
Lifetime expected
credit losses
(individually
assessed) Credit-
impaired
financial
assets
(lifetime
expected
credit losses) Total
Allowance for expected credit losses as of December 31, 2014 7,079 2,794 - - 9,873
Transfer to lifetime expected credit losses - (2,177 ) 2,177 - -
Transfer to credit-impaired financial assets - - - - -
Transfer to 12-month expected credit losses - - - - -
Financial assets that have been derecognized during the year (6,908 ) (284 ) - - (7,192 )
Changes due to financial instruments recognized as of December 31, 2014 (6,908 ) (2,461 ) 2,177 - (7,192 )
New financial assets originated or purchased 2,743 - - - 2,743
Write-offs - - - - -
Changes in models/risk parameters - - - - -
Foreign exchange and other movements - - - - -
Allowance for expected credit losses as of December 31, 2015 2,914 333 2,177 - 5,424
~~F-58~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.7~~ ~~Instruments with off-balance sheet credit risk (continued)~~
12-month
expected
credit losses Lifetime
expected
credit losses
(collectively
assessed) Lifetime expected
credit losses
(individually
assessed) Credit-
impaired
financial
assets
(lifetime
expected
credit losses) Total
Allowance for expected credit losses as of  January 1, 2014 5,884 170 - - 6,054
Transfer to lifetime expected credit losses (2,794 ) 2,794 - - -
Transfer to credit-impaired financial assets - - - - -
Transfer to 12-month expected credit losses - - - - -

Financial assets that have been derecognized during the year (5,446 ) (170 ) - - (5,616 )
Changes due to financial instruments recognized as of January 1,2014 (8,240 ) 2,624 - - (5,616 )
New financial assets originated or purchased 9,435 - - - 9,435
Write-offs - - - - -
Changes in models/risk parameters - - - - -
Foreign exchange and other movements - - - - -

Allowance for expected credit losses as of December 31, 2014 7,079 2,794 - - 9,873
The reserve for expected credit losses on off-balance sheet credit risk reflects the Bank’s Management estimate of expected credit losses on off-balance sheet credit risk items such as: confirmed letters of credit, stand-by letters of credit, guarantees and credit commitments.
~~F-59~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.8~~ ~~Derivative financial instruments for hedging purposes~~
~~As of December 31, 2015 and 2014, and January 1, 2014, quantitative information on derivative financial instruments held for hedging purposes is as follows:~~
December 31, 2015
Nominal Carrying amount of the
hedging instrument Line item
in the
statement
of financial
position
where the
hedging
instrument
Changes in
fair value used
for
calculating
hedge

Amount Asset Liability is located ineffectiveness
Fair value hedges:
Interest rate swaps 886,631 2,549 1,444 647
Cross-currency interest rate swaps 214,067 322 23,710 Derivative 14,731
Cash flow hedges: financial
Interest rate swaps 870,000 230 2,254 Instruments (258 )
Cross-currency interest rate swaps 75,889 374 395 used for 215
Forward foreign exchange 247,869 3,925 2,058 hedging – 1,867
Net investment hedges: receivable
Forward foreign exchange 3,818 - 28 or payable - 28
Total 2,298,274 7,400 29,889 at fair value 17,230
~~F-60~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.8~~ ~~Derivative financial instruments for hedging purposes (continued)~~
December 31, 2014
Nominal Carrying amount of the
hedging instrument Line item
in the
statement
of financial
position
where the
hedging
instrument Changes in
fair value used
for
calculating
hedge
Amount Asset Liability is located ineffectiveness
Fair value hedges:

Interest rate swaps 167,865 17 1,285 Derivative (4,490 )
Cross-currency interest rate swaps 282,490 1,062 31,556 financial (26,443 )
Cash flow hedges: Instruments
Interest rate swaps 891,500 2,691 1,805 used for 736
Cross-currency interest rate swaps 56,000 - 5,547 hedging – (11,939 )
Forward foreign exchange 126,058 8,554 - receivable 7,962
Net investment hedges: or payable -
Forward foreign exchange 5,146 - 94 at fair value (434 )
Total 1,529,059 12,324 40,287 (34,608 )
~~F-61~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.8~~ ~~Derivative financial instruments for hedging purposes (continued)~~
Nominal Carrying amount of the
hedging instrument Line item in the
statement of
financial position
where the
hedging
instrument is
Amount Asset Liability located
Fair value hedges:
Interest rate swaps 494,558 4,625 1,403 Derivative
Cross-currency interest rate swaps 269,488 2,784 6,835 financial
Cash flow hedges: instruments used
Interest rate swaps 453,000 393 242 for hedging –
Cross-currency interest rate swaps 126,308 6,391 - receivable or
Forward foreign exchange 88,130 684 92 payable - at fair
Net investment hedges: value
Forward foreign exchange 5,810 340 -
Total 1,437,294 15,217 8,572
~~F-62~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.8~~ Derivative financial instruments for hedging purposes (continued)

The gains and losses resulting from activities of derivative financial instruments and hedging recognized in the consolidated statements of profit or loss are presented below:

December 31, 2015 December 31, 2016
Gain (loss)
recognized in
OCI
(effective
portion) Classification of gain
(loss) Gain (loss)
reclassified from
accumulated
OCI to the
consolidated
statement of
profit or loss Gain (loss)
recognized on
derivatives
(ineffective
portion) Gain (loss)
recognized in
OCI (effective
portion) Classification of gain
(loss) Gain (loss)
reclassified from
accumulated OCI
to the
consolidated
statement of
profit or loss Gain (loss)
recognized on
derivatives
(ineffective
portion)
Derivatives – cash flow hedge
Interest rate swaps 35 Gain (loss) on interest rate swap - (229 ) 627 Gain (loss) on interest rate swap - (1,258 )
Cross-currency interest rate swaps 5,367 Gain (loss) on foreign currency exchange - 84 (1,299 ) Gain (loss) on foreign exchange - 16
Interest income – loans - - Interest income loans at amortized cost - (110 )
Forward foreign exchange 3,511 Interest income – securities at FVOCI (694 ) -
Foreign exchange forward 233 Interest income – securities at FVOCI - -
Interest income – loans (1,821 ) - Interest income loans at amortized cost (4,751 ) -
Interest expense – borrowings and debt - - Interest expense – borrowings and debt - -
Interest expenses – deposits 166 - Interest expenses – deposits 1,672 -
Gain (loss) on foreign currency exchange 12,539 - Gain (loss) on foreign currency exchange 9,097 -
Total 8,913 10,190 (145 ) (439 ) 6,018 (1,352 )

Derivatives – net investment hedge
Forward foreign exchange (901 ) - -
Total (901 ) - -

~~F-63~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-47
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

5. ~~Financial instruments (continued)~~
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
~~5.8 Derivative financial instruments for hedging purposes (continued)~~Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
December 31, 2014
Gain (loss)
recognized in
OCI
(effective
portion) Classification of gain
(loss) Gain (loss)
reclassified from
accumulated
OCI to the
consolidated
statement of
profit or loss Gain (loss)
recognized on
derivatives
(ineffective
portion)
Derivatives – cash flow hedge
Interest rate swaps (1,947 ) Gain (loss) on interest rate swap - (207 )
Cross-currency interest rate swaps (11,904 ) Gain (loss) on foreign currency exchange - -
Interest income – loans (4 ) -
Forward foreign exchange 8,633 Interest income – securities at FVOCI (238 ) -
Interest income – loans (2,011 ) -
Interest expense – borrowings and debt - -
Interest expenses – deposits - -
Gain (loss) on foreign currency exchange 3,011 -
Total (5,218 ) 758 (207 )

Derivatives – net investment hedge
Forward foreign exchange 38 - -
Total 38 - -
~~F-64~~(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

5. Financial instruments (continued)

~~5.8~~5.7 Derivative financial instruments for hedging purposes (continued)
December 31, 2015
Gain (loss)
recognized in
OCI (effective
portion) Classification of gain
(loss) Gain (loss)
reclassified from
accumulated OCI
to the
consolidated
statement of
profit or loss Gain (loss)
recognized on
derivatives
(ineffective
portion)
Derivatives – cash flow hedge
Interest rate swaps 35 Gain (loss) on interest rate swap - (229 )
Cross-currency interest rate swaps 5,367 Gain (loss) on foreign exchange - 84
Foreign exchange forward 3,511 Interest income – securities at FVOCI (694 ) -
Interest income loans at amortized cost (1,821 ) -
Interest expense – borrowings and debt - -
Interest expenses – deposits 166 -
Gain (loss) on foreign currency exchange 12,539 -
Total 8,913 10,190 (145 )

Derivatives – net investment hedge
  Foreign exchange forward (901 ) - -
Total (901 ) - -
F-48
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
5. Financial instruments (continued)
5.7 Derivative financial instruments for hedging purposes (continued)
December 31, 2014
Gain (loss)
recognized in
OCI (effective
portion) Classification of gain
(loss) Gain (loss)
reclassified from
accumulated OCI
to the
consolidated
statement of
profit or loss Gain (loss)
recognized on
derivatives
(ineffective
portion)
Derivatives – cash flow hedge
Interest rate swaps (1,947 ) Gain (loss) on interest rate swap - (207 )
Cross-currency interest rate swaps (11,904 ) Gain (loss) on foreign exchange - -
Interest income loans at amortized cost (4 ) -
Foreign exchange forward 8,633 Interest income – securities at FVOCI (238 ) -
Interest income loans at amortized cost (2,011 ) -
Interest expense – borrowings and debt - -
Interest expenses – deposits - -
Gain (loss) on foreign currency exchange 3,011 -
Total (5,218 ) 758 (207 )

Derivatives – net investment hedge
  Foreign exchange forward 38 - -
Total 38 - -
F-49
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
5. Financial instruments (continued)
5.7 Derivative financial instruments for hedging purposes (continued)

The Bank recognized in the consolidated statement of profit or loss the gain (loss) on derivative financial instruments and the gain (loss) of the hedged asset or liability related to qualifying fair value hedges, as follows:

December 31, 2015 December 31, 2016
Classification in
consolidated
statement of profit or
loss Gain (loss) on
derivatives Gain (loss) on
hedge item Net gain (loss) Classification in
consolidated statement
of profit or loss Gain (loss) on
derivatives Gain (loss) on
hedge item Net gain (loss)
Derivatives – fair value hedge
Interest rate swaps Interest income – securities at FVOCI (1,047 ) 1,514 467 Interest income – securities at FVOCI (617 ) 1,593 976
Interest income – loans (376 ) 3,987 3,611 Interest income at amortized cost (25 ) 2,023 1,998
Interest expenses – borrowings and debt 6,268 (24,026 ) (17,758 ) Interest expenses – borrowings and debt 4,558 (28,261 ) (23,703 )
Derivative financial instruments and hedging (1,841 ) 1,688 (153 ) Derivative financial instruments and hedging (2,077 ) 2,178 101
Cross-currency interest rate swaps Interest income – loans (135 ) 348 213 Interest income loans at amortized cost (372 ) 928 556
Interest expenses – borrowings and debt 744 (3,785 ) (3,041 ) Interest expenses – borrowings and debt 195 (6,183 ) (5,988 )
Derivative financial instruments and hedging (19,522 ) 20,550 1,028 Derivative financial instruments and hedging 17,673 (16,752 ) 921
Total (15,909 ) 276 (15,633 ) 19,335 (44,474 ) (25,139 )
December 31, 2015
Classification in
consolidated statement
of profit or loss Gain (loss) on
derivatives Gain (loss) on
hedge item Net gain (loss)
Derivatives – fair value hedge
Interest rate swaps Interest income – securities at FVOCI (1,047 ) 1,514 467
Interest income – loans at amortized cost (376 ) 3,987 3,611
Interest expenses – borrowings and debt 6,268 (24,026 ) (17,758 )
Derivative financial instruments and hedging (1,841 ) 1,688 (153 )
Cross-currency interest rate swaps Interest income – loans at amortized cost (135 ) 348 213
Interest expenses – borrowings and debt 744 (3,785 ) (3,041 )
Derivative financial instruments and hedging (19,522 ) 20,550 1,028
Total �� (15,909 ) 276 (15,633 )

~~F-65~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-50
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial instruments (continued)

~~5.8~~5.7 Derivative financial instruments for hedging purposes (continued)

December 31, 2014 December 31, 2014
Classification in
consolidated
statement of profit or
loss Gain (loss) on
derivatives Gain (loss) on
hedge item Net gain (loss) Classification in
consolidated statement
of profit or loss Gain (loss) on
derivatives Gain (loss) on
hedge item Net gain (loss)
Derivatives – fair value hedge
Interest rate swaps Interest income – securities at FVOCI (1,800 ) 2,345 545 Interest income – securities at FVOCI (1,800 ) 2,345 545
Interest income – loans (361 ) 3,112 2,751 Interest income at amortized cost (361 ) 3,112 2,751
Interest expenses – borrowings and debt 3,737 (16,204 ) (12,467 ) Interest expenses – borrowings and debt 3,737 (16,204 ) (12,467 )
Derivative financial instruments and hedging (994 ) 1,021 27 Derivative financial instruments and hedging (994 ) 1,021 27
Cross-currency interest rate swaps Interest income – loans (853 ) 1,695 842 Interest income loans at amortized cost (853 ) 1,695 842
Interest expenses – borrowings and debt 4,538 (10,031 ) (5,493 ) Interest expenses – borrowings and debt 4,538 (10,031 ) (5,493 )
Derivative financial instruments and hedging (24,335 ) 24,434 99 Derivative financial instruments and hedging (24,335 ) 24,434 99
Total (20,068 ) 6,372 (13,696 ) (20,068 ) 6,372 (13,696 )
Derivatives financial position and performance
The following tables details the changes of the market value of the underlying item in the statement of financial position related to fair value hedges:
December 31, 2016
Fair value hedges Carrying
amount Thereof
accumulated
fair value
adjustments Line item in the statement of financial
position
Interest rate risk
Loans 18,514 12 Loans at amortized cost
Issuances 752,910 2,089 Short and long term borrowings and debt

Foreign exchange rate risk and FX
Securities at FVOCI 22,468 (232 ) Financial instruments at FVOCI
Loans 1,469 (618 ) Loans at amortized cost
Issuances 45,647 1,189 Short and long term borrowings and debt
F-51
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
5. Financial instruments (continued)
5.7 Derivative financial instruments for hedging purposes (continued)
Derivatives financial position and performance (continued)
December 31, 2015
Fair value hedges Carrying
amount Thereof
accumulated
fair value
adjustments
Line item in the statement of financial
position
Interest rate risk
Loans 81,931 - Loans at amortized cost
Issuances 750,000 - Short and long term borrowings and debt
The following tables detail the profile of the timing of the nominal amount of the hedging instrument:
December 31, 2016
Risk type Foreign
Exchange risk Interest rate
risk
Foreign exchange
and Interest
rate risk
Total
Up to 1 month 66,149 - - 66,149
31 to 60 days 33,393 85,000 - 118,393
61 to 90 days 24,093 60,000 - 84,093
91 to 180 days 71,533 745,080 - 816,613
181 to 365 days 109,228 160,422 189 269,839
1 to 2 years 92,115 50,000 24,948 167,063
2 to 5 years 73,311 434,500 96,218 604,029
More than 5 years - 13,200 79,246 92,446
Total 469,822 1,548,202 200,601 2,218,625
December 31, 2015
Risk type Foreign
Exchange risk Interest rate
risk
Foreign exchange
and Interest
rate risk
Total
Up to 1 month 106,371 25,000 - 131,371
31 to 60 days 15,134 265,000 - 280,134
61 to 90 days 38,739 90,000 - 128,739
91 to 180 days 48,811 345,000 - 393,811
181 to 365 days 197,482 80,000 415 277,897
1 to 2 years 534 480,931 442 481,907
2 to 5 years 40,000 397,500 24,948 462,448
More than 5 years - 73,200 68,767 141,967
Total 447,071 1,756,631 94,572 2,298,274
F-52
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
5. Financial instruments (continued)
5.7 Derivative financial instruments for hedging purposes (continued)
Derivatives financial position and performance (continued)
The following tables detail the sources of ineffectiveness for our cash flow hedge positions:
December 31, 2016
Type of risk hedge USD-OIS Tenor Xccy basis Credit spread Total
Ineffectiveness
Interest rate risk 19 - - 604 623
Foreign exchange risk 25 - (4 ) (5 ) 16
Total 44 - (4 ) 599 639
December 31, 2015
Type of risk hedge USD-OIS Tenor Xccy basis Credit spread Total
Ineffectiveness
Interest rate risk 25 (136 ) - 341 230
Foreign exchange risk (25 ) - (72 ) 14 (83 )
Total - (136 ) (72 ) 355 147

For control purposes, derivative instruments are recorded at their nominal amount (“notional amount”) in memorandum accounts. Interest rate swaps are made either in a single currency or cross currency for a prescribed period to exchange a series of interest rate flows, which involve fixed for floating interest payments, and vice versa. The Bank also engages in certain foreign exchange trades to serve customers’ transaction needs and to manage foreign currency risk. All such positions are hedged with an offsetting contract for the same currency.

The Bank manages and controls the risks on these foreign exchange trades by establishing counterparty credit limits by customer and by adopting policies that do not allow for open positions in the credit and investment portfolio. The Bank also uses foreign currency exchange contracts to hedge the foreign exchange risk associated with the Bank’s equity investment in a non-U.S. dollar functional currency foreign subsidiary. Derivative and foreign exchange instruments negotiated by the Bank are executed mainly over-the-counter (OTC). These contracts are executed between two counterparties that negotiate specific agreement terms, including notional amount, exercise price and maturity.

The maximum length of time over which the Bank has hedged its exposure to the variability in future cash flows on forecasted transactions is ~~8.19~~7.19 years.
~~F-66~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.8 Derivative financial instruments for hedging purposes (continued)~~

The Bank estimates that approximately ~~$635~~$782 reported as losses in OCI as of December 31, ~~2015~~2016 related to ~~forward~~ foreign exchange forward contracts, are expected to be reclassified into interest income as an adjustment to yield of hedged loans during the twelve-month period ending December 31, ~~2016.~~2017.

The Bank estimates that approximately $1,019 of losses reported in OCI as of December 31, 2016 related to forward foreign exchange contracts are expected to be reclassified into interest expense as an adjustment to yield of hedged available-for-sale securities during the twelve-month period ending December 31, 2017.
F-53
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
5. Financial instruments (continued)
5.7 Derivative financial instruments for hedging purposes (continued)
Types of Derivatives and Foreign Exchange Instruments

Interest rate swaps are contracts in which a series of interest rate flows in a single currency are exchanged over a prescribed period. The Bank has designated a portion of these derivative instruments as fair value hedges and a portion as cash flow hedges. Cross currency swaps are contracts that generally involve the exchange of both interest and principal amounts in two different currencies. The Bank has designated a portion of these derivative instruments as fair value hedges and a portion as cash flow hedges. ~~Forward foreign~~Foreign exchange forward contracts represent an agreement to purchase or sell foreign currency at a future date at agreed-upon terms. The Bank has designated these derivative instruments as cash flow hedges and net investment hedges.

In addition to hedging derivative financial instruments, the Bank has derivative financial instruments held for trading purposes as disclosed in Note 5.1.

~~5.9 Offsetting of financial assets and liabilities~~
5.8 Offsetting of financial assets and liabilities

In the ordinary course of business, the Bank enters into derivative financial instrument transactions and securities sold under repurchase agreements under industry standards agreements. Depending on the collateral requirements stated in the contracts, the Bank and counterparties can receive or deliver collateral based on the fair value of the financial instruments transacted between parties. Collateral typically consists of cash deposits and securities. The master netting agreements include clauses that, in the event of default, provide for close-out netting, which allows all positions with the defaulting counterparty to be terminated and net settled with a single payment amount.

The International Swaps and Derivatives Association master agreement (“ISDA”) and similar master netting arrangements do not meet the criteria for offsetting in the consolidated statement of financial position. This is because they create for the parties to the agreement a right of set-off of recognized amounts that is enforceable only following an event of default, insolvency or bankruptcy of the Bank or the counterparties or following other predetermined events.

~~F-67~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial instruments (continued)~~
~~5.9 Offsetting of financial assets and liabilities (continued)~~
The following tables summarize financial assets and liabilities that have been offset in the consolidated statement of financial position or are subject to master netting agreements:

a) Derivative financial instruments – assets
December 31, 2015
Gross amounts
offset in the
consolidated Net amount of
assets presented
in the
consolidated Gross amounts not offset
in the consolidated
statement of financial
position
Description Gross
amounts
assets statement of
financial
position statement of
financial
position Financial
instruments Cash
collateral
received Net
Amount
Derivative financial instruments 7,400 - 7,400 - (690 ) 6,710
Total 7,400 - 7,400 - (690 ) 6,710
December 31, 2014
Gross amounts
offset in the
consolidated Net amount of
assets presented
in the
consolidated Gross amounts not offset
in the consolidated
statement of financial
position
Description Gross
amounts
assets statement of
financial
position statement of
financial
position Financial
instruments Cash
collateral
received Net
Amount
Derivative financial instruments 12,324 - 12,324 - - 12,324
Total 12,324 - 12,324 - - 12,324
January 1, 2014
December 31, 2016 December 31, 2016
Gross amounts
offset in the
consolidated Net amount of
assets presented
in the
consolidated Gross amounts not offset
in the consolidated
statement of financial
position
Gross amounts
offset in the
consolidated

Net amount of
assets presented
in the
Gross amounts not offset in
the consolidated statement
of financial position
Description Gross
amounts
assets statement of
financial
position statement of
financial
position Financial
instruments Cash
collateral
received Net
Amount Gross
amounts
assets statement of
financial
position consolidated
statement of
financial position Financial
instruments Cash
collateral
received Net
Amount
Derivative financial instruments 15,217 - 15,217 - (1,050 ) 14,167
Derivative financial instruments-hedging 9,352 - 9,352 - - 9,352
Total 15,217 - 15,217 - (1,050 ) 14,167 9,352 - 9,352 - - 9,352

~~F-68~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-54
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial Instruments (continued)

5.8 Offsetting of financial assets and liabilities (continued)
~~5.9 Offsetting of financial assets and liabilities (continued)~~
a) Derivative financial instruments – assets (continued)
December 31, 2015

Gross amounts
offset in the
consolidated

Net amount of
assets presented
in the
Gross amounts not offset in
the consolidated statement
of financial position
Description Gross
amounts
assets statement of
financial
position consolidated
statement of
financial position Financial
instruments Cash
collateral
received Net
Amount
Derivative financial instruments 7,400 - 7,400 - (690 ) 6,710
Total 7,400 - 7,400 - (690 ) 6,710

The following table presents the reconciliation of assets that have been offset or are subject to master netting agreements to individual line items in the consolidated statement of financial ~~position as of~~position:
December 31, 2016
Description Gross amounts
of assets Gross amounts
offset in the
consolidated
statement of
financial position
Net amount of assets
presented
in the consolidated
statement of
financial position

Derivative financial instruments - hedging 9,352 - 9,352
Total 9,352 - 9,352
December 31, 2015
Description Gross amounts
of assets Gross amounts
offset in the
consolidated
statement of
financial position
Net amount of assets
presented
in the consolidated
statement of
financial position

Derivative financial instruments used for hedging 7,400 - 7,400
Total 7,400 - 7,400
F-55
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014 ~~and January 1, 2014:~~
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

December 31, 2015
Description Gross amounts
of assets Gross amounts
offset in the
consolidated
statement of
financial position Net amount of
assets presented
in the consolidated
statement of
financial position

Derivative financial instruments:
Derivative financial instruments used for hedging – receivable 7,400 - 7,400
Total derivative financial instruments 7,400 - 7,400
December 31, 2014
Description Gross amounts
of assets Gross amounts
offset in the
consolidated
statement of
financial position Net amount of
assets presented
in the consolidated
statement of
financial position

Derivative financial instruments:
Derivative financial instruments used for hedging – receivable 12,324 - 12,324
Total derivative financial instruments 12,324 - 12,324
January 1, 2014
Description Gross amounts
of assets Gross amounts
offset in the
consolidated
statement of
financial position Net amount of
assets presented
in the consolidated
statement of
financial position

Derivative financial instruments:
Derivative financial instruments used for hedging – receivable 15,217 - 15,217
Total derivative financial instruments 15,217 - 15,217
~~F-69~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated~~ 5. Financial ~~Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~Instruments (continued)

5.8 Offsetting of financial assets and liabilities (continued)
b) Financial liabilities and derivative financial instruments – liabilities
December 31, 2016
Gross
amounts
offset in the
Net amount
of liabilities
presented
in the
Gross amounts not offset
in the consolidated
statement of financial
position
Description Gross
amounts
of
liabilities consolidated
statement of
financial
position consolidated
statement of
financial
position Financial
instruments Cash
collateral
pledged Net
Amount

Financial liabilities at FVTPL 24 - 24 - - 24
Derivative financial instruments - hedging 59,686 - 59,686 - (59,012 ) 674
Total 59,710 - 59,710 - (59,012 ) 698
December 31, 2015
Gross
amounts
offset in the
Net amount
of liabilities
presented
in the
Gross amounts not offset
in the consolidated
statement of financial
position
Description
Gross
amounts
of
liabilities
consolidated
statement of
financial
position consolidated
statement of
financial
position Financial
instruments Cash
collateral
pledged Net
Amount
Securities sold under repurchase agreements 114,084 - 114,084 (111,620 ) (2,463 ) 1
Financial liabilities at FVTPL 89 - 89 - - 89
Derivative financial instruments - hedging 29,889 - 29,889 - (26,901 ) 2,988
Total 144,062 - 144,062 (111,620 ) (29,364 ) 3,078
F-56
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5. Financial Instruments (continued)

~~5.9~~5.8 Offsetting of financial assets and liabilities (continued)

b) Financial liabilities and derivative financial instruments – liabilities (continued)
December 31, 2015
Gross Gross
amounts
offset in the
consolidated Net amount
of liabilities
presented
in the
consolidated Gross amounts not offset
in the consolidated
statement of financial
position
Description amounts
of
liabilities statement of
financial
position statement of
financial
position Financial
instruments Cash
collateral
pledged Net
Amount

Securities sold under repurchase agreements 114,084 - 114,084 (111,620 ) (2,463 ) 1

Financial liabilities at FVTPL 89 - 89 - - 89

Derivative financial instruments - hedging 29,889 - 29,889 - (26,899 ) 2,990

Total 144,062 - 144,062 (111,620 ) (29,362 ) 3,080
December 31, 2014
Gross Gross
amounts
offset in the
consolidated Net amount
of liabilities
presented
in the
consolidated Gross amounts not offset
in the consolidated
statement of financial
position
Description amounts
of
liabilities statement of
financial
position statement of
financial
position Financial
instruments Cash
collateral
pledged Net
Amount

Securities sold under repurchase agreements 300,519 - 300,519 (294,054 ) (6,465 ) -

Financial liabilities at FVTPL 52 - 52 - - 52

Derivative financial instruments - hedging 40,287 - 40,287 - (29,183 ) 11,104

Total 340,858 - 340,858 (294,054 ) (35,648 ) 11,156
~~F-70~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
5. ~~Financial Instruments (continued)~~
~~5.9 Offsetting of financial assets and liabilities (continued)~~
January 1, 2014
Gross Gross
amounts
offset in the
consolidated Net amount
of liabilities
presented
in the
consolidated Gross amounts not offset
in the consolidated
statement of financial
position
Description amounts
of
liabilities statement of
financial
position statement of
financial
position Financial
instruments Cash
collateral
pledged Net
Amount

Securities sold under repurchase agreements 286,162 - 286,162 (285,471 ) (691 ) -

Financial liabilities at FVTPL 72 - 72 - - 72

Derivative financial instruments - hedging 8,572 - 8,572 - (5,340 ) 3,232

Total 294,806 - 294,806 (285,471 ) (6,031 ) 3,304

The following table presents the reconciliation of liabilities that have been offset or are subject to master netting agreements to individual line items in the consolidated statement of financial ~~position~~position:
December 31, 2016
Description Gross amounts
of liabilities Gross amounts
offset in the
consolidated
statement of
financial position Net amount of
liabilities presented
in the consolidated
statement of
financial position

Derivative financial instruments:
Financial liabilities at FVTPL 24 - 24
Derivative financial instruments used for hedging 59,686 - 59,686
Total derivative  financial instruments 59,710 - 59,710
December 31, 2015
Description Gross amounts
of liabilities Gross amounts
offset in the
consolidated
statement of
financial position Net amount of
liabilities presented
in the consolidated
statement of
financial position
Securities sold under repurchase agreements 114,084 - 114,084
Derivative financial instruments:
Financial liabilities at FVTPL 89 - 89
Derivative financial instruments used for hedging 29,889 - 29,889
Total derivative  financial instruments 29,978 - 29,978
F-57
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
6. Loans commitments and financial guarantees contracts
In the normal course of business, to meet the financing needs of its customers, the Bank is party to loans commitments and financial guarantees contracts. These instruments involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the consolidated statement of financial position. Credit risk represents the possibility of loss resulting from the failure of a customer to perform in accordance with the terms of a contract.
The Bank’s outstanding loans commitments and financial guarantees contracts are as follows:

December 31,
2016

December 31,
2015

Confirmed letters of credit 216,608 99,031
Stand-by letters of credit and guaranteed –
Commercial risk 176,177 158,599
Credit commitments 10,250 189,820
Total 403,035 447,450
The remaining maturity profile of the Bank’s outstanding loans commitments and financial guarantees contracts is as follows:
Maturities
December 31,
2016

December 31,
2015

Up to 1 year 399,257 424,687
From 1 to 2 years - 22,185
From 2 to 5 years 3,200 -
More than 5 years 578 578
403,035 447,450
Loans commitments and financial guarantees contracts classified by issuer’s credit quality indicators are as follows:
Rating⁽¹⁾
December 31,
2016
December 31,
2015
1-4 145,255 276,860
5-6 193,368 170,590
7 64,412 -
8 - -
9 - -
10 - -
Total 403,035 447,450
⁽¹⁾Current ratings as of December 31, 2016 and 2015, respectively.
F-58
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014 ~~and January 1, 2014:~~
December 31, 2015
Description Gross amounts
of liabilities Gross amounts
offset in the
consolidated
statement of
financial position Net amount of
liabilities presented
in the consolidated
statement of
financial position

Securities sold under repurchase agreements 114,084 - 114,084

Derivative financial instruments:

Financial liabilities at FVTPL 89 - 89

Derivative financial instruments used for hedging – payable 29,889 - 29,889

Total derivative  financial instruments 29,978 - 29,978
~~F-71~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

5.6. ~~Financial Instruments~~Loans commitments and financial guarantees contracts (continued)

~~5.9 Offsetting~~The breakdown of the Bank’s loans commitments and financial ~~assets and liabilities (continued)~~guarantees contracts exposure by country risk is as follows:

December 31, 2014
Description Gross amounts
of liabilities Gross amounts
offset in the
consolidated
statement of
financial position Net amount of
liabilities presented
in the consolidated
statement of
financial position

Securities sold under repurchase agreements 300,519 - 300,519
Derivative financial instruments:
Financial liabilities at FVTPL 52 - 52
Derivative financial instruments used for hedging – payable 40,287 - 40,287
Total derivative  financial instruments 40,339 - 40,339

December 31,
2016
December 31
2015
Country:
Argentina - 10,145
Bolivia 190 1,261
Brazil - 17,291
Canada 160
Colombia 78,815 96,085
Costa Rica 2,250 -
Dominican Republic 26,787 4,527
Ecuador 172,522 88,585
El Salvador 1,305 145
Guatemala 7,000 -
Honduras 1,170 876
Mexico 11,118 46,994
Panama 39,756 136,022
Paraguay - 43
Peru 42,764 19,018
Singapore - 25,000
Switzerland 1,000 1,000
United Kingdom 70 70
Uruguay 18,128 388
Total 403,035 447,450

Letters of credit and guarantees
January 1, 2014
Description Gross amounts
of liabilities Gross amounts
offset in the
consolidated
statement of
financial position
Net amount of
liabilities presented
in the consolidated
statement of
financial position

Securities sold under repurchase agreements 286,162 - 286,162
Derivative financial instruments:
Financial liabilities at FVTPL 72 - 72
Derivative financial instruments used for hedging – payable 8,572 - 8,572
Total derivative  financial instruments 8,644 - 8,644
The Bank, on behalf of its client’s base, advises and confirms letters of credit to facilitate foreign trade transactions. When confirming letters of credit, the Bank adds its own unqualified assurance that the issuing bank will pay and that if the issuing bank does not honor drafts drawn on the letter of credit, the Bank will. The Bank provides stand-by letters of credit and guarantees, which are issued on behalf of institutional clients in connection with financing between its clients and third parties. The Bank applies the same credit policies used in its lending process, and once issued the commitment is irrevocable and remains valid until its expiration. Credit risk arises from the Bank's obligation to make payment in the event of a client’s contractual default to a third party. Risks associated with stand-by letters of credit and guarantees are included in the evaluation of the Bank’s overall credit risk.
Credit commitments
Commitments to extend credit are binding legal agreements to lend to clients. Commitments generally have fixed expiration dates or other termination clauses and require payment of a fee to the Bank. As some commitments expire without being drawn down, the total commitment amounts do not necessarily represent future cash requirements.

~~F-72~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-59
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

6. Loans commitments and financial guarantees contracts (continued)
The allowances for credit losses related to loans commitments and financial guarantees contracts are as follows:
Stage 1⁽¹⁾ Stage 2⁽²⁾ Stage 3⁽³⁾ Total
Allowance for expected credit losses as of December 31, 2015 2,914 2,510 - 5,424
Transfer to lifetime expected  credit losses (646 ) 693 - 47
Transfer to credit-impaired instruments - - - -
Transfer to 12-month expected credit losses - - - -
Net effect of changes in reserve for expected credit loss (748 ) 1,756 - 1,008
Instruments that have been derecognized during the year (2,631 ) (326 ) - (2,957 )
Changes due to instruments recognized as of December 31, 2015: (4,025 ) 2,123 - (1,902 )
New instruments  originated or purchased 2,254 - - 2,254
Allowance for expected credit losses as of December 31, 2016 1,143 4,633 - 5,776
Stage 1⁽¹⁾ Stage 2⁽²⁾ Stage 3⁽³⁾ Total
Allowance for expected credit losses as of December 31, 2014 7,079 2,794 - 9,873
Transfer to lifetime expected  credit losses - - - -
Transfer to credit-impaired instruments - - - -
Transfer to 12-month expected credit losses - - - -
Instruments that have been derecognized during the year (6,908 ) (284 ) - (7,192 )
Changes due to  instruments recognized as of December 31, 2014: (6,908 ) (284 ) - (7,192 )
New financial assets originated or purchased 2,743 - - 2,743
Allowance for expected credit losses as of December 31, 2015 2,914 2,510 - 5,424
⁽¹⁾ 12-month expected credit losses.
⁽²⁾ Lifetime expected credit losses.
⁽³⁾ Credit-impaired financial assets (lifetime expected credit losses).
The reserve for expected credit losses on loans commitments and financial guarantees contracts reflects the Bank’s Management estimate of expected credit losses items such as: confirmed letters of credit, stand-by letters of credit, guarantees and credit commitments.
F-60
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
7. Property and equipment

A breakdown of cost, accumulated depreciation, additions and disposals for property and equipment ~~as of December 31, 2015 and 2014~~ is as follows:

IT
equipment Furniture
and
fixtures Leasehold
improvement Other
equipment Total IT equipment Furniture
and
fixtures
Leasehold
improvement

Other
equipment
Total
Cost:
Balance as of January 1, 2014 3,152 2,135 7,413 548 13,248 3,152 2,135 7,413 548 13,248
Additions 23 13 51 - 87 23 13 51 - 87
Disposals (39 ) (1 ) (6 ) (88 ) (134 ) (39 ) (1 ) (6 ) (88 ) (134 )
Balances as of December 31, 2014 3,136 2,147 7,458 460 13,201
Balance as of December 31, 2014 3,136 2,147 7,458 460 13,201
Additions 368 30 179 38 615 368 30 179 38 615
Disposals (138 ) (175 ) (225 ) (41 ) (579 ) (138 ) (175 ) (225 ) (41 ) (579 )
Balance as of December 31, 2015 3,366 2,002 7,412 457 13,237 3,366 2,002 7,412 457 13,237
Additions 1,436 2,137 239 161 3,973
Disposals (416 ) (361 ) (880 ) - (1,657 )
Balance as of December 31, 2016 4,386 3,778 6,771 618 15,553

Accumulated depreciation:
Balances as of January 1, 2014 1,906 1,005 1,637 268 4,816
Balance as of January 1, 2014 1,906 1,005 1,637 268 4,816
Depreciation expense of the year 530 335 571 109 1,545 530 335 571 109 1,545
Disposals (39 ) (1 ) (6 ) (75 ) (121 ) (39 ) (1 ) (6 ) (75 ) (121 )
Balance as of December 31, 2014 2,397 1,339 2,202 302 6,240 2,397 1,339 2,202 302 6,240
Depreciation expense of the year 388 322 556 105 1,371 388 322 556 105 1,371
Disposals (114 ) (170 ) (222 ) (41 ) (547 ) (114 ) (170 ) (222 ) (41 ) (547 )
Balance as of December 31, 2015 2,671 1,491 2,536 366 7,064 2,671 1,491 2,536 366 7,064
Depreciation expense of the year 483 384 513 77 1,457
Disposals (412 ) (230 ) (875 ) - (1,517 )
Balance as of December 31, 2016 2,742 1,645 2,174 443 7,004

Carrying amounts as of:
December 31, 2016 1,644 2,133 4,597 175 8,549
December 31, 2015 695 511 4,876 91 6,173 695 511 4,876 91 6,173
December 31, 2014 739 808 5,256 158 6,961 739 808 5,256 158 6,961
January 1, 2014 1,246 1,130 5,776 280 8,432

~~F-73~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-61
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

7.8. Intangible assets

A breakdown of cost, accumulated amortization, additions, sales and disposals for intangible assets ~~as of December 31, 2015 and 2014~~ is as follows:

~~Software~~
Costs:
~~Balances~~Balance as of January 1, 2014 10,955
Additions 83
Disposals (51 )
~~Balances~~Balance as of December 31, 2014 10,987
Additions -
Disposals (211 )
~~Balances~~Balance as of December 31, 2015 10,776
Additions 3,111
Disposals (4 )
Balance as of December 31, 2016 13,883

Accumulated amortization:
~~Balances~~Balance as of January 1, 2014 9,065
Disposals (44 )
Amortization expense of the year 942
~~Balances~~Balance as of December 31, 2014 9,963
Disposals (210 )
Amortization expense of the year 596
~~Balances~~Balance as of December 31, 2015 10,349
Disposals (4 )
Amortization expense of the year 629
Balance as of December 31, 2016 10,974

Carrying amounts as of:
December 31, 2016 2,909
December 31, 2015 427
December 31, 2014 1,024
~~January 1, 2014~~ ~~1,890~~

Expenses related to the amortization of intangible assets are presented as part of amortization expenses in the consolidated statement of profit or loss.

8.9. Other assets

Following is a summary of other assets as of December 31, 2016 and 2015:
December 31,
2016 December 31,
2015

Accounts receivable 5,413 6,428
IT projects under development 4,199 4,952
Other 1,934 4,414
11,546 15,794
F-62
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014 ~~and January 1, 2014:~~
December 31
2015 December 31
2014 January 1
2014

Accounts receivable 6,428 4,281 1,514
Equity investment in a private fund (at cost) 530 530 530
IT projects under development 4,952 835 1
Other 3,884 2,410 1,446
15,794 8,056 3,491
~~F-74~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

9.10. Deposits

The ~~remaining~~ maturity profile of the Bank’s deposits is as follows:

December 31
2015 December 31
2014 January 1
2014 December 31,
2016 December 31,
2015
Demand 243,839 84,175 63,047 127,014 243,839
Up to 1 month 1,492,175 1,512,868 1,617,059 1,201,328 1,492,175
From 1 month to 3 months 475,611 460,681 311,048 463,479 475,611
From 3 month to 6 months 319,995 276,970 207,182 336,627 319,995
From 6 month to 1 year 263,849 147,000 157,000 436,884 263,849
From 1 month to 2 year - 25,000 6,000
From 1 year to 2 years 190,000 -
From 2 years to 5 years 47,520 -
2,795,469 2,506,694 2,361,336 2,802,852 2,795,469

The following table presents additional information regarding the Bank’s deposits:

December 31
2015 December 31
2014 January 1
2014 December 31,
2016 December 31,
2015
Aggregate amounts of time deposits of $100,000 or more 2,794,912 2,506,244 2,298,289 2,802,474 2,794,912
Aggregate amounts of deposits in the New York Agency 235,203 230,305 227,559 250,639 235,203

December 31
2015 2014
Interest expense paid to deposits in the New York Agency 1,228 961
December 31,
2016 December 31,
2015 December 31,
2014
Interest expense paid to deposits in the New York Agency. 2,094 1,228 961

~~10.~~11. Securities sold under repurchase agreements
As of December 31, 2016, the Bank does not have financing transactions under repurchase agreements.

The Bank’s financing transactions under repurchase agreements amounted to $114.1 million ~~$300.5 million, and $286.2 million~~ as of December 31, ~~2015 and 2014, and January 1, 2014, respectively.~~2015.

During the years ended December 31, 2016, 2015 and 2014, interest expense related to financing transactions under repurchase agreements totaled $970, $1,800 and $2,100, respectively, corresponding to interest expense generated by the financing contracts under repurchase agreements. These expenses are included in the interest expense – short-term borrowings and debt line in the consolidated statements of profit or loss.

~~F-75~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-63
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~11.~~12. Borrowings and debt

~~11.1~~12.1 Short-term borrowings and debt

The breakdown of short-term (original maturity of less than one year) borrowings and debt, together with contractual interest rates, is as follows:

December 31
2015 December 31
2014 January 1
2014
December 31,
2016
December 31,
2015
Short-term Borrowings:
At fixed interest rates 983,245 1,256,411 1,289,851 788,075 983,245
At floating interest rates 871,522 1,348,431 1,017,527 657,000 871,522
Total borrowings 1,854,767 2,604,842 2,307,378 1,445,075 1,854,767
Short-term Debt:
At fixed interest rates 525,590 77,695 287,987 25,000 525,590
At floating interest rates 50,000 10,000 110,000 - 50,000
Total debt 575,590 87,695 397,987 25,000 575,590
Total short-term borrowings and debt 2,430,357 2,692,537 2,705,365 1,470,075 2,430,357

Average outstanding balance during the year 2,266,864 2,191,253 1,348,230 2,266,864
Maximum balance at any month-end 2,856,507 2,692,537 1,876,322 2,856,507
Range of fixed interest rates on borrowing and debt in U.S. dollars 0.53% to 1.21 % 0.64% to 1.20 % 0.67% to 1.43 % 1.10% to 1.50 % 0.53% to 1.21 %
Range of floating interest rates on borrowing and debt in U.S. dollars 0.67% to 1.24 % 0.46% to 1.16 % 0.79% to 1.47 %
Range of floating interest rates on borrowing in U.S. dollars 1.14% to 1.48 % 0.67% to 1.24 %
Range of fixed interest rates on borrowing in Mexican pesos 3.76% to 3.98 % 3.58% to 3.60 % 4.13% to 4.58 % 6.16 % 3.76% to 3.98 %
Range of floating interest rate on borrowing in Mexican pesos 3.90% to 4.17 % 3.69 % 4.03% to 4.24 % 5.72 % 3.90% to 4.17 %
Range of fixed interest rate on debt in Japanese yens 0.31% to 0.33 % 0.75 % 0.75 % - 0.31% to 0.33 %
Fixed interest rate on debt in Swiss francs - 0.55 % 0.80 %
Weighted average interest rate at end of the year 0.93 % 0.81 % 1.30 % 0.93 %
Weighted average interest rate during the year 0.85 % 0.93 % 1.10 % 0.85 %

The balances of short-term borrowings and debt by currency, is as follows:

December 31
2015 December 31
2014 January 1
2014 December 31,
2016 December 31,
2015
Currency
US dollar 2,402,701 2,626,800 2,536,815 1,470,000 2,402,701
Mexican peso 14,366 11,042 73,964 75 14,366
Japanese yen 13,290 4,185 4,749 - 13,290
Swiss franc - 50,510 89,837
Total 2,430,357 2,692,537 2,705,365 1,470,075 2,430,357

~~F-76~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-64
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~11.~~12. Borrowings and debt (continued)

~~11.2~~12.2 Long-term borrowings and debt

Borrowings consist of long-term and syndicated loans obtained from international banks. Debt instruments consist of public and private issuances under the Bank's Euro Medium Term Notes Program (“EMTN”) as well as public issuances in the Mexican market. The breakdown of borrowings and long-term debt (original maturity of more than one year), together with contractual interest rates gross of prepaid commission of ~~$7,017, $5,649~~$5,133 and ~~$5,042~~$7,017 as of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014,~~2015, respectively, is as follows:

December 31
2015 December 31
2014 January 1
2014
December 31,
2016
December 31,
2015
Long-term Borrowings:
At fixed interest rates with due dates from September 2016 to October 2020 113,039 65,000 25,000
At floating interest rates with due dates from November 2016 to December 2020 695,837 578,956 506,346
At fixed interest rates with due dates from September 2017 to December 2021. 61,148 113,039
At floating interest rates with due dates from April 2017 to August 2019. 631,326 695,837
Total borrowings 808,876 643,956 531,346 692,474 808,876
Long-term Debt:
At fixed interest rates with due dates from March 2016 to March 2024 929,998 464,515 444,574
At floating interest rates with due dates from July 2016 to January 2018 149,956 296,834 177,806
Total debt 1,079,954 761,349 622,380
At fixed interest rates with due dates from March 2018 to March 2024. 921,479 929,998
At floating interest rates with due dates from January 2018 to April 2019. 167,918 149,956
Total long-term debt 1,089,397 1,079,954
Total long-term borrowings and debt outstanding 1,888,830 1,405,305 1,153,726 1,781,871 1,888,830

Average outstanding balance during the year 1,589,451 1,388,708 1,881,085 1,589,451
Maximum outstanding balance at any month – end 1,888,830 1,587,009 2,054,138 1,888,830
Range of fixed interest rates on borrowing and debt in U.S. dollars 1.01% to 3.75 % 1.50% to 3.75 %
1.50% to 3.75
% 2.85% to 3.75 % 1.01% to 3.75 %
Range of floating interest rates on borrowing and debt in U.S. dollars 0.84% to 1.95 % 0.72% to 1.76 %
0.52% to 1.77
%
Range of floating interest rates on borrowing in U.S. dollars 1.66% to 2.49 % 0.84% to 1.95 %
Range of fixed interest rates on borrowing in Mexican pesos 4.30% to 5.95 % - - 4.75% to 8.90 % 4.30% to 5.95 %
Range of floating interest rates on debt in Mexican pesos 3.93% to 5.45 % 3.67% to 3.96 %
4.44% to 5.29
%
Range of floating interest rates on borrowing and debt in Mexican pesos 6.19% to 6.54 % 3.93% to 5.45 %
Range of fixed interest rate on debt in Japanese yens 0.50% to 0.81 % - - 0.46% to 0.81% % 0.50% to 0.81 %
Range of fixed interest rate on debt in Euros 0.40% to 3.75 % - 6.50 % 3.75 % 0.40% to 3.75 %
Range of fixed interest rate on debt in Australian dollar 3.33 % -
Weighted average interest rate at the end of the year 2.62 % 2.71 % 2.98 % 2.62 %
Weighted average interest rate during the year 2.65 % 2.86 % 2.84 % 2.65 %

~~F-77~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-65
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~11.~~12. Borrowings and debt (continued)

~~11.2~~12.2 Long-term borrowings and debt (continued)

The balances of long-term borrowings and debt by currency, is as follows:

December 31
2015 December 31
2014 January 1
2014 December 31,
2016 December 31,
2015
Currency
US dollar 1,599,233 1,069,207 866,830 1,392,995 1,599,233
Mexican peso 153,332 271,833 242,916 219,347 153,332
Japanese yen 25,035 - 43,980 95,238 25,035
Euro 111,230 64,265 - 52,574 111,230
Australian dollar 21,717 -
Total 1,888,830 1,405,305 1,153,726 1,781,871 1,888,830

The Bank's funding activities include: (i) EMTN, which may be used to issue notes for up to $2.3 billion, with maturities from 7 days up to a maximum of 30 years, at fixed or floating interest rates, or at discount, and in various currencies. The notes are generally issued in bearer or registered form through one or more authorized financial institutions; (ii) Short-and Long-Term Notes “Certificados Bursatiles” Program (the “Mexico Program”) in the Mexican local market, registered with the Mexican National Registry of Securities maintained by the National Banking and Securities Commission in Mexico (“CNBV”, for its acronym in Spanish), for an authorized aggregate principal amount of 10 billion Mexican pesos with maturities from one day to 30 years.

Some borrowing agreements include various events of default and covenants related to minimum capital adequacy ratios, incurrence of additional liens, and asset sales, as well as other customary covenants, representations and warranties. As of December 31, ~~2015,~~2016, the Bank was in compliance with all covenants.

The future remaining maturities of long-term borrowings and debt outstanding as of December 31, ~~2015,~~2016, are as follows:

Due in Outstanding
Outstanding
Due in
2016 209,187
2017 729,498 460,228
2018 502,732 553,140
2019 35,860 333,593
2020 354,733 375,133
2021 7,203
2024 56,820 52,574
1,888,830 1,781,871

~~F-78~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-66
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~12.~~13. Other liabilities

December 31
2015 December 31
2014 January 1
2014
Accruals and other accumulated expenses 9,676 10,787 9,177
Dividends payable 146 14,785 13,339
Accounts payable 11,096 4,260 2,471
Others 3,426 3,046 2,960
24,344 32,878 27,947
Following is a summary of other liabilities as of December 31, 2016 and 2015:
December 31,
2016 December 31,
2015
Accruals and other accumulated expenses 4,170 9,676
Accounts payable 11,179 11,096
Others 2,979 3,572
18,328 24,344

~~13.~~14. Earnings per share

The following table presents a reconciliation of the income and share data used in the basic and diluted earnings per share (“EPS”) computations for the dates indicated:

December 31
2015 December 31
2014 December 31,
2016 December 31,
2015 December 31,
2014

Profit for the year for both basic and diluted EPS 103,984 102,366
Profit for the year 87,045 103,984 102,366

Basic earnings per share 2.67 2.65 2.23 2.67 2.65
Diluted earnings per share 2.66 2.63 2.22 2.66 2.63

Weighted average common shares outstanding - applicable to basic 38,925 38,693 39,085 38,925 38,693

Effect of dilutive securities:
Effect of diluted securities:
Stock options and restricted stock units plans 188 189 125 188 189
Adjusted weighted average common shares outstanding applicable to diluted EPS 39,113 38,882 39,210 39,113 38,882

~~F-79~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-67
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~14.~~15. Capital and Reserves

Common stock

The Bank’s common stock is divided into four categories:

1) “Class A”; shares may only be issued to Latin American Central Banks or banks in which the state or other government agency is the majority shareholder.
2) “Class B”; shares may only be issued to banks or financial institutions.
3) “Class E”; shares may be issued to any person whether a natural person or a legal entity.
4) “Class F”; may only be issued to state entities and agencies of non-Latin American countries, including, among others, central banks and majority state-owned banks in those countries, and multilateral financial institutions either international or regional institutions.

The holders of “Class B” shares have the right to convert or exchange their “Class B” shares, at any time, and without restriction, for “Class E” shares, at a rate of one-to-one.

The following table provides detailed information on the Bank’s common stock activity per class for each of the years in the ~~two-year~~three-year period ended December 31, ~~2015:~~2016:

(Share units) “Class A”   “Class B”      “Class E” “Class F” Total “Class A”   “Class B”      “Class E” “Class F” Total
Authorized 40,000,000 40,000,000 100,000,000 100,000,000 280,000,000 40,000,000 40,000,000 100,000,000 100,000,000 280,000,000

Outstanding at January 1, 2014 6,342,189 2,520,422 29,710,556 - 38,573,167 6,342,189 2,520,422 29,710,556 - 38,573,167
Conversions - (20,208 ) 20,208 - - - (20,208 ) 20,208 - -
Repurchase of common stock - (21,164 ) (2,110 ) - (23,274 )
Repurchase common stock - (21,164 ) (2,110 ) - (23,274 )
Restricted stock issued – directors - - 28,500 - 28,500 - - 28,500 - 28,500
Exercised stock options - compensation plans - - 111,427 - 111,427 - - 111,427 - 111,427
Restricted stock units – vested - - 87,519 - 87,519 - - 87,519 - 87,519
Outstanding at December 31, 2014 6,342,189 2,479,050 29,956,100 - 38,777,339 6,342,189 2,479,050 29,956,100 - 38,777,339

Conversions - (4,581 ) 4,581 - - - (4,581 ) 4,581 - -
Repurchase of common stock - - - -
Restricted stock issued – directors - - 57,000 - 57,000 - - 57,000 - 57,000
Exercised stock options - compensation plans - - 70,358 - 70,358 - - 70,358 - 70,358
Restricted stock units – vested - - 64,208 - 64,208 - - 64,208 - 64,208
Outstanding at December 31, 2015 6,342,189 2,474,469 30,152,247 - 38,968,905 6,342,189 2,474,469 30,152,247 - 38,968,905

Restricted stock issued – directors - - 57,000 - 57,000
Exercised stock options - compensation plans - - 68,785 - 68,785
Restricted stock units – vested - - 65,358 - 65,358
Outstanding at December 31, 2016 6,342,189 2,474,469 30,343,390 - 39,160,048

~~F-80~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-68
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~14.~~15. Capital and Reserves (continued)

The following table presents information regarding shares repurchased but not retired by the Bank and accordingly classified as treasury stock:

“Class A” “Class B” “Class E” Total
Shares Amount Shares Amount Shares Amount Shares Amount
Outstanding at January 1, 2014 318,140 10,708 568,010 15,655 2,520,522 55,645 3,406,672 82,008
Repurchase of common stock - - 21,164 587 2,110 53 23,274 640
Restricted stock issued – directors - - - - (28,500 ) (629 ) (28,500 ) (629 )
Exercised stock options - compensation plans - - - - (111,427 ) (2,460 ) (111,427 ) (2,460 )
Restricted stock units – vested - - - - (87,519 ) (1,932 ) (87,519 ) (1,932 )
Outstanding at December 31, 2014 318,140 10,708 589,174 16,242 2,295,186 50,677 3,202,500 77,627

Repurchase of common stock - - - - - - - -
Restricted stock issued - directors - - - - (57,000 ) (1,259 ) (57,000 ) (1,259 )
Exercised stock options - compensation plans - - - - (70,358 ) (1,553 ) (70,358 ) (1,553 )
Restricted stock units - vested - - - - (64,208 ) (1,418 ) (64,208 ) (1,418 )
Outstanding at December 31, 2015 318,140 10,708 589,174 16,242 2,103,620 46,447 3,010,934 73,397
“Class A” “Class B” “Class E” Total
Shares Amount Shares Amount Shares Amount Shares Amount
Outstanding at January 1, 2014 318,140 10,708 568,010 15,655 2,520,522 55,645 3,406,672 82,008
Repurchase of common stock - - 21,164 587 2,110 53 23,274 640
Restricted stock issued – directors - - - - (28,500 ) (629 ) (28,500 ) (629 )
Exercised stock options - compensation plans - - - - (111,427 ) (2,460 ) (111,427 ) (2,460 )
Restricted stock units – vested - - - - (87,519 ) (1,932 ) (87,519 ) (1,932 )
Outstanding at December 31, 2014 318,140 10,708 589,174 16,242 2,295,186 50,677 3,202,500 77,627

Repurchase of common stock - - - - - - - -
Restricted stock issued – directors - - - - (57,000 ) (1,259 ) (57,000 ) (1,259 )
Exercised stock options - compensation plans - - - - (70,358 ) (1,553 ) (70,358 ) (1,553 )
Restricted stock units – vested - - - - (64,208 ) (1,418 ) (64,208 ) (1,418 )
Outstanding at December 31, 2015 318,140 10,708 589,174 16,242 2,103,620 46,447 3,010,934 73,397

Repurchase of common stock - - - - - - - -
Restricted stock issued - directors - - - - (57,000 ) (1,259 ) (57,000 ) (1,259 )
Exercised stock options - compensation plans - - - - (68,785 ) (1,519 ) (68,785 ) (1,519 )
Restricted stock units - vested - - - - (65,358 ) (1,443 ) (65,358 ) (1,443 )
Outstanding at December 31, 2016 318,140 10,708 589,174 16,242 1,912,477 42,226 2,819,791 69,176

Reserves

The Banking Law in the Republic of Panama requires banks with general banking license to maintain a total capital adequacy index that shall not be lower than 8% of total assets and off-balance sheet irrevocable contingency transactions, weighted according to their risk; and primary capital equivalent that shall not be less than 4%4.5% of its assets and ~~off-balance sheet irrevocable contingency transactions,~~loans commitments and financial guarantees contracts, weighted according to their risk. As of December 31, ~~2015,~~2016, the Bank’s total capital adequacy ratio is ~~16.27%~~16.61% which is in compliance with the minimum capital adequacy ratios required by the Banking Law in the Republic of Panama.

F-69
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
15. Capital and Reserves (continued)
Restriction on retained earnings

The Bank does not have restrictions on its ability to access its retained earnings other than those resulting from the supervisory framework within which the Bank operates. The supervisory framework requires banks to keep an additional reserve within equity for credit risk coverage of its credit facilities. As of December 31, 2016 and 2015, the amount stands at $62.5 and $38.7 ~~million. As of December 31, 2014, $7.9~~ million, respectively of retained earnings are restricted from dividend distribution for purposes of complying with local regulatory requirements.

~~F-81~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~14.~~ ~~Capital and Reserves (continued)~~
~~Treasury shares~~
~~During the year ended at December 31, 2014, the Bank recorded at cost 23,274 common treasury shares for an amount of $640, acquired in 2014.~~
Additional paid-in capital

As of December, 31 ~~2015~~2016 and ~~2014,~~2015, the additional paid-in capital consists of additional cash contributions to the common capital paid by shareholders.

~~15.~~16. Cash and stock-based compensation plans

The Bank has established equity compensation plans under which it manages restricted stock, restricted stock units and stock purchase option plans to attract, retain and motivate directors and top employees and compensate them for their contributions to the growth and profitability of the Bank. Vesting conditions for each of the Bank’s plans are only comprised of specified requisite service periods.

A.2008 Stock Incentive Plan – Directors and Executives

In February 2008, the Board of Directors of the Bank approved an incentive plan for directors and executives allowing the Bank to grant restricted stock, restricted stock units, stock purchase options, and/or other similar compensation instruments. The maximum aggregate number of shares which may be granted under this plan is three million “Class E” common shares. The 2008 Stock Incentive Plan is administered by the Board of Directors which has the authority in its discretion to select the directors and executives to whom the awards may be granted; to determine whether and to what extent awards are granted, and to amend the terms of any outstanding award under this plan.

Restricted stocks are issued at the grant date, but are withheld by the Bank until the vesting date. Restricted stocks are entitled to receive dividends. A restricted stock unit is a grant valued in terms of the Bank’s stock, but no stock is issued at the grant date. Restricted stock units are not entitled to dividends. The Bank issues and delivers common stock at the vesting date of the restricted stock units.

During 2016 and 2015, ~~2014,~~ the Board of Directors approved the grant of restricted stock to directors and stock options and restricted stock units to certain executives of the Bank, as follows:

Restricted stock – Directors
During the years ~~2015~~2016 and ~~2014~~2015 the Board of Directors granted 57,000 ~~and 28,500, respectively,~~ of “Class E” common shares. The fair value of restricted stock granted was based on the stock closing price in the New York Stock Exchange of the “Class E” shares on April 13, 2016 and April 16, ~~2015 and July 15, 2014.~~2015. The fair value of restricted stock granted totaled $1,376 in 2016 and $1,925 in 2015, ~~and $862 in 2014,~~ of which ~~$1,553~~$617 and ~~$809~~$852 were charged against income during 2016 and 2015, respectively.
The total expense recorded during 2016, 2015 and 2014 ~~respectively.~~of restricted stock – directors $1,548, $1,553 and $809. The remaining cost pending amortization of ~~$1,301~~$1,146 at December 31, ~~2015~~2016 will be amortized over 2.3 years.

The stocks lose their restriction from the year following the anniversary date, as follows: 35% in the first and second year, and 30% in the third year.
~~F-82~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-70
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~15.~~16. Cash and stock-based compensation plans
~~Restricted stock vest on the grant’s date anniversary, as follows:~~
~~Year of Grant~~
~~2015~~ ~~35% in the first and second year, and 30% in the third year~~
~~2014~~ ~~35% in the first and second year, and 30% in the third year~~
~~2013~~ ~~35% in the first and second year, and 30% in the third year~~ (continued)

A summary of the restricted stock granted to Directors is presented below:

Shares Weighted average
grant date fair
value Shares
Weighted average
grant date fair value

Outstanding at January 1, 2014 84,862 20.10 84,862 20.10
Granted 28,500 30.25 28,500 30.25
Vested (35,026 ) 18.80 (35,026 ) 18.80
Outstanding at December 31, 2014 78,336 24.37 78,336 24.37
Granted 57,000 33.78 57,000 33.78
Vested (39,015 ) 22.69 (39,015 ) 22.69
Outstanding at December 31, 2015 96,321 30.62 96,321 30.62
Granted 57,000 24.14
Vested (56,421 ) 28.80
Outstanding at December 31, 2016 96,900 27.86
Expected to vest 96,321 96,900

The fair value of vested stock during the years 2016 and 2015 was $1,625, and ~~2014 was~~ $885, ~~and $659,~~ respectively.

Restricted Stock Units and Stock Purchase Options granted to certain Executives

The Board of Directors approved the grant of stock purchase options and restricted stock units to certain executives of the Bank with a grant date fair value of ~~$1.8~~$1.7 million in 2015 and ~~$1.6~~$1.8 million in 2014. In ~~2015,~~2016, the distribution of the fair value in restricted stock units and stock purchase options was $1.7 million on restricted stock units and in 2015, $0.5 million in stock purchase options and $1.3 million ~~and $0.5 million respectively; $0.9 million and $0.7 million~~ in ~~2014,~~restricted stock units, respectively.

Restricted stock ~~units:~~units

The fair value of the stock units was based on the “Class E” stock closing price in the New York Stock Exchange on the grants date. These stock units vest 25% each year on the grant date’s anniversary.The restricted stock units are exchanged at a ratio of 1: 1 for common shares "Class E".

Compensation costs of the restricted stock units are amortized during the period of ~~restriction.~~restriction by accelerated method. Costs charged against income during 2016, 2015 and 2014 due to the amortization of these grants totaled $1,295, $1,282 and $1,188, respectively. The remaining compensation cost pending amortization of ~~$985~~$1,096 in ~~2015~~2016 will be amortized over 3.1 years.

~~F-83~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-71
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~15.~~16. Cash and stock-based compensation plans (continued)
Restricted stock units (continued)

A summary of the status of the restricted stock units granted to certain executives is presented below:

Shares Weighted
average
grand date
fair value Weighted
average
remaining
contractual
term Aggregate
Intrinsic
value Shares Weighted
average grand
date fair value Weighted
average
remaining
contractual
term
Aggregate
Intrinsic
value

Outstanding at January 1, 2014 242,749 17.13 242,749 17.13
Granted 47,737 19.24 47,737 19.24
Forfeited (39,255 ) 17.25 (39,255 ) 17.25
Vested (87,519 ) 16.27 (87,519 ) 16.27
Outstanding at December 31, 2014 163,712 18.18 163,712 18.18
Granted 63,244 21.67 63,244 21.67
Forfeited - -
Vested (64,208 ) 17.67 $ 850 (64,208 ) 17.67
Outstanding at December 31, 2015 162,748 19.74 2.00 years $ 1,008 162,748 19.74
Granted 91,454 18.26
Forfeited (21,408 ) 17.69
Vested (65,358 ) 18.83
Outstanding at December 31, 2016 167,436 19.35 2.22 years $ 141
Expected to vest 161,982 19.74 $ 1,001 167,436 19.35 $ 1,689

The fair value of vested stock during the years 2016 and 2015 is $1,230, and ~~2014 is~~ $1,135, ~~and $1,424,~~ respectively.

Stock purchase ~~options:~~options

The fair value of stock purchase options granted to certain Executives during 2015 ~~and 2014~~ was estimated using a binomial option-pricing model, based on the following factors:

Measuring
unit 2015 2014 Measuring
unit 2016 2015 2014

Weighted average fair value per option $ 1.95 - 2.06 2.11 – 2.33 $ - 1.95 - 2.06 2.11 - 2.33
Weighted average expected term, in years Years 5.5 5.5 Year - 5.5 5.5
Expected volatility % 22 % 22% - 24 % % - 22 % 22% - 24 %
Risk-free rate % 0.02 – 1.52 0.05 - 1.54 % - 0.02 – 1.52 0.05 - 1.54
Expected dividend % 5.00 % 5.00 % % - 5.00 % 5.00 %

These options expire seven years after the grant date and are exercisable at a rate of 25% each year on the grant date’s anniversary.

~~F-84~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-72
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~15.~~16. Cash and stock-based compensation plans (continued)

Stock purchase options (continued)
Related cost charged against income during 2016, 2015 and 2014 as a result of the amortization of these plans amounted to $251, $454 and $409, respectively. The remaining compensation cost pending amortization of ~~$418~~$167 in ~~2015~~2016 will be amortized over a period of ~~3.12~~2.11 years.

A summary of stock options granted is presented below:

Options Weighted
average
exercise
price Weighted
average
remaining
contractual
term Aggregate
Intrinsic
value Options Weighted
average
exercise price Weighted
average
remaining
contractual
term
Aggregate
Intrinsic
value

Outstanding at January 1, 2014 187,745 14.90 187,745 14.90
Granted 315,971 25.15 315,971 25.15
Forfeited (671 ) 18.57 (671 ) 18.57
Exercised (111,349 ) 13.18 (111,349 ) 13.18
Outstanding at December 31, 2014 391,696 23.65 391,696 23.65
Granted 233,418 29.25 233,418 29.25
Forfeited - - - -
Exercised (70,358 ) 20.86 (70,358 ) 20.86
Outstanding at December 31, 2015 554,756 26.36 5.37 years $ 2,978 554,756 26.36
Granted - -
Forfeited (126 ) 18.93
Exercised (68,785 ) 22.78
Outstanding at December 31, 2016 485,845 26.87 4.51 years $ 1,248
Exercisable 52,454 23.55 1.11 years 241 152,793 25.93 4.24 years $ 537
Expected to vest 501,631 26.65 5.45 years $ 2,737 333,052 27.31 4.64 years $ 711

The intrinsic value of exercised options during the years 2016 and 2015 was $412 and ~~2014 was~~ $811, ~~and $1,911,~~ respectively. During the years ~~2015~~2016 and ~~2014~~2015 the Bank received ~~$1,467~~$1,565 and ~~$1,470,~~$1,467, respectively, from exercised options.

B.Other plans - Expatriate Top Executives Plan

The Bank sponsors a defined contribution plan for its expatriate top executives based in Panama, which are not eligible to participate in the Panamanian social security system. The Bank’s contributions are determined as a percentage of the annual salaries of top executives eligible for the plan, each contributing an additional amount withheld from their salary. Contributions to this plan are managed by a fund manager through a trust. The executives are entitled to the Bank’s contributions after completing at least three years of service in the Bank. During the years 2016, 2015 and 2014, the Bank charged to salaries expense $121, $171 and $133, respectively, that correspond to the Bank’s contributions to this plan. As of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014~~2015 the accumulated liability payable amounted to ~~$246, $222~~$365 and ~~$176,~~$246, respectively.

~~F-85~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-73
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~16.~~17. Business segment information

The Bank’s activities are managed and executed in two business segments: Commercial and Treasury. The business segment results are determined based on the Bank’s managerial accounting process as defined by IFRS 8 – Operating Segments, which assigns consolidated statement of financial positions, revenue and expense items to each business segment on a systematic basis. The Chief Operating Decision Maker (CODM), represented by the Chief Executive Officer (CEO) and the Management Committee reviews internal management reports from each division at least quarterly. Segment profit, as included in the internal management reports is used to measure performance as management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate within the same industry.

The Bank’s net interest income represents the main driver of profits; therefore, the Bank presents its interest-earning assets by business segment, to give an indication of the size of business generating net interest income. Interest-earning assets also generate gains and losses on sales, such as for financial instruments at fair value through OCI and financial instruments at fair value through profit or loss, which are included in net other income, in the Treasury Segment. The Bank also discloses its other assets and contingencies by business segment, to give an indication of the size of business that generates net fees and commissions, also included in net other income, in the Commercial Business Segment.

The Commercial Business Segment incorporates all of the Bank’s financial intermediation and fees generated by the commercial portfolio. The commercial portfolio includes book value of loans at amortized cost, acceptances, loan commitments and ~~contingencies.~~financial guarantee contracts. Profits from the Commercial Business Segment include net interest income from loans at amortized cost, fee income, gain on sale of loans at amortized cost, impairment loss from expected credit losses on loans at amortized cost, impairment loss from expected credit losses on loan commitments and ~~off-balance sheet instruments,~~financial guarantee contracts, and allocated expenses.

The Treasury Business Segment incorporates deposits in banks and all of the Bank’s financial instruments at fair value through profit or loss, financial instruments at fair value through OCI and securities at amortized cost. Profits from the Treasury Business Segment include net interest income from deposits with banks, financial instruments at fair value through OCI and securities at amortized cost, derivative financial instruments foreign currency exchange, gain (loss) for financial instrument at fair value through profit or loss, gain (loss) for financial instrument at fair value through OCI, impairment loss for expected credit losses on investment securities, other income and allocated expenses.

~~F-86~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-74
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~16.~~17. Business segment information (continued)

The following table provides certain information regarding the Bank’s operations by segment:

Year ended December 31 Year ended December 31,
2015 2014 2016 2015 2014
Commercial
Interest income 209,858 202,096 236,392 209,858 202,096
Interest expense (82,697 ) (79,674 ) (96,017 ) (82,697 ) (79,674 )
Net interest income 127,161 122,422 140,375 127,161 122,422
Net other income⁽²⁾ 21,492 21,068 16,333 21,492 21,068
Impairment loss from expected credit losses on loans at amortized cost (12,800 ) (10,601 )
Expenses (40,429 ) (42,752 )
Total income 156,708 148,653 143,490
Impairment loss from expected credit losses on loans at amortized cost and impairment loss from expected credit losses on loan commitments and financial guarantee contracts (35,112 ) (12,800 ) (10,601 )
Expenses, less impairment loss from expected credit losses (34,599 ) (40,429 ) (42,752 )
Profit for the year 95,424 90,137 86,997 95,424 90,137
Commercial assets and contingencies (end of year balances):
Commercial assets and loan commitments and financial guarantee contracts (end of year balances):
Interest-earning assets^{(3 and 5)} 6,682,445 6,677,735 6,013,482 6,682,445 6,677,735
Other assets and contingencies⁽⁴⁾ 437,436 496,097
Total interest-earning assets, other assets and contingencies 7,119,881 7,173,832
Other assets and loan commitments and financial guarantee contracts⁽⁴⁾ 422,422 437,436 496,097
Total interest-earning assets, other assets and loan commitments and financial guarantee contracts 6,435,904 7,119,881 7,173,832

Treasury
Interest income 10,454 10,802 9,506 10,454 10,802
Interest expense 7,864 8,112 5,328 7,864 8,112
Net interest income 18,318 18,914 14,834 18,318 18,914
Net other income⁽²⁾ 6,887 5,206 (3,568 ) 6,887 5,206
Total income 11,266 25,205 24,120
Impairment loss for expected credit losses on investment securities (5,290 ) (1,030 ) (3 ) (5,290 ) (1,030 )
Expenses (11,355 ) (10,860 )
Expenses, less impairment loss for expected credit losses (11,216 ) (11,355 ) (10,860 )
Profit for the year 8,560 12,230 47 8,560 12,230
Treasury assets and contingencies (end of year balances):
Interest-earning assets⁽⁵⁾ 1,603,395 1,231,800
Total interest-earning assets, other assets and contingencies 1,603,395 1,231,800
Treasury assets (end of year balances):
Interest-earning assets^{(3 and 5)} 1,177,961 1,603,921 1,231,800
Total interest-earning assets 1,177,961 1,603,921 1,231,800

Combined business segment total
Interest income 220,312 212,898 245,898 220,312 212,898
Interest expense (74,833 ) (71,562 ) (90,689 ) (74,833 ) (71,562 )
Net interest income 145,479 141,336 155,209 145,479 141,336
Net other income⁽²⁾ 28,379 26,274 12,765 28,379 26,274
Impairment loss from expected credit losses on loans at amortized cost (12,800 ) (10,601 )
Total income 167,974 173,858 167,610
Impairment loss from expected credit losses on loans at amortized cost and impairment loss from expected credit losses on loan commitments and financial guarantee contracts (35,112 ) (12,800 ) (10,601 )
Impairment loss from expected credit losses on investment securities (5,290 ) (1,030 ) (3 ) (5,290 ) (1,030 )
Expenses (51,784 ) (53,613 )
Expenses, less impairment loss from expected credit losses (45,814 ) (51,784 ) (53,613 )
Profit for the year 103,984 102,366 87,045 103,984 102,366

~~F-87~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-75
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~16.~~17. Business segment information (continued)

Year ended December 31, January 1,
2015 2014 2014
Total assets and contingencies (end of year balances):
Interest-earning assets^{(3 and 5)} 8,285,840 7,909,535 7,418,048
Other assets and contingencies⁽⁴⁾ 437,436 496,097 481,551
Total interest-earning assets, other assets and contingencies 8,723,276 8,405,632 7,899,599

December 31,
2016

December 31,
2015

Total assets and loan commitments and financial guarantee contracts (end of year balances):
Interest-earning assets^{(2 and 4)} 7,191,443 8,286,366
Other assets and loan commitments and financial guarantee contracts⁽³⁾ 422,422 437,436
Total interest-earning assets, other assets and loan commitments and financial guarantee contracts 7, 613,865 8,723,802

⁽¹⁾ The numbers set out in these tables have been rounded and accordingly may not total exactly. The balances for 2016 correspond to December 31, 2016 figures.
⁽²⁾ Net other income ~~consist~~consists of other income including gains on sale of loans at amortized cost, gains (loss) per financial instrument at FVTPL and FVOCI, derivative instruments ~~fees and commissions, net~~ and foreign currency exchange.
⁽³⁾ Includes deposits and loans at amortized cost, net of unearned interest and deferred fees.
⁽⁴⁾ Includes customers’ liabilities under acceptances, ~~letters of credit~~loans commitments and financial guarantees ~~covering commercial and country risk, and credit commitments.~~contracts.
⁽⁵⁾ Includes cash and ~~due from banks,~~cash equivalents, interest-bearing deposits with banks, financial instruments at fair value through OCI, ~~and~~ financial instruments at amortized cost and financial instruments toat fair value tothrough profit or loss.

Year ended December 31, January 1,
2015 2014 2014
December 31,
2016

December 31,
2015

Reconciliation of total assets:
Interest-earning assets – business segment 8,285,840 7,909,535 7,418,048 7,191,443 8,286,366
Allowance for expected credit losses on loans at amortized cost (89,974 ) (77,687 ) (70,876 ) (105,988 ) (89,974 )
Allowance for expected credit losses on securities at amortized cost (602 ) (526 )
Customers’ liabilities under acceptances 15,100 114,018 1,128 19,387 15,100
Intangibles 427 1,024 1,890
Intangibles, net 2,909 427
Accrued interest receivable 45,456 48,177 40,778 44,187 45,456
Property and equipment, net 6,173 6,961 8,432 8,549 6,173
Derivative financial instruments used for hedging - receivable 7,400 12,324 15,217 9,352 7,400
Other assets 15,794 8,056 3,491 11,546 15,794
Total assets – consolidated financial statements 8,286,216 8,022,408 7,418,108 7,180,783 8,286,216

~~F-88~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-76
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~17.~~18. Fair value of financial instruments

The Bank determines the fair value of its financial instruments using the fair value hierarchy established in IFRS 13 - Fair Value Measurements and Disclosure, which requires the Bank to maximize the use of observable inputs (those that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market information obtained from sources independent of the reporting entity) and to minimize the use of unobservable inputs (those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances) when measuring fair value. Fair value is used on a recurring basis to measure assets and liabilities in which fair value is the primary basis of accounting. Additionally, fair value is used on a non-recurring basis to evaluate assets and liabilities for impairment or for disclosure purposes. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Bank uses some valuation techniques and assumptions when estimating fair value. The Bank applied the following fair value hierarchy:

Level 1 – Assets or liabilities for which an identical instrument is traded in an active market, such as publicly-traded instruments or futures contracts.
Level 2 – Assets or liabilities valued based on observable market data for similar instruments, quoted prices in markets that are not active; or other observable inputs that can be corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 – Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments measured based on the best available information, which might include some internally-developed data, and considers risk premiums that a market participant would require.

When determining the fair value measurements for assets and liabilities that are required or permitted to be recorded at fair value, the Bank considers the principal or most advantageous market in which it would transact and considers the assumptions that market participants would use when pricing the asset or liability. When possible, the Bank uses active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Bank uses observable market information for similar assets and liabilities. However, certain assets and liabilities are not actively traded in observable markets and the Bank must use alternative valuation techniques to determine the fair value measurement. The frequency of transactions, the size of the bid-ask spread and the size of the investment are factors considered in determining the liquidity of markets and the relevance of observed prices in those markets.

When there has been a significant decrease in the volume or level of activity for a financial asset or liability, the Bank uses the present value technique which considers market information to determine a representative fair value in usual market conditions.

A description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, including the general classification of such assets and liabilities under the fair value hierarchy is presented below:

~~F-89~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~17.~~ ~~Fair value of financial instruments (continued)~~
Financial instruments at FVTPL and FVOCI

Financial instruments at FVTPL are carried at fair value, which is based upon quoted prices when available, or if quoted market prices are not available, on discounted expected cash flows using market rates commensurate with the credit quality and maturity of the security.

Financial instruments at FVOCI are carried at fair value, based on quoted market prices when available, or if quoted market prices are not available, based on discounted expected cash flows using market rates commensurate with the credit quality and maturity of the security.

When quoted prices are available in an active market, financial instruments at FVOCI and financial instruments at FVTPL are classified in level 1 of the fair value hierarchy. If quoted market prices are not available or they are available in markets that are not active, then fair values are estimated based upon quoted prices of similar instruments, or where these are not available, by using internal valuation techniques, principally discounted cash flows models. Such securities are classified within level 2 of the fair value ~~hierarchy~~hierarchy.
F-77
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
18. Fair value of financial instruments (continued)

Derivative financial instruments

The valuation techniques and inputs depend on the type of derivative and the nature of the underlying instrument. Exchange-traded derivatives that are valued using quoted prices are classified within level 1 of the fair value hierarchy.

For those derivative contracts without quoted market prices, fair value is based on internal valuation techniques using inputs that are readily observable and that can be validated by information available in the market. The principal technique used to value these instruments is the discounted cash flows model and the key inputs considered in this technique include interest rate yield curves and foreign exchange rates. These derivatives are classified within level 2 of the fair value hierarchy.

The fair value adjustments applied by the Bank to its derivative carrying values include credit valuation adjustments (“CVA”), which are applied to OTC derivative instruments, in which the base valuation generally discounts expected cash flows using the Overnight Index Swap (“OIS”) interest rate curves. Because not all counterparties have the same credit risk as that implied by the relevant OIS curve, a CVA is necessary to incorporate the market view of both, counterparty credit risk and the Bank’s own credit risk, in the valuation.

Own-credit and counterparty CVA is determined using a fair value curve consistent with the Bank’s or counterparty credit rating. The CVA is designed to incorporate a market view of the credit risk inherent in the derivative portfolio. However, most of the Bank’s derivative instruments are negotiated bilateral contracts and are not commonly transferred to third parties. Derivative instruments are normally settled contractually, or if terminated early, are terminated at a value negotiated bilaterally between the counterparties. Therefore, the CVA (both counterparty and own-credit) may not be realized upon a settlement or termination in the normal course of business. In addition, all or a portion of the CVA may be reversed or otherwise adjusted in future periods in the event of changes in the credit risk of the Bank or its counterparties or due to the anticipated termination of the transactions.

Transfer of financial assets
Gains or losses on sale of loans depend in part on the carrying amount of the financial assets involved in the transfer, and its fair value at the date of transfer. The fair value of instruments is determined based upon quoted market prices when available, or are based on the present value of future expected cash flows using information related to credit losses, prepayment speeds, forward yield curves, and discounted rates commensurate with the risk involved.

~~F-90~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-78
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~17.~~18. Fair value of financial instruments (continued)

Financial instruments measured at fair value on a recurring basis by caption on the consolidated statement of financial positions using the fair value hierarchy are described below:

December 31, 2015
Level 1^(a) Level 2^(b) Level 3^(c)
Total

Assets
Securities at fair value through OCI
Corporate debt 76,091 8,724 - 84,815
Sovereign debt 56,988 - - 56,988
Total securities at fair value through OCI 133,079 8, 724 - 141,803
Financial instruments at FVTPL
Investment funds - 53,411 - 53,411
Total financial instruments at FVTPL - 53,411 - 53,411
Derivative financial instruments used for hedging – receivable
Interest rate swaps - 2,779 - 2,779
Cross-currency interest rate swaps - 696 - 696
Forward foreign exchange - 3,925 - 3,925
Total derivative financial instrument used for hedging – receivable - 7,400 - 7,400
Total financial assets at fair value 133,079 69,535 - 202,614

Liabilities
Financial instruments at FVTPL
Interest rate swaps - 15 - 15
Cross-currency interest rate swaps - - - -
Forward foreign exchange - 74 - 74
Total financial instruments at FVTPL - 89 - 89
Derivative financial instruments used for hedging – payable
Interest rate swaps - 3,698 - 3,698
Cross-currency interest rate swaps - 24,105 - 24,105
Forward foreign exchange - 2,086 - 2,086
Total derivative financial instruments used for hedging – payable - 29,889 - 29,889
Total financial liabilities at fair value - 29,978 - 29,978
^(a) ~~Level 1: Quoted market prices in an active market.~~
^(b) ~~Level 2: Internally developed models with significant observable market or quoted market prices in an inactive market.~~
^(c) ~~Level 3: Internally developed models with significant unobservable market information.~~
~~F-91~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~17.~~ ~~Fair value of financial instruments (continued)~~

December 31, 2014
December 31, 2016
Level 1^(a) Level 2^(b) Level 3^(c)
Total
Level 1^(a) Level 2^(b) Level 3^(c) Total
Assets
Securities at fair value through OCI
Securities at fair value through OCI:
Corporate debt 119,095 - - 119,095 13,909 - - 13,909
Sovereign debt 219,878 - - 219,878 13,912 2,786 - 16,698
Total securities at fair value through OCI 338,973 - - 338,973 27,821 2,786 - 30,607

Financial instruments at FVTPL
Investment funds - 57,574 - 57,574
Total financial instruments at FVTPL - 57,574 - 57,574
Derivative financial instruments used for hedging - receivable
Derivative financial instruments used for hedging – receivable:
Interest rate swaps - 2,708 - 2,708 - 363 - 363
Cross-currency interest rate swaps - 1,062 - 1,062 - 2,561 - 2,561
Forward foreign exchange - 8,554 - 8,554
Total derivative financial instruments used for hedging – receivable - 12,324 - 12,324
Total assets at fair value 338,973 69,898 - 408,871
Foreign exchange forward - 6,428 - 6,428
Total derivative financial instrument used for hedging – receivable - 9,352 - 9,352
Total financial assets at fair value 27,821 12,138 - 39,959

Liabilities
Financial instruments at FVTPL
Financial instruments at FVTPL:
Interest rate swaps - 52 - 52 - - - -
Cross-currency interest rate swaps - - - - - - - -
Forward foreign exchange - - - -
Foreign exchange forward - 24 - 24
Total financial instruments at FVTPL - 52 - 52 - 24 - 24
Derivative financial instruments used for hedging – payable
Derivative financial instruments used for hedging – payable:
Interest rate swaps - 3,090 - 3,090 - 3,704 - 3,704
Cross-currency interest rate swaps - 37,103 - 37,103 - 46,198 - 46,198
Forward foreign exchange - 94 - 94
Foreign exchange forward - 9,784 - 9,784
Total derivative financial instruments used for hedging – payable - 40,287 - 40,287 - 59,686 - 59,686
Total liabilities at fair value - 40,339 - 40,339
Total financial liabilities at fair value - 59,710 - 59,710
^(a) Level 1: Quoted market prices in an active market.
^(b) Level 2: Internally developed models with significant observable market or quoted market prices in an inactive market.
^(c) Level 3: Internally developed models with significant unobservable market information.

~~F-92~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-79
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~17.~~18. Fair value of financial instruments (continued)

January 1, 2014

December 31, 2015

Level 1^(a) Level 2^(b) Level 3^(c)
Total
Level 1^(a) Level 2^(b) Level 3^(c) Total
Assets
Securities at fair value through OCI
Corporate debt 178,168 - - 178,168 76,091 8,724 - 84,815
Sovereign debt 156,200 - - 156,200 56,988 - - 56,988
Total securities at fair value through OCI 334,368 - - 334,368 133,079 8,724 - 141,803

Financial instruments at FVTPL
Investment funds - 68,762 - 68,762 - 53,411 - 53,411
Total financial instruments at FVTPL - 68,762 - 68,762 - 53,411 - 53,411
Derivative financial instruments used for hedging - receivable
Derivative financial instruments used for hedging – receivable
Interest rate swaps - 5,018 - 5,018 - 2,779 - 2,779
Cross-currency interest rate swaps - 9,175 - 9,175 - 696 - 696
Forward foreign exchange - 1,024 - 1,024
Total derivative financial instruments used for hedging – receivable - 15,217 - 15,217
Total assets at fair value 334,368 83,979 - 418,347
Foreign exchange forward - 3,925 - 3,925
Total derivative financial instrument used for hedging – receivable - 7,400 - 7,400
Total financial assets at fair value 133,079 69,535 - 202,614

Liabilities
Financial instruments at FVTPL
Interest rate swaps - 65 - 65 - 15 - 15
Cross-currency interest rate swaps - 7 - 7 - - - -
Foreign exchange forward - 74 - 74
Total financial instruments at FVTPL - 72 - 72 - 89 - 89
Derivative financial instruments used for hedging – payable
Interest rate swaps - 1,645 - 1,645 - 3,698 - 3,698
Cross-currency interest rate swaps - 6,835 - 6,835 - 24,105 - 24,105
Forward foreign exchange - 92 - 92
Foreign exchange forward - 2,086 - 2,086
Total derivative financial instruments used for hedging – payable - 8,572 - 8,572 - 29,889 - 29,889
Total liabilities at fair value - 8,644 - 8,644
Total financial liabilities at fair value - 29,978 - 29,978
^(a) Level 1: Quoted market prices in an active market.
^(b) Level 2: Internally developed models with significant observable market or quoted market prices in an inactive market.
^(c) Level 3: Internally developed models with significant unobservable market information.

The following information should not be interpreted as an estimate of the fair value of the Bank. Fair value calculations are only provided for a limited portion of the Bank’s financial assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparison of fair value information of the Bank and other companies may not be meaningful for comparative analysis.

F-80
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
18. Fair value of financial instruments (continued)
The following methods and assumptions were used by the Bank’s management in estimating the fair values of financial instruments whose fair value is not measured on a recurring basis:

~~F-93~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~17.~~ ~~Fair value of financial instruments (continued)~~
Financial instruments with carrying value that approximates fair value

The carrying value of certain financial assets, including cash and due from banks, interest-bearing deposits in banks, customers’ liabilities under acceptances, accrued interest receivable and certain financial liabilities including customer’s demand and time deposits, securities sold under repurchase agreements, accrued interest payable, and acceptances outstanding, as a result of their short-term nature, are considered to approximate fair value. These instruments are classified in Level 2.

Securities at amortized cost

The fair value has been based upon current market quotations, where available. If quoted market prices are not available, fair value has been estimated based upon quoted price of similar instruments, or where these are not available, on discounted expected cash flows using market rates commensurate with the credit quality and maturity of the security. These securities are classified in Levels 1 and 2.

Loans at amortized cost

The fair value of the loan portfolio, including impaired loans, is estimated by discounting future cash flows using the current rates at which loans would be made to borrowers with similar credit ratings and for the same remaining maturities, considering the contractual terms in effect as of December 31 of the relevant year. These assets are classified in Level 2.

Short and long-term borrowings and debt

The fair value of short and long-term borrowings and debt is estimated using discounted cash flow analysis based on the current incremental borrowing rates for similar types of borrowing arrangements, taking into account the changes in the Bank’s credit margin. These liabilities are classified in Level 2.

~~F-94~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-81
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~17.~~18. Fair value of financial instruments (continued)

The following table provides information on the carrying value and estimated fair value of the Bank’s financial instruments that are not measured on a recurring basis:

December 31, 2015

Carrying
value

Fair
value
Level 1^(a) Level 2^(b) Level 3^(c)
Financial assets
Instruments with carrying value thatapproximates fair value 1,360,522 1,360,522 - 1,360,522 -
Securities at amortized cost 108,215 101,726 76,673 25,053 -
Loans at amortized cost⁽¹⁾ 6,592,471 6,727,045 - 6,727,045 -

Financial liabilities
Instruments with carrying value that approximates fair value 2,678,806 2,678,806 - 2,678,806 -
Short-term borrowings and debt 2,430,357 2,428,513 - 2,428,513 -
Long-term borrowings and debt 1,881,813 1,904,231 - 1,904,231 -
December 31, 2014 December 31, 2016

Carrying
Value

Fair
value
Level 1^(a) Level 2^(b) Level 3^(c)
Carrying
value

Fair
value
Level 1^(a) Level 2^(b) Level 3^(c)
Financial assets
Instruments with carrying value thatapproximates fair value 942,710 942,710 - 942,710 -
Instruments with carrying value that approximates fair value
Cash and deposits on banks 1,069,538 1,069,538 - 1,069,538 -
Acceptances 19,387 19,387 - 19,387 -
Interest receivable 44,187 44,187 - 44,187 -
Securities at amortized cost 54,738 53,295 29,909 23,386 - 77,214 76,406 73,406 3,000 -
Loans at amortized cost, net⁽¹⁾ 6,600,048 6,820,731 - 6,820,731 -
Loans at amortized cost⁽¹⁾ 5,907,494 6,021,006 - 6,021,006 -

Financial liabilities
Instruments with carrying value that approximates fair value 2,936,086 2,936,166 - 2,936,166 -
Deposits 2,802,852 2,802,852 - 2,802,852 -
Acceptances 19,387 19,387 - 19,387 -
Interest payable 16,603 16,603 - 16,603 -
Short-term borrowings and debt 2,692,537 2,692,344 - 2,692,344 - 1,470,075 1,470,045 - 1,470,045 -
Long-term borrowings and debt 1,399,656 1,424,579 - 1,424,579 - 1,776,738 1,808,228 - 1,808,228 -

^(a) ~~Level 1: Quoted market prices in an active market.~~
^(b) ~~Level 2: Internally developed models with significant observable market or quoted market prices in an inactive market.~~
^(c) ~~Level 3: Internally developed models with significant unobservable market information.~~
~~F-95~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
(~~Amounts expressed in thousands of U.S. dollars)~~
~~17.~~ ~~Fair value of financial instruments (continued)~~
January 1, 2014

Carrying
Value

Fair
value
Level 1^(a) Level 2^(b) Level 3^(c)
Financial assets
Instruments with carrying value thatapproximates fair value 881,624 881,624 - 881,624 -
Securities at amortized cost 33,570 33,634 17,010 16,624 -
Loans at amortized cost, net⁽¹⁾ 6,070,754 6,264,624 - 6,264,624 -

Financial liabilities
Instruments with carrying value that approximates fair value 2,662,412 2,662,609 - 2,662,609 -
Short-term borrowings and debt 2,705,365 2,711,936 - 2,711,936 -
Long-term borrowings and debt 1,148,684 1,180,877 - 1,180,877 -
^{(a)a )} Level 1: Quoted market prices in an active market.
^(b) Level 2: Internally developed models with significant observable market or quoted market prices in an inactive market.
^(c) Level 3: Internally developed models with significant unobservable market information.

⁽¹⁾ The carrying value of loans is net of the allowance for expected credit losses of ~~$89.9~~$106.0 million and unearned interest and deferred fees of $7.2 million for December 31, 2016.
F-82
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
18. Fair value of financial instruments (continued)
The following table provides information on the carrying value and estimated fair value of the Bank’s financial instruments that are not measured on a recurring basis:
December 31, 2015

Carrying
Value

Fair
value
Level 1^(a) Level 2^(b) Level 3^(c)
Financial assets
Instruments with carrying value that approximates fair value
Cash and deposits on banks 1,299,966 1,299,966 - 1,299,966 -
Acceptances 15,100 15,100 - 15,100 -
Interest receivable 45,456 45,456 - 45,456 -
Securities at amortized cost 108,215 101,726 76,673 25,053 -
Loans at amortized cost⁽¹⁾ 6,592,471 6,727,045 - 6,727,045 -

Financial liabilities
Instruments with carrying value that approximates fair value
Deposits 2,795,469 2,795,469 - 2,795,469 -
Repurchase agreement 114,084 114,084 - 114,084 -
Acceptances 15,100 15,100 - 15,100 -
Interest payable 17,716 17,716 - 17,716 -
Short-term borrowings and debt 2,430,357 2,428,513 - 2,428,513 -
Long-term borrowings and debt 1,881,813 1,904,231 - 1,904,231 -
^(a) Level 1: Quoted market prices in an active market.
^(b) Level 2: Internally developed models with significant observable market or quoted market prices in an inactive market.
^(c) Level 3: Internally developed models with significant unobservable market information.
⁽²⁾ The carrying value of loans is net of the allowance for expected credit losses of $90.0 million and unearned interest and deferred fees of $9.3 million for December 31, 2015; allowance for expected credit losses of $77.7 million and unearned interest and deferred fees of $8.5 million for December 31, 2014; and, allowance for expected credit losses of $70.9 million and unearned interest and deferred fees of $6.7 million for January 1, 2014.2015.

~~F-96~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-83
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~18.~~19. Accumulated other comprehensive income (loss)

~~As of December 31, 2015 and 2014, the~~The breakdown of accumulated other comprehensive income (loss) related to financial instruments at FVOCI, derivative financial instruments, and foreign currency translation is as follows:

Financial
instruments
at FVOCI Derivative
financial
instruments

Total

Financial
instruments
at FVOCI Derivative
financial
instruments Foreign
currency
translation
adjustments,
net of hedges Total
Balance as of January 1, 2014 (9,029 ) (671 ) - (9,700 ) (9,029 ) (671 ) (9,700 )

Net unrealized gain (loss) arising from the year 3,174 (1,813 ) - 1,361 3,174 (1,813 ) 1,361
Reclassification adjustment for (gains) loss included in the profit of the year⁽¹⁾ (962 ) 1,464 (655 ) (153 ) (962 ) 1,464 502
Foreign currency translation adjustment, net - - 655 655
Other comprehensive income (loss) from the year 2,212 (349 ) - 1,863 2,212 (349 ) 1,863
Balance as of December 31, 2014 (6,817 ) (1,020 ) - (7,837 ) (6,817 ) (1,020 ) (7,837 )

Net unrealized gain (loss) arising from the year (6,267 ) (4,942 ) - (11,209 ) (6,267 ) (4,942 ) (11,209 )
Reclassification adjustment for (gains) loss included in the profit of the year⁽¹⁾ 4,153 4,212 (453 ) 7,912 4,153 4,212 8,365
Foreign currency translation adjustment, net - - 453 453
Other comprehensive income (loss) from the year (2,114 ) (730 ) - (2,843 ) (2,114 ) (730 ) (2,844 )
Balance as of December 31, 2015 (8,931 ) (1,750 ) - (10,681 ) (8,931 ) (1,750 ) (10,681 )

Net unrealized gain (loss) arising from the year 7,048 4,383 11,431
Reclassification adjustment for (gains) loss included in the profit of the year⁽¹⁾ 1,030 (4,581 ) (3,551 )
Other comprehensive income (loss) from the year 8,078 (198 ) 7,880
Balance as of December 31, 2016 (853 ) (1,948 ) (2,801 )
⁽¹⁾   Reclassification adjustments include amounts recognized in profit of the year that had been part of other comprehensive income (loss) in this and previous years.

~~F-97~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-84
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~18.~~19. Accumulated other comprehensive income (loss) (continued)

The following table presents amounts reclassified from other comprehensive income to the profit of the year:

December 31, 2016
Details about accumulated other
comprehensive income components Amount reclassified
from accumulated other
comprehensive income Affected line item in the consolidated statement of
profit or loss where net income is presented
Realized gains (losses) on financial instruments at FVOCI: - Interest income – financial instruments at FVOCI
(7,243 ) Net gain on sale of financial instruments at FVOCI
6,213 Derivative financial instruments and hedging
(1,030 )
Gains (losses) on derivative financial instruments:
Foreign exchange forward (4,750 ) Interest income – loans at amortized cost
1,679 Interest expense - borrowings
6,060 Net gain (loss) on foreign currency exchange
Interest rate swaps 1,104 Net gain (loss) on interest rate swaps
Cross-currency interest rate swap 488 Net gain (loss) on cross-currency swaps
4,581
December 31, 2015
Details about accumulated other
comprehensive income components Amount reclassified
from accumulated other
~~other~~ comprehensive
income Affected line item in the consolidated statement of
of profit or loss where net income is presented
Realized gains (losses) on financial instruments at FVOCI: 240 Interest income – financial instruments at FVOCI
393 Net gain on sale of financial instruments at FVOCI
(4,786 ) Derivative financial instruments and hedging
(4,153 )

Gains (losses) on derivative financial instruments:
~~Forward foreign~~Foreign exchange forward (1,822 ) Interest income -– loans at amortized cost
- Interest expense - borrowings
(2,390 ) Net gain (loss) on foreign currency exchange
(4,212 )

Interest rate swaps (229 ) Net gain (loss) on interest rate swaps

Cross-currency interest rate swap 84 Net gain (loss) on cross-currency swaps

F-85
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
19. Accumulated other comprehensive income (loss) (continued)
December 31, 2014
Details about accumulated other
comprehensive income components Amount reclassified
from accumulated other
~~other~~ comprehensive
income Affected line item in the consolidated statement of
of profit or loss where net income is presented
Realized gains (losses) on financial instruments at FVOCI: 2 Interest income – financial instruments at FVOCI
1,796 Net gain on sale of financial instruments at FVOCI
(836 ) Derivative financial instruments and hedging
962

Gains (losses) on derivative financial instruments:
~~Forward foreign~~Foreign exchange forward (2,245 ) Interest income -– loans at amortized cost
- Interest expense - borrowings
781 Net gain (loss) on foreign currency exchange
(1,464 )

Interest rate swaps (201 ) Net gain (loss) on interest rate swaps
~~Cross-currency interest rate swap~~ - ~~Net gain (loss) on cross-currency swaps~~

~~F-98~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~19.~~20. Related party transactions

During the reporting year, total compensation paid to directors and the executives of Bladex as representatives of the Bank amounted to:

December 31
2015

December 31
2014
December 31,
2016 December 31,
2015 December 31,
2014
Expenses:
Compensation costs paid to directors 949 1,135 880 949 1,135
Compensation costs paid to executives 4,601 4,027 4,055 4,601 4,027

~~20.~~21. Fees and commissions, net

December 31
2015

December 31
2014

Commission Income – Loans & commitments 2,988 2,118
Commission Income  - Letters of credit 9,332 9,275
Commission Income – Arrangements 6,880 6,109
Total 19,200 17,502
December 31,
2016 December 31,
2015 December 31,
2014
Commission income - Loans & commitments, net 1,126 2,988 2,118
Commission income - Letters of credit 7,458 9,332 9,275
Commission income - Arrangements 5,722 6,880 6,109
Total 14,306 19,200 17,502

~~21.~~22. Net gain or (loss) on financial instruments at FVTPL

December 31
2015

December 31
2014

Net gain on financial liabilities at FVTPL 645 (393 )
Net gain on investment funds 5,086 2,754
5,731 2,361
December 31,
2016 December 31,
2015 December 31,
2014
Net gain (loss) on financial instruments at FVTPL 1,481 645 (393 )
Net (loss) gain on investment funds (4,364 ) 5,086 2,754
(2,883 ) 5,731 2,361
F-86
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~22.~~23. Salaries and other employee expenses

December 31
2015

December 31
2014
December 31,
2016 December 31,
2015 December 31,
2014
Wages and salaries 15,500 16,044 16,132 15,500 16,044
Payroll taxes 2,264 2,491 2,244 2,264 2,491
Personnel benefits 8,613 9,855 3,090 8,613 9,855
Share–based payments 4,058 3,176 3,730 4,058 3,176
Total 30,435 31,566 25,196 30,435 31,566

~~23.~~24. Other expenses

December 31
2015

December 31
2014

Advertising and marketing 829 712
Regulatory Fees 1,565 1,371
Rental - office and equipment 3,019 3,100
Administrative 7,469 6,912
Other 244 743
Total 13,126 12,838
~~F-99~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
December 31,
2016 December 31,
2015 December 31,
2014
Advertising and marketing 785 829 712
Regulatory fees 1,348 1,565 1,371
Rental - office and equipment 2,681 3,019 3,100
Administrative 7,468 7,469 6,912
Professional services 4,255 4,621 5,177
Maintenance and repairs 1,866 1,635 1,545
Other 129 244 743
Total 18,532 19,382 19,560

~~24.~~25. Commitments and contingencies

Leasing arrangements

Operating lease commitments – Bank as lessee

The Bank has several operating sublease contracts as sub-lessor of property in New York and Panama. These contracts are cancellable subleases and extend up to seven years with renewal at maturity, by agreement between the parties.
Future minimum lease payments under cancellable operating leases as ~~at December 31, 2015 and 2014, and January 1, 2014 as~~ follows:

December 31
2015 December 31
2014 January 1
2014 December 31,
2016 December 31,
2015 December 31,
2014
Within 1 year 2,055 2,305 2,236 1,984 2,055 2,305
After 1 year but not more than 5 years 6,731 6,589 6,873 7,362 6,731 6,589
More than 5 years 14,128 14,128 15,798 10,638 14,128 14,128
Total 22,914 23,022 24,907 19,984 22,914 23,022

~~Operating lease commitments – Bank as lessee (continued)~~
~~Operating lease commitments result primarily from non-cancellable rental agreements for properties; the amounts in the above table are calculated based on current rental agreements.~~ The total amount of expenses recognized in connection with such leases in 2016, 2015 and 2014 are $2,605, $2,930 and $2,249, respectively.

Operating leases – Bank as sub-lessor

The Bank has several operating sublease contracts as sub-lessor of property in New York and Panama. These contracts are cancellable sublease and extend up to seven years with renewal at maturity, by agreement between the parties.
Future minimum lease payments under cancellable operating leases as ~~at December 31, 2015 and 2014, and January 1, 2014 as~~ follows:

December 31
2015

December 31
2014

January 1
2014
December 31,
2016 December 31,
2015 December 31,
2014
Within 1 year 455 662 158 289 455 662
After 1 year but not more than 5 years 822 1,277 1,732 646 822 1,277
More than 5 years - - 207
Total 1,277 1,939 2,097 935 1,277 1,939

~~Operating lease commitments result primarily from non-cancellable rental agreements for properties; the amounts in the above table are calculated based on current rental agreements.~~ The total amount of income recognized in connection with such leases in 2016, 2015 and 2014 are $436, $661 and $661, respectively.

~~F-100~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-87
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~25.~~26. Litigation

Bladex is not engaged in any litigation that is material to the Bank’s business or, to the best of the knowledge of the Bank’s management that is likely to have an adverse effect on its business, financial condition or results of operations.

~~26.~~27. Risk management

Risk is inherent in the Bank’s activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Bank’s continuing profitability and each individual within the Bank is accountable for the risk exposures relating to his or her responsibilities. The Bank is exposed to market, credit, compliance and liquidity risk. It is also subject to country risk and various operating risks.

The Board of Directors is responsible for the overall risk management approach and for approving the risk management strategies and principles. The Board has appointed an Administration Committee which has the responsibility to monitor the overall risk process within the Bank.

The Risk Committee has the overall responsibility for the development of the risk strategy and implementing principles, frameworks, policies and limits. The Risk Committee is responsible for managing risk decisions and monitoring risk levels and reports on a weekly basis to the Supervisory Board.

The Risk Management Unit is responsible for implementing and maintaining risk related procedures to ensure an independent control process is maintained. The unit works closely with the Risk Committee to ensure that procedures are compliant with the overall framework.

The Risk ~~Controlling~~Management Unit is responsible for monitoring compliance with risk principles, policies and limits across the Bank. This unit also ensures the complete capture of the risks in risk measurement and reporting systems. Exceptions are reported on a daily basis, where necessary, to the Risk Committee, and the relevant actions are taken to address exceptions and any areas of weakness.

The Bank‘s Assets/Liabilities Committee (ALCO) is responsible for managing the Bank’s assets and liabilities and the overall financial structure. It is also primarily responsible for the funding and liquidity risks of the Bank. The Bank’s policy is that risk management processes throughout the Bank are audited annually by the Internal Audit function, which examines both the adequacy of the procedures and the Bank’s compliance with the procedures. Internal Audit discusses the results of all assessments with management, and reports its findings and recommendations to the Audit Committee.

Risk measurement and reporting systems

The Bank’s risks are measured using a method that reflects both the expected loss likely to arise in normal circumstances and unexpected losses, which are an estimate of the ultimate actual loss based on statistical models. The models make use of probabilities derived from historical experience, adjusted to reflect the economic environment. The Bank also runs worst-case scenarios that would arise in the event that extreme events which are unlikely to occur do, in fact, occur.

~~F-101~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~26.~~ ~~Risk management (continued)~~
~~Risk measurement and reporting systems (continued)~~
Monitoring and controlling risks is primarily performed based on limits established by the Bank. These limits reflect the business strategy and market environment of the Bank as well as the level of risk that the Bank is willing to accept, with additional emphasis on selected industries. In addition, the Bank’s policy is to measure and monitor the overall risk bearing capacity in relation to the aggregate risk exposure across all risk types and activities. Information compiled from all the businesses is examined and processed in order to analyze, control and identify risks on a timely basis. This information is presented and explained to the Board of Directors, the Risk Committee, and the head of each business division. The report includes aggregate credit exposure, credit metric forecasts, market risk sensitivities, stop losses, liquidity ratios and risk profile changes. On a monthly basis, detailed reporting of industry, customer and geographic risks takes place. Senior management assesses the appropriateness of the allowance for credit losses on a monthly basis. The Supervisory Board receives a comprehensive risk report once a quarter which is designed to provide all the necessary information to assess and conclude on the risks of the Bank. For all levels throughout the Bank, specifically tailored risk reports are prepared and distributed in order to ensure that all business divisions have access to extensive, necessary and up–to–date information.
F-88
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
27. Risk management (continued)

Risk mitigation

As part of its overall risk management, the Bank uses derivatives and other instruments to manage exposures resulting from changes in interest rates, foreign currencies, equity risks, credit risks, and exposures arising from forecast transactions.

In accordance with the Bank’s policy, its risk profile is assessed before entering into hedge transactions, which are authorized by the appropriate level of seniority within the Bank. The effectiveness of hedges is assessed by the Risk Controlling Unit (based on economic considerations rather than the IFRS hedge accounting regulations). The effectiveness of all the hedge relationships is monitored by the Risk Controlling Unit quarterly. In situations of ineffectiveness, the Bank will enter into a new hedge relationship to mitigate risk on a continuous basis.

Risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Bank’s performance to developments affecting a particular industry or geographical location. In order to avoid excessive concentrations of risk, the Bank’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. Selective hedging is used within the Bank to manage risk concentrations at both the relationship and industry levels.

The Bank has exposure to the following risk from financial instruments:

~~F-102~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~26.~~ ~~Risk management (continued)~~
~~26.1~~27.1 Credit risk

Credit risk is the risk that the Bank will incur a loss because its customers or counterparties fail to discharge their contractual obligations. The Bank manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties and for geographical and industry concentrations, and by monitoring exposures in relation to such limits.

The Bank has established a credit quality review process to provide early identification of possible changes in the creditworthiness of counterparties, including regular collateral revisions. Counterparty limits are established by the use of a credit risk classification system, which assigns each counterparty a risk rating. Risk ratings are subject to regular revision. The credit quality review process aims to allow the Bank to assess the potential loss as a result of the risks to which it is exposed and take corrective action.

Individually assessed allowances

The Bank determines the allowances appropriate for each individually significant loan or advance on an individual basis, taking into account any overdue payments of interests, credit rating downgrades, or infringement of the original terms of the contract. Items considered when determining allowance amounts include the sustainability of the counterparty’s business plan, its ability to improve performance if it is in a financial difficulty, projected receipts and the expected payout should bankruptcy ensue, the availability of other financial support, the realizable value of collateral and the timing of the expected cash flows. Allowances for losses are evaluated at each reporting date, unless unforeseen circumstances require more careful attention.

F-89
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
27. Risk management (continued)
27.1 Credit risk (continued)
Collectively assessed allowances

Allowances are assessed collectively for losses on loans and advances and for debt investments at amortized costs that are not individually significant and for individually significant loans and advances that have been assessed individually and found not to be impaired.
The Bank generally bases its analyses on historical experience and prospective information. However, when there are significant market developments, regional and/or global, the Bank would include macroeconomic factors within its assessments. These factors include, depending on the characteristics of the individual or collective assessment: unemployment rates, current levels of bad debt, changes in the law, changes in regulation, bankruptcy trends, and other consumer data. The Bank may use the aforementioned factors as appropriate to adjust the impairment allowances.

Allowances are evaluated separately at each reporting date with each portfolio. The collective assessment is made for groups of assets with similar risk characteristics, in order to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident in the individual loans assessments. The collective assessment takes account of data from the loan portfolio (such as historical losses on the portfolio, levels of arrears, credit utilization, loan to collateral ratios and expected receipts and recoveries once impaired) or economic data (such as current economic conditions, unemployment levels and local or industry–specific problems). The approximate ~~delay between the~~ time when a loss is likely to have been incurred and the time it will be identified as requiring an individually assessed impairment allowance is also taken into consideration. ~~Local management is responsible for deciding the length of this period.~~ The impairment allowance is then reviewed by credit management to ensure alignment with the Bank’s overall policy.

Financial guarantees and letters of credit are assessed in a similar manner as for loans.

~~F-103~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~26.~~ ~~Risk management (continued)~~
~~26.1 Credit risk (continued)~~
Derivative financial instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on the statement of financial position at fair value.

With gross–settled derivatives, the Bank is also exposed to a settlement risk, being the risk that the Bank honors its obligation, but the counterparty fails to deliver the counter value.

Credit–related commitments risks

The Bank makes available to its customers guarantees that may require that the Bank makes payments on their behalf and enters into commitments to extend credit lines to secure their liquidity needs. Letters of credit and guarantees (including standby letters of credit) commit the Bank to make payments on behalf of customers in the event of a specific act, generally related to the import or export of goods. Such commitments expose the Bank to similar risks to loans and are mitigated by the same control processes and policies.

Collateral and other credit enhancements

The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are in place covering the acceptability and valuation of each type of collateral.

The main types of collateral obtained are, as follows:

- For commercial lending, charges over real estate properties, inventory and trade ~~receivables~~receivables.

The Bank also obtains guarantees from parent companies for loans to their subsidiaries. Management monitors the market value of collateral and will request additional collateral in accordance with the underlying agreement. It is the Bank’s policy to dispose of repossessed properties in an orderly fashion. The proceeds are used to reduce or repay the outstanding claim. In general, the Bank does not occupy repossessed properties for business use.
F-90
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
27. Risk management (continued)
27.1 Credit risk (continued)
Collateral and other credit enhancements (continued)

The Bank also makes use of master netting agreements with counterparties with whom a significant volume of transactions are undertaken. Such arrangements provide for single net settlement of all financial instruments covered by the agreements in the event of default on any one contract. Master netting arrangements do not normally result in an offset of balance–sheet assets and liabilities unless certain conditions for offsetting.

Although master netting arrangements may significantly reduce credit risk, it should be noted that:
- Credit risk is eliminated only to the extent that amounts due to the same counterparty will be settled after the assets are ~~realized~~realized.
- The extent to which overall credit risk is reduced may change substantially within a short period because the exposure is affected by each transaction subject to the arrangement.

~~F-104~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~26.~~27.2 ~~Risk management (continued)~~Liquidity risk
~~26.2 Liquidity risk~~

Liquidity refers to the Bank’s ability to maintain adequate cash flows to fund operations and meet obligations and other commitments on a timely basis. The Bank maintains its liquid assets mainly in demand deposits, overnight funds and time deposits with well-known international banks. These liquid assets are adequate to cover 24-hour deposits from customers, which theoretically could be withdrawn on the same day. As of December 31, 2015 and 2014, and January 1, 2014, the Bank’s 24-hour deposits from customers (demand deposit accounts and call deposits) amounted to $244 million, $84 million, and $63 million, respectively; representing 9%, 3% and 3% of the Bank’s total deposits, for each year reported. The liquidity requirement resulting from these maturities is satisfied by the Bank’s liquid assets, which as of December 31, 2015 and 2014, and January 1, 2014 were $1,267 million, $741 million, and $831 million, respectively (representing 45%, 30% and 35% of total deposits, respectively) of which $50 million, $20 million and $60 million corresponds to time deposits for each year reported.

As established by the Bank’s liquidity policy, the Bank’s liquid assets are held in overnight deposits with the Federal Reserve Bank of New York or in the form of interbank deposits with reputable international banks that have A1, P1, or F1 ratings from two of the major internationally – recognized rating agencies and are primarily located outside of the Region. ~~These banks must have a correspondent relationship with the Bank.~~ In addition, the Bank’s liquidity policy allows for investing in negotiable money market instruments, including Euro certificates of deposit, commercial paper, ~~bankers’ acceptances~~ and other liquid instruments with maturities of up to three years. These instruments must be of investment grade quality A or better, ~~and~~ must have a liquid secondary ~~market.~~market and be considered as such according to Basel III rules.

The Bank performs daily reviews, controls and periodic stress tests on its liquidity position, including the application of a series of limits to restrict its overall liquidity risk and to monitor the liquidity level according to the macroeconomic environment. The Bank determines the level of liquid assets to be held on a daily basis, adopting a Liquidity Coverage Ratio methodology referencing the Basel Committee guidelines. Additionally, ~~specific~~the Liquidity Coverage Ratio is complemented with the use of the Net Stable Funding Ratio to maintain an adequate long-term funding structure. Specific limits have been established to control (1) cumulative maturity “gaps” between assets and liabilities, for each maturity classification presented in the Bank’s internal liquidity reports, and (2) concentrations of deposits taken from any client or economic group maturing in one day and total maximum deposits maturing in one day.

The Bank follows a Contingent Liquidity Plan. The plan contemplates the regular monitoring of several quantified internal and external reference benchmarks (such as deposit level, ~~quality of assets,~~ Emerging Markets Bonds Index Plus, ~~cost of funds,~~ LIBOR-OIS spread and market interest rates), which in cases of high volatility would trigger implementation of a series of precautionary measures to reinforce the Bank’s liquidity position. In the Bank’s opinion, its liquidity position is adequate for the Bank’s present requirements.

F-91
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
27. Risk management (continued)
27.2 Liquidity risk (continued)
The following table shows the Bank’s liquid assets, by principal geographic ~~area as of December 31 of each year, and as of January 1, 2014:~~area:

December 31 January 1
2015 2014 2014
United States of America 1,215 719 769
Other O.E.C.D. 11 1 62
Multilateral 40 20 -
Other 1 1 -
Total 1,267 741 831
~~F-105~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~26.~~ ~~Risk management (continued)~~
~~26.2 Liquidity risk (continued)~~
(in millions US$) December 31,
2016 2015
United States of America 591 1,215
Other O.E.C.D. 409 11
Multilateral - 40
Latin America 8 1
Total 1,008 1,267

As of December 31, 2016 and 2015, the Bank’s 24-hour deposits from customers (demand deposit accounts and ~~2014, liquidity~~call deposits) amounted to $227 million and $244 million, respectively; representing 8% and 9% of the Bank’s total deposits, for each year reported. The liquidity requirement resulting from these maturities is satisfied by the Bank’s liquid assets, which as of December 31, 2016 and 2015 were $1,008 million and $1,267 million, ~~$741~~respectively (representing 36% and 45% of total deposits, respectively) of which $591 million, or 59% and ~~$831 million, respectively.~~ $1,213 million, or 96%, ~~$616 million or 83%, $736 million or 89%,~~ as of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014,~~2015, of liquid assets were deposited at the Federal Reserve Bank of New York. The remaining liquid assets consisted of short-term funds deposited with other banks.

While the Bank’s liabilities generally mature over somewhat shorter periods than its assets, the associated liquidity risk is diminished by the short-term nature of the loan portfolio, as the Bank is engaged primarily in the financing of foreign trade. As of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014,~~2015, the Bank’s short-term loan and investment securities portfolio (maturing within one year based on original contractual term) totaled ~~$3,189 million, $3,638~~$3,577 million and ~~$3,616~~$3,189 million, respectively. As of December 31, 2016 and 2015, it had an average original term to maturity of 184 and 198 days, respectively and an average remaining term to maturity of 89 days and 90 ~~days.~~days, respectively.

Medium-term assets (loans and investment securities maturing beyond one year based on original contractual term) totaled ~~$3,753 million, $3,442~~$2,552 million and ~~$2,900~~$3,753 million as of December 31, 2016 and 2015, ~~and 2014, and January 1, 2014.~~respectively. Of that amount, ~~$228 million, $282~~$105 million and ~~$329~~$228 million corresponded to the Bank’s investment securities as of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014.~~2015. The remaining ~~$3,526 million, $3,127~~$2,447 million and ~~$2,552~~$3,526 million in medium-term assets corresponded to the Bank’s loan portfolio as of December 31, ~~2015~~2016 and ~~2014, and January 1, 2014.~~2015. As of December 31, 2016 and 2015, the medium-term assets had an average original term to maturity of three years and ten months, and three years and seven months, respectively; and an average remaining term to maturity of one year and seven months (588 days), and one year and eight months (618 days)., respectively.
F-92
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)
27. Risk management (continued)
27.2 Liquidity risk (continued)

The following table details the Banks’s assets and liabilities grouped by its remaining maturity with respect to the contractual maturity:

December 31, 2015 December 31, 2016
Description
Up to 3
months

3 to 6
months

6 to 12
months

1 to 5
year

More
than 5
year

Without
maturity
Total Up to 3
months 3 to 6
months 6 months
to 1 year 1 to 5
years More
than 5
years Without
maturity Total
Assets
Cash and cash equivalent 1,299,966 - - - - - 1,299,966 1,069,538 - - - - - 1,069,538
Investment securities 22,749 13,619 12,953 113,613 87,609 52,886 303,429 1,024 3,000 - 83,643 20,756 (602 ) 107,821
Loans at amortized cost 2,390,914 1,094,889 1,188,864 1,973,526 43,556 - 6,691,749 2,262,349 1,267,194 551,794 1,843,476 95,918 - 6,020,731
Unearned interest & deferred fees (722 ) (1,163 ) (1,477 ) (5,454 ) (488 ) - (9,304 )
Unearned interest and deferred fees (663 ) (906 ) (258 ) (4,762 ) (660 ) - (7,249 )
Allowance for expected credit losses - - - - - (89,974 ) (89,974 ) - - - - - (105,988 ) (105,988 )
Other assets 54,873 18,889 4,024 5,061 733 6,770 90,350 55,445 6,587 3,721 6,399 642 23,136 95,930
Total 3,767,780 1,126,234 1,204,364 2,086,746 131,410 (30,318 ) 8,286,216 3,387,693 1,275,875 555,257 1,928,756 116,656 (83,454 ) 7,180,783

Liabilities
Deposits in Banks 2,211,625 319,995 263,849 - - - 2,795,469
Deposits in banks 2,306,413 173,288 275,631 47,520 - - 2,802,852
Other liabilities 1,487,458 862,141 471,232 1,622,937 74,475 573 4,518,816 884,453 744,135 346,294 1,330,515 61,220 - 3,366,617
Total 3,699,083 1,182,136 735,081 1,622,937 74,475 573 7,314,285 3,190,866 917,423 621,925 1,378,035 61,220 - 6,169,469

Net position 68,697 (55,902 ) 469,283 463,809 56,935 (30,891 ) 971,931 196,827 358,452 (66,668 ) 550,721 55,436 (83,454 ) 1,011,314
December 31, 2015
Description Up to 3
months 3 to 6
months 6 months
to 1 year 1 to 5
years More
than 5
years Without
maturity Total
Assets
Cash and cash equivalent 1,299,966 - - - - - 1,299,966
Investment securities 22,749 13,619 12,953 113,613 87,609 52,886 303,429
Loans at amortized cost 2,390,914 1,094,889 1,188,864 1,973,526 43,556 - 6,691,749
Unearned interest and deferred fees (722 ) (1,163 ) (1,477 ) (5,454 ) (488 ) - (9,304 )
Allowance for expected credit losses - - - - - (89,974 ) (89,974 )
Other assets 54,873 18,889 4,024 5,061 733 6,770 90,350
Total 3,767,780 1,126,234 1,204,364 2,086,746 131,410 (30,318 ) 8,286,216

Liabilities
Deposits in banks 2,211,625 319,995 263,849 - - - 2,795,469
Other liabilities 1,487,458 862,141 471,232 1,622,937 74,475 573 4,518,816
Total 3,699,083 1,182,136 735,081 1,622,937 74,475 573 7,314,285

Net position 68,697 (55,902 ) 469,283 463,809 56,935 (30,891 ) 971,931

~~F-106~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-93
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~26.~~27. Risk management (continued)

~~26.2 Liquidity risk (continued)~~
December 31, 2014
Description
Up to 3
months

3 to 6
months

6 to 12
months

1 to 5
year

More
than 5
year

Without
maturity
Total
Assets
Cash and cash equivalent 780,515 - - - - - 780,515
Investment securities 36,033 47,996 35,876 155,516 117,732 58,132 451,285
Loans at amortized cost 2,450,529 1,268,478 1,067,074 1,859,968 40,195 - 6,686,244
Unearned interest & deferred fees (362 ) (678 ) (859 ) (6,157 ) (453 ) - (8,509 )
Allowance for expected credit losses - - - - - (77,687 ) (77,687 )
Other assets 157,365 8,808 2,838 11,826 540 9,183 190,560
Total 3,424,080 1,324,604 1,104,929 2,021,153 158,014 (10,372 ) 8,022,408

Liabilities
Deposits in Banks 2,057,724 276,970 147,000 25,000 - - 2,506,694
Other liabilities 1,864,589 693,271 829,557 1,108,293 78,373 30,592 4,604,675
Total 3,922,313 970,241 976,557 1,133,293 78,373 30,592 7,111,369

Net position 498,233 354,363 128,372 887,860 79,641 40,966 911,039
January 1, 2014
Description
Up to 3
months

3 to 6
months

6 to 12
months

1 to 5
year

More
than 5
year

Without
maturity
Total
Assets
Cash and cash equivalent 839,718 - - - - - 839,718
Investment securities - 2,200 42,758 191,680 131,489 68,573 436,700
Loans at amortized cost 2,767,142 949,364 774,803 1,653,864 3,125 - 6,148,298
Unearned interest & deferred fees (877 ) (810 ) (503 ) (4,478 ) - - (6,668 )
Allowance for expected credit losses - - - - - (70,876 ) (70,876 )
Other assets 32,974 9,174 7,065 7,505 1,977 12,241 70,936
Total 3,638,957 959,928 824,123 1,848,571 136,591 9,938 7,418,108

Liabilities
Deposits in Banks 1,991,154 207,182 157,000 6,000 - - 2,361,336
Other liabilities 1,394,588 918,785 1,045,723 820,454 5,591 12,629 4,197,770
Total 3,385,742 1,125,967 1,202,723 826,454 5,591 12,629 6,559,106

Net position 253,215 166,039 378,600 1,022,117 131,000 2,691 859,002
~~F-107~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~26.~~27.3 ~~Risk management (continued)~~Market risk
~~26.3 Market risk~~

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, deposits, investment and financial instruments at FVTPL, short- and long-term borrowings and debt, derivatives and trading positions. ~~Among many other market conditions that~~This risk may ~~shift~~result 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.~~volatility. 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

Interest rate risk

The Bank endeavors to manage its assets and liabilities in order to reduce the potential adverse effects on the net interest income that could be produced by interest rate changes. The Bank’s interest rate risk is the exposure of earnings (current and potential) and capital to adverse changes in interest rates and is managed by attempting to match the term and repricing characteristics of the Bank’s interest rate sensitive assets and liabilities. The Bank’s interest rate risk typically arises from the Bank’s liability sensitive short-term position, which means that the Bank’s interest-bearing liabilities tend to reprice more quickly than the Bank’s interest-earning assets. This is offset by the short-term nature of the Bank’s interest-earning assets, namely liquid assets and loan portfolio, and the fact that most of the assets and liabilities pricing is based on short-term market rates (LIBOR-based) with contractual re-pricing schedules for longer term transactions. As a result, there is a potential adverse impact on the Bank’s net interest income from interest rate increases in the very short term. The Bank’s policy with respect to interest rate risk provides that the Bank establishes limits with regards to: (1) changes in net interest income due to a potential impact, given certain movements in interest rates and (2) changes in the amount of available equity funds of the Bank, given a one basis point movement in interest rates. Most of the Bank’s assets and most of its liabilities are denominated in US American Dollars and hence the Bank does not incur a significant currency exchange risk. The currency exchange rate risk is mitigated by the use of derivatives, which, although perfectly covered economically, may generate a certain accounting volatility

The following summary table presents a sensitivity analysis of the effect on the Bank’s results of operations derived from a reasonable variation in interest rates which its financial obligations are subject to, based on change in points.

Change in
interest rate

Effect on
income

December 31, 2016 +200 bps 24,603
-200 bps (11,382 )

December 31, 2015 +200 bps 18,723
-200 bps (3,480 )
~~December 31, 2014~~ ~~+200 bps~~ ~~18,803~~
~~-200 bps~~ ~~(4,265~~ )

This analysis is based on the prior year changes in interest rates and assesses the impact on income, with balances as of December ~~2015~~31, 2016 and ~~2014.~~2015. This sensitivity provides an idea of the changes in interest rates, taking as example the volatility of the interest rate of the previous year.

~~F-108~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-94
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~26.~~27. Risk management (continued)

~~26.3 Market risk (continued)~~
27.3 Market risk (continued)

Interest rate risk (continued)

The table below summarizes the Bank's exposure based on the terms of repricing of interest rates on financial assets and liabilities.

December 31, 2015 December 31, 2016
Description
Up to 3
months

3 to 6
months

6 to 12
months
1 to 5 year
More than
5 year
Total Up to 3
months 3 to 6
months 6 months
to 1 year 1 to 5 years More than
5 years Total
Assets
Time deposit 50,000 - - - - 50,000 125,000 - - - - 125,000
Securities and other financial assets 34,100 10,000 13,345 105,394 86,848 249,687 9,025 3,000 - 72,094 18,200 102,319
Loans at amortized cost 4,532,150 1,760,730 288,031 110,838 - 6,691,749 4,350,913 1,445,290 141,060 83,919 - 6,021,182
Total 4,616,250 1,770,730 301,376 216,232 86,848 6,991,436 4,484,938 1,448,290 141,060 156,013 18,200 6,248,501

Liabilities
Deposits 1,967,929 319,995 263,706 - - 2,551,630 2,179,399 173,288 275,631 47,520 - 2,675,838
Repurchase agreements 102,775 11,308 - - - 114,083 - - - - - -
Borrowings, pledged deposits and debt 2,430,951 718,258 271,811 842,901 54,410 4,318,331 2,168,964 402,643 133,190 495,883 46,133 3,246,813
Total 4,501,655 1,049,561 535,517 842,901 54,410 6,984,044 4,348,363 575,931 408,821 543,403 46,133 5,922,651
Total interest rate sensibility 114,595 721,169 (234,141 ) (626,669 ) 32,438 7,392 136,575 872,359 (267,761 ) (387,390 ) (27,933 ) 325,850

December 31, 2014 December 31, 2015
Description
Up to 3
months

3 to 6
months

6 to 12
months
1 to 5 year
More than
5 year
Total Up to 3
months 3 to 6
months 6 months
to 1 year 1 to 5 years More than
5 years Total
Assets
Time deposit 20,000 - - - - 20,000 50,000 - - - - 50,000
Securities and other financial assets 71,899 48,315 7,823 139,255 112,248 379,540 34,100 10,000 13,345 105,394 86,848 249,687
Loans at amortized cost 4,421,456 1,835,219 273,852 155,717 - 6,686,244 4,532,150 1,760,730 288,031 111,049 - 6,691,960
Total 4,513,355 1,883,534 281,675 294,972 112,248 7,085,784 4,616,250 1,770,730 301,376 216,443 86,848 6,991,647

Liabilities
Deposits 8,000 15,000 - - - 23,000 1,967,929 319,995 263,849 - - 2,551,773
Repurchase agreements 295,814 4,706 - - - 300,520 102,775 11,308 - - - 114,083
Borrowings, pledged deposits and debt 2,792,560 483,456 317,310 440,000 66,303 4,099,629 2,430,951 718,258 271,811 842,901 54,410 4,318,331
Total 3,096,374 503,162 317,310 440,000 66,303 4,423,149 4,501,655 1,049,561 535,660 842,901 54,410 6,984,187
Total interest rate sensibility 1,416,981 1,380,372 (35,635 ) (145,028 ) 45,945 2,662,635 114,595 721,169 (234,284 ) (626,458 ) 32,438 7,460

~~F-109~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-95
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~26.~~27. Risk management (continued)

~~26.3 Market risk (continued)~~
~~Interest rate risk (continued)~~
January 1, 2014
Description
Up to 3
months

3 to 6
months

6 to 12
months
1 to 5 year
More than
5 year
Total
Assets
Time deposit 60,000 - - - - 60,000
Securities and other financial assets 25,699 2,200 39,383 163,050 123,845 354,177
Loans at amortized cost 4,437,513 1,348,702 319,652 35,796 6,650 6,148,313
Total 4,523,212 1,350,902 359,035 198,846 130,495 6,562,490

Liabilities
Deposits 15,000 - - - - 15,000
Repurchase agreements 266,947 19,215 - - - 286,162
Borrowings, pledged deposits and debt 2,914,857 354,104 414,367 177,806 - 3,861,134
Total 3,196,804 373,319 414,367 177,806 - 4,162,296
Total interest rate sensibility 1,326,408 977,583 (55,332 ) 21,040 130,495 2,400,194
27.3 Market risk (continued)

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate because of changes in exchange rates of foreign currencies, and other financial variables, as well as the reaction of market participants to political and economic events. For purposes of accounting standards this risk does not come from financial instruments that are not monetary items, or for financial instruments denominated in the functional currency. Exposure to currency risk is low since the Bank’s has maximum exposure limits established by the Board.

~~F-110~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~26.~~ ~~Risk management (continued)~~
~~26.3 Market~~Most of the Bank’s assets and most of its liabilities are denominated in US American Dollars and hence the Bank does not incur a significant currency exchange risk. The currency exchange rate risk ~~(continued)~~
~~Currency risk (continued)~~is mitigated by the use of derivatives, which, although perfectly covered economically, may generate a certain accounting volatility.

The following table details the maximum to foreign currency, where all assets and liabilities are presented based on their book value, except for derivatives, which are included within other assets and other liabilities based on its value nominal.

December 31, 2015
Brazilian
Real
expressed
in US$ European
Euro
expressed
in US$ Japanese
Yen
expressed
in US$ Colombian
Peso
expressed
in US$ Mexican
Peso
expressed
in US$ Other
currencies
expressed
in US$⁽¹⁾ Total
Exchange rate 3.96 1.09 120.40 3175.18 17.34

Assets
Cash and cash equivalent 405 6 5 50 887 150 1,503
Investments and other financial assets 3,818 - - - 1,601 - 5,419
Loans - - - - 136,896 - 136,896
Other assets - 271,005 38,208 - 28,831 - 338,044
Total 4,223 271,011 38,213 50 168,215 150 481,862

Liabilities
Borrowings and deposit placements - 270,913 38,208 - 168,103 - 477,224
Other liabilities 3,883 - - - - - 3,883
Total 3,883 270,913 38,208 - 168,103 - 481,107

Net currency position 340 98 5 50 112 150 755
December 31, 2016
Brazilian
Real
expressed
in US$ European
Euro
expressed
in US$ Japanese
Yen
expressed
in US$ Colombian
Peso
expressed
in US$ Mexican
Peso
expressed
in US$ Other
currencies
expressed
in US$⁽¹⁾ Total
Exchange rate 3.25 1.06 116.68 3002.00 20.6139

Assets
Cash and cash equivalent 4,014 6 6 55 2,339 74 6,494
Investments and other financial assets - - - - - - -
Loans at amortized cost - - - - 295,580 - 295,580
Other assets - 52,800 94,279 - 79,104 - 226,183
Total 4,014 52,806 94,285 55 377,023 74 528,257

Liabilities
Borrowings and deposit placements - - 94,279 - 280,557 - 374,836
Other liabilities 3,933 52,800 - - 96,951 - 153,684
Total 3,933 52,800 94,279 - 377,508 - 528,520

Net currency position 81 6 6 55 (485 ) 74 (263 )

⁽¹⁾ It includes other currencies such as: Argentine pesos, Australian- dollar, Canadian dollar, Swiss franc, Peruvian soles and Remimbis.

~~F-111~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-96
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~26.~~27. Risk management (continued)

~~26.3 Market risk (continued)~~
27.3 Market risk (continued)

Currency risk (continued)

December 31, 2014 December 31, 2015
Brazilian
Real
expressed
in US$ European
Euro
expressed
   in US$ Japanese
Yen
expressed
in US$ Colombian
Peso
expressed
in US$ Mexican
Peso
expressed
   in US$ Other
currencies
expressed
in US$⁽¹⁾ Total Brazilian
Real
expressed
in US$ European
Euro
expressed
in US$ Japanese
Yen
expressed
in US$ Colombian
Peso
expressed
in US$ Mexican
Peso
expressed
in US$ Other
currencies
expressed
in US$⁽¹⁾ Total
Exchange rate 2.66 1.21 119.49 2378.64 14.71 3.96 1.09 120.40 3,175.18 17.34

Assets
Cash and cash equivalent 501 8 7 27 867 126 1,536 405 6 5 50 887 150 1,503
Investments and other financial assets 5,269 �� - - - 5,336 - 10,605 3,818 - - - 1,601 - 5,419
Loans - - - - 140,616 - 140,616
Loans at amortized cost - - - - 136,896 - 136,896
Other assets - 60,745 4,185 - 160,764 - 225,694 - 271,005 38,208 - 28,831 - 338,044
Total 5,770 60,753 4,192 27 307,583 126 378,451 4,223 271,011 38,213 50 168,215 150 481,862

Liabilities
Borrowings and deposit placements - 66,303 4,185 - 307,853 - 378,341 - 270,913 38,208 - 168,103 - 477,224
Other liabilities 5,269 - - - - - 5,269 3,883 - - - - - 3,883
Total 5,269 66,303 4,185 - 307,853 - 383,610 3,883 270,913 38,208 - 168,103 - 481,107

Net currency position 501 (5,550 ) 7 27 (270 ) 126 (5,159 ) 340 98 5 50 112 150 755

⁽²⁾⁽¹⁾ It includes other currencies such as: Argentine pesos, Australian- dollar, Canadian dollar, Swiss franc, Peruvian soles and Remimbis.

~~F-112~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~26.~~27.4 Operational Risk ~~management (continued)~~
~~26.3 Market risk (continued)~~
~~Currency risk (continued)~~
January 1, 2014
Brazilian
Real
expressed
in US$ European
Euro
expressed
in US$ Japanese
Yen
expressed
in US$ Colombian
Peso
expressed
in US$ Mexican
Peso
expressed
in US$ Other
currencies
expressed
in US$⁽¹⁾ Total
Exchange rate 2.36 1.38 105.28 1,930.00 13.09

Assets
Cash and cash equivalent 533 141 6 35 543 65 1,323
Investments and other financial assets 5,509 - - - - - 5,509
Loans - - - - 220,880 - 220,880
Other assets - - 4,749 - 94,371 - 99,120
Total 6,042 141 4,755 35 315,794 65 326,832

Liabilities
Borrowings and deposit  placements - - 4,749 - 316,879 - 321,628
Other liabilities 5,509 - - - - - 5,509
Total 5,509 - 4,749 - 316,879 - 327,137

Net currency position 533 141 6 35 (1,085 ) 65 (305 )
⁽³⁾ ~~It includes other currencies such as: Argentine pesos, Australian- dollar, Canadian dollar, Swiss franc, Peruvian soles and Remimbis~~.
~~26.4 Operational Risk~~

Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to operate effectively, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial loss. 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. The Bank cannot expect to eliminate all operational risks, but it endeavors to manage these risks through a control framework and by monitoring and responding to potential risks. Controls include effective segregation of duties, access, authorization and reconciliation procedures, staff education and assessment processes, such as the use of internal audit.

~~F-113~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~F-97
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2016, 2015 and 2014
(Amounts expressed in thousands of U.S. dollars, except when otherwise indicated)

~~26.~~27. Risk management (continued)

~~26.4 Operational Risk (continued)~~
27.4 Operational Risk (continued)

Capital management

The primary objectives of the Bank’s capital management policy are to ensure that the Bank complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximize shareholder value.

The Bank manages its capital structure and makes adjustments to it according to changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Bank may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.

December 31
2015 December 31
2014 January 1
2014
Tier 1 capital 1,050,778 1,008,122 870,528
Tier 2 capital (10,680 ) (7,837 ) (9,700 )
Total regulatory capital 1,040,098 1,000,285 860,828

Risk weighted assets 6,460,108 6,660,010 5,942,178
Tier 1 capital ratio 16.27 % 15.14 % 14.65 %
~~F-114~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~27.~~ ~~First-time adoption of IFRS~~
For years up to and including the year ended December 31, 2014, the Bank prepared its financial statements in accordance with United States Generally Accepted Accounting Policies (US-GAAP). These consolidated financial statements, for the year ended December 31, 2015, are the first the Bank has prepared in accordance with IFRS in adherence to a mandate of the SBP for fully licensed banks in Panama. Accordingly, the Bank has prepared financial statements which comply with IFRS applicable for years ending on or after December 31, 2015, together with the comparative period data as at and for the year ended December 31, 2014, as described in the summary of significant accounting policies. In preparing these financial statements, the Bank’s opening statement of financial position was prepared as at January 1, 2014, the bank date of transition to IFRS. This note explains the principal adjustments made by the Bank in restating its 2014 US-GAAP consolidated financial statements, including the consolidated statement of financial position as at January 1, 2014 and the consolidated financial statements as at and for the year ended December 31, 2014.
~~27.1 Exemptions applied~~
~~Cumulative translation differences~~
Bladex has elected the cumulative translation differences to be set to zero at the date of the transition for its subsidiaries, as a result of the effects of changes in foreign exchange rates. Consequently, the Bank is not required to identify the cumulative translation differences that occurred prior to their date of transition to IFRS.
~~27.2 Estimates~~
The estimates at January 1, 2014 and at December 31, 2014 are consistent with those made for the same dates in accordance with US-GAAP (after adjustments to reflect any differences in accounting policies).
~~The estimates used by the Bank to present these amounts in accordance with IFRS reflect conditions as at January 1, 2014, the date of transition to IFRS and as of December 31, 2014~~
~~F-115~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~27.~~ ~~First-time adoption of IFRS (continued)~~
~~Application of IFRS 1~~
~~A reconciliation of the consolidated statements of financial position for the year ended 2014 and as at January 1~~^st~~, is as follows:~~
USGAAP IFRS USGAAP IFRS
December 31, December 31 January 1, January 1
Ref. 2014 Adjustment Reclassification 2014 2014 Adjustment Reclassification 2014
Assets
Cash and cash equivalents 780,515 - - 780,515 839,718 - - 839,718
Financial Instruments:
At fair value through profit or loss (h) 57,574 - - 57,574 118,661 (49,899 ) - 68,762
At fair value through OCI 338,973 - - 338,973 334,368 - - 334,368
Securities at amortized cost (a) 54,180 (277 ) 835 54,738 33,759 (189 ) - 33,570
Loans at amortized cost 6,686,244 - - 6,686,244 6,148,298 - - 6,148,298
Allowance for expected credit losses (b) 79,675 1,988 - 77,687 72,751 1,875 - 70,876
Unearned interest & deferred fees 8,509 - - 8,509 6,668 - - 6,668
Loans at amortized cost, net 6,598,060 (1,988 ) - 6,600,048 6,068,879 (1,875 ) - 6,070,754

At fair value -   Derivative financial instruments used for hedging – receivable 12,324 - - 12,324 15,217 - - 15,217

Property and equipment, net 7,105 - (144 ) 6,961 10,466 - (2,034 ) 8,432
Intangibles, net 1,024 - - 1,024 - - 1,890 1,890

Other assets:
Customers' liabilities under acceptances 114,018 - - 114,018 1,128 - - 1,128
Accrued interest receivable (c) 47,938 239 - 48,177 40,727 51 - 40,778
Other assets 13,561 - (5,505 ) 8,056 8,389 - (4,898 ) 3,491
Total of other assets 175,517 239 (5,505 ) 170,251 50,244 51 (4,898 ) 45,397
- - - - - - -
Total assets 8,025,272 1,950 (4,814 ) 8,022,408 7,471,312 (48,162 ) (5,042 ) 7,418,108

Liabilities and stockholders' equity
Deposits:
Noninterest-bearing - Demand 394 - - 394 663 - - 663
Interest-bearing - Demand 83,781 - - 83,781 62,384 - - 62,384
Time 2,422,519 - - 2,422,519 2,298,289 - - 2,298,289
Total deposits 2,506,694 - - 2,506,694 2,361,336 - - 2,361,336

At fair value – Derivative financial instruments used for hedging – payable 40,287 - - 40,287 8,572 - - 8,572

Financial liabilities at fair value through profit or loss 52 - - 52 72 - - 72
Securities sold under repurchase agreement 300,519 - - 300,519 286,162 - - 286,162
Short-term borrowings and debt 2,692,537 - - 2,692,537 2,705,365 - - 2,705,365
Long-term borrowings and debt (d) 1,405,519 (214 ) (5,649 ) 1,399,656 1,153,871 (145 ) (5,042 ) 1,148,684

Other liabilities:
Acceptances outstanding 114,018 - - 114,018 1,128 - - 1,128
Accrued interest payable 14,855 - - 14,855 13,786 - - 13,786
Allowance for expected credit losses on off-balance sheet credit risk (e) 6,849 3,024 - 9,873 5,222 832 - 6,054
Other liabilities 32,878 - - 32,878 27,947 - - 27,947
Total other liabilities 168,600 3,024 - 171,624 48,083 832 - 48,915
Total liabilities 7,114,208 2,810 (5,649 ) 7,111,369 6,563,461 687 (5,042 ) 6,559,106

Stockholders' equity:
Common stock 279,980 - - 279,980 279,980 - - 279,980
Treasury stock (77,627 ) - - (77,627 ) (82,008 ) - - (82,008 )
Additional paid-in capital in excess of assigned value of common stock (f) 117,339 2,305 - 119,644 118,646 1,978 - 120,624
Capital reserves 95,210 - - 95,210 95,210 - - 95,210
Retained earnings 510,046 (8,377 ) - 501,669 458,699 (3,803 ) - 454,896
Accumulated other comprehensive loss (g) (13,885 ) 5,212 835 (7,837 ) (12,575 ) 2,875 - (9,700 )
Total equity attributable to equity holders of the bank 911,063 (860 ) 835 911,039 857,952 1,050 - 859,002
Non-controlling interest (h) - - - 49,899 (49,899 ) - -
Total stockholders' equity 911,063 (860 ) 835 911,039 907,851 (48,849 ) - 859,002
Total liabilities and stockholders' equity 8,025,272 1,950 (4,814 ) 8,022,408 7,471,312 (48,162 ) (5,042 ) 7,418,108
~~F-116~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~27.~~ ~~First-time adoption of IFRS (continued)~~
~~Application of IFRS 1 (continued)~~
~~A reconciliation of the consolidated statements of profit or loss for the year ended 2014 is as follows:~~
USGAAP IFRS
Ref 2014 Adjustments 2014

Interest income from financial instruments
Deposits 1,545 - 1,545
At fair value through profit or loss 20 (20 ) -
At fair value through OCI 8,115 - 8,115
At amortized cost (c) 203,050 188 203,238
Total interest income 212,730 168 212,898
Interest expense:
Deposits 11,245 - 11,245
Invesment funds 37 (37 ) -
Short-term borrowings and debt 23,893 - 23,893
Long-term borrowings and debt 36,424 - 36,424
Total interest expense 71,599 (37 ) 71,562

Net interest income 141,131 205 141,336

Other income
Fees and commissions, net 17,502 - 17,502
Derivate financial instruments and foreign currency exchange (d,g) 872 (664 ) 208
Gain per financial instrument at fair value through profit or loss (h) 3,016 (655 ) 2,361
Gain  per financial instrument at fair value through OCI 1,871 - 1,871
Gain on sale of loans at amortized cost 2,546 - 2,546
Other income, net (h) 1,744 42 1,786
Net other income 27,551 (1,277 ) 26,274

Total income 168,682 (1,072 ) 167,610

Expenses
Impairment loss from expected credit losses on loans at amortized cost (b) 6,895 (113 ) 6,782
Impairment loss from expected credit losses on investment securities (a) (7 ) 1,037 1,030
Impairment (gain) loss from expected credit losses on off-balance sheet  instruments (e) 1,627 2,192 3,819
Salaries and other employee expenses (f) 31,339 227 31,566
Depreciation of equipment and leasehold improvements 2,487 (942 ) 1,545
Amortization of intangible assets - 942 942
Professional services 5,177 - 5,177
Maintenance and repairs 1,544 - 1,544
Expenses from investment funds (h) 416 (416 ) -
Other expenses (f) 12,739 99 12,838

Profit for the year 106,465 (4,098 ) 102,366

Profit (loss) attributable to the redeemable noncontrolling interest (475 ) 475 -

Profit for the year  attributable to Bladex stockholders 106,940 (4,573 ) 102,366
~~F-117~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~27.~~ ~~First-time adoption of IFRS (continued)~~
~~Application of IFRS 1 (continued)~~
~~A reconciliation of the consolidated statements cash flows for the year ended 2014 is as follows:~~
USGAAP Reclassification/
adjustments IFRS
Net cash from (used in) operating activities 170,451 (436,989 ) (266,538 )
Net cash (used in) from investing activities (604,935 ) 582,347 (22,588 )
Net cash from (used in) financing activities 345,102 (145,358 ) 199,744
Effect of exchange rate changes on cash resources 1 - 1
Net change in cash resources (89,381 ) - (89,381 )
Cash resources at beginning of year 830,686 - 830,686
Cash resources at end of year 741,305 - 741,305
~~F-118~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~27.~~ ~~First-time adoption of IFRS (continued)~~
~~Application of IFRS 1 (continued)~~
Due to transition to IFRS, the following lines have been reclassified in the USGAAPConsolidated Statement of Cash Flows from financing to operating activities:  Net increase in due to depositors. In addition, the following lines have been reclassified in the USGAAP Consolidated Statement of Cash Flows from investing activities to operating activities: Net increase in pledged deposits;  the lines of net increase in loans and proceeds from the sale of loans were merged and reported in a single line as net increase in loans at amortized cost;  the line of acquisition of equipment and leasehold improvements has been broken down into four lines as acquisition of equipment and leasehold improvements, acquisition of intangible assets, and proceeds from disposal of equipment and leasehold improvements, and proceeds from disposal of  intangible assets. Also, the following lines have been reclassified in the USGAAP Consolidated Statement of Cash Flows on the operating activities:  the provision for loan losses and provision for losses on off-balance sheet risk were merged into one line as impairment loss from expected credit losses; accrued interest receivable is presented in two lines as interest income and interest received; accrued interest payable is presented in two lines as interest expense and interest paid; amortization of premium and discounts on investments were reclassified to investing activities as per their  respective classification as purchases of financial instrument at fair value through OCI and purchases of financial instrument at  amortized cost.
~~F-119~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~27.~~ ~~First-time adoption of IFRS (continued)~~
~~Application of IFRS 1 (continued)~~
~~The total effect on retained earnings and equity is further analyzed as follows:~~
December 31 January 1
Ref 2014 2014

Transition adjustments recorded in additional paid-in-capital in excess of assigned value of common stock

Adjustment for recognition of share-based payment costs f) 2,305 1,978

Transition adjustments recorded in retained earnings

Recognition of  interest revenue on credit-impaired financial instruments c) 239 51

Adjustment of mark-to market as per fair value and cash flow hedge d) (1 ) 131

Current translation adjustment –  exemption as per IFRS 1 g) (2,350 ) (1,695 )

Adjustment for expected credit losses for loans at amortized cost b) (1,036 ) 1,044

Adjustment for Impairment of investment securities a) (2,392 ) (1,355 )

Foreign exchange of investments at FVOCI g) (532 ) -

Adjustment for recognition of share-based payment costs f) (2,305 ) (1,978 )

Effect of transition to IFRS on retained earnings (8,377 ) (3,803 )

Transition adjustments recorded in other comprehensive income:

Adjustment for hedge ineffectiveness g) 215 14

Current translation adjustment –  exemption as per IFRS 1 g) 2,350 1,695

Adjustment for impairment of investment securities a) 2,115 1,166

Foreign exchange of investments at FVOCI g) 532 -

Effect of transition to IFRS on other comprehensive income 5,212 2,875

Transition adjustments recorded in other equity component:

Deconsolidation of the investment fund h) - (49,899 )

Total effect on equity (860 ) (48,849 )
~~F-120~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~27.~~ ~~First-time adoption of IFRS (continued)~~
~~Application of IFRS 1 (continued)~~
~~Explanations of the notes to the reconciliations are the following:~~
a) ~~Adjustment for impairment loss on securities at FVOCI and amortized cost in accordance with IFRS 9.~~
- Under IFRS 9, financial assets classified as at FVOCI and financial assets classified as at amortized cost are subject to the same single impairment model, which measures expected credit losses as either 12-month expected credit losses or lifetime expected credit losses. Under US GAAP an analysis is performed to determine whether the impairment in fair value is temporary or other than temporary.
b) ~~Adjustment for expected credit losses for loans at amortized cost~~
- The calculation of the reserve for expected credit losses on loans at amortized cost are adjusted to reflect the requirements under IFRS 9, which establishes the expected credit losses to be measured as either 12-month expected credit losses or lifetime expected credit losses. Under US GAAP impairment is based on incurred loss model when there is no longer reasonable assurance that the future cash flows associated with them will be collected in their entirety or when due.
c) ~~Recognition of interest revenue on credit-impaired financial instruments~~
- Under IFRS, when assessing significant increases in credit risk, under Stage 3 (where a credit event has occurred) interest revenue is calculated on the amortized cost; in other words, the gross carrying amount after deducting the impairment allowance. Under US GAAP any interest receivable on non-accruing loans is reversed and charged-off against earnings.
d) ~~Adjustment of mark-to-market as per fair value and cash flow hedge~~
- ~~As part of the ineffectiveness test carried out for all its derivatives, some adjustments were recorded to the mark-to-market of the underlying.~~
e) ~~Adjustment for expected credit losses for off-balance sheet instruments~~
- The calculation of the reserve for expected credit losses on off-balance sheet instruments are adjusted to reflect the requirements under IFRS 9, which requires the expected credit losses to be measured as either 12-month expected credit losses or lifetime expected credit losses. Under US GAAP impairment is based on incurred loss model when there is no longer reasonable assurance that the future cash flows associated with them will be collected in their entirety or when due.
f) ~~Adjustment for recognition of share-based payment costs based on the accelerated attribution method.~~
- In the case of graded vesting, the Bank must recognize compensation expense on an accelerated basis. Previously under USGAAP, for awards containing only service conditions, the Bank had made the accounting policy election to recognize compensation expense on a straight-line basis, whereas the award was valued as a single award with an average expected life.
~~F-121~~
~~Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~December 31, 2015 and 2014~~
~~(Amounts expressed in thousands of U.S. dollars)~~
~~27.~~ ~~First-time adoption of IFRS (continued)~~
~~Application of IFRS 1 (continued)~~
g) ~~Adjustment for hedge ineffectiveness – cash flow hedge / Current translation adjustment – exemption as per IFRS 1/Foreign exchange of investments at fair value through OCI (continued)~~
~~Adjustment for hedge ineffectiveness – cash flow hedge~~
- Under USGAAP, the Bank used the short-cut method for its interest rate swaps and the critical-term match for the rest of its derivatives. As per IFRS, ineffectiveness should be measured for all its derivatives.
~~Current translation adjustment – exemption as per IFRS 1~~
- The Bank deemed the cumulative translation differences for foreign operations at the date of transition to be zero. After the date of transition, translation differences arising on translation of foreign operations are recognized in other comprehensive income and included in a separate translation reserve within equity.
~~Foreign exchange of investments at fair value through OCI~~
- Under USGAAP, the foreign exchange on investments available for sale was recorded in other comprehensive income. As per IFRS, the foreign exchange of these investments, which falls under the category of investments at fair value through OCI, should be recorded in profit or loss.
h) ~~Deconsolidation of the investment fund~~
- As a result of the evaluation of control, as per IFRS 10 “Consolidated Financial Statements”, according to which the existing rights do not give the Bank the ability to direct the relevant activities of the fund nor the ability to use its power over the investee to affect its return, the Bank has determined that there is no control over the investment fund at the date of transition.
~~Reclassification corresponds to the segregation of intangibles from property, plant and equipment, and the presentation of debt issuance costs together with the liabilities.~~

December 31,
2016
December 31,
2015
Tier 1 capital 1,054,719 1,050,778

Risk weighted assets 6,350,544 6,460,108
Tier 1 capital ratio 16.61 % 16.27 %

28. Subsequent Events

Bladex announced a quarterly cash dividend of 15,077 which represent $0.385 per share corresponding to the fourth quarter of ~~2015.~~2016. The cash dividend was approved by the Board of Directors at its meeting held January 17, 2017 and ~~was paid~~is payable on February ~~23, 2016~~16, 2017 to the Bank’s stockholders as of the February ~~10, 2016~~1, 2017 record date. In accordance with IAS 10 - “Events after the date of the consolidated statements of financial position”, if an entity declares dividends after such date, it cannot recognize the amount of these dividends as a liability in the year-end consolidated financial statements.

~~F-122~~
F-98

x	Large Accelerated Filer	¨	Accelerated Filer	¨	Non-accelerated Filer
				¨	Emerging growth company

		Page

PART I		5

Item 1.	Identity of Directors, Senior Management and Advisers	5

Item 2.	Offer Statistics and Expected Timetable	5

Item 3.	Key Information	5
A.	Selected Financial Data	5
B.	Capitalization and Indebtedness	7
C.	Reasons for the Offer and Use of Proceeds	7
D.	Risk Factors	7

Item 4.	Information on the Company	1315
A.	History and Development of the Company	1315
B.	Business Overview	16
C.	Organizational Structure	3436
D.	Property, Plant and Equipment	3436

Item 4A.	Unresolved Staff Comments	3536

Item 5.	Operating and Financial Review and Prospects	3536
A.	Operating Results	3537
B.	Liquidity and Capital Resources	59
C.	Research and Development, Patents and Licenses, etc.	6869
D.	Trend Information	69
E.	Off-Balance Sheet Arrangements	7071
F.	Tabular Disclosure of Contractual Obligations	7172

Item 6.	Directors, Executive Officers and Employees	7273
A.	Directors and Executive Officers	7273
B.	Compensation	7778
C.	Board Practices	8182
D.	Employees	8486
E.	Share Ownership	8586

Item 7.	Major Stockholders and Related Party Transactions	8587
A.	Major Stockholders	8587
B.	Related Party Transactions	8789
C.	Interests of Experts and Counsel	8890

Item 8.	Financial Information	8890
A.	Consolidated Statements and Other Financial Information	8890
B.	Significant Changes	8991

Item 9.	The Offer and Listing	8991
A.	Offer and Listing Details	8991
B.	Plan of Distribution	9091
C.	Markets	9091
D.	Selling Shareholders	9092
E.	Dilution	9092

F.	Expenses of the Issue	9092

Item 10.	Additional Information	9092
A.	Share Capital	9092
B.	Memorandum and Articles of Association	9092
C.	Material Contracts	9394
D.	Exchange Controls	9394
E.	Taxation	9394
F.	Dividends and Paying Agents	9899
G.	Statement by Experts	9899
H.	Documents on Display	9899
I.	Subsidiary Information	98100

Item 11.	Quantitative and Qualitative Disclosure About Market Risk	98100

Item 12.	Description of Securities Other than Equity Securities	~~106~~105

PART II		106

Item 13.	Defaults, Dividend Arrearages and Delinquencies	106

Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	106

Item 15.	Controls and Procedures	106

Item 16.	[Reserved]	108
Item 16A.	Audit and Compliance Committee Financial Expert	108
Item 16B.	Code of Ethics	108
Item 16C.	Principal Accountant Fees and Services	109
Item 16D.	Exemptions from the Listing Standards for Audit Committees	109
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	109
Item 16F.	Change in Registrant’s Certifying Accountant	109
Item 16G.	Corporate Governance	109
Item 16H.	Mine Safety Disclosure	110

PART III		111

Item 17.	Financial Statements	111

Item 18.	Financial Statements	111

Item 19.	Exhibits	112

6,342,189	Shares of Class A Common Stock
2,474,469	Shares of Class B Common Stock
~~30,152,247~~30,343,390	Shares of Class E Common Stock
0	Shares of Class F Common Stock
~~38,968,905~~39,160,048	Total Shares of Common Stock

¨	U.S. GAAP		x	International Financial Reporting Standards as issued	¨ ~~Other~~
	by the International Accounting Standards Board	¨	Other

	As of December 31,
	2015⁽¹⁾		%		2014⁽²⁾		%
	(in $ million, except percentages)
Loans	$	6,692		93.5	$	6,686		93.0
Contingencies and other assets		463		6.5		501		7.0
Total	$	7,155		100.0	$	7,187		100.0

	As of December 31,
	2016⁽¹⁾		%		2015⁽²⁾		%		2014⁽³⁾		%
	(in $ millions, except percentages)
Loans at amortized cost	$	6,021		93.4	$	6,692		93.5	$	6,686		93.0
Loan commitments and financial guarantee contracts		403		6.3		447		6.3		386		5.4
Other assets		20		0.3		16		0.2		115		1.6
Total	$	6,444		100.0	$	7,155		100.0	$	7,187		100.0

	As of December 31, 2015
	(in $ million)
	Due in one year or less		Due after one year through five years		Due after five years through ten years		Total
FIXED RATE
Private sector commercial banks and financial institutions	$	733	$	33	$	0	$	766
State-owned commercial banks		360		16		0		376
State-owned organizations		410		0		0		410
Private middle-market companies		204		5		0		209
Private corporations		1,363		53		0		1,416
Sub-total	$	3,070	$	107	$	0	$	3,177
FLOATING RATE
Private sector commercial banks and financial institutions	$	563	$	645	$	1	$	1,209
State-owned commercial banks		139		98		0		237
State-owned organizations		26		25		0		51
Private middle-market companies		94		78		7		179
Private corporations		791		1,019		29		1,839
Sub-total	$	1,613	$	1,865	$	37	$	3,515
Total	$	4,683	$	1,972	$	37	$	6,692

	As of December 31, 2016
	(in $ millions)
	Impaired and due in one year or less		Due after one year through five years		Due after five years through ten years		Total
FIXED RATE
Private sector commercial banks and financial institutions	$	497	$	23	$	0	$	520
State-owned commercial banks		227		12		0		239
State-owned organizations		690		0		0		690
Private middle-market companies		183		2		0		185
Private corporations		1,056		20		0		1,076
Sub-total	$	2,653	$	57	$	0	$	2,710
FLOATING RATE
Private sector commercial banks and financial institutions		768		451		0		1,219
State-owned commercial banks		207		69		0		276
Central banks		30		0		0		30
State-owned organizations		82		15		0		97
Private middle-market companies		50		54		5		109
Private corporations		772		795		13		1,580
Sub-total	$	1,909	$	1,384	$	18	$	3,311
Total	$	4,562	$	1,441	$	18	$	6,021

Name of Director	Number of Shares Owned as of Dec. 31, 2015 ⁽¹⁾		Number of Shares that may be acquired within 60 days of Dec. 31, 2015 ⁽²⁾		Total Number of Shares Beneficially Owned		Percent of Class Beneficially Owned		Restricted Shares ⁽³⁾
Facundo Martínez Maino⁽⁴⁾		0		0		0		0		0
João Carlos de Nóbrega Pecego⁽⁵⁾ .		0		0		0		*		0
Roland Holst		1,650		0		1,650		*		7,950
Mario Covo		25,972		0		25,972		*		10,155
Herminio Blanco		55,627		0		55,627		*		10,155
Maria da Graça França		18,247		0		18,247		*		10,155
William D. Hayes⁽⁶⁾		6,434		0		6,434		*		10,155
Miguel Heras		0				0				6,000
Gonzalo Menéndez Duque		36,151		0		36,151		*		15,230
Total		144,081		0		144,081				69,800

Class F Common Stock	Number of Shares	% of Class	% of Total Common Stock
Total Shares of Class F Common Stock	0	0.0	0.0
Total Shares of Common Stock	39,160,048		100.0

					Number of Shares Outstanding as of
Class of Shares	Number of Shares Outstanding as of December 31, 2015		Number of Shares Outstanding as of December 31, 2014		December 31, 2016		December 31, 2015
Class A Common Shares		6,342,189		6,342,189		6,342,189		6,342,189
Class B Common Shares		2,474,469		2,479,050		2,474,469		2,474,469
Class E Common Shares		30,152,247		29,956,100		30,343,390		30,152,247
Class F Common Shares		0		0		0		0
Total Common Shares		38,968,905		38,777,339		39,160,048		38,968,905

Payment date	Record date	Dividend per share		Record date	Dividend per share
February 16, 2017				February 1, 2017	$	0.385
November 17, 2016				October 31, 2016	$	0.385
August 17, 2016				August 3, 2016	$	0.385
May 11, 2016				April 25, 2016	$	0.385
February 23, 2016	February 10, 2016	$	0.385	February 10, 2016	$	0.385
November 6, 2015	October 26, 2015	$	0.385	October 26, 2015	$	0.385
August 4, 2015	July 27, 2015	$	0.385	July 27, 2015	$	0.385
May 5, 2015	April 27, 2015	$	0.385	April 27, 2015	$	0.385
January 13, 2015	January 5, 2015	$	0.385	January 5, 2015	$	0.385
November 7, 2014	October 27, 2014	$	0.35	October 27, 2014	$	0.35
August 5, 2014	July 28, 2014	$	0.35	July 28, 2014	$	0.35
May 6, 2014	April 28, 2014	$	0.35	April 28, 2014	$	0.35
January 14, 2014	January 6, 2014	$	0.35	January 6, 2014	$	0.35

	Price per Class E Share (in $)⁽¹⁾				Price per Class E Share (in $)⁽¹⁾
	High		Low		High		Low
2016						30.50		19.63
2015		34.49		22.16		34.49		22.16
2014		34.90		24.29		34.90		24.29
2013		28.82		21.70		28.82		21.70
2012		23.15		16.00		23.15		16.00
2011		19.03		14.84
2016:
2017:
March		25.07		21.55		28.79		26.30
February		23.48		19.63		28.57		26.25
January		25.60		21.08		30.42		26.95
2015:
2016:
December		28.55		25.00		30.50		28.12
November		28.85		26.71		29.45		25.92
October		27.80		22.16		29.55		25.36
2017:
First Quarter						30.42		26.25
2016:
First Quarter		25.60		19.63		25.60		19.63
Second Quarter						27.76		21.95
Third Quarter						29.35		25.85
Fourth Quarter						30.50		25.36
2015:
First Quarter		33.34		26.66		33.34		26.66
Second Quarter		34.49		29.83		34.49		29.83
Third Quarter		32.72		22.87		32.72		22.87
Fourth Quarter		28.85		22.16		28.85		22.16
2014:
First Quarter		27.74		24.29
Second Quarter		29.81		24.90
Third Quarter		34.90		29.25
Fourth Quarter		34.53		29.38

Expected maturity date
	2017			2018			2019			2020			2021			There- after			Without maturity		Total 2016			Fair value 2016
($ Equivalent in thousands)
ASSETS:
Investment Securities
Fixed rate
U.S. Dollars		3,987			-			24,772			10,153			42,607			18,905			-		100,423			99,013
Average fixed rate		3.50	%		-			8.26	%		5.02	%		4.70	%		4.09	%		-		5.45	%
Floating rate
U.S. Dollars		-			-			8,000			-			-			-			-		8,000			8,000
Average floating rate		-			-			2.37	%		-			-			-			-		2.37	%
Loans
Fixed rate
U.S. Dollars		2,487,723			27,657			2,147			397			-			-			-		2,517,924			2,522,771
Average fixed rate		3.18	%		4.01	%		4.95	%		5.08	%		-			-			-		3.19	%
Mexican Peso		165,113			9,985			7,919			6,239			2,374			-			-		191,631			196,351

		As of December 31, 2015
		Brazilian Real expressed in US$		European Euro expressed in US$		Japanese Yen expressed in US$		Colombian Peso expressed in US$		Mexican Peso expressed in US$		Other currencies expressed in US$⁽¹⁾		Total
		(in $ thousand, except exchange rates)
Exchange rate	��		3.96		1.09		120.40		3175.18		17.34

Assets
Cash and cash equivalent			405		6		5		50		887		150		1,503
Investments and other financial assets			3,818		-		-		-		1,601		-		5,419
Loans			-		-		-		-		136,896		-		136,896
Other assets			-		271,005		38,208		-		28,831		-		338,044
Total			4,223		271,011		38,213		50		168,215		150		481,862

Liabilities
Borrowings and deposit placements			-		270,913		38,208		-		168,103		-		477,224
Other liabilities			3,883		-		-		-		-		-		3,883
Total			3,883		270,913		38,208		-		168,103		-		481,107

Net currency position			340		98		5		50		112		150		755

	As of December 31, 2014
	Brazilian Real expressed in US$		European Euro expressed in US$			Japanese Yen expressed in US$		Colombian Peso expressed in US$		Mexican Peso expressed in US$			Other currencies expressed in US$⁽¹⁾		Total
	(in $ thousand, except exchange rates)
Exchange rate		2.66		1.21			119.49		2378.64		14.71

Assets
Cash and cash equivalent		501		8			7		27		867			126		1,536
Investments and other financial assets		5,269		-			-		-		5,336			-		10,605
Loans		-		-			-		-		140,616			-		140,616
Other assets		-		60,745			4,185		-		160,764			-		225,694
Total		5,770		60,753			4,192		27		307,583			126		378,451

Liabilities
Borrowings and deposit placements		-		66,303			4,185		-		307,853			-		378,341
Other liabilities		5,269		-			-		-		-			-		5,269
Total		5,269		66,303			4,185		-		307,853			-		383,610

Net currency position		501		(5,550	)		7		27		(270	)		126		(5,159	)

	As of December 31, 2015 (in $ thousand)
Fair value hedges	Carrying amount		Thereof accumulated fair value adjustments		Line item in the statement of financial position

Interest rate risk
Loans		81,931		-	Loans at amortized cost
Issuances		750,000		-	Short and long term borrowings and debt

		As of December 31, 2014 (in $ thousand)
Fair value hedges		Carrying amount		Thereof accumulated fair value adjustments	Line item in the statement of financial position

Interest rate risk
Loans		100,215		101	Loans at amortized cost
Issuances		401,781		1,781	Short and long term borrowings and debt

	As of December 31, 2015 (in $ thousand)
Risk type	Foreign Exchange risk		Interest rate risk		Foreign exchange and Interest rate risk		Total
Up to 1 month	102,553		25,000		-		127,553
31 to 60 days		15,134		265,000		-		280,134
61 to 90 days		38,740		90,000		-		128,740
91 to 180 days		48,811		345,000		-		393,811
181 to 365 days		197,482		80,000		415		277,897
1 to 2 years		535		480,931		442		481,908
2 to 5 years		40,000		397,500		24,948		462,448
More than 5 years		-		73,200		68,768		141,968
Total		443,255		1,756,631		94,573		2,294,459

	As of December 31, 2015 (in $ thousand)
	USD-OIS			Tenor			Xccy basis			Credit spread		Total Ineffectiveness
Type of risk hedge
Interest rate risk⁽¹⁾		25			(136	)					341		229
Foreign exchange risk⁽¹⁾		(25	)					(72	)		14		(84	)
		0			(136	)		(72	)		354		146
	As of December 31, 2014 (in $ thousand)
		USD-OIS			Tenor			Xccy basis			Credit spread		Total Ineffectiveness
Type of risk hedge
Interest rate risk⁽¹⁾		-			(214	)					8		(206	)
Foreign exchange risk⁽¹⁾		-			0			-			-		-
		-			(214	)		-			8		(206	)

~~List of Consolidated Financial Statements~~
With Report of Independent Registered Public Accounting Firm	F-3
Consolidated statements of financial position	F-4
Consolidated statements of profit or loss	F-5
Consolidated statements of profit or loss and other comprehensive income	F-6
Consolidated statements of changes in equity	F-7
Consolidated statements of cash flows	F-8
Notes to the Consolidated Financial Statements	F-9

List of Exhibits

Exhibit 1.1.	Amended and Restated Articles of Incorporation*

Exhibit 1.2.	By-Laws**

Exhibit 8.1.	List of Subsidiaries***

Exhibit 11.1.	Code of Ethics ****

Exhibit 12.1.	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a – 14(a) and 15d – 14(a) ***

Exhibit 12.2.	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a – 14(a) and 15d – 14(a) ***

Exhibit 13.1.	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 ***

Exhibit 13.2.	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002***

~~BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A.~~

/s/ Rubens V. Amaral Jr.
Chief Executive Officer

Exhibit 8.1.	List of Subsidiaries

~~Exhibit 11.1.~~	~~Code of Ethics~~

Exhibit 12.1.	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a – 14(a) and 15d – 14(a)

Exhibit 12.2.	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a – 14(a) and 15d – 14(a)

Exhibit 13.1.	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

Exhibit 13.2.	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

Contents	~~Page~~Pages

With Report Of Independent Registered Public Accounting Firm	F-3

Audited consolidated financial statements:

Consolidated statements of financial position	F-4

Consolidated statements of profit or loss	F-5

Consolidated statements of profit or loss and other comprehensive income	F-6

Consolidated statements of changes in equity	F-7

Consolidated statements of cash flows	F-8

Notes to the consolidated financial statements	~~F-9~~

		December 31			December 31			January 1
	Notes	2015			2014			2014			Notes	2016			2015
Assets
Cash and cash equivalents	4,17		1,299,966			780,515			839,718		4,18		1,069,538			1,299,966
Financial Instruments:	5,17
At fair value through profit or loss	5.2		53,411			57,574			68,762		5.2,18		-			53,411
At fair value through OCI	5.3,17		141,803			338,973			334,368		5.3,18		30,607			141,803
Securities at amortized cost, net	5.4,17		108,215			54,738			33,570		5.4,18		77,214			108,215
Loans at amortized cost	5.6		6,691,749			6,686,244			6,148,298		5.6		6,020,731			6,691,749
Less:
Allowance for expected credit losses	5.6		89,974			77,687			70,876		5.6		105,988			89,974
Unearned interest & deferred fees			9,304			8,509			6,668
Unearned interest and deferred fees											5.6		7,249			9,304
Loans at amortized cost, net			6,592,471			6,600,048			6,070,754				5,907,494			6,592,471

At fair value - Derivative financial instruments used for hedging – receivable	5.8,5.9,17		7,400			12,324			15,217		5.7,5.8,18		9,352			7,400

Property and equipment, net	6		6,173			6,961			8,432		7		8,549			6,173
Intangibles, net	7		427			1,024			1,890		8		2,909			427

Other assets:
Customers' liabilities under acceptances	17		15,100			114,018			1,128		18		19,387			15,100
Accrued interest receivable	17		45,456			48,177			40,778		18		44,187			45,456
Other assets	8		15,794			8,056			3,491		9		11,546			15,794
Total of other assets			76,350			170,251			45,397				75,120			76,350
									-
Total assets			8,286,216			8,022,408			7,418,108				7,180,783			8,286,216

Liabilities and stockholders' equity
Deposits:	9,17										10,18
Noninterest-bearing - Demand			639			394			663				1,617			639
Interest-bearing - Demand			243,200			83,781			62,384				125,397			243,200
Time			2,551,630			2,422,519			2,298,289				2,675,838			2,551,630
Total deposits			2,795,469			2,506,694			2,361,336				2,802,852			2,795,469

At fair value – Derivative financial instruments used for hedging – payable	5.8,5.9,17		29,889			40,287			8,572		5.7,5.8,18		59,686			29,889

Financial liabilities at fair value through profit or loss	5.1,5.9,17		89			52			72		5.1,5.8,18		24			89
Securities sold under repurchase agreement	4,5.3,5.9,10,17		114,084			300,519			286,162		5.8,11,18		-			114,084
Short-term borrowings and debt	11,17		2,430,357			2,692,537			2,705,365		12.1,18		1,470,075			2,430,357
Long-term borrowings and debt, net	11,17		1,881,813			1,399,656			1,148,684		12.2,18		1,776,738			1,881,813

Other liabilities:
Acceptances outstanding	17		15,100			114,018			1,128		18		19,387			15,100
Accrued interest payable	17		17,716			14,855			13,786		18		16,603			17,716
Allowance for expected credit losses on off-balance sheet credit risk	5.7		5,424			9,873			6,054
Allowance for expected credit losses on loan commitments and financial guarantees contracts											6		5,776			5,424
Other liabilities	12		24,344			32,878			27,947		13		18,328			24,344
Total other liabilities			62,584			171,624			48,915				60,094			62,584
Total liabilities			7,314,285			7,111,369			6,559,106				6,169,469			7,314,285


Stockholders' equity:	13,14,15,18										14,15,16,19
Common stock			279,980			279,980			279,980				279,980			279,980
Treasury stock			(73,397	)		(77,627	)		(82,008	)	15		(69,176	)		(73,397	)
Additional paid-in capital in excess of assigned value of common stock			120,177			119,644			120,624				120,594			120,177
Capital reserves			95,210			95,210			95,210				95,210			95,210
Retained earnings			560,642			501,669			454,896				587,507			560,642
Accumulated other comprehensive loss	5.3,5.8,18		(10,681	)		(7,837	)		(9,700	)	5.3,5.7,19		(2,801	)		(10,681	)
Total stockholders' equity			971,931			911,039			859,002				1,011,314			971,931
Total liabilities and stockholders' equity			8,286,216			8,022,408			7,418,108				7,180,783			8,286,216

	Common stock		Treasury stock			Additional paid- in capital in excess of assigned value of common stock			Capital reserves		Retained earnings			Accumulated other comprenhensive income (loss)			Total			Common stock		Treasury stock			Additional paid- in capital in excess of assigned value of common stock			Capital reserves		Retained earnings			Accumulated other comprehensive income (loss)			Total
Balances at January 1, 2014		279,980		(82,008	)		120,624			95,210		454,896			(9,700	)		859,002			279,980		(82,008	)		120,624			95,210		454,896			(9,700	)		859,002
Profit for the year		-		-			-			-		102,366			-			102,366			-		-			-			-		102,366			-			102,366
Other comprehensive income		-		-			-			-		-			1,863			1,863			-		-			-			-		-			1,863			1,863
Issuance of restricted shares		-		629			(629	)		-		-			-			-
Issuance of restricted stock																					-		629			(629	)		-		-			-			-
Compensation cost - stock options and stock units plans		-		-			2,573			-		-			-			2,573			-		-			2,573			-		-			-			2,573
Exercised options and stock units vested		-		4,392			(2,924	)		-		-			-			1,468			-		4,392			(2,924	)		-		-			-			1,468
Repurchase of "Class B" and "Class E" common stock		-		(640	)		-			-		-			-			(640	)		-		(640	)		-			-		-			-			(640	)
Dividends declared		-		-			-			-		(55,593	)		-			(55,593	)		-		-			-			-		(55,593	)		-			(55,593	)
Balances at December 31, 2014		279,980		(77,627	)		119,644			95,210		501,669			(7,837	)		911,039			279,980		(77,627	)		119,644			95,210		501,669			(7,837	)		911,039

Profit for the year		-		-			-			-		103,984			-			103,984			-		-			-			-		103,984			-			103,984
Other comprehensive income		-		-			-			-		-			(2,844	)		(2,844	)		-		-			-			-		-			(2,844	)		(2,844	)
Issuance of restricted stock																					-		1,259			(1,259	)		-		-			-			-
Compensation cost - stock options and stock units plans		-		-			3,296			-		-			-			3,296			-		-			3,296			-		-			-			3,296
Issuance of restricted shares		-		1,259			(1,259	)		-		-			-			-
Exercised options and stock units vested		-		2,971			(1,504	)		-		-			-			1,467			-		2,971			(1,504	)		-		-			-			1,467
Dividends declared		-		-			-			-		(45,011	)		-			(45,011	)		-		-			-			-		(45,011	)		-			(45,011	)
Balances at December 31, 2015		279,980		(73,397	)		120,177			95,210		560,642			(10,681	)		971,931			279,980		(73,397	)		120,177			95,210		560,642			(10,681	)		971,931

Profit for the year																					-		-			-			-		87,045			-			87,045
Other comprehensive income																					-		-			-			-		-			7,880			7,880
Issuance of restricted stock																					-		1,259			(1,259	)		-		-			-			-
Compensation cost - stock options and stock units plans																					-		-			3,063			-		-			-			3,063
Exercised options and stock units vested																					-		2,962			(1,387	)		-		-			-			1,575
Dividends declared																					-		-			-			-		(60,180	)		-			(60,180	)
Balances at December 31, 2016																					279,980		(69,176	)		120,594			95,210		587,507			(2,801	)		1,011,314

	Rating	Description
	~~Description~~
1 to 4		Clients with payment ability to satisfy their financial commitments.

	5 to 6		Clients with payment ability to satisfy their financial commitments, but with more frequent reviews.
7
	7	Clients exposed to systemic risks specific to the country or the industry in which they are located, facing adverse situations in their operation or financial condition. At this level, access to new funding is uncertain.
8
	8	Clients whose primary source of payment (operating cash flow) is inadequate, and who show evidence of deterioration in their working capital that does not allow them to satisfy payments on the agreed terms, endangering recovery of unpaid balances.
9
	9	Clients whose operating cash flow continuously shows insufficiency to service the debt on the originally agreed terms. Due to the fact that the borrower presents an impaired financial and economic situation, the likelihood of recovery is low.
10
	10	Clients with operating cash flow that does not cover their costs, are in suspension of payments, presumably will also have difficulties fulfilling possible restructuring agreements, are in a state of insolvency, or have filed for bankruptcy, among others.

		Useful life in Years

	Furniture and equipment	3 to 5 years
	Leasehold improvements	3 to 15 years or up to the lease term

	12-month expected credit losses			Lifetime expected credit losses (collectively assessed)		Lifetime expected credit losses (individually assessed)		Credit- impaired financial assets (lifetime expected credit losses)		Total
Allowance for expected credit losses as of December 31, 2014		276			-		-		-		276
Transfer to lifetime expected credit losses		(178	)		178		-		-		-
Transfer to credit-impaired financial assets		-			-		-		-		-
Transfer to 12-month expected credit losses		-			-		-		-		-
Financial assets that have been derecognized during the year		(207	)		-		-		-		(207	)
Changes due to financial instruments recognized as of December 31, 2014		(385	)		178		-		-		(207	)
New financial assets originated or purchased		457			-		-		-		457
Write-offs		-			-		-		-		-
Changes in models/risk parameters		-			-		-		-		-
Foreign exchange and other movements		-			-		-		-		-
Allowance for expected credit losses as of December 31, 2015		348			178		-		-		526

	Assignments and Participations		Gains		Assignments and Participations		Gains

For the year ended December 31, 2016						157,242		724
For the year ended December 31, 2015		92,438		422		92,438		422
For the year ended December 31, 2014		515,552		2,169		515,552		2,169

January 1, 2014
	Corporations				Banking and financial institutions				Middle- market companies
Rating⁽¹⁾	Private		State- owned		Private		State- owned		Private		Sovereign		Total
1-4		526,940		605,529		657,924		54,563		14,392		144		1,859,492
5-6		1,845,113		333,349		1,127,874		419,630		559,715				4,285,681
7		-		-		-		-		-		-		-
8		3,125		-		-		-		-		-		3,125
9		-		-		-		-		-		-		-
10		-		-		-		-		-		-		-
Total		2,375,178		938,878		1,785,798		474,193		574,107		144		6,148,298

Number of director
members

Total number of
participants^(*)

Total number of
meetings held

Audit and Compliance Committee

Risk Policy and Assessment Committee

Finance and Business Committee

Nomination and Compensation Committee