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BLX Banco Latinoamericano De Comercio Exterior

Filed: 29 Oct 20, 1:56pm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

Long Form of Press Release

 

Commission File Number 1-11414

 

BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A.

(Exact name of Registrant as specified in its Charter)

 

FOREIGN TRADE BANK OF LATIN AMERICA, INC.

(Translation of Registrant’s name into English)

 

Business Park Torre V, Ave. La Rotonda, Costa del Este

P.O. Box 0819-08730

Panama City, Republic of Panama

(Address of Registrant’s Principal Executive Offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes ¨ No x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes ¨ No x

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date:    October 27, 2020 
  
 FOREIGN TRADE BANK OF LATIN AMERICA, INC.
 (Registrant)
  
  
  By:/s/ Ana Graciela de Méndez
  
  Name:Ana Graciela de Méndez
  Title:CFO

 

 

 

 

 

BLADEX ANNOUNCES PROFIT FOR THE THIRD QUARTER OF $15.4 MILLION, OR $0.39 PER SHARE, PRESERVING
ITS SOUND CREDIT QUALITY AND RESUMING PORTFOLIO GROWTH

 

PANAMA CITY, REPUBLIC OF PANAMA, October 27, 2020

 

Banco Latinoamericano de Comercio Exterior, S.A. (NYSE: BLX, “Bladex”, or “the Bank”), a Panama-based multinational bank originally established by the central banks of 23 Latin-American and Caribbean countries to promote foreign trade and economic integration in the region, today announced its results for the third quarter (“3Q20”) and nine months (“9M20”) ended September 30, 2020.

 

The consolidated financial information in this document has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

 

FINANCIAL SNAPSHOT

 

(US$ million, except percentages and per share amounts)  9M20  9M19  3Q20  2Q20  3Q19
Key Income Statement Highlights                    
Net Interest Income ("NII") $70.1  $82.6  $22.6  $21.7  $26.7 
Fees and commissions, net $7.6  $10.3  $2.6  $1.9  $2.8 
(Loss) gain on financial instruments, net $(4.7) $0.7  $(0.4) $(3.9) $(0.2)
Total revenues $73.8  $95.2  $25.2  $19.9  $29.5 
Reversal (provision) for credit losses $1.2  $(2.4) $(1.5) $2.6  $(0.6)
Operating expenses $(27.2) $(29.4) $(8.3) $(8.3) $(9.0)
Profit for the period $47.9  $64.0  $15.4  $14.1  $20.4 
Profitability Ratios                    
Earnings per Share ("EPS") (1) $1.21  $1.62  $0.39  $0.36  $0.52 
Return on Average Equity (“ROAE”) (2)  6.2%  8.5%  6.0%  5.5%  8.0%
Return on Average Assets (“ROAA”)  0.96%  1.36%  0.95%  0.83%  1.34%
Net Interest Margin ("NIM") (3)  1.43%  1.77%  1.42%  1.28%  1.77%
Net Interest Spread ("NIS") (4)  1.12%  1.19%  1.19%  1.01%  1.19%
Efficiency Ratio (5)  36.8%  30.9%  33.1%  41.5%  30.4%
Assets, Capital, Liquidity & Credit Quality                    
Credit Portfolio (6) $5,320  $6,302  $5,320  $5,011  $6,302 
Commercial Portfolio (7) $5,087  $6,217  $5,087  $4,915  $6,217 
Investment Portfolio $234  $85  $234  $96  $85 
Total assets $6,311  $6,681  $6,311  $6,627  $6,681 
Total equity $1,026  $1,009  $1,026  $1,022  $1,009 
Market capitalization (8) $482  $790  $482  $456  $790 
Tier 1 Basel III Capital Ratio (9)  26.5%  21.1%  26.5%  24.8%  21.1%
Total assets / Total equity (times)  6.2   6.6   6.2   6.5   6.6 
Liquid Assets / Total Assets (10)  23.2%  14.4%  23.2%  29.6%  14.4%
Credit-impaired loans to Loan Portfolio (11)  0.00%  1.11%  0.00%  0.00%  1.11%
Total allowance for losses to Credit Portfolio (12)  0.84%  1.66%  0.84%  0.95%  1.66%
Total allowance for losses to credit-impaired loans (times) (12)   n.m.   1.7    n.m.    n.m.   1.7 

 

"n.m." means not meaningful.

 

 

 

 

 

 

BUSINESS HIGHLIGHTS

 

·Bladex’s unique business model has unceasingly proven to be a key advantage in the current context, allowing it to maintain a sound asset quality and to swiftly re-balance its credit risk towards defensive sectors. The Bank resumed portfolio growth during the quarter and reports sustainable results and a solid financial position, denoted by the $15.4 million Profit for the 3Q20 (+9% QoQ), with a capitalization of 26.5% Tier 1 Basel III Capital Ratio.

 

·The Bank continued to collect almost all scheduled credit maturities (close to 100% during the 3Q20 and since the onset of Covid-19), evidencing the high quality of the Bank’s borrower base and short-term nature of its business.

 

·3Q20 loan origination more than doubled from the previous quarter (+120% QoQ), still under strict credit underwriting standards, resulting in a 3% Commercial Portfolio growth, reaching $5.1 billion as of September 30, 2020, at wider credit spreads (+14 bps over Libor vs the prior quarter), although the size of the Commercial Portfolio is still below pre-Covid levels (-18% YoY). Considering the increase in its investment securities portfolio, the Bank’s total Credit Portfolio increased 6% QoQ.

 

·Bladex’s portfolio remained well-diversified and focused on high quality exposures, with 59% in investment grade countries, 53% with financial institutions and 14% with sovereign and state-owned corporations. The Bank continued downsizing exposure to higher risk sectors, such as the airline industry, which has been decreased by $99 million or 67% since March 31, 2020, now representing less than 1% of total portfolio.

 

·In line with Bladex’s strategy to maintain a solid and diversified funding base to support Commercial Portfolio growth, the Bank successfully placed a 144A/RegS bond in the U.S. and international capital markets, coupled with other medium-term bilateral, syndicated and capital market transactions, while its deposit base continued to grow. In turn, the Bank has gradually reduced its liquidity position, mostly consisting of cash and due from banks, which stood at $1.5 billion (23% of Total Assets) at the end of 3Q20, a still robust level given the prevailing market uncertainty and deep economic impact of Covid-19.

 

·Net Interest Income (“NII”) and Margin (“NIM”) experienced a positive quarterly trend (+4% and +14 bps QoQ, respectively), on the widening rate differential between loans and liabilities, but still below pre-Covid levels (-15% YoY and -35 bps YoY, respectively), mostly pressured by higher average cash position levels (27% of average assets) and decreased average loan balances (by design).

 

·Fees and commission income totaled $2.6 million for 3Q20, up 35% QoQ, mainly driven by higher fees from the letters of credit business (+28% QoQ) which is now performing at pre-Covid levels.

 

·Credit provision charges totaled $1.5 million in 3Q20, mainly on higher Credit Portfolio balances and the continuous assessment of the impact of certain country risk deteriorations on the Bank’s exposure. Asset quality remained sound with no new credit impaired transactions during the quarter, resulting in zero non-performing loans as of September 30, 2020. As of the same date, the Bank’s total allowance for credit losses represented a coverage ratio of 84 bps the total Credit Portfolio.

 

·Efficiency Ratio improved to 33% in 3Q20, due to higher total revenues (+27% QoQ) with stable operating expenses (+1% QoQ). YTD Operating expenses are still down $2.3 million, or 8%, YoY on lower personnel expenses, mostly due to a reduced performance-based variable compensation provision.

 

 

 

 

 

 

CEO’s Comments

 

Mr. Jorge Salas, Bladex’s Chief Executive Officer said: “Our third quarter results are, once again, a good reflection of our conservative approach and the resilience of our business model. The strong credit quality of Bladex’s commercial portfolio, coupled with its short-term nature, resulted in the timely collection of almost 100% of all loans at maturity. Having said that, we remain prudently cautious in the face of the great deal of uncertainty that still lies ahead in the months to come.

 

Bladex resumed portfolio growth and, by working closely with its clients, the Bank was able to disburse over $2.2 billion, more than twice the volume disbursed in the previous quarter. This resulted in a $172 million growth, equivalent to a 3% increase of its commercial portfolio to $5.1 billion, while maintaining sound asset quality and portfolio diversification.

 

On the liability side, the Bank’s deposit base increased by $169 million, or 6% quarter-on-quarter, with a relevant participation from our Class A shareholders, that represented 51% of total deposits by the end of September. During this last quarter, Bladex also successfully placed a new global syndication and its third issuance in the 144A/RegS market for USD $400 million, which was four times oversubscribed. At the same time, the Bank gradually reduced its liquidity position, mostly consisting of cash and due from banks, which stood at $1.5 billion at the end of 3Q20, a still robust level given the prevailing market uncertainty and deep economic impact of Covid-19.

 

With a gradual but positive trend in its levels of profitability, a strong capitalization, a resilient asset portfolio, robust levels of liquidity and a solid funding base, the Bank enjoys a strong financial position to face a challenging credit cycle in the Region. I am very proud of the way our team has come together to navigate the storm so far. There is no doubt that opportunities will keep arising as the economies re-open throughout the Region and Bladex will continue to support its clients during this uncertain time.”

 

RESULTS BY BUSINESS SEGMENT

 

The Bank’s activities are managed and executed through two business segments, Commercial and Treasury. Information related to each reportable segment is set out below. Business segment results are based on the Bank’s managerial accounting process, which assigns assets, liabilities, revenue and expense items to each business segment on a systemic basis.

 

COMMERCIAL BUSINESS SEGMENT

 

The Commercial Business Segment encompasses the Bank’s core business of financial intermediation and fee generation activities developed to cater to corporations, financial institutions and investors in Latin America. These activities include the origination of bilateral short-term and medium-term loans, structured and syndicated credits, loan commitments, and financial guarantee contracts such as issued and confirmed letters of credit, stand-by letters of credit, guarantees covering commercial risk, and other assets consisting of customers’ liabilities under acceptances.

 

 

 

 

 

Profits from the Commercial Business Segment include (i) net interest income from loans; (ii) fees and commissions from the issuance, confirmation and negotiation of letters of credit, guarantees and loan commitments, as well as through loan structuring and syndication activities; (iii) gain on sale of loans generated through loan intermediation activities, such as sales and distribution in the primary market; (iv) gain (loss) on sale of financial instruments measured at FVTPL; (v) reversal (provision) for credit losses, (vi) impairment on non-financial assets; and (vii) direct and allocated operating expenses.

 

  

 

During 3Q20, the Bank continued to collect almost all scheduled credit maturities (close to 100% during the 3Q20 and since the onset of Covid-19), on account of the high quality of its borrower base and the short-term nature of its Commercial Portfolio. Meanwhile, 3Q20 loan origination more than doubled from the previous quarter (+120% QoQ), still under tighter credit underwriting standards, and resulted in a 3% Commercial Portfolio growth, reaching $5.1 billion as of September 30, 2020, at wider credit spreads (+14 bps over Libor vs the prior quarter), while the size of the Commercial Portfolio still trails behind pre-Covid levels (-18% YoY). On an average basis, Commercial Portfolio balances were $5.0 billion for the 3Q20 (-5% QoQ; -16% YoY) and $5.5 billion for the first 9M20 (-9% YoY).

 

As of September 30, 2020, 73% of the Commercial Portfolio was scheduled to mature within a year, and 55% of its short-term origination represented trade finance transactions, compared to 71% and 52%, respectively, a quarter ago, and 76% and 53%, respectively, a year ago.

 

The following graphs illustrate the geographic distribution of the Bank’s Commercial Portfolio, highlighting the portfolio´s risk diversification by country and across industry segments:

 

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As of September 30, 2020, 59% of the portfolio remained geographically distributed in investment grade countries, up 1 pt. from the previous quarter and 7 pts. from a year ago, as the Bank weighted its portfolio towards lower-risk countries, taking advantage of good risk/return opportunities. On a country-risk basis, Brazil represented the largest country-risk exposure at 17% of the total Commercial Portfolio, of which 84% were with financial institutions. Other relevant country-risk exposures were to investment grade countries such as Colombia at 14%, Mexico at 12%, Chile at 10%, and top-rated countries outside of Latin America (which relates to transactions carried out in Latin America) at 9% of the total portfolio. The Bank also continued adjusting its exposure in higher-risk countries such as Argentina and Ecuador, now each representing 3% of total Commercial Portfolio, both down 19% and 9% from a quarter ago, and down 44% and 58% from a year ago, respectively.

 

The Commercial Portfolio by industries remained well-diversified and focused on high quality borrowers, as the Bank’s traditional client base of financial institutions represented 53% of the total Commercial Portfolio, while sovereign and state-owned corporations represented 14% of the total portfolio at the end of 3Q20, and the remainder with top tier corporates across the Region. Across corporate sectors, all industries except for Electric Power at 6% of the portfolio, represented 5% or less of the total Commercial Portfolio at the end of 3Q20. In addition, the Bank continued reducing exposure to higher risk sectors, such as the airline industry, which has been decreased by $99 million or 67% since March 31, 2020, now representing less than 1% of total portfolio.

 

Refer to Exhibit IX for additional information related to the Bank’s Commercial Portfolio distribution by country, and Exhibit XI for the Bank’s distribution of loan disbursements by country.

 

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(US$ million)  9M20  9M19  YoY (%)   3Q20  2Q20  3Q19  QoQ (%)   YoY (%) 
Commercial Business Segment:                                
Net interest income $66.9  $82.3   -19% $21.2  $20.9  $26.9   1%  -21%
Other income (expense)  5.5   11.5   -52%  2.9   (0.8)  3.4   471%  -14%
Total revenues  72.4   93.8   -23%  24.1   20.1   30.3   20%  -20%
Reversal (provision) for credit losses  1.4   (2.7)  151%  (1.4)  2.7   (0.9)  -153%  -53%
Reversal (impairment) on non-financial assets  0.0   0.5   -100%  0.1   (0.1)  0.5   200%  -72%
Operating expenses  (20.1)  (22.5)  10%  (6.5)  (6.3)  (7.0)  -4%  7%
Profit for the segment $53.6  $69.2   -22% $16.3  $16.4  $22.9   -1%  -29%

 

The Commercial Business Segment’s result was $16.3 million for the 3Q20 (-1% QoQ; -29% YoY) and $53.6 million for the first 9M20 (-22% YoY). Profit for the segment remained quarterly stable, as the 20% QoQ increase in total revenues, mainly from higher fees from the Bank’s letters of credit business (+28% QoQ), was offset by the credit provision variation for losses ($1.4 million provision vs. $2.7 million reversal in 2Q20). The YoY Profit decrease was mainly attributable to lower core income generation from Net Interest Income and commission income, as the Bank prudently decided to reduce loan balances and maintain higher liquidity levels given the prevailing market uncertainty and deep economic impact of Covid-19.

 

TREASURY BUSINESS SEGMENT

 

The Treasury Business Segment focuses on managing the Bank’s investment portfolio and the overall structure of its assets and liabilities to achieve more efficient funding and liquidity positions for the Bank, mitigating the traditional financial risks associated with the balance sheet, such as interest rate, liquidity, price and currency risks. Interest-earning assets managed by the Treasury Business Segment include liquidity positions in cash and cash equivalents, as well as highly liquid corporate debt securities rated above ‘A-‘, and financial instruments related to the investment management activities, consisting of securities at fair value through other comprehensive income (“FVOCI”) and securities at amortized cost (the “Investment Portfolio”). The Treasury Business Segment also manages the Bank’s interest-bearing liabilities, which constitute its funding sources, mainly deposits, 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, and related net other income (net results from derivative financial instruments and foreign currency exchange, gain (loss) per financial instruments at fair value through profit or loss (“FVTPL”), gain (loss) on sale of securities at FVOCI, and other income), recovery or impairment loss on financial instruments, and direct and allocated operating expenses.

 

Liquidity balances totaled $1,465 million at the end of 3Q20, down from $1,959 million at the end of 2Q20, as the Bank gradually reduced its liquidity position and resumed portfolio growth, and up from $963 million at the end of 3Q19, still maintaining a robust level given the prevailing market uncertainty and deep economic impact of Covid-19. Deposits placed with the Federal Reserve Bank of New York represented 82% of total liquidity balances at the end of 3Q20. As of the end of 3Q20, 2Q20, and 3Q19, liquidity balances to total assets represented 23%, 30% and 14%, respectively, while the liquidity balances to total deposits ratio was 48%, 68% and 34%, respectively.

 

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The Investment Portfolio balances amounted to $234 million as of September 30, 2020, of which $107 million were corporate debt securities classified as high quality liquid assets (“HQLA”) in accordance with the specifications of the Basel Committee; up from $96 million as of June 30, 2020, and $85 million as of September 30, 2019. The Investment Portfolio mostly consisted of readily-quoted Latin American and Multilateral securities, out of which 54% represented sovereign or state-owned risk at the end of the 3Q20, compared to 80% a quarter ago and 71% a year ago (refer to Exhibit X for a per-country risk distribution of the Investment Portfolio).

 

On the funding side, deposit balances increased to $3.1 billion at the end of 3Q20, up 6% QoQ and 7% YoY compared to $2.9 billion a quarter and year ago. The continued growth in the Bank’s deposit base denotes the growth of its new Yankee CD program which complements the short-term funding structure, and the steady support from the Bank’s Class A shareholders (i.e.: central banks and their designees), which represented 51% of total deposits at the end of 3Q20, compared to 53% and 62% of total deposits a quarter and year ago, respectively. As of September 30, 2020, total deposits represented 60% of total funding sources, up from 52% a quarter and year ago, respectively. Consequently, short- and medium-term borrowings and debt totaled $2.1 billion at the end of 3Q20 (-21% QoQ and YoY). Weighted average funding costs improved to 1.26% in 3Q20 (-31 bps QoQ; -183 bps YoY), and 1.75% in the first 9M20 (-149 bps YoY), on a higher average deposit base and in line with the Bank’s strategy to maintain a solid and diversified funding base to support Commercial Portfolio growth.

 

(US$ million)  9M20  9M19  YoY (%)   3Q20  2Q20  3Q19  QoQ (%)   YoY (%) 
Treasury Business Segment:                                
Net interest income $3.2  $0.3   946% $1.4  $0.8  ($0.3)  75%  606%
Other income (expense)  (1.8)  1.1   -262%  (0.3)  (1.0)  (0.5)  66%  36%
Total revenues  1.5   1.4   5%  1.1   (0.2)  (0.8)  573%  229%
(Provision) reversal for credit losses  (0.2)  0.3   -165%  (0.1)  (0.1)  0.3   -16%  -135%
Operating expenses  (7.0)  (6.9)  -1%  (1.8)  (2.0)  (2.0)  8%  7%
Loss for the segment $(5.8) $(5.2)  -10% $(0.9) $(2.3) $(2.5)  62%  64%

 

The Treasury Business Segment’s results were a $0.9 million loss for the 3Q20 and a $5.8 million loss for the first 9M20. The quarterly improvements were mainly associated to an increase in NII on improved liquidity performance, an increased bond portfolio, and decreased funding costs. On a year-to-date basis, loss for the segment increased 10% YoY mainly on provisions for credit losses during the period, while total revenues increased 5% YoY, as higher NII offset the losses in other financial instruments related to the Bank’s results on its hedging positions and investment securities.

 

NET INTEREST INCOME AND MARGINS

 

(US$ million, except percentages)  9M20  9M19  YoY (%)   3Q20  2Q20  3Q19  QoQ (%)   YoY (%) 
Net Interest Income                                
Interest income $143.2  $209.6   -32% $39.7  $44.5  $65.5   -11%  -39%
Interest expense  (73.1)  (127.0)  42%  (17.1)  (22.8)  (38.9)  25%  56%
Net Interest Income ("NII") $70.1  $82.6   -15% $22.6  $21.7  $26.7   4%  -15%
                                 
Net Interest Margin ("NIM")  1.43%  1.77%  -19%  1.42%  1.28%  1.77%  11%  -20%

 

NII and NIM were $22.6 million and 1.42% for the 3Q20, and $70.1 million and 1.43% for the first 9M20, respectively. The QoQ increase was mainly related to widening rate differential between loans and liabilities. On a YoY comparison, NII and NIM were still pressured by higher average cash position levels (27% and 23% of average interest-earning assets in 3Q20 and 9M20, respectively) and lower average loan balances, as the Bank prudently decided since the onset of Covid-19 to reduce loan balances and maintained increased liquidity levels.

 

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FEES AND COMMISSIONS

 

Fees and Commissions, net, includes the fee income associated with letters of credit and the fee income derived from loan structuring and syndication activities, together with loan intermediation and distribution activities in the primary market, and other commissions, mostly from other contingent credits, such as guarantees and credit commitments, net of fee expenses.

 

 (US$ million)  9M20    9M19   YoY (%)   3Q20   2Q20    3Q19    QoQ (%)   YoY (%) 
Letters of credit fees  6.5   7.0   -7%  2.3   1.8   2.3   28%  -2%
Loan syndication fees  0.5   2.9   -82%  0.1   0.1   0.5   14%  -87%
Other commissions, net  0.6   0.4   52%  0.2   0.0   0.0   411%  622%
Fees and Commissions, net $7.6  $10.3   -26% $2.6  $1.9  $2.8   35%  -7%

 

Fees and Commissions income totaled $2.6 million for 3Q20 and $7.6 million for the first 9M20. The 35% QoQ increase was mainly driven by higher fees from the Bank’s letters of credit business (+28% QoQ), performing at pre-Covid levels. The YoY reduction in fees and commissions were mostly related to a general slowdown in the loan structuring and syndication business which has started to pick up in recent months.

 

PORTFOLIO QUALITY AND TOTAL ALLOWANCE FOR LOSSES

 

(US$ million, except percentages) 30-Sep-20  30-Jun-20  31-Mar-20  31-Dec-19  30-Sep-19 
Allowance for loan losses                    
Balance at beginning of the period $45.4  $99.9  $99.3  $101.4  $103.3 
Provisions (reversals)  1.5   (2.4)  0.5   (2.1)  0.5 
Write-offs, net of recoveries  (4.4)  (52.1)  0.1   0.0   (2.4)
End of period balance $42.5  $45.4  $99.9  $99.3  $101.4 
                     
Allowance for loan commitments and financial guarantee contract losses                    
Balance at beginning of the period $2.1  $2.4  $3.0  $2.7  $2.6 
Provisions (reversals)  (0.1)  (0.3)  (0.6)  0.4   0.1 
End of period balance $2.1  $2.1  $2.4  $3.0  $2.7 
                     
Allowance for Investment Portfolio losses                    
Balance at beginning of the period $0.2  $0.1  $0.1  $0.3  $0.3 
Provisions (reversals)  0.1   0.1   (0.0)  (0.2)  (0.0)
End of period balance $0.3  $0.2  $0.1  $0.1  $0.3 
                     
Total allowance for losses $44.9  $47.8  $102.5  $102.5  $104.4 
                     
Total allowance for losses to Credit Portfolio  0.84%  0.95%  1.73%  1.56%  1.66%
Credit-impaired loans to Loan Portfolio  0.00%  0.00%  1.16%  1.05%  1.11%
Total allowance for losses to credit-impaired loans (times)   n.m.    n.m.   1.7   1.7   1.7 

 

"n.m." means not meaningful.

 

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The total allowance for credit losses decreased to $44.9 million, representing a coverage ratio to the Credit Portfolio of 84 bps as of September 30, 2020, compared to $47.8 million, or 95 bps, a quarter ago and compared to $104.4 million, or 166 bps, a year ago. The quarterly decrease was mostly related to the Bank’s sale of a Stage 2 watchlist loan, which resulted in a $4.4 million write-off against previously constituted reserves in Stage 2, coupled with the Bank’s improved mix of its Credit Portfolio exposure by Stages.

 

Asset quality remained sound with no new credit impaired transactions during the quarter, resulting in zero non-performing loans as of September 30, 2020, the same level from the previous quarter, and compared to $61.8 million, or 1.11% of non-performing loans to total Loan Portfolio balances from a year ago.

 

OPERATING EXPENSES

 

  9M20   9M19  YoY (%)   3Q20   2Q20   3Q19   QoQ (%)   YoY (%) 
Operating expenses                        
Salaries and other employee expenses  15.8   17.8   -11%  4.6   4.2   5.7   11%  -18%
Depreciation of equipment and leasehold improvements  2.7   2.1   28%  1.1   0.9   0.7   31%  54%
Amortization of intangible assets  0.6   0.5   9%  0.2   0.2   0.2   -1%  16%
Other expenses  8.1   9.0   -10%  2.4   3.1   2.4   -21%  -1%
Total Operating Expenses $27.2  $29.4   -8% $8.3  $8.3  $9.0   1%  -7%
Efficiency Ratio  36.8%  30.9%      33.1%  41.5%  30.4%        

 

The Bank’s 3Q20 and 9M20 operating expenses totaled $8.3 million (+1% QoQ; -7% YoY) and $27.2 million (-8% YoY), respectively. The YoY expense reduction was primarily related to lower personnel expenses, mostly due to a lower performance-based variable compensation provision.

 

3Q20 and 9M20 Efficiency Ratio stood at 33% and 37%, respectively. The quarterly improvement compared to 42% in the 2Q20 was driven by higher total revenues (+27% QoQ) with stable operating expenses (+1% QoQ). The YoY increases in Efficiency Ratios were attributed to lower income generation in the current context, partially offset by the Bank’s reductions in operating expenses.

 

11

 

 

 

CAPITAL RATIOS AND CAPITAL MANAGEMENT

 

The following table shows capital amounts and ratios as of the dates indicated:

 

(US$ million, except percentages and shares outstanding) 30-Sep-20  30-Jun-20  30-Sep-19  QoQ (%)  YoY (%) 
Tier 1 Capital (9) $1,026  $1,022  $1,009   0%  2%
Risk-Weighted Assets Basel III (9) $3,878  $4,114  $4,780   -6%  -19%
Tier 1 Basel III Capital Ratio (9)  26.5%  24.8%  21.1%  6%  25%
Total equity $1,026  $1,022  $1,009   0%  2%
Total equity to total assets  16.3%  15.4%  15.1%  5%  8%
Accumulated other comprehensive income (loss) ("OCI") $(6) $(4) $(2)  -57%  -230%
Total assets / Total equity (times)  6.2   6.5   6.6   -5%  -7%
Shares outstanding (in thousand)  39,672   39,672   39,602   0%  0%

 

 

The Bank’s equity consists entirely of issued and fully paid ordinary common stock, with 39.7 million common shares outstanding as of September 30, 2020. At the same date, the Bank’s ratio of total assets to total equity stood at 6.2 times, and the Bank’s Tier 1 Basel III Capital Ratio strengthened to 26.5%, resulting from lower risk-weighted assets on a better mix of the Bank’s portfolio risk profile, while the equity base remained stable at over $1 billion.

 

RECENT EVENTS

 

§Quarterly dividend payment: The Bank’s Board of Directors (the “Board”) approved a quarterly common dividend of $0.25 per share corresponding to the third quarter 2020. The cash dividend will be paid on November 25, 2020, to shareholders registered as of November 9, 2020.
§Bond issuance in the international capital market: On September 9, 2020, Bladex announced the successful issuance of its third bond in the 144A/Reg S market for US$400 million. The five-year term bonds pay a fixed rate coupon of 2.375%. This new bond, which was oversubscribed more than four times, attracted investors from the United States, Europe, Asia, and Latin America.

 

Notes:

 

-Numbers and percentages set forth in this earnings release have been rounded and accordingly may not total exactly.

 

-QoQ and YoY refer to quarter-on-quarter and year-on-year variations, respectively.

 

Footnotes:

 

1)Earnings per Share (“EPS”) calculation is based on the average number of shares outstanding during each period.

 

2)ROAE refers to return on average stockholders’ equity which is calculated on the basis of unaudited daily average balances.

 

3)NIM refers to net interest margin which constitutes to Net Interest Income (“NII”) divided by the average balance of interest-earning assets.

 

4)NIS refers to net interest spread which constitutes the average yield earned on interest-earning assets, less the average yield paid on interest-bearing liabilities.

 

5)Efficiency Ratio refers to consolidated operating expenses as a percentage of total revenues.

 

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6)The Bank’s “Credit Portfolio” includes gross loans (or the “Loan Portfolio”), securities at FVOCI and at amortized cost, gross of interest receivable and the allowance for expected credit losses, loan commitments and financial guarantee contracts, such as confirmed and stand-by letters of credit, and guarantees covering commercial risk; and other assets consisting of customers’ liabilities under acceptances.

 

7)The Bank’s “Commercial Portfolio” includes gross loans (or the “Loan Portfolio”), loan commitments and financial guarantee contracts, such as issued and confirmed letters of credit, stand-by letters of credit, guarantees covering commercial risk and other assets consisting of customers’ liabilities under acceptances.

 

8)Market capitalization corresponds to total outstanding common shares multiplied by market close price at the end of each corresponding period.

 

9)Tier 1 Capital is calculated according to Basel III capital adequacy guidelines and is equivalent to stockholders’ equity excluding certain effects such as the OCI effect of the financial instruments at fair value through OCI. Tier 1 Capital ratio is calculated as a percentage of risk-weighted assets. Risk-weighted assets are estimated based on Basel III capital adequacy guidelines.

 

10)Liquid assets refer to total cash and cash equivalents, consisting of cash and due from banks and interest-bearing deposits in banks, excluding pledged deposits and margin calls; as well as highly rated corporate debt securities (above ‘A-‘). Liquidity ratio refers to liquid assets as a percentage of total assets.

 

11)Credit-impaired loans are also commonly referred to as Non-Performing Loans or NPLs. Loan Portfolio refers to gross loans, excluding interest receivable, the allowance for loan losses, and unearned interest and deferred fees.

 

12)Total allowance for losses refers to allowance for loan losses plus allowance for loan commitments and financial guarantee contract losses and allowance for investment securities losses.

 

SAFE HARBOR STATEMENT

 

This press release contains forward-looking statements of expected future developments within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as: “anticipate”, “intend”, “plan”, “goal”, “seek”, “believe”, “project”, “estimate”, “expect”, “strategy”, “future”, “likely”, “may”, “should”, “will” and similar references to future periods. The forward-looking statements in this press release include the Bank’s financial position, asset quality and profitability, among others. These forward-looking statements reflect the expectations of the Bank’s management and are based on currently available data; however, actual performance and results are subject to future events and uncertainties, which could materially impact the Bank’s expectations. Among the factors that can cause actual performance and results to differ materially are as follows: the coronavirus (COVID-19) pandemic and government actions intended to limit its spread; the anticipated changes in the Bank’s credit portfolio; the continuation of the Bank’s preferred creditor status; the impact of increasing/decreasing interest rates and of the macroeconomic environment in the Region on the Bank’s financial condition; the execution of the Bank’s strategies and initiatives, including its revenue diversification strategy; the adequacy of the Bank’s allowance for expected credit losses; the need for additional allowance for expected credit losses; the Bank’s ability to achieve future growth, to reduce its liquidity levels and increase its leverage; the Bank’s ability to maintain its investment-grade credit ratings; the availability and mix of future sources of funding for the Bank’s lending operations; potential trading losses; the possibility of fraud; and the adequacy of the Bank’s sources of liquidity to replace deposit withdrawals. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

ABOUT BLADEX

 

Bladex, a multinational bank originally established by the central banks of Latin-American and Caribbean countries, began operations in 1979 to promote foreign trade and economic integration in the Region. The Bank, headquartered in Panama, also has offices in Argentina, Brazil, Colombia, Mexico, and the United States of America, and a Representative License in Peru, supporting the regional expansion and servicing its customer base, which includes financial institutions and corporations.

 

13

 

 

 

Bladex is listed on the NYSE in the United States of America (NYSE: BLX), since 1992, and its shareholders include: central banks and state-owned banks and entities representing 23 Latin American countries; commercial banks and financial institutions; and institutional and retail investors through its public listing.

 

CONFERENCE CALL INFORMATION

 

There will be a conference call to discuss the Bank’s quarterly results on Tuesday, October 27, 2020 at 11:00 a.m. New York City time (Eastern Time). For those interested in participating, please dial 1-877-271-1828 in the United States or, if outside the United States, 1-334-323-9871. Participants should use conference passcode 89194804#, and dial in five minutes before the call is set to begin. There will also be a live audio webcast of the conference at http://www.bladex.com. The webcast presentation will be available for viewing and downloads on http://www.bladex.com.

 

The conference call will become available for review on Conference Replay one hour after its conclusion and will remain available for 60 days. Please dial (877) 919-4059 or (334) 323-0140 and follow the instructions. The replay passcode is: 23850585.

 

For more information, please access http://www.bladex.com or contact:

 

Mrs. Ana Graciela de Méndez

Chief Financial Officer

Tel: +507 210-8563

E-mail address: amendez@bladex.com

 

14

 

 

 

 

EXHIBIT I 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

  AT THE END OF,                
  (A)  (B)  (C)  (A) - (B)     (A) - (C)       
  September 30, 2020  June 30, 2020  September 30, 2019  CHANGE  %  CHANGE  %    
  (In US$ thousand)                
Assets                               
                                
Cash and due from banks $1,401,669  $2,021,365  $981,484  ($619,696)  (31)% $420,185   43%   
                                
Securities and other financial assets, net  238,572   100,223   96,958   138,349   138   141,614   146    
                                
Loans  4,566,255   4,485,553   5,554,259   80,702   2   (988,004)  (18)   
Interest receivable  30,339   32,401   40,031   (2,062)  (6)  (9,692)  (24)   
Allowance for loan losses  (42,492)  (45,434)  (101,425)  2,942   6   58,933   58    
Unearned interest and deferred fees  (7,176)  (8,167)  (13,715)  991   12   6,539   48    
Loans, net  4,546,926   4,464,353   5,479,150   82,573   2   (932,224)  (17)   
                                
Customers' liabilities under acceptances  89,576   3,444   86,407   86,132   2,501   3,169   4    
Derivative financial instruments - assets  6,943   8,615   3,730   (1,672)  (19)  3,213   86    
                                
Equipment and leasehold improvements, net  16,620   17,109   22,569   (489)  (3)  (5,949)  (26)   
Intangibles, net  864   1,050   1,474   (186)  (18)  (610)  (41)   
Investment properties  3,285   3,354   0   (69)  (2)  3,285   n.m.  (*) 
Other assets  6,739   7,712   9,420   (973)  (13)  (2,681)  (28)   
                                
Total assets $6,311,194  $6,627,225  $6,681,192  ($316,031)  (5)% ($369,998)  (6)%   
                                
Liabilities                               
                                
Demand deposits $361,230  $281,685  $145,530  $79,545   28% $215,700   148%   
Time deposits  2,693,965   2,604,530   2,705,940   89,435   3   (11,975)  (0)   
   3,055,195   2,886,215   2,851,470   168,980   6   203,725   7    
Interest payable  3,431   3,119   6,813   312   10   (3,382)  (50)   
Total deposits  3,058,626   2,889,334   2,858,283   169,292   6   200,343   7    
                                
Securities sold under repurchase agreements  10,663   10,403   56,065   260   2   (45,402)  (81)   
Borrowings and debt, net  2,066,943   2,627,216   2,626,040   (560,273)  (21)  (559,097)  (21)   
Interest payable  9,649   6,954   13,589   2,695   39   (3,940)  (29)   
                                
Customers' liabilities under acceptances  89,576   3,444   86,407   86,132   2,501   3,169   4    
Derivative financial instruments - liabilities  33,315   52,193   13,398   (18,878)  (36)  19,917   149    
Allowance for loan commitments and financial guarantee contract losses  2,088   2,139   2,675   (51)  (2)  (587)  (22)   
Other liabilities  14,627   13,683   15,634   944   7   (1,007)  (6)   
                                
Total liabilities $5,285,487  $5,605,366  $5,672,091  ($319,879)  (6)% ($386,604)  (7)%   
                                
Equity                               
                                
Common stock $279,980  $279,980  $279,980  $0   0% $0   0%   
Treasury stock  (57,866)  (57,866)  (59,669)  0   0   1,803   3    
Additional paid-in capital in excess of value assigned of common stock  119,850   119,447   119,920   403   0   (70)  (0)   
Capital reserves  95,210   95,210   95,210   0   0   0   0    
Regulatory reserves  136,019   136,019   136,019   0   0   0   0    
Retained earnings  458,265   452,739   439,385   5,526   1   18,880   4    
Other comprehensive income (loss)  (5,751)  (3,670)  (1,744)  (2,081)  (57)  (4,007)  (230)   
                                
Total equity $1,025,707  $1,021,859  $1,009,101  $3,848   0% $16,606   2%   
                                
Total liabilities and equity $6,311,194  $6,627,225  $6,681,192  ($316,031)  (5)% ($369,998)  (6)%   

 

(*) "n.m." means not meaningful.

 

15

 

 

 

EXHIBIT II

 

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

(In US$ thousand, except per share amounts and ratios)  

 

  FOR THE THREE MONTHS ENDED             
  (A)  (B)  (C)  (A) - (B)     (A) - (C)    
  September 30, 2020  June 30, 2020  September 30, 2019  CHANGE  %  CHANGE  % 
Net Interest Income:                            
Interest income $39,694  $44,507  $65,514  ($4,813)  (11)% ($25,820)  (39)%
Interest expense  (17,086)  (22,784)  (38,856)  5,698   25   21,770   56 
                             
Net Interest Income  22,608   21,723   26,658   885   4   (4,050)  (15)
                             
Other income (expense):                            
Fees and commissions, net  2,611   1,940   2,815   671   35   (204)  (7)
Loss on financial instruments, net  (437)  (3,949)  (169)  3,512   89   (268)  (159)
Other income, net  407   191   217   216   113   190   88 
Total other income, net  2,581   (1,818)  2,863   4,399   242   (282)  (10)
                             
Total revenues  25,189   19,905   29,521   5,284   27   (4,332)  (15)
                             
(Provision) reversal for credit losses  (1,543)  2,607   (612)  (4,150)  (159)  (931)  (152)
Reversal (impairment) on non-financial assets  140   (140)  500   280   200   (360)  (72)
                             
Operating expenses:                            
Salaries and other employee expenses  (4,626)  (4,172)  (5,651)  (454)  (11)  1,025   18 
Depreciation of equipment and leasehold improvements  (1,116)  (854)  (724)  (262)  (31)  (392)  (54)
Amortization of intangible assets  (185)  (186)  (160)  1   1   (25)  (16)
Other expenses  (2,415)  (3,054)  (2,434)  639   21   19   1 
Total operating expenses  (8,342)  (8,266)  (8,969)  (76)  (1)  627   7 
                             
Profit for the period $15,444  $14,106  $20,440  $1,338   9% ($4,996)  (24)%
                             
PER COMMON SHARE DATA:                            
Basic earnings per share $0.39  $0.36  $0.52                 
Diluted earnings per share $0.39  $0.36  $0.52                 
Book value (period average) $25.85  $25.94  $25.52                 
Book value (period end) $25.85  $25.76  $25.48                 
                             
Weighted average basic shares  39,672   39,654   39,602            ��    
Weighted average diluted shares  39,672   39,654   39,602                 
Basic shares period end  39,672   39,672   39,602                 
                             
PERFORMANCE RATIOS:                            
Return on average assets  0.95%  0.83%  1.34%                
Return on average equity  6.0%  5.5%  8.0%                
Net interest margin  1.42%  1.28%  1.77%                
Net interest spread  1.19%  1.01%  1.19%                
Efficiency Ratio  33.1%  41.5%  30.4%                
Operating expenses to total average assets  0.52%  0.48%  0.59%                

 

16

 

 

 

 

EXHIBIT III

 

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

(In US$ thousand, except per share amounts and ratios)

 

  FOR THE NINE MONTHS ENDED       
  (A)  (B)  (A) - (B)    
  September 30, 2020  September 30, 2019  CHANGE  % 
Net Interest Income:                
Interest income $143,190  $209,598  $(66,408)  (32)%
Interest expense  (73,059)  (126,989)  53,930   42 
                 
Net Interest Income  70,131   82,609   (12,478)  (15)
                 
Other income (expense):                
Fees and commissions, net  7,624   10,293   (2,669)  (26)
(Loss) gain on financial instruments, net  (4,744)  650   (5,394)  (830)
Other income, net  838   1,674   (836)  (50)
Total other income, net  3,718   12,617   (8,899)  (71)
                 
Total revenues  73,849   95,226   (21,377)  (22)
                 
Reversal (provision) for credit losses  1,153   (2,365)  3,518   149 
Reversal on non-financial assets  0   500   (500)  (100)
                 
Operating expenses:                
Salaries and other employee expenses  (15,804)  (17,791)  1,987   11 
Depreciation of equipment and leasehold improvements  (2,705)  (2,120)  (585)  (28)
Amortization of intangible assets  (562)  (515)  (47)  (9)
Other expenses  (8,079)  (8,978)  899   10 
Total operating expenses  (27,150)  (29,404)  2,254   8 
                 
Profit for the period $47,852  $63,957  $(16,105)  (25)%
                 
PER COMMON SHARE DATA:                
Basic earnings per share $1.21  $1.62         
Diluted earnings per share $1.21  $1.62         
Book value (period average) $25.87  $25.40         
Book value (period end) $25.85  $25.48         
                 
Weighted average basic shares  39,645   39,566         
Weighted average diluted shares  39,645   39,566         
Basic shares period end  39,672   39,602         
                 
PERFORMANCE RATIOS:                
Return on average assets  0.96%  1.36%        
Return on average equity  6.2%  8.5%        
Net interest margin  1.43%  1.77%        
Net interest spread  1.12%  1.19%        
Efficiency Ratio  36.8%  30.9%        
Operating expenses to total average assets  0.55%  0.63%        

 

17

 

 

 

EXHIBIT IV

 

CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES  

 

  FOR THE THREE MONTHS ENDED 
  September 30, 2020  June 30, 2020  September 30, 2019 
  AVERAGE     AVG.  AVERAGE     AVG.  AVERAGE     AVG. 
  BALANCE  INTEREST  RATE  BALANCE  INTEREST  RATE  BALANCE  INTEREST  RATE 
   (In US$ thousand)
INTEREST EARNING ASSETS                                    
Cash and cash equivalents $1,737,338  $897   0.20% $1,945,739  $916   0.19% $658,220  $3,757   2.23%
Securities at fair value through OCI  30,318   40   0.52   5,132   9   0.67   12,143   110   3.56 
Securities at amortized cost (1)  104,762   871   3.25   73,953   668   3.58   73,351   653   3.48 
Loans, net of unearned interest  4,472,974   37,886   3.31   4,798,823   42,914   3.54   5,247,195   60,994   4.55 
                                     
TOTAL INTEREST EARNING ASSETS $6,345,392  $39,694   2.45% $6,823,647  $44,507   2.58% $5,990,909  $65,514   4.28%
                                     
Allowance for expected credit losses on loans  (40,654)          (87,621)          (99,476)        
Non interest earning assets  137,993           132,472           167,755         
                                     
TOTAL ASSETS $6,442,730          $6,868,498          $6,059,188         
                                     
                                     
INTEREST BEARING LIABILITIES                                    
Deposits  3,067,604  $4,400   0.56%  2,730,228  $5,691   0.82% $2,692,159  $16,692   2.43%
Securities sold under repurchase agreement and short-term borrowings and debt  878,831   4,586   2.04   1,692,766   8,426   1.97   891,872   8,361   3.67 
Long-term borrowings and debt, net (2)  1,350,266   8,100   2.35   1,304,760   8,667   2.63   1,338,207   13,803   4.04 
                                     
TOTAL INTEREST BEARING LIABILITIES $5,296,700  $17,086   1.26% $5,727,754  $22,784   1.57% $4,922,239  $38,856   3.09%
                                     
Non interest bearing liabilities and other liabilities $120,370          $112,004          $126,214         
                                     
TOTAL LIABILITIES  5,417,070           5,839,758           5,048,453         
                                     
EQUITY  1,025,660           1,028,740           1,010,735         
                                     
TOTAL LIABILITIES AND EQUITY $6,442,730          $6,868,498          $6,059,188         
                                     
NET INTEREST SPREAD          1.19%          1.01%          1.19%
                                     
NET INTEREST INCOME AND NET INTEREST MARGIN     $22,608   1.42%     $21,723   1.28%     $26,658   1.77%

 

 

(1) Gross of the allowance for losses relating to securities at amortized cost.

(2) Includes lease liabilities, net of prepaid commissions.

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

 

18

 

 

 

 

EXHIBIT V

 

CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES

 

  FOR THE NINE MONTHS ENDED 
  September 30, 2020  September 30, 2019 
  AVERAGE     AVG.  AVERAGE     AVG. 
  BALANCE  INTEREST  RATE  BALANCE  INTEREST  RATE 
  (In US$ thousand) 
INTEREST EARNING ASSETS                        
Cash and cash equivalents $1,494,489  $4,272   0.38% $737,277  $13,295   2.38%
Securities at fair value through OCI  13,573   71   0.69   16,079   515   4.22 
Securities at amortized cost (1)  82,872   2,157   3.42   76,222   1,979   3.42 
Loans, net of unearned interest  4,971,430   136,690   3.61   5,406,703   193,809   4.73 
                         
TOTAL INTEREST EARNING ASSETS $6,562,365  $143,190   2.87% $6,236,282  $209,598   4.43%
                         
Allowance for expected credit losses on loans  (75,830)          (100,127)        
Non interest earning assets  140,860           151,287         
                         
TOTAL ASSETS $6,627,395          $6,287,442         
                         
INTEREST BEARING LIABILITIES                        
Deposits $2,786,549  $21,553   1.02% $2,724,034  $53,281   2.58%
Securities sold under repurchase agreement and short-term borrowings and debt  1,317,970   21,672   2.16   1,102,044   30,411   3.64 
Long-term borrowings and debt, net (2)  1,382,571   29,834   2.84   1,337,621   43,297   4.27 
                         
TOTAL INTEREST BEARING LIABILITIES $5,487,090  $73,059   1.75% $5,163,699  $126,989   3.24%
                         
Non interest bearing liabilities and other liabilities $114,808          $118,927         
                         
TOTAL LIABILITIES  5,601,897           5,282,626         
                         
EQUITY  1,025,498           1,004,816         
                         
TOTAL LIABILITIES AND EQUITY $6,627,395          $6,287,442         
                         
NET INTEREST SPREAD          1.12%          1.19%
                         
NET INTEREST INCOME AND NET INTEREST MARGIN     $70,131   1.43%     $82,609   1.77%

 

 

(1)Gross of the allowance for losses relating to securities at amortized cost.
(2)Includes lease liabilities, net of prepaid commissions.

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

 

19

 

 

 

EXHIBIT VI

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

(In US$ thousand, except per share amounts and ratios)

 

  NINE MONTHS  FOR THE THREE MONTHS ENDED  NINE MONTHS 
  ENDED                 ENDED 
  SEP 30/20  SEP 30/20  JUN 30/20  MAR 31/20  DEC 31/19  SEP 30/19  SEP 30/19 
Net Interest Income:                            
Interest income $143,190  $39,694  $44,507  $58,990  $64,084  $65,514  $209,598 
Interest expense  (73,059)  (17,086)  (22,784)  (33,189)  (37,178)  (38,856)  (126,989)
                             
Net Interest Income  70,131   22,608   21,723   25,801   26,906   26,658   82,609 
                             
Other income (expense):                            
Fees and commissions, net  7,624   2,611   1,940   3,073   5,354   2,815   10,293 
(Loss) gain on financial instruments, net  (4,744)  (437)  (3,949)  (358)  (2,029)  (169)  650 
Other income, net  838   407   191   240   1,200   217   1,674 
                             
Total other income, net  3,718   2,581   (1,818)  2,955   4,525   2,863   12,617 
                             
Total revenues  73,849   25,189   19,905   28,756   31,431   29,521   95,226 
                             
Reversal (provision) for credit losses  1,153   (1,543)  2,607   89   1,935   (612)  (2,365)
Reversal (impairment) on non-financial assets  0   140   (140)  0   0   500   500 
Total operating expenses  (27,150)  (8,342)  (8,266)  (10,543)  (11,270)  (8,969)  (29,404)
                             
Profit for the period $47,852  $15,444  $14,106  $18,302  $22,096  $20,440  $63,957 
                             
SELECTED FINANCIAL DATA                            
                             
PER COMMON SHARE DATA                            
Basic earnings per share $1.21  $0.39  $0.36  $0.46  $0.56  $0.52  $1.62 
                             
PERFORMANCE RATIOS                            
Return on average assets  0.96%  0.95%  0.83%  1.12%  1.34%  1.34%  1.36%
Return on average equity  6.2%  6.0%  5.5%  7.2%  8.7%  8.0%  8.5%
Net interest margin  1.43%  1.42%  1.28%  1.59%  1.65%  1.77%  1.77%
Net interest spread  1.12%  1.19%  1.01%  1.17%  1.18%  1.19%  1.19%
Efficiency Ratio  36.8%  33.1%  41.5%  36.7%  35.9%  30.4%  30.9%
Operating expenses to total average assets  0.55%  0.52%  0.48%  0.65%  0.69%  0.59%  0.63%

 

20

 

 

 

  EXHIBIT VII

 

BUSINESS SEGMENT ANALYSIS

(In US$ thousand)

 

  FOR THE NINE MONTHS ENDED FOR THE THREE MONTHS ENDED
  SEP 30/20  SEP 30/19  SEP 30/20  JUN 30/20  SEP 30/19 
COMMERCIAL BUSINESS SEGMENT:                    
                     
Net interest income $66,887  $82,299  $21,201  $20,919  $26,936 
Other income (expense)  5,488   11,526   2,929   (790)  3,407 
Total revenues  72,375   93,825   24,130   20,129   30,343 
Reversal (provision) for credit losses  1,356   (2,679)  (1,430)  2,704   (934)
Reversal (impairment) on non-financial assets  0   500   140   (140)  500 
Operating expenses  (20,111)  (22,459)  (6,507)  (6,263)  (6,998)
Profit for the segment $53,620  $69,187  $16,333  $16,430  $22,911 
                     
Segment assets  4,657,429   5,596,531   4,657,429   4,489,329   5,596,531 
                     
TREASURY BUSINESS SEGMENT:                    
                     
Net interest income $3,244  $310  $1,407  $804  ($278)
Other income (expense)  (1,770)  1,091   (348)  (1,028)  (544)
Total revenues  1,474   1,401   1,059   (224)  (822)
(Provision) reversal for credit losses  (203)  314   (113)  (97)  322 
Operating expenses  (7,039)  (6,945)  (1,835)  (2,003)  (1,971)
Loss for the segment $(5,768) $5,230) $(889) $(2,324)  (2,471)
                     
Segment assets  1,647,046   1,075,342   1,647,046   2,130,220   1,075,342 
                     
TOTAL:                    
                     
Net interest income $70,131  $82,609  $22,608  $21,723  $26,658 
Other income (expense)  3,718   12,617   2,581   (1,818)  2,863 
Total revenues  73,849   95,226   25,189   19,905   29,521 
Reversal (provision) for credit losses  1,153   (2,365)  (1,543)  2,607   (612)
Reversal (impairment) on non-financial assets  0   500   140   (140)  500 
Operating expenses  (27,150)  (29,404)  (8,342)  (8,266)  (8,969)
                     
Profit for the period $47,852  $63,957  $15,444  $14,106  $20,440 
                     
Total segment assets  6,304,475   6,671,873   6,304,475   6,619,549   6,671,873 
Unallocated assets  6,719   9,319   6,719   7,676   9,319 
Total assets  6,311,194   6,681,192   6,311,194   6,627,225   6,681,192 

 

21

 

 

 

  EXHIBIT VIII

 

CREDIT PORTFOLIO

DISTRIBUTION BY COUNTRY

(In US$ million)

 

  AT THE END OF,       
  (A)  (B)  (C)       
  Sept. 30, 2020 June 30, 2020 Sept. 30, 2019  Change in Amount 
COUNTRY Amount  % of Total
Outstanding
  Amount  % of Total
Outstanding
  Amount  % of Total
Outstanding
  (A) - (B)  (A) - (C) 
ARGENTINA $146   3  $180   4  $263   4  ($34) ($117)
BOLIVIA  8   0   8   0   5   0   0   3 
BRAZIL  914   17   809   16   1,063   17   105   (149)
CHILE  510   10   479   10   661   10   31   (151)
COLOMBIA  732   14   805   16   844   13   (73)  (112)
COSTA RICA  178   3   221   4   317   5   (43)  (139)
DOMINICAN REPUBLIC  194   4   137   3   213   3   57   (19)
ECUADOR  174   3   191   4   416   7   (17)  (242)
EL SALVADOR  46   1   62   1   67   1   (16)  (21)
GUATEMALA  319   6   304   6   359   6   15   (40)
HONDURAS  62   1   108   2   113   2   (46)  (51)
JAMAICA  29   1   11   0   39   1   18   (10)
MEXICO  639   12   484   10   874   14   155   (235)
PANAMA  340   6   400   8   332   5   (60)  8 
PARAGUAY  108   2   96   2   104   2   12   4 
PERU  148   3   178   4   136   2   (30)  12 
TRINIDAD & TOBAGO  177   3   179   4   190   3   (2)  (13)
URUGUAY  27   1   0   0   0   0   27   27 
MULTILATERAL ORGANIZATIONS  57   1   0   0   0   0   57   57 
OTHER NON-LATAM (1)  512   10   359   7   306   5   153   206 
                                 
TOTAL CREDIT PORTFOLIO (2) $5,320   100% $5,011   100% $6,302   100% $309  ($982)
                                 
UNEARNED INTEREST AND DEFERRED FEES  (7)      (8)      (14)      1   7 
                                 
                                  
TOTAL CREDIT PORTFOLIO, NET OF UNEARNED INTEREST & DEFERRED FEES $5,313      $5,003      $6,288      $310  ($975)

 

(1)Risk in highly rated countries outside the Region, mostly in Europe and North America, related to transactions carried out in the Region.

 

(2)Includes gross loans (or the “Loan Portfolio”), securities at FVOCI and at amortized cost, gross of interest receivable and the allowance for expected credit losses, loan commitments and financial guarantee contracts, such as confirmed and stand-by letters of credit, and guarantees covering commercial risk; and other assets consisting of customers’ liabilities under acceptances.

 

22

 

 

 

EXHIBIT IX

 

COMMERCIAL PORTFOLIO

DISTRIBUTION BY COUNTRY

(In US$ million)

 

  AT THE END OF, 
  (A)  (B)  (C)       
  Sept. 30, 2020  June 30, 2020  Sept. 30, 2019  Change in Amount 
COUNTRY Amount  % of Total
Outstanding
  Amount  % of Total
Outstanding
  Amount  % of Total
Outstanding
  (A) - (B)  (A) - (C) 
ARGENTINA $146   3  $180   4  $263   4  $(34) $(117)
BOLIVIA  8   0   8   0   5   0   0   3 
BRAZIL  888   17   800   16   1,058   17   88   (170)
CHILE  504   10   474   10   656   11   30   (152)
COLOMBIA  703   14   776   16   829   13   (73)  (126)
COSTA RICA  178   3   221   4   317   5   (43)  (139)
DOMINICAN REPUBLIC  194   4   137   3   213   3   57   (19)
ECUADOR  174   3   191   4   416   7   (17)  (242)
EL SALVADOR  46   1   62   1   67   1   (16)  (21)
GUATEMALA  319   6   304   6   359   6   15   (40)
HONDURAS  62   1   108   2   113   2   (46)  (51)
JAMAICA  29   1   11   0   39   1   18   (10)
MEXICO  595   12   462   9   847   14   133   (252)
PANAMA  332   7   369   8   299   5   (37)  33 
PARAGUAY  108   2   96   2   104   2   12   4 
PERU  136   3   178   4   136   2   (42)  0 
TRINIDAD & TOBAGO  177   3   179   4   190   3   (2)  (13)
URUGUAY  27   1   0   0   0   0   27   27 
OTHER NON-LATAM (1)    461   9   359   7   306   5   102   155 
                                 
TOTAL COMMERCIAL PORTFOLIO (2) $5,087   100% $4,915   100% $6,217   100% $172  $(1,130)
                                 
UNEARNED INTEREST AND DEFERRED FEES  (7)      (8)      (14)      1   7 
                                 
TOTAL COMMERCIAL PORTFOLIO, NET OF UNEARNED INTEREST & DEFERRED FEES $5,080      $4,907      $6,203      $173  $(1,123)

 

(1)Risk in highly rated countries outside the Region, mostly in Europe and North America, related to transactions carried out in the Region.
(2)Includes gross loans (or the “Loan Portfolio”), loan commitments and financial guarantee contracts, such as confirmed and stand-by letters of credit, and guarantees covering commercial risk; and other assets consisting of customers’ liabilities under acceptances.

 

23

 

 

 

EXHIBIT X

 

INVESTMENT PORTFOLIO

DISTRIBUTION BY COUNTRY

(In US$ million)

 

  AT THE END OF, 
  (A)  (B)  (C)       
  Sept. 30, 2020  June 30, 2020  Sept. 30, 2019  Change in Amount 
COUNTRY Amount  % of Total
Outstanding
  Amount  % of Total
Outstanding
  Amount  % of Total
Outstanding
  (A) - (B)  (A) - (C) 
BRAZIL $26   11  $9   9  $5   5  $17  $21 
CHILE  6   3   5   5   5   6   1   1 
COLOMBIA  30   13   29   31   15   18   1   15 
MEXICO  44   19   22   23   27   32   22   17 
PANAMA  8   4   31   32   33   39   (23)  (25)
PERU  12   5   0   0   0   0   12   12 
MULTILATERAL ORGANIZATIONS  57   24   0   0   0   0   57   57 
OTHER NON-LATAM (1)    51   22   0   0   0   0   51   51 
                                 
TOTAL INVESTMENT PORTOFOLIO (2) $234   100% $96   100% $85   100% $138  $149 

 

(1)Risk in highly rated countries outside the Region.
(2)Includes securities at FVOCI and at amortized cost, gross of interest receivable and the allowance for losses.

 

24

 

 

 

 

EXHIBIT XI

 

LOAN DISBURSEMENTS

DISTRIBUTION BY COUNTRY

(In US$ million)

 

  YEAR-TO-DATE  QUARTERLY  Change in Amount 
  (A)  (B)  (C)  (D)  (E)          
COUNTRY 9M20  9M19  3Q20  2Q20  3Q19  (A) - (B)  (C) - (D)  (C) - (E) 
ARGENTINA $21  $193  $20  $1  $50  $(172) $19  $(30)
BOLIVIA  5   5   5   0   5   0   5   0 
BRAZIL  426   780   373   53   425   (354)  320   (52)
CHILE  198   896   116   82   358   (698)  34   (242)
COLOMBIA  143   995   94   49   315   (852)  45   (221)
COSTA RICA  66   320   60   6   112   (254)  54   (52)
DOMINICAN REPUBLIC  286   429   199   87   124   (143)  112   75 
ECUADOR  77   595   51   26   190   (518)  25   (139)
EL SALVADOR  25   97   20   5   41   (72)  15   (21)
GUATEMALA  180   330   111   69   60   (150)  42   51 
HONDURAS  45   132   0   45   52   (87)  (45)  (52)
JAMAICA  65   157   43   22   59   (92)  21   (16)
MEXICO  631   2,774   472   159   1,000   (2,143)  313   (528)
PANAMA  231   446   108   123   91   (215)  (15)  17 
PARAGUAY  68   101   25   43   10   (33)  (18)  15 
PERU  60   189   51   9   80   (129)  42   (29)
TRINIDAD & TOBAGO  5   126   0   5   0   (121)  (5)  0 
URUGUAY  0   25   0   0   0   (25)  0   0 
OTHER NON-LATAM (1)    255   153   167   88   82   102   79   85 
                                 
TOTAL LOAN DISBURSED (2) $2,787  $8,743  $1,915  $872  $3,054  $(5,956) $1,043  $(1,139)

 

(1)Origination in highly rated countries outside the Region, mostly in Europe and North America, related to transactions carried out in the Region.
(2)Total loan disbursed does not include loan commitments and financial guarantee contracts, nor other interest-earning assets such as investment securities.

 

25

 

 

 

 

 

 

26