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: July 20, 2018

 

  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 SECOND QUARTER 2018 OF $16.6 MILLION, OR $0.42 PER SHARE, AND

YEAR-TO-DATE 2018 OF $31.1 MILLION, OR $0.79 PER SHARE

 

PANAMA CITY, REPUBLIC OF PANAMA, July 20, 2018

 

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 second quarter (“2Q18”) and six months (“6M18”) ended June 30, 2018.

 

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)
  6M18   6M17   2Q18   1Q18   2Q17 
Key Income Statement Highlights                         
Net Interest Income ("NII")  $54.5   $63.8   $27.9   $26.6   $29.3 
Fees and commissions, net  $8.1   $8.3   $5.0   $3.1   $5.0 
Impairment loss from ECL on loans, loan commitments and financial guarantees contracts  $3.7   $8.5   $1.8   $2.0   $4.3 
Operating expenses (1)  $25.7   $23.8   $11.4   $14.3   $12.6 
Profit for the period  $31.1   $40.9   $16.6   $14.5   $17.5 
Profitability Ratios                         
Earnings per Share ("EPS") (2)  $0.79   $1.04   $0.42   $0.37   $0.44 
Return on Average Equity (“ROAE”) (3)   6.0%   8.1%   6.4%   5.6%   6.9%
Return on Average Assets (“ROAA”)   0.99%   1.23%   1.07%   0.91%   1.08%
Net Interest Margin ("NIM") (4)   1.75%   1.91%   1.81%   1.68%   1.80%
Net Interest Spread ("NIS") (5)   1.29%   1.58%   1.31%   1.26%   1.44%
Efficiency Ratio (6)   41%   33%   36%   47%   37%
Assets, Capital, Liquidity & Credit Quality                         
Commercial Portfolio (7)  $6,054   $5,840   $6,054   $5,731   $5,840 
Treasury Portfolio  $94   $79   $94   $85   $79 
Total assets  $6,331   $6,422   $6,331   $5,875   $6,422 
Total stockholders' equity  $1,047   $1,024   $1,047   $1,047   $1,024 
Market capitalization (8)  $975   $1,078   $975   $1,127   $1,078 
Tier 1 Basel III Capital Ratio (9)   20.0%   20.3%   20.0%   22.6%   20.3%
Total assets / Total stockholders' equity (times)   6.0    6.3    6.0    5.6    6.3 
Liquid Assets / Total Assets (10)   10.3%   12.0%   10.3%   9.3%   12.0%
NPL to Loan Portfolio (11)   0.98%   1.12%   0.98%   1.12%   1.12%
Total allowance for ECL to Commercial Portfolio (12)   1.44%   2.06%   1.44%   1.57%   2.06%
Total allowance for ECL to NPL (times) (12)   1.6    1.9    1.6    1.5    1.9 

 

2Q18 & 6M18 Highlights

 

·Profit for the 2Q18 increased 15% QoQ to $16.6 million. Net Interest Income (“NII”) increased 5% on higher Net Interest Margin (“NIM”) (+13 bps), and fee income increased 64% from syndicated transactions. 2Q18 and 6M18 profits decreased by 5% and 24% YoY, respectively, due to lower NII from tighter net lending spreads.

 

·The quarterly increase in NII to $27.9 million and NIM to 1.81%, reflected a net positive effect in the repricing of the Bank’s assets and liabilities in an increasing interest rate environment. The Bank maintained a narrow interest rate gap structure due to the short-term nature of its loan portfolio, and was able to pass along LIBOR-based market rates increases in funding to its asset base.

 

 

 

 

 

·NII of $54.5 million for 6M18 decreased 15% YoY on lower NIM (-16 bps YoY), due to tighter net lending spreads from shorter-tenor loan origination. Nevertheless, in 2Q18, the Bank originated $538 million in longer tenor loans (up from $79 million in 1Q18 and $66 million in 2Q17).

 

·Fee income for 2Q18 increased 64% QoQ to $5.0 million (stable YoY), from the closing of two structured syndicated transactions. Commissions from letters of credit and contingencies were stable QoQ and with a positive trend YoY.

 

·Efficiency improved to 36% in 2Q18 compared to 47% in 1Q18 and 37% in 2Q17. QoQ improvement came from lower operating expenses (-21% QoQ) and a 2% QoQ increase in total income. 6M18 Efficiency was 41% mostly due to the impact of annual variable compensation expense that was incurred in 1Q18.

 

·2Q18 Annualized Return on Average Equity (“ROAE”) was 6.4%, compared to 5.6% in 1Q18 and 6.9% in 2Q17. Year-to-date ROAE stood at 6.0% compared to 8.1% in 6M17. Tier 1 Basel III Capital Ratio remained solid at 20.0% at the end of 2Q18.

 

·2Q18 EoP Commercial Portfolio balances increased to $6.1 billion (+6% QoQ; +4% YoY), on stronger demand for credit in the Region and an increase in the Bank’s client base. Average portfolio balances were $5.9 billion in 6M18 (flat YoY).

 

·NPL balances were $54.3 million or 0.98% of total Loan Portfolio at the end of 2Q18, compared to NPL balances of $58.8 million and $62.6 million at 1Q18 and 2Q17, respectively, or 1.12%.

 

CEO’s Comments

 

Mr. N. Gabriel Tolchinsky, Bladex’s Chief Executive Officer, said, “Our second quarter results improved relative to the first quarter, with positive performance trends such as higher loan balances and fee-related income, as well as lower operating expenses. However, a more challenging environment is developing, particularly in the region’s three largest economies – Brazil, Mexico and Argentina. During the past several weeks we saw diminishing expectations for economic growth in Brazil due to the truckers’ strike, Argentina’s currency depreciating by more than 30% and Mexico’s election of a populist candidate. These challenges were exacerbated by more protectionist measures out of Washington with potential negative impact on trade and on the region’s economic growth. This environment, if it persists, may influence our perception of credit risk for our performing loan portfolio as well as recoveries for problem loans.”

 

Mr. Tolchinsky stated that “during the first half of 2Q2018, credit spreads didn’t reflect incremental risk and continued to be influenced by high US dollar liquidity in the region. In the second half of the quarter however, we experienced higher margins. In the coming quarters we will continue to extend the average tenor of our short-term originations and increase medium-term loan originations for good credit quality borrowers. At the same time, from an operational perspective, we will continue to focus on reducing costs and increasing productivity and efficiency.”

 

RESULTS BY BUSINESS SEGMENT

 

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.

 

 

 

 

 

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. The extensive array of products and services include the origination of bilateral, structured and syndicated credits, short- and medium-term loans, customers’ liabilities under acceptances, loan commitments and financial guarantee contracts, such as confirmed and stand-by letters of credit, and guarantees covering commercial risk. 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 the sale of loans generated through loan intermediation activities, such as sales in the secondary market and distribution in the primary market; (iv) loss on investment properties at fair value through profit or loss; (v) impairment loss (recovery) from ECL on loans, loan commitments and financial guarantee contracts, as well as impairment loss in other assets; and (vi) direct and allocated operating expenses.

 

As of June 30, 2018, Commercial Portfolio balances reached $6.1 billion, a 6% increase compared to $5.7 billion as of March 31, 2018 and a 4% increase compared to $5.8 billion as of June 30, 2017, on stronger demand for credit in the Region and an increase in the Bank’s client base. On an average basis, 6M18 and 2Q18 Commercial Portfolio balances reached $5.9 billion (flat YoY) and $5.8 billion (-3% QoQ, +2% YoY), respectively. As of June 30, 2018, trade finance transactions represented 54% of the Commercial Portfolio, down from 59% a quarter ago and 69% a year ago, but still focused on trade-related operations, while 81% of the Commercial Portfolio was scheduled to mature within a year, compared to 82% a quarter ago and 80% a year ago.

 

 

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

 

  2

 

 

 

 

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

 

(US$ million)  6M18   6M17   YoY (%)   2Q18   1Q18   2Q17   QoQ (%)   YoY (%) 
Commercial Business Segment:                                        
Net interest income  $55.0   $63.3    -13%  $27.8   $27.1   $30.0    3%   -7%
Fees and commissions, net   8.1    8.3    -2%   5.0    3.1    5.0    64%   0%
Net other income (loss), excluding fees and commissions (13)   (1.3)   0.4    -409%   (0.7)   (0.5)   0.2    -46%   -480%
Total income   61.8    72.0    -14%   32.1    29.7    35.2    8%   -9%
Less:                                        
Impairment loss from ECL on loans, loan commitments and financial guarantees contracts   3.7    8.5    -56%   1.8    2.0    4.3    -8%   -59%
Impairment loss in other assets   1.7    0.0    n.m.    1.7    0.0    0.0    n.m.    n.m. 
Operating expenses   19.6    18.5    6%   8.8    10.8    9.8    -18%   -10%
Profit for the period  $36.7   $45.1    -18%  $19.8   $16.9   $21.1    17%   -6%

 

"n.m." means not meaningful.

 

  3

 

 

 

2018 Second Quarter and Year-to-Date Commercial Business Segment’s results:

 

i.Net interest income increased 3% QoQ, reflecting a net positive effect in the repricing of the Bank’s loans at a similar pace than its funding base, in an increasing interest rate environment. YoY net interest income decreased due to tighter net lending spreads from shorter-tenor loan origination;

ii.Fee income for 2Q18 increased 64% QoQ to $5.0 million (stable YoY), from the closing of two structured syndicated transactions. Commissions from letters of credit and contingencies were stable QoQ and with a positive trend YoY;

iii.Impairment loss from ECL during 2Q18 mostly related due to higher loan portfolio EoP balances. In addition, in 2Q18 the Bank recorded a $1.7 million impairment loss in other assets and a $1.1 million loss on investment properties at fair value through profit or loss (included in net other income), both related to a previously restructured loan; and

iv.Lower quarterly allocated operating expenses mostly due to the impact of annual variable compensation expense incurred in 1Q18.

 

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 (cash and cash equivalents), and security instruments related to the investment management activities, consisting of securities at fair value through OCI and investment securities at amortized cost (“Investment Securities 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.

 

Profit from the Treasury Business Segment includes 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, gain (loss) per financial instruments at fair value through OCI, and other income), impairment loss from ECL on investment securities, and direct and allocated operating expenses.

 

Liquidity balances amounted to $0.6 billion as of June 30, 2018, of which 97% of the Bank’s liquid assets were held in deposits with the Federal Reserve Bank of New York, compared to $0.5 billion, or 94% of liquid assets, at the end of 1Q18, and compared to $0.8 billion, or 44% of liquid assets, at the end of 2Q17. As of these quarter-end dates, the liquid assets to total assets ratio were 10.3%, 9.3%, and 12%, respectively, while the liquid assets to total deposits ratio were 21.7%, 19.3%, and 23%, respectively.

 

The Investment Securities Portfolio balances totaled $94 million as of June 30, 2018, compared to $85 million as of March 31, 2018, and compared to $79 million as of June 30, 2017. As of these dates, the Investment Securities Portfolio accounted for 1% of total assets, respectively, mostly consisting of readily-quoted Latin American securities, and of which 77%, 87% and 94% represented sovereign or state-owned risk, respectively (refer to Exhibit X for a per-country risk distribution of the Investment Securities Portfolio).

 

  4

 

 

 

On the funding side, deposit balances increased 6% QoQ to reach $3.0 billion (-11% YoY), or 57% of total funding sources, at the end of 2Q18, compared to 59% and 63% of total funding sources at the end of 1Q18 and 2Q17, respectively. Deposits placed by central banks or designees (i.e.: Class A shareholders of the Bank) were up to 73% of total deposits as of June 30, 2018, compared to 70% and 71%, respectively. As of June 30, 2018, total borrowings and debt increased 17% QoQ and 12% YoY, mostly reflected on short-term borrowings to complement the deposit base on covering the Bank’s funding needs. Weighted average funding cost was 2.65% in 2Q18 (up 33 bps QoQ and 70 bps YoY) and 2.48% in 6M18 (up 65 bps YoY), mainly reflecting higher LIBOR-based market rates, partly compensated by lower funding spreads.

 

(US$ million)  6M18   6M17   YoY (%)   2Q18   1Q18   2Q17   QoQ (%)   YoY (%) 
Treasury Business Segment:                                        
Net interest income  $(0.5)  $0.5    -203%  $0.0   $(0.5)  $(0.7)   108%   106%
Net other income (loss) (13)   0.9    0.3    237%   (0.7)   1.6    (0.1)   -142%   -383%
Total income (loss)   0.5    0.7    -39%   (0.6)   1.1    (0.8)   -158%   23%
Less:                                        
Recovery from ECL on investment securities   (0.0)   (0.5)   90%   (0.0)   (0.0)   (0.0)   12%   -100%
Operating expenses   6.1    5.3    15%   2.6    3.6    2.8    -28%   -9%
Loss for the period  $(5.6)  $(4.1)   -37%  $(3.2)  $(2.4)  $(3.6)   -30%   12%

 

2018 Second Quarter and Year-to-Date Treasury Business Segment’s results were mainly impacted by:

i.Quarterly loss on derivative financial instruments at fair value used for hedging purposes (reported in net other income (loss)), mainly due to ineffectiveness;

ii.Year-to-date higher interest expense mostly attributable to the increase in funding rates on higher LIBOR-based market rates, partially compensated with lower funding spreads and volumes; and

iii.Lower quarterly allocated operating expenses mostly due to the impact of annual variable compensation expense incurred in 1Q18.

 

  5

 

 

 

NET INTEREST INCOME AND MARGINS

 

(US$ million, except percentages)  6M18   6M17   YoY (%)   2Q18   1Q18   2Q17   QoQ (%)   YoY (%) 
Net Interest Income                                        
Interest income  $119.4   $115.2    4%  $61.9   $57.4   $56.1    8%   10%
Interest expense   (64.9)   (51.5)   26%   (34.0)   (30.8)   (26.8)   10%   27%
Net Interest Income  $54.5   $63.8    -15%  $27.9   $26.6   $29.3    5%   -5%
                                         
Net Interest Margin   1.75%   1.91%   -9%   1.81%   1.68%   1.80%   8%   1%

 

2018 Second Quarter and Year-to-Date Net Interest Income and margins were mainly impacted by:

i.Net positive effect in the repricing of the Bank’s assets and liabilities in an increasing interest rate environment. The Bank maintained a narrow interest rate gap structure due to the short-term nature of its loan portfolio, and was able to pass along LIBOR-based market rates increases in its funding to its asset base, and

ii.Tighter net lending spreads from shorter-tenor loan origination. Nevertheless, in 2Q18, the Bank increased its longer tenor lending origination.

 

FEES AND OTHER INCOME

 

Fees and Other Income includes the fee income associated with letters of credit and other contingent credits, such as guarantees and credit commitments, as well as fee income derived from loan structuring and syndication activities, together with loan intermediation and distribution activities in the primary and secondary markets.

 

(US$ million)  6M18   6M17   YoY (%)   2Q18   1Q18   2Q17   QoQ (%)   YoY (%) 
Fees and Commissions, net  $8.1   $8.3    -2%  $5.0   $3.1   $5.0    64%   0%
Letters of credit and other contingent credits   6.1    5.7    6%   3.0    3.0    2.6    0%   15%
Loan structuring and distribution fees   2.0    2.6    -21%   2.0    0.0    2.4    n.m.    -15%
(Loss) gain on sale of loans   (0.6)   0.1    -735%   0.0    (0.6)   0.0    100%   -100%
Other income, net   0.6    0.6    6%   0.5    0.1    0.3    361%   108%
Fees and Other Income  $8.1   $9.0    -10%  $5.6   $2.5   $5.3    118%   5%

 

"n.m." means not meaningful.

 

2018 Second Quarter and Year-to-date Fees and Other Income were mainly impacted by:

i.QoQ higher syndication fees from the closing of two structured syndicated transactions during the 2Q18;
ii.YoY improved commissions from the letters of credit and other contingent credit business; and
iii.Year-to-date loss on a loan sold at a discount recorded in 1Q18 related to a previously executed structured transaction.

 

  6

 

 

 

PORTFOLIO QUALITY AND ALLOWANCE FOR ECL ON LOANS, LOAN COMMITMENTS AND FINANCIAL GUARANTEE CONTRACTS

 

(US$ million, except percentages)  30-Jun-18   31-Mar-18   31-Dec-17   30-Sep-17   30-Jun-17 
Allowance for ECL on loans                         
Balance at beginning of the period  $82.7   $81.3   $111.7   $115.6   $109.9 
Provisions (reversals)   7.6    1.4    (1.1)   0.4    5.7 
Write-offs, net of recoveries   (4.5)   0.0    (29.3)   (4.2)   0.0 
End of period balance  $85.7   $82.7   $81.3   $111.7   $115.6 
                          
Allowance for ECL on loan commitments and financial guarantee contracts:                         
Balance at beginning of the period  $7.4   $6.8   $4.8   $4.6   $5.9 
Provisions (reversals)   (5.8)   0.6    2.0    0.2    (1.3)
End of period balance  $1.7   $7.4   $6.8   $4.8   $4.6 
                          
Total allowance for ECL (allowance for ECL on loans plus allowance for ECL on loan commitments and financial guarantee contracts)  $87.4   $90.1   $88.1   $116.6   $120.2 
                          
Total allowance for ECL to Commercial Portfolio   1.44%   1.57%   1.47%   2.04%   2.06%
NPL to gross loan portfolio   0.98%   1.12%   1.07%   1.20%   1.12%
Total allowance for ECL to NPL (times)   1.6    1.5    1.5    1.8    1.9 

 

The total allowance for ECL amounted to $87.4 million at June 30, 2018, representing 1.44% of the total Commercial Portfolio, compared to $90.1 million and 1.57%, respectively, as of March 31, 2018, and compared to $120.2 million and 2.06%, respectively, as of June 30, 2017. The $2.7 million QoQ decrease was mainly associated to improved letters of credit portfolio mix, partially offset by increased loan loss provisions associated to higher EoP portfolio balances, net of a $4.5 million write-off against existing individually allocated reserves.

 

As of June 30, 2018, NPL balances were $54.3 million, or 0.98% of total Loan Portfolio balances, compared to $58.8 million and $62.6 million at the end of March 31, 2018 and June 30, 2017, respectively, or 1.12% of Loan Portfolio balances at the end of both corresponding quarters.

 

  7

 

 

 

OPERATING EXPENSES

 

Operating expenses reflect the following line items of the consolidated statements of profit or loss:

 

(US$ million, except percentages)  6M18   6M17   YoY (%)   2Q18   1Q18   2Q17   QoQ (%)   YoY (%) 
Operating expenses                                        
Salaries and other employee expenses   16.2    14.5    12%   6.1    10.1    7.8    -40%   -22%
Depreciation of equipment and leasehold improvements   0.6    0.8    -18%   0.3    0.3    0.4    -1%   -10%
Amortization of intangible assets   0.7    0.4    78%   0.3    0.3    0.2    0%   89%
Other expenses   8.2    8.2    0%   4.6    3.6    4.3    30%   8%
Total Operating Expenses  $25.7   $23.8    8%  $11.4   $14.3   $12.6    -21%   -10%
                                         
Efficiency Ratio   41%   33%   26%   36%   47%   37%   -22%   -1%

 

Quarterly and year-to-date salaries and other employee expenses were impacted by annual variable compensation expense that was incurred in 1Q18. Excluding the annual variable compensation, operating expenses remained relatively stable reflecting the Bank’s effort to improve efficiency and productivity.

 

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-Jun-18   31-Mar-18   30-Jun-17   QoQ (%)   YoY (%) 
Tier 1 Capital (9)  $1,048   $1,047   $1,025    0%   2%
Risk-Weighted Assets Basel III (9)  $5,233   $4,623   $5,048    13%   4%
Tier 1 Basel III Capital Ratio (9)   20.0%   22.6%   20.3%   -12%   -1%
Total stockholders’ equity  $1,047   $1,047   $1,024    0%   2%
Total stockholders’ equity to total assets   16.5%   17.8%   15.9%   -7%   4%
Accumulated other comprehensive income (loss) ("OCI")  $2   $4   $(3)   -42%   161%
Total assets / Total stockholders' equity (times)   6.0    5.6    6.3    8%   -4%
Shares outstanding (in thousand)   39,638    39,546    39,362    0%   1%

 

The Bank’s equity consists entirely of issued and fully paid ordinary common stock, with 39.6 million common shares outstanding as of June 30, 2018. At the same date, the Bank’s ratio of total assets to stockholders’ equity was 6.0x, with a Tier 1 Basel III Capital Ratio that remained solid at 20.0%.

 

  8

 

 

 

RECENT EVENTS

 

§Quarterly dividend payment: The Bank’s Board of Directors approved a quarterly common dividend of $0.385 per share corresponding to the second quarter 2018. The dividend will be paid on August 15, 2018, to stockholders registered as of July 31, 2018.

 

§Ratings updates: On July 12, 2018, Fitch Ratings affirmed the Bank’s long- and short-term foreign currency Issuer Default Rating at ‘BBB+/F2’ respectively; with a “Stable” Outlook.

 

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)Total operating expenses includes the following expenses 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, and other expenses.

 

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

 

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

 

4)NIM refers to net interest margin which constitutes to net interest income divided by the average balance of interest-earning assets.

 

5)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.

 

6)Efficiency Ratio refers to consolidated operating expenses as a percentage of total income.

 

7)The Bank’s “Commercial Portfolio” 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.

 

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. Liquidity ratio refers to liquid assets as a percentage of total assets.

 

11)Loan Portfolio refers to loans, gross of the allowance for expected credit losses and unearned interest and deferred fess.

 

12)Total allowance for ECL refers to allowance for expected credit losses on loans plus allowance for expected credit losses on loan commitments and financial guarantee contracts.

 

  9

 

 

 

13)Net other income (loss) by Business Segment consists of the following items:

 

-Commercial Business Segment: gain on sale of loans, loss on investment properties at fair value through profit or loss, and net related other income.

 

-Treasury Business Segment: net other income from derivative financial instruments and foreign currency exchange, gain (loss) per financial instruments at fair value through profit or loss, gain (loss) per financial instruments at fair value through OCI, and net related other income.

 

SAFE HARBOR STATEMENT

 

This press release contains forward-looking statements of expected future developments. The Bank wishes to ensure that such statements are accompanied by meaningful cautionary statements pursuant to the safe harbor established by the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this press release refer to the growth of the credit portfolio, including the trade portfolio, the increase in the number of the Bank’s corporate clients, the positive trend of lending spreads, the increase in activities engaged in by the Bank that are derived from the Bank’s client base, anticipated operating profit and return on equity in future periods, including income derived from the Treasury Business Segment, the improvement in the financial and performance strength of the Bank and the progress the Bank is making. These forward-looking statements reflect the expectations of the Bank’s management and are based on currently available data; however, actual experience with respect to these factors is 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 anticipated growth of 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.

 

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, Peru, and the United States of America, supporting the regional expansion and servicing its customer base, which includes financial institutions and corporations.

 

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 Friday, July 20, 2018 at 11:00 a.m. New York City time (Eastern Time). For those interested in participating, please dial (800) 311-9401 in the United States or, if outside the United States, (334) 323-7224. Participants should use conference ID# 8034, 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.

 

  10

 

 

 

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: 35690080.

 

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

 

  11

 

 

 

EXHIBIT I

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

       AT THE END OF,                     
   (A)   (B)   (C)   (A) - (B)       (A) - (C)     
   June 30, 2018   March 31, 2018   June 30, 2017   CHANGE   %   CHANGE   % 
   (In US$ thousand)                 
                             
ASSETS:                                   
Cash and cash equivalents  $683,523   $560,276   $819,390   $123,247    22%  $(135,867)   (17)%
Financial Instruments:                                   
At fair value through profit or loss   0    0    13    0    n.m.(*)   (13)   (100)
At fair value through OCI   21,076    24,313    16,435    (3,237)   (13)   4,641    28 
Securities at amortized cost, net   78,129    68,112    62,791    10,017    15    15,338    24 
Loans   5,555,254    5,225,324    5,570,315    329,930    6    (15,061)   (0)
Less:                                   
Allowance for expected credit losses   85,711    82,670    115,607    3,041    4    (29,896)   (26)
Unearned interest and deferred fees   6,660    5,927    6,723    733    12    (63)   (1)
Loans, net   5,462,883    5,136,727    5,447,985    326,156    6    14,898    0 
                                    
Derivative financial instruments used for hedging – receivable   6,379    14,682    6,497    (8,303)   (57)   (118)   (2)
                                    
Investment properties, net   3,971    0    0    3,971    n.m.(*)   3,971    n.m.(*)
                                    
Property and equipment, net   6,958    7,120    8,044    (162)   (2)   (1,086)   (14)
Intangibles, net   4,790    5,115    2,534    (325)   (6)   2,256    89 
                                    
Other assets:                                   
Customers' liabilities under acceptances   13,656    4,940    5,194    8,716    176    8,462    163 
Accrued interest receivable   38,379    34,725    33,466    3,654    11    4,913    15 
Other assets   11,330    19,035    19,813    (7,705)   (40)   (8,483)   (43)
Total of other assets   63,365    58,700    58,473    4,665    8    4,892    8 
                                    
TOTAL ASSETS  $6,331,074   $5,875,045   $6,422,162   $456,029    8%  $(91,088)   (1)%
                                    
LIABILITIES AND STOCKHOLDERS' EQUITY:                                   
Deposits:                                   
Demand  $20,001   $42,001   $126,977   ($22,000)   (52)%  $(106,976)   (84)%
Time   2,969,001    2,772,214    3,226,578    196,787    7    (257,577)   (8)
Total deposits   2,989,002    2,814,215    3,353,555    174,787    6    (364,553)   (11)
                                    
Derivative financial instruments used for hedging – payable   30,064    12,469    33,946    17,595    141    (3,882)   (11)
                                    
Financial liabilities at fair value through profit or loss   0    0    27    0    n.m.(*)   (27)   (100)
Securities sold under repurchase agreement   0    49,316    0    (49,316)   (100)   0    n.m.(*)
Short-term borrowings and debt   1,048,470    776,967    487,056    271,503    35    561,414    115 
Long-term borrowings and debt, net   1,169,672    1,123,908    1,485,707    45,764    4    (316,035)   (21)
                                    
Other liabilities:                                   
Acceptances outstanding   13,656    4,940    5,194    8,716    176    8,462    163 
Accrued interest payable   15,953    17,005    12,953    (1,052)   (6)   3,000    23 
Allowance for expected credit losses on loan commitments and financial guarantee contracts   1,652    7,423    4,615    (5,771)   (78)   (2,963)   (64)
Other liabilities   15,226    22,066    14,969    (6,840)   (31)   257    2 
Total other liabilities   46,487    51,434    37,731    (4,947)   (10)   8,756    23 
                                    
TOTAL LIABILITIES  $5,283,695   $4,828,309   $5,398,022   $455,386    9%  $(114,327)   (2)%
                                    
STOCKHOLDERS' EQUITY:                                   
Common stock   279,980    279,980    279,980    0    0%   0    0%
Treasury stock   (58,635)   (60,671)   (64,733)   2,036    (3)   6,098    (9)
Additional paid-in capital in excess of assigned value of common stock   119,059    120,319    118,899    (1,260)   (1)   160    0 
Capital reserves   95,210    95,210    95,210    0    0    0    0 
Dynamic provision   108,756    108,756    107,392    0    0    1,364    1 
Regulatory credit reserve   15,201    18,748    7,123    (3,547)   (19)   8,078    113 
Retained earnings   485,724    480,778    483,702    4,946    1    2,022    0 
Accumulated other comprehensive income (loss)   2,084    3,616    (3,433)   (1,532)   (42)   5,517    (161)
                                    
TOTAL STOCKHOLDERS' EQUITY  $1,047,379   $1,046,736   $1,024,140   $643    0%  $23,239    2%
                                    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $6,331,074   $5,875,045   $6,422,162   $456,029    8%  $(91,088)   (1)%

 

(*)  "n.m." means not meaningful.

 

  12

 

 

 

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)     
   June 30, 2018   March 31, 2018   June 30, 2017   CHANGE   %   CHANGE   % 
                     
NET INTEREST INCOME:                                   
Interest income  $61,919   $57,437   $56,099   $4,482    8%  $5,820    10%
Interest expense   (34,030)   (30,847)   (26,754)   (3,183)   10    (7,276)   27 
                                    
NET INTEREST INCOME   27,889    26,590    29,345    1,299    5    (1,456)   (5)
                                    
OTHER INCOME:                                   
Fees and commissions, net   5,032    3,059    5,013    1,973    64    19    0 
(Loss) gain on derivative financial instruments and foreign currency exchange   (516)   1,666    473    (2,182)   (131)   (989)   (209)
Loss per financial instrument at fair value through profit or loss   (280)   (62)   (649)   (218)   352    369    (57)
Loss per financial instrument at fair value through OCI   0    0    (35)   0    n.m.(*)   35    (100)
Gain (loss) on sale of loans   0    (625)   12    625    (100)   (12)   (100)
Loss on investment properties at fair value through profit or loss   (1,148)   0    0    (1,148)   n.m.(*)   (1,148)   n.m.(*)
Other income, net   530    115    255    415    361    275    108 
NET OTHER INCOME   3,618    4,153    5,069    (535)   (13)   (1,451)   (29)
                                    
TOTAL INCOME   31,507    30,743    34,414    764    2    (2,907)   (8)
                                    
EXPENSES:                                   
Impairment loss from expected credit losses on loans   7,564    1,377    5,666    6,187    449    1,898    33 
Recovery from expected credit losses on investment securities   (22)   (25)   (11)   3    (12)   (11)   100 
(Recovery) impairment loss from expected credit losses on loan commitments and financial guarantee contracts   (5,771)   579    (1,324)   (6,350)   (1,097)   (4,447)   336 
Impairment loss in other assets   1,740    0    0    1,740    n.m.(*)   1,740    n.m.(*)
OPERATING EXPENSES:                                   
Salaries and other employee expenses   6,083    10,094    7,768    (4,011)   (40)   (1,685)   (22)
Depreciation of equipment and leasehold improvements   319    323    356    (4)   (1)   (37)   (10)
Amortization of intangible assets   337    338    178    (1)   (0)   159    89 
Other expenses   4,631    3,559    4,300    1,072    30    331    8 
TOTAL OPERATING EXPENSES   11,370    14,314    12,602    (2,944)   (21)   (1,232)   (10)
TOTAL EXPENSES   14,881    16,245    16,933    (1,364)   (8)   (2,052)   (12)
                                    
PROFIT FOR THE PERIOD  $16,626   $14,498   $17,481   $2,128    15%  $(855)   (5)%
                                    
PER COMMON SHARE DATA:                                   
Basic earnings per share  $0.42   $0.37   $0.44                     
Diluted earnings per share  $0.42   $0.37   $0.44                     
Book value (period average)  $26.34   $26.45   $25.95                     
Book value (period end)  $26.42   $26.47   $26.02                     
                                    
Weighted average basic shares   39,626    39,466    39,317                     
Weighted average diluted shares   39,651    39,492    39,347                     
Basic shares period end   39,638    39,546    39,362                     
                                    
PERFORMANCE RATIOS:                                   
Return on average assets   1.07%   0.91%   1.08%                    
Return on average stockholders' equity   6.4%   5.6%   6.9%                    
Net interest margin   1.81%   1.68%   1.80%                    
Net interest spread   1.31%   1.26%   1.44%                    
Efficiency Ratio   36.1%   46.6%   36.6%                    
Operating expenses to total average assets   0.73%   0.90%   0.78%                    

 

(*)  "n.m." means not meaningful.

 

  13

 

 

 

EXHIBIT III

 

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

 

   FOR THE SIX MONTHS ENDED         
   (A)   (B)   (A) - (B)     
   June 30, 2018   June 30, 2017   CHANGE   % 
   (In US$ thousand)         
NET INTEREST INCOME:                    
Interest income  $119,356   $115,230   $4,126    4%
Interest expense   (64,877)   (51,453)   (13,424)   26 
                     
NET INTEREST INCOME   54,479    63,777    (9,298)   (15)
                     
OTHER INCOME:                    
Fees and commissions, net   8,091    8,282    (191)   (2)
Gain on derivative financial instruments and foreign currency exchange   1,150    604    546    90 
Loss per financial instrument at fair value through profit or loss   (342)   (709)   367    (52)
Gain per financial instrument at fair value through OCI   0    79    (79)   (100)
(Loss) gain on sale of loans   (625)   98    (723)   (738)
Loss on investment properties at fair value through profit or loss   (1,148)   0    (1,148)   n.m.(*)
Other income, net   645    609    36    6 
NET OTHER INCOME   7,771    8,963    (1,192)   (13)
                     
TOTAL INCOME   62,250    72,740    (10,490)   (14)
                     
EXPENSES:                    
Impairment loss from expected credit losses on loans   8,941    9,619    (678)   (7)
Recovery from expected credit losses on investment securities   (47)   (465)   418    (90)
Recovery from expected credit losses on loan commitments and financial guarantee contracts   (5,192)   (1,161)   (4,031)   347 
Impairment loss in other assets   1,740    0    1,740    n.m.(*)
OPERATING EXPENSES:                    
Salaries and other employee expenses   16,177    14,464    1,713    12 
Depreciation of equipment and leasehold improvements   642    787    (145)   (18)
Amortization of intangible assets   675    379    296    78 
Other expenses   8,190    8,178    12    0 
TOTAL OPERATING EXPENSES   25,684    23,808    1,876    8 
TOTAL EXPENSES   31,126    31,801    (675)   (2)
                     
PROFIT FOR THE PERIOD  $31,124   $40,939   $(9,815)   (24)%
                     
PER COMMON SHARE DATA:                    
Basic earnings per share  $0.79   $1.04           
Diluted earnings per share  $0.79   $1.04           
Book value (period average)  $26.40   $25.89           
Book value (period end)  $26.42   $26.02           
                     
Weighted average basic shares   39,547    39,252           
Weighted average diluted shares   39,572    39,280           
Basic shares period end   39,638    39,362           
                     
PERFORMANCE RATIOS:                    
Return on average assets   0.99%   1.23%          
Return on average stockholders' equity   6.0%   8.1%          
Net interest margin   1.75%   1.91%          
Net interest spread   1.29%   1.58%          
Efficiency Ratio   41.3%   32.7%          
Operating expenses to total average assets   0.82%   0.72%          

 

(*)    "n.m." means not meaningful.

 

  14

 

 

 

EXHIBIT IV

 

CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES

 

   FOR THE THREE MONTHS ENDED 
   June 30, 2018   March 31, 2018   June 30, 2017 
   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  $689,288    3,225    1.85%  $752,628   $2,939    1.56%  $1,077,011   $2,822    1.04%
Securities at fair value through OCI   16,291    143    3.47    16,652    123    2.95    17,776    126    2.79 
Securities at amortized cost (1)   71,467    521    2.88    68,835    485    2.82    64,000    441    2.73 
Loans, net of unearned interest   5,398,233    58,030    4.25    5,576,646    53,890    3.87    5,385,901    52,710    3.87 
                                              
TOTAL INTEREST EARNING ASSETS  $6,175,279   $61,919    3.97%  $6,414,761   $57,437    3.58%  $6,544,688   $56,099    3.39%
                                              
Allowance for expected credit losses on loans   (86,664)             (81,474)             (110,357)          
Non interest earning assets   132,226              114,985              83,297           
                                              
TOTAL ASSETS  $6,220,841             $6,448,272             $6,517,628           
                                              
                                              
INTEREST BEARING LIABILITIES                                             
Deposits   3,130,345   $16,388    2.07%  $3,223,641   $14,004    1.74%  $3,253,009   $11,593    1.41%
Trading liabilities   11    0    0.00    1    0    0.00    51    0    0.00 
Securities sold under repurchase agreement and short-term borrowings and debt   820,052    6,293    3.04    984,930    6,575    2.67    647,524    2,487    1.52 
Long-term borrowings and debt, net (2)   1,121,591    11,349    4.00    1,111,615    10,268    3.69    1,517,279    12,674    3.30 
                                              
TOTAL INTEREST BEARING LIABILITIES  $5,071,999   $34,030    2.65%  $5,320,187   $30,847    2.32%  $5,417,863   $26,754    1.95%
                                              
Non interest bearing liabilities and other liabilities  $104,967             $84,258             $79,595           
                                              
TOTAL LIABILITIES   5,176,966              5,404,444              5,497,457           
                                              
STOCKHOLDERS' EQUITY   1,043,875              1,043,827              1,020,170           
                                              
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $6,220,841             $6,448,272             $6,517,628           
                                              
NET INTEREST SPREAD             1.31%             1.26%             1.44%
                                              
NET INTEREST INCOME AND NET INTEREST MARGIN       $27,889    1.81%       $26,590    1.68%       $29,345    1.80%

 

(1)Gross of the allowance for expected credit losses relating to securities at amortized cost.
(2)Net of prepaid commissions.

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

 

  15

 

 

 

EXHIBIT V

 

CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES

 

   FOR THE SIX MONTHS ENDED 
   June 30, 2018   June 30, 2017 
   AVERAGE       AVG.   AVERAGE       AVG. 
   BALANCE   INTEREST   RATE   BALANCE   INTEREST   RATE 
   (In US$ thousand) 
                         
INTEREST EARNING ASSETS                              
Cash and cash equivalents  $720,783   $6,164    1.70%  $1,054,992   $4,823    0.91%
Securities at fair value through OCI   16,471    266    3.21    21,592    296    2.72 
Securities at amortized cost (1)   70,158    1,006    2.85    67,315    974    2.88 
Loans, net of unearned interest   5,486,946    111,920    4.06    5,575,774    109,137    3.89 
                               
TOTAL INTEREST EARNING ASSETS  $6,294,358   $119,356    3.77%  $6,719,673   $115,230    3.41%
                               
Allowance for expected credit losses on loans   (84,083)             (108,282)          
Non interest earning assets   123,653              78,658           
                               
TOTAL ASSETS  $6,333,928             $6,690,048           
                               
                               
INTEREST BEARING LIABILITIES                              
Deposits  $3,176,735   $30,392    1.90%  $3,095,271   $17,800    1.14%
Trading liabilities   6    0    0.00    40    0    0.00 
Securities sold under repurchase agreement and short-term borrowings and debt   902,039    12,868    2.84    839,856    6,055    1.43 
Long-term borrowings and debt, net (2)   1,116,627    21,617    3.85    1,652,208    27,598    3.32 
                               
TOTAL INTEREST BEARING LIABILITIES  $5,195,407   $64,877    2.48%  $5,587,375   $51,453    1.83%
                               
Non interest bearing liabilities and other liabilities  $94,670             $86,517           
                               
TOTAL LIABILITIES   5,290,077              5,673,892           
                               
STOCKHOLDERS' EQUITY   1,043,851              1,016,156           
                               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $6,333,928             $6,690,048           
                               
NET INTEREST SPREAD             1.29%             1.58%
                               
NET INTEREST INCOME AND NET INTEREST MARGIN       $54,479    1.75%       $63,777    1.91%

 

(1)Gross of the allowance for expected credit losses relating to securities at amortized cost.
(2)Net of prepaid commissions.

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

 

  16

 

 

 

EXHIBIT VI

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

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

 

   SIX MONTHS   FOR THE THREE MONTHS ENDED   SIX MONTHS 
   ENDED                       ENDED 
   JUN 30/18   JUN 30/18   MAR 31/18   DEC 31/17   SEP 30/17   JUN 30/17   JUN 30/17 
                             
NET INTEREST INCOME:                                   
Interest income  $119,356   $61,919   $57,437   $55,799   $55,050   $56,099   $115,230 
Interest expense   (64,877)   (34,030)   (30,847)   (27,658)   (27,153)   (26,754)   (51,453)
                                    
NET INTEREST INCOME   54,479    27,889    26,590    28,141    27,897    29,345    63,777 
                                    
                                    
OTHER INCOME (LOSS):                                   
Fees and commissions, net   8,091    5,032    3,059    5,666    3,566    5,013    8,282 
Gain (loss) on derivative financial instruments and foreign currency exchange   1,150    (516)   1,666    (425)   (616)   473    604 
(Loss) Gain per financial instrument at fair value through profit or loss   (342)   (280)   (62)   (26)   3    (649)   (709)
Gain (Loss) per financial instrument at fair value through OCI   0    0    0    170    0    (35)   79 
(Loss) gain on sale of loans   (625)   0    (625)   68    15    12    98 
Loss on investment properties at fair value through profit or loss   (1,148)   (1,148)   0    0    0    0    0 
Other income, net   645    530    115    913    201    255    609 
                                    
NET OTHER INCOME   7,771    3,618    4,153    6,366    3,169    5,069    8,963 
                                    
                                    
TOTAL INCOME   62,250    31,507    30,743    34,507    31,066    34,414    72,740 
                                    
Impairment loss (recovery) from expected credit losses on loans   8,941    7,564    1,377    (1,122)   362    5,666    9,619 
(Recovery) Impairment loss from expected credit losses on investment securities   (47)   (22)   (25)   (99)   75    (11)   (465)
(Recovery) impairment loss from expected credit losses on loan commitments and financial guarantee contracts   (5,192)   (5,771)   579    2,015    215    (1,324)   (1,161)
Impairment loss in other assets   1,740    1,740    0    0    0    0    0 
Operating expenses   25,684    11,370    14,314    13,114    9,953    12,602    23,808 
PROFIT FOR THE PERIOD  $31,124   $16,626   $14,498   $20,599   $20,461   $17,481   $40,939 
                                    
SELECTED FINANCIAL DATA                                   
                                    
PER COMMON SHARE DATA                                   
Basic earnings per share  $0.79   $0.42   $0.37   $0.52   $0.52   $0.44   $1.04 
                                    
PERFORMANCE RATIOS                                   
Return on average assets   0.99%   1.07%   0.91%   1.31%   1.30%   1.08%   1.23%
Return on average stockholders' equity   6.0%   6.4%   5.6%   7.9%   7.9%   6.9%   8.1%
Net interest margin   1.75%   1.81%   1.68%   1.78%   1.76%   1.80%   1.91%
Net interest spread   1.29%   1.31%   1.26%   1.38%   1.37%   1.44%   1.58%
Efficiency Ratio   41.3%   34.8%   46.6%   38.0%   32.0%   36.6%   32.7%
Operating expenses to total average assets   0.82%   0.73%   0.90%   0.83%   0.63%   0.78%   0.72%

 

  17

 

 

 

EXHIBIT VII

 

BUSINESS SEGMENT ANALYSIS

(In US$ thousand)

 

   FOR THE SIX MONTHS ENDED   FOR THE THREE MONTHS ENDED 
   JUN 30/18   JUN 30/17   JUN 30/18   MAR 31/18   JUN 30/17 
                     
COMMERCIAL BUSINESS SEGMENT:                         
                          
Net interest income (1)  $54,957   $63,315   $27,847   $27,110   $30,024 
Net other income (2)   6,840    8,687    4,289    2,551    5,208 
Total income   61,797    72,002    32,136    29,661    35,232 
Less:                         
Impairment loss from expected credit losses on loans, loan commitments and financial guarantee contracts   3,749    8,458    1,793    1,956    4,342 
Impairment loss in other assets   1,740    0    1,740    0    0 
Operating expenses (3)   19,567    18,494    8,806    10,761    9,794 
                          
PROFIT FOR THE PERIOD  $36,741   $45,050   $19,797   $16,944   $21,096 
                          
Average interest-earning assets (4)   5,486,946    5,575,774    5,398,233    5,576,646    5,385,901 
End-of-period interest-earning assets (4)   5,548,594    5,563,592    5,548,594    5,219,397    5,563,592 
                          
TREASURY BUSINESS SEGMENT:                         
                          
Net interest income (1)  $(478)  $462   $42   $(520)  $(679)
Net other income (loss) (2)   931    276    (671)   1,602    (139)
Total income (loss)   453    738    (629)   1,082    (818)
Less:                         
Recovery from expected credit losses on investment securities   (47)   (465)   (22)   (25)   (11)
Operating expenses (3)   6,117    5,314    2,564    3,553    2,808 
                          
LOSS FOR THE PERIOD  $(5,617)  $(4,111)  $(3,171)  $(2,446)  $(3,615)
                          
Average interest-earning assets (5)   807,412    1,143,899    777,046    838,115    1,158,787 
End-of-period interest-earning assets (5)   777,912    898,777    777,912    645,025    898,777 
                          
COMBINED BUSINESS SEGMENT TOTAL:                         
                          
Net interest income (1)  $54,479   $63,777   $27,889   $26,590   $29,345 
Net other income (2)   7,771    8,963    3,618    4,153    5,069 
Total income   62,250    72,740    31,507    30,743    34,414 
Less:                         
Impairment loss from expected credit losses on loans, loan commitments and financial guarantee contracts   3,749    8,458    1,793    1,956    4,342 
Recovery from expected credit losses on investment securities   (47)   (465)   (22)   (25)   (11)
Impairment loss in other assets   1,740    0    1,740    0    0 
Operating expenses (3)   25,684    23,808    11,370    14,314    12,602 
PROFIT FOR THE PERIOD  $31,124   $40,939   $16,626   $14,498   $17,481 
                          
Average interest-earning assets   6,294,358    6,719,673    6,175,279    6,414,761    6,544,688 
End-of-period interest-earning assets   6,326,506    6,462,369    6,326,506    5,864,422    6,462,369 

 

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.

(1) Interest income on interest-earning assets, net of allocated cost of funds.

(2) Net other income (loss) by Business Segment consists of the following items:

- Commercial Business Segment: net fees and commissions, loss on investment properties at fair value through profit or loss, gain on sale of loans, and net related other income.

- Treasury Business Segment: net other income from derivative financial instruments and foreign currency exchange, gain (loss) per financial instruments at fair value through profit or loss, gain (loss) per financial instruments at fair value through OCI, and net related other income.

(3) Operating Expenses allocation methodology assigns overhead expenses based on resource consumption by business segment. Total operating expenses includes the following 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, and other expenses.

(4) Includes loans, net of unearned interest and deferred fees.

(5) Includes cash and cash equivalents, financial instruments at fair value through profit or loss, securities at fair value through OCI and securities at amortized cost, gross of the allowance for expected credit losses.

 

  18

 

 

 

EXHIBIT VIII

 

CREDIT PORTFOLIO

DISTRIBUTION BY COUNTRY

(In US$ million)

 

   AT THE END OF, 
   (A)   (B)   (C)         
   June 30, 2018   March 31, 2018   June 30, 2017   Change in Amount 
COUNTRY (*)  Amount   % of Total
Outstanding
   Amount   % of Total
Outstanding
   Amount   % of Total
Outstanding
   (A) - (B)   (A) - (C) 
                                 
ARGENTINA  $555    9   $353    6   $196    3   $202   $359 
BELGIUM   13    0    10    0    13    0    3    0 
BOLIVIA   10    0    5    0    0    0    5    10 
BRAZIL   1,049    17    916    16    1,046    18    133    3 
CHILE   193    3    253    4    226    4    (60)   (33)
COLOMBIA   773    13    780    13    695    12    (7)   78 
COSTA RICA   367    6    445    8    360    6    (78)   7 
DOMINICAN REPUBLIC   270    4    200    3    79    1    70    191 
ECUADOR   383    6    320    6    267    5    63    116 
EL SALVADOR   31    0    42    1    88    1    (11)   (57)
GERMANY   28    0    33    1    45    1    (5)   (17)
GUATEMALA   300    5    255    4    275    5    45    25 
HONDURAS   79    1    50    1    52    1    29    27 
JAMAICA   57    1    22    0    60    1    35    (3)
MEXICO   906    15    869    15    1,069    18    37    (163)
NICARAGUA   25    0    24    0    42    1    1    (17)
PANAMA   505    8    437    8    479    8    68    26 
PARAGUAY   69    1    81    1    57    1    (12)   12 
PERU   233    4    313    5    510    9    (80)   (277)
SINGAPORE   43    1    47    1    33    1    (4)   10 
SWITZERLAND   1    0    100    2    0    0    (99)   1 
TRINIDAD & TOBAGO   183    3    184    3    199    3    (1)   (16)
UNITED STATES   0    0    20    0    73    1    (20)   (73)
URUGUAY   58    1    39    1    37    1    19    21 
OTHER   17    0    18    0    18    0    (1)   (1)
                                         
TOTAL CREDIT PORTFOLIO (1)  $6,148    100%  $5,816    100%  $5,919    100%  $332   $229 
                                         
UNEARNED INTEREST AND DEFERRED FEES   (7)        (6)        (7)        (1)   0 
                                         
TOTAL CREDIT PORTFOLIO, NET OF UNEARNED                                        
INTEREST & DEFERRED FEES  $6,141        $5,810        $5,912        $331   $229 

 

(1)Includes gross loans (or the “Loan Portfolio”), securities at fair value through OCI and at amortized cost, gross of 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.
(*)Risk in countries outside the Region related to transactions carried out in the Region.

 

  19

 

 

 

EXHIBIT IX

 

COMMERCIAL PORTFOLIO

DISTRIBUTION BY COUNTRY

(In US$ million)

 

   AT THE END OF, 
   (A)   (B)   (C)         
   June 30, 2018   March 31, 2018   June 30, 2017   Change in Amount 
COUNTRY (*)  Amount   % of Total
Outstanding
   Amount   % of Total
Outstanding
   Amount   % of Total
Outstanding
   (A) - (B)   (A) - (C) 
                                 
ARGENTINA  $555    9   $353    6   $196    3   $202   $359 
BELGIUM   13    0    10    0    13    0    3    0 
BOLIVIA   10    0    5    0    0    0    5    10 
BRAZIL   1,045    17    912    16    1,039    18    133    6 
CHILE   188    3    248    4    221    4    (60)   (33)
COLOMBIA   744    12    751    13    666    11    (7)   78 
COSTA RICA   367    6    445    8    360    6    (78)   7 
DOMINICAN REPUBLIC   270    4    200    3    79    1    70    191 
ECUADOR   383    6    320    6    267    5    63    116 
EL SALVADOR   31    1    42    1    88    2    (11)   (57)
GERMANY   28    0    33    1    45    1    (5)   (17)
GUATEMALA   300    5    255    4    275    5    45    25 
HONDURAS   79    1    50    1    52    1    29    27 
JAMAICA   57    1    22    0    60    1    35    (3)
MEXICO   879    15    849    15    1,049    18    30    (170)
NICARAGUA   25    0    24    0    42    1    1    (17)
PANAMA   484    8    419    7    470    8    65    14 
PARAGUAY   69    1    81    1    57    1    (12)   12 
PERU   233    4    313    5    510    9    (80)   (277)
SINGAPORE   43    1    47    1    33    1    (4)   10 
SWITZERLAND   1    0    100    2    0    0    (99)   1 
TRINIDAD & TOBAGO   175    3    175    3    190    3    0    (15)
UNITED STATES   0    0    20    0    73    1    (20)   (73)
URUGUAY   58    1    39    1    37    1    19    21 
OTHER   17    0    18