BLADEX ANNOUNCES 3Q22 PROFIT UP 17% QoQ TO $26.9 MILLION AND ROE OF 10.3%, UP 120 BPS QoQ

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Banco Latinoamericano de Comercio Exterior, S.A. (Bladex)

Nov 01, 2022, 18:30 ET

PANAMA CITY, Republic of Panama, Nov. 1, 2022 /PRNewswire/ -- 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 ("3Q22") and nine months ("9M22") ended September 30, 2022.

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").


(US$ million, except percentages and per share amounts)	3Q22	2Q22	3Q21	9M22	9M21
Key Income Statement Highlights
Net Interest Income ("NII")	$40.2	$32.7	$22.1	$98.6	$62.0
Fees and commissions, net	$6.3	$4.3	$4.8	$14.5	$12.1
(Loss) gain on financial instruments, net	($0.3)	($0.1)	($0.1)	$0.2	$0.1
Other income, net	$0.2	$0.0	$0.1	$0.2	$0.3
Total revenues	$46.3	$36.9	$26.8	$113.5	$74.4
Provision for credit losses	($4.8)	($0.8)	($0.8)	($13.8)	($2.2)
Operating expenses	($14.6)	($13.1)	($10.3)	($38.7)	($29.6)
Profit for the period	$26.9	$23.0	$15.7	$61.0	$42.6
Profitability Ratios
Earnings per Share ("EPS") ⁽¹⁾	$0.74	$0.63	$0.41	$1.68	$1.08
Return on Average Equity ("ROE")⁽²⁾	10.3 %	9.1 %	6.1 %	8.0 %	5.5 %
Return on Average Assets ("ROA") ⁽³⁾	1.2 %	1.1 %	0.9 %	0.9 %	0.9 %
Net Interest Margin ("NIM")⁽⁴⁾	1.77 %	1.54 %	1.33 %	1.56 %	1.28 %
Net Interest Spread ("NIS")⁽⁵⁾	1.43 %	1.32 %	1.17 %	1.31 %	1.11 %
Efficiency Ratio⁽⁶⁾	31.6 %	35.4 %	38.5 %	34.1 %	39.8 %
Assets, Capital, Liquidity & Credit Quality
Credit Portfolio⁽⁷⁾	$8,862	$8,685	$6,956	$8,862	$6,956
Commercial Portfolio⁽⁸⁾	$7,821	$7,583	$6,188	$7,821	$6,188
Investment Portfolio	$1,041	$1,102	$768	$1,041	$768
Total assets	$9,320	$8,925	$6,977	$9,320	$6,977
Total equity	$1,049	$1,019	$1,013	$1,049	$1,013
Market capitalization⁽⁹⁾	$474	$482	$667	$474	$667
Tier 1 Capital to risk-weighted assets (Basel III – IRB) ⁽¹⁰⁾	14.4 %	15.1 %	21.3 %	14.4 %	21.3 %
Capital Adequacy Ratio (Regulatory) ⁽¹¹⁾	12.2 %	12.9 %	16.9 %	12.2 %	16.9 %
Total assets / Total equity (times)	8.9	8.8	6.9	8.9	6.9
Liquid Assets / Total Assets ⁽¹²⁾	11.1 %	10.6 %	11.9 %	11.1 %	11.9 %
Credit-impaired loans to Loan Portfolio⁽¹³⁾	0.1 %	0.2 %	0.2 %	0.1 %	0.2 %
Total allowance for losses to Credit Portfolio⁽¹⁴⁾	0.7 %	0.6 %	0.7 %	0.7 %	0.7 %
Total allowance for losses to credit-impaired loans (times)⁽¹⁴⁾	5.8	5.3	4.4	5.8	4.4

3Q22 FINANCIAL & BUSINESS HIGHLIGHTS

Increased Profitability, with Net Profit of $26.9 million (+17% QoQ; +71% YoY) driven mainly by higher Net Interest Income ("NII"), fee income growth and capture of efficiencies.
Annualized Return on Equity ("ROE") expanded to 10.3% (+120 bps QoQ and +422 bps YoY) on higher profitability and a more efficient use of capital. At quarter end, the Bank´s Tier 1 Basel III Capital and Regulatory Capital Adequacy Ratios stood at 14.4% and 12.2%, respectively, well above international standards and regulatory minimums.
NII growth for the sixth consecutive quarter, reaching $40.2 million in 3Q22 (+23% QoQ; +82% YoY), reflecting higher average net lending rates and volumes. Net Interest Margin ("NIM") expanded to 1.77% in 3Q22 (+23 bps QoQ; +44 bps YoY) supported by increases in both credit spreads and market rates.
Fees and Commissions increased to $6.3 million (+47% QoQ; +32% YoY). Higher fees from the Bank's loan syndication desk activity, along with the sustained positive trend performance in fees from the letters of credit business were the main drivers behind the quarterly and yearly fee growth.
Efficiency Ratio improved to 31.6% (-382 bps QoQ; -693 bps YoY) reflecting the successful execution of Bladex´s growth strategy. This more than offset higher operating expenses related mainly to strengthening talent capabilities, a new variable compensation program and other expenses incurred to improve processes and technology.
Record Credit Portfolio of $8.9 million (+2% QoQ; +27% YoY).

Ninth consecutive quarter of Commercial Portfolio growth, reaching a record $7.8 billion (+3% QoQ; +26% YoY), reflecting stronger demand from the Bank's traditional client base, boosted by higher commodity prices and trade flows in the Region, as well as new clients. The average Commercial Portfolio balance for 3Q22 increased 5% QoQ and 29% YoY.
The Investment Portfolio stood at $1.0 billion at quarter-end (-6% QoQ; +36% YoY). The quarterly decrease resulted mainly from the runoff of highly rated corporate debt securities ('A-' or above) aimed to enhance liquidity yields.

Robust asset quality, with Credit-impaired loans ("NPLs") stable at $11 million, representing an NPL ratio of 0.1% at quarter-end. Total allowance for credit losses accounted for 0.7% of the total Credit Portfolio and was 5.8 times NPL balances. Provisions for credit losses amounted to $4.8 million in 3Q22, on higher loan loss provision charges associated to the growth of the Commercial Portfolio and a couple of isolated credits in Stage 2 & 3, net of recoveries.
Solid liquidity position at 11% of total assets as of September 30, 2022, or $1,033 million, consisting of cash and due from banks and highly rated corporate debt securities ('A-' or above). Bladex benefits from a resilient deposit franchise and diversified funding through ample access to global debt and capital markets.

CEO's Comments

Mr. Jorge Salas, Bladex's Chief Executive Officer said: "Bladex continued to deliver strong results in the third quarter as we advance on our goal of driving sustainable and profitable growth. The successful execution of our strategy over the past nine months is already delivering very positive results. Expansion of our customer and product base, along with increased penetration among current clients and focus on higher margin sectors and geographies contributed to sustained growth in our credit book to a record of nearly $9 billion at quarter end. This was the ninth consecutive quarter reporting commercial portfolio growth while maintaining healthy asset quality levels with NPLs at nearly zero percent.

Our increased focus on margins and profitability along with positive market dynamics have allowed us to drive remarkable growth in Net Interest Income, up 23% and hitting a new record of $40.2 million bolstered by the continuous expansion in Net Interest Margin. Execution of our strategic plan is also resulting in higher fees driven by both increased activity in our loan syndication, as well as higher fees from letters of credit.

As a result, Net Income for the quarter increased 71% year-on-year to $26.9 million, which along with a more optimized capital structure resulted in an expansion of ROE to 10.3%, up from 6.1% a year-ago.

In sum, we are consistently executing our five-year strategy, capitalizing on the strengths we have built over 40 years of banking in Latin America and the Caribbean with the goal of enhancing profitability, ensure long-term sustainability, and increase overall value creation for all our stakeholders."

RECENT EVENTS

Quarterly dividend payment: The Board of Directors approved a quarterly common dividend of $0.25 per share corresponding to 3Q22. The cash dividend will be paid on November 30, 2022, to shareholders registered as of November 14, 2022.
Ratings updates: On August 25, 2022, Fitch Ratings affirmed the Bank's global issuer credit ratings at "BBB", and upgraded the short-term IDR to 'F2'. The outlook remains "Stable". "The short-term rating upgrade reflects Fitch's assessment of Bladex´s further strengthening of its liquidity structure, notably provided by funding improvements including enhanced access to contingent financing, along with the continuation of the expansion of its financing sources amid a challenging global environment."

On October 28, 2022, Moody's Investors Service affirmed all Bladex's ratings, including the "Baa2" long-term foreign currency deposit rating and "Prime-2" short-term foreign currency deposit rating. At the same time, Moody's Investors Service changed the outlook on all ratings to negative, from stable.

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:

Earnings per Share ("EPS") calculation is based on the average number of shares outstanding during each period.
ROE refers to return on average stockholders' equity which is calculated based on unaudited daily average balances.
ROA refers to return on average assets which is calculated based on unaudited daily average balances.
NIM refers to net interest margin which constitutes to Net Interest Income ("NII") divided by the average balance of interest-earning assets.
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.
Efficiency Ratio refers to consolidated operating expenses as a percentage of total revenues.
The Bank's "Credit Portfolio" includes gross loans at amortized cost (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.
The Bank's "Commercial Portfolio" includes gross loans at amortized cost (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.
Market capitalization corresponds to total outstanding common shares multiplied by market close price at the end of each corresponding period.
Tier 1 Capital ratio is calculated according to Basel III capital adequacy guidelines, and as a percentage of risk-weighted assets. Risk-weighted assets are estimated based on Basel III capital adequacy guidelines, utilizing internal-ratings based approach or "IRB" for credit risk and standardized approach for operational risk.
As defined by the Superintendency of Banks of Panama through Rules No. 01-2015 and 03-2016, based on Basel III standardized approach. The capital adequacy ratio is defined as the ratio of capital funds to risk-weighted assets, rated according to the asset's categories for credit risk. In addition, risk-weighted assets consider calculations for market risk and operating risk.
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.
Loan Portfolio refers to gross loans at amortized cost, excluding interest receivable, the allowance for loan losses, and unearned interest and deferred fees. Credit-impaired loans are also commonly referred to as Non-Performing Loans or NPLs.
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 geopolitical events; 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.

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 Wednesday, November 2, 2022 at 11:00 a.m. New York City time (Eastern Time). For those interested in participating, please dial +1 888 686-3653 in the United States or, if outside the United States, +1 718 866-4614. Participants should use conference passcode 877068, 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 one hour after its conclusion.

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

Mr. Carlos Daniel Raad
Chief Investor Relations Officer
Tel: +507 366-4925 ext. 7925
E-mail address: [email protected] / [email protected]

SOURCE Banco Latinoamericano de Comercio Exterior, S.A. (Bladex)