Banco Latinoamericano de Comercio Exterior, S. A. (BLX) 27 Oct 202020 Q3 Earnings call transcript

Hello, everyone, and welcome to Bladex' Third Quarter 2020 Conference Call on this 27th day of October 2020. This call is being recorded and is for investors and analysts only.

If you are a member of the media, you are invited to listen only. Bladex has prepared a PowerPoint presentation to accompany their discussion. It is available through the webcast and on the Bank's corporate website at www.bladex.com.

Mr. are today us Joining Jorge Salas, and Executive Officer; Ms. Chief Financial Graciela de Chief Méndez, Ana Officer. be earnings corporate on issued comments based Their will the and available earlier is release, on the website. today was which made pursuant in XXXX. and Act described Securities the The following XXE Private statement to Safe the forward-looking the of Harbor Act Reform of of the Litigation Section statements for XXXX Exchange is Security anticipated we future condition. forward-looking, communications, these and in such results, may Bladex' statements regarding statements affecting are In market make that as financial plans its trends the and certain results forward-looking the conference initial These statements not expectations of are Bladex or and subsequent on Bladex' undertake this day knowledge. of on update these expectations based broadcast does to the call, events Bank's Various Commission. risks, press and the filings uncertainties Exchange Securities with and and assumptions the in release are detailed these one the of more any differ the underlying materialize, risks results expressed prove uncertainties results significantly or of and may or Should actual in incorrect, communications. assumptions from or should these implied that, I And the to am over turn with Mr. pleased to call presentation. Salas for his

will up open sheet some talking and morning, executive will will the And I and I'm discuss Today, to about third Thank After closing during presentation Graciela our morning, I you, discuss This of today the us through and results. everyone with members my questions. Méndez, comments, few then joining it our management our make Annie quarter it. a Ana de quarter be remarks, CFO; going team. I Annie's will balance and then here the Nick. P&L for of implications good

key. underlying well. unique of business and a still the for Bladex flexibility of be quarter, base performed very quality quite that we're The me Let saying for start the customer uncertain to the environment fundamentals by continue in our our model business overall where

presentation Slide to Going X. on the

Slide and collections QX, as quarter favoring healthy short-term of as while and the As quarter, risk recall, see matures loan across like first the billion focus the QX, few than reassessing the third we're portfolio liquidity had portfolio we quarter. can XX this in process corporates. just you we that industry maturing virtually to In on quarter. all much portfolio top with XX% $X countries you maturities of over in during shrunk in billion, to mostly in. top Again, X, the of billion, XXX% in during we up tier during very banks credit the tier weeks very operate close did XX%, of $X solid entered all our we probably collected More a by QX. all second during $X we our After third

by to on we Moving X. our grow X%. QX, managed to Slide In portfolio

fully average QX That continue on of rate higher now performing than an previous is exposure less The above disbursed was X and maturing the with this average remains that XXX with X, region. across XX% $X quarter-on-quarter. year closely was countries credit similarly basis is rate tier loan portfolio In mostly these working the in portfolio quarter. very our the based NPL. and grade book sectors. is investment zero XX and and our trade-related basis were maturing short-term, a of higher institutions XX with of in of for both XX% that Slide financial highlights was in – points XX is fact disbursed QX, book times of XX% Slide billion countries conservative in in top loan terms our resulting the LIBOR the two plus days We the volume billion, over than XXXX. our points is the $X.X clients for loans, quarter. loans average slightly average through term

sectors. remaining the graphs, countries and You both can see in is exposure among well-diversified

next as our specific terms X, portfolio It’s Costa to credit declining. of to mentioning highlights the like and Argentina, countries matures exposures exposure that both conservative sectors move risk sectors. been slide. in worth exposure that Likewise, and our will Rica. reducing Ecuador fact our has remains In countries high-risk Slide we very our We strategically also in our keep in

$XXX to an represents As the portfolio. and come airline industry in by exposure our example, since almost today a has of down X% total than QX. less continues downward trend follow It XX%, a million,

to XXX% throughout to effort show making by Also, the always Slide billion, level. composition profitability position highly cash million end in quarter – with increased small portfolio Of in the [indiscernible] accordance a an million. $XXX mix on year. Moving investment asset we asset in our robust as By our and our by this of Committee. assets sure valued specifications liquid was of X, increase has high-quality Basel invested $X million, relatively maintain reached $XXX by the $XXX we the total,

American we’ll X, Bladex efficient very than to half million. as CD shareholders structure our to funding continue our Latin the on One, attract a grow and Couple Class quarter-on-quarter central of year. new several liability evolution, comprise on positive has funding $XXX and new should quarter-on-quarter. be Also over of banks, A growth to Moving the balance here, deposits. X% over These further varied certificates deposit proving XX% show an base are sheet observed points tool be our program our highlighted. things the side of total much has to as to our in deposit The reached investors. continues how Yankee diversify more Slide base side one,

source, cost of support the region represent banks demonstration during across central deposits said that As the continues Bladex not we in delays times. uncertain clear stable, have funding before, a only but also effective these

bond The other issuance. is mentioning our worth thing

issuance in been a that base The Bladex to the Also, of for a The us. its with loan, million the bank these its probably financial paid successfully As be $XXX placement completed fixed of will Moreover, Asia, $XXX carried the entered times The XXXA so generating transactions the us these of lending turn so its lowest bonds pay increasing the early Europe out term the reinforcing far. I placed you she all and further successfully bank allows sells new resources Annie? have to with team. Annie, facility saw of demand efficient by September, walk funding of a by rate new million. commercial in financial of for our among medium-term market the bank the four of XXXA/RegS call all The P&L capture was for maturity investors coupon the robustness to have the by now five-year third which transactions on syndicated issues was X.XXX%. implications oversubscribed. can objective opportunities the structure into through dual identified diversification of and the America. times of and residual extending liability. purpose bond

Thank you, Jorge. all. And good morning to

the levels. from which income quarter and and on a XX, spread has So a or fees the interest, where we and already net to present total with to net pre-COVID revenues increased this representing due healthy X% results third for to business, margin is in million, Slide number income a increase up XXXX $XX.X performance X% higher mainly quarter-on-quarter from other combined to due of fees let's the interest of move better million to a recovered and $X.X

million and quarter, XX Quarterly driver while in interest net of XX% in quarter for million In or increased repricing. stable instruments quarter-on-quarter compared portfolio in up at $X.X financial of $XX.X changes by fair margin net credit Year-on-year, into net points when continuous sound market lending line NIM its and reflection lower X.XX% balances X.XX%, income before reflects represent was net totaled the value impacted stable addition, compensating $X.X decreased bank in even loan before. income the at since of due pricing XX%, The another loan on provision with XXXX quarter, ROE more of asset third income for increases overall $X the uncertainty really close the the interest which million, difference later. basis rates, Lower detail XXX% quarter. the no of bank loan Jorge on as denoted a of between composition interest of to to X.X quarterly to for denoting to improvement and view X% profits quarter-on-quarter. On is increased was revenue. trend points. denoting the of loan a I combined the the NII of charges of revenue an cash quarterly COVID-XX for This income for nonetheless points decreased evolution, pool by provision decided a triggered a represents XX, mostly quarterly net March drivers the with the billion with charges performance the main approximately percentage of X% that good or XXXX as level with margin Slide impact main asset risk in quality will level. of continued on origination returns alluded third which take collections pre-COVID has is relatively the third Jorge quarterly in position liabilities interest higher to profits of change advantage lower of spreads to six which new margin and by Jorge positively Bladex and thus historical levels, increase on and NPL higher adjusted increase during of that referred by turn the credit This mentioned, in a rates, the previous respect as widening solid overall to also lower over go of and in to resulted and market lending basis impact to differential of rate LIBOR in funding total repricing account on based equity

effect volume the mix I On compensation, quarter still continued hand, as for asset assets for during period, XX%. the Even of mentioned, cash pressure though end of show at total put other average to X% growth balances total average at assets NII positive the with in trend the the representing about of to XX% due a to just the and accounted increase average third started loan quarter. quarter third and with a XX% loans on

loan market the in as of base. average as that balance of credits are quarter, to well Moreover, reflecting respect, credit bank by of September credit decreased yield accounted exposure equity for decreased In ending for. the incorporate XX% mostly Year-on-year, under quarter evolution representing which during a Slide Argentina, the million, mainly combined already by best in margin credit and of the is increased explains as in economic losses by in having including expected in Number estimation allocated to in bank risk developments financed reduction points in overall While lower the countries as deteriorated the $XXX exposure, third company's Stage interest so charge privilege South accounting also impact XX, recent overall we credit exposure of drop lower so representing $XX.X of on, the X, X that Stage down said this the increased to the for March of established rate On zero quarterly allowance just and this the losses total that by allowances NII zero, assets client's XX%. the of total beginning risk, denoting of transaction million I the credit in during to ample the bank’s during reduction the to have net has rates the change during given X remained quarter, $X.X the now NPL sale quarter, during of total downgraded sector, on exposures XX% mainly previously XXXX. that losses by Non-user compensation, assets IFRS XX – been the low balance X which third a at write-off was led September $XXX commented the basis our Stage allowances, exposure exposure, environment requirements exposure. a recorded the allowances current quarter. American the norm, XXXX. through Overall, portfolio country cash total balances impacting since exposure million crisis. with current to categorized the XX, million, Bladex’s the this country third forward-looking at basis reducing exposures, in now of million XX XX% by as company XX% during of an X X% by increased year. provisions that of to reduced were risk present XXXX. collections originations on This quarter, the excess a the of low credit $X.X XX, million points watch represented in credit Stage of based against bank’s airline the recovery million $X.X from overall $XX.X for list reflect that

non-personnel All the of Slide on to respect remained ratio compensation to to more for points stable. at of of and due year-on-year, I for to improvement at level the salary we provision, which the quarter XXXX revenue. higher on relatively mainly levels accounted lower an relatively previous percentage stood call expenses third to current. third like remains stable now XX, with quarter, expense Efficiency Number you. Continuing the while decreased quarter other expenses than due quarter-on-quarter eight would operating back remained turn Jorge. performance-based variable Thank employee to XX.X%

Thank you, Annie.

months uncertain our is proud far. very and our quality priorities the navigate to collecting a in therefore has all countries that, of loans Having be has on the our That doubt said questions business continue great will approach our opening virtually it now. A my exclusively that that with during still am and of so be this is a our in the comments, There there uncertainty of XXX% team third in As our region arising keep once for quarter that of to support time will there to top is doubt and storm of client dispersed the way to the keep tier to deal us reopen economies as side, liquidity. portfolio that ample to open is banks, keeping times. and in come clients together deal no we conservative the said the the I'll on of allowed a Bladex I results said model. come flexibility I there opportunities are new again reflection up continue good and corporations sectors. Brazilian maturities loan in no throughout

Our Thank Lewis will this the question is go first question. at from your your you. Alvaro, we Instructions] And comes proceed please time floor open, Alvaro for Please line open ahead. now questions. [Operator [ph]. with

you hear on me? can was Sorry, I mute.

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for I two Perfect. that question. Thank questions. one. update I'll start you for thank and have you. with Well, taking the

conditions if growth. resumed portfolio focus And quarter, So forward, also wanted could you there's the in on this bank assuming the And sectoring economic we if growth the during elaborate just current the its on? region? any of growth see this going I sustainability I to to that particular anticipate

opportunities It's a very Sure. question going good forward. Thank the question. to sustainability. you opportunities for and related your forward going We do see

our corporate take clients the organically increased we As inorganically. clients. advantage from base, clients. to situation of an both with banking our seeing the are economies seeing reopen, demands in their grow clients corporate their and and looking Also demand uptake own we're to Obviously, some of client are

as opportunities the of well. there. there's demand thing switching extent to there interesting some also with credit. on have that we there suppliers I are some some maybe think, So There's an letters going sometimes, And

say will there demand short would in reopen. we I So, be do as economies that think

a do of understanding in sectors, of we well. are and very as demand sectors more lot far clear have we what resilient a sectors those have As as

there much. Thank a another so Perfect. you And time is for question?

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regards question liquidity, has other is reduced The the its liquidity gradually in to bank position.

last around the it quarter. at $X.X the During end quarter of at billion third stood

your what are at point? this I to see just your optimize plans liquidity So to wanted

way down, growth. we're of say I on see a I with as could that to coming – our increase to increasing profitability that's also been has increase portfolio highly position. we're profitability target can liquidity you position, assets, cap I for low but we liquidity. that And as specific liquid, our of commercial positioning I arrive, down. a portfolio risk cash on Yes, opportunities mentioned, mentioned the bond give coming liquidity though because as also cannot

the Well, the feedback question. so much for this for you Perfect. thank update on and

Thank you.

And go you. comes sir. our Thank Robert next from Please Tate. question ahead,

Good morning. Can you hear me?

hear can we you. Yes,

if questions just Great, thank results. solid. you. okay. good have I Very Congratulations on the three that's

is first on the industries industry, the second airline loans one the in third one high-risk in just loans one on the So dividends. other is the and

is wanted due to $XX borrower? That's just one number first one And first balance what So I than to ask borrower or more loan remaining just the remaining million? to of for of it question. average months the the airline the maturity one is

Robert. Thank you,

the it's So airline exposure very borrower with The over for in one feel years. just comfortable billion $X that more and exposure. and we has is, it's cash two

Okay. Thank you.

industries. are interests, other other them, including in And risk risk upstream in a And high think, so question the I on number is year particular early and gas. high the reported second automotive, and oil about loans you others the of of just and spoke on retail industries,

was us the Thanks. And those in us great. just bit those That is – I loans to just as give of give wondering industries happening terms if to you so would background what and about could more talk a industries. be

Sure.

oil also among sugar So car this supply That's $XXX by been chain, gas car industry and million. risk and numbers. to We've a our upstream, dealers lesser have, ethanol reduce extent, others. exposure including higher to industry, able compared about and XX% and then to QX to we and

retail car then So, and and major in concession with trade, well. sugar a and as airlines

are exposed So, mainly oil to and industry [indiscernible]. focused the oil XX% in gas

a exposure stress company the that plays believe scenario. main is there. under trade And a we sovereign Our key with role

sold So you I comfortable XX% to what exposure crisis we clarity I don't the That's we by case that. say. Brazil. can sugar NPL need a would industry feel In and there. the if know the of onset since in our on ethanol, more cut after

Yes.

the on just to the its raise Like, yes, things the emphasis that tend decision? and – And dividend question the that you that levels. you. and in to fine the are place think previous the most I I thank that in to back guess that's assessing what in whether is on third dividend – it question, final making

know, to Board. going up is to it It's the I'm Robert. say a dividend Sure as you all policy decision. again, the quarterly

the we are and So is you Capital on evolve. I results speculate we the but future the a visibility tell normal, quarter, going see levels reflection to cannot you cannot preservation how don’t dividends. situation of also this I the I changing until high that for the to the capital operate region not more going have whole of on consider nature our priority is the I otherwise, historically prefer tell of forward. situation I is new a this in.

very Okay, on you their thank Congratulations much. solid results.

Robert. you, Thank

you, Thank Robin.

Thank you. [Operator have we no this and that Okay, time. Instructions] questions appears it additional at

All thank joining you call then safe. right, the please for Good everybody and bye. stay

participants all All disconnect. you This for your Thank today's conference. may attention. concludes now