Banco Latinoamericano de Comercio Exterior, S. A. (BLX) 4 May 222022 Q1 Earnings call transcript

Hello, everyone and welcome to Bladex's First Quarter 2022 Conference Call on this 4th day of May 2022. 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; Mrs. Chief Financial Graciela de Chief Mendez, 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 and of described Securities Section The following of Private statement to safe Securities forward-looking the of harbor Act Reform XXXX. the the Litigation XXE statements for XXXX Act is Exchange trends may such results, we communications, make the anticipated as plans regarding these that condition. forward-looking certain its In are affecting future statements Bladex's and financial results in markets statements and day statements the call, forward-looking are undertake based These Bladex's does knowledge. expectations events Bladex broadcast conference to on the this subsequent these expectations on of of update not initial and or the the filings bank's press Various uncertainties risks, release Securities Exchange in with Commission. and assumptions detailed and and are communications. or results more Should any differ the underlying one or results or prove these expressed significantly implied of of may materialize should actual these incorrect, assumptions from or uncertainties risks in pleased call And I turn over with am to Mr. that, to the for presentation. Salas his

morning members to our for go the much, today Annie XXXX. CFO, Thank you Sam our with executive my to few and straight Mendez; results X. here I'm to Commercial a other and is Shelby, Slide also everyone. line; Canineu, discuss Officer, on let's QX of team, Chief very this good Please

Okay.

to last mainly and XX% X% was of quarter increased months, the the That Commercial period This interest XX of that, volume year-on-year. of the the Net income quarter of quarter. commercial reached is higher the last at consecutive year to prices the a ago. growth, growth. levels for precisely So close a boosted now in should this in by week the of quarter quarter-on-quarter Having quarter the reflect -- growth anticipation the historical was and the does now this say, in up our increase the year continued the compared portfolio. bank beginning $X.X place grew shows. the once and observed and last quarter Bladex this income interest XX% increase of commodity of portfolio our in in I liquidity quarter not maintained it's billion. last the $X.X XX% previous billion We peak quarter, of the said end seventh time of from of portfolio again of in asset XX% assets trade up a and The terms and XX% in record-breaking impact credit full took from weeks, at most the as expected credit or during the is

due asset year-on-year strong the directly the this related bit in to quality, as for XX% more you no of will in the remain the growth the from recently Once forthcoming the a portfolio quarter credit to know, revenue significant IFRS provisions based, for were a credit However, additional basis provide as you down bank's months. robust growth growth profits improvement Nevertheless, in sustained growth X. course, Annie changes nonperforming and little elaborate about later close talk Board. the during again, will to has on of And dividends and by all accompanied strong asset there, credit saw. loans a our been this, she'll quarter. declared X,

sectors. sheet In than continue in we maturities, basis able more I Sam Canineu, downstream, trade its Therefore, financial in $X.X during corridor. the of we led total, In oil waterfall and to the and in actively this Peru The and food much to in quarter. and Slide U.S.-Mexican This decreased last $X.X exposure now graph QX, gas down on to both usual taking terms Mexico. show geographies had to we previous loan half advantage our as breakdown -- team, Moving Commercial year. has at and of the quarter. Commercial our in closely lending maturing. higher That we relatively On as from the The significantly the at during of X. nominal billion loans been trend. the relative XX our to of quarter-on-quarter, Slide institutions we average. by billion stable Panama, of and remained to see were billion points X% In trade spreads such portfolio tied the portfolio Slide disburse the show is spreads positive participation -- the manufacturing its trade the the but volumes, turnover X, mean, positive illustrate sectors quarterly new for latter book in balance in evolution trend slide, on terms as $X.X almost X, of XX% fast

total at show On the side in left for combined the trend the growth consistent asset of of of assets slide, XX% accounting quarter almost loan to and total a our we investment portfolio, our end. both

increased is quarter, which the steadily diversification of $XXX of Let At mention U.S. quarter. couple over X The portfolio now. This quarters million credit credit further million, commercial the billion was the with that the investment mainly last the investment assets the for me credit investment has this a our component of things the mark to our fixed of $XXX from non-LatAm $X provides exposures. issuers, quarter portfolio about end end during our invested XX% at break has the and main income now of portfolio a portfolio and been complements growing

issuers as to our mostly with definitions, assets XXX% on of at We also qualify multilateral Basel placed invested and York portfolio diversification New providing of and liquidity investments, liquidity fed. have a III $XXX U.S. aimed smaller liquid otherwise according to the to close high-quality million, which

transactions, open we the QX, also In evolution the up Bladex's of by almost unit. a growth a the resources to These comments here during I saw and scenario and reopening global seasonal $XXX close and On it transaction the our typical billion, she long-term life walk Deposits $X.X on several a in right, Annie? to to our in recovering such up syndicated for last the debt Treasury diversified having in commercial questions. were the as funding our current while new the maintaining America quarter, And general Annie our then on approximately will leave impacts going you behavior And funding then, million its on us million now we strength. will placement and turning X of view funding the P&L, specifically. Latin MXN illustrate keep and for to capital $XXX share increase can of P&L I'm macro done through the reaching $XXX cost-efficient, markets borrowings structure. the after allow and closed from Mexico months of million, year. will the Annie so relevant it very debt, resilient base. billion, we and the for

Jorge, morning Thanks, good to and everyone.

quarter on Profit and down give the me number basis. Let you of for first now on for X. our XXXX $XX quarter a results, sequential quarterly little year-on-year XX% on a starting was color XX% Slide first more million

been lower the reflect close quarter. commented, bottom during Jorge increased have excluded, XXXX provisions credit level. this would profit to If mainly collective fourth quarter results line As

month flows. the capitalized and strong demand commented, Loan Bladex during for was the March. boosted just higher of particularly commodity finance, trade strong growth by on has Jorge also trade As prices

$X interest quarter months, during in recorded net fully seen revenues stream XXXX So year-on-year fees and full increases line the on XX% the of Operating fourth business. mid-single levels, have coming and XXXX we provision stable, pick on you reflecting transactions in uneven quarter revenues quarter-on-quarter remains was to Also since business ahead related personnel-related the not fourth by revenue XX% I the expand mainly a been quarter-on-quarter. seen Notwithstanding, as for and transaction-based are year-on-year surely XXXX. reflected this, was up fees QX X as through this IFRS with we increased trend There first and the for in expenses know. an remained up quarter-on-quarter, in pipeline comparison as higher upfront, second year-on-year nature in digits credit on new this our million relatively expense growth be XXXX. half top of hires results of expenses, a quarter-on-quarter, however, the in during of onetime income, salary-related letters mainly in will X% sustained while up activity. quarter have above order were workforce increased of Syndication support reduction on impacting XX% expense activity attractive were charges higher is, X% and credit strengthening short to

effect well relates $X.X investment the Now of to drivers the Slide quarterly NII moving combined XX% portfolio. the on the annual and like The million in in funding, $X.X into X. average loan income NII net evolution XXXX. to bank's or $X.X growth as billion expansion in of volume an dive first $X increase in resulted billion average to I'd when million compared mostly on of in net the or quarter the increase credit interest to Considering the NII.

points grade In in increased rates another XX aligned with medium-term $X.X reflecting million Fed financial lending differential up, credit on to effect NII as mainly addition, liabilities year-on-year, market expected and basis the rate added the net by loans starting growth between pick to all-in higher and spreads actions.

resulted anticipation reaching quarter, of assets asset March interest-earning by net million. quarter of cost $X XX with XXXX. incremental an total increased XXXX loans XXXX. $XXX million, strong partly million over again, of on late turn XXXX to in early the during quarter the average quarter prior was portfolio end strong to composition impact funding liquidity and a assets, deployed towards by balances of in decrease levels exceeding caused from loan asset cash $XXX margin, yields total and in income by reduced compared with by relative which point to as average, denoting XXXX, up fourth net turn average the credit million By up $XXX up ended the credit of which increased offset earning first average growth bank in during This basis million, on when fully $XXX the secured average for had another overall for quarter, was funding Now the billion investments was however, interest to growth, $X.X by the increased which liquidity quarter-on-quarter of March, NII position X.XX% interest

high-quality line So overall assets regulatory million, portfolio, in reached with bond liquid requirements. LCR the including $XXX liquidity,

downward margin month quick recovered of March quarter improving As X.XX%. the by of basis from the first reversal from a and X to X points a level result, X.XX%, interest XXXX net year the trend of in the for the fourth months

a billion. $X risk relatively over increased with by X. X. remains Slide position. level X.X%. XX Most showing by X% of risk X evidenced to Stage or to of as increased for during per coverage The preceding on close coverage origination portfolios, NPLs and reserve portfolio overall exposure, at Please investment with this for to year and X% low exposure a Provisions high-quality credits alone, exposure quarter Slide Xx. credit as total move Stage stable X% X ago. the of Stage relatively credit the our commercial since reserve amounted bank as Considering maintains respect NPL exposure, the capital its losses remained of precisely total credit credit Moving as X low in of the to to by let's and from IFRS quarter loans total classified now XX%, stable exceeds million down $X credits on

at reached relatively Basel the at loan by above XXXX, investment quarter-on-quarter, stable impacted X%, and remained risk-weighted XX%, at regulatory preceding quarter. the the year-on-year minimum and well stood of the XX% regulatory III a March In increased due XX% capitalization the up billion adequacy As manner, down $X year to XX, ago, capital from XX% the ratio quarter asset end portfolio, equity XX% Tier still credit and higher base, over of levels of from in the while same XX.X%. X

With calculating respect With share, you. quarters, the preceding both the me of X%. with call to internal highlight, the stock assets a $X.XX line ratios let but the credit Jorge. applies earnings Basel follow while quarter approach the risk-based takes prices one this, current to in XX% back first per of Thank turn first recently declared in in quarterly standardized Just and advanced yield now Board same to dividends, the to representing excess regulator risk-weighted the these approach. III methodology,

Thank you, job. Annie. Great

macro high-level and share scenario Latin impact Let me just few on current a the on Bladex. the on thoughts and America

Belarus or on any of have nor to with America or direct to with that effects First Ukraine. of financial material countries. does respect start Russian those have not trade me linkages by all, the Bladex Moreover, the does not Ukraine, exposure invasion Russia, indirect saying meaningful flows let Latin

impact conflict, Although this some as be feeling analysis, clients' our Latin has ripple see have substantial our fertilizers which in shock basis, credit on of Bladex, on a sectors. the on with the There's obviously minimal these trade of to conflict, said the may for commodity products, of conflict positive and region more the Having in trade exposure a specific material exacerbated certain prices, a of not or any is new communication resulted operations. which client in included the effect also even Based may no doubt America. that that, by the surge effects region's flows does products advantage. play for however, such close we portfolio base, our

of of Central key commodity region all major other exporters. that importers Latin Mexico, exception American most net the American With manufacturing are economies and economy, are commodity, base of

while obviously, and in is clearly inflation favorable increase are exporters Latin growth for not. commodity lower commodity price the Now the higher America,

XX% result, for the forecast a territory. that, revised As in still Irrespective trade this and prospects. the should slightly, expected into base this of With region and optimistic growth interest remain year grow portfolio, for short-term inflation rates now to further and customer of all our the are our rose move for restrictive close down Bladex with to reach official were foreign of and quality X% region the given almost at XXXX. we our said

during their to or opportunity the the left by and focused Bladex importers typical that were financing model, allowing this was exporters to global our through activities and second our same our off we of trend on on able such managing of healthy year, capture way clients. for was on continue increase and either lever quarter was winning large We countries us believe Bladex continue continue at window to should the will in of fact a portfolio did demand least business exposure. to The focus As quarter had for in that to illustration, in onset our the on we pandemic, due margins. lines lending region expertise sectors, banks loan of our part commodity the from this that stopped increase the lending agile Russian-Ukraine the that the

credit you, we going well its profitability the a leave reach our are use as there. favorable that efficient dynamics, to portfolio, our business we ability more benefit given will now Finally, as that for questions. high market to of as open confident capital, increase it Thank we of our and turnover our will I'm model. it up

Instructions] Research. from Chris question our with first Sakai have [Operator Singular We

on see I'm Marrone. Bladex in just country in is concerned with in Latin How most inflation the had Jim be a you And do question for I to which inflation? to inflation? America. regards problematic

question. great a it's Yes,

concerned by shareholders the acted First very of proactively Fed thing I of even before not term. the favorable that banks all have short obviously in pressures. Bladex, region, rates local the been reaction in a the demand see in inflationary financing increases. most for extent that to did has an interest contain comment currency way, the the domestic as We're There hard the the important increase central is real that Bladex favors really to we to

through navigate in we that the portfolio, Now our And slowdown a given some that. short-term can of nature we should think economies. bring

to We up a countries, not night. ask that Brazil, are -- we're me, lesser it's us I also keep necessarily mean, at but particularly if Argentina, you but something worried extent,

exposures that exporters mostly comfortable We hard and it we are feel and we with monitoring closely, the have, currency.

add -- something, want see don't or... Annie you to don't know we So I if

it's think very I clear. No,

much probably particular very be I higher a by impacted inflation. In Argentina think would countries, of terms

way, I at today. exposure to by dramatically million we do the less Which ago there don't years point know, from, $XXX million few our some a $XXX than

That's right.

Okay. it's of you the pretty idea any guess, last I It's sort then year. grown investment how grow question, Great. the there? of over target on year? -- any portfolio. And have for one have well to What rest your you Do do going the

Jim. Yes, question, good

designed to loan in commercial As remarks, I portfolio. is our complement portfolio that the said opening

that portfolio work see extent the but to have So down, together. slowing we portfolio, they increased in loan investment the demand the we

if on see So when see portfolio. then demand we happens, if increase investment the you'll potentially an -- when in our commercial less that and side,

is and strong. So commercial today, demand for side commercial very the

So see we a in growth our slowdown of the investment portfolio.

We'll Tom take McGuire from question our [ph], Investor. next Private

I of reflection the good sheet, And all stock which see The a market your very XX% seems don't conference short results. thing is I and balance And between or that. quality, me which understand call low is price your and good term is your your reflection your a loan have a and it to is nature, book it's book value, good disconnect of of loans, you in greater. value nonperforming, one

stock do you a there's book disconnect think wide So value? why price such your between your and

are Yes, we Tom. and going respect, enhance. And at definitely, you, -- Thank forward, really right, to you're looking very be you absolutely want conscious We that of in that. much we should that.

IR growth capabilities in that see better to and share prospects Bladex, for convey about price. are the team Our and the -- able be hopefully, which very reflected enthusiastic the and, we IR

the value book have do As which pretty right the a And super-clean the above at bank. mention, recognizes now. well book, you book did reflects much we value is present our levels of market what

So...

absolutely disconnect. I so a mean, right, Yes, complementing -- there you're is

the For our fundamental to reflect happen, for than is value. true us, price reason later no share to that we expect there and sooner

good. Okay,

to do paraphrase wrong concerned you, investors It's isn't you've investors a you, know saying Exactly? got of better bunch to So job. with. that whole more a don't that are there it's -- anything and you're about

peers, business -- mean, a model of we're shareholder different American banks, it. different structure. see Latin a and sort with of but part because And a necessarily I you not That's different trading see And reason happen than above you Latin value. But sooner at later. But we confident American going we're that's see shouldn't we least no be to banks book why clearly there.

call. And Okay. very I said, good like

Thank you.

you, Tom. Thank

We'll take our question Golding next from with CRC. Brad

a have questions. handful I of

volume Or up same prices on increased but loan Are prices are loan is of up? commodity are the commodity increased you funding? book. people of quantity underlying underlying, seeing funding the going -- go seeing First are because funding or you your book

you do you the Sam, on one? Are to question. take Good that line? want

Sure, Jorge.

Sam Chief right. Commercial is our all --

Yes.

both. Brad, the think, I answer is

and lot commodity more inflation a course, region capital importers the increase that big see exporters they Of the that their in we're the coming and of from needs. commodity we financing working fact

So because that happy can But we're them. with there we new increase follow that is new also origination an for as with just in of had clients as well we available clients. loans existing our lines underlying

-- material not. I higher question, if So prices. your but more no, the commodity giving is but answered obviously, the I hope

No, continue is, next with my absolutely. you guess stable book? do grow you you I to the prices, commodity continuing? that question -- will loan see Can

Yes.

I be aspect. profitability And to help are increase to say, -- now this see same do sake would right increase of last the numbers portfolio; being in information there we're magnitude. we're the think stable still on again, on that can I the that not about since let's so good if the were today, commodity higher year, not it book, to commodity. to I it compare the of on bit just information I our underlying our in opportunities alter grow not -- would in But does or commodity, But have the market it do depending based us the it increase. continue us by current help demand do that little life think I course, you should selective we a magnitude will But us when the but of prices because increasing, -- course, the are commodity talking for driven increased despite on for average how they prices. for volumes depend were we're big increasing despite extend an with. also see selective or of the

broadly? Of credit course. prices are higher enhancing commodity of And your I borrowers the quality assume the

and exporters. on net yes. say I'll finance a we basis, Again, both Yes. importers

LatAm the business -- of or does producers region, are the commodities, of exporters has a So that it lot help their it their so profitability.

Of about also in talking big there extent, companies. and a part the we're talking is about importers oil that a national course, we're

more is But higher large that them or getting, of So goods prices, today, of very we're finished they're in material positive sovereign case are raw of course, example. large for like for a for commodity or not corporations. necessarily not majority because talking paying about -- entities for

concerns there. So no

So And book it and to much better your be will grow sounds buy a That lesser capital? you they given be nice How very sounds you situation credits and like your continue current improve. to importers your tend the -- already exporters loan in. can back to can shares?

that? should take Or take? to want you do I Annie,

Sure.

region. can Let up said, the discussed capitalized level. Board me I we're to capital be, tell strong, buybacks. we -- the at nature prefer repurchase, are going dividends I continuously we is continue related stock speculate I strongly will and a volatile about so be to given Everything What the bank, future dividends, to as you it's not of Board capitalized. to the to or it's management,

the more feel know, going profitable. to Annie capital or into We are entering and just efficient free. a I you as something, to our make want territory to tier don't more add Sam, ratios are that portfolio not in our and do risk

of book in that as add, I'll rising short-term driven, Yes. because we is trade demand benefit the interest model capture like that rise it for which see to this well working rates have, a debt. driven, able business fast turn course, we and capital moment that, the we us in a predominantly Jorge, are does as

than less is not should year, of that So a concern. a a really portfolio the not be capital -- has of majority we think a vast our maturity

of have it did a We'll looks get job bank. your visit fixed happy income always the portfolio. managing carpet And you out also group when the fantastic. certainly risk Okay, on we're the final Treasury of red and the you a roll to York. couple rate to like out great And New points, promote

red Brad. We carpet. love and go to we New constantly York, you, Thank

please another Okay. Well, do. you quarter. me Congratulations call when great on

you. Thank

do We from the a Instructions] webcast. submission [Operator have

that indicated to in You of month March going a as this forward? sustainable net see recovered interest level Do X.XX%. of level a the you margin

do the margin interest X.XX% Short answer that to forward. We believe net is March sustainable in yes. is close going

before, by is a demand. local fueled in has And significant they're countries hikes significant, financing, trade-related most in and the cases, said mostly growth in we obviously demand increased by dollar region also, in that for very currencies some currency the As the rate helps Bladex.

And a follow-up actions increase interest question. rates net margin overall Fed How will interest and income? expected bank's to the impact

take notes, you and know, made lending up I'll mentioned that. to or previously is moderate. is interest of due we've rate of predominantly Like as very gap short-term may nature which rate the Bladex's business, floating our

tenor. In into of far have markets rate been longer noninterest-sensitive transactions comment can our in the are medium-term in financed risk to positive fixed base the addition, entering assets that has we the to debt been over billion variation provide by interest the of so fixed are to years, is also during last be that we that what neutral protection And $X lending against observing I couple NII. assets derived rate, addition, capital effect could equity. rate our from

$XX XXX to increase equity, XX once NII add interest on in giving an from sides high-level you would in its over will or sheet the have of bottom approximately point assets repricing as bank's I'd of into assets. million both annualized let's materializes, perspective, points in liabilities rate in a the of all and benefit gross also process numbers. yields basis billion course, of like on $X finalized. increase to put basis to With So That's, line net basis margin. repricing the this the say, balance

interest as take several impact are course, full may ongoing, this after rates rate actions gradual Of increases and subside. quarters

second attribute have from should It's imply for another expansion of NII concentrated that the increase items correct? The do noted first credit offsetting and $X.XX the the the approximately loss end portfolio. that of the per generate the quarter. provision in quarter portfolio higher website. comments These also results losses, share on growth question loan was a the provisions, million $X.X quarterly We without at

Correct.

correct. that's Yes,

we margin a reflection saw As you -- net And we provisions. increased close to in that the X.XX%. growth would in interest else see is with stable from the stable being portfolio everything portfolio said, next and that already a is revenues March quarter, assuming stable obviously, of for equal, that a what

absolutely right. that's Yes,

no this [Operator appears time. additional or that back at It for remarks. the we any questions will over today's now presenters Instructions] have turn further I to program closing

everybody I just want thank their questions. to for

We the much, you growth and and performance increase the forward looking bank to with take are extremely Thank excited of very profitability. and care.

Thank you.

That teleconference. concludes today's your Thank you participation. for

You disconnect. may now