Banco Latinoamericano de Comercio Exterior, S. A. (BLX) 28 Feb 232022 Q4 Earnings call transcript

Good morning everyone and thanks for joining our Fourth Quarter 2022 Earnings Call.

Before we begin our presentation, allow me to remind that certain statements made during the course of this discussion may constitute forward-looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to materially differ, including factors that may be beyond the Company's control.

For a description of these risks, please refer to our filings with the U.S. Securities and Exchange Commission and our earnings release.

Speaking on today's call is our CEO, Jorge Salas; and our CFO, Ana Mendez. are will my be today executive from us that team available joining some colleagues of the Also for Q&A.

me let go this, turn to call With Jorge. ahead. the Please

joining. quarter results year of take Hello thank everyone on Thank the to our strategic and will our the you, fourth you five execution the Carlos. of for our discuss Today, summarize and progress opportunity plan. we year, first

to will Ana, reviewing the highlights XXXX turn Let explain the I fourth detail. call CFO me results by start the our and of will who in then quarter

Finally, outlook I'll current we're make environment some XXXX, the closing comments related to navigating guidance. for the and some provide how

strong straight inflation year, we very quality. managed results. tensions, to go book robust please. X to record grow me our a and Amid much the slowdown high global maintain during loan as XX% geopolitical and a asset very In Let a as increase XXXX, Slide delivered margins our Bladex

almost importantly interest results, net Our NII credit than The up year-on-year. was the increased letter is X% and both fees year up is almost points. higher net on almost and were of last income XX% equity now higher basis we points perhaps positive. XX% return XXX will as than margin year, fees, syndication the And more XX year year-on-year, see very for basis trend last is

remained activity well year. thought our designed in Economic while our is there of results, the advantage model current strategy a renewed executing last management and out exceeded these America taking macro a is capitalize Behind upside business expectations that the team to Latin resilient unique potential strong scenario. of carefully

action high prices gradual economic region, almost and foreign Central impact of markets high. the and The performance. tight a global grew together Class There had allowed record Bladex's A activity commodity decisive reached trade absorption positive doubt in region no that with on flows business Latin and credit our Banks, American shocks. is anticipated shareholders X% of a The the

results Having said of were that, the the largely main our financial of execution drivers product the plan. strategic for XXXX solid of the

Slide Moving to X.

you on update our me the Let progress strategic brief plan. give of a

growing As I Investor to fee the generating Bladex base and capital business without products, profitability allocation, model. automating appetite opportunity without increase essence its a client November, our growth during plan. has the some base clear our for credit changing processes, our our of changing of the deposit in with key sales expanding are increasing Day its mentioned, avenues risk Optimizing in customer cross

headed our now been by by Canineu, Sam to thus team commercial able renewed expand XX% has Our far. client base

added to our base, were All also top has year. product. product that The the increase That our on the of that to base have in capitalize came at manage additional contact the the average customer precisely single is profile commercial Furthermore, was penetration XXXX from client same XX%. of team current our point and XX% one of able least now model by clients of our region. risk XX% in corporations tier new growth clients during

rate, hikes Moreover, to key to have funding able the a we of with together the of mitigate that corporate which our impact has XXXX our been securing fixed medium were interest increase things been base, funds. cost rate deposit bank term on

last It inefficiency, to by for because over already key our time onboarding only reduce processes, year. reducing new All bankers operational XX% was streamline added onboarding because not has was and we also client markets. possible also transaction of volume, allowing which this procedures additional we new redesign increased possible in XX% key the our new

call for fourth CFO, through quarter you results detail. and turn our here I'm to going in our the to Annie? walk Annie, who now it leave will

annual results of Slide the XXXX, of and I everyone. million denoting morning, million X for our fourth a year $XX with am total to starting XX% Good $XX a profit a quarter Jorge. on Thanks, reaching increase. pleased for quarterly the present annual

In by a digit XX.X% drivers of year. turn, and positioning that the for ROE. has quarter basis points XXX the you bar I bottom-line bank up to to sustained fourth X%, for positive previous two on the from next been trends year increased slides, annualized color the level few reach flow the In the also give in increasing, the Actual ROE the reaching more quarterly main will profitability. ROE close sustaining XXXX

billion. X. Slide $X.X to increased annual assets Total XX% by basis to Turning on an

year-end. loan commercial in portfolio portfolio, On the year. the at of $X.X billion, issuance of the closed XX% XX% and back confirmation billion mainly consisting letters Bladex billion reaching $X.X another from at of previous increase $X.X strong an Including credit the growth of contingencies, in

and This with is trade over business commercial enhancing while Bladex base, an $X flows country, investment diversification bank's advantage customer and balance strong billion The growth by portfolio, business further core in economic taking increased of its activity. complemented focus with allowing the exposures reflects a the on expanding macro environment LATAM cross-selling year-end. for by in of of at

from addition, of placed New at with due stood cash Federal York bank's banks assets year-end. the XX% at the mostly total Reserve In and

regulator. III Basel required Following as liquidity standards, by banking a prudent management under Panama's

for total see portfolio of for quarters and quickly now. the higher in to the you with during Turning quarter the amount can similar of which high commercial lending to experience spreads we maturities trends to our exceeding several allowing turnover a disbursement pick the us XX% up continue Slide X,

to the returns. which XX% fourth rate X.XX% year average As continue over basis year. base a remains ago. XX suffer of spread average expansion at margin of we denoting increase market the months, XX duration portfolio mostly for risk adjusted from The the at to a the maturing stood is next close through optimization and the lending short on focus portfolio Hence points quarter within with mix

the an cost important have one. effective resilient and of while economic represented in X, funding well historically also As Slide diversified. number shown funding throughout stay structure our source most being Deposits cycles,

of XX% banks client December from to of program. XX A and deposits the Yankee represented XXXX, corporations, central XX% and XX% our relate our shareholder, Class of from our total bank remaining which CD XX% funding, As came another

Apart banks across of availability from the as well global funding loan from the from the range ample lines syndicated and correspondent sources globe, a markets including wide bilateral of Bladex as continuous deposit, several comes capital credit access debt to the market.

X III regulators at to Turning a or Panamanian year-end. capitalized, Bladex Tier remains the XX.X% Slide of and X. XX.X% reaching ratio well equity of capital Basel ratio

portfolio more During margins and XXXX, a higher returns. efficient use Bladex capital, achieved loan its having at increased of

growth a model. favored margin having on over fourth position, loan deceleration commented remaining our quarter, pillar quarterly balance during last we the a we As call, growth, of to while business expansion capital sheet a our sound saw in committed

Board earnings. of declared of share $X.XX In unchanged four recently per addition, and the a of quarter XX% for from quarter preceding dividend the a payout representing quarters

account spreads. in continued interest to present rate reached the financial a trend basis interest and now fourth XX liabilities points assets 'XX. earning previous increased basis we lending and mainly the Slide ago, the net X.XX% XX, spread Turning margin representing strong differential Net quarter from driving points the positive on spreads of in quarter An year of and between from performance. XX interest increase top-line

year-on-year, XX XX basis reached of assets, the supported the the quarter spread increasing yield yield and financed an both financed equity. higher by margin of market bank's and on by X.XX% increase of the turn, XQ of points portion net previous interest the basis 'XX, earning of bank's interest assets in the points by net interest rate In impact from representing equity overall including by the

the overall the in half on Moving lending increases the on to assets of that behind about market impact see interest as Slide was of $XX stated, can rate, just by liabilities million spreads I reason XXXX. increase the supported income year XX, and for we net and rate higher

on proactive attributed $X.X in prudent by The credit credit the strong the billion when other year growth portfolio by management. or is million complemented mainly related half financial loan and another and which investment the accompanied in average liabilities $XXX increased to continued liquidity average a to by over compared portfolio, increase XX% before, growth,

XX, a increase the million letters fee an credit throughout have in annual XXXX, quarterly year. resulting of from Slide representing the previous On for shown a trend $XX of income year, XX% from increasing total

The for syndication bank and the structuring to generation fee component business. other the relates of important

quarterly its a transaction than Given nature, based rather basis. its activity on be analyzed should annually

So million. for $X it by stronger XXXX, increasing year to showed the XX% also results level close to a

still the shown monitored As quality for performing. experienced were risk another Slide at total of risk, credits $XXX credit, sound $X.X portfolio million, are a for X level. increased closely Accounting have as asset but credit Stage on total exposure fees for XX, Low billion representing Stage year-end. X of origination, at XX% X.X% classified which Bladex accounted maintains

total or Finally, at of merrily Stage during for coverage quarter. as X.X% two of Overall, represents $XX million the total total impaired new X a classified year-end impaired as credit. exposure reserve balance XXXX, about times fourth the we credit $XX million credit, of of is total impaired for a

credit amounted to reserve for during well X to allocated related million growth individually credits to to on Total Stage Stage $XX.X XXXX collective charges of portfolio an XXXX. X credit as provision allowances as increase increase

XX, we overcompensated solid consistently as positive can expenses efficiency, Slide growth bank's by the revenue On design. a see has in higher trend

two XX% XXXX, in compared to the cost to income efficiency stood the year ratio For at previous XX% the years.

salary strengthening based based on to expenses performance focus new to expense increases, Bladex's capabilities, initiatives strategic compensation higher on processes a related hires and along reflect and technology. variable new a mainly structure, With with other a execution improve

leave Jorge it you. call the remarks. me his here to back Let final and Thank turn for

and XXXX Annie. long transition space interest likely timing is towards rate, Clearly, transition, lower more expected in economic towards many much The the the financial from and mark. transition of year question point balance. turning interest very America The you big Thank being see rate We outlook but above Latin lower target. for is inflation the far towards macro a rates settled persistent not be to ago. growth, still for of so transition inflation slightly than lower is and

is towards happen of the XXXX. end Our that will expectation this

trade the particularly shock is is positive grow end higher prices Russian by currently commodity the the by pre-pandemic point no additional That invasion an Key that driver X% XXXX levels the for is levels. of America. surge region XX% flows are in America doubt that $X There that is record for for the exacerbated will for than XXXX. and of trillion at Latin South reaching and Bladex this Ukraine fact almost trade main of the

this are on high while profitability during favorable, less increases and In said focus GDP Having that, and growth price not region. favorable on context, XXXX, clearly growth. more is commodity the for mediocre will we inflation

X% me we maintain we consistent high with year. Unlike a to macro interest as In the environment coupled let standards, for management's XX, over Slide year, aim a that leveraged to to on poses XXXX, growth, mentioned at rate last especially we single-digit focus a XX%. words clear on Moving X% trend. We few shock. the plan for current credit discipline demand with if companies, particularly underwriting risks, grew

forward. mentioned asset treasurer as growing units keep we Annie focused base, our positioned reward currently our in earlier, are trend also clearly sensitive in that as in rates. additional is lending risk in Thirdly, optimizing see spreads, margins only most funding source. which The not our frontline cost interest bank Moreover, is but efficient a deposit of our we making sure positive going anticipation

we are enhancing our Lastly, need process convinced making offering. that automation, redesign and on to product and keep progress we

hard already with profitability yielding the last working strengthen into share I structured will When Slide product going As before, are solutions. trade but favor results. good made working guidance This mentioned year. capital slide, processes and complement and offering also me forward. client go the we We're changes for XX, let only not key some relationship, treasury to our in our

ratios expect We core be equity strengthened. to

profitable forecasting and are between will XX% a growth and moderate more as than last be range our year. We XX% even

to incorporate of that expect margin interest but net from still to letters at higher X.X. not be and impact above between for and X.X% grow this between syndication interest our margin credit, market full rates. the mostly from does continue We figure XXXX XX% will X% Net and X.X Fees our of for levels year stood desk. QX also

way, return higher target equity the longer process revenues be that be we during day efficiency not November. least, to expect our XXXX is likely continue a levels. in Our around shared section That Last offset investment available of the but XX% will with means and will technology. term line the last improvement on will guidance as our low-double-digits the webcast website. on IR the investor that By in full in we

now for and leave questions. for here call I'm open it going the to Operator?

Patrick from question text first the with Brown. start We'll Instructions] [Operator

of the First chain any China, excellent are that talk from and supply particularly have for the of first there's a on has seeing this Mexico all benefited Has given question results disruptions, ground? and two questions. lot with My I What Bladex? recent congratulations. you opportunities near-shoring. represented is,

second part due of helped to the growth cost income to bank market during preparing the current this are But in XXXX ratio? then compensate lower to expenses. revenue scenario growth material And question, How is markets. has increase sustain potentially you for to revenue the

question. Mr. you, Thank for Brown your

Let start first. me the tackling second question

As we have the our of the main bank strategic make returns. to that is has objective mentioned, sustainable plan sure

but working in product stated limited I target is as mid track that. see. most a but you on can still clearly on as is upside, is by share teens, clients we're improving we Investor a hard XXXX. the on said, also And with Day, offering As there's wallet big Bladex clearly returns we're

it. everything we said sure make a was scale see developing and having and that decrease near the efficiency we will interest our credit for a the fees improve maintain in This say where we that for deposit when our pre-pandemic from And for gain rates. potential not in rates letter know, We compensate additional future for that of were this That have as payments base. generate sure and compensate are do project we sure sure, will decrease X% bank spreads to products, our includes expanding that potentially fees, levels will for rate all new you revenues treasury started. progress. not I in business, products in scaling

second first companies result parks, phases strongly yes, Tesla we as considering most some the in seeing the see that answer large industrial clients, clients near-shoring, a today manufacturing and have about of opening our In of starting are Mexico, opportunities in is in of for developing that of to near-shoring, regards will question believe short the is benefit we're I telecommunications that to particularly mainly Mexico business Latin are fact, near-shoring the conglomerates an production saw automotive matter announcement sure we us. our

for of for asking Many are investments. those their capital clients

U.S. the So, the in should increased our trade flows the is between answer and to ultimately that's inevitably Mexico. benefit of blacks the this lead short business core in run. will yes, so And long

that for you thank Okay, answer. much very

Individual question comes Mr. Investor. from Vallarino, next Our Ricardo

$XX us size the You growth XXXX. set commented commented year Day commercial you billion billion target? for you portfolio with down the roadmap see $XX Bladex Investor to XXXX. on have Recently, you investor the that that target a expect on how give to portfolio you a of reaching you to slow Can

our The the because is part of of dependent the in of growth pace region. large dynamics

of first expected the down than year, we're seeing we're slowing a more grew we the So, that bit because and the basically, and economics year this little headwinds region of the now. then

will dynamics products the as depend of the on have our growth the that the but larger billion customer again, to and the of So, track. in extent portfolio billion are largely to we also we're region, target $XX now. commercial additional And a base we is on getting pace way $XX the

from also This The question. next from is question CPA. Jeffrey Mr. text Jeffrey Auto Auto is

of with we in bank Company, to Is Generally country lending bank's Congratulations they the on year have expect XX XX to a million on I exceeded a in volume and the XXXX color about criteria, lending Is fourth quarter, to industry changing high or the quarter grew activity? short-term, this your results. involved this the had should is mistaken see with In have doing? the you trade like oversight NPLs. and level I largely a fourth I'll on this. some your do from have bank concern result the full expectations them. million finance.

Thank you for your question.

First of not have underwriting standards will changed all, and not credit change.

than That did loan We by largely will represents the a our and and XXXX. X.X% Mexico. it's have remain due it's in We less end conservative. to exposure NPLs particular, one reserved uptick non-banking of an institution of on mainly financial in very book is

after have the Chapter the in We materially last increased Mexico coverage XX November. announced Company

exposures not portfolio, financial financial Chile. it's of or That non-bank and concerned our in financial institutions really non-bank about more of X% in represent of institutions. and mainly mainly it's in is So, do one our our affiliates companies regulated Mexico not case than institutions, in we're

are we not not and we concerned are So, risk our changing appetite. credit

question next Our comes from Atuesta Bancolombia. from Andrea

like stable. the in to begins would strategy to expenses will what margins I and maintain be? more to about have rates but expecting color profitability in the are you What the were decrease solid NIM

Annie. the to call question rates? Let to the on me turn comment Do want you to,

already NIM, Yes, still rate is, the you. we as the re-pricing our in our all Jorge Thank expectations interest with to have mentioned to liabilities. see see assets we Sure. what increases and respect of

to a very between and So, expanding. balance we the margin interest Jorge net in sheet. future expect see that short-term, actions X.X% X.X%, the mentioned our we in on continue depends re-pricing that fed

After Jorge we rate previous enhance of solutions hope new and will that's answer, tailor-based the are what in five they and just developing the year about. mentioned is to in plan stop. spreads products a precisely Like increases, come process that our structure

rate do to expect we able to be to compensate is So, that increases.

do we that X% also the beginning to rates we back saw that pandemic. Jorge going go anticipate at as And the of to not mentioned, are interest

of constant. around X% should So X.X% fed fund rates more than rates normalize interest to the remain

projections contemplated. that our ROE for definitely in meetings, target of is So,

expansion, in a X.X%. So products level and generating new about that be rates margin normalized fee should interest

wants Sam, to about I worried too. say Commercial that, Officer, our think Chief you're if

in strategy we clients, say you of that face, of new a core this after from, though the comes like has well increasing that not been countries different arbitrage receivable, I Day trade that, as chain, of were so to numbers, we we of of layer big the parts, would Investor business Bladex a then our within structure discounts. building new even well, that reinforce comes to but from, supply financing just part quarter quarter that heard be I'd is finance, both facing noticeable Yes, that various profitability might our the the finance if doing, types all as terms part

And and and new after have that onboarding, been as increasing that we year, with of clients, that quarter. higher everything Same you build margin. been we have substantially. to And new to that layer the the for that do. optionality this quarter layer increase build and of we with we've clients more think continue that last And numbers did business, I comes new business

So, we're legacy not always or or business the been usual, that dependent on business the say doing. let's we business the as

building year. And we're I the Thank last think that is I with well. that we course, right what presented on we that think plan you.

of a to growth and on behave follow-up you Andrea. How letters commissions for do in front? question have What business? XXXX from this credit expect fees your syndication expectation is of We

because of credit Those they very traditions again, been have, that is of The nature. the doing. different letters in business, they're strategy part we've

all, doing specifically clients that this adding of new are more type of First business.

of more they that lot on letters year, we only were letter of the to that. cross-selling And clients on doing business of are as last for successful specifically we've onboarded more the as well that lending. clients focusing a So, been clients and we've business been credit credit

So, grow. business for I that to in think direction is continue particular that to

as that business of suffers, but terms the compensated that trade in if flows cross we're of clients the is well existing a be new region. course the in credit clients. should more new of the to both letter we course, depend And trade Of tied very sell as or on market adding clients reduced

is a different syndication the business, is substantially, really that it's it a and time. grow business So that takes business more for completely the that to business

us have the that strong with we of most we're where we a sell in we to careful base captive come Bladex investors transactions on that very what market. But the do. quite along also

business not a that So, -- more aggressive. we it's have been we are

And activity clients in the to fundraise slower business for to they when are willing to we us continue that M&A creating also the of funds. that year. solutions past, to as buy did do. certainty require I is extra mean, market for pay We do an been to we them, has this fee a

structure we is new What structure should that and that is also project generate added a business fees. or more finance

to line but this think for very expect business. the can year on I looking depend So, we we we number, to syndication much year, last be because conditions increase number, with market in increase the hopefully, the

question next Consulting. from comes from GBR Our Michael Rockman

management is three How the thinking a capital allocation with discount times at about than the and to the and covered dividend substantial book directors of more value? stock board being

an end Tier which the level, I including that's operate potential discussion. to instrument, XX we Capital the want just XX. lower is X ranges At buybacks, between board established. We allocation, the equity ongoing XX.X mean, the range we alternatives. and reported ratio, at dividends a the all banquet common hybrid and that have of

of our I say support to that and capital take $XX portfolio. between we year growth bank allocation grade bank investment And sound to are it's model, a business $XX our optimizing mentioned, to committed I we're It's five focused capital the billion a will position. commercial and As rating. on a the our plan. of billion long-term of pillar can pillar the

long-term So, target, the we're focused if more than the on short-term.

team further line for no be this now seeing the management I back point. to passing remarks. the questions at the concluding will I'm

your call. to thank and questions want just joining I No, everybody this for

transition before, focus aggressive region. on mentioned year not see will profitability will We committed and not we forward. in of standards so this XXXX a change growth and I the to profitability perhaps As going as underwriting year,

That's everybody say and for thank connecting. what for to I have now you

today's you Thank conference all now have you and great concludes Thank a very We'll call. lines. Goodbye. day. much. be the closing This