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Blx webcast presentation 2 q20 final

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2q2020

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Blx webcast presentation 2 q20 final

  1. 1. 2Q20 Earnings Results Presentation July 28, 2020
  2. 2. This presentation 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 presentation 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 government actions intended to limit its spread; 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. 2
  3. 3. Well-positioned at the onset of the crisis: The Bank’s business model becomes an especially relevant comparative advantage within the current context, allowing a UNIQUE possibility to adapt to the rapidly changing market conditions in a very agile manner. ✓ Top-Tier Clients (FIs & Corp industry leaders). No retail exposure. ✓  70% maturing in less than a year. ✓ Regional footprint allowing fast portfolio reallocation throughout resilient countries and industries 31-Mar-20 Loans Contingencies In US$ millions 3
  4. 4. ✓ $2BN scheduled credit maturities ✓ 99% credit collection ✓ $222 million in prepayments Maturities Loans Contingencies In US$ millions 99% collection of scheduled credit maturities, on the account of high quality of borrowers and short- term nature of the portfolio. 4
  5. 5. Disbursements Selective disbursements for $1BN under tighter credit underwriting standards, in defensive sectors and clients with focus in lower risk countries. Loans Contingencies In US$ millions ✓ Re-assessed portfolio profile & contacted our client base ✓ New disbursements concentrated in 2H of the quarter ✓ At shorter tenors and at wider risk- adjusted credit spreads 5
  6. 6. 30-Jun-20 By design, Commercial Portfolio decreases 16%, maintaining a sound asset quality and portfolio diversification, further strengthening the Bank’s liquidity position. Loans Contingencies In US$ millions ✓ 58% in investment grade countries; 52% in FI’s ✓ 71% maturing in less than a year ✓ Robust credit quality, with $0 NPL’s 6
  7. 7. 78% 20% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 31-Mar-2020 Other * 6,823 Loans Cash and due from banks 68% 30% 2% 30-Jun-2020 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 6,627 Asset size remained basically unaltered. The reduction on the loan portfolio balances, coupled with the increased liquidity, have impacted the results for the second quarter. ✓ By design, loan balances down 16% to $4.5BN ✓ Collection of 99% of scheduled credit maturities plus prepayments ✓ Reassessment of the risk profile of the entire portfolio ✓ Selective disbursements at wider credit spreads ✓ Strong liquidity position at $2BN, as a result of its continued and ample access to diversified funding sources ✓ Rapid collection of loan maturities as an effective liquidity buffer Total Assets (in US$ million) * Includes Securities and other financial assets, net; Interest receivable loans; Allowance for loan losses; Unearned interest and deferred fees loans; Customers' liabilities under acceptances; Derivative financial instruments – assets; Equipment and leasehold improvements, net; Intangibles, net; Investment properties and Other assets 7
  8. 8. 8 The portfolio´s reallocation resulted in an increase in investment grade countries to 58%, maintaining a significant stake in top-tier financial institutions at 52%. The remaining exposure continues to be well diversified among several sectors and countries. 52% 8% 5% 5% 4% 4% 4% 3% 3% 2% 2% 2% 6% Financial Institutions Electric Power Food and Beverage Metal Manufacturing Oil and Gas (Downstream) Oil and Gas (Integrated) Other Services Other Manufacturing Industries Oil and Gas (Upstream) Retail Trade Mining Grains and Oilseeds OtherIndustries≤ 1.5% Commercial Portfolioby Industry Mar 20 Jun 20 16% 10% 9% 8% 7% 4% 4% 16% 6% 4% 4% 4% 3% 2% 2% 1% Colombia Chile Mexico Panama Non Latam Trinidad & Tobago Peru Brazil Guatemala Costa Rica Ecuador Argentina Dominican Republic Honduras Paraguay OtherLatam≤ 1% Commercial Portfolioby Country Mar 20 - IG 55% Jun 20 - IG 58% Non-Investment Grade Investment Grade 8
  9. 9. 43% 30% 25% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 31-Mar-2020 Other * 5,804 Long-term borrowings and debt, net Repos and Short- term borrowings and debt Deposits 52% 23% 24% 1% 30-Jun-2020 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 5,605 ✓ Repayment of our 144-A bond for US$350MM ✓ Successful new bond in the Mexican capital market, in local currency, for a USD equivalent of  US$230MM ✓ +17% QoQ ✓ 53% from central bank shareholders, up from 48% in Q1 ✓ Ample availability and access to short-term bilateral funding sources from long-standing correspondent banks across the globe Total Liabilities (US$ million) Increasing the tenor of the borrowings from 10 months to 16 months The Bank maintained a fluid access to diversified and stable funding sources, increasing the tenor of its overall funding structure and benefiting from a decreasing interest rate environment. * Includes Interest payable deposits; Interest payable borrowings and debt; Customers' liabilities under acceptances; Derivative financial instruments – liabilities; Allowance for loan commitments and financial guarantee contract losses and Other liabilities 9
  10. 10. (In US $ million) 6M20 6M19 2Q20 1Q20 2Q19 S tatem ent of P rofit or Los s Net Interes t Incom e ("NII") $47.5 $56.0 $21.7 $25.8 $27.9 Fees and com m is s ions , and other incom e, net $5.4 $8.9 $2.1 $3.3 $5.6 (Los s ) gain on financial ins trum ents , net ($4.3) $0.8 ($3.9) ($0.4) $0.1 R evers al (provis ion) for credit los s es $2.7 ($1.8) $2.6 $0.1 ($0.8) Im pairm ent on non-financial as s ets ($0.1) $0.0 ($0.1) $0.0 $0.0 Operating expens es ($18.8) ($20.4) ($8.3) ($10.5) ($10.6) P rofit for the period $32.4 $43.5 $14.1 $18.3 $22.3 Net income for Q2 of $14.1MM on lower interest and fee revenues, impacted by the Bank’s decision to increase its liquidity position and lower loan balances in view of the current market environment. 9.0% 7.2% 5.5% 8.8% 6.4% 1.4% 1.1% 0.8% 1.4% 1.0% 2Q19 1Q20 2Q20 6M19 6M20 ROAEand ROAA Evolution Return on Average Equity (ROAE) Return on Average Assets (ROAA) 4,902 4,681 4,114 20.4% 21.8% 24.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 30-Jun-2019 31-Mar-2020 30-Jun-2020 Tier 1 Ratio(Basel III) Risk-Weighted Assets Basel III (US$ million) Tier1 Capital Ratio (Basel III) -$5.3MM QoQ ✓ On reduced Commercial Portfolio, impacting NII and fees -$1.3MM +$2.3MM QoQ ✓ Net impact of credit provision reversal and unrealized loss of a debt instrument measured at FVPL ✓ On lower personnel expenses 10
  11. 11. NII and NIM negatively impacted by the change in asset composition, partly compensated by the Bank’s favorable interest rate gap position in a decreasing market rate environment and widening of lending spreads. NII QoQ: -$4.1MM (from $25.8 MM in 1Q20 to $21.7MM in 2Q20) -$4.1MM Rate Effect Volume Effect Volume Variation NII Impact -$6.6MM -$8.4MM -1.8MM +$3.5MM -$851MM +289MM +1,148MM *Gross of unearned interest and deferred fees. Includes NPLs effect * 1,946 5,728 4,809 798 5,439 5,660 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Cash and Due from Banks Financial Liabilities Loans 1Q20 2Q20 1Q20 2Q20 1Q20 2Q20 Average Balances -0.38% -0.84% -1.03% Interest Rate Variations NII Impact -$4.6MM +12.2MM -$5.1MM +$2.5MM Loans Financial Liabilities Cash and Due from Banks Interest Rate Evolution 4.81% 4.54% 4.19% 3.94% 3.56% 3.28% 3.09% 2.69% 2.41% 1.57% 2.44% 2.23% 1.79% 1.22% 0.19% 0.00 % 1.00% 2.00 % 3.00% 4.00 % 5.00 % 6.00 % 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2Q19 3Q19 4Q19 1Q20 2Q20 1.53% 1.45% 1.50% 1.53% 1.99% 11
  12. 12. 12 12 (*) The sale of the Bank’s remaining credit-impaired sugar loan resulted in a $2.7 million Stage 3 (IFRS 9) credit provision reversal, and a $52.1 million loan write-off against previously constituted Stage 3 (IFRS 9) individually assessed credit allowance. Credit provision reversals totaling $2.6 million, mostly related to the sale of its single remaining credit- impaired loan (or NPL). Quarter-end total allowance for credit losses represented nearly 1% of the total Credit Portfolio. Total Credit Portfolio ($MM) = Stage 3 (Credit Impaired) Stage 2 (Increased Risk) Stage 1 (Low Risk) Allowance for losses / Credit Portfolio (%) = QoQ $383MM, 6% $518MM, 10% $62MM, 1% 1.73% 0.95% $5,911MM $5,011MM +$136MM -$62MM (*) $5,466MM, 93% $4,493MM, 90% -$974MM
  13. 13. 6M20 6M19 YoY (%) 2Q20 1Q20 2Q19 QoQ (%) YoY (%) Operating expens es S alaries and other employee expens es 11.2 12.1 -8% 4.2 7.0 5.8 -40% -28% D epreciation of equipment and leas ehold improvements 1.6 1.4 14% 0.9 0.7 0.7 16% 21% Amortization of intangible as s ets 0.4 0.4 6% 0.2 0.2 0.2 -3% -3% Other expens es 5.7 6.5 -13% 3.1 2.6 3.8 17% -20% T otal Operating Expens es $18.8 $20.4 -8% $8.3 $10.5 $10.6 -22% -22% T otal Revenues $48.7 $65.7 -26% $19.9 $28.8 $33.6 -31% -41% Effic ienc y Ratio 38.7% 31.1% 24% 41.5% 36.7% 31.4% Operating expenses decreased by 22% QoQ to $8.3MM mainly due to decreased salary and other employee expenses, on the account of reduced performance-based variable compensation provision. 13 (In US $ million) 6M20 6M19 2Q20 1Q20 2Q19 S tatem ent of P rofit or Los s Net Interes t Incom e ("NII") $47.5 $56.0 $21.7 $25.8 $27.9 Fees and com m is s ions , and other incom e, net $5.4 $8.9 $2.1 $3.3 $5.6 (Los s ) gain on financial ins trum ents , net ($4.3) $0.8 ($3.9) ($0.4) $0.1 R evers al (provis ion) for credit los s es $2.7 ($1.8) $2.6 $0.1 ($0.8) Im pairm ent on non-financial as s ets ($0.1) $0.0 ($0.1) $0.0 $0.0 Operating expens es ($18.8) ($20.4) ($8.3) ($10.5) ($10.6) P rofit for the period $32.4 $43.5 $14.1 $18.3 $22.3
  14. 14. 14 14 “We believe that our 40-year experience in the Region, including several negative credit cycles, and our good understanding of the impacts and macroeconomic dynamics in every country, play to our advantage. We are committed to continue to support our clients, for whom we have been long-standing allies.” -Jorge Salas, CEO “We believe that our 40-year experience in the Region, including several negative credit cycles, and our good understanding of the impacts and macroeconomic dynamics in every country, play to our advantage. We are committed to continue to support our clients, for whom we have been long-standing allies.” -Jorge Salas, CEO

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