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Bladex 3Q20 Earnings Results Presentation

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Blx webcast presentation 3Q20

  1. 1. 1 Banco Latinoamericano de Comercio Exterior, S.A. (“Bladex”) 3Q20 Earnings Results Presentation October 27, 2020
  2. 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.
  3. 3. 3 +3% growth QoQ in Commercial Portfolio, maintaining sound asset quality and portfolio diversification ▪ $0 NPLs ▪ All loans are current ▪ 59% in Investment Grade countries ▪ 73% maturing in less than a year ▪ Margin over Libor +14pbs QoQ Resumed portfolio quarterly growth with strong level of disbursements ▪ > $2.2 billion in new disbursements (+111% QoQ) ▪ Continued risk assessment and close contact with clients ▪ Margins of new disbursements slightly higher than those of maturities (USD millions, except for %) - QoQ Bladex continues to be well-positioned throughout the crisis ▪ Top-tier clients (FIs & Corporate industry leaders) ▪ No retail exposure ▪ 71% maturing in less than a year ▪ Robust credit quality with $0 NPLs 3Q20 started with a well-positioned Commercial Portfolio, focused on defensive sectors, albeit at lower balances by design, with forthcoming opportunities to resume growth ​ ​ ​ ​ 4,486 (1,834) 1,915 4,566 430 (227) 318 520 30-Jun-20 Maturities * Disbursements 30-Sep-20 (*) Includes prepayments and sales 4,915 (2,061) +2,233 5,087 L+ 2.31% L+ 1.95% Loan Portfolio Average Interest Rate Total L+ 2.27% L+ 2.45% Contingencies Loans Collection of virtually all scheduled credit maturities ▪ Collected over $2 billion in quarterly maturities ▪ High quality borrowers ▪ Short-term nature of the portfolio
  4. 4. 4 +3% growth QoQ in Commercial Portfolio, maintaining sound asset quality and portfolio diversification ▪ $0 NPLs ▪ All loans are current ▪ 59% in Investment Grade countries ▪ 73% maturing in less than a year ▪ Margin over Libor +14pbs QoQ Resumed portfolio quarterly growth with strong level of disbursements ▪ > $2.2 billion in new disbursements (+111% QoQ) ▪ Continued risk assessment and close contact with clients ▪ Margins of new disbursements slightly higher than those of maturities (USD millions, except for %) - QoQ Collection of virtually all scheduled credit maturities ▪ Collected over $2 billion in quarterly maturities ▪ High quality borrowers ▪ Short-term nature of the portfolio During 3Q20, the trend in collections remained strong at close to 100%, evidencing the unceasingly high quality of Bladex’s borrower base and short-term nature of its business ​ ​ ​ ​ 4,486 (1,834) 1,915 4,566 430 (227) 318 520 30-Jun-20 Maturities * Disbursements 30-Sep-20 (*) Includes prepayments and sales 4,915 (2,061) +2,233 5,087 L+ 2.31% L+ 1.95% Loan Portfolio Average Interest Rate Total L+ 2.27% L+ 2.45% Contingencies Loans Bladex continues to be well-positioned throughout the crisis ▪ Top-tier clients (FIs & Corporate industry leaders) ▪ No retail exposure ▪ 71% maturing in less than a year ▪ Robust credit quality with $0 NPLs
  5. 5. 5 +3% growth QoQ in Commercial Portfolio, maintaining sound asset quality and portfolio diversification ▪ $0 NPLs ▪ All loans are current ▪ 59% in Investment Grade countries ▪ 73% maturing in less than a year ▪ Margin over Libor +14pbs QoQ (USD millions, except for %) - QoQ Resumed portfolio quarterly growth with strong level of disbursements ▪ > $2.2 billion in new disbursements (+111% QoQ) ▪ Continued risk assessment and close contact with clients ▪ Margins of new disbursements slightly higher than those of maturities Quarterly loan origination more than doubled from the previous quarter, while lending margins continued an upward trend ​ ​ ​ ​ 4,486 (1,834) 1,915 4,566 430 (227) 318 520 30-Jun-20 Maturities * Disbursements 30-Sep-20 (*) Includes prepayments and sales 4,915 (2,061) +2,233 5,087 L+ 2.31% L+ 1.95% Loan Portfolio Average Interest Rate Total L+ 2.27% L+ 2.45% Contingencies Loans Bladex continues to be well-positioned throughout the crisis ▪ Top-tier clients (FIs & Corporate industry leaders) ▪ No retail exposure ▪ 71% maturing in less than a year ▪ Robust credit quality with $0 NPLs Collection of virtually all scheduled credit maturities ▪ Collected over $2 billion in quarterly maturities ▪ High quality borrowers ▪ Short-term nature of the portfolio
  6. 6. 6 Resumed portfolio quarterly growth with strong level of disbursements ▪ > $2.2 billion in new disbursements (+111% QoQ) ▪ Continued risk assessment and close contact with clients ▪ Margins of new disbursements slightly higher than those of maturities Collection of virtually all scheduled credit maturities ▪ Collected over $2 billion in quarterly maturities ▪ High quality borrowers ▪ Short-term nature of the portfolio (USD millions, except for %) - QoQ +3% growth QoQ in Commercial Portfolio, maintaining sound asset quality and portfolio diversification ▪ $0 NPLs ▪ All loans are current ▪ 59% in Investment Grade countries ▪ 73% maturing in less than a year ▪ Margin over Libor +14pbs QoQ Increased end-of-period Commercial Portfolio balances (+3% QoQ) and lending spreads (+14pbs), maintaining a sound asset quality and diversification ​ ​ ​ ​ 4,486 (1,834) 1,915 4,566 430 (227) 318 520 30-Jun-20 Maturities * Disbursements 30-Sep-20 (*) Includes prepayments and sales 4,915 (2,061) +2,233 5,087 L+ 2.31% L+ 1.95% Loan Portfolio Average Interest Rate Total L+ 2.27% L+ 2.45% Contingencies Loans Bladex continues to be well-positioned throughout the crisis ▪ Top-tier clients (FIs & Corporate industry leaders) ▪ No retail exposure ▪ 71% maturing in less than a year ▪ Robust credit quality with $0 NPLs
  7. 7. 7 Q1 Q2 Q3 Variance Q3 Vs Q1 $195 $180 $146 -25% ($49 MM) $281 $221 $178 -37% ($103 MM) $355 $191 $174 -51% ($181MM) 14% 12% 10% 9% 7%3% 3% 1% 17% 6% 4% 3% 3% 3% 2% 3% Colombia Mexico Chile Non-Latam Panama T. & Tobago Peru Uruguay Brazil Guatemala Dominican Republic Costa Rica Ecuador Argentina Paraguay Other Latam≤ 1% Q1 Q2 Q3 Variance Q3 Vs Q1 $147 $68 $48 -67% ( $99 MM) Airlines Less than 1% as of Q3 Bladex maintained its focus on high quality origination and on reducing exposure to higher risk countries and sectors By Country Commercial Portfolio by Industry Argentina 3% as of Q3 Costa Rica 3% as of Q3 By Country As of Sep20 By CountryCommercial Portfolio by Country As of Sep 20 Ecuador 3% as of Q3 (USD millions) - EoP (USD millions) - EoP USD 5.1 BnUSD 5.1 Bn IG 59% Non-IG 41% 53% 6% 5% 5% 4% 4% 3% 3% 3% 2% 2% 2% 2%1% 1% 4% Financial institutions Electric power Metal manufacturing Food and beverage Other services Oil and gas (Downstream) Oil and gas (upstream) Other manufacturing industries Oil and gas (Integrated) Coffee Grains and oilseeds Mining Retail trade Plastics and Packaging Sugar Other Industries <1%
  8. 8. 8 79% 68% 74% 20% 31% 22% 1% 1% 4% 6,770 6,603 6,202 -1,000,000 -800,000 -600,000 -400,000 -200,000 0 0% 20% 40% 60% 80% 100% 1Q20 2Q20 3Q20 Loans Cash and due from banks Investment Portfolio (USD millions, except for %) - EoP Interest Earning Assets The Bank resumed portfolio growth during 3Q20, shifting from high liquidity levels in previous quarters (by design) +$81 MM or 2% QoQ ✓ The Bank resumed loan portfolio growth during 3Q20 after high liquidity levels from previous quarters (by design) -$620 MM or -31% QoQ ✓ The Bank has gradually reduced its cash position, still remaining at a robust level; mainly placed with the Federal Reserve Bank of New York +$138 MM or 144% QoQ ✓ Higher Investment Portfolio, of which $107 million were new corporate debt securities classified as HQLA by Basel III standards
  9. 9. 9 44% 52% 60% 30% 23% 8% 26% 25% 32% 5,659 5,524 5,133 -80,000 -70,000 -60,000 -50,000 -40,000 -30,000 -20,000 -10,000 0 0% 20% 40% 60% 80% 100% 1Q20 2Q20 3Q20 Long-term borrowings and debt, net Repos and Short-term borrowings and debt Deposits Bladex successfully tapped the international debt and capital markets, while deposits continued to grow, resulting in a continuous solid and diversified funding base Funding Structure +$169 MM or 6% QoQ ✓ Deposit base continued to grow, with more than half provided by the Bank's Class A shareholders (51%) ✓ Growth of the Bank’s new Yankee CD program to $329 million (+70% QoQ) ✓ 3rd issuance in the international capital markets (144A/RegS) for USD $400 million, 4 times oversubscribed. The 5-year term bonds pay a fixed rate coupon of 2.375% (Treasury +220bps) ✓ New syndicated loan placed among investors from Asia, Europe, US and Latin America +$273 MM or 20% QoQ (USD millions, except for %) - EoP ✓ Reduced reliance on short-term bilateral funding, while maintaining a fluent access to a wide network of fund providers from Asia, Europe and the Americas -$833 MM or -66% QoQ
  10. 10. 10 (USD millions) 3Q19 2Q20 3Q20 Statement of Profit or Loss Net Interest Income ("NII") $26.7 $21.7 $22.6 Fees and commissions, and other income, net $3.0 $2.1 $3.0 (Loss) gain on financial instruments, net ($0.2) ($3.9) ($0.4) Reversal (provision) for credit losses ($0.6) $2.6 ($1.5) Reversal (impairment) on non- financial assets $0.5 ($0.1) $0.1 Operating expenses ($9.0) ($8.3) ($8.3) Profit for the period $20.4 $14.1 $15.4 Sustained operating performance in 3Q20, on higher revenues and stable operating expenses QoQ, while provisions for credit losses remained low on sound asset quality ✓ Revenue growth QoQ on higher margins and increased letter of credit fees ✓ Combined impact from credit provisions and changes in fair value of financial instruments remain low Financial Margins ✓ Decreased quarterly expense levels YoY on lower variable compensation ROAE & ROAA 8.0% 8.7% 7.2% 5.5% 6.0% 1.3% 1.3% 1.1% 0.8% 1.0% 3Q19 4Q19 1Q20 2Q20 3Q20 Return on Average Equity (ROAE) Return on Average Assets (ROAA) 1.77% 1.65% 1.59% 1.28% 1.42% 1.19% 1.18% 1.17% 1.01% 1.19% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% 2.00% 3Q19 4Q19 1Q20 2Q20 3Q20 Net Interest Margin ("NIM") Net Interest Spread ("NIS") +$1.8 MM QoQ -$0.6 MM QoQ ✓ Downward trend reversal in NIM & NIS in 3Q20 ✓ Lower returns in 2020 mainly on change in asset composition Stable QoQ≈ ✓ Increased quarterly profits by 9% QoQ+$1.3 MM QoQ
  11. 11. 11 4.54% 4.19% 3.94% 3.56% 3.31% 3.09% 2.69% 2.41% 1.57% 1.26% 2.23% 1.79% 1.22% 0.19% 0.20% 3.29% 3.30% 3.38% 3.39% 2.64% 0.00 % 2.00 % 4.00 % 6.00 % 8.00 % 10 .0 0% 12 .0 0% 14 .0 0% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 3Q19 4Q19 1Q20 2Q20 3Q20 1.45% 1.50% 1.53% 2.05% 1.99% 1,737 135 5,297 4,481 1,946 79 5,728 4,8092Q20 3Q20 2Q20 3Q20 2Q20 3Q20 3Q20 2Q20 NII: +$0.9MM QoQ to $22.6MM Rate Effect Volume Effect Interest Rate Variations Positive quarterly trend in NII and NIM, on widening rate differential between loans and liabilities. Still below pre-Covid levels, mostly pressured by high average cash position and lower average loan balances -0.25% -0.31% 0.02% NII Impact -$2.5MM +$4.0MM +$0.1MM +$1.3MM Loans Financial Liabilities Cash and due from banks Interest Rate Evolution Investment Portfolio -0.75% -$0.3MM Volume Variation NII Impact -$0.4MM -$2.5MM +$0.5MM -$0.1MM -328MM +56MM -209MM Average Balances Loans * Financial Liabilities Investment Portfolio Cash and due from banks +$1.7MM-431MM * Gross of unearned interest and deferred fees. NIM: +14bps QoQ to 1.42% NIS: +18bps QoQ to 1.19% ✓ +6pbs in lending rate differential; net positive impact of $1.5 MM QoQ, driving positive total rate net effect. ✓ Change in average asset composition since March 2020 still weighting on NII volume net effect
  12. 12. 12 (USD million) 30-Sep-19 30-Jun-20 30-Sep-20 Allowance for losses Balance at beginning of the period $106.2 $102.5 $47.8 Provisions (reversals) 0.6 (2.6) $1.5 Write-offs, net of recoveries (2.4) (52.1) (4.4) End of period balance $104.4 $47.8 $44.9 95% 90% 94% 4% 10% 6% 1% 0% 0% 6,302 5,011 5,320 -1,000,000 -800,000 -600,000 -400,000 -200,000 0 0% 20% 40% 60% 80% 100% 120% 3Q19 2Q20 3Q20 62 1.1% 0.0% 0.0% 1.7x n.a. n.a. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 45 50 55 60 65 70 75 80 3Q19 2Q20 3Q20 Credit Impaired Loans Credit impaired loans to loan portfolio Total allowance for losses to credit impaired loans Zero NPLs since June 30, 2020 Adequate level of allowances for credit losses under IFRS 9 incorporates forward looking expected losses and reflects sound portfolio quality, with zero non-performing loans and the entire portfolio being current Allowance for Credit Losses Credit Impaired Loans (USD millions, except for %)(USD millions, except for %) Total Allowance for Losses to Credit Portfolio 1.66% 0.84% Allowance for Losses to Stages 1 + 2 0.80% 0.84% 0.95% 0.95% Allowance for Losses 104.4 44.947.8 Stage 1 (low risk) Stage 2 (increased risk) Stage 3 (credit impaired) Credit Portfolio (1) Includes allowance for expected credit losses on loans at amortized cost, on loan commitments and financial guarantees contracts, and on securities at amortized cost and at fair value through other comprehensive income. 1
  13. 13. 13 5.7 4.2 4.6 3.3 4.1 3.7 9.0 8.3 8.3 - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 3Q19 2Q20 3Q20 Salaries and other employee expenses Non-employee related expenses 29.5 19.9 25.2 -9.0 -8.3 -8.3 30.4% 41.5% 33.1% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% -20 -10 0 10 20 30 40 50 3Q19 2Q20 3Q20 Total revenues Operating expenses Efficiency Ratio Efficiency improved in 3Q20 due to higher revenues and stable operating expenses QoQ EfficiencyOperating Expenses (USD millions, except for %)(USD millions)
  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 “Third quarter results are, once again, a good reflection of our conservative approach and the flexibility of our business model. There is no doubt that there is still a great deal of uncertainty in the months to come and therefore priorities will continue to be the quality of the loan portfolio and keeping ample liquidity. Opportunities will keep arising as the economies re-open throughout the region and Bladex will continue to support its clients during this uncertain time.” -Jorge Salas, CEO

Bladex 3Q20 Earnings Results Presentation

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