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US Non-Deal Roadshow, March 2018

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US Non-Deal Roadshow, March 2018

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US Non-Deal Roadshow, March 2018

  1. 1. Corporate Presentation As of December 2017 March, 2018
  2. 2. “This presentation contains forward-looking statements. These statements are made under the “safe harbor” provisions established by the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. The forward-looking statements in this presentation reflect the expectations of the Bank’s management and are based on currently available data; however, actual experience with respect to these factors is subject to future events and uncertainties, which could materially impact the Bank’s expectations. A number of factors could cause actual performance and results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the anticipated growth of the Bank’s credit portfolio, including its trade finance portfolio; the continuation of the Bank’s preferred creditor status; the impact of increasing 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 credit losses; the need for additional provisions for credit losses; the Bank’s ability to achieve future growth, the Bank’s ability 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 large deposit withdrawals.” 2
  3. 3. Agenda ▪ Business Model Evolution 4 ▪ Mission and Vision 6 ▪ 2017 Financial Performance 7 ▪ Business Environment 2018 15 ▪ ST, MT and LT goals 16 ▪ Appendix 19 3
  4. 4. Business Model Evolution, Current Vision/Mission Original 1979 - 2001 • On lending to banks • Important rating arbitrage • Focus on short term trade finance • Strong fee income generation from L/Cs & Country Risk Guarantees • Concentration on the 3 main economies (AR, BR, MX) 1979 Asian Crisis 1997-1998 Long Term Capital Management Crisis & Russian GKO 1998 Brazilian Crisis ‘’Brazilian Real Devaluation’’ 1998-1999 • Small adjustment to Credit Portfolio > the $6 billion range • Fee income reaches highest levels, CRG and LCs 1997 Argentinian Crisis 2001 – 2004 • Drastic reduction in the credit portfolio and client relationship • Focus on work out of the Argentinian Portfolio • Recapitalization 20012000 New Corporate Strategy 2004 - 2008 • New Corporate clients • Focus on trade finance and rating arbitrage • High portfolio concentration (country and tickets) • Low fee income 2002 2004 Financial Crisis 2008- 2009 • Focus on strengthening liquidity – important reduction of portfolio & client relationship • Concentration of funding- interbank lines & European banks 20082007 4
  5. 5. To be recognized as a leading institution in supporting trade and regional integration across Latin America To provide financial solutions of excellence to financial institutions, companies and investors doing business in Latin America VISION MISSION Expansion of Corporate Strategy 2010 – 2014 • Increase physical presence in other countries • Expand target market - middle market companies • Less importance of rating arbitrage • Implementation of loan syndication platform 2010 Oil Price and Commodities Super Cycle over/ Brazilian Crisis 2015 – 2016 • Sluggish trade flows growth • Important reduction of Brazilian portfolio 2016 “Back to Basics” 2015 - Present • Renewed focus on short term foreign trade • Negative credit cycle – commodity prices & Brazil’s recession • Drive higher levels of productivity • No rating arbitrage – Largest countries with similar or higher ratings than Bladex’s • Consolidation of the loan syndication platform – more fee income 2014 2015 CURRENT Business Model Evolution, Current Vision/Mission (Cont.) 5
  6. 6. 2017 Highlights - Cleaner and stronger balance sheet - negative credit cycle is over - Positive trends of business confirmed with a strong performance in 4Q17 - Streamlined and leaner organization – focus on productivity ▪ Higher disbursements during the year ▪ Resumed loan growth in 4Q17 ▪ Fee income close to record highs, with resilient growth YoY and QoQ ▪ Lower operating expenses, excluding non-recurring charges ▪ Effective loan restructuring efforts with lower specific provisions and problem exposures ▪ Strong liquidity and funding mix ACHIEVEMENTS ▪ Portfolio growth – tighter margins and high levels of liquidity ▪ Keep increased levels of fee income ▪ Maximize the use of capital – return to double-digit ROAE CHALLENGES 6
  7. 7. ▪ 4Q17 Profit of $20.6 MM (+1% QoQ, +54% YoY). FY17 Profit of $82.0 MM (-6% YoY) ▪ RoAE of 8.0% in 2017 with a 21.1% Tier I Basel III Capital Ratio Financial Performance Overview 4Q17 & FY17 Highlights ▪ Commercial portfolio growth in 4Q17 (+5% EoP and +3% Avg.) ▪ Strong origination - Annual disbursements reached $14.6Bn, +22% YoY ▪ NPLs (-10%) in 2017: successful restructuring and collection; write-offs against existing reserves ▪ Allowances for ECL (–21%) YoY and (–24%) QoQ on improved credit quality => Reserve coverage at 1.47% ▪ Upward shift in NII and NIM in 4Q17 mainly on increased average loan volumes ▪ In 2017 NII and NIM were impacted by lower volumes and tighter lending margins on abundant liquidity and short term trade finance focus, partially offset by increase in base rates ▪ Fees & Other Income close to record highs ▪ Two structured deals executed in 4Q17; Seven in 2017 ▪ Average deposits in excess of US$ 3 billion helps replacing more expensive funding ▪ Stable cost of funds – annual increase due to higher base rates ▪ Operating expenses increased on non-recurring personnel-related costs ▪ Recurring expenses were down 4% for the year 2017 Commercial Portfolio resumed growth Finalized credit restructurings Improved NII & NIM during 4Q17 Strong fee-based income Operating expenses driven by non-recurring charges Solid & diversified funding mix Stable Return metrics with strong capitalization levels 7
  8. 8. ▪ QoQ NII and NIM - Slight improvement on higher average lending balances ▪ YoY NII and NIM – Negatively impacted by reduced average loan volumes and lower net lending spreads Net Interest Income & Financial Margins 8
  9. 9. Fees & Other Income ▪ Two syndicated transactions executed in 4Q17 for a total of seven deals in FY17 ▪ Improved L/C business activity in 4Q17 and FY17 9
  10. 10. Commercial Portfolio Highlights ▪ EOP - FIs @ 49% of total (+10 pts YoY), traditional client base ▪ EOP Corporations @ 51% - Important industry diversification ▪ Oil & Gas exposure stable at 14% - YoY ▪ Increased relative exposure in Colombia, offseting decrease in Peru ▪ Increase in non-trade reflects renewed focus on lending to financial institutions ▪ 81% maturing within one year +4 pts YoY 10
  11. 11. ▪ NPL balances down on collections, write-offs against existing specific reserves, and migration from underperforming category ▪ ECL decrease on lower NPLs, with total reserve coverage of 1.5 times Credit Quality - NPL (*) (*) (*) Reserve refers to the allowance for expected credit losses on loans, loan commitments and financial guarantee contracts. 11
  12. 12. ▪ EoP deposits balance of $2.9 B; 67% placed by Central Banks or designees ▪ Average deposits at $3.2 B for 4Q17 and FY17, representing 62% and 59% of avg. total funding respectively (vs. 49% and 48% a year earlier) ▪ ST borrowings and debt +5 pts QoQ Average Funding Sources and Cost of Funds Deposits by Type of Client (As of December 31, 2017) Funding Sources by Geography (As of December 31, 2017) Funding Sources 12
  13. 13. Shareholder Returns ▪ $0.385/share declared for 4Q17 ▪ Attractive dividend yield of 5.5% in 2017 13
  14. 14. Credit demand recovery and improvement of origination margins Focus on Origination Bank Leverage Core Business Strengthening Business Environment 2018 Global Growth Trade Flows Growth - LATAM Economic Growth - LATAM Commodities Price Stability 14
  15. 15. ❖ Business acceleration ▪ Core Business Model + Complementary at full performance ▪ Origination- Management-Distribution Origination ▪ Strengthening of short- and medium- Trade Finance ▪ Segment-focused analysis (Country/Sector/Supply Chain) ▪ Focus on FIs, corporations, sovereigns and state-owned Active Liability Management (“ALM”) Higher Fees ▪ Contingencies (LCs) ▪ Syndications ▪ Derivatives ▪ Work Flows ▪ Operating & IT Platform 2018: Transition year* 2019-2020: Consolidation 2021-2025: Growth ❖ Reinforcement of Core Business Model ❖ Enhance origination capacity Use of capital (15% Tier 1) ❖ Consolidation of other products along the supply chain (“SCF”) ▪ Structured Credit Facilities quick off *Operation and work-setting transition. ROE: 10% ROE: 12% ROE: 15% ❖ Focus on Core Business Model ❖ Focus on Operating Efficiency 15 Short- medium- and long-term goals
  16. 16. Trade and Working Capital Financing to clients Resulting Portfolio Buyer 1, Country 1 Buyer 2, Country 2 Buyer x(times), Country x(times) 2018 Current Business Model 2019-2020 Complementary ▪ Trade finance programs for LatAm receivables discounting ▪ Provide supply chain solutions, focused on leveraging buyer/seller relationships ▪ Fee generation from portfolio turnover ▪ Niche player working to improve efficiencies ▪ Working Capital financing with/without USD trade documentation ▪ Competition from local banks 16 Business Model Evolution Days: A B C D Confirmation/Reception Of GoodsPurchase order Goods payment Client exports Finished Products Buyer Pays Order-to-Cash cycle E Cash-to-Cash Cycle Import Production Export Supplier CLIENT Buyer
  17. 17. Source: ICC Trade register 2015, Opus, Observations on the Evolution of Trade Finance, 2013 – CEB analysis 2017 LATAM TRADE (Exports + Imports): 1.9TnUSD Cash in Advance 30% 0.6TnUSD • In emerging countries, Cash in Advance should be higher than the average Traditional Trade Finance 8% (5-10%) 0.15TnUSD Open Account 62% 1.2TnUSD • Traditional documentary credits: LCs, SBLCs, Guarantees and Collections, represent between 5 and 10% of LatAm Trade Finance (BIS, ICC); (0.1TnUSD according to SWIFT) • Financial Intermediation (0.2TnUSD): - Import/Export Financing - Vendor Finance (receivables discounting, Forfaiting) - Factoring • Commodities Financing, etc.. • Inventory Financing • Structured Trade Finance (“STF”) • Without Bank Intermediation: - Open Account (Exporter is financing) Intl. factors Supply value chain – other financing (“SCF”) 17 Potential target market 5% of Regional Financial System’s assets from cross- border activity
  18. 18. Appendix
  19. 19. Key Financial Metrics Quarterly Results Full-Year Results (In US$ million, except percentages) 4Q17 3Q17 4Q16 QoQ YoY 2017 2016 YoY Profit for the period $20.6 $20.5 $13.3 1% 54% $82.0 $87.0 -6% EPS (US$) $0.52 $0.52 $0.34 0% 53% $2.09 $2.23 -6% Return on Average Equity ("ROAE") 7.9% 7.9% 5.3% 0% 50% 8.0% 8.8% -8% Return on Average Assets (ROAA) 1.30% 1.30% 0.73% 0% 79% 1.27% 1.16% 9% Net Interest Margin ("NIM") 1.78% 1.76% 2.05% 1% -13% 1.85% 2.08% -11% Net Interest Spread ("NIS") 1.38% 1.37% 1.79% 1% -23% 1.48% 1.84% -20% Loan Portfolio 5,506 5,343 6,021 3% -9% 5,506 6,021 -9% Commercial Portfolio 5,999 5,706 6,444 5% -7% 5,999 6,444 -7% Total Allowance for ECL on loans, loan commitments and financial guarantee contracts to Commercial Portfolio 1.47% 2.04% 1.73% -28% -15% 1.47% 1.73% -15% Non-Performing Loans to Gross Loan Portfolio (%) 1.07% 1.20% 1.09% -11% -2% 1.07% 1.09% -2% Total Allowance for ECL on loans, loan commitments and financial guarantee contracts to Non-Performing Loans (x times) 1.5 1.8 1.7 -17% -12% 1.5 1.7 -12% Efficiency Ratio 38% 32% 28% 19% 35% 34% 27% 24% Market Capitalization 1,061 1,159 1,153 -8% -8% 1,061 1,153 -8% Assets 6,273 6,200 7,181 1% -13% 6,273 7,181 -13% Tier 1 Capital Ratio Basel III 20.4% 20.3% 17.9% 1% 14% 20.4% 17.9% 14% Leverage (times) 6.0 6.0 7.1 0% -15% 6.0 7.1 -15% (*) End-of-period balances. Results Performance Portfolio Quality (*) Efficiency Scale & Capitalization (*) 19
  20. 20. Regional Exposure by Industry as of December 31, 2017 20

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