BLADEX ANNOUNCES NET PROFIT OF $37.0 MILLION OR $1.02 PER SHARE, EXPANDING ITS ANNUALIZED RETURN ON EQUITY TO 13.7% FOR 1Q23

Rhea-AI Summary

Banco Latinoamericano de Comercio Exterior (Bladex), listed as NYSE:BLX, reported strong financial results for 1Q23, with a net profit of $37.0 million, marking a 19% increase quarter-on-quarter and a significant 232% year-on-year rise. This performance is attributed to continued growth in net interest income, which rose to $52.6 million, reflecting a 105% year-on-year growth and an expansion in the net interest margin to 2.41%. The bank's return on equity improved to 13.7%, up by 212 basis points QoQ. Despite a 9% QoQ decline in fees, they still grew by 22% YoY. Operating expenses decreased slightly, leading to an improved efficiency ratio of 26.9%. Bladex maintained a stable credit portfolio of $8,716 million, with solid liquidity at 14.1% of total assets.

Positive

• Net profit of $37.0 million in 1Q23 (+19% QoQ; +232% YoY)
• Net interest income increased to $52.6 million in 1Q23 (+6% QoQ; +105% YoY)
• Return on equity rose to 13.7% in 1Q23 (+212 bps QoQ; +925 bps YoY)
• Efficiency ratio improved to 26.9% in 1Q23 (-400 bps QoQ; -958 bps YoY)
• Stable credit portfolio at $8,716 million (stable QoQ; +4% YoY)
• Liquidity position at 14.1% of total assets as of March 31, 2023

Negative

• Fees and commissions decreased by 9% QoQ in 1Q23

PANAMA CITY, Republic of Panama, April 18, 2023 /PRNewswire/ -- Banco Latinoamericano de Comercio Exterior, S.A. (NYSE: BLX, "Bladex", or "the Bank"), a Panama-based multinational bank originally established by the central banks of 23 Latin-American and Caribbean countries to promote foreign trade and economic integration in the Region, announced today its results for the First Quarter ("1Q23") ended March 31, 2023. 

The consolidated financial information in this document has been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

FINANCIAL SNAPSHOT

(US$ million, except percentages and per share amounts)	1Q23	4Q22	1Q22
Key Income Statement Highlights
Net Interest Income ("NII")	$52.6	$49.4	$25.7
Fees and commissions, net	$4.8	$5.3	$3.9
Gain (loss) on financial instruments, net	$1.7	($1.6)	$0.6
Total revenues	$59.2	$53.2	$30.2
Provision for credit losses	($6.3)	($5.8)	($8.1)
Operating expenses	($15.9)	($16.4)	($11.0)
Profit for the period	$37.0	$31.0	$11.1
Profitability Ratios
Earnings per Share ("EPS") (1)	$1.02	$0.85	$0.31
Return on Average Equity ("ROE") (2)	13.7 %	11.6 %	4.5 %
Return on Average Assets ("ROA") (3)	1.6 %	1.3 %	0.6 %
Net Interest Margin ("NIM") (4)	2.41 %	2.11 %	1.32 %
Net Interest Spread ("NIS") (5)	1.82 %	1.63 %	1.15 %
Efficiency Ratio (6)	26.9 %	30.8 %	36.4 %
Assets, Capital, Liquidity & Credit Quality
Credit Portfolio (7)	$8,716	$8,726	$8,412
Commercial Portfolio (8)	$7,778	$7,706	$7,321
Investment Portfolio	$938	$1,020	$1,091
Total assets	$9,249	$9,284	$8,458
Total equity	$1,096	$1,069	$1,005
Market capitalization (9)	$633	$588	$565
Tier 1 Capital to risk-weighted assets (Basel III – IRB) (10)	15.3 %	15.3 %	16.2 %
Capital Adequacy Ratio (Regulatory) (11)	13.5 %	13.2 %	13.4 %
Total assets / Total equity (times)	8.4	8.7	8.4
Liquid Assets / Total Assets (12)	14.1 %	13.7 %	9.2 %
Credit-impaired loans to Loan Portfolio (13)	0.5 %	0.4 %	0.2 %
Impaired credits (14) to Credit Portfolio	0.4 %	0.4 %	0.1 %
Total allowance for losses to Credit Portfolio (15)	0.8 %	0.8 %	0.7 %
Total allowance for losses to Impaired credits (times) (15)	2.1	1.9	5.2

1Q23 FINANCIAL & BUSINESS HIGHLIGHTS

• Positive trend for higher Profitability, with Net Profit of $37.0 million in 1Q23 (+19% QoQ; +232% YoY), driven by continued growth trend on top line revenues from higher Net Interest Income ("NII") and fee income.
• Expanded Annualized Return on Equity ("ROE") to 13.7% in 1Q23, increasing 212 bps QoQ and 925 bps YoY.  The Bank´s Tier 1 Basel III Capital and Regulatory Capital Adequacy Ratios stood at 15.3% and 13.5%, respectively, as the Bank remained committed to a strong capitalization. 
• Growth trend in NII for eighth consecutive quarter, increasing to $52.6 million in 1Q23 (+6% QoQ; +105% YoY), as Net Interest Margin ("NIM") expanded to 2.41% in 1Q23 (+30 bps QoQ; +109 bps YoY), on the back of higher lending spreads and market rates.
• Higher YoY Fees and Commissions totaling $4.8 million for 1Q23 (-9% QoQ; +22% YoY), as fee income from letters of credit sustained its increasing trend for sixth consecutive quarters (+6% QoQ; +18% YoY), offsetting the uneven transaction-based nature of the Bank's loan syndication activity.
• Constant improvement in Efficiency Ratio to 26.9% in 1Q23
  (-400 bps QoQ; -958 bps YoY) on the back of solid revenue growth, overcompensating higher YoY operating expenses related to strategy execution. For the 1Q23, operating expenses seasonally decreased 3% QoQ mainly due to slower pace in administrative expenses. 
• Steady level of Credit Portfolio at $8,716 million as of March 31, 2023 (stable QoQ; +4% YoY). 
• Commercial Portfolio EoP balances reached $7,778 million at 1Q23 (+1% QoQ; +6% YoY), as the Bank favored margin expansion through optimization of portfolio mix and risk-adjusted returns. Consequently, 1Q23 average Commercial Portfolio balances decreased 6% QoQ but still up 12% YoY. 
• Investment Portfolio stood at $938 million as of March 31, 2023 (-8% QoQ; -14% YoY), mostly consisting of credit investment portfolio held at amortized cost, enhancing credit exposure diversification.

• Healthy asset quality, with 0.4% of impaired credits (Stage 3) for a total of $35 million at 1Q23, unchanged from the previous quarter, with a reserve coverage of over 2x.  Most of the credit portfolio (98%) remains classified as low risk or Stage 1.
• Solid liquidity position at 14.1% of total assets as of March 31, 2023, or $1,303 million, consisting of cash and due from banks mostly placed with the Federal Reserve Bank of New York. Bladex continues to benefit from a resilient deposit franchise and a well-diversified funding base.

CEO's Comments

Mr. Jorge Salas, Bladex's Chief Executive Officer said: "Our focus on profitability is reflected on Bladex's strong first quarter results.  The Bank's treasury unit and commercial team performed exceptionally well, with record net interest income and strong fee income, particularly in the Bank's letter of credit unit.  We have carefully executed a well-thought-out strategy, designed to capitalize on the strong upside potential of Bladex's unique business model while leveraging the current macro-scenario.  We remain committed to enhancing the Bank's profitability in 2023 by prioritizing strategic investments and operational efficiency. We are optimistic about the execution of the strategic plan and anticipate a year of transition towards slower growth, eventually lower interest rates, and slightly lower inflation rates.  Despite the challenges, we see substantial opportunities for Bladex, and we are prepared to take advantage of them while maintaining our commitment to credit underwriting standards. Our target for sustained increase in profitability reflects our confidence to execute the strategic plan and deliver value to Bladex's shareholders."

RECENT EVENTS

• Quarterly dividend payment: The Board of Directors approved a quarterly common dividend of $0.25 per share corresponding to 1Q23.  The cash dividend will be paid on May 17, 2023, to shareholders registered as of May 4, 2023.
• Appointment of Director:  On March 30, 2023, after a thorough selection process, in compliance with applicable laws and regulation, and as provided for in the Articles of Incorporation, the Board of Directors of the Bank appointed Ms. Angelica Ruiz Celis as Class E Director to replace Ms. Lorenza Martinez Trigueros, who tendered her resignation on May 30, 2022.  Ms. Angelica Ruiz Celis' initial term shall expire on the date of the Annual Meeting of Shareholders of the year 2025.

Notes:

• Numbers and percentages set forth in this earnings release have been rounded and accordingly may not total exactly.
• QoQ and YoY refer to quarter-on-quarter and year-on-year variations, respectively. 

Footnotes:

1. Earnings per Share ("EPS") calculation is based on the average number of shares outstanding during each period.
2. ROE refers to return on average stockholders' equity which is calculated based on unaudited daily average balances.
3. ROA refers to return on average assets which is calculated based on unaudited daily average balances.
4. NIM refers to net interest margin which constitutes to Net Interest Income ("NII") divided by the average balance of interest-earning assets.
5. NIS refers to net interest spread which constitutes the average yield earned on interest-earning assets, less the average yield paid on interest-bearing liabilities.
6. Efficiency Ratio refers to consolidated operating expenses as a percentage of total revenues. 
7. The Bank's "Credit Portfolio" includes gross loans at amortized cost (or the "Loan Portfolio"), securities at FVOCI and at amortized cost, gross of interest receivable and the allowance for expected credit losses, loan commitments and financial guarantee contracts, such as confirmed and stand-by letters of credit, and guarantees covering commercial risk; and other assets consisting of customers' liabilities under acceptances.
8. The Bank's "Commercial Portfolio" includes gross loans at amortized cost (or the "Loan Portfolio"), loan commitments and financial guarantee contracts, such as issued and confirmed letters of credit, stand-by letters of credit, guarantees covering commercial risk and other assets consisting of customers' liabilities under acceptances.
9. Market capitalization corresponds to total outstanding common shares multiplied by market close price at the end of each corresponding period.
10. Tier 1 Capital ratio is calculated according to Basel III capital adequacy guidelines, and as a percentage of risk-weighted assets.  Risk-weighted assets are estimated based on Basel III capital adequacy guidelines, utilizing internal-ratings based approach or "IRB" for credit risk and standardized approach for operational risk.
11. As defined by the Superintendency of Banks of Panama through Rules No. 01-2015 and 03-2016, based on Basel III standardized approach. The capital adequacy ratio is defined as the ratio of capital funds to risk-weighted assets, rated according to the asset's categories for credit risk. In addition, risk-weighted assets consider calculations for market risk and operating risk.
12. Liquid assets refer to total cash and cash equivalents, consisting of cash and due from banks and interest-bearing deposits in banks, excluding pledged deposits and margin calls; as well as highly rated corporate debt securities (above 'A-').  Liquidity ratio refers to liquid assets as a percentage of total assets.   
13. Loan Portfolio refers to gross loans at amortized cost, excluding interest receivable, the allowance for loan losses, and unearned interest and deferred fees. Credit-impaired loans are also commonly referred to as Non-Performing Loans or NPLs.
14. Impaired Credits refers to Non-Performing Loans or NPLs and non-performing securities at FVOCI and at amortized cost. 
15. Total allowance for losses refers to allowance for loan losses plus allowance for loan commitments and financial guarantee contract losses and allowance for investment securities losses.

SAFE HARBOR STATEMENT

This press release 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 press release 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 geopolitical events; 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.  

ABOUT BLADEX

Bladex, a multinational bank originally established by the central banks of Latin-American and Caribbean countries, began operations in 1979 to promote foreign trade and economic integration in the Region. The Bank, headquartered in Panama, also has offices in Argentina, Brazil, Colombia, Mexico, and the United States of America, and a Representative License in Peru, supporting the regional expansion and servicing its customer base, which includes financial institutions and corporations.

Bladex is listed on the NYSE in the United States of America (NYSE: BLX), since 1992, and its shareholders include: central banks and state-owned banks and entities representing 23 Latin American countries; commercial banks and financial institutions; and institutional and retail investors through its public listing.

CONFERENCE CALL INFORMATION

There will be a conference call to discuss the Bank's quarterly results on Wednesday, April 19, 2023 at 11:00 a.m. New York City time (Eastern Time).  For those interested in participating, please dial +1 888 686-3653 in the United States or, if outside the United States, +1 718 866-4614.  Participants should use conference passcode 877068, and dial in five minutes before the call is set to begin.  There will also be a live audio webcast of the conference at http://www.bladex.com.  The webcast presentation will be available for viewing and downloads on http://www.bladex.com.  The conference call will become available for review one hour after its conclusion. 

For more information, please access http://www.bladex.com or contact:

Mr. Carlos Daniel Raad
Chief Investor Relations Officer
Tel: +507 366-4925 ext. 7925
E-mail address: craad@bladex.com / ir@bladex.com

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SOURCE Banco Latinoamericano de Comercio Exterior, S.A. (Bladex)

FAQ

What were Bladex's earnings for the first quarter of 2023?

Bladex reported a net profit of $37.0 million for 1Q23.

How did Bladex's net interest income perform in 1Q23?

The net interest income for Bladex increased to $52.6 million, representing a 6% increase QoQ and a 105% increase YoY.

What is the return on equity for Bladex in 1Q23?

Bladex's return on equity expanded to 13.7% in 1Q23, increasing by 212 basis points compared to the previous quarter.

What was the efficiency ratio reported by Bladex for 1Q23?

The efficiency ratio improved to 26.9% in 1Q23, a decrease of 400 basis points quarter-on-quarter.

How much liquidity does Bladex have as of March 31, 2023?

Bladex maintains a liquidity position of 14.1% of total assets as of March 31, 2023.