2 This presentation contains forward-looking statements of expected future developments. The Bank wishes to ensure that such statements are accompanied by meaningful cautionary statements pursuant to the safe harbor established by the Private Securities Litigation Reform Act of The forward-looking statements in this presentation refer to the growth of the trade portfolio, the increase in the number of the Bank’s clients, the increase in activities engaged in by the Bank that are derived from the Bank’s trade finance client base, anticipated operating income in future periods, the improvement in the financial strength of the Bank and the progress the Bank is making. These forward-looking statements 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. Among the factors that can cause actual performance and results to differ materially are as follows: the possibility that the Bank will need to renegotiate, restructure or write-off certain of its Argentine loans; the possibility of pre-payments; the anticipated growth of the Bank’s trade finance portfolio; the continuation of the Bank’s preferred creditor status; the effects of increased interest rates on the Bank’s financial condition; the implementation of the Bank’s strategies and initiatives, including its revenue diversification strategy; the pending applications in the United States to open a representative office in Miami, Florida; the adequacy of the Bank’s allowance for credit losses to address the likely impact of the Argentine crisis and other credit risks on the Bank’s loan portfolio; the necessity of making additional provisions for 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; and the adequacy of the Bank’s sources of liquidity to cover large deposit withdrawals.
3 Index The Company Business Strategy Financial Results Capital ManagementInvestment ConsiderationsIIIIIIIVV
4 The Company Background Bladex is a supranational bank established in 1975 by Central Banks in Latin America and the Caribbean, to finance and promote trade in the RegionIncorporated and headquartered in Panama, it started operations in 1979Shareholders include Central Banks and state entities in 23 countries in the Region, as well as local, regional, and international banks, along with private investors
5 The Company Company Highlights First Latin American bank listed in NYSE (1992)First Latin American bank rated “Investment Grade”Current credit ratings:
6 Eight Directors are independent; one is part of Management The Company Ownership and Board CompositionBoard of Directors Composition:Class “A” – Central Banks or designees (16.4%)Class “B” – Commercial Banks (8.5%)Class “E” – Investors “NYSE” (75.1%)Eight Directors are independent; one is part of Management
7 The Company Bladex: A Unique Company By definition and vocationFocus on, and commitment to, Latin AmericaKnowledge of the RegionMore than 25 years of operation in 23 countriesClient franchiseStrong customer loyalty, sterling client listState and private interests combined in a seamless fashionShareholder mixEfficient operationsA small team (159 people), with a wide reach and influence
8 The Company Bladex: A Unique Company Recognized as key institution by the international financial communityWorld Bank, IDB, FMO, DEG, etc. have supported the companyPreferred creditor statusAmong the very few Latin American brands recognized internationallyAn investment-gate into the RegionAmong the most international of Latin American companiesWorld class Corporate Governance standards
9 The Company Management Team NameTitleExperienceJoined BLXJaime RiveraCEO24 years in Bank of America in various capacities throughout the Region and in the U.S.Mar’02: COOJan’04: CEORubens AmaralCCOGeneral Manager of Banco do Brasil, New York Branch and Managing Director for North America since 2000Mar’04Ernesto BruggiaCOOGeneral Manager of Banco de la Provincia de Buenos Aires since 1999General Manager of Grupo BAPRO (holding company of BPBA), since November 1998Jul’04Gregory TestermanSVP Treasury17 years in Banco Santander Central Hispano in various capacities. Worked in Europe, Japan and U.S.Jan’05Miguel A. KerbesSVP Risk Mgmt.Assistant Credit Director for the Southern Cone Area of Banco Santander-Chile ( )Head of Credit Division at Banco Boston-Chile ( )2000: VPJul’02: SVP
10 The Company Management Team (cont.) NameTitleExperienceJoined BLXCarlos YapSVP Finance25 years working at Bladex in various capacities19801993: VPJul’02: SVPMiguel MorenoPartner and IT Consulting Manager for PwC, Bogotá, Colombia ( )VP of IT & Operations for Banco de Credito, Bogotá, Colombia ( )Sep’01SVP Controller(Reports to the Audit Committee of the Board)Ana María de AriasSVP - HHRR & Corp. Oper.VP of HHRR of Banco General, one of the most important banks in Panama ( ) and as VPA ( )Panama Canal Commission in various capacities ( )Jun’04Joaquín UribeSVP Processes Eng. & ITCitibank Colombia in various capacities ( )Information Services Manager for System Integration and Project Quality Office at UNISYS Corporation, Colombia( )Sep’01: VPJul’02: SVP
11 The Company Corporate Governance Highlights Internal controls designed and tested to be SOX 404 compliantIn March 2005, the SEC extended for one year the deadline for foreign private issuersDirectors’ independence definition, as well as Board Committee structure and composition, meet NYSE standardsDisclosure Committee operating at Bank levelEthics Committee and Code of Ethics in place“Whistleblower” program in placeNo AML or other regulatory issues outstandingTransparency:Regulatory reporting Conference calls Prompt news releasesAnalyst reports Road showsRating agencies reports Website
12 Index The Company Business Strategy Financial Results Capital ManagementInvestment ConsiderationsIIIIIIIVV
13 Low financial & operting cost High Volume Pristine credit quality Business Strategy Business Focus: Trade Finance ServicesTrade is the engine of economic growth in the Region – 20% plus p.a.Historically attractive risk/reward relationship for BladexFour key success factors:Low financial& operting costHigh VolumePristinecredit qualityRight capitalstructure
14 Business Strategy A Growing Market Trade Flows - Latin AmericaSource:'1990 to 2003 data: CEPAL (Comisión Económica para América Latina y el Caribe)'2004 to 2005 trade growth projections: based on data from UBS Publication (Latin American Economic Perspectives, 20-August-2004).
15 Bladex’s Special Competitive Advantage Business Strategy A Growing MarketBladex’s Special Competitive AdvantageSource:'1990 to 2002 data: CEPAL (Comisión Económica para América Latina y el Caribe)‘2003 data: World Trade Organization
16 Business Strategy Strategic Approach Client FocusBladex is the Bank of banks in the RegionIn addition, Bladex provides trade services to corporations through co-financing, syndicated transactions, and bilateral relationships
17 Related Services Other Core Business Financial Intermediation Business Strategy Earnings Model – Strategic ViewRelatedServicesOtherP/BCore BusinessFinancialIntermediationRelatively lowRelatively high
18 Core- Financial Intermediation New Products and Initiatives Business Strategy Earnings Model – Strategic ViewCapitalHumanResourcesProcesses& TechnologyWorkingTradeFinance -CorporateOthersU.S.OriginationBanksCore- Financial IntermediationE-learningPaymentsDigitalIdentityInvestmentPortfolioDistributionLAECANew Products and InitiativesC L I E N T SBrandClient FranchiseGovt. ShareholdersKnowledge of theRegion
19 Business Strategy Earnings Model – Capital View 15% - 20% p.a. growthCoreFinancialIntermediationMargins stable at relatively thin levelsCapitalIntensiveEximbank structures10%ROEOtherCountry Risk GuaranteesRevenueL/C’s15%ROEGuaranteesU.S. Origination / DistributionNon CapitalIntensivePaymentsDigital IdentityE-learning
20 Business Strategy Financial Intermediation Our intermediation business has strengthened:The trade portfolio grew 58% in the last two years (as of June 30, 2005). Growth with banks in the trade portfolio alone in last year was 20%19 new clients during the first six months of 2005 (out of a base of 161).Our liability borrowings margin decreased by 4 b.p. (18%) in the last year, allowing us to be more competitive in more markets
21 Business Strategy New Initiatives Digital Identity / Certification:Digital certification that will guarantee the security and trust in the electronic transactions performed between clients and their trading partners, assuring the identity of the transaction originator.Payments:Bladex entered into a strategic alliance with Bank of America, to provide our regional customers with world class electronic payments processing.Focus is primarily on the processing of commercial and treasury payments in US dollars.U.S. Origination / Vendor Financing:Strategic product for high volume exporters that mitigates foreign exposure and increase trade flows with buyers overseas.Investment Portfolio /Trading Desk:Investment, distribution and trading.E-learning:Educational on-line products with topics oriented to the banking industry.
22 Business Strategy Competition Competition – Financial IntermediationNew entrants are a reality. Impact primarily on pricing, not volume yetMajor competitors in traditional trade finance:Wachovia, Bank of New York, American Express, Bank of America (partner)HSBC, RBS, Standard Chartered, a few German banksMajor competitors in structured trade finance:Hypo V., Calyon, Standard Bank, Santander (partner)Bladex competes successfully based on its unique features: client loyalty, commitment to the Region, preferred creditor status, market knowledge, and privileged accessCompetition – New InitiativesIn areas where it exists (payments), we work with very strong partners (i.e. Bank of America)In other areas: no significant competition (by design)
23 Index The Company Business Strategy Financial Results Capital ManagementInvestment ConsiderationsIIIIIIIVV
30 Financial Results Exposure in Brazil Our largest exposure activity reflects the relative size of th economy, growth and client franchiseTarget exposure is 40% - 50% of total portfolio.Accruing Brazilian credit portfolio:Average tenor of the loan portfolio: 413 days as of June 30, 2005Two non-accrual loans, one of which is current. Total $36 million
32 Index The Company Business Strategy Financial Results Capital ManagementInvestment ConsiderationsIIIIIIIVV
33 Capital Management Equity Levels Drivers Basel IIRating agencies & creditorsperceptionEconomic capital(internal model)CapitalFuture growth requirementsRegulatory Capital Requirements
34 Capital Management Capital Management Guidelines Bladex seeks to balance risk and return considerations in order to:Withstand market volatilityMaintain stable access to funding sourcesProvide a solid base to finance growthPromote share ownership by long-term investorsGenerate competitive returns on Shareholders’ EquityCapital management decisions follow from continued appraisal of above considerationsOctober 7, 2004 and April 11, 2005 payments of extraordinary dividends of US$1.00 per common share and US$2.00 per common share, respectively, and a US$50 million stock repurchase program, reflect above approach. Since January 2004, have returned capital for a total of US$163 million
35 Capital Management April through December, 2005 Much of the Argentine recoveries originally scheduled for 2005 and 2006 have been realized in advanceWith the collection of the high-margin loans involved, core profitability will come under pressure while the new portfolio and fee income initiatives are builtCritical success factor: inexpensive funding – for which a very strong balance sheet will be required until profit & loss strengthensNumber one priority: growth and improved profitability. Capital Management actions will followDoing the reverse could put the company in a difficult cycleWeaker balance sheetSmaller profitHigher cost of fundsEven higher cost of fundsSmaller growth…….
36 Capital Management Historical Tier 1 – Basel I & II
37 Capital Management Historical ROE Our business model has historically yielded ROE between 12% to 17%, even in times of high competition.
38 Index The Company Business Strategy Financial Results Capital ManagementInvestment ConsiderationsIIIIIIIVV
39 Investment Considerations Why Bladex? Trade is the primary engine of growth in Latin AmericaPreferred creditor statusTransparency, world-class Corporate Governance standardsExplicit support from multilateral agencies and shareholder governmentsSolid financials, investment gradeUS GAAP reportingMultiple regulators: SEC, Fed, NYSBC, Panamanian banking authoritiesExpanded research coverageIncreasing market liquidity (47% increase in average daily volume in last year to 156 thousand shares/day)Regional playDefensive play
40 Thank you!! Muchas gracias, Gonzalo. Saturday, March 25, 2017Thank you!!Muchas gracias, Gonzalo.Distinguidas autoridades, señoras y señores, queridos amigos, reitero el mensaje de bienvenida que les extendiera el Sr. Menéndez Duque:Muchas gracias por estar con nosotros esta noche.
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