UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of May, 2023
Commission File Number 1-11414
BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A.
(Exact name of Registrant as specified in its Charter)
FOREIGN TRADE BANK OF LATIN AMERICA, INC.
(Translation of Registrant's name into English)
Business Park Torre V, Ave. La Rotonda, Costa del Este
P.O. Box 0819-08730
Panama City, Republic of Panama
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F
x
Form 40-F
o
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FOREIGN TRADE BANK OF LATIN AMERICA, INC.
(Registrant)
Date://May 11, 2023 By: /s/ Ana Graciela de Mendez
Name: Ana Graciela de Mendez
Title: Chief Financial Officer
Banco Latinoamericano
de Comercio Exterior, S.A.
and Subsidiaries
Unaudited condensed consolidated interim financial statements as of March 31,
2023, and for the three months ended March 31, 2023 and 2022
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Banco Latinoamericano de Comercio Exterior, S.A.
and Subsidiaries
Contents
Unaudited condensed consolidated interim statement of financial position
Unaudited condensed consolidated interim statement of profit or loss
Unaudited condensed consolidated interim statement of comprehensive income
Unaudited condensed consolidated interim statement of changes in equity
Unaudited condensed consolidated interim statement of cash flows
Notes to the unaudited condensed consolidated interim financial statements
2
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of financial position
March 31, 2023 and December 31, 2022
(In thousands of US dollars)
March 31, December 31,
Notes 2023 2022
(Unaudited) (Audit)
Assets
Cash and due from banks 3,4,5 1,313,883 1,241,586
Securities, net 3,4,6 939,875 1,023,632
Loans, net 3,4,7 6,700,566 6,760,434
Customers' liabilities under acceptances 3,4 137,586 163,345
Derivative financial instruments - assets 3,4,10 125,707 68,159
Equipment and leasehold improvements, net 16,882 17,282
Intangibles, net 2,368 2,104
Other assets 11 11,774 7,368
Total assets 9,248,641 9,283,910
Liabilities and Equity
Liabilities:
Demand deposits 503,341 233,757
Time deposits 3,065,398 2,956,959
3,4,12 3,568,739 3,190,716
Interest payable 17,438 14,670
Total deposits 3,586,177 3,205,386
Securities sold under repurchase agreements 3,4,13 347,594 300,498
Borrowings and debt, net 3,4,14 3,955,042 4,416,511
Interest payable 44,037 47,878
Lease liabilities 315 16,491 16,745
Acceptances outstanding 3,4 137,586 163,345
Derivative financial instruments - liabilities 3,4,10 34,068 33,761
Allowance for losses on loan commitments and financial guarantee contract 3,4 3,461 3,628
Other liabilities 16 28,652 26,811
Total liabilities 8,153,108 8,214,563
Equity:
Common stock 279,980 279,980
Treasury stock (111,863) (114,097)
Additional paid-in capital in excess of value assigned to common stock 119,782 120,498
Capital reserves 22 95,210 95,210
Regulatory reserves 22 136,019 136,019
Retained earnings 571,474 543,612
Other comprehensive income (loss) 4,931 8,125
Total equity 1,095,533 1,069,347
Total liabilities and equity 9,248,641 9,283,910
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
3
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statement of profit or loss
For the three months ended March 31, 2023 and 2022
(In thousands of US dollars, except per share data and number of shares)
Notes 2023 2022
Interest income:
Deposits 14,399 503
Securities 6,384 4,293
Loans 122,596 40,208
Total interest income 19 143,379 45,004
Interest expense:
Deposits (40,058) (3,540)
Borrowings and debt (50,557) (15,595)
Lease liabilities 15 (144) (148)
Total interest expense 19 (90,759) (19,283)
Net interest income 52,620 25,721
Other income (expense):
Fees and commissions, net 19 4,812 3,949
Loss on financial instruments, net 9 1,704 566
Other income, net 39 16
Total other income, net 19 6,555 4,531
Total revenues 59,175 30,252
Provision for credit losses 3,19 (6,331) (8,111)
Operating expenses:
Salaries and other employee expenses (9,736) (7,445)
Depreciation of equipment and leasehold improvements (548) (533)
Amortization of intangible assets (187) (124)
Other expenses (5,419) (2,920)
Total operating expenses 19 (15,890) (11,022)
Profit for the period 36,954 11,119
Per share data:
Basic earnings per share (in US dollars) 17 1.02 0.31
Diluted earnings per share (in US dollars) 17 1.02 0.31
Weighted average basic shares (in thousands of shares) 17 36,360 36,249
Weighted average diluted shares (in thousands of shares) 17 36,360 36,249
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
4
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statement of comprehensive income
For the three months ended March 31, 2023 and 2022
(In thousands of US dollars)
2023 2022
Profit for the period 36,954 11,119
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Change in fair value on financial instruments, net of hedging (3,390) 9,985
Reclassification of gains on financial instruments to profit or loss 196 312
Other comprehensive income (3,194) 10,297
Total comprehensive income for the period 33,760 21,416
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
5
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statement of changes in equity
For the three months ended March 31, 2023 and 2022
(In thousands of US dollars)
Common Treasury Additional Capital Regulatory Retained Other Total
stock stock paid-in reserves reserves earnings comprehensive equity
capital income
in
excess
of
value
assigned
to
common
stock
Balance 279,980 (115,799) 120,043 95,210 136,019 487,885 (11,548) 991,79
at
January
1,
2022
Profit - - - - - 11,119 - 11,11
for
the
period
Other - - - - - - 10,297 10,29
comprehensive
income
Compensation - - 418 - - - - 41
cost
-
stock
options
and
stock
units
plans
Exercised - 664 (664) - - - -
options
and
stock
units
vested
Dividends - - - - - (9,068) - (9,068
declared
Balances 279,980 (115,135) 119,797 95,210 136,019 489,936 (1,251) 1,004,55
at
March
31,
2022
Balance 279,980 (114,097) 120,498 95,210 136,019 543,612 8,125 1,069,34
at
January
1,
2023
Profit - - - - - 36,954 - 36,95
for
the
period
Other - - - - - - (3,194) (3,194
comprehensive
income
Issuance - - - - - - -
of
restricted
stock
Compensation - - 1,518 - - - - 1,51
cost
-
stock
options
and
stock
units
plans
Exercised - 2,234 (2,234) - - - -
options
and
stock
units
vested
Dividends - - - - - (9,092) - (9,092
declared
Balances 279,980 (111,863) 119,782 95,210 136,019 571,474 4,931 1,095,53
at
March
31,
2023
0
9
7
8
-
)
6
7
4
)
-
8
-
)
3
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
6
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statement of cash flows
For the three months ended March 31, 2023 and 2022
(In thousands of US dollars)
Notes 2023 2022
Cash flows from
operating activities
Profit for 36,954 11,119
the period
Adjustments to reconcile profit for the period to net
cash provided by (used in) operating activities:
Depreciation of equipment 548 533
and leasehold improvements
Amortization of 187 124
intangible assets
Provision for 3 6,331 8,111
credit losses
Loss on financial 9 - 219
instruments at FVTPL
Loss on sale of financial 1,367 -
instruments at amortized cost
Compensation cost - 1,518 418
share-based payment
Net changes in hedging 6,137 (305)
position and foreign currency
Interest (143,379) (45,004)
income
Interest 90,759 19,283
expense
Changes in operating
assets and liabilities:
Pledged 1,291 (1,325)
deposits
Loans 101,905 (730,293)
Other assets (3,675) (704)
Due to 378,024 219,640
depositors
Other 1,829 13,531
liabilities
Cash flows provided by (used 479,796 (504,653)
in) operating activities
Interest 127,085 37,555
received
Interest paid (88,670) (14,115)
Net cash provided by (used 518,211 (481,213)
in) operating activities
Cash flows from
investing activities:
Acquisition of equipment (145) (77)
and leasehold improvements
Acquisition of (450) (219)
intangible assets
Proceeds from the sale of 7,611 -
securities at amortized cost
Proceeds from the redemption of 93,112 21,783
securities at amortized cost
Proceeds from the redemption 39,600 20,000
of securities at FVOCI
Purchase of securities (63,212) (314,126)
at amortized cost
Net cash provided by (used 76,516 (272,639)
in) investing activities
Cash flows from
financing activities:
Increase (decrease) in securities 47,096 (81,650)
sold under repurchase agreements
Net decrease in short-term 14 (503,227) (195,107)
borrowings and debt
Proceeds from long-term 14 - 515,488
borrowings and debt
Payments of long-term 14 (55,668) (76,228)
borrowings and debt
Payments of lease 15 (255) (246)
liabilities
Dividends paid (9,085) (8,994)
Net cash (used in) provided (521,139) 153,263
by financing activities
Increase (decrease) net in 73,588 (600,589)
cash and cash equivalents
Cash and cash equivalents 1,190,936 1,211,001
at beginning of the period
Cash and cash equivalents 5 1,264,524 610,412
at end of the period
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
7
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
1.
Corporate information
Banco Latinoamericano de Comercio Exterior, S. A. ("Bladex Head Office" and
together with its subsidiaries "Bladex" or the "Bank"), headquartered in
Panama City, Republic of Panama, is a specialized multinational bank
established to support the financing of foreign trade and economic integration
in Latin America and the Caribbean (the "Region"). The Bank was established
pursuant to a May 1975 proposal presented to the Assembly of Governors of
Central Banks in the Region, which recommended the creation of a multinational
organization to increase the foreign trade financing capacity of the Region.
The Bank was organized in 1977, incorporated in 1978 as a corporation pursuant
to the laws of the Republic of Panama, and initiated operations on January 2,
1979. Under a contract law signed in 1978 between the Republic of Panama and
Bladex, the Bank was granted certain privileges by the Republic of Panama,
including an exemption from payment of income taxes in Panama.
The Bank operates under a general banking license issued by the National
Banking Commission of Panama, predecessor of the Superintendence of Banks of
Panama (the "SBP").
In the Republic of Panama, banks are regulated by the SBP through Executive
Decree No. 52 of April 30, 2008, which adopts the unique text of Law Decree
No. 9 of February 26, 1998, modified by Law Decree No. 2 of February 22, 2008.
Banks are also regulated by resolutions and agreements issued by this entity.
The main aspects of this law and its regulations include: the authorization of
banking licenses, minimum capital and liquidity requirements, consolidated
supervision, procedures for management of credit, liquidity and market risks,
measures to prevent money laundering, the financing of terrorism and related
illicit activities, and procedures for banking intervention and liquidation,
among others.
Bladex Head Office's subsidiaries are the following:
- Bladex Holdings Inc. is a wholly owned subsidiary, incorporated under the
laws of the State of Delaware, United States of America (USA), on May 30,
2000. Bladex Holdings Inc. has ownership in Bladex Representacao Ltda.
- Bladex Representacao Ltda, incorporated under the laws of Brazil on
January 7, 2000, acts as the Bank's representative office in Brazil. Bladex
Representacao Ltda. is 99.999% owned by Bladex Head Office and the remaining
0.001% is owned by Bladex Holdings Inc.
- Bladex Development Corp. was incorporated under the laws of the Republic
of Panama on June 5, 2014. Bladex Development Corp. is 100% owned by Bladex
Head Office.
-
BLX Soluciones, S.A. de C.V., SOFOM, E.N.R. ("BLX Soluciones") was
incorporated under the laws of Mexico on June 13, 2014 and suspended its
operations on July 28, 2021. The company specializes in offering financial
leasing and other financial products such as loans and factoring. BLX
Soluciones is 99.9% owned by Bladex Head Office, and Bladex Development Corp.
owns the remaining 0.1%.
Bladex Head Office has an agency in New York City, USA (the "New York
Agency"), which began operations on March 27, 1989. The New York Agency is
principally engaged in financing transactions related to international trade,
mostly the confirmation and financing of letters of credit for customers in
the Region. The New York Agency also has authorization to book transactions
through an International Banking Facility ("IBF").
The Bank has representative offices in Buenos Aires, Argentina; in Mexico
City, Mexico; and in Bogota, Colombia, and has a representative license in
Lima, Peru.
These condensed consolidated interim financial statements were authorized for
issue by the Board of Directors on April 14, 2023.
8
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
2.
Basis of preparation of the consolidated financial statements
These condensed consolidated interim financial statements of Banco
Latinoamericano de Comercio Exterior, S. A. and its subsidiaries have been
prepared in accordance with International Accounting Standard 34 Interim
Financial Reporting (IAS 34) issued by the International Accounting Standards
Board ("IASB").
As all the disclosures required by IFRS for annual period consolidated
financial statements are not included herein, these condensed consolidated
interim financial statements should be read in conjunction with the audited
consolidated financial statements and the notes thereto as of and for the year
ended December 31, 2022, contained in the Bank's annual audited consolidated
financial statements. The condensed consolidated interim statements of profit
or loss, other comprehensive income, changes in equity and cash flows for the
periods presented are not necessarily indicative of results expected for any
future period.
3. Financial risk review
This note presents information about the Bank's exposure to financial risks.
A.
Credit risk
i. Credit quality analysis
The following tables set out information about the credit quality of financial
assets measured at amortized cost, and debt instruments at FVOCI. Unless
specifically indicated, for financial assets the amounts in the table
represent the outstanding gross balances. For loan commitments and financial
guarantee contracts, the amounts in the table represent the amounts committed
or guaranteed, respectively.
Loans at amortized cost, outstanding balance
March 31, 2023
PD Ranges Stage 1 Stage 2 Stage 3 Total
Grades 1 - 4 0.03 - 0.74 2,980,657 - - 2,980,657
Grades 5 - 6 0.75 - 3.80 3,480,582 34,273 - 3,514,855
Grades 7 - 8 3.81 - 34.51 116,866 42,890 - 159,756
Grades 9 - 10 34.52 - 100 - - 30,107 30,107
6,578,105 77,163 30,107 6,685,375
Loss allowance (29,298) (4,108) (25,865) (59,271)
Total 6,548,807 73,055 4,242 6,626,104
December 31, 2022
PD Ranges Stage 1 Stage 2 Stage 3 Total
Grades 1 - 4 0.03 - 0.74 2,864,686 - - 2,864,686
Grades 5 - 6 0.75 - 3.80 3,645,901 50,625 - 3,696,526
Grades 7 - 8 3.81 - 34.51 123,603 48,098 20,000 191,701
Grades 9 - 10 34.52 - 100 - - 10,107 10,107
6,634,190 98,723 30,107 6,763,020
Loss allowance (28,589) (5,050) (21,561) (55,200)
Total 6,605,601 93,673 8,546 6,707,820
9
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
Loan commitments, financial guarantees issued and customers' liabilities under
acceptances
March 31, 2023
12-month PD Stage 1 Stage 2 Stage 3 Total
Ranges
Commitments and financial guarantees issued
Grades 1 - 4 0.03 - 0.74 454,310 - - 454,310
Grades 5 - 6 0.75 - 3.80 340,707 1,700 - 342,407
Grades 7 - 8 3.81 - 34.51 158,498 - - 158,498
953,515 1,700 - 955,215
Customers' liabilities under acceptances
Grades 1 - 4 0.03 - 0.74 39,509 - - 39,509
Grades 5 - 6 0.75 - 3.80 14,890 - - 14,890
Grades 7 - 8 3.81 - 34.51 83,187 - - 83,187
137,586 - - 137,586
1,091,101 1,700 - 1,092,801
Loss allowance (3,438) (23) - (3,461)
Total 1,087,663 1,677 - 1,089,340
December 31, 2022
12-month PD Stage 1 Stage 2 Stage 3 Total
Ranges
Commitments and financial guarantees issued
Grades 1 - 4 0.03 - 0.74 302,260 - - 302,260
Grades 5 - 6 0.75 - 3.80 279,550 1,700 - 281,250
Grades 7 - 8 3.81 - 34.51 195,864 - - 195,864
777,674 1,700 - 779,374
Customers' liabilities under acceptances
Grades 1 - 4 0.03 - 0.74 34,258 - - 34,258
Grades 5 - 6 0.75 - 3.80 19,782 - - 19,782
Grades 7 - 8 3.81 - 34.51 109,305 - - 109,305
163,345 - - 163,345
941,019 1,700 - 942,719
Loss allowance (3,605) (23) - (3,628)
Total 937,414 1,677 - 939,091
10
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
Securities at amortized cost
March 31, 2023
12-month DP Stage 1 Stage 2 Stage 3 Total
Ranges
Grades 1 - 4 0.03 - 0.74 743,430 - - 743,430
Grades 5 - 6 0.75 - 3.80 95,910 54,363 - 150,273
Grades 7 - 8 3.81 - 34.51 - - - -
Grades 9 - 10 34.52 - 100.00 - - 4,996 4,996
839,340 54,363 4,996 898,699
Loss allowance (1,699) (2,919) (5,055) (9,673)
Total 837,641 51,444 (59) 889,026
December 31, 2022
12-month PD Stage 1 Stage 2 Stage 3 Total
Ranges
Grades 1 - 4 0.03 - 0.74 736,139 - - 736,139
Grades 5 - 6 0.75 - 3.80 154,248 46,589 - 200,837
Grades 7 - 8 3.81 - 34.51 - - 4,995 4,995
890,387 46,589 4,995 941,971
Loss allowance (2,170) (1,779) (4,002) (7,951)
Total 888,217 44,810 993 934,020
Securities at FVOCI
March 31, 2023
12-month PD Stage 1 Stage 2 Stage 3 Total
Ranges
Grades 1 - 4 0.03 - 0.74 38,823 - - 38,823
38,823 - - 38,823
Loss allowance (5) - - (5)
Total 38,818 - - 38,818
December 31, 2022
12-month PD Stage 1 Stage 2 Stage 3 Total
Ranges
Grades 1 - 4 0.03 - 0.74 77,972 - - 77,972
77,972 - - 77,972
Loss allowance (10) - - (10)
Total 77,962 - - 77,962
11
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
The following table presents information of the current and past due balances
of loans at amortized cost in stages 1, 2 and 3:
March 31, 2023
Stage 1 Stage 2 Stage 3 Total
Current 6,578,105 77,163 - 6,655,268
Defaulters - - 20,000 20,000
Past due - - 10,107 10,107
Total 6,578,105 77,163 30,107 6,685,375
December 31, 2022
Stage 1 Stage 2 Stage 3 Total
Current 6,634,190 98,723 - 6,732,913
Defaulters - - 20,000 20,000
Past due - - 10,107 10,107
Total 6,634,190 98,723 30,107 6,763,020
The following table presents an analysis of counterparty credit exposures
arising from derivative transactions. The Bank's derivative fair values are
generally secured by cash.
March 31, 2023
Notional value Derivative Derivative
USD financial financial
instruments - instruments -
fair value assets fair value
liabilities
Interest rate swaps 364,238 117 (3,801)
Cross-currency swaps 1,000,647 108,566 (30,267)
Foreign exchange forwards 180,639 17,024 -
Total 1,545,524 125,707 (34,068)
December 31, 2022
Notional value Derivative Derivative
USD financial financial
instruments - instruments -
fair value assets fair value
liabilities
Interest rate swaps 368,711 483 (544)
Cross-currency swaps 1,175,570 45,806 (33,217)
Foreign exchange forwards 189,173 21,870 -
Total 1,733,454 68,159 (33,761)
12
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
ii. Loss allowances
The following tables show reconciliations from the opening to the closing
balances of the loss allowance by class of financial instrument.
Loans at amortized cost
Stage 1 Stage 2 Stage 3 Total
Allowance for expected credit losses as of December 31, 2022 28,589 5,050 21,561 55,200
Net effect of changes in allowance for expected credit losses (391) (458) 4,304 3,455
Financial instruments that have been derecognized during the period (8,079) (484) - (8,563)
New instruments originated or purchased 9,179 - - 9,179
Allowance for expected credit losses as of March 31, 2023 29,298 4,108 25,865 59,271
Stage 1 Stage 2 Stage 3 Total
Allowance for expected credit losses as of December 31, 2021 20,115 16,175 5,186 41,476
Transfer to lifetime expected credit losses (29) 29 - -
Transfer to 12-month expected credit losses 176 (176) - -
Transfer to credit-impaired financial instruments (130) - 130 -
Net effect of changes in allowance for expected credit losses (1,718) (10,146) 16,072 4,208
Financial instruments that have been derecognized during the year (12,385) (832) - (13,217)
New instruments originated or purchased 22,560 - - 22,560
Write-offs - - (893) (893)
Recoveries - - 1,066 1,066
Allowance for expected credit losses as of December 31, 2022 28,589 5,050 21,561 55,200
13
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
Loan commitments, financial guarantee contracts and customers' liabilities
under acceptances
The allowance for expected credit losses on loan commitments and financial
guarantee contracts reflects the Bank's Management is estimate of expected
credit losses of customers' liabilities under acceptances and contingent
liabilities such as: confirmed letters of credit, stand-by letters of credit,
guarantees, and credit commitments.
Stage 1 Stage 2 Stage 3 Total
Allowance for expected credit losses as of December 31, 2022 3,605 23 - 3,628
Net effect of changes in reserve for expected credit losses (428) - - (428)
Financial instruments that have been derecognized during the period (1,909) - - (1,909)
New instruments originated or purchased 2,170 - - 2,170
Allowance for expected credit losses as of March 31, 2023 3,438 23 - 3,461
Stage 1 Stage 2 Stage 3 Total
Allowance for expected credit losses as of December 31, 2021 3,472 331 - 3,803
Transfer to 12-month expected credit losses 133 (133) - -
Net effect of changes in reserve for expected credit losses (160) (39) - (199)
Financial instruments that have been derecognized during the year (2,981) (136) - (3,117)
New instruments originated or purchased 3,141 - - 3,141
Allowance for expected credit losses as of December 31, 2022 3,605 23 - 3,628
Securities at amortized cost
Stage 1 Stage 2 Stage 3 Total
Allowance for expected credit losses as of December 31, 2022 2,170 1,779 4,002 7,951
Transfer to lifetime expected credit losses (72) 72 - -
Net effect of changes in allowance for expected credit losses (76) 1,778 1,053 2,755
Financial instruments that have been derecognized during the period (364) - - (364)
New instruments originated or purchased 41 - - 41
Write-offs - (710) - (710)
Allowance for expected credit losses as of March 31, 2023 1,699 2,919 5,055 9,673
14
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
Stage 1 Stage 2 Stage 3 Total
Allowance for expected credit losses as of December 31, 2021 1,790 - - 1,790
Transfer to lifetime expected credit losses (46) 46 - -
Transfer to credit-impaired financial instruments (33) - 33 -
Net effect of changes in allowance for expected credit losses (13) 941 3,969 4,897
Financial instruments that have been derecognized during the year (420) - - (420)
New instruments originated or purchased 892 792 - 1,684
Allowance for expected credit losses as of December 31, 2022 2,170 1,779 4,002 7,951
Securities at FVOCI
Stage 1 Stage 2 Stage 3 Total
Allowance for expected credit losses as of December 31, 2022 10 - - 10
Financial instruments that have been derecognized during the period (5) - - (5)
Allowance for expected credit losses as of March 31, 2023 5 - - 5
Stage 1 Stage 2 Stage 3 Total
Allowance for expected credit losses as of December 31, 2021 26 - - 26
Financial instruments that have been derecognized during the year (16) - - (16)
Allowance for expected credit losses as of December 31, 2022 10 - - 10
The following table provides a reconciliation between:
- Amounts shown in the previous tables reconciling opening and closing
balances of loss allowance per class of financial instrument; and
- The (reversal) provision for credit losses' line item in the condensed
consolidated interim statement of profit or loss.
15
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
Loans at Loan Securities
amortized commitments
cost and financial
guarantee
contracts
March 31, 2023 At amortized FVOCI Total
cost
Net effect of changes in allowance 3,455 (428) 2,755 - 5,782
for expected credit losses
Financial instruments that have (8,563) (1,909) (364) (5) (10,841)
been derecognized during the period
New financial assets 9,179 2,170 41 - 11,390
originated or purchased
Total 4,071 (167) 2,432 (5) 6,331
Loans at Loan Securities
amortized commitments
cost and financial
guarantee
contracts
March 31, 2022 At amortized FVOCI Total
cost
Net effect of changes in allowance (1,175) (96) 280 - (991)
for expected credit losses
Financial instruments that have (5,403) (2,313) (67) (3) (7,786)
been derecognized during the period
New financial assets 14,287 2,061 540 - 16,888
originated or purchased
Total 7,709 (348) 753 (3) 8,111
iii.
Credit-impaired financial assets
Credit-impaired loans and advances are graded 8 to 10 in the Bank's internal
credit risk grading system.
The following table sets out a reconciliation of changes in the carrying
amount of the allowance for credit losses for credit-impaired financial assets:
March 31, 2023 December 31, 2022
Credit-impaired loans at beginning of period 21,561 5,186
Classified as credit-impaired during the period - 130
Change in allowance for expected credit losses 4,200 14,606
Write-offs - (893)
Recoveries of amounts previously written off - 1,066
Interest income 104 1,466
Credit-impaired loans at end of period 25,865 21,561
16
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
March 31, 2023 December 31, 2022
Investments at amortized cost with credit impairment at beginning of period 4,002 -
Classified as credit-impaired during the period - 33
Change in allowance for expected credit losses 1,760 3,717
Interest income 3 252
Write-offs (710) -
Investments at amortized cost with credit impairment at end of period 5,055 4,002
17
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
iv.
Concentrations of credit risk
The Bank monitors concentrations of credit risk by sector, industry and
country. An analysis of concentrations of credit risk from loans, loan
commitments, financial guarantees and securities is as follows.
Concentration by sector and industry
Loans at Loan commitments Securities
amortized cost and financial
guarantee contracts
At amortized cost FVOCI
March December March December March December March December
31, 31, 31, 31, 31, 31, 31, 31,
2023 2022 2023 2022 2023 2022 2023 2022
Carrying amount 6,685,375 6,763,020 137,586 163,345 898,699 941,971 38,823 77,972
- principal
Amount - - 955,215 779,374 - - - -
committed/guaranteed
Concentration
by sector
Corporations:
Private 2,565,161 2,553,193 595,273 409,139 549,246 543,381 19,938 24,773
State-owned 1,075,563 1,115,932 143,103 110,468 45,112 51,388 - -
Financial
institutions:
Private 2,214,630 2,245,385 112,350 120,614 217,698 250,975 - -
State-owned 702,226 719,882 242,075 302,498 31,754 31,902 18,885 53,199
Sovereign 127,795 128,628 - - 54,889 64,325 - -
Total 6,685,375 6,763,020 1,092,801 942,719 898,699 941,971 38,823 77,972
Concentration
by industry
Financial 2,932,356 2,965,266 354,425 423,112 249,452 282,878 18,885 53,199
institutions
Manufacturing 1,327,882 1,341,453 373,226 293,659 365,908 339,914 9,981 14,898
Oil and petroleum 1,179,030 1,244,491 130,287 104,426 90,650 77,553 9,957 9,875
derived products
Agricultural 340,132 317,037 - 3,854 - - - -
Services 276,329 267,868 78,182 55,430 59,267 64,412 - -
Mining 219,681 150,707 25,000 - 14,618 24,381 - -
Sovereign 127,795 128,628 - - 54,889 64,325 - -
Other 282,170 347,570 131,681 62,238 63,915 88,508 - -
Total 6,685,375 6,763,020 1,092,801 942,719 898,699 941,971 38,823 77,972
18
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
Risk rating and concentration by country
Loans at Loan commitments Securities
amortized cost and financial
guarantee
contracts
At amortized cost FVOCI
March December March December March December March December
31, 31, 31, 31, 31, 31, 31, 31,
2023 2022 2023 2022 2023 2022 2023 2022
Carrying amount 6,685,375 6,763,020 137,586 163,345 898,699 941,971 38,823 77,972
- principal
Amount - - 955,215 779,374 - - - -
committed/guaranteed
Rating
1-4 2,980,657 2,864,685 493,819 336,519 743,430 736,139 38,823 77,972
5-6 3,514,855 3,696,527 357,297 301,031 150,273 200,837 - -
7-8 159,756 191,701 241,685 305,169 - 4,995 - -
10 30,107 10,107 - - 4,996 - - -
Total 6,685,375 6,763,020 1,092,801 942,719 898,699 941,971 38,823 77,972
Concentration
by country
Argentina 50,390 55,598 - - - - - -
Australia - - - - 9,558 9,628 - -
Belgium 14,474 25,362 - - - - - -
Bolivia 6,636 - 5,086 3,759 - - - -
Brazil 832,018 980,205 127,213 54,907 54,337 69,501 - -
Canada - - - - 13,431 13,503 - -
Chile 529,241 416,714 78,354 44,846 114,688 112,586 - -
Colombia 859,893 702,409 77,500 54,333 44,236 54,484 - -
Costa 187,935 260,625 50,011 56,718 7,979 9,926 - -
Rica
Denmark - - 10,340 11,880 - - - -
Dominican 535,037 579,918 890 27,534 4,797 4,828 - -
Republic
Ecuador 118,699 110,466 241,685 305,168 - - - -
El 37,895 30,032 - - - - - -
Salvador
France 82,524 126,929 69,906 66,906 - - - -
Germany - - 10,000 10,000 - - - -
Guatemala 734,659 745,837 64,010 67,456 - - - -
Honduras 165,989 176,270 3,367 3,615 - - - -
Hong - 2,800 - - - - - -
Kong
Ireland - - - - 9,688 9,579 - -
Israel - - - - 4,857 4,880 - -
Italy - - - - 14,774 - - -
Jamaica 97,898 14,083 - - - - - -
Japan 14,043 14,712 - - 4,394 4,353 - -
Luxembourg 114,625 114,557 - - - - - -
Mexico 926,746 823,028 52,478 69,080 100,411 100,870 - -
Norway - - - - 9,889 - - -
Panama 434,552 533,452 22,604 19,240 24,619 29,065 - -
Paraguay 135,710 151,287 230 3,430 - - - -
Peru 418,775 478,998 173,352 114,941 31,088 60,575 - -
Singapore 143,880 152,208 15,420 24,333 - - - -
Trinidad 132,462 128,846 - - - - - -
and Tobago
United States 45,891 53,463 4,089 3,349 449,953 458,193 38,823 43,464
of America
United 9,791 51,221 - - - - - -
Kingdom
Uruguay 55,612 34,000 86,266 1,224 - - - -
Multilateral - - - - - - - 34,508
Total 6,685,375 6,763,020 1,092,801 942,719 898,699 941,971 38,823 77,972
19
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
v.
Offsetting financial assets and liabilities
The following tables include financial assets and liabilities that are offset
in the condensed consolidated interim financial statement or subject to an
enforceable master netting arrangement:
a)
Derivative financial instruments - assets
March 31, 2023
Gross Gross Net Gross Net Amount
amounts of amounts amount of amounts
assets offset assets not
in the presented offset in
condensed in the the condensed
consolidated condensed consolidated
interim consolidated interim
statement of interim statement of
financial statement of financial
position financial position
position
Financial Cash
instruments collateral
received
Derivative 125,707 - 125,707 - (104,630) 21,077
financial
instruments used
for hedging
Total 125,707 - 125,707 - (104,630) 21,077
December 31, 2022
Gross Gross Net Gross Net Amount
amounts of amounts amount of amounts
assets offset assets not
in the presented offset in
condensed in the the condensed
consolidated condensed consolidated
interim consolidated interim
statement interim statement of
of statement financial
financial of position
position financial
position
Financial Cash
instruments collateral
received
Derivative 68,159 - 68,159 - (50,615) 17,544
financial
instruments used
for hedging
Total 68,159 - 68,159 - (50,615) 17,544
20
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
A.
Credit risk (continued)
b)
Securities sold under repurchase agreements and derivative financial
instruments - liabilities
March 31, 2023
Gross Gross Net Gross amounts Net
amounts of amounts amount of not offset in Amount
liabilities offset assets the condensed
in the presented consolidated
condensed in the interim
consolidated condensed statement of
interim consolidated financial
statement of interim position
financial statement of
position financial
position
Financial Cash
instruments collateral
received
Securities (347,594) - (347,594) 401,827 21,394 75,627
sold under
repurchase
agreements
Derivative (34,068) - (34,068) - 17,966 (16,102)
financial
instruments used
for hedging
Total (381,662) - (381,662) 401,827 39,360 59,525
December 31, 2022
Gross Gross Net Gross Net
amounts of amounts amount of amounts Amount
liabilities offset assets not
in the presented offset in
condensed in the the
consolidated condensed condensed
interim consolidated consolidated
statement interim interim
of statement statement
financial of of
position financial financial
position position
Financial Cash
instruments collateral
received
Securities (300,498) - (300,498) 791,956 22,947 514,405
sold
under
repurchase
agreements
Derivative (33,761) - (33,761) - 17,702 (16,059)
financial
instruments
used
for
hedging
Total (334,259) - (334,259) 791,956 40,649 498,346
21
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
B.
Liquidity risk
i.
Exposure to liquidity risk
The following table details the Bank's liquidity ratios, described in the
previous paragraph:
March 31, 2023 December 31,
2022
At the end of the period 195.85 % 167.46 %
Period average 221.76 % 132.63 %
Maximum of the period 356.99 % 276.86 %
Minimun of the period 135.06 % 81.18 %
The following table includes the Bank's liquid assets by country risk:
March 31, 2023 December 31, 2022
(in millions of Cash and Securities Total Cash and Securities Total
USD dollars) due from FVOCI due from FVOCI
banks banks
United States 1,224 39 1,263 1,151 43 1,194
of America
Latin 15 - 15 15 - 15
America
Multilateral 25 - 25 25 35 60
Total 1,264 39 1,303 1,191 78 1,269
The following table includes the Bank's demand deposits from customers and its
ratio to total deposits from customers:
March 31, 2023 December 31,
2022
(in millions of USD dollars)
Demand and "overnight" deposits 768 583
Demand and "overnight" deposits to total deposits 21.52 % 18.27 %
The liquidity requirements resulting from the Bank's demand deposits from
customers is satisfied by the Bank's liquid assets as follows:
(in millions of USD dollars) March 31, 2023 December 31,
2022
Total liquid assets 1,303 1,269
Total assets to total liabilities 36.52 % 39.77 %
Total liquid assets in the Federal 84.54 % 90.23 %
Reserve of the United States of America
22
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
B. Liquidity risk (continued)
Even though the average term of the Bank's assets exceeds the average term of
its liabilities, the associated liquidity risk is diminished by the short-term
nature of a significant portion of the loan portfolio, since the Bank is
primarily engaged in financing foreign trade.
The following table includes the carrying amount for the Bank's loans and
securities short-term portfolio with maturity within one year based on their
original contractual term along with its average remaining term:
(in millions of USD dollars) March 31, 2023 December 31,
2022
Loan portfolio at amortized cost and investment portfolio 3,728 4,008
less than/equal to 1 year according to its original terms
Average term (days) 185 200
The following table includes the carrying amount for the Bank's loans and
securities medium term portfolio with maturity over one year based on their
original contractual terms along with their average remaining term:
(in millions of USD dollars) March 31, 2023 December 31,
2022
Loan portfolio at amortized cost and investment portfolio 3,895 3,775
greater than/equal to 1 year according to its original terms
Average term (days) 1364 1367
23
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
B. Liquidity risk (continued)
ii. Maturity analysis for financial liabilities and financial assets
The following table details the future undiscounted cash flows of financial
assets and liabilities grouped by their remaining maturity with respect to the
contractual maturity:
March 31, 2023
Up to 3 3 to 6 6 months 1 to 5 More Gross Carrying
months months to 1 years than 5 inflows amount
year years (outflows)
Assets
Cash and 1,313,991 - - - - 1,313,991 1,313,883
due
from
banks
Securities 116,379 42,066 86,565 760,036 10,293 1,015,339 939,875
Loans 2,484,749 1,237,971 1,067,054 2,387,272 137,825 7,314,871 6,700,566
Derivative 19,438 12,206 4,900 88,796 367 125,707 125,707
financial
instruments
- assets
Total 3,934,557 1,292,243 1,158,519 3,236,104 148,485 9,769,908 9,080,031
Liabilities
Deposits (2,915,712) (350,110) (231,412) (125,360) - (3,622,594) (3,586,177)
Securities (164,084) (55,144) (134,031) - - (353,259) (347,594)
sold under
repurchase
agreements
Borrowings (877,916) (598,427) (642,844) (2,211,697) (30,139) (4,361,023) (3,999,079)
and
debt,
net
Lease (399) (399) (739) (6,000) (13,454) (20,991) (16,491)
liabilities
Derivative (1,895) (672) (16,267) (14,420) (814) (34,068) (34,068)
financial
instruments -
liabilities
Total (3,960,006) (1,004,752) (1,025,293) (2,357,477) (44,407) (8,391,935) (7,983,409)
Subtotal (25,449) 287,491 133,226 878,627 104,078 1,377,973 1,096,622
net
position
Off-balance
sheet
contingencies
Confirmed 223,649 122,957 16,673 - - 363,279
letters
of
credit
Stand-by 72,332 154,469 83,642 33,105 - 343,548
letters of
credit and
guarantees
Credit 69,331 15,718 - 163,339 - 248,388
commitments
Total 365,312 293,144 100,315 196,444 - 955,215
Total (390,761) (5,653) 32,911 682,183 104,078 422,758
net
position
24
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
B.
Liquidity risk (continued)
December 31, 2022
Up to 3 3 to 6 6 months 1 to 5 More Gross Carrying
months months to 1 years than 5 inflows amount
year years (outflows)
Assets
Cash and 1,241,779 - - - - 1,241,779 1,241,586
due
from
banks
Securities 129,983 105,789 98,345 744,996 10,293 1,089,406 1,023,632
Loans 2,294,259 1,478,494 1,223,661 2,244,454 158,967 7,399,835 6,760,434
Derivative 4,216 10,831 14,015 39,097 - 68,159 68,159
financial
instruments
- assets
Total 3,670,237 1,595,114 1,336,021 3,028,547 169,260 9,799,179 9,093,811
Liabilities
Deposits (2,770,754) (256,989) (161,889) (39,805) - (3,229,437) (3,205,386)
Securities (53,418) (64,513) (55,144) (138,286) - (311,361) (300,498)
sold under
repurchase
agreements
Borrowings (776,584) (895,531) (934,288) (2,212,704) (41,523) (4,860,630) (4,464,389)
and
debt,
net
Lease (384) (384) (738) (5,769) (13,771) (21,046) (16,745)
liabilities
Derivative (3,702) (764) (63) (26,882) (2,350) (33,761) (33,761)
financial
instruments -
liabilities
Total (3,604,842) (1,218,181) (1,152,122) (2,423,446) (57,644) (8,456,235) (8,020,779)
Subtotal 65,395 376,933 183,899 605,101 111,616 1,342,944 1,073,032
net
position
Off-balance
sheet
contingencies
Confirmed 166,367 117,398 21,024 - - 304,789
letters
of
credit
Stand-by 132,353 117,750 92,750 8,772 - 351,625
letters of
credit and
guarantees
Credit - 13,102 32,906 76,952 - 122,960
commitments
Total 298,720 248,250 146,680 85,724 - 779,374
Total (233,325) 128,683 37,219 519,377 111,616 563,570
net
position
The amounts in the tables above have been compiled as follows:
Type of financial instrument Basis on which amounts are compiled
Financial assets and liabilities Undiscounted cash flows, which
include estimated interest payments.
Issued financial guarantee Earliest possible contractual maturity. For
contracts, and loan commitments issued financial guarantee contracts, the maximum
amount of the guarantee is allocated to the earliest
period in which the guarantee could be called.
Derivative financial assets Contractual undiscounted cash flows. The
and financial liabilities amounts shown are the gross nominal inflows
and outflows for derivatives that
simultaneously settle gross or net amounts.
25
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
B. Liquidity risk (continued)
iii. Liquidity reserves
As part of the management of liquidity risk arising from financial
liabilities, the Bank holds liquid assets comprising cash and cash equivalents.
The following table sets out the components of the Banks's liquidity reserves:
March 31, 2023 December 31, 2022
Amount Fair value Amount Fair value
Balances with Federal Reserve of the United 1,101,784 1,101,784 1,144,896 1,144,896
States of America
Cash and balances with other banks 162,740 162,740 46,040 46,040
(1)
Total 1,264,524 1,264,524 1,190,936 1,190,936
(1)
Excludes pledged deposits.
iv. Financial assets available to support future funding
The following table sets out the Bank's financial assets available to support
future funding:
March 31, 2023 December 31, 2022
Pledged as Available as Pledged as Available as
collateral collateral collateral collateral
Cash and due 49,360 1,264,524 50,649 1,190,936
from banks
Notional of 385,512 539,048 331,571 672,042
investment securities
Loans at - 6,685,375 - 6,763,020
amortized cost
Total 434,872 8,488,947 382,220 8,625,998
26
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
C.
Market risk
The Bank manages market risk by considering the condensed consolidated interim
financial situation of the Bank.
i. Interest rate risk
The table below details the Bank's exposure based on interest rate
repricing/maturity date on interest-bearing financial assets and liabilities:
March 31, 2023
Up to 3 3 to 6 6 months 1 to 5 More Without Total
months months to years than 5 interest
1 year years rate
risk
Assets
Cash 1,291,361 - - - - 22,522 1,313,883
and
due
from
banks
Securities, 114,955 34,847 70,255 709,486 7,979 - 937,522
net
Loans 3,085,828 2,113,004 1,197,049 266,260 23,234 - 6,685,375
Total 4,492,144 2,147,851 1,267,304 975,746 31,213 22,522 8,936,780
Liabilities
Demand (2,885,767) (339,565) (219,243) (113,832) - (10,332) (3,568,739)
deposits
and
time
deposits
Securities (162,228) (53,740) (131,626) - - - (347,594)
sold
under
repurchase
agreements
Borrowings (1,389,477) (1,054,038) (449,994) (1,046,467) (15,066) - (3,955,042)
and
debt,
net
Total (4,437,472) (1,447,343) (800,863) (1,160,299) (15,066) (10,332) (7,871,375)
Net effect of 9,752 7,185 (16,251) 74,376 (447) - 74,615
derivative
financial
instruments
held for
interest
risk
management
Total 64,424 707,693 450,190 (110,177) 15,700 12,190 1,140,020
interest
rate
sensitivity
27
-------------------------------------------------------------------------------
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
C.
Market risk (continued)
December 31, 2022
Up to 3 3 to 6 6 months 1 to 5 More Without Total
months months to years than 5 interest
1 year years rate
risk
Assets
Cash 1,233,700 - - - - 7,886 1,241,586
and
due
from
banks
Securities, 112,736 114,815 82,666 701,749 7,977 - 1,019,943
net
Loans 2,956,268 2,531,067 1,007,343 240,949 27,393 - 6,763,020
Total 4,302,704 2,645,882 1,090,009 942,698 35,370 7,886 9,024,549
Liabilities
Demand (2,746,776) (250,299) (153,862) (35,082) - (4,697) (3,190,716)
deposits
and
time
deposits
Securities (52,164) (62,968) (53,740) (131,626) - - (300,498)
sold
under
repurchase
agreements
Borrowings (1,354,457) (953,503) (1,083,543) (999,151) (25,857) - (4,416,511)
and
debt
Total (4,153,397) (1,266,770) (1,291,145) (1,165,859) (25,857) (4,697) (7,907,725)
Net effect of 476 41 2,145 12,215 (2,350) - 12,527
derivative
financial
instruments
held for
interest
risk
management
Total 149,783 1,379,153 (198,991) (210,946) 7,163 3,189 1,129,351
interest
rate
sensitivity
Following is an analysis of the Bank's sensitivity to the most likely increase
or decrease in market interest rates at the reporting date, assuming no
asymmetrical movements in yield curves and a constant financial position:
Change in Effect on Effect on
interest rate profit or loss equity
March 31, 2023 +50 bps 2,675 (1,906)
-50 bps (2,487) 1,949
December 31, 2022 +50 bps 4,559 676
-50 bps (4,629) (206)
Interest rate movements affect reported equity in the following ways:
- Retained earnings: increases or decreases in net interest income and in
fair values of derivatives reported in profit or loss;
- Fair value reserve: increases or decreases in fair values of financial
assets at FVOCI reported directly in equity; and
- Hedging reserve: increases or decreases in fair values of hedging
instruments designated in qualifying cash flow hedge relationships.
This sensitivity provides an analysis of changes in interest rates,
considering the previous year's interest rate volatility.
28
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
C.
Market risk (continued)
Managing interest rate benchmark reform and any risks arising due to reform
The Bank has USD LIBOR exposures on floating-rate loans, borrowings and loan
commitments. Disaggregated information of such financial instruments that have
yet to transition to an alternative benchmark rate as at March 31, 2023 is the
following. The information presented is the remaining exposure as at each
reporting date.
March 31, 2023 June 30,
2023
(Notional in US$ thousands)
Financial assets
Loans 1,263,252 1,158,306
Financial liabilities
Borrowings 35,000 12,500
Loan commitments 130,157 130,157
Disaggregated information by derivative financial instruments based on
floating USD LIBOR rate, that have yet to transition to an alternative
benchmark rate as at March 31, 2023 is the following. The information
presented is the remaining notional amount as at each reporting date.
March 31, 2023 June 30,
2023
(Notional US$ thousands)
Derivatives held for risk management
Derivative financial instruments - liabilities 73,768 68,768
29
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
3.
Financial risk review (continued)
C.
Market risk (continued)
ii. Foreign exchange risk
The following table presents the maximum exposure amount in foreign currency
of the Bank's carrying amount of total assets and liabilities, except for
hedging relationships.
March 31, 2023
Brazilian European Japanese Colombian Mexican Other Total
real euro yen peso peso currencies
(1)
Exchance rate 5.07 1.08 132.75 4,672.90 18.02
Assets
Cash and due from banks - 111 3 44 1,644 136 1,938
Loans - 13,556 - - 326,160 - 339,716
Total - 13,667 3 44 327,804 136 341,654
Liabilities
Borrowings and debt - (13,556) - - (327,446) - (341,002)
Total - (13,556) - - (327,446) - (341,002)
Net currency position - 111 3 44 358 136 652
December 31, 2022
Brazilian European euro Japanese Colombian Mexican Other Total
real yen peso peso currencies
(1)
Exchance rate 5.29 1.07 130.96 4,854.37 19.50
Assets
Cash and due from banks 26 53 4 9 5,439 38 5,569
Loans - - - - 301,765 - 301,765
Total 26 53 4 9 307,204 38 307,334
Liabilities
Borrowings and debt - - - - (306,603) - (306,603)
Total - - - - (306,603) - (306,603)
Net currency position 26 53 4 9 601 38 731
(1)
It includes other currencies such as: Argentine pesos, Australian dollar,
Swiss franc, Sterling pound, Peruvian soles, and Chinese renminbi.
30
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
4.
Fair value of financial instruments
A.
Recurring valuation
Financial instruments measured at fair value on a recurring basis by caption
on the condensed consolidated interim statement of financial position using
the fair value hierarchy are described below:
March 31, 2023
Level 1 Level 2 Level 3 Total
Assets
Securities at FVOCI - Corporate debt - 38,999 - 38,999
Derivative financial instruments - assets:
Interest rate swaps - 117 - 117
Cross-currency swaps - 108,566 - 108,566
Foreign exchange forwards - 17,024 - 17,024
Total derivative financial instrument assets - 125,707 - 125,707
Total assets at fair value - 164,706 - 164,706
Liabilities
Derivative financial instruments - liabilities:
Interest rate swaps - 3,801 - 3,801
Cross-currency swaps - 30,267 - 30,267
Total derivative financial instruments - liabilities - 34,068 - 34,068
Total liabilities at fair value - 34,068 - 34,068
December 31, 2022
Level 1 Level 2 Level 3 Total
Assets
Securities at FVOCI - Corporate debt - 78,372 - 78,372
Derivative financial instruments - assets:
Interest rate swaps - 483 - 483
Cross-currency swaps - 45,806 - 45,806
Foreign exchange forwards - 21,870 - 21,870
Total derivative financial instrument assets - 68,159 - 68,159
Total assets at fair value - 146,531 - 146,531
Liabilities
Derivative financial instruments - liabilities:
Interest rate swaps - 544 - 544
Cross-currency swaps - 33,217 - 33,217
Total derivative financial instruments - liabilities - 33,761 - 33,761
Total liabilities at fair value - 33,761 - 33,761
31
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
4.
Fair value of financial instruments (continued)
B.
Non-recurring valuation
The following table provides information on the carrying value and the
estimated fair value of the Bank's financial instruments that are not measured
on a recurring basis:
March 31, 2023
Carrying Fair Level 1 Level 2 Level 3
value value
Assets
Cash and deposits in banks 1,313,883 1,313,883 - 1,313,883 -
Securities at amortized cost 900,876 864,477 - 864,477 -
(1)
Loans at amortized cost 6,700,566 6,725,579 - 6,725,579 -
(2)
Customers' liabilities under acceptances 137,586 137,586 - 137,586 -
Liabilities
Deposits 3,586,177 3,586,177 - 3,586,177 -
Securities sold under repurchase agreements 347,594 347,594 - 347,594 -
Borrowings and debt, net 3,945,042 3,938,602 - 3,938,602 -
Acceptances outstanding 137,586 137,586 - 137,586 -
December 31, 2022
Carrying Fair Level 1 Level 2 Level 3
value value
Assets
Cash and deposits in banks 1,241,586 1,241,586 - 1,241,586 -
Securities at amortized cost 945,260 895,154 - 894,034 1,120
(1)
Loans at amortized cost, net 6,760,434 6,785,652 - 6,785,652 -
(2)
Customers' liabilities under acceptances 163,345 163,345 - 163,345 -
Liabilities
Deposits 3,205,386 3,205,386 - 3,205,386 -
Securities sold under repurchase agreements 300,498 300,498 - 300,498 -
Borrowings and debt, net 4,416,511 4,389,902 - 4,389,902 -
Acceptances outstanding 163,345 163,345 - 163,345 -
(1)
The carrying value of securities at amortized cost is net of accrued interest
receivable of $11.8 million and the allowance for expected credit losses of
$9.0 million as of March 31, 2023 (accrued interest receivable of $11.2
million and the allowance for expected credit losses of $8.0 million as of
December 31, 2022).
(2)
The carrying value of loans at amortized cost is net of accrued interest
receivable of $91.4 million, the allowance for expected credit losses of $59.3
million and unearned interest and deferred fees of $16.9 million as of March
31, 2023 (accrued interest receivable of $70.0 million, the allowance for
expected credit losses of $55.2 million and unearned interest and deferred
fees of $17.3 million as of December 31, 2022).
32
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
Cash and due from banks
The following table presents the details of interest-bearing deposits in banks
and restricted deposits:
March 31, 2023 December 31, 2022
Unrestricted deposits with the Federal 1,101,784 1,144,896
Reserve of the United States of America
Cash and non-interest-bearing 22,522 7,886
deposits in other banks
Cash and interest-bearing 189,577 88,804
deposits in other banks
(1)
Total cash and 1,313,883 1,241,586
due from banks
Less:
Time deposits with original maturity over 49,359 50,650
90 days and other restricted deposits
(1)
Total cash and due from banks in the condensed 1,264,524 1,190,936
consolidated interim statement of cash flows
The following table presents the restricted deposits classified by country risk:
March 31, 2023 December 31, 2022
Switzerland 15,947 16,797
Spain 13,794 12,814
United States of America 11,300 11,387
(1)
Germany 5,308 5,380
United Kingdom 2,330 4,272
Canada 680 -
Total 49,359 50,650
(1)
Includes restricted deposit of $10.0 million for both years with the New York
State Department of Financial Services under March 1994 legislation and margin
call deposits collateralizing derivative financial instrument transactions.
33
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
6.
Securities, net
Securities are presented as follows:
March 31, 2023 Amortized cost FVOCI Total
Principal 898,699 38,823 937,522
Interest receivable 11,850 176 12,026
Allowance (9,673) - (9,673)
900,876 38,999 939,875
December 31, 2022 Amortized cost FVOCI Total
Principal 941,971 77,972 1,019,943
Interest receivable 11,240 400 11,640
Allowance (7,951) - (7,951)
945,260 78,372 1,023,632
Securities by contractual maturity are shown in the following table:
March 31, 2023 Amortized cost FVOCI Total
Due within 1 year 171,546 38,823 210,369
After 1 year but within 5 years 719,174 - 719,174
After 5 years but within 10 years 7,979 - 7,979
Balance - principal 898,699 38,823 937,522
December 31, 2022 Amortized cost FVOCI Total
Due within 1 year 222,666 77,972 300,638
After 1 year but within 5 years 711,328 - 711,328
After 5 years but within 10 years 7,977 - 7,977
Balance - principal 941,971 77,972 1,019,943
The following table includes the securities pledged to secure repurchase
transactions (see note 13):
March 31, 2023 December 31, 2022
Securities pledged to secure repurchase transactions 401,827 345,187
Securities sold under repurchase agreements (347,594) (300,498)
34
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
7.
Loans
The following table presents the loan portfolio according to its classification
and subsequent measurement:
March 31, 2023 December 31, 2022
Loans, outstanding balance 6,685,375 6,763,020
Interest receivable 91,395 69,965
Loss allowance (59,271) (55,200)
Unearned interest and deferred fees (16,933) (17,351)
Loans, net 6,700,566 6,760,434
The fixed and floating interest rate distribution of the loan portfolio is as
follows:
March 31, 2023 December 31,
2022
Fixed interest rate 3,684,391 3,827,083
Floating interest rates 3,000,984 2,935,937
Total 6,685,375 6,763,020
As of March 31, 2023, and December 31, 2022, 80% and 79% of the loan portfolio
at fixed interest rates has remaining maturities of less than 180 days.
Interest rates on loans ranges from 1.27% to 16.28% (
December 31, 2022:
1.27% to 15.32%).
The following table details information relating to loans granted to class A
and B shareholders:
March 31, 2023 December 31,
2022
Loans to class A and B shareholders 654,361 834,768
% Loans to class A and B shareholders over total loan portfolio 10 % 12 %
% Class A and B stockholders with loans over number of class A and B stockholders 11 % 11 %
8.
Loan commitments and financial guarantee contracts
The Bank's outstanding loan commitments and financial guarantee contracts are
as follows:
March 31, 2023 December 31,
2022
Documentary letters of credit 363,279 304,789
Stand-by letters of credit and guarantees - commercial risk 343,548 351,625
Credit commitments 248,388 122,960
Total 955,215 779,374
35
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Table of Contents
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
8.
Loan commitments and financial guarantee contracts
The remaining maturity profile of the Bank's outstanding loan commitments and
financial guarantee contracts is as follows:
March 31, 2023 December 31,
2022
Up to 1 year 758,771 693,650
From 1 to 2 years 36,102 15,956
Over 2 to 5 years 160,342 69,768
Total 955,215 779,374
9.
Gain (loss) on financial instruments, net
The amounts that were recognized in profit or loss related to the results of
financial instruments are detailed below:
March 31,
2023 2022
Gain on derivative financial instruments and foreign currency exchange, net 3,071 785
Unrealized Loss on financial instruments at FVTPL - (219)
Loss on sale of financial instruments at amortized cost (1,367) -
1,704 566
36
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10.
Derivative financial instruments
The following table details quantitative information on the notional amounts
and carrying amounts of the derivative instruments used for hedging by type of
risk hedged and type of hedge:
March 31, 2023
Nominal Carrying amount of hedging
amount instruments
Asset Liability
(1) (2)
Interest rate risk
Fair value hedges 304,238 68 (3,801)
Cash flow hedges 60,000 49 -
Interest rate and foreign exchange risk
Fair value hedges 250,855 20,305 (15,814)
Cash flow hedges 749,792 88,261 (14,453)
Foreign exchange risk
Cash flow hedges 180,639 17,024 -
1,545,524 125,707 (34,068)
December 31, 2022
Nominal Carrying amount of hedging
amount instruments
Asset Liability
(1) (2)
Interest rate risk
Fair value hedges 293,711 340 (543)
Cash flow hedges 75,000 143 (1)
Interest rate and foreign exchange risk
Fair value hedges 252,793 4,129 (16,237)
Cash flow hedges 922,777 41,677 (16,980)
Foreign exchange risk
Cash flow hedges 189,173 21,870 -
1,733,454 68,159 (33,761)
(1)
Included in the condensed consolidated interim statement of financial position
under the line Derivative financial instruments - assets.
(2)
Included in the condensed consolidated interim statement of financial position
under the line Derivative financial instruments - liabilities.
37
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10.
Derivative financial instruments (continued)
A.
Fair value hedges
The following table details the nominal amounts and carrying amounts of
derivative instruments used in fair value hedges by type of risk and hedged
item, along with the changes during the years used to determine and recognize
the ineffectiveness of the hedge:
March 31, 2023
Nominal amount Carrying Changes in fair Ineffectiveness
amount of value used to recognized in
hedging calculate hedge profit or loss
instruments ineffectiveness (3)
(3)
Asset Liability
(1) (2)
Interest
rate risk
Loans 155,513 - (2,612) (834) 34
Securities at 10,000 68 - (35) 38
amortized cost
Borrowings 138,725 - (1,189) 814 127
and debt
Interest rate and
foreign exchange risk
Loans - - - (113) (27)
Borrowings 250,855 20,305 (15,814) 19,031 2,610
and debt
Total 555,093 20,373 (19,615) 18,863 2,782
December 31, 2022
Nominal amount Carrying Changes in fair Ineffectiveness
amount of value used to recognized in
hedging calculate hedge profit or loss
instruments ineffectiveness (3)
(3)
Asset Liability
(1) (2)
Interest
rate risk
Loans 155,511 134 (543) 1,607 (18)
Securities 10,000 178 - 167 (62)
at FVOCI
Borrowings 128,200 28 - (3,457) (111)
and debt
Interest rate and
foreign exchange risk
Loans 1,938 108 - (227) (129)
Borrowings 250,855 4,021 (16,237) 8,072 (1,548)
and debt
Total 546,504 4,469 (16,780) 6,162 (1,868)
(1)
Included in the condensed consolidated interim statement of financial position
under the line Derivative financial instruments - assets.
(2)
Included in the condensed consolidated interim statement of financial position
under the line Derivative financial instruments - liabilities.
(3)
Included in the condensed consolidated interim statement of profit or loss
under the line Loss on financial instruments, net.
38
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10.
Derivative financial instruments (continued)
A.
Fair value hedges (continued)
The following table details the carrying amounts of the fair value hedged
items by type of risk and hedged item, along with the changes during the
period used to determine and recognize the ineffectiveness of the hedge:
March 31, 2023
Carrying Line in the condensed Accumulated Changes in
amount of consolidated interim amount of fair value of
hedged items statement of fair value hedge the hedged
financial adjustments items used
position that included in to calculate
includes the the carrying hedge
carrying amount of the ineffectiveness
amount of the hedged items (1)
hedged items
Asset Liability
Interest
rate risk
Loans 159,502 - Loans, (757) 868
net
Securities at 9,852 - Securities, (155) 73
amortized cost net
Borrowings - (137,622) Borrowings and 2,663 (687)
and debt debt, net
Interest rate and
foreign exchange risk
Loans - - Loans, - 86
net
Borrowings - (257,120) Borrowings and (4,696) (16,421)
and debt debt, net
Total 169,354 (394,742) (2,945) (16,081)
December 31, 2022
Carrying Line in the condensed Accumulated Changes in
amount of consolidated interim amount of fair value of
hedged items statement of fair value hedge the hedged
financial adjustments items used
position that included in to calculate
includes the the carrying hedge
carrying amount of the ineffectiveness
amount of the hedged items (1)
hedged items
Asset Liability
Interest
rate risk
Loans 157,136 - Loans, (1,625) (1,625)
net
Securities at 9,654 - Securities, (229) (229)
amortized cost net
Borrowings - (129,306) Borrowings and 3,350 3,346
and debt debt, net
Interest rate and
foreign exchange risk
Loans 1,839 - Loans, (580) 98
net
Borrowings - (243,851) Borrowings and 11,612 (9,620)
and debt debt, net
Total 168,629 (373,157) 12,528 (8,030)
(1)
Included in the condensed consolidated interim statement of profit or loss
under the line Loss on financial instruments, net.
39
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10.
Derivative financial instruments (continued)
A.
Fair value hedges (continued)
The following table details the maturity of the nominal amount for the
derivative instruments used in fair value hedges:
March 31, 2023
Interest rate Cross currency swaps Total
swaps
Less than 1 year 145,512 68,768 214,280
Over 1 to 2 years 20,001 84,646 104,647
Over 2 to 5 years 138,725 87,316 226,041
More than 5 years - 10,125 10,125
Total 304,238 250,855 555,093
December 31, 2022
Interest rate Cross currency swaps Total
swaps
Less than 1 year 145,511 1,937 147,448
Over 1 to 2 years 20,000 153,415 173,415
Over 2 to 5 years 128,200 87,316 215,516
More than 5 years - 10,125 10,125
Total 293,711 252,793 546,504
B.
Cash flow hedges
The following table details the nominal amounts and carrying amounts of
derivative instruments used in cash flow hedges by type of risk and hedged
item, along with the changes during the period used to determine and recognize
the ineffectiveness of the hedge:
March 31, 2023
Carrying Change Changes Ineffectiveness Amount
amount of in fair in the recognized reclassified
hedging value fair value in from the
instruments used for of the profit hedge
calculating hedging or loss reserve
hedge instruments (4) to profit
ineffectiveness recognized or loss
in (4)
OCI
(3)
Nominal Asset Liability
amount (1) (2)
Interest
rate risk
Borrowings 60,000 49 - (37) (37) - 19
and
debt
Interest
rate and
foreign
exchange risk
Borrowings 749,792 88,261 (14,453) 45,767 46,085 318 687
and
debt
Foreign
exchange
risk
Deposits - - - (37) (37) - 37
Borrowings 180,639 17,024 - (4,809) (4,809) - -
and
debt
Total 990,431 105,334 (14,453) 40,884 41,202 318 743
40
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10.
Derivative financial instruments (continued)
B.
Cash flow hedges (continued)
December 31, 2022
Carrying Change Changes Ineffectiveness Amount
amount of in fair in the recognized reclassified
hedging value fair value in from the
instruments used for of the profit hedge
calculating hedging or loss reserve
hedge instruments (4) to profit
ineffectiveness recognized or loss
in (4)
OCI
(3)
Nominal Asset Liability
amount (1) (2)
Interest
rate risk
Borrowings 75,000 143 (1) 550 551 1 -
and
debt
Interest
rate and
foreign
exchange risk
Borrowings 922,777 41,677 (16,980) 28,211 27,061 (1,150) 4,914
and
debt
Foreign
exchange
risk
Deposits 8,534 37 - 37 37 - -
Borrowing 180,639 21,833 - 21,833 21,833 - -
and
Debt
Total 1,186,950 63,690 (16,981) 50,631 49,482 (1,149) 4,914
(1)
Included in the condensed consolidated interim statement of financial position
under the line Derivative financial instruments - assets.
(2)
Included in the condensed consolidated interim statement of financial position
under the line Derivative financial instruments - liabilities.
(3)
Included in equity in the condensed consolidated interim statement of
financial position under the line Other comprehensive income (loss).
(4)
Included in the condensed consolidated interim statement of profit or loss
under the line Loss on financial instruments, net.
The following table details the carrying amounts of the cash flow hedged items
by type of risk and hedged item, along with the changes during the period used
to determine and recognize the ineffectiveness of the hedge:
March 31, 2023
Carrying Line in the Changes in the Cash flow
amount of condensed fair value hedge reserve
hedged items consolidated of the hedged
interim items used
statement of to calculate
financial the hedge
position that ineffectiveness
includes
the carrying
amount of
the hedged items
Asset Liability
Interest
rate risk
Borrowings - (61,097) Borrowings and 37 (60)
and debt debt, net
Interest rate and
foreign exchange risk
Borrowings - (823,249) Borrowings and (46,085) (4,948)
and debt debt, net
Foreign
exchange risk
Deposits - - Demand 37 -
deposits
Borrowings (194,503) Borrowings and 4,809 3,998
and debt debt, net
Total - (1,078,849) (41,202) (1,010)
41
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10.
Derivative financial instruments (continued)
B.
Cash flow hedges (continued)
December 31, 2022
Carrying Line in the Changes in the Cash flow
amount of condensed fair value hedge reserve
hedged items consolidated of the hedged
interim items used
statement of to calculate
financial the hedge
position that ineffectiveness
includes
the carrying
amount of
the hedged items
Asset Liability
Interest
rate risk
Borrowings - (75,695) Borrowings and (551) (97)
and debt debt, net
Interest rate and
foreign exchange risk
Borrowings - (943,942) Borrowings and (27,061) (8,836)
and debt debt, net
Foreign
exchange risk
Deposits - (8,566) Demand (37) (44)
deposits
Borrowings - (196,646) Borrowings and (21,833) 1,836
and debt debt, net
Total - (1,224,849) (49,482) (7,141)
The following table details the maturity of the derivative instruments used in
cash flow hedges:
March 31, 2023
Foreign Interest Cross currency swaps Total
exchange rate
forward contracts swaps
Less than 1 year 180,639 60,000 215,049 455,688
Over 1 to 2 years - - 203,282 203,282
Over 2 to 5 years - - 314,175 314,175
More than 5 years - - 17,286 17,286
Total 180,639 60,000 749,792 990,431
December 31, 2022
Foreign Interest Cross currency swaps Total
exchange rate
forward contracts swaps
Less than 1 year 189,173 75,000 388,035 652,208
Over 1 to 2 years - - 194,639 194,639
Over 2 to 5 years - - 322,817 322,817
More than 5 years - - 17,286 17,286
Total 189,173 75,000 922,777 1,186,950
42
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
11.
Other assets
Following is a summary of other assets:
March 31, 2023 December 31, 2022
Accounts receivable 2,520 2,240
Prepaid expenses 4,560 1,120
Prepaid fees and commissions 281 325
Interest receivable - deposits 1,499 751
IT projects under development 298 425
Severance fund 2,036 2,026
Other 580 481
Total 11,774 7,368
12.
Deposits
The maturity profile of the Bank's deposits, excluding interest payable, is as
follows:
March 31, 2023 December 31,
2022
Demand 503,341 233,757
Up to 1 month 939,056 999,043
From 1 month to 3 months 1,016,024 969,960
From 3 month to 6 months 507,928 385,972
From 6 month to 1 year 478,097 554,402
From 1 year to 2 years 106,487 31,287
From 2 years to 5 years 17,806 16,295
Total 3,568,739 3,190,716
The following table presents additional information regarding the Bank's
deposits:
March 31, 2023 December 31,
2022
Aggregate amount of $100,000 or more 3,568,349 3,190,376
Aggregate amount of deposits in the New York Agency 725,117 526,474
March 31,
2023 2022
Interest expense on deposits made in the New York Agency 8,455 1,086
13.
Securities sold under repurchase agreements
As of March 31, 2023, and December 31, 2022, the Bank had financing
transactions under repurchase agreements for $347.6 million and $300.5
million, respectively.
During the periods ended March 31, 2023 and 2022, interest expense relating to
financing transactions under repurchase agreements totaled $1.9 million and
$567 thousand, respectively. These expenses are included as interest expense -
borrowings and debt in the condensed consolidated interim statement of profit
or loss.
43
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
14.
Borrowings and debt
Some borrowing agreements include various events of default and covenants
relating to minimum capital adequacy ratios, incurrence of additional liens,
and asset sales, as well as other customary covenants, representations and
warranties. As of March 31, 2023, the Bank was in compliance with all those
covenants.
Carrying amount of borrowings and debt is detailed as follows:
March 31, 2023
Short-Term Long-term
Borrowings Debt Borrowings Debt Total
Principal 1,662,727 52,715 637,775 1,610,458 3,963,675
Transaction costs (762) (22) (2,709) (5,140) (8,633)
1,661,965 52,693 635,066 1,605,318 3,955,042
December 31, 2022
Short-Term Long-term
Borrowings Debt Borrowings Debt Total
Principal 2,153,351 42,255 650,275 1,580,727 4,426,608
Transaction costs (1,376) (5) (2,952) (5,764) (10,097)
2,151,975 42,250 647,323 1,574,963 4,416,511
44
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
14.
Borrowings and debt (continued)
Short-term borrowings and debt
The breakdown of short-term (original maturity of less than one year)
borrowings and debt, along with contractual interest rates, plus prepaid
commissions, is as follows:
March 31, December 31,
2023 2022
Short-term borrowings:
At fixed interest rates 1,272,601 1,584,776
At floating interest rates 390,126 568,575
Principal 1,662,727 2,153,351
Less: Transaction costs (762) (1,376)
Total short-term borrowings, net 1,661,965 2,151,975
Short-term debt:
At floating interest rates 52,715 42,255
Principal 52,715 42,255
Less: Transaction costs (22) (5)
Total short-term debt, net 52,693 42,250
Total short-term borrowings and debt 1,714,658 2,194,225
Range of fixed interest rates on borrowings and debt in U.S. dollars 2.42% to 6.15% 1.53% to 6.52%
Range of floating interest rates on borrowings in U.S. dollars 5.31% to 6.06% 4.90% to 5.72%
Range of floating interest rates on borrowings and debt in Mexican pesos 11.60% to 12.65% 10.97% to 12.00%
Range of floating interest rates on borrowings in Euro 3.04 % - %
Range of fixed interest rates on borrowings and debt in Japanese yen 0.84% to 1.23% 0.84% a 1.23%
The outstanding balances of short-term borrowings and debt by currency,
excluding prepaid commissions, are as follows:
March 31, 2023 December 31,
2022
US dollar 1,233,003 1,593,531
Euro 13,556 -
Mexican peso 275,285 405,830
Japanese yen 193,598 196,245
Carrying amount - principal 1,715,442 2,195,606
45
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
14.
Borrowings and debt (continued)
Long-term borrowings and debt
The breakdown of long-term borrowings and debt (original maturity of more than
one year), along with contractual interest rates, plus prepaid commissions are
as follows:
March 31, December 31,
2023 2022
Long-term borrowings:
At fixed interest rates with due dates from May 2023 to September 2023 75,000 75,000
At floating interest rates with due dates from August 2023 to May 2026 562,775 575,275
Principal 637,775 650,275
Less: Transaction costs (2,709) (2,952)
Total long-term borrowings, net 635,066 647,323
Long-term debt:
At fixed interest rates with due dates from March 2024 to November 2034 1,147,065 1,136,743
At floating interest rates with due dates from May 2023 to February 2026 463,393 443,984
Principal 1,610,458 1,580,727
Less: Transaction costs (5,140) (5,764)
Total long-term debt, net 1,605,318 1,574,963
Total long-term borrowings and debt, net 2,240,384 2,222,286
Range of fixed interest rates on borrowings and debt in U.S. dollars 0.80% to 5.81% 0.80% to 5.81%
Range of floating interest rates on borrowings and debt in U.S. dollars 5.59% to 6.27% 4.96% to 6.04%
Range of fixed interest rates on borrowings and debt in Mexican pesos 6.50% to 9.20% 6.50% to 9.20%
Range of floating interest rates on borrowings and debt in Mexican pesos 11.49% to 11.88% 10.55% to 10.93%
Range of fixed interest rates on debt in Japanese yens 0.40% to 1.27% 0.40% to 1.27%
Range of fixed interest rates on debt in Euros 0.90% to 3.75% 0.23% to 3.75%
Range of fixed interest rates on debt in Australian dollars 1.41% to 6.81% 1.41% a 6.81%
Range of fixed interest rates on debt in Sterling pounds 1.50 % 1.50 %
Range of fixed interest rates on debt in Swiss francs 0.35 % 0.35 %
46
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
14.
Borrowings and debt (continued)
Long-term borrowings and debt (continued)
The outstanding balances of long-term borrowings and debt by currency,
excluding prepaid commissions, are as follows:
March 31, 2023 December 31,
2022
US dollar 1,127,775 1,155,275
Mexican peso 916,861 845,867
Euro 85,603 111,095
Japanese yen 75,481 76,513
Australian dollar 27,017 26,968
Swiss franc 10,931 10,820
Sterling pound 4,565 4,464
Carrying amount - principal 2,248,233 2,231,002
Future payments of long-term borrowings and debt outstanding as of March 31,
2023, are as follows:
Year Outstanding
2023 160,773
2024 576,292
2025 945,428
2026 264,370
2027 276,002
2029 15,066
2034 10,302
Carrying amount - principal 2,248,233
The following table presents the reconciliation of movements of borrowings and
debt arising from financing activities, as presented in the condensed
consolidated interim statement of cash flows
:
2023 2022
Balance as of January 1, 4,416,511 3,304,178
Net decrease in short-term borrowings and debt (503,227) (195,107)
Proceeds from long-term borrowings and debt - 515,488
Payments of long-term borrowings and debt (55,668) (76,228)
Change in foreign currency rates 94,179 19,054
Fair value adjustment due to hedge accounting relationship 1,787 (1,203)
Other adjustments 1,460 (2,980)
Balance as of March 31, 3,955,042 3,563,202
The reconciliation of the movements of the equity accounts that are part of
the financing activities are presented in the condensed consolidated interim
statement of changes in equity.
47
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
15.
Lease liabilities
Maturity analysis of contractual undiscounted cash flows of the lease
liabilities is detailed below:
March 31, 2023 December 31,
2022
Due within 1 year 1,537 1,506
After 1 year but 7,490 7,210
within 5 years
After 5 years but 11,964 12,330
within 10 years
Total undiscounted 20,991 21,046
lease liabilities
Short-term 989 965
Long-term 15,502 15,780
Lease liabilities included in the condensed 16,491 16,745
consolidated interim statement of financial position
Amounts recognized in the condensed consolidated interim statement of cash
flows:
March 31,
2023 2022
Payments of lease liabilities 255 246
Amounts recognized in profit or loss:
March 31,
2023 2022
Interest on lease liabilities (144) (148)
16.
Other liabilities
Following is a summary of other liabilities:
March 31, 2023 December 31,
2022
Accruals and other accumulated expenses 11,079 16,812
Accounts payable 14,378 7,269
Other 3,195 2,730
Total 28,652 26,811
48
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
17.
Earnings per share
The following table presents a reconciliation of profit and share data used in
the basic and diluted earnings per share ("EPS") computations for the dates
indicated:
March 31,
2023 2022
(Thousands of US$ dollars)
Profit for the period 36,954 11,119
(U.S. dollars)
Basic earnings per share 1.02 0.31
Diluted earnings per share 1.02 0.31
(Thousands of shares)
Weighted average of common shares outstanding applicable to basic EPS 36,360 36,249
Adjusted weighted average of common shares outstanding applicable to diluted EPS 36,360 36,249
18.
Fee and commission income
Fee and commission income from contracts with customers broken down by main
types of services, are detailed as follows:
March 31, 2023
Syndications Documentary and stand-by Other commissions, Total
letters of credit net
Opening and confirmation 177 3,243 494 3,914
Negotiation and acceptance - 34 - 34
Amendment - 556 (8) 548
Structuring 54 - 176 230
Other 166 91 (171) 86
397 3,924 491 4,812
49
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
18.
Fee and commission income (continued)
March 31, 2022
Syndications Documentary and stand-by Other commissions, Total
letters of credit net
Opening and confirmation - 2,562 385 2,947
Negotiation and acceptance - 93 - 93
Amendment - 617 - 617
Structuring 430 - - 430
Other - 57 (195) (138)
430 3,329 190 3,949
The following table provides information on the ordinary income that is
expected to be recognized on the contracts in force:
March 31,
2023
Up to 1 year 2,772
From 1 to 2 years 111
More than 2 years 228
Total 3,111
19.
Business segment information
The following table provides certain information regarding the Bank's
operations by segment:
March 31, 2023
Commercial Treasury Total
Interest income 122,595 20,784 143,379
Interest expense (115) (90,644) (90,759)
Inter-segment net interest income (77,651) 77,651 -
Net interest income 44,829 7,791 52,620
Other income (expense), net 4,992 1,563 6,555
Total income 49,821 9,354 59,175
Provision for credit losses (3,904) (2,427) (6,331)
Operating expenses (11,844) (4,046) (15,890)
Segment profit (loss) 34,073 2,881 36,954
Segment assets 6,854,382 2,383,965 9,238,347
Segment liabilities 154,240 7,970,216 8,124,456
50
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
19.
Business segment information (continued)
March 31, 2022
Commercial Treasury Total
Interest income 40,208 4,796 45,004
Interest expense (118) (19,165) (19,283)
Inter-segment net interest income (14,836) 14,836 -
Net interest income 25,254 467 25,721
Other income (expense), net 4,132 399 4,531
Total income 29,386 866 30,252
Provision for credit losses (7,361) (750) (8,111)
Operating expenses (8,800) (2,222) (11,022)
Segment profit (loss) 13,225 (2,106) 11,119
Segment assets 6,658,539 1,790,642 8,449,181
Segment liabilities 210,565 7,215,270 7,425,835
The following table shows the reconciliation of information by business segment:
March 31,
2023 2022
Profit for the period 36,954 11,119
Assets:
Assets from reportable segments 9,238,347 8,449,181
Other assets - unallocated 10,294 9,202
Total 9,248,641 8,458,383
Liabilities:
Liabilities from reportable segments 8,124,456 7,425,835
Other liabilities - unallocated 28,652 27,992
Total 8,153,108 7,453,827
51
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
20.
Related party transactions
The detail of the assets and liabilities with related private corporations and
financial institutions is as follows:
March 31, 2023 December 31,
2022
Assets:
Demand deposits 11,434 5,986
Loans, net 207,182 242,024
Securities at amortized cost 19,396 19,593
Total 238,012 267,603
Liabilities:
Time deposits 399,469 567,451
Total 399,469 567,451
Contingencies:
Stand-by letters of credit 150 3,350
Loss allowance - (16)
The detail of income and expenses with related parties is as follows:
March 31,
2023 2022
Interest income:
Loans 2,022 127
Securities at amortized cost 149 -
Total 2,171 127
Interest expense:
Deposits (5,447) (365)
Net interest income (expenses) (3,276) (238)
Other income (expense):
Fees and commissions, net 7 38
Net income (loss) from related parties (3,269) (200)
The total compensation paid to directors and the executives as representatives
of the Bank amounted to:
March 31,
2023 2022
Expenses:
Compensation costs to directors 127 223
Compensation costs to executives 4,146 1,701
52
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
20.
Related party transactions (continued)
Compensation costs of Bank's directors and executives include annual cash
retainers and the cost of granted restricted stock and restricted stock units.
21.
Litigation
Bladex is not engaged in any litigation that is significant to the Bank's
business or, to the best of the knowledge of Bank's management, that is likely
to have an adverse effect on its business, consolidated financial position or
consolidated financial performance.
22.
Applicable laws and regulations
Liquidity index
Rule No. 2-2018 issued by the Superintendence of Banks of Panama (SBP)
establishes, as of March 31, 2023, and December 31, 2022, the minimum LCR to
be reported to the SBP was 100%. The Bank's LCR as of March 31, 2023 and
December 31, 2022 was 195.85% and 167.46%, respectively.
Rule No. 4-2008 issued by the SBP establishes that every general license or
international license bank must always maintain, a minimum balance of liquid
assets equivalent to 30% of the gross total of its deposits in the Republic of
Panama or overseas up to 186 days, counted from the reporting date.
The liquidity index reported by the Bank to the regulator as of March 31,
2023, and December 31, 2022, was 97.01% and 100.49%, respectively.
Capital adequacy
The Banking Law in the Republic of Panama and Rules No. 01-2015 and 03-2016.
The information corresponding to the total capital adequacy index is as
follows:
March 31, 2023 December 31, 2022
Capital funds 1,105,324 1,072,110
Risk-weighted assets 8,198,062 8,117,913
Capital adequacy index 13.48 % 13.21 %
53
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
22.
Applicable laws and regulations (continued)
Leverage ratio
The table below presents the Bank's leverage ratio in compliance with Article
No.17 of Rule No. 1-2015:
March 31, 2023 December 31, 2022
Ordinary capital 969,306 936,092
Non-risk-weighted assets 9,639,072 9,606,970
Leverage ratio 10.06 % 9.74 %
Specific provisions
Based on the classification of risks, collateral and in compliance with SBP
Rule No. 4-2013, the Bank classified the loan portfolio as follows:
March 31, 2023
Normal Special Mention Substandard Doubtful Unrecoverable Total
Loans at amortized cost
Corporations 3,630,617 - - - 10,107 3,640,724
Financial institutions:
Private 2,194,630 - - 20,000 - 2,214,630
State-owned 702,226 - - - - 702,226
2,896,856 - - 20,000 - 2,916,856
Sovereign 127,795 - - - - 127,795
Total 6,655,268 - - 20,000 10,107 6,685,375
Allowance for loan
losses under IFRS 33,406 - - 20,344 5,521 59,271
(1)
:
December 31, 2022
Normal Special Mention Substandard Doubtful Unrecoverable Total
Loans at amortized cost
Corporations 3,659,018 - - - 10,107 3,669,125
Financial institutions:
Private 2,225,385 - 20,000 - - 2,245,385
State-owned 719,882 - - - - 719,882
2,945,267 - 20,000 - - 2,965,267
Sovereign 128,628 - - - - 128,628
Total 6,732,913 - 20,000 - 10,107 6,763,020
Allowance for loan
losses IFRS 33,639 - 16,141 - 5,420 55,200
(1)
:
(1)
As of March 31, 2023, and December 31, 2022, there is no excess in the
specific provision calculated in accordance with Rule No. 8-2014 of the SBP,
over the provision calculated in accordance with IFRS.
As of March 31, 2023, and
December 31, 2022
, there are no restructured loans.
54
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
22.
Applicable laws and regulations (continued)
Below is the classification of the loan portfolio by maturity profile based on
Rule No. 4-2013 and modified by Rule No. 8-2014:
March 31, 2023
Current Past due Delinquent Total
Loans at amortized cost
Corporations 3,630,617 - 10,107 3,640,724
Financial institutions:
Private 2,194,630 - 20,000 2,214,630
State-owned 702,226 - - 702,226
2,896,856 - 20,000 2,916,856
Sovereign 127,795 - - 127,795
Total 6,655,268 - 30,107 6,685,375
December 31, 2022
Current Past due Delinquent Total
Loans at amortized cost
Corporations 3,659,018 - 10,107 3,669,125
Financial institutions:
Private 2,225,385 20,000 - 2,245,385
State-owned 719,882 - - 719,882
2,945,267 20,000 - 2,965,267
Sovereign 128,628 - - 128,628
6,732,913 20,000 10,107 6,763,020
In accordance with Rule No. 4-2013, as amended by Rule No. 8-2014,
non-accruing loans are presented by category as follows:
March 31, 2023
Normal Special Mention Substandard Doubtful Unrecoverable Total
Loans at amortized cost
Impaired loans - - - 20,000 10,107 30,107
Total - - - 20,000 10,107 30,107
December 31, 2022
Normal Special Mention Substandard Doubtful Unrecoverable Total
Loans at amortized cost
Impaired loans - - 20,000 - 10,107 30,107
Total - - 20,000 - 10,107 30,107
March 31, 2023 December 31, 2022
Non-accruing loans:
Private corporations 30,107 30,107
Interest that would be reversed if the loans had been classified as non-accruing loans 1,277 1,173
As of March 31, 2023, and
December 31, 2022
, there was no interest income collected on loans in non-accrual status.
55
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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
22.
Applicable laws and regulations (continued)
Modified special mention loans
As of March 31, 2023, and
December 31, 2022
, the Bank does not have modified loans; therefore, the requirements and
disclosures established by Article No. 8 of Rule No. 6-2021 are not applicable.
Credit risk coverage - dynamic provision
As of March 31, 2023, and
December 31, 2022
, the total amount of the dynamic provision calculated according to the
guidelines of Rule No. 4-2013 of the SBP is $136 million for both periods,
appropriated from retained earnings for purposes of compliance with local
regulatory requirements. This allocation is restricted for dividend
distribution purposes.
Capital reserve
In addition to capital reserves required
by regulations, the Bank maintains a capital reserve of $95.2 million, which
was voluntarily established. Pursuant to Article No. 69 of the Banking Law,
reduction of capital reserves requires prior approval of SBP.
23.
Subsequent events
The Bank announced a quarterly cash dividend of $0.25 US dollar cents per
share corresponding to the first quarter of 2023. The cash dividend was
approved by the Board of Directors on April 14, 2023 and will be paid on May
17, 2023 to the Bank's stockholders as of May 4 , 2023 record date.
56