Banco Latinoamericano de Comercio Exterior Q2 2025 Earnings Report

Banco Latinoamericano de Comercio Exterior EPS Results

• Actual EPS: $1.73
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Banco Latinoamericano de Comercio Exterior Revenue Results

• Actual Revenue: $90.04 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Banco Latinoamericano de Comercio Exterior Announcement Details

• Quarter: Q2 2025
• Date: 8/4/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, August 5, 2025
• Conference Call Time: 11:00AM ET

Banco Latinoamericano de Comercio Exterior (NYSE:BLX), S. A., a multinational bank, primarily engages in the financing of foreign trade in Latin America and the Caribbean. The company operates in two segments, Commercial and Treasury. It offers bilateral loans; structured loans including syndicated and clubbed, such as acquisition and pre-export financing, A/B loan financing, bridge loans, and liability management; and project financing. The company also provides letter of credit comprising import and export letters of credit, and credit discounting and financing, as well as usance payable at sight; stand-by services; bank guarantees, including first demand and local guarantees; import and export documentary collection; irrevocable reimbursement undertaking; and canal tolls. In addition, it offers liquidity and investment solutions, such as time deposits, DDA accounts, Yankee certificate of deposits, and EMTN private placement services, as well as supply chain finance services. The company primarily serves financial institutions, corporations, and sovereigns and state-owned entities. Banco Latinoamericano de Comercio Exterior, S. A.was formerly known as Banco Latinoamericano de Exportaciones, S.A. and changed its name to Banco Latinoamericano de Comercio Exterior, S. A. in June 2009. The company was founded in 1975 and is headquartered in Panama City, the Republic of Panama.

Banco Latinoamericano de Comercio Exterior Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Bladex delivered record net income of $64.2 million in Q2, driving a quarterly ROE of 18.5 %, the highest in over two decades.
• Positive Sentiment: Fee income surged to $20 million (up 88 % QoQ and 59 % YoY), powered by the landmark $1.6 billion Stasolier syndicated facility.
• Positive Sentiment: Asset quality remained pristine with nonperforming loans at just 0.2 % of exposure, robust reserve coverage of 5×, and over 97 % of loans in Stage 1.
• Positive Sentiment: Deposits climbed to $6.4 billion (up 10 % QoQ), now representing 62 % of total funding and strengthening the bank’s cost-efficient funding base.
• Positive Sentiment: Bladex’s new digital trade finance platform is fully live, expected to enhance efficiency and scale letter of credit volumes over the next 18 months.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to BLADEX Second Quarter twenty twenty five Earnings Conference Call. A slide presentation is accompanying today's webcast and is also available on the Investors section of the company's website, www.bladex.com. There will be an opportunity for you to ask questions at the end of today's presentation. Please note, today's conference call is being recorded. As a reminder, all participants will be in a listen only mode.

[Operator]

I would now like to turn the call over to Mr. Jorge Salas, Chief Executive Officer. Sir, please go ahead.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Good morning, everyone, and thank you for joining us today to discuss Bladex's results for the 2025. I will begin with the highlights of our performance during the quarter. And then, as usual, Anet, our CFO, will walk you through the financials in more detail. After that, I will share a few thoughts on the macro environment and update you on the progress of Bladex's transformation journey before we open the call for question. The second quarter stands as one of the strongest quarters in our bank's history, not only because of the record bottom line number, but perhaps more importantly, because of the earnings quality.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Furthermore, it reaffirms the resilience and adaptability of our business model in the face of an increasingly complex macro environment in a particularly volatile trade environment. In the second quarter, we delivered record earnings, strong revenue growth propelled by fee income while maintaining pristine asset quality and robust capital levels. While the results include a meaningful contribution from a landmark structured transaction executing during the quarter, it is important to highlight that even without this transaction, the quarter would still have marked a record performance driven by well diversified commercial activity and disciplined execution across all business lines. Our commercial portfolio grew to $10,800,000,000. That is up 1% quarter over quarter and 18% year over year.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Growth was broad based with strong momentum in Central America. As I said, credit quality remained exceptional with nonperforming loans close to zero and over 97% of exposures classified as stage one. On the funding side, deposits increased to $6,400,000,000, 10% above the prior quarter and 23% higher than a year ago. Deposits now represent 62% of our total funding. It's obviously key to keep our funding costs under control.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

The growth in deposits was driven by continued strength in our long standing institutional deposit base, including central banks, our Class A shareholders, and a solid performance of our Yankee CD program as well as a sustained increase in corporate client deposits, which have grown more than 30% in the last twelve months. Net interest income totaled nearly $68,000,000 up 4% from the previous quarter and 8% versus last year. Our net interest margin stood at 2.36%, slightly above expectations. Fee income deserves a special mention. Fee income stood at $20,000,000 for the quarter, up 88% quarter over quarter and 59% year over year.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

A significant part of this increase was due to the structured syndicated deal I mentioned before. In such transaction, Bladex acted as global coordinator and mandated lead arranger alongside a global bank and a multilateral institution for a $1,600,000,000 senior secured syndicated facility for Stasolier, Suriname's national oil company and top contributor to the country's GDP. Suriname has been a class a shareholder of Bladex since 1997. The transaction received a strong reception from the market, attracting 18 financial institutions from all over the world. It is once again the proof of our ability to selectively execute high impact deals that align with both our risk appetite and our mission.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Bladex has a long standing track record of supporting state owned enterprises in strategic sectors such as oil and gas and with the strong fundamentals and excellent governments is a company we've followed closely for many, many years. While our loan book remain remains predominantly short term, this facility with a weighted average life of approximately five years fits comfortably within our usual medium term exposure limits and reflects our ability to support longer dated, well structured transactions when the risk return profile is attractive. But beyond this transaction, commercial activity remains strong, and our pipeline continues to be active and as strong as ever, particularly in the trade finance and structured lending. These dynamics give us the confidence in our ability to continue delivering recurring and high quality fee income. Operating expenses were stable quarter over quarter, and our efficiency ratio improved to 23.1%, a three eighty basis point gain versus the prior quarter and comfortably within our full year guidance.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Finally, net income reached a record of $64,000,000 up over 24% from the first quarter and 28% from a year ago. Return on equity stood at 18.5, the highest quarterly ROE in over two decades, a clear reflection of the strength and scalability of our business model. Capital levels

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

portfolio. Our total credit portfolio stood at $12,200,000,000 up 18% year over year, reflecting sustained growth in commercial activity across the region. The commercial portfolio, which includes loans and contingencies, reached $10,800,000,000 up 1% quarter over quarter and 18% year over year. Growth this quarter was primarily driven by our off balance sheet business, which rose 11% quarter over quarter and twenty five percent year over year, supported by higher demand across all segments that have credits, guarantees and credit commitments. This help us to deepen client engagement while preserving capital and enhancing risk adjusted returns.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

The loan portfolio closed this quarter at $8,600,000,000 up 16% year over year. While end of quarter balances were slightly below March levels, the average balances were higher than the ones in the first quarter, reflecting healthy origination. In a context of continued margin compression and elevated liquidity, we remain focused on sound underwriting and high quality opportunities. Bladex continued to grow its commercial portfolio by executing opportunities aligned with our strategic focus. High value transactions, such as the Statsoli financing facility and other syndicated deals demonstrated the strength of our origination and distribution capabilities, helping to offset tighter pricing and ample market liquidity.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

Many of these transactions were in the works for several quarters, highlighting the depth of our pipeline and consistency in execution. Our commercial exposure remains well diversified across sectors and geographies, with our main exposures in Brazil, Guatemala and Mexico. This quarter, we also saw relative growth in Costa Rica, Paraguay and Suriname. We continue to find opportunities across the region to strengthen client relationships, capitalize on market dislocations and grow our presence in key markets. Looking ahead, we see strong momentum in the execution of medium term structured transactions, which offer higher margins and better capital efficiency, complemented by short term transactions that keep us agile and responsive to our client needs.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

Turning now to the investment portfolio. Balances increased 8% quarter over quarter and 20% year over year, reaching just over $1,300,000,000 The portfolio is short in duration with an average duration around two years and remains concentrated in investment grade non LatAm issuers, providing liquidity and credit diversification. Most of these securities are held through our New York agency and are eligible for the Fed discount window, reinforcing our already strong liquidity position by providing contingent access to a lender of last resort. Lastly, total assets reached 12,700,000,000 up 2% quarter over quarter and 16% year over year, reflecting both commercial momentum and our flexible balance sheet strategy. We continue to grow with discipline, preserving capital, sustaining client activity and reinforcing our balance sheet strength.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

Moving on to asset quality. Credit performance remained strong in the second quarter and continues to reflect our disciplined and proactive approach to risk. As of June, nonperforming loans or Stage three totaled $19,000,000 or just 0.2% of total exposure with a robust reserve coverage of five times, while Stage two exposures remained stable at $240,000,000 or 2% of total credit portfolio. In turn, nearly 98% of our portfolio is classified as Stage one with no signs of deterioration or weakening credit trends. Provisions for credit losses totaled $5,000,000 this quarter.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

Most of it was tied to strengthening reserve for exposures in higher risk credit profiles, primarily related to Stage two rather than new impairments or downgrades. Overall, the credit portfolio remains in solid shape, backed by strong client performance and no material credit events or emerging risks. Let's now turn to funding. Deposits reached $6,400,000,000 at quarter end, up 10% quarter over quarter and 23% year over year. Beyond the increase in absolute terms, deposits have also continued to grow in relative importance, now representing 62% of total funding compared to 57% last quarter.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

This tendency highlights the growing strength of our client relationships and the central role deposits play in our funding strategy. This strong performance was supported by steady growth in bank and corporate deposits. As Jorge mentioned, corporate deposits grew over 30% year over year, reflecting our ability to expand and diversify our funding base. In addition, Class A shareholder deposits, which remain a core pillar, accounted for 37% of total deposits at quarter end. Our Genghis CD program also continues to scale effectively.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

Balances reached $1,300,000,000 representing 20% of total deposits, providing both granularity and duration to our deposit base. Outside deposits, short term funding and repo balances remain stable, continuing to play a key role in supporting portfolio growth. Meanwhile, long term funding totaled $2,500,000,000 or 24% of total financial liabilities. We are pleased to share that this past July, as part of our funding diversification strategy, we issued a local bond in the Mexican market for MXN 4,000 million. The transaction was very well received and oversubscribed, confirming strong demand from local investors and reinforcing our position as a recurring issuer in Mexico.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

The proceeds were swapped to U. S. Dollars at very attractive levels, providing cost efficient funding to support portfolio growth. In short, we continue to develop a robust and stable funding base that is cost effective, increasingly diversified and aligned with the evolving requirements of our commercial strategy. In addition, at quarter end, liquid assets represented over 15% of total assets, providing a solid buffer and ample flexibility.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

We are building a funding base that give us flexibility to support growth, respond to market shift and optimize our liability structure over time. Now let's take a look at capital. Total equity reached $1,400,000,000 up 3% quarter over quarter and 12% year over year, reflecting the strength of our earnings generation and retained capital. Our CET1 ratio remains solid at 15%, while the total capital adequacy ratio improved to 13.9, both in lines with internal targets and well above regulatory minimums. This reflects a balanced approach between supporting portfolio growth and preserving capital strength while reinforcing our firm commitment to maintaining an investment grade profile.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

In line with this performance, the Board approved a quarterly dividend of $0.06 $25 per share, unchanged from the prior quarter. This reflects the consistency of our financial results and our confidence in the durability of the bank's earning. Our capital position remains robust, allowing us to grow, return capital and defend our credit ratings with confidence. Let's move now to the top line, starting with the net interest income. Net interest income totaled $67,700,000 up 4% quarter over quarter and 8% year over year, driven by increasing average loan balances and disciplined pricing across the credit portfolio.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

Our net interest margin remained stable at 2.36% and our net interest spreads improved to 1.7%, up five basis points versus the first quarter. These results confirm that our margins have now stabilized at target levels even in the face of falling interest rates. While origination remains pressured by tighter pricing and high liquidity across the region, we have successfully turned our funding strategy and disciplined underwriting into solid and consistent earnings. Our growing and more diversified deposit base continues to lower our cost of funds and support margin stability. As a result, we remain confident in our full year NIM guidance in the range of 2.3%, assuming no major changes in rate projections or portfolio mix.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

With spreads and NIM holding steady, we are proving that strong origination and proactive asset liability management can sustain earnings even in challenging rate environments. Turning now to fee income. Non interest income reached $19,900,000 this quarter, nearly doubling from the prior quarter and making a record high for Bladex. The standout performance was the closing of the transaction for Suriname National Oil Company, Statsoli, a $1,600,000,000 syndicated loan in which Bladex acted as a global book runner. This has been the largest syndicated facility ever arranged by Bladex in forty six years of history.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

As a result, syndicated transactions and recurring fees from our role as admin agent contributed $10,000,000 during the quarter, reinforcing the strength of our structuring and distribution franchise and our increased relevance in providing medium term solutions. Credit commitment also added $2,800,000 in fee income, demonstrating the importance of contingent lending within our product offering. That said, the record fee generation in the quarter wasn't solely driven by syndicated transactions. Recurring activity across the other business lines remained strong. Fees from letter of credits rose to $7,800,000 up 17% quarter over quarter and 20% year over year, reflecting healthy volumes in our core trade finance flows.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

As we continue to roll out our new trade finance platform, we expect this revenue stream to grow further, supported by enhanced client experience and processing efficiency. While transactions like Statsoli are not frequent, our fee generation reflects the steady growth of our structure and higher value added trade finance businesses. Record fees this quarter reflect more than one big deal. They validate the depth, strength and reach of our multi line origination capabilities. Let's now turn to expenses and efficiency.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

Operating expenses totaled $20,800,000 essentially in line with both the previous quarter and our estimate for the period. This consistency reflects our disciplined approach to cost management as we advance in key strategic initiative. During the quarter, we continue executing on our transformation agenda with a focus on technology and digital capabilities. This include the deployment of our new trade finance platform, which is expected to be fully operational for the letter of credit products by the end of the third quarter. With the platform now live, we anticipate that the related depreciation expenses will begin to impact costs towards the end of the third quarter.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

That said, this will not impact our full year efficiency guidance. Importantly, we expect this investment to enhance client experience and unlock incremental fee income over time. Aside from project related costs, the underlying expense base remains stable with no material increases in personnel or overheads costs. As a result, our efficiency ratio improved to 23.1%, well above our full year target range. While this quarter's result was supported by elevated fee income, we continue to expect efficiency to remain below 30% even as we sustain investment in growth and modernization.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

We continue to manage expenses with a long term mindset, balancing strategic investment with cost discipline to enable scalable and profitable growth. Let me close with a look at earnings and returns. Net income for the second quarter reached $64,200,000 up 24% from the first quarter and 28% year over year, driven by strong top line performance, stable credit provisions and disciplined cost management. This marks the highest quarterly operating income in the bank's history and reflects the strength of our commercial model, the scalability of our platform and the disciplined execution of our strategy. Return on equity expanded to 18.5%, also a record high in the last two decades.

[Annette van Hoorde, EVP & CFO at Banco Latinoamericano de Comercio Exterior]

To put this in perspective, even after normalizing for the extraordinary fee from the Statsolite transaction, ROE would have remained well within our guidance range, demonstrating the strength of our underlying profitability. This performance reflects a combination of solid revenue growth, fee diversification, a more efficient funding base and a strong cost control, all achieved without compromising our risk standards. In conclusion, even excluding the significant free income from the Statsoli transaction, our core earnings would still rank among the strongest in recent years. This reinforces that our profitability is not driven by one off transactions, but by a disciplined strategy that continues to deliver attractive and sustainable returns for our shareholders. With that, I will now turn the call back to Jorge for closing remarks. Thank you all.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Thank you very much, Annette. Very clear. Great job. Turning now to the macro backdrop. The global environment remains complex.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Trade tensions and shifting policy priorities continue to fuel market volatility and uncertainty. Geopolitical risks have also intensified with the renewed conflict between Iran and Israel contributing to spike in oil prices. Governments are shifting towards more protectionist policies. That said, actual impact so far has been lower than initially expected. In Latin America, the picture remains broadly resilient.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Consumption continues to drive growth while investment lags. The IMF expects regional growth to ease slightly in 2025 mainly due to slower activity in Brazil and Mexico. In contrast, several economies such as Colombia, Chile, Panama, Costa Rica and Guatemala are expected to accelerate their growth trajectory in the second half of this year. Fiscal vulnerabilities remain a key risk in a high interest rate environment. That said, trade shifts and low regional tariff offer new opportunities for Latin America particularly in manufacturing and exports.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Also remittance flows remain stronger than anticipated with many countries still seeing double digit growth here. In general, Latin America's fundamentals remain solid. In this context, as a regionally focused institution, Bladex is well positioned to support clients navigating this environment through disciplined credit execution and deep experience in cross border flows. We remain cautious and at the same time constantly evaluating opportunities with an attractive risk reward balance. Let me now quickly update you on the execution of our strategic plan.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Exactly one year ago we announced our partnership with CGI, a global leader in trade finance technology. The plan was to implement a new digital platform to modernize our trade operations particularly our management of letters of credit and working capital solutions. At the time we share our intentions to roll out this solution within a twelve month timeline. Today, I'm proud to report that we have delivered exactly as promised. Twelve months later, with flawless execution and no delays, the platform is fully up and running.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

This was a complex and very demanding IT project that was run by our project management office. The project involved more than 50 professionals across the organization working in close collaboration with our vendor. Final testing was successfully completed during the second quarter of this year. We rolled out the platform to a group of pilot clients in July and today we're operating entirely on the new system. I want to recognize the dedication and professionalism of the entire team But this is not just a system upgrade.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

It marks the beginning of a new era for Bladex in the digital transformation of its trade finance operations. Our new trade platform significantly enhances our efficiency, our security and the client experience and reinforces our commitment to offering world class solutions to our clients across the region. We are now entering a transition phase where new trade operations are already being processed through the new platform while existing transactions will naturally run their course in the legacy system. As this transition occurs we expect the platform to reach full operational capacity over the next eighteen months gradually becoming the backbone of our trade finance offering. Before we move to a Q and A let me close by saying that we are pleased with how the year overall is unfolding.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Our results for the first half of the year gives us confidence to reaffirm our full year guidance and we remain optimistic about the outlook for the second half. The fundamentals across the region remain constructive. Our pipeline is stronger than ever. Bladex is well positioned to continue delivering solid, consistent results. With that, let's now open the line for questions.

[Operator]

Thank you very much for the presentation. We will now begin the Q and A section for investors and analysts. If you wish to ask a question, please click on raise hand. If your question has already been taken, you can leave the queue by clicking on put hand down. There is also the possibility to ask your question through the Q and A icon at the bottom of the screen.

[Operator]

You may select the icon and type your question with your name and company. Written questions that are not addressed during the earnings call will be returned by the Investor Relations team. Our first question comes from Ricardo Buscpigo with BTG. Congrats

[Ricardo Buchpiguel, Director - Equity Research at BTG Pactual]

on the solid quarter. I have two questions here on my side. This was a particularly strong quarter for syndication fees, as you mentioned. So it'll be interesting to hear exactly what drove this strong performance in this line, if there is something in terms of market conditions that helped a little bit in this quarter? And what should we expect going forward, especially because considering the second half of the year is usually a bit stronger in the syndication line?

[Ricardo Buchpiguel, Director - Equity Research at BTG Pactual]

And for my second question, back in q one conference call, you guys mentioned that you're already expecting some widening of spreads following terms liberation day, and we did see that in in future results. Right? But since then, markets have come down quite a bit, and I would like to hear your your take on how you're seeing the the competitive environment now, especially with more active capital markets towards the second half of the year and whether we should see or expect a a spread tightening in the the coming quarters, especially a little bit more of NIM? Thank you very much.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Thank you, Ricardo, for your question. A few things here. I'm gonna answer the first question and then turn it over to to Sam, our our chief commercial officer, to to answer the spreads question. But as far as the results and and how how sustainable, yeah, the record results include us as as we said this one off transaction that had, you know, exceptional syndication and and structuring fees. But as I said before, even if you include that exclude that transaction, we would have had a a record quarter anyways.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

I think the ROE would have been close to 17% even without that transaction. Now if if you zoom out and look at this bank over the last three and a half years, what you see is a systematic increase in fee income, not only in nominal terms, but also as a percentage of total income, which is exactly which it it was exactly the idea and will continue to be the idea. Remember that you have a bank, Ricardo, that has essentially a matchbook and will continue to have a matchbook and that has floating rates on both sides of the balance sheet. So so the whole idea this plan is to make our results less dependent on on market rates. So and so fees is is basically the name of the game.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

In our case, as a trade bank, the letter of credit fees are essential, and that's why we have invested in this in this platform that that's gonna start scaling soon. So in other words, I'm not ready to give you exact guidance for for 2026. I mean, it will depend on on on market rates among other things. What I can tell you is that we see we still see substantial potential in basically all of our business lines as we as we keep scaling scaling the bank in the future. Sam, do you wanna tackle this spreads question?

[Samuel Canineu, EVP - Commercial Banking at Banco Latinoamericano de Comercio Exterior]

Well, in terms of market conditions, I think the market continues to be pretty liquid and competitive. But this this has been, I would say, business as usual for us this year, and yet we continue to grow profitably. Now we see more margin pressure definitely on the FI lending market, And we so far have been able to compensate with the higher spreads on the structured trade and working capital business as we continue to roll out new solutions. I think we'll we'll see more stabilization on the for short term margins. And the for the rest of the year, we don't expect major changes.

[Samuel Canineu, EVP - Commercial Banking at Banco Latinoamericano de Comercio Exterior]

I think there could be maybe some upside in case of, you know, the the the trade wars continue. But, so far, we haven't seen such, trade wars affecting so much, the margins.

[Ricardo Buchpiguel, Director - Equity Research at BTG Pactual]

No. Very, very clear. And with with data you you guys mentioned, it would make sense to expect, you guys approaching closer to the top end of the guidance or even surprise surprising a little bit the top end of the guidance in terms of ROE, given that you already deliver a lot in in the in the the first half of the year. And right now, the guidance is implying, like, a big deceleration in terms of of bottom line.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Yes. For sure. We're gonna be very close to the guidance, but if some, we're gonna be closer to the upper end of our guidance. Remember that the the amortization of the platforms will start in the second quarter, but it seems like they're gonna be today, what I can say is it seems they're gonna be slightly above our guidance. Yes.

[Ricardo Buchpiguel, Director - Equity Research at BTG Pactual]

Very clear. Thank you.

[Operator]

Our next question comes from Santiago Martinez with Credicorp. You can open your microphone.

[Santiago Martinez Mejia, Equity Research Analyst at Credicorp]

Hi, everyone. Congratulations for these results. I have two questions on my side. The second one the first one, sorry, is regarding if we if we should observe an increase in in fees and letters of credits in the upcoming quarters due to the new platform of letter of credits. And how much this could how much could this increase in terms of fees and profitability?

[Santiago Martinez Mejia, Equity Research Analyst at Credicorp]

And then the second question is, how do you perceive the current uncertainty in global trade as it impacted loan demand in different sectors and countries? Thank you.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Thank you, Santiago. Good question. As far as the letters of credit and and the new trade platform, I mean, the point here is that there's a big upside in processing smaller transactions with better margins. And that will be from both existing clients and also new clients. I mean, the new platform would allow us to do that in in a cost efficient manner with much better service with a new digital client interface, but also reducing operational risk.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

So so over the medium term, you're gonna see significant increase in in transactional volume and better margins. We we do anticipate a reduction in the average ticket size, but the overall strategy is focused on scaling the business through higher transaction throughput. The the platform is is now live, and and we anticipate, as I said, the depreciation expenses to to start impacting cost now. But, you know, LCs are are very, very profitable. This is especially given its low capital consumption.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

And and this is, for sure, an important strategic investment, but we expect it to pay off within eighteen months. So it's it's gonna be it's a it's a very straightforward business case. You wanna tackle the second one, Sam?

[Samuel Canineu, EVP - Commercial Banking at Banco Latinoamericano de Comercio Exterior]

Yeah. I think it's pretty straightforward. So far, we have not seen so much affection in volume given the volume or pricing, given the the the new tariffs. I think, I mean, we we we were speaking with our clients on a daily basis about that. I think the important thing everybody is is is preparing preparing to reroute their their I mean, the the region will continue to export, And if not to The US, to to other regions, most of what comes from it is commodities, and commodities can be let's say, it's easier to to reroute them.

[Samuel Canineu, EVP - Commercial Banking at Banco Latinoamericano de Comercio Exterior]

And the demand, I would say, least in the short term, the demand for financing such exports will should should be there. I think on the long, on the long term, then, yes, I think it's it's it's something that we're evaluating and also preparing for, but, we we don't know how it's gonna be.

[Santiago Martinez Mejia, Equity Research Analyst at Credicorp]

Thank you so much. And just to to make a sum, considering the the record fee income and expected pipeline in syndication fees for the upcoming quarters, can we still consider net fees at current levels? Or how sustainable is is this in in is these quarters in terms of of fees?

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

So in in terms of so you have basically two fees. You have syndication fees. You have that one off transaction that is very meaningful. We do have a very strong pipeline. As I said, in in syndications, I would say, stronger than ever, perhaps not with transactions not as big as this $1,600,000,000 transaction, but but steady and healthy pipeline.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

And as far as the letters of credit fees, I mean, you you've seen I mean, they're up 20% from last year. And as the platform starts rolling out and and we're including new clients from different segments, then you will see sustained increase in in LL layers of credit fees as well.

[Santiago Martinez Mejia, Equity Research Analyst at Credicorp]

Thank you so much.

[Executive]

Our next question comes in reading form by Jeffrey Otto, and it's the following. Congratulations on the continuous execution of your growth plan. Expanding into factoring, accounts receivable financing has been mentioned by Bladex in the past. It will seem to be a natural niche for Bladex. Is the bank making an effort to expand in this space?

[Executive]

And if so, do you expect this to become a meaningful profit center?

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Yes. Let me yeah. Good very good question. And factoring is obviously an essential part of our working capital solutions, strategy. It it is a natural fit.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Sam, I don't wanna I don't know if you wanna give some some color on on that question. We've done some we've made some progress already there.

[Samuel Canineu, EVP - Commercial Banking at Banco Latinoamericano de Comercio Exterior]

Yeah. We have been putting a lot of resources to grow the business, not only through single invoice discounting, but also portfolio solutions as securitization and other forms of portfolio discounts. This is a growing business for us, and we see ample room for growth in in in the many countries that we operate. This is a common need from our clients, let's say, the the sell side of their the the the sell side of their accounts, short term working capital. And, yes, there is definitely focus on to grow that in the in the short and the medium one.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Not only in in I would say I would add only not only international factoring, but also potentially in in in in local currency as long as we don't run any FX risk, and there are some ways to hedge that. But there are some markets where, the regulation favors the the factor yeah. Yeah. Synthetic factoring. So we're looking into that. Yes.

[Operator]

Our next question comes from Ricardo Valarino. Congratulations once again on a magnificent quarter, both ROE and the efficiency ratio at record levels. How should see these two in the near and midterm outlook?

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Thank you, Ricardo. I think we I think we tackled that question before. These are these are record results. They are impacted by this one off transaction. They would have been record results anyway even without accounting for that transactions.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

As far as the guidance for the year, we expect for sure to be below I mean, better than the efficiency guidance and for sure in the upper end of our ROE and bottom line results. As far as going forward, we'll depend on on market rates, but the whole idea of the plan is to make, again, this bank less dependent on market rates. So we're very promising.

[Operator]

Okay. Thank you very much. That's all the questions we have for today. I'll pass the line back to the Bladex team for their concluding remarks.

[Jorge L. Salas Taurel, CEO at Banco Latinoamericano de Comercio Exterior]

Well, thank you. Thank you, everybody, for for the questions. Again, we see substantial potential in in all of our business lines, and we look forward to having you in the next call. Thank you so much.

[Operator]

This concludes Bladex's call. You may now disconnect, and have a nice day.

Participants

Executives

• Jorge L. Salas Taurel, CEO
• Annette van Hoorde, EVP & CFO
• Samuel Canineu, EVP - Commercial Banking

Analysts

• Ricardo Buchpiguel, Director - Equity Research at BTG Pactual
• Santiago Martinez Mejia, Equity Research Analyst at Credicorp
• Executive