Banco Latinoamericano de Comercio Exterior, S.A. and Subsidiaries
Unaudited condensed consolidated interim financial statements as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020
Banco Latinoamericano de Comercio Exterior, S.A. and Subsidiaries
Contents
Unaudited condensed consolidated interim statement of financial position | 3 | |
Unaudited condensed consolidated interim statement of profit or loss | 4 | |
Unaudited condensed consolidated interim statement of comprehensive income | 5 | |
Unaudited condensed consolidated interim statement of changes in equity | 6 | |
Unaudited condensed consolidated interim statement of cash flows | 7 | |
Notes to the unaudited condensed consolidated interim financial statements | 8 |
2
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statement of financial position
September 30, 2021 and December 31, 2020
(In thousands of US dollars)
Notes |
September 30, 2021 (Unaudited) |
December 31, 2020 (Audit) | ||||||||
Assets | ||||||||||
Cash and due from banks | 4,5 | 663,975 | 863,812 | |||||||
Securities and other financial assets, net | 3,4,6 | 772,957 | 398,068 | |||||||
Loans, net | 3,4,7 | 5,268,827 | 4,896,647 | |||||||
Customers' liabilities under acceptances | 3,4 | 239,544 | 74,366 | |||||||
Derivative financial instruments - assets | 3,4,10 | 7,124 | 27,778 | |||||||
Equipment and leasehold improvements, net | 15,294 | 16,213 | ||||||||
Intangibles, net | 1,658 | 1,984 | ||||||||
Investment properties | 2,050 | 3,214 | ||||||||
Other assets | 11 | 5,651 | 6,816 | |||||||
Total assets | 6,977,080 | 6,288,898 | ||||||||
Liabilities and Equity | ||||||||||
Liabilities: | ||||||||||
Demand deposits | 431,874 | 170,660 | ||||||||
Time deposits | 2,946,944 | 2,968,240 | ||||||||
3,4,12 | 3,378,818 | 3,138,900 | ||||||||
Interest payable | 3,027 | 1,975 | ||||||||
Total deposits | 3,381,845 | 3,140,875 | ||||||||
Securities sold under repurchase agreements | 3,4,13 | 330,998 | 10,663 | |||||||
Borrowings and debt, net | 4,14 | 1,960,699 | 1,985,070 | |||||||
Interest payable | 9,813 | 9,175 | ||||||||
Acceptance outstanding | 3,4 | 239,544 | 74,366 | |||||||
Derivative financial instruments - liabilities | 3,4,10 | 23,770 | 9,211 | |||||||
Allowance for loan commitments and financial guarantees contracts losses | 3,4 | 3,654 | 2,904 | |||||||
Other liabilities | 15 | 14,033 | 18,714 | |||||||
Total liabilities | 5,964,356 | 5,250,978 | ||||||||
Equity: | ||||||||||
Common stock | 279,980 | 279,980 | ||||||||
Treasury stock | (84,366 | ) | (57,999 | ) | ||||||
Additional paid-in capital in excess of value assigned to common stock | 119,627 | 120,414 | ||||||||
Capital reserves | 21 | 95,210 | 95,210 | |||||||
Regulatory reserves | 21 | 136,019 | 136,019 | |||||||
Retained earnings | 477,109 | 464,088 | ||||||||
Other comprehensive income (loss) | (10,855 | ) | 208 | |||||||
Total equity | 1,012,724 | 1,037,920 | ||||||||
Total liabilities and equity | 6,977,080 | 6,288,898 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
3
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of profit or loss
For the three and nine months ended September 30, 2021 and 2020
(In thousands of US dollars, except per share data and number of shares)
For the three months ended September 30, |
For the nine months ended September 30, | |||||||||||||||||
Notes | 2021 | 2020 | 2021 | 2020 | ||||||||||||||
Interest income: | ||||||||||||||||||
Deposits | 287 | 897 | 904 | 4,272 | ||||||||||||||
Securities | 2,567 | 911 | 6,129 | 2,228 | ||||||||||||||
Loans | 31,916 | 37,886 | 94,819 | 136,690 | ||||||||||||||
Total interest income | 18 | 34,770 | 39,694 | 101,852 | 143,190 | |||||||||||||
Interest expense: | ||||||||||||||||||
Deposits | (3,093 | ) | (4,400 | ) | (10,034 | ) | (21,553 | ) | ||||||||||
Borrowings and debt | (9,598 | ) | (12,686 | ) | (29,846 | ) | (51,506 | ) | ||||||||||
Total interest expense | 18 | (12,691 | ) | (17,086 | ) | (39,880 | ) | (73,059 | ) | |||||||||
Net interest income | 22,079 | 22,608 | 61,972 | 70,131 | ||||||||||||||
Other income (expense): | ||||||||||||||||||
Fees and commissions, net | 17 | 4,752 | 2,611 | 12,063 | 7,624 | |||||||||||||
Gain (loss) on financial instruments, net | 9 | (112 | ) | (437 | ) | 51 | (4,744 | ) | ||||||||||
Other income, net | 111 | 407 | 295 | 838 | ||||||||||||||
Total other income, net | 18 | 4,751 | 2,581 | 12,409 | 3,718 | |||||||||||||
Total revenues | 26,830 | 25,189 | 74,381 | 73,849 | ||||||||||||||
(Provision for) reversal of credit losses | 3,18 | (771 | ) | (1,543 | ) | (2,155 | ) | 1,153 | ||||||||||
Gain (loss) on non-financial assets, net | - | 140 | - | - | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Salaries and other employee expenses | (5,952 | ) | (4,626 | ) | (16,764 | ) | (15,804 | ) | ||||||||||
Depreciation of investment properties, equipment and improvements | (622 | ) | (1,116 | ) | (2,132 | ) | (2,705 | ) | ||||||||||
Amortization of intangible assets | (99 | ) | (185 | ) | (623 | ) | (562 | ) | ||||||||||
Other expenses | (3,655 | ) | (2,415 | ) | (10,076 | ) | (8,079 | ) | ||||||||||
Total operating expenses | 18 | (10,328 | ) | (8,342 | ) | (29,595 | ) | (27,150 | ) | |||||||||
Profit for the period | 15,731 | 15,444 | 42,631 | 47,852 | ||||||||||||||
Per share data: | ||||||||||||||||||
Basic earnings per share (in US dollars) | 16 | 0.41 | 0.39 | 1.08 | 1.21 | |||||||||||||
Diluted earnings per share (in US dollars) | 16 | 0.41 | 0.39 | 1.08 | 1.21 | |||||||||||||
Weighted average basic shares (in thousands of shares) | 16 | 38,789 | 39,672 | 39,377 | 39,645 | |||||||||||||
Weighted average diluted shares (in thousands of shares) | 16 | 38,789 | 39,672 | 39,377 | 39,645 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
4
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of profit or loss and other comprehensive income
For the three and nine months ended September 30, 2021 and 2020
(In thousands of US dollars)
For the three months ended September 30 |
For the nine months ended September 30 | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Profit for the period | 15,731 | 15,444 | 42,631 | 47,852 | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Items that will not be reclassified subsequently to profit or loss: | ||||||||||||||||
Change in fair value on equity instrument at FVOCI, net of hedging | - | - | - | 546 | ||||||||||||
Items that are or may be reclassified subsequently to profit or loss: | ||||||||||||||||
Change in fair value on financial instruments, net of hedging | (2,205 | ) | (1,698 | ) | (11,555 | ) | (3,080 | ) | ||||||||
Reclassification of gains (losses) on financial instruments to the profit or loss | 80 | (261 | ) | 44 | (606 | ) | ||||||||||
Exchange difference in conversion of foreign currency operation | - | (122 | ) | 448 | (793 | ) | ||||||||||
Other comprehensive income (loss) | (2,125 | ) | (2,081 | ) | (11,063 | ) | (3,933 | ) | ||||||||
Total comprehensive income for the period | 13,606 | 13,363 | 31,568 | 43,919 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
5
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of changes in equity
For the nine months ended September 30, 2021 and 2020
(In thousands of US dollars)
Common stock |
Treasury stock |
Additional paid- in capital in excess of value assigned to common stock |
Capital reserves |
Regulatory reserves |
Retained earnings |
Other comprehensive income |
Total equity | |||||||||||||||||||||||||
Balances at January 1, 2020 | 279,980 | (59,669 | ) | 120,362 | 95,210 | 136,019 | 446,083 | (1,818 | ) | 1,016,167 | ||||||||||||||||||||||
Profit for the period | - | - | - | - | - | 47,852 | - | 47,852 | ||||||||||||||||||||||||
Other comprehensive income (loss) | - | - | - | - | - | - | (4,535 | ) | (4,535 | ) | ||||||||||||||||||||||
Transfer of fair value on equity instrument at FVOCI | - | - | - | - | - | (602 | ) | 602 | - | |||||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 1,291 | - | - | - | - | 1,291 | ||||||||||||||||||||||||
Exercised options and stock units vested | - | 280 | (280 | ) | - | - | - | - | - | |||||||||||||||||||||||
Dividends declared | - | - | - | - | - | (35,068 | ) | - | (35,068 | ) | ||||||||||||||||||||||
Balances at September 30, 2020 | 279,980 | (57,866 | ) | 119,850 | 95,210 | 136,019 | 458,265 | (5,751 | ) | 1,025,707 | ||||||||||||||||||||||
Balances at January 1, 2021 | 279,980 | (57,999 | ) | 120,414 | 95,210 | 136,019 | 464,088 | 208 | 1,037,920 | |||||||||||||||||||||||
Profit for the period | - | - | - | - | - | 42,631 | - | 42,631 | ||||||||||||||||||||||||
Other comprehensive income (loss) | - | - | - | - | - | - | (11,063 | ) | (11,063 | ) | ||||||||||||||||||||||
Transfer of fair value on equity instrument at FVOCI | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Issuance of restricted stock | - | 1,392 | (1,392 | ) | - | - | - | - | - | |||||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 1,493 | - | - | - | - | 1,493 | ||||||||||||||||||||||||
Exercised options and stock units vested | - | 888 | (888 | ) | - | - | - | - | - | |||||||||||||||||||||||
Repurchase of "Class B" and "Class E" common stock | - | (28,647 | ) | - | - | - | - | - | (28,647 | ) | ||||||||||||||||||||||
Dividends declared | - | - | - | - | - | (29,611 | ) | - | (29,611 | ) | ||||||||||||||||||||||
Balances at September 30, 2021 | 279,980 | (84,366 | ) | 119,627 | 95,210 | 136,019 | 477,109 | (10,855 | ) | 1,012,724 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
6
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of cash flows
For the nine months ended September 30, 2021 and 2020
(In thousands of US dollars)
2021 | 2020 | |||||||
Cash flows from operating activities | ||||||||
Profit for the period | 42,631 | 47,852 | ||||||
Adjustments to reconcile profit for the period to net cash provided by (used in) operating activities: | ||||||||
Depreciation of equipment and leasehold improvements | 2,132 | 2,705 | ||||||
Amortization of intangible assets | 623 | 562 | ||||||
Provision for (reversal of) credit losses | 2,155 | (1,153 | ) | |||||
(Gain) unrealized loss on financial instruments at fair value through profit or loss | (172 | ) | 2,986 | |||||
Realized gain on financial instruments at fair value through profit or loss | - | (484 | ) | |||||
Gain net on sale of financial assets at fair value through OCI | (14 | ) | - | |||||
Gain on sale of financial instruments at amortized cost | (333 | ) | - | |||||
Compensation cost - share-based payment | 1,493 | 1,291 | ||||||
Net changes in hedging position and foreign currency | (906 | ) | 4,240 | |||||
Loss for disposal of equipment and leasehold improvements | 256 | 6 | ||||||
Interest income | (101,852 | ) | (143,190 | ) | ||||
Interest expense | 39,880 | 73,059 | ||||||
Net decrease (increase) in operating assets: | ||||||||
Pledged deposits | (13,823 | ) | (23,952 | ) | ||||
Loans | (385,063 | ) | 1,236,130 | |||||
Other assets | 1,179 | 2,602 | ||||||
Net increase (decrease) in operating liabilities: | ||||||||
Due to depositors | 239,918 | 166,859 | ||||||
Other liabilities | (4,937 | ) | (2,587 | ) | ||||
Cash flows provided by operating activities | (176,833 | ) | 1,366,926 | |||||
Interest received | 111,545 | 146,677 | ||||||
Interest paid | (38,915 | ) | (77,981 | ) | ||||
Net cash (used in) provided by operating activities | (104,203 | ) | 1,435,622 | |||||
Cash flows from investing activities: | ||||||||
Acquisition of equipment and leasehold improvements | (307 | ) | (601 | ) | ||||
Acquisition of intangible assets | (297 | ) | - | |||||
Proceeds from the redemption of securities at fair value through OCI | 10,000 | - | ||||||
Proceeds from redemption of securities at amortized cost | 81,116 | 44,577 | ||||||
Proceeds from the sale of securities at fair value through OCI | 33,492 | 1,882 | ||||||
Proceeds from the sale of securities at amortized cost | 16,369 | - | ||||||
Purchases of securities at fair value through OCI | (9,999 | ) | (103,600 | ) | ||||
Purchases of securities at amortized cost | (512,051 | ) | (89,182 | ) | ||||
Net cash provided by investing activities | (381,677 | ) | (146,924 | ) | ||||
Cash flows from financing activities: | ||||||||
Increase (decrease) in securities sold under repurchase agreements | 320,336 | (29,867 | ) | |||||
Net increase (decrease) in short-term borrowings and debt | 37,222 | (1,162,760 | ) | |||||
Proceeds from long-term borrowings and debt | 167,675 | 386,096 | ||||||
Repayments of long-term borrowings and debt | (194,094 | ) | (246,982 | ) | ||||
Payments of leases liabilities | (916 | ) | (820 | ) | ||||
Dividends paid | (29,356 | ) | (34,818 | ) | ||||
Repurchase of common stock | (28,647 | ) | - | |||||
Net cash provided by (used in) financing activities | 272,220 | (1,089,151 | ) | |||||
(Decrease) increase net in cash and cash equivalents | (213,660 | ) | 199,547 | |||||
Cash and cash equivalents at beginning of the period | 846,008 | 1,159,718 | ||||||
Cash and cash equivalents at end of the period | 632,348 | 1,359,265 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
7
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 Representaçao Ltda. |
- | Bladex Representaçao Ltda, incorporated under the laws of Brazil on January 7, 2000, acts as the Bank's representative office in Brazil. Bladex Representaçao 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. BLX Soluciones is 99.9% owned by Bladex Head Office, and Bladex Development Corp. owns the remaining 0.1%. The company specializes in offering financial leasing and other financial products such as loans and factoring. |
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 unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors on October 19, 2021.
8
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 |
2.1 | Statement of compliance |
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, 2020, 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 |
This note presents information about the Bank's exposure to financial risks and the Bank's management of capital.
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 securities at FVOCI. Unless specifically indicated, for financial assets the amounts in the table represent the outstanding balances. For loan commitments and financial guarantee contracts, the amounts in the table represent the amounts committed or guaranteed, respectively.
Loans at amortized cost
September 30, 2021 | ||||||||||||||||||
PD Ranges | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 2,652,930 | - | - | 2,652,930 | |||||||||||||
Grades 5 - 6 | 0.75 - 3.80 | 2,306,667 | 94,099 | - | 2,400,766 | |||||||||||||
Grades 7 - 8 | 3.81 - 34.51 | 133,108 | 94,993 | 10,593 | 238,694 | |||||||||||||
5,092,705 | 189,092 | 10,593 | 5,292,390 | |||||||||||||||
Loss allowance | (19,341 | ) | (17,000 | ) | (5,124 | ) | (41,465 | ) | ||||||||||
Total | 5,073,364 | 172,092 | 5,469 | 5,250,925 |
December 31, 2020 | ||||||||||||||||||
PD Ranges | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 2,582,794 | - | - | 2,582,794 | |||||||||||||
Grades 5 - 6 | 0.75 - 3.95 | 1,928,142 | 167,996 | - | 2,096,138 | |||||||||||||
Grades 7 - 8 | 3.96 - 30.67 | 102,532 | 119,340 | 10,593 | 232,465 | |||||||||||||
Grades 9 - 10 | 30.68 - 100 | - | - | - | - | |||||||||||||
4,613,468 | 287,336 | 10,593 | 4,911,397 | |||||||||||||||
Loss allowance | (16,661 | ) | (19,916 | ) | (4,588 | ) | (41,165 | ) | ||||||||||
Total | 4,596,807 | 267,420 | 6,005 | 4,870,232 |
9
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 (continued) |
A. | Credit risk (continued) |
Loan commitments, financial guarantees issued and customers' liabilities under acceptances
September 30, 2021 | ||||||||||||||||||
12-month PD Ranges | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||
Commitments and contingencies | ||||||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 353,107 | - | - | 353,107 | |||||||||||||
Grades 5 - 6 | 0.75 - 3.80 | 218,102 | 19,486 | - | 237,588 | |||||||||||||
Grades 7 - 8 | 3.81 - 34.51 | 64,961 | - | - | 64,961 | |||||||||||||
636,170 | 19,486 | - | 655,656 | |||||||||||||||
Customers' liabilities under acceptances | ||||||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 46,129 | - | - | 46,129 | |||||||||||||
Grades 5 - 6 | 0.75 - 3.80 | - | - | - | - | |||||||||||||
Grades 7 - 8 | 3.81 - 34.51 | 193,415 | - | - | 193,415 | |||||||||||||
239,544 | - | - | 239,544 | |||||||||||||||
875,714 | 19,486 | - | 895,200 | |||||||||||||||
Loss allowance | (3,348 | ) | (306 | ) | - | (3,654 | ) | |||||||||||
Total | 872,366 | 19,180 | - | 891,546 |
December 31, 2020 | ||||||||||||||||||
12-month PD Ranges | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||
Commitments and contingencies | ||||||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 245,927 | - | - | 245,927 | |||||||||||||
Grades 5 - 6 | 0.75 - 3.95 | 198,638 | 38,446 | - | 237,084 | |||||||||||||
Grades 7 - 8 | 3.96 - 30.67 | 81,887 | - | - | 81,887 | |||||||||||||
526,452 | 38,446 | - | 564,898 | |||||||||||||||
Customers' liabilities under acceptances | ||||||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 1,498 | - | - | 1,498 | |||||||||||||
Grades 5 - 6 | 0.75 - 3.95 | 723 | - | - | 723 | |||||||||||||
Grades 7 - 8 | 3.96 - 30.67 | 72,145 | - | - | 72,145 | |||||||||||||
74,366 | - | - | 74,366 | |||||||||||||||
600,818 | 38,446 | - | 639,264 | |||||||||||||||
Loss allowance | (2,426 | ) | (478 | ) | - | (2,904 | ) | |||||||||||
Total | 598,392 | 37,968 | - | 636,360 |
10
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 (continued) |
B. | Credit risk (continued) |
Securities at amortized cost
September 30, 2021 | ||||||||||||||||||
12-month PD Ranges | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 384,143 | - | - | 384,143 | |||||||||||||
Grades 5 - 6 | 0.75 - 3.80 | 188,626 | - | - | 188,626 | |||||||||||||
572,769 | - | - | 572,769 | |||||||||||||||
Loss allowance | (1,777 | ) | - | - | (1,777 | ) | ||||||||||||
Total | 570,992 | - | - | 570,992 |
December 31, 2020 | ||||||||||||||||||
12-month PD Ranges | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 108,505 | - | - | 108,505 | |||||||||||||
Grades 5 - 6 | 0.75 - 3.95 | 50,562 | 5,007 | - | 55,569 | |||||||||||||
159,067 | 5,007 | - | 164,074 | |||||||||||||||
Loss allowance | (462 | ) | (33 | ) | - | (495 | ) | |||||||||||
Total | 158,605 | 4,974 | - | 163,579 |
Securities at fair value through other comprehensive income (FVOCI)
September 30, 2021 | ||||||||||||||||||
12-month PD Ranges | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 194,805 | - | - | 194,805 | |||||||||||||
194,805 | - | - | 194,805 | |||||||||||||||
Loss allowance | (26 | ) | - | - | (26 | ) | ||||||||||||
Total | 194,779 | - | - | 194,779 |
December 31, 2020 | ||||||||||||||||||
12-month PD Ranges | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||
Grades 1 - 4 | 0.03 - 0.74 | 231,348 | - | - | 231,348 | |||||||||||||
231,348 | - | - | 231,348 | |||||||||||||||
Loss allowance | (43 | ) | - | - | (43 | ) | ||||||||||||
Total | 231,305 | - | - | 231,305 |
11
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 (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:
September 30, 2021 | ||||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||
Current | 5,092,705 | 189,092 | 10,593 | 5,292,390 |
December 31, 2020 | ||||||||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Current | 4,613,468 | 287,336 | 10,593 | 4,911,397 |
As of September 30, 2021, and December 31, 2020, other financial assets were not past due nor impaired.
12
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 (continued) |
A. | Credit risk (continued) |
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.
September 30, 2021 | ||||||||||||
Notional value USD |
Derivative financial instruments - fair value asset |
Derivative financial instruments - fair value liabilities | ||||||||||
Interest rate swaps | 60,000 | 1,095 | (738 | ) | ||||||||
Cross-currency swaps | 671,160 | 5,369 | (23,032 | ) | ||||||||
Foreign exchange forwards | 40,244 | 660 | - | |||||||||
Total | 771,404 | 7,124 | (23,770 | ) |
December 31, 2020 | ||||||||||||
Notional value USD |
Derivative financial instruments - fair value asset |
Derivative financial instruments - fair value liabilities | ||||||||||
Interest rate swaps | 145,667 | 1,831 | (1,774 | ) | ||||||||
Cross-currency swaps | 565,997 | 25,947 | (3,848 | ) | ||||||||
Foreign exchange forwards | 71,353 | - | (3,589 | ) | ||||||||
Total | 783,017 | 27,778 | (9,211 | ) |
13
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 (continued) |
A. | Credit risk (continued) |
ii. | Loss allowances |
The following tables show reconciliations from the opening to the closing balance 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, 2020 | 16,661 | 19,916 | 4,588 | 41,165 | ||||||||||||
Transfer to lifetime expected credit losses | (158 | ) | 158 | - | - | |||||||||||
Net effect of changes in allowance for expected credit losses | (545 | ) | (2,431 | ) | 376 | (2,600 | ) | |||||||||
Financial instruments that have been derecognized during the period | (10,934 | ) | (643 | ) | - | (11,577 | ) | |||||||||
New financial assets originated or purchased | 14,317 | - | - | 14,317 | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Recoveries | - | - | 160 | 160 | ||||||||||||
Allowance for expected credit losses as of September 30, 2021 | 19,341 | 17,000 | 5,124 | 41,465 |
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2019 | 28,892 | 15,842 | 54,573 | 99,307 | ||||||||||||
Transfer to lifetime expected credit losses | (886 | ) | 886 | - | - | |||||||||||
Transfer to credit-impaired financial instruments | - | (2,100 | ) | 2,100 | - | |||||||||||
Net effect of changes in allowance for expected credit losses | 134 | 13,443 | (118 | ) | 13,459 | |||||||||||
Financial instruments that have been derecognized during the year | (24,307 | ) | (3,729 | ) | - | (28,036 | ) | |||||||||
New financial assets originated or purchased | 12,828 | - | - | 12,828 | ||||||||||||
Write-offs | - | (4,426 | ) | (52,106 | ) | (56,532 | ) | |||||||||
Recoveries | - | - | 139 | 139 | ||||||||||||
Allowance for expected credit losses as of December 31, 2020 | 16,661 | 19,916 | 4,588 | 41,165 |
14
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 (continued) |
A. | Credit risk (continued) |
Loan commitments, financial guarantee contracts and customers' liabilities under acceptances
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2020 | 2,426 | 478 | - | 2,904 | ||||||||||||
Transfer to lifetime expected credit losses | (53 | ) | 53 | - | - | |||||||||||
Net effect of changes in reserve for expected credit losses | (27 | ) | (97 | ) | - | (124 | ) | |||||||||
Financial instruments that have been derecognized during the period | (1,470 | ) | (128 | ) | - | (1,598 | ) | |||||||||
New instruments originated or purchased | 2,472 | - | - | 2,472 | ||||||||||||
Allowance for expected credit losses as of September 30, 2021 | 3,348 | 306 | - | 3,654 |
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2019 | 2,683 | 361 | - | 3,044 | ||||||||||||
Transfer to lifetime expected credit losses | (96 | ) | 96 | - | - | |||||||||||
Net effect of changes in reserve for expected credit losses | 37 | 42 | - | 79 | ||||||||||||
Financial instruments that have been derecognized during the year | (1,864 | ) | (21 | ) | - | (1,885 | ) | |||||||||
New instruments originated or purchased | 1,666 | - | - | 1,666 | ||||||||||||
Allowance for expected credit losses as of December 31, 2020 | 2,426 | 478 | - | 2,904 |
15
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 (continued) |
A. | Credit risk (continued) |
Securities at amortized cost
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2020 | 462 | 33 | - | 495 | ||||||||||||
Net effect of changes in allowance for expected credit losses | (19 | ) | - | - | (19 | ) | ||||||||||
Financial instruments that have been derecognized during the period | (149 | ) | (33 | ) | - | (182 | ) | |||||||||
New financial assets originated or purchased | 1,483 | - | - | 1,483 | ||||||||||||
Allowance for expected credit losses as of September 30, 2021 | 1,777 | - | - | 1,777 |
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2019 | 103 | 10 | - | 113 | ||||||||||||
Transfer to lifetime expected credit losses | (10 | ) | 10 | - | - | |||||||||||
Net effect of changes in allowance for expected credit losses | 15 | 23 | - | 38 | ||||||||||||
Financial instruments that have been derecognized during the year | (76 | ) | (10 | ) | - | (86 | ) | |||||||||
New financial assets originated or purchased | 430 | - | - | 430 | ||||||||||||
Allowance for expected credit losses as of December 31, 2020 | 462 | 33 | - | 495 |
Securities at fair value through other comprehensive income (FVOCI)
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2020 | 43 | - | - | 43 | ||||||||||||
Financial instruments that have been derecognized during the period | (17 | ) | - | - | (17 | ) | ||||||||||
Allowance for expected credit losses as of September 30, 2021 | 26 | - | - | 26 |
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 (continued) |
A. | Credit risk (continued) |
Securities at fair value through other comprehensive income (FVOCI)
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2019 | - | - | - | - | ||||||||||||
Financial instruments that have been derecognized during the year | 43 | - | - | 43 | ||||||||||||
Allowance for expected credit losses as of December 31, 2020 | 43 | - | - | 43 |
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 and other comprehensive income. |
Securities | ||||||||||||||||||||
September 30, 2021 | Loans at amortized cost | Loan commitments and financial guarantee contracts | At amortized cost | FVOCI | Total | |||||||||||||||
Net effect of changes in allowance for expected credit losses | (2,600 | ) | (124 | ) | (19 | ) | - | (2,743 | ) | |||||||||||
Financial instruments that have been derecognized during the year | (11,577 | ) | (1,598 | ) | (182 | ) | (17 | ) | (13,374 | ) | ||||||||||
New financial assets originated or purchased | 14,317 | 2,472 | 1,483 | - | 18,272 | |||||||||||||||
Total | 140 | 750 | 1,282 | (17 | ) | 2,155 |
Securities | ||||||||||||||||||||
September 30, 2020 | Loans at amortized cost | Loan commitments and financial guarantee contracts | At amortized cost | FVOCI | Total | |||||||||||||||
Net effect of changes in allowance for expected credit losses | 10,196 | (109 | ) | 22 | - | 10,109 | ||||||||||||||
Financial instruments that have been derecognized during the year | (21,747 | ) | (1,797 | ) | (76 | ) | - | (23,620 | ) | |||||||||||
New financial assets originated or purchased | 11,151 | 950 | 242 | 15 | 12,358 | |||||||||||||||
Total | (400 | ) | (956 | ) | 188 | 15 | (1,153 | ) |
17
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 (continued) |
A. | Credit risk (continued) |
iii. | Credit-impaired financial assets |
The following table sets out a reconciliation of changes in the net carrying amount of allowance for credit losses for credit-impaired loans.
September 30, 2021 | December 31, 2020 | |||||||
Credit-impaired loans and advances at beginning of period | 4,588 | 54,573 | ||||||
Classified as credit-impaired during the period | - | 2,100 | ||||||
Change in allowance for expected credit losses | 191 | (744 | ) | |||||
Recoveries of amounts previously written off | 160 | 139 | ||||||
Interest income | 185 | 626 | ||||||
Write-offs | - | (52,106 | ) | |||||
Credit-impaired loans and advances at end of period | 5,124 | 4,588 |
During the year ended December 31, 2020, the sale of the outstanding credit-impaired loan in Stage 3, classified at amortized cost, was made for $11.6 million. This sale resulted in a write off against the allowance for credit losses of $ 52.1 million.
18
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 (continued) |
A. | Credit risk (continued) |
iv. | Concentrations of credit risk |
The Bank monitors concentrations of credit risk by sector, industry and by country. An analysis of concentrations of credit risk from loans, loan commitments, financial guarantees and investment securities is as follows.
Concentration by sector and industry
Securities | ||||||||||||||||||||||||||||||||
Loans at amortized cost | Loan commitments and financial guarantee contracts | At amortized cost | FVOCI | |||||||||||||||||||||||||||||
September 30, 2021 |
December 31, 2020 |
September 30, 2021 |
December 31, 2020 |
September 30, 2021 |
December 31, 2020 |
September 30, 2021 |
December 31, 2020 | |||||||||||||||||||||||||
Carrying amount - principal | 5,292,390 | 4,911,397 | 239,544 | 74,366 | 572,769 | 164,074 | 194,805 | 231,348 | ||||||||||||||||||||||||
Amount committed/guaranteed | - | - | 655,656 | 564,898 | - | - | - | - | ||||||||||||||||||||||||
Concentration by sector | ||||||||||||||||||||||||||||||||
Corporations: | ||||||||||||||||||||||||||||||||
Private | 1,888,788 | 1,425,929 | 478,017 | 276,249 | 337,396 | 56,979 | 59,530 | 60,403 | ||||||||||||||||||||||||
State-owned | 980,266 | 741,791 | 59,396 | 92,299 | 46,447 | 29,985 | - | 23,858 | ||||||||||||||||||||||||
Financial institutions: | - | |||||||||||||||||||||||||||||||
Private | 1,962,252 | 2,231,742 | 76,288 | 65,434 | 111,184 | 33,715 | - | - | ||||||||||||||||||||||||
State-owned | 431,571 | 476,520 | 281,499 | 205,282 | 44,167 | 28,276 | 135,275 | 141,974 | ||||||||||||||||||||||||
Sovereign | 29,513 | 35,415 | - | - | 33,575 | 15,119 | - | 5,113 | ||||||||||||||||||||||||
Total | 5,292,390 | 4,911,397 | 895,200 | 639,264 | 572,769 | 164,074 | 194,805 | 231,348 | ||||||||||||||||||||||||
Concentration by industry | ||||||||||||||||||||||||||||||||
Financial institutions | 2,393,823 | 2,708,262 | 357,787 | 270,716 | 155,351 | 61,991 | 135,275 | 141,974 | ||||||||||||||||||||||||
Manufacturing | 1,188,192 | 760,985 | 323,860 | 173,493 | 183,082 | 66,053 | 44,922 | 45,654 | ||||||||||||||||||||||||
Oil and petroleum derived products | 932,026 | 586,030 | 107,286 | 98,189 | 60,433 | 20,911 | 14,608 | 38,607 | ||||||||||||||||||||||||
Agricultural | 307,661 | 336,715 | - | - | - | - | - | - | ||||||||||||||||||||||||
Services | 195,441 | 264,597 | 54,971 | 63,086 | 66,331 | - | - | - | ||||||||||||||||||||||||
Mining | 102,973 | 94,955 | - | - | 14,876 | - | - | - | ||||||||||||||||||||||||
Sovereign | 29,513 | 35,415 | - | - | 33,575 | 15,119 | - | 5,113 | ||||||||||||||||||||||||
Other | 142,761 | 124,438 | 51,296 | 33,780 | 59,121 | - | - | - | ||||||||||||||||||||||||
Total | 5,292,390 | 4,911,397 | 895,200 | 639,264 | 572,769 | 164,074 | 194,805 | 231,348 |
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 (continued) |
A. | Credit risk (continued) |
Risk rating and concentration by country
Securities | ||||||||||||||||||||||||||||||||
Loans at amortized cost | Loan commitments and financial guarantee contracts | At amortized cost | FVOCI | |||||||||||||||||||||||||||||
September 30, 2021 |
December 31, 2020 |
September 30, 2021 |
December 31, 2020 |
September 30, 2021 |
December 31, 2020 |
September 30, 2021 |
December 31, 2020 | |||||||||||||||||||||||||
Carrying amount - principal | 5,292,390 | 4,911,397 | 239,544 | 74,366 | 572,769 | 164,074 | 194,805 | 231,348 | ||||||||||||||||||||||||
Amount committed/guaranteed | - | - | 655,656 | 564,898 | - | - | - | - | ||||||||||||||||||||||||
Rating | ||||||||||||||||||||||||||||||||
1-4 | 2,652,930 | 2,582,794 | 399,236 | 247,425 | 384,143 | 108,505 | 194,805 | 231,348 | ||||||||||||||||||||||||
5-6 | 2,400,766 | 2,096,138 | 237,588 | 237,807 | 188,626 | 55,569 | - | - | ||||||||||||||||||||||||
7-8 | 238,694 | 232,465 | 258,376 | 154,032 | - | - | - | - | ||||||||||||||||||||||||
Total | 5,292,390 | 4,911,397 | 895,200 | 639,264 | 572,769 | 164,074 | 194,805 | 231,348 | ||||||||||||||||||||||||
Concentration by country | ||||||||||||||||||||||||||||||||
Argentina | 97,087 | 130,944 | - | - | - | - | - | - | ||||||||||||||||||||||||
Australia | - | - | - | - | 9,968 | - | - | - | ||||||||||||||||||||||||
Belgium | 17,131 | 9,807 | - | - | - | - | - | - | ||||||||||||||||||||||||
Bolivia | 10,000 | 12,000 | 2,800 | 2,800 | - | - | - | - | ||||||||||||||||||||||||
Brazil | 1,061,704 | 971,652 | 80,000 | 50,000 | 98,049 | 41,128 | - | - | ||||||||||||||||||||||||
Canada | - | - | - | - | 4,987 | - | - | - | ||||||||||||||||||||||||
Chile | 592,924 | 533,945 | 20,684 | 7,911 | 100,438 | 11,992 | - | 28,972 | ||||||||||||||||||||||||
Colombia | 598,264 | 714,258 | 50,333 | 50,333 | 34,997 | 29,998 | - | - | ||||||||||||||||||||||||
Costa Rica | 163,475 | 146,200 | 29,794 | 56,876 | 3,972 | - | - | - | ||||||||||||||||||||||||
Dominican Republic | 270,162 | 202,433 | 16,500 | 16,500 | 4,977 | - | - | - | ||||||||||||||||||||||||
Ecuador | 31,365 | 45,511 | 261,896 | 165,275 | - | - | - | - | ||||||||||||||||||||||||
El Salvador | 81,500 | 40,000 | 4,333 | 1,087 | - | - | - | - | ||||||||||||||||||||||||
France | 109,169 | 150,810 | 57,904 | 84,862 | - | - | - | - | ||||||||||||||||||||||||
Germany | - | - | 7,000 | - | - | - | - | - | ||||||||||||||||||||||||
Guatemala | 347,284 | 281,485 | 64,995 | 43,845 | 3,080 | - | - | - | ||||||||||||||||||||||||
Honduras | 24,620 | 10,199 | 1,175 | 345 | - | - | - | - | ||||||||||||||||||||||||
Hong Kong | 6,000 | 1,800 | - | - | - | - | - | - | ||||||||||||||||||||||||
Israel | - | - | - | - | 4,989 | - | - | - | ||||||||||||||||||||||||
Jamaica | 36,988 | 23,274 | - | - | - | - | - | - | ||||||||||||||||||||||||
Luxembourg | 117,600 | 50,000 | - | - | - | - | - | - | ||||||||||||||||||||||||
Mexico | 860,838 | 607,099 | 4,298 | 4,995 | 46,262 | 43,910 | - | - | ||||||||||||||||||||||||
Nicaragua | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Panama | 211,368 | 241,097 | 62,548 | 61,435 | 12,919 | 10,399 | - | - | ||||||||||||||||||||||||
Paraguay | 46,093 | 100,816 | 9,380 | 11,800 | - | - | - | - | ||||||||||||||||||||||||
Peru | 231,954 | 272,752 | 75,608 | 47,245 | 58,306 | 26,647 | - | - | ||||||||||||||||||||||||
Singapore | 121,336 | 75,095 | - | - | - | - | - | - | ||||||||||||||||||||||||
Trinidad and Tobago | 133,413 | 165,995 | 20,000 | - | - | - | - | - | ||||||||||||||||||||||||
United States of America | 45,000 | 113,816 | - | - | 189,825 | - | 88,759 | 89,794 | ||||||||||||||||||||||||
United Kingdom | 5,204 | 10,409 | 19,981 | - | - | - | - | - | ||||||||||||||||||||||||
Uruguay | 71,911 | - | 105,971 | 33,955 | - | - | - | - | ||||||||||||||||||||||||
Multilateral | - | - | - | - | - | - | 106,046 | 112,582 | ||||||||||||||||||||||||
Total | 5,292,390 | 4,911,397 | 895,200 | 639,264 | 572,769 | 164,074 | 194,805 | 231,349 |
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 (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 |
September 30, 2021 | ||||||||||||||||||||||||
Gross |
Gross amounts offset in the consolidated statement of |
Net amount of assets presented in the consolidated | Gross amounts not offset in the consolidated statement of financial position | |||||||||||||||||||||
Description |
amounts of assets |
financial position |
statement of financial position |
Financial instruments |
Cash collateral received | Net Amount | ||||||||||||||||||
Derivative financial instruments used for hedging | 7,124 | - | 7,124 | - | (4,990 | ) | 2,134 | |||||||||||||||||
Total | 7,124 | - | 7,124 | - | (4,990 | ) | 2,134 |
December 31, 2020 | ||||||||||||||||||||||||
Gross |
Gross amounts offset in the consolidated statement of |
Net amount of assets presented in the consolidated | Gross amounts not offset in the consolidated statement of financial position | |||||||||||||||||||||
Description |
amounts of assets |
financial position |
statement of financial position |
Financial instruments |
Cash collateral received | Net Amount | ||||||||||||||||||
Derivative financial instruments used for hedging | 27,778 | - | 27,778 | - | (24,720 | ) | 3,058 | |||||||||||||||||
Total | 27,778 | - | 27,778 | - | (24,720 | ) | 3,058 |
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 (continued) |
A. | Credit risk (continued) |
b) | Securities sold under repurchase agreements and derivative financial instruments - liabilities |
September 30, 2021 | ||||||||||||||||||||||||
Gross amounts offset in the consolidated |
Net amount of liabilities presented in the | Gross amounts not offset in the consolidated statement of financial position | ||||||||||||||||||||||
Description |
Gross amounts of liabilities |
statement of financial position |
consolidated statement of financial position |
Financial instruments |
Cash collateral pledged |
Net Amount | ||||||||||||||||||
Securities sold under repurchase agreements | (330,998 | ) | - | (330,998 | ) | 358,674 | 765 | 28,441 | ||||||||||||||||
Derivative financial instruments used for hedging | (23,770 | ) | - | (23,770 | ) | - | 20,862 | (2,908 | ) | |||||||||||||||
Total | (354,768 | ) | - | (354,768 | ) | 358,674 | 21,627 | 25,533 |
December 31, 2020 | ||||||||||||||||||||||||
Gross amounts offset in the consolidated |
Net amount of liabilities presented in the | Gross amounts not offset in the consolidated statement of financial position | ||||||||||||||||||||||
Description |
Gross amounts of liabilities |
statement of financial position |
consolidated statement of financial position |
Financial instruments |
Cash collateral pledged |
Net Amount | ||||||||||||||||||
Securities sold under repurchase agreements | (10,663 | ) | - | (10,663 | ) | 11,998 | 18 | 1,353 | ||||||||||||||||
Derivative financial instruments used for hedging | (9,211 | ) | - | (9,211 | ) | - | 7,786 | (1,425 | ) | |||||||||||||||
Total | (19,874 | ) | - | (19,874 | ) | 11,998 | 7,804 | (72 | ) |
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 (continued) |
B. | Liquidity risk |
i. | Exposure to liquidity risk |
The following table details the Bank's liquidity ratios, described in the previous paragraph, as of September 30, 2021, and December 31, 2020, respectively:
September 30, 2021 |
December 31, 2020 | |||||||
At the end of the period | 201.90 | % | 249.42 | % | ||||
Period average | 125.04 | % | 115.98 | % | ||||
Maximum of the period | 306.82 | % | 249.42 | % | ||||
Minimum of the period | 73.82 | % | 53.26 | % |
The following table includes the Bank's liquid assets by geographical location:
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
(in millions of USD dollars) |
Cash and due from banks | Securities FVOCI | Total |
Cash and due from banks | Securities FVOCI | Total | ||||||||||||||||||
United State of America | 568 | 41 | 609 | 740 | 90 | 830 | ||||||||||||||||||
Other O.E.C.D countries | - | 19 | 19 | 100 | - | 100 | ||||||||||||||||||
Latin America | 14 | - | 14 | 6 | - | 6 | ||||||||||||||||||
Other countries | 50 | - | 50 | - | - | - | ||||||||||||||||||
Multilateral | - | 135 | 135 | - | 112 | 112 | ||||||||||||||||||
Total | 632 | 195 | 827 | 846 | 202 | 1,048 |
The following table includes the Bank's demand deposits from customers and its ratio to total deposits from customers:
(in millions of USD dollars) |
September 30, 2021 |
December 31, 2020 | ||||||
Demand liabilities and "overnight" | 514 | 171 | ||||||
% Demand liabilities and "overnight" to total deposits | 15.21 | % | 5.44 | % |
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 (continued) |
B. | Liquidity risk (continued) |
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) |
September 30, 2021 |
December 31, 2020 | ||||||
Total liquid assets | 827 | 1,048 | ||||||
% Total assets to total liabilities | 24.48 | % | 33.40 | % | ||||
% Total liquid assets in the Federal Reserve of the United States of America | 68.53 | % | 65.68 | % |
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 together with its average remaining term:
(in millions of USD dollars) |
September 30, 2021 |
December 31, 2020 | ||||||
Loan portfolio at amortized cost and securities portfolio less than/equal to 1 year according to its original terms | 3,312 | 3,114 | ||||||
Average term (days) | 186 | 195 |
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 together with their average remaining term:
(in millions of USD dollars) |
September 30, 2021 |
December 31, 2020 | ||||||
Loan portfolio at amortized cost and securities portfolio greater than/equal to 1 year according to its original terms | 2,748 | 2,193 | ||||||
Average term (days) | 1,380 | 1,382 |
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 (continued) |
B. | Liquidity risk (continued) |
ii. | Maturity analysis for financial liabilities and financial assets |
The following table details the future undiscounted cash flows of assets and liabilities grouped by their remaining maturity with respect to the contractual maturity:
September 30, 2021 | ||||||||||||||||||||||||||||
Description |
Up to 3 months | 3 to 6 months |
6 months to 1 year | 1 to 5 years |
More than 5 years |
Gross inflows (outflows) |
Carrying amount | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and due from banks | 663,986 | - | - | - | - | 663,986 | 663,975 | |||||||||||||||||||||
Securities and other financial assets, net | 21,316 | 38,950 | 131,241 | 607,933 | - | 799,440 | 772,957 | |||||||||||||||||||||
Loans, net | 2,262,094 | 1,056,656 | 683,660 | 1,377,733 | 144,594 | 5,524,737 | 5,268,827 | |||||||||||||||||||||
Derivative financial instruments - assets | 1,755 | - | - | 5,369 | - | 7,124 | 7,124 | |||||||||||||||||||||
Total | 2,949,151 | 1,095,606 | 814,901 | 1,991,035 | 144,594 | 6,995,287 | 6,712,883 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Deposits | (3,202,832 | ) | (155,638 | ) | (15,473 | ) | (9,665 | ) | - | (3,383,608 | ) | (3,381,845 | ) | |||||||||||||||
Securities sold under repurchase agreements | (146,615 | ) | (149,808 | ) | - | (35,515 | ) | - | (331,938 | ) | (330,998 | ) | ||||||||||||||||
Borrowings and debt, net | (252,445 | ) | (255,837 | ) | (450,242 | ) | (1,093,351 | ) | (30,138 | ) | (2,082,013 | ) | (1,970,512 | ) | ||||||||||||||
Derivative financial instruments - liabilities | - | - | (11,323 | ) | (11,785 | ) | (662 | ) | (23,770 | ) | (23,770 | ) | ||||||||||||||||
Total | (3,601,892 | ) | (561,283 | ) | (477,038 | ) | (1,150,316 | ) | (30,800 | ) | (5,821,329 | ) | (5,707,125 | ) | ||||||||||||||
Contingencies | ||||||||||||||||||||||||||||
Confirmed lettes of credit | 206,155 | 46,783 | 3,367 | - | - | 256,305 | 256,305 | |||||||||||||||||||||
Stand-by letters of credit and guarantees | 8,440 | 58,588 | 120,026 | 12,178 | - | 199,232 | 199,232 | |||||||||||||||||||||
Credit commitments | 54,286 | 20,000 | 52,500 | 73,333 | - | 200,119 | 200,119 | |||||||||||||||||||||
Total | 268,881 | 125,371 | 175,893 | 85,511 | - | 655,656 | 655,656 | |||||||||||||||||||||
Net position | (921,622 | ) | 408,952 | 161,970 | 755,208 | 113,794 | 518,302 | 350,102 |
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 (continued) |
B. | Liquidity risk (continued) |
ii. | Maturity analysis for financial liabilities and financial assets (continued) |
December 31, 2020 | ||||||||||||||||||||||||||||
Description |
Up to 3 months | 3 to 6 months |
6 months to 1 year | 1 to 5 years |
More than 5 years |
Gross inflows (outflows) |
Carrying amount | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and due from banks | 863,831 | - | - | - | - | 863,831 | 863,812 | |||||||||||||||||||||
Securities and other financial assets, net | 11,541 | 20,961 | 60,311 | 312,027 | - | 404,840 | 398,068 | |||||||||||||||||||||
Loans, net | 1,712,049 | 998,923 | 1,255,069 | 293,489 | 1,156,625 | 5,416,155 | 4,896,647 | |||||||||||||||||||||
Derivative financial instruments - assets | - | 119 | 129 | 26,691 | 839 | 27,778 | 27,778 | |||||||||||||||||||||
Total | 2,587,421 | 1,020,003 | 1,315,509 | 632,207 | 1,157,464 | 6,712,604 | 6,186,305 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Deposits | (2,678,292 | ) | (166,832 | ) | (293,306 | ) | (6,638 | ) | - | (3,145,068 | ) | (3,140,875 | ) | |||||||||||||||
Securities sold under repurchase agreements | - | (5,784 | ) | (4,977 | ) | - | - | (10,761 | ) | (10,663 | ) | |||||||||||||||||
Borrowings and debt, net | (166,034 | ) | (60,816 | ) | (456,932 | ) | (1,425,806 | ) | (24,922 | ) | (2,134,510 | ) | (1,994,245 | ) | ||||||||||||||
Derivative financial instruments - liabilities | (3,020 | ) | (1,081 | ) | (71 | ) | (5,039 | ) | - | (9,211 | ) | (9,211 | ) | |||||||||||||||
Total | (2,847,346 | ) | (234,513 | ) | (755,286 | ) | (1,437,483 | ) | (24,922 | ) | (5,299,550 | ) | (5,154,994 | ) | ||||||||||||||
Contingencies | ||||||||||||||||||||||||||||
Confirmed lettes of credit | 167,301 | 29,466 | 20,015 | - | - | 216,782 | 216,782 | |||||||||||||||||||||
Stand-by letters of credit and guarantees | 35,041 | 106,943 | 55,963 | 12,550 | - | 210,497 | 210,497 | |||||||||||||||||||||
Credit commitments | - | - | 4,286 | 133,333 | - | 137,619 | 137,619 | |||||||||||||||||||||
Total | 202,342 | 136,409 | 80,264 | 145,883 | - | 564,898 | 564,898 | |||||||||||||||||||||
Net position | (462,267 | ) | 649,081 | 479,959 | (951,159 | ) | 1,132,542 | 848,156 | 466,413 |
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 contracts, and loan commitments | Earliest possible contractual maturity. For 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 liabilities and financial assets | Contractual undiscounted cash flows. The amounts shown are the gross nominal inflows and outflows for derivatives that simultaneously settle gross or net amounts. |
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 (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:
September 30, | December 31, | |||||||||||||||
2021 | 2020 | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Balances with Federal Reserve of the United States of America | 566,849 | 566,849 | 688,612 | 688,612 | ||||||||||||
Cash and due from banks (1) | 65,499 | 65,499 | 157,396 | 157,396 | ||||||||||||
Total Liquidity reserves | 632,348 | 632,348 | 846,008 | 846,008 |
(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:
September 30, 2021 | ||||||||
Guaranteed | Available as collateral | |||||||
Cash and due from banks | 31,627 | 632,348 | ||||||
Notional of investment securities | 338,081 | 393,460 | ||||||
Loans at amortized cost | - | 5,292,390 | ||||||
Total assets | 369,708 | 6,318,198 |
December 31, 2020 | ||||||||
Guaranteed | Available as collateral | |||||||
Cash and due from banks | 17,804 | 846,008 | ||||||
Notional of investment securities | 11,450 | 371,900 | ||||||
Loans at amortized cost | - | 4,911,397 | ||||||
Total assets | 29,254 | 6,129,305 |
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 (continued) |
C. | Market risk |
i. | Interest rate risk |
The following is a summary of the Bank's interest rate gap position for the financial assets and liabilities based on their next repricing date:
September 30, 2021 | ||||||||||||||||||||||||||||
Description |
Up to 3 months |
3 to 6 months |
6 months to 1 year | 1 to 5 years |
More than 5 years |
Non interest rate risk | Total | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and due from banks | 661,742 | - | - | - | - | 2,233 | 663,975 | |||||||||||||||||||||
Securities and other financial assets, net | 8,085 | 26,832 | 100,449 | 632,208 | - | - | 767,574 | |||||||||||||||||||||
Loans | 3,734,592 | 1,112,458 | 263,870 | 179,499 | 7,194 | - | 5,297,613 | |||||||||||||||||||||
Total assets | 4,404,419 | 1,139,290 | 364,319 | 811,707 | 7,194 | 2,233 | 6,729,162 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Demand deposits and time deposits | (3,198,437 | ) | (155,164 | ) | (15,400 | ) | (9,500 | ) | - | (317 | ) | (3,378,818 | ) | |||||||||||||||
Securities sold under repurchase agreements | (146,517 | ) | (149,453 | ) | - | (35,028 | ) | - | - | (330,998 | ) | |||||||||||||||||
Borrowings and debt, net | (933,228 | ) | (47 | ) | (106,466 | ) | (904,389 | ) | (16,569 | ) | - | (1,960,699 | ) | |||||||||||||||
Total liabilities | (4,278,182 | ) | (304,664 | ) | (121,866 | ) | (948,917 | ) | (16,569 | ) | (317 | ) | (5,670,515 | ) | ||||||||||||||
Net effect of derivative financial instruments held for interest risk management | 1,095 | - | (11,323 | ) | (6,415 | ) | (662 | ) | - | (17,306 | ) | |||||||||||||||||
Total interest rate sensitivity | 127,332 | 834,626 | 231,130 | (143,625 | ) | (10,037 | ) | 1,916 | 1,041,341 |
December 31, 2020 | ||||||||||||||||||||||||||||
Description |
Up to 3 months |
3 to 6 months |
6 months to 1 year | 1 to 5 years |
More than 5 years |
Non interest rate risk | Total | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Demand deposits and time deposits | 859,481 | - | - | - | - | 4,331 | 863,812 | |||||||||||||||||||||
Securities and other financial assets | 9,554 | 9,139 | 55,960 | 320,769 | - | - | 395,422 | |||||||||||||||||||||
Loans | 3,468,477 | 895,794 | 434,813 | 117,262 | - | - | 4,916,346 | |||||||||||||||||||||
Total assets | 4,337,512 | 904,933 | 490,773 | 438,031 | - | 4,331 | 6,175,580 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Demand deposits and time deposits | (2,675,867 | ) | (166,317 | ) | (290,000 | ) | (6,500 | ) | - | (216 | ) | (3,138,900 | ) | |||||||||||||||
Securities sold under repurchase agreements | - | (5,728 | ) | (4,935 | ) | - | - | - | (10,663 | ) | ||||||||||||||||||
Borrowings and debt | (1,103,703 | ) | (45,859 | ) | (16,511 | ) | (794,522 | ) | (24,475 | ) | - | (1,985,070 | ) | |||||||||||||||
Total liabilities | (3,779,570 | ) | (217,904 | ) | (311,446 | ) | (801,022 | ) | (24,475 | ) | (216 | ) | (5,134,633 | ) | ||||||||||||||
Net effect of derivative financial instruments held for interest risk management | (3 | ) | (373 | ) | 58 | 15,982 | 839 | - | 16,503 | |||||||||||||||||||
Total interest rate sensitivity | 557,939 | 686,656 | 179,385 | (347,009 | ) | (23,636 | ) | 4,115 | 1,057,450 |
28
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 (continued) |
C. | Market risk (continued) |
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 interest rate |
Effect on profit or loss |
Effect on equity | ||||||||||
September 30, 2021 | +50 bps | 2,511 | 16,064 | |||||||||
-50 bps | (2,014 | ) | 6,362 | |||||||||
December 31, 2020 | +50 bps | 1,182 | 16,618 | |||||||||
-50 bps | (5,161 | ) | 107 |
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 a consideration of changes in interest rates, considering last period interest rate volatility.
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, excluding derivative financial assets and liabilities, based on their fair value.
September 30, 2021 | ||||||||||||||||||||||||||||
Brazilian Real |
European Euro |
Japanese Yen |
Colombian Peso |
Mexican Peso | Other Currencies (1) | Total | ||||||||||||||||||||||
Exchance rate | 5.44 | 1.16 | 111.30 | 3,816.79 | 20.64 | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and due from banks | - | 8 | 1 | 26 | 10,994 | 143 | 11,172 | |||||||||||||||||||||
Loans | - | - | - | - | 151,030 | - | 151,030 | |||||||||||||||||||||
Total Assets | - | 8 | 1 | 26 | 162,024 | 143 | 162,202 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Borrowings and debt | - | - | - | - | (161,940 | ) | - | (161,940 | ) | |||||||||||||||||||
Total liabilities | - | - | - | - | (161,940 | ) | - | (161,940 | ) | |||||||||||||||||||
Net currency position | - | 8 | 1 | 26 | 84 | 143 | 262 |
(1) It includes other currencies such as: Argentine pesos, Australian dollar, Swiss franc, Sterling pound, Peruvian soles, and Chinese renminbi.
29
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 (continued) |
C. | Market risk (continued) |
ii. | Foreign exchange risk (continued) |
December 31, 2020 | ||||||||||||||||||||||||||||
Brazilian Real |
European Euro |
Japanese Yen |
Colombian Peso |
Mexican Peso | Other Currencies (1) | Total | ||||||||||||||||||||||
Exchance rate | 5.19 | 1.22 | 103.23 | 3,430.19 | 19.92 | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and due from banks | 81 | 13 | 1 | 20 | 1,615 | 80 | 1,810 | |||||||||||||||||||||
Loans | - | - | - | - | 182,395 | - | 182,395 | |||||||||||||||||||||
Total Assets | 81 | 13 | 1 | 20 | 184,010 | 80 | 184,205 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Borrowings and debt | - | - | - | - | (183,863 | ) | - | (183,863 | ) | |||||||||||||||||||
Total liabilities | - | - | - | - | (183,863 | ) | - | (183,863 | ) | |||||||||||||||||||
Net currency position | 81 | 13 | 20 | 147 | 80 | 342 |
(1) It includes other currencies such as: Argentine pesos, Australian dollar, Swiss franc, Sterling pound, Peruvian soles, and Chinese renminbi.
30
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:
September 30, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Securities and other financial assets: | ||||||||||||||||
Securities at FVOCI - Corporate debt | - | 194,805 | - | 194,805 | ||||||||||||
Securities at FVOCI - Sovereign debt | - | - | - | - | ||||||||||||
Loans at fair value through profit or loss | - | - | 5,223 | 5,223 | ||||||||||||
Total securities and other financial assets | - | 194,805 | 5,223 | 200,028 | ||||||||||||
Derivative financial instruments - assets: | ||||||||||||||||
Interest rate swaps | - | 1,095 | - | 1,095 | ||||||||||||
Cross-currency swaps | - | 5,369 | - | 5,369 | ||||||||||||
Foreign exchange forwards | - | 660 | - | 660 | ||||||||||||
Total derivative financial instrument assets | - | 7,124 | - | 7,124 | ||||||||||||
Total assets at fair value | - | 201,929 | 5,223 | 207,152 | ||||||||||||
Liabilities | ||||||||||||||||
Derivative financial instruments - liabilities: | ||||||||||||||||
Interest rate swaps | - | 738 | - | 738 | ||||||||||||
Cross-currency swaps | - | 23,032 | - | 23,032 | ||||||||||||
Foreign exchange forwards | - | - | - | - | ||||||||||||
Total derivative financial instruments - liabilities | - | 23,770 | - | 23,770 | ||||||||||||
Total liabilities at fair value | - | 23,770 | - | 23,770 |
31
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) |
A. | Recurring valuation (continued) |
December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Securities and other financial assets: | ||||||||||||||||
Securities at FVOCI - Corporate debt | - | 226,235 | - | 226,235 | ||||||||||||
Securities at FVOCI - Sovereign debt | - | 5,113 | - | 5,113 | ||||||||||||
Loans at fair value through profit or loss | - | - | 4,949 | 4,949 | ||||||||||||
Total securities and other financial assets | - | 231,348 | 4,949 | 236,297 | ||||||||||||
Derivative financial instruments - assets: | ||||||||||||||||
Interest rate swaps | - | 1,831 | - | 1,831 | ||||||||||||
Cross-currency swaps | - | 25,947 | - | 25,947 | ||||||||||||
Foreign exchange forwards | - | - | - | - | ||||||||||||
Total derivative financial instrument assets | - | 27,778 | - | 27,778 | ||||||||||||
Total assets at fair value | - | 259,126 | 4,949 | 264,075 | ||||||||||||
Liabilities | ||||||||||||||||
Derivative financial instruments - liabilities: | ||||||||||||||||
Interest rate swaps | - | 1,774 | - | 1,774 | ||||||||||||
Cross-currency swaps | - | 3,848 | - | 3,848 | ||||||||||||
Foreign exchange forwards | - | 3,589 | - | 3,589 | ||||||||||||
Total derivative financial instruments - liabilities | - | 9,211 | - | 9,211 | ||||||||||||
Total liabilities at fair value | - | 9,211 | - | 9,211 |
Fair value calculations are provided only for a limited portion of assets and liabilities. Due to the wide range of valuation techniques and the degree of subjectivity used for estimates, comparisons of fair value information disclosed by the Bank with those of other companies may not be meaningful for comparative analysis.
32
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:
September 30, 2021 | ||||||||||||||||||||
Carrying value |
Fair value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and deposits on banks | 663,975 | 663,975 | - | 663,975 | - | |||||||||||||||
Securities at amortized cost (1) | 577,426 | 577,261 | - | 567,582 | 9,679 | |||||||||||||||
Loans at amortized cost, net (2) | 5,263,604 | 5,348,107 | - | 5,348,107 | - | |||||||||||||||
Customers' liabilities under acceptances | 239,544 | 239,544 | - | 239,544 | - | |||||||||||||||
Investment properties | 2,050 | 2,050 | - | - | 2,050 | |||||||||||||||
Liabilities | ||||||||||||||||||||
Deposits | 3,381,845 | 3,381,845 | - | 3,381,845 | - | |||||||||||||||
Securities sold under repurchase agreements | 330,998 | 330,998 | - | 330,998 | - | |||||||||||||||
Borrowings and debt, net (3) | 1,942,816 | 1,940,103 | - | 1,940,103 | - | |||||||||||||||
Customers' liabilities under acceptances | 239,544 | 239,544 | - | 239,544 | - |
December 31, 2020 | ||||||||||||||||||||
Carrying value |
Fair value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and deposits on banks | 863,812 | 863,812 | - | 863,812 | - | |||||||||||||||
Securities at amortized cost (1) | 165,564 | 168,110 | - | 157,698 | 10,412 | |||||||||||||||
Loans at amortized cost, net (2) | 4,891,698 | 4,972,599 | - | 4,972,599 | - | |||||||||||||||
Customers' liabilities under acceptances | 74,366 | 74,366 | - | 74,366 | - | |||||||||||||||
Investment properties | 3,214 | 3,214 | - | - | 3,214 | |||||||||||||||
Liabilities | ||||||||||||||||||||
Deposits | 3,140,875 | 3,140,875 | - | 3,140,875 | - | |||||||||||||||
Securities sold under repurchase agreements | 10,663 | 10,663 | - | 10,663 | - | |||||||||||||||
Borrowings and debt, net (3) | 1,966,271 | 1,989,719 | - | 1,989,719 | - | |||||||||||||||
Customers' liabilities under acceptances | 74,366 | 74,366 | - | 74,366 | - |
(1) | The carrying value of securities at amortized cost is net of accrued interest receivable of $6.4 million and the allowance for expected credit losses of $1.7 million as of September 30, 2021 (accrued interest receivable of $1.9 million and the allowance for expected credit losses of $0.4 million as of December 31, 2020). |
(2) | The carrying value of loans at amortized cost is net of accrued interest receivable of $20.9 million, the allowance for expected credit losses of $41.4 million and unearned interest and deferred fees of $8.2 million for September 30, 2021 (accrued interest receivable of $27.3 million, the allowance for expected credit losses of $41.1 million and unearned interest and deferred fees of $5.8 million for December 31, 2020). |
(3) | Borrowings and debt exclude lease liabilities for an amount of $17.8 million and $18.7 million as of September 30, 2020 and December 31, 2020, respectively. |
33
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) |
C. | Level 3 - Fair value measurement |
The following table presents the movement of a level 3 financial instruments measured at fair value:
Debt instruments at fair value through profit or loss (debentures) |
Loans at fair value through profit or loss | Total | ||||||||||
At December 31, 2019 | 6,492 | - | 6,492 | |||||||||
Additions | 1,433 | 5,750 | 7,183 | |||||||||
Net changes in fair value(1) | (2,175 | ) | (801 | ) | (2,976 | ) | ||||||
Sales | (5,750 | ) | - | (5,750 | ) | |||||||
At December 31, 2020 | - | 4,949 | 4,949 | |||||||||
Additions | - | - | - | |||||||||
Net changes in fair value(1) | - | 274 | 274 | |||||||||
Sales | - | - | - | |||||||||
At September 30, 2021 | - | 5,223 | 5,223 |
(1) The fair value of the instrument includes interest receivable.
For financial instruments measured at fair value in level 3 category, the Bank uses the following methodologies and inputs using present value techniques.
Loans at fair value through profit or loss - Level 3
In 2020, the Bank realized the sale of the debt instrument measured at fair value through profit or loss for $5.8 million. As a result, the Bank recognized a loan and classified it at fair value through profit or loss with a carrying amount of $5.2 million and $4.9 million as of September 30, 2021 and December 31, 2020, respectively.
Inputs used in the fair value measurement are detailed as follows:
Observable inputs | Unobservable inputs | |
- Forward interest rate referenced to 12M USD Libor | - Discount rate or discount margin of floating rate bond "USD US composite B+" with credit risk similar to the instrument analyzed adjusted by the country risk premium. |
Fair value measurement sensitivity to unobservable inputs - discount rate | 2021 | 2020 | ||
A significant increase in volatility would result in a lower fair value | 6.86% - 7.48% | 3.128% to 8.89% |
34
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) |
C. | Level 3 - Fair value measurement (continued) |
Management used market data published in Bloomberg for the construction of the discount curve, which allows for a more accurate measurement of the instrument.
Although the Bank believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different fair value measurements. For fair value measurements in level 3, changing one or more of the assumptions used would have the following effects.
Loans at fair value through profit or loss |
Effect on profit or loss | ||
+ 100 bps to the observable and unobservable inputs | (130 | ) | |
- 100 bps to the observable and unobservable inputs | 134 |
5. | Cash and due from banks |
The following table presents the details of interest-bearing deposits in banks and pledged deposits:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Unrestricted deposits with the Federal Reserve of the United States of America | 566,849 | 688,612 | ||||||
Cash and non-interest-bearing deposits in other banks | 2,233 | 4,331 | ||||||
Cash and interest-bearing deposits in other banks(1) | 94,893 | 170,869 | ||||||
Total cash and due from banks | 663,975 | 863,812 | ||||||
Less: | ||||||||
Time deposits with original maturity over 90 days and other restricted deposits (1) | 31,627 | 17,804 | ||||||
Total cash and due from banks in the consolidated statement of cash flows | 632,348 | 846,008 |
(1) | Includes restricted deposit of $10.0 million for both periods with the New York State Banking Department under March 1994 legislation and margin call deposits collateralizing derivative financial instrument transactions demand deposits based on daily rates determined by banks. |
35
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 (continued) |
The following table presents the pledged deposits classified by country risk:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Country: | ||||||||
United States of America(1) | 11,485 | 11,515 | ||||||
Switzerland | 7,787 | 3,027 | ||||||
Netherlands | 3,290 | 334 | ||||||
Japan | 3,060 | 1,330 | ||||||
France | 2,980 | 50 | ||||||
Mexico | 1,700 | 790 | ||||||
United Kingdom | 710 | 130 | ||||||
Spain | 315 | 18 | ||||||
Germany | 300 | - | ||||||
Canada | - | 610 | ||||||
Total | 31,627 | 17,804 |
(1) | Includes pledged deposits of $10.0 million for both periods, with the New York State Banking Department under March 1994 legislation and deposits pledged to guarantee derivative financial instrument transactions. |
6. | Securities and other financial assets, net |
Securities and other financial assets are presented as follows:
At fair value | ||||||||||||||||||||
At September 30, 2021 |
With changes in other comprehensive income (loss) | With | ||||||||||||||||||
Carrying amount | Amortized cost |
Recyclable to profit and loss |
Non-recyclable to profit and loss |
changes in profit or loss |
Total securities and other financial assets, net | |||||||||||||||
Principal | 572,769 | 194,805 | - | - | 767,574 | |||||||||||||||
Interest receivable | 6,434 | 726 | - | - | 7,160 | |||||||||||||||
Reserves (1) | (1,777 | ) | (26 | ) | - | - | (1,803 | ) | ||||||||||||
577,426 | 195,505 | - | - | 772,931 |
At fair value | ||||||||||||||||||||
At December 31, 2020 |
With changes in other comprehensive income (loss) | With | ||||||||||||||||||
Carrying amount | Amortized cost |
Recyclable to profit and loss |
Non-recyclable to profit and loss |
changes in profit or loss |
Total securities and other financial assets, net | |||||||||||||||
Principal | 164,074 | 231,348 | - | - | 395,422 | |||||||||||||||
Interest receivable | 1,985 | 1,156 | - | - | 3,141 | |||||||||||||||
Reserves (1) | (495 | ) | (43 | ) | - | - | (538 | ) | ||||||||||||
165,564 | 232,461 | - | - | 398,025 |
(1) | The loss allowance for losses for securities at FVOCI is included in equity in the condensed consolidated interim statement of financial position in the line Other comprehensive income. |
36
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 and other financial assets, net (continued) |
As of December 31, 2020, the Bank sold 261,164 shares, which were designated at their initial recognition at fair value with changes in other comprehensive income due to market changes affecting the liquidity of the instrument.
The cumulative fair value of the shares sold was $1.7 million, and the cumulative loss recognized in other comprehensive income was $602 thousand, transferred to retained earnings.
Securities and other financial assets by contractual maturity are shown in the following table:
At fair value | ||||||||||||||||||||
At September 30, 2021 |
With changes in other comprehemsive income | With | ||||||||||||||||||
Amortized cost |
Recyclable to profit ans loss |
Non-recyclable to profit and loss |
changes in profit or loss |
Total securities and other financial assets, net | ||||||||||||||||
Due within 1 year | 37,533 | 107,988 | - | - | 145,521 | |||||||||||||||
After 1 year but within 5 years | 535,236 | 86,817 | - | - | 622,053 | |||||||||||||||
Balance - principal | 572,769 | 194,805 | - | - | 767,574 |
At fair value | ||||||||||||||||||||
At December 31, 2020 | With changes in other comprehemsive income | With | ||||||||||||||||||
Amortized cost |
Recyclable to profit ans loss |
Non-recyclable to profit and loss |
changes in profit or loss |
Total securities and other financial assets, net | ||||||||||||||||
Due within 1 year | 40,625 | 34,027 | - | - | 74,652 | |||||||||||||||
After 1 year but within 5 years | 123,449 | 197,321 | - | - | 320,770 | |||||||||||||||
Balance - principal | 164,074 | 231,348 | - | - | 395,422 |
37
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 and other financial assets, net (continued) |
The following table includes the securities pledged to secure repurchase transactions accounted for as secured pledged:
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
Amortized cost | Fair value | Total | Amortized cost | Fair value | Total | |||||||||||||||||||
Securities pledged to secure repurchase transactions | 358,674 | - | 358,674 | 11,998 | - | 11,998 | ||||||||||||||||||
Securities sold under repurchase agreements | (330,998 | ) | - | (330,998 | ) | (10,663 | ) | - | (10,663 | ) |
7. | Loans |
The following table presents the loan portfolio according to its classification and subsequent measurement:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Loans at amortized cost | 5,292,390 | 4,911,397 | ||||||
Interest receivable | 20,912 | 27,350 | ||||||
Loss allowances | (41,465 | ) | (41,165 | ) | ||||
Unearned interest and deferred fees | (8,233 | ) | (5,884 | ) | ||||
Loans at amortized cost, net | 5,263,604 | 4,891,698 | ||||||
Loans at fair value through profit or loss (1) | 5,223 | 4,949 | ||||||
Loans, net | 5,268,827 | 4,896,647 |
(1) The Bank realized the sale of debt instruments measured at fair value through profit or loss for $5.8 million. As a result, the Bank recognized a loan and classified it at fair value through profit or loss with a carrying amount of $5.2 million and $4.9 million as of September 30, 2021 and December 31, 2020, respectively.
38
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 (continued) |
The fixed and floating interest rate distribution of the loan portfolio is as follows:
September 30, | December 31, | |||||||
2020 | 2020 | |||||||
Fixed interest rates | 2,930,034 | 2,544,544 | ||||||
Floating interest rates | 2,367,579 | 2,371,802 | ||||||
Total | 5,297,613 | 4,916,346 |
As of September 30, 2021, and December 31, 2020, 84% and 41% of the loan portfolio at fixed interest rates has remaining maturities of less than 180 days. The range of interest rates on loans fluctuates from 0.41% to 9.75% (December 31, 2020 0.43% to 9.70%).
The following table details information relating to loans granted to class A and B shareholders:
September 30, | December 31, | |||||||
2021 | 20120 | |||||||
Class A and B shareholder loans | 393,199 | 522,316 | ||||||
% Loans to class A and B shareholders over total loan portfolio | 7% | 11% | ||||||
% Class A and B stockholders with loans over number of class A and B stockholders | 10% | 12% |
Modified financial assets
The following table refers to modified financial assets during the period, where modification does not result in de-recognition:
September 30, |
December 31, | |||||||
Gross carrying amount before modification | 65,000 | 8,829 | ||||||
Allowance loss before modification (1) | (12,739 | ) | (1,796 | ) | ||||
Net amortized cost before modification | 52,261 | 7,033 | ||||||
Gross carrying amount after modification | 65,000 | 8,829 | ||||||
Allowance loss after modification (2) | (12,699 | ) | (1,802 | ) | ||||
Net amortized cost after modification | 52,301 | 7,027 |
(1) Expected credit loss for 12 months.
(2) Expected credit loss within the life of the financial asset.
Recognition and derecognition of financial assets
During the period ended December 31, 2020, a Stage 3 impaired loan was sold for $11.6 million and a Stage 2 loan with a significant increase in credit risk was sold for $13.2 million, both classified at amortized cost. This resulted in a write-off against reserves of $56.1 million. These sales were made based on compliance with the Bank's strategy to optimize credit risk of its loan portfolio.
39
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 |
In the normal course of business, to meet the financing needs of its customers, the Bank is party to loan commitments and financial guarantee contracts. These instruments involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the condensed consolidated interim statement of financial position. Credit risk represents the possibility of loss resulting from the failure of a customer to perform in accordance with the terms of a contract.
The Bank's outstanding loan commitments and financial guarantee contracts are as follows:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Documentary letters of credit | 256,305 | 216,782 | ||||||
Stand-by letters of credit and guarantees - commercial risk | 199,232 | 210,497 | ||||||
Credit commitments | 200,119 | 137,619 | ||||||
Total loans commitments and financial guarantee contracts | 655,656 | 564,898 |
The remaining maturity profile of the Bank's outstanding loan commitments and financial guarantee contracts is as follows:
September 30, | December 31, | |||||||
Maturities | 2021 | 2020 | ||||||
Up to 1 year | 570,144 | 419,015 | ||||||
From 1 to 2 years | 85,512 | 75,883 | ||||||
Over 2 to 5 years | - | 70,000 | ||||||
Total | 655,656 | 564,898 |
40
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) |
9. | Gain (loss) on financial instruments, net |
The following table sets forth the details for the gain or loss on financial instruments recognized in the condensed consolidated interim statements of profit or loss:
For the three months ended September 30, | ||||||||
2021 | 2020 | |||||||
Loss on derivative financial instruments and foreign currency exchange, net | (118 | ) | (357 | ) | ||||
Unrealized gain (loss) on financial instruments at fair value through profit or loss | 509 | (159 | ) | |||||
Realized (loss) gain on financial instruments at fair value through profit or loss | (836 | ) | 79 | |||||
Gain on sale of financial instruments at amortized cost | 333 | - | ||||||
(112 | ) | (437 | ) |
For the nine months ended September 30, | ||||||||
2021 | 2020 | |||||||
Gain (loss) on derivative financial instruments and foreign currency exchange, net | 1,201 | (2,242 | ) | |||||
Unrealized gain (loss) on financial instruments at fair value through profit or loss | 172 | (2,986 | ) | |||||
Realized (loss) gain on financial instruments at fair value through profit or loss | (1,669 | ) | 484 | |||||
Gain on sale of financial instruments at amortized cost | 333 | - | ||||||
Realized gain on financial instruments at fair value through OCI | 14 | - | ||||||
51 | (4,744 | ) |
41
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:
September 30, 2021 | ||||||||||||
Nominal | Carrying amount of hedging instruments | |||||||||||
amount | Asset (1) | Liability (2) | ||||||||||
Interest rate risk | ||||||||||||
Fair value hedges | 40,000 | 1,095 | - | |||||||||
Cash flow hedges | 20,000 | - | (738 | ) | ||||||||
Interest rate and foreign exchange risk | ||||||||||||
Fair value hedges | 343,687 | 378 | (17,993 | ) | ||||||||
Cash flow hedges | 327,473 | 4,991 | (5,039 | ) | ||||||||
Foreign exchange risk | ||||||||||||
Cash flow hedges | 40,244 | 660 | - | |||||||||
771,404 | 7,124 | (23,770 | ) |
December 31, 2020 | ||||||||||||
Nominal | Carrying amount of hedging instruments | |||||||||||
amount | Asset (1) | Liability (2) | ||||||||||
Interest rate risk | ||||||||||||
Fair value hedges | 85,667 | 1,831 | (233 | ) | ||||||||
Cash flow hedges | 60,000 | - | (1,541 | ) | ||||||||
Interest rate and foreign exchange risk | ||||||||||||
Fair value hedges | 344,489 | 2,856 | (3,848 | ) | ||||||||
Cash flow hedges | 221,508 | 23,091 | - | |||||||||
Foreign exchange risk | ||||||||||||
Cash flow hedges | 71,353 | - | (3,589 | ) | ||||||||
783,017 | 27,778 | (9,211 | ) |
(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.
42
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 notional 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 periods used to determine and recognize the ineffectiveness of the hedge:
September 30, 2021 | ||||||||||||||||||||
Nominal |
Carrying amount of hedging instruments |
Changes in fair value used to calculate hedge |
Ineffectiveness recognized in | |||||||||||||||||
amount | Asset (1) | Liability (2) | ineffectiveness (3) | profit or loss (3) | ||||||||||||||||
Interest rate risk | ||||||||||||||||||||
Borrowings and debt | 40,000 | 1,095 | - | 1 | 14 | |||||||||||||||
Interest rate and foreign exchange risk | ||||||||||||||||||||
Loans | 3,273 | 378 | - | 21 | (95 | ) | ||||||||||||||
Borrowings and debt | 340,414 | - | (17,993 | ) | (15,961 | ) | 679 | |||||||||||||
Total | 383,687 | 1,473 | (17,993 | ) | (15,939 | ) | 598 |
December 31, 2020 | ||||||||||||||||||||
Nominal |
Carrying amount of hedging instruments |
Changes in fair value used to calculate hedge |
Ineffectiveness recognized in | |||||||||||||||||
amount | Asset (1) | Liability (2) | ineffectiveness (3) | profit or loss (3) | ||||||||||||||||
Interest rate risk | ||||||||||||||||||||
Loans | 10,667 | - | (132 | ) | 84 | 1 | ||||||||||||||
Securities at FVOCI | 5,000 | - | (101 | ) | (29 | ) | (20 | ) | ||||||||||||
Borrowings and debt | 70,000 | 1,831 | - | 199 | (27 | ) | ||||||||||||||
Interest rate and foreign exchange risk | ||||||||||||||||||||
Loans | 4,075 | 356 | - | 178 | (149 | ) | ||||||||||||||
Borrowings and debt | 340,414 | 2,500 | (3,848 | ) | (2,524 | ) | (468 | ) | ||||||||||||
Total | 430,156 | 4,687 | (4,081 | ) | (2,092 | ) | (663 | ) |
(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 is the line Loss on financial instruments, net.
43
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 notional amounts and 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:
September 30, 2021 | ||||||||||||||||||
Carrying amount of hedged items |
Line in the consolidated statement of financial position that includes the |
Accumulated amount of fair value hedge adjustments included in the |
Change in fair value of the hedged items used | |||||||||||||||
Asset | Liability |
carrying amount of the hedged items |
carrying amount of the hedged items |
to calculate hedge ineffectiveness(1) | ||||||||||||||
Interest rate risk | ||||||||||||||||||
Borrowings and debt | - | (41,134 | ) | Borrowings and debt, net | (28 | ) | 13 | |||||||||||
Interest rate and foreign exchange risk | ||||||||||||||||||
Loans | 2,935 | - | Loans, net | (770 | ) | (116 | ) | |||||||||||
Borrowings and debt | - | (322,395 | ) | Borrowings and debt, net | 17,722 | 16,640 | ||||||||||||
Total | 2,935 | (363,529 | ) | 16,924 | 16,537 |
December 31, 2020 | ||||||||||||||||||
Carrying amount of hedged items | Line in the consolidated | Accumulated amount of fair value hedge adjustments included in the |
Change in fair value of the hedged items used | |||||||||||||||
Asset | Liability |
carrying amount of the hedged item |
carrying amount of the hedged items |
to calculate hedge ineffectiveness(1) | ||||||||||||||
Interest rate risk | ||||||||||||||||||
Loans | 10,837 | - | Loans, net | 74 | (83 | ) | ||||||||||||
Securities at FVOCI | 5,113 | - | Securities and other financial assets, net | 85 | 9 | |||||||||||||
Borrowings and debt | - | (71,937 | ) | Borrowings and debt, net | (292 | ) | (226 | ) | ||||||||||
Interest rate and foreign exchange risk | ||||||||||||||||||
Loans | 3,789 | - | Loans, net | (654 | ) | (327 | ) | |||||||||||
Borrowings and debt | - | (339,688 | ) | Borrowings and debt, net | 1,083 | 2,056 | ||||||||||||
Total | 19,739 | (411,625 | ) | 296 | 1,429 |
(1) | Included in the condensed consolidated interim statement of profit or loss is the line Loss on financial instruments, net. |
44
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 notional amount for the derivative instruments used in fair value hedges:
September 30, 2021 | ||||||||||||
Maturity |
Interest rate swaps |
Foreign exchange and interest rate risks | Total | |||||||||
Fair value hedge | ||||||||||||
Less than 1 year | 40,000 | 271,646 | 311,646 | |||||||||
Over 1 to 2 years | - | 3,273 | 3,273 | |||||||||
Over 2 to 5 years | - | 68,768 | 68,768 | |||||||||
Total | 40,000 | 343,687 | 383,687 |
December 31, 2020 | ||||||||||||
Maturity |
Interest rate swaps |
Foreign exchange and interest rate risks | Total | |||||||||
Fair value hedge | ||||||||||||
Less than 1 year | 85,667 | - | 85,667 | |||||||||
Over 1 to 2 years | - | 271,646 | 271,646 | |||||||||
Over 2 to 5 years | - | 72,843 | 72,843 | |||||||||
Total | 85,667 | 344,489 | 430,156 |
45
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 |
The following table details the notional 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:
September 30, 2021 | ||||||||||||||||||||||||||||
Nominal |
Carrying amount of hedging instruments |
Change in fair value used for calculating hedge |
Changes in the fair value of the hedging instruments recognized in |
Ineffectiveness recognized in |
Amount reclassified from the hedge reserve to profit | |||||||||||||||||||||||
amount | Asset (1) | Liability (2) | ineffectiveness | OCI (3) | profit or loss (4) | or loss (4) | ||||||||||||||||||||||
Interest rate risk | ||||||||||||||||||||||||||||
Borrowings and debt | 20,000 | - | (738 | ) | 364 | 362 | (2 | ) | (423 | ) | ||||||||||||||||||
Interest rate and foreign exchange risk | ||||||||||||||||||||||||||||
Borrowings and debt | 327,473 | 4,991 | (5,039 | ) | (25,180 | ) | (24,931 | ) | 249 | - | ||||||||||||||||||
Foreign exchange risk | ||||||||||||||||||||||||||||
Loans | 40,244 | 660 | - | 705 | 702 | (3 | ) | (3,589 | ) | |||||||||||||||||||
Total | 387,717 | 5,651 | (5,777 | ) | (24,111 | ) | (23,867 | ) | 244 | (4,012 | ) |
December 31, 2020 | ||||||||||||||||||||||||||||
Nominal |
Carrying amount of hedging instruments |
Change in fair value used for calculating hedge |
Changes in the fair value of the hedging instruments recognized in |
Ineffectiveness recognized in |
Amount reclassified from the hedge reserve to profit | |||||||||||||||||||||||
amount | Asset (1) | Liability (2) | ineffectiveness | OCI (3) | profit or loss (4) | or loss (4) | ||||||||||||||||||||||
Interest rate risk | ||||||||||||||||||||||||||||
Borrowings and debt | 60,000 | - | (1,541 | ) | (443 | ) | (442 | ) | 1 | (75 | ) | |||||||||||||||||
Interest rate and foreign exchange risk | ||||||||||||||||||||||||||||
Borrowings and debt | 221,508 | 23,091 | - | 23,380 | 23,481 | 101 | (1,697 | ) | ||||||||||||||||||||
Foreign exchange risk | ||||||||||||||||||||||||||||
Loans | 71,353 | - | (3,589 | ) | (3,466 | ) | (3,465 | ) | 1 | (1,927 | ) | |||||||||||||||||
Borrowings and debt | - | - | - | - | - | - | - | |||||||||||||||||||||
Total | 352,861 | 23,091 | (5,130 | ) | 19,471 | 19,574 | 103 | (3,699 | ) |
(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 on the line Other comprehensive income. |
(4) | Included in the condensed consolidated interim statement of profit or loss under the line Loss on financial instruments, net. |
46
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) |
The following table details the nominal amounts and 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:
September 30, 2021 | ||||||||||||||||||
Carrying amount of hedged items |
Line in the consolidated statement of financial position that includes the carrying amount of the |
Change in the fair value of the hedged items used to calculate the hedge | Cash flow hedge | |||||||||||||||
Asset | Liability | hedged items | ineffectiveness | reserve | ||||||||||||||
Interest rate risk | ||||||||||||||||||
Borrowings and debt | - | (20,042 | ) | Borrowings and debt, net | (362 | ) | 650 | |||||||||||
Interest rate and foreign exchange risk | ||||||||||||||||||
Borrowings and debt | - | (340,964 | ) | Borrowings and debt, net | 24,931 | 10,329 | ||||||||||||
Foreign exchange risk | ||||||||||||||||||
Loans | 39,472 | - | Loans, net | (702 | ) | 339 | ||||||||||||
Total | 39,472 | (361,006 | ) | 23,867 | 11,318 |
December 31, 2020 | ||||||||||||||||||
Carrying amount of hedged items |
Line in the consolidated statement of financial position that includes the carrying amount of the |
Change in the fair value of the hedged items used to calculate the hedge | Cash flow hedge | |||||||||||||||
Asset | Liability | hedged items | ineffectiveness | reserve | ||||||||||||||
Interest rate risk | ||||||||||||||||||
Borrowings and debt | - | (20,045 | ) | Borrowings and debt, net | 442 | 1,440 | ||||||||||||
Interest rate and foreign exchange risk | ||||||||||||||||||
Borrowings and debt | - | (243,817 | ) | Borrowings and debt, net | (23,481 | ) | (1,980 | ) | ||||||||||
Foreign exchange risk | ||||||||||||||||||
Loans | 74,509 | - | Loans, net | 3,465 | 562 | |||||||||||||
Total | 74,509 | (263,862 | ) | (19,574 | ) | 22 |
47
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 hedge (continued) |
The following table details the maturity of the derivative instruments used in cash flow hedges:
September 30, 2021 | ||||||||||||||||
Maturity |
Foreign exchange risk |
Interest rate swaps |
Foreign exchange and interest rate risks | Total | ||||||||||||
Cash flow hedge | ||||||||||||||||
Less than 1 year | 40,244 | - | - | 40,244 | ||||||||||||
Over 1 to 2 years | - | 20,000 | 30,332 | 50,332 | ||||||||||||
Over 2 to 5 years | - | - | 280,072 | 280,072 | ||||||||||||
More than 5 years | - | - | 17,069 | 17,069 | ||||||||||||
Total | 40,244 | 20,000 | 327,473 | 387,717 |
December 31, 2020 | ||||||||||||||||
Maturity |
Foreign exchange risk |
Interest rate swaps |
Foreign exchange and interest rate risks | Total | ||||||||||||
Cash flow hedge | ||||||||||||||||
Less than 1 year | 71,353 | 40,000 | - | 111,353 | ||||||||||||
Over 2 to 5 years | - | 20,000 | 197,854 | 217,854 | ||||||||||||
More than 5 years | - | - | 23,654 | 23,654 | ||||||||||||
Total | 71,353 | 60,000 | 221,508 | 352,861 |
48
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:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Accounts receivable | 940 | 938 | ||||||
Prepaid expenses | 1,296 | 2,541 | ||||||
Prepaid fees and commissions | 312 | 486 | ||||||
Interest receivable - deposits | 23 | 8 | ||||||
IT projects under development | 439 | 218 | ||||||
Severance fund | 1,964 | 1,927 | ||||||
Other | 677 | 698 | ||||||
5,651 | 6,816 |
12. | Deposits |
The maturity profile of the Bank's deposits, excluding interest payable, as follows:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Demand | 431,874 | 170,660 | ||||||
Up to 1 month | 712,610 | 1,127,120 | ||||||
From 1 month to 3 months | 881,241 | 878,900 | ||||||
From 3 months to 6 months | 951,271 | 544,860 | ||||||
From 6 months to 1 year | 346,934 | 365,879 | ||||||
From 1 year to 2 years | 54,888 | 51,481 | ||||||
3,378,818 | 3,138,900 |
The following table presents additional information regarding the Bank's deposits
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Aggregate amounts of $100,000 or more | 3,378,501 | 3,138,684 | ||||||
Aggregate amounts of deposits in the New York Agency | 604,361 | 657,851 |
Three months ended September 30 | ||||||||
2021 | 2020 | |||||||
Interest expense on deposits made in the New York Agency | 847 | 1,040 |
Nine months ended September 30 | ||||||||
2021 | 2020 | |||||||
Interest expense on deposits made in the New York Agency | 3,097 | 3,857 |
49
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)
13. | Securities sold under repurchase agreements |
As of September 30, 2021, and December 31, 2020, the Bank had financing transactions under repurchase agreements for $331 million and $10.7 million, respectively.
During the periods ended September 30, 2021 and 2020, interest expense related to financing transactions under repurchase agreements totaled $525 thousand and $407 thousand, respectively. These expenses are included as interest expense - borrowings and debt line in the condensed consolidated interim statement of profit or loss.
14. | Borrowings and debt |
Some borrowing agreements include various events of default and covenants related to minimum capital adequacy ratios, incurrence of additional liens, and asset sales, as well as other customary covenants, representations and warranties. As of September 30, 2021, the Bank was in compliance with all those covenants.
Borrowings and debt are detailed as follows:
September 30, 2021 | ||||||||||||||||||||||||||||
Short-Term | Long-term | |||||||||||||||||||||||||||
Carrying amount | Borrowings | Debt | Lease Liabilities | Borrowings | Debt | Lease Liabilities | Total | |||||||||||||||||||||
Principal | 415,469 | - | 1,326 | 298,693 | 1,234,084 | 16,557 | 1,966,129 | |||||||||||||||||||||
Prepaid commissions | - | - | - | (210 | ) | (5,220 | ) | - | (5,430 | ) | ||||||||||||||||||
415,469 | - | 1,326 | 298,483 | 1,228,864 | 16,557 | 1,960,699 |
December 31, 2020 | ||||||||||||||||||||||||||||
Short-Term | Long-term | |||||||||||||||||||||||||||
Carrying amount | Borrowings | Debt | Lease Liabilities | Borrowings | Debt | Lease Liabilities | Total | |||||||||||||||||||||
Principal | 331,585 | 49,350 | 1,244 | 477,010 | 1,116,033 | 17,555 | 1,992,777 | |||||||||||||||||||||
Prepaid commissions | - | - | - | (1,158 | ) | (6,549 | ) | - | (7,707 | ) | ||||||||||||||||||
331,585 | 49,350 | 1,244 | 475,852 | 1,109,484 | 17,555 | 1,985,070 |
50
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, excluding lease liabilities) borrowings and debt, along with contractual interest rates, is as follows:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Short-term borrowings: | ||||||||
At fixed interest rates | 10,000 | 55,000 | ||||||
At floating interest rates | 405,469 | 276,585 | ||||||
Total borrowings | 415,469 | 331,585 | ||||||
Short-term debt: | ||||||||
At floating interest rates | - | 49,350 | ||||||
Total debt | - | 49,350 | ||||||
Total short-term borrowings and debt | 415,469 | 380,935 | ||||||
Range of fixed interest rates on borrowings and debt in U.S. dollars | 0.50% | 0.45% to 1.40% | ||||||
Range of floating interest rates on borrowings in U.S. dollars | 0.33% to 0.48% | 0.47% to 1.65% | ||||||
Range of floating interest rates on borrowings and debt in Mexican pesos | 5.15% to 5.20% | 4.97% to 5.05% |
The outstanding balances of short-term borrowings and debt by currency, are as follows:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Currency | ||||||||
US dollar | 350,000 | 299,957 | ||||||
Mexican peso | 65,469 | 80,978 | ||||||
Total | 415,469 | 380,935 |
51
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 borrowings and long-term debt (original maturity of more than one year, excluding lease liabilities), along with contractual interest rates, plus prepaid commissions as of September 30, 2021 and December 31, 2020, respectively, are as follows (excludes lease liabilities):
September 30, 2021 |
December 31, 2020 | |||||||
Long-term borrowings: | ||||||||
At fixed interest rates with due dates from November 2021 to September 2023 | 116,027 | 68,190 | ||||||
At floating interest rates with due dates from October 2021 to August 2023 | 182,666 | 408,820 | ||||||
Total long-term borrowings | 298,693 | 477,010 | ||||||
Long-term debt: | ||||||||
At fixed interest rates with due dates from June 2022 to December 2027 | 912,400 | 784,006 | ||||||
At floating interest rates with due dates from March 2022 to June 2023 | 321,684 | 332,027 | ||||||
Total long-term debt | 1,234,084 | 1,116,033 | ||||||
Total long-term borrowings and debt | 1,532,777 | 1,593,043 | ||||||
Less: Prepaid commissions | (5,430 | ) | (7,707 | ) | ||||
Total long-term borrowings and debt, net | 1,527,347 | 1,585,336 | ||||||
Range of fixed interest rates on borrowings and debt in U.S. dollars | 0.8% to 2.38% | 2.04% to 3.05% | ||||||
Range of floating interest rates on borrowings and debt in U.S. dollars | 1.17% to 1.78% | 1.16% to 1.85% | ||||||
Range of fixed interest rates on borrowings in Mexican pesos | 6.50% to 9.09% | 6.77% to 9.09% | ||||||
Range of floating interest rates on borrowings and debt in Mexican pesos | 5.14% to 5.92% | 4.87% to 5.74% | ||||||
Range of fixed interest rates on debt in Japanese yens | 0.40% to 0.95% | 0.52% | ||||||
Range of fixed interest rates on debt in Euros | 0.23% to 3.75% | 0.9% to 3.75% | ||||||
Range of fixed interest rates on debt in Australian dollars | 1.41% | 0.00% | ||||||
Range of fixed interest rates on debt in Sterling pounds | 1.50% | 0.00% |
52
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 balances of long-term borrowings and debt by currency, excluding prepaid commissions, are as follows (excluding lease liabilities):
September 30, 2021 |
December 31, 2020 | |||||||
Currency | ||||||||
US dollar | 780,024 | 910,296 | ||||||
Mexican peso | 494,088 | 509,687 | ||||||
Euro | 124,062 | 101,469 | ||||||
Japanese yen | 111,547 | 71,591 | ||||||
Australian dollar | 18,070 | - | ||||||
Sterling pounds | 4,986 | - | ||||||
Total | 1,532,777 | 1,593,043 |
Future payments of long-term borrowings and debt outstanding as of September 30, 2021, are as follows (excluding lease liabilities):
Outstanding | |||||
Payments | |||||
2021 | 30,879 | ||||
2022 | 411,599 | ||||
2023 | 273,298 | ||||
2024 | 155,381 | ||||
2025 | 610,230 | ||||
2026 | 34,821 | ||||
2027 | 16,569 | ||||
1,532,777 |
53
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)
Reconciliation - Movements of borrowings
The following table presents the reconciliation of movements of borrowings and debt arising from financing activities, as presented in the condensed consolidated interim statements of cash flows:
2021 | 2020 | |||||||
Balance as of January 1, | 1,985,070 | 3,138,310 | ||||||
Net increase (decrease) in short-term borrowings and debt | 37,222 | (1,162,760 | ) | |||||
Proceeds from long-term borrowings and debt | 167,675 | 386,096 | ||||||
Repayments of long-term borrowings and debt | (194,094 | ) | (246,982 | ) | ||||
Payment of lease liabilities | (916 | ) | (820 | ) | ||||
Net increase in lease liabilities | - | 27 | ||||||
Change in foreign currency | (35,011 | ) | (43,888 | ) | ||||
Adjustment of fair value for hedge accounting relationship | (1,465 | ) | 962 | |||||
Other adjustments | 2,218 | (4,002 | ) | |||||
Balance as of September 30, | 1,960,699 | 2,066,943 |
The reconciliation of equity account movements is presented in the condensed consolidated interim statement of changes in equity.
54
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) |
Lease liabilities
Maturity analysis of contractual undiscounted cash flows of the lease liabilities is detailed below:
September 30, 2021 |
December 31, 2020 | |||||||
Due within 1 year | 2,098 | 2,058 | ||||||
After 1 year but within 5 years | 10,636 | 10,641 | ||||||
After 5 years but within 10 years | 9,782 | 11,354 | ||||||
Total undiscounted lease liabilities | 22,516 | 24,053 | ||||||
Short-term | 1,326 | 1,244 | ||||||
Long-term | 16,557 | 17,555 | ||||||
Lease liabilities included in the consolidated statement of financial position | 17,883 | 18,799 |
Amounts recognized in the statement of cash flows:
September 30, 2021 |
December 31, 2020 | |||||||
Payments of lease liabilities | 916 | 1,114 |
Amounts recognized in profit or loss:
Three months ended September 30, | ||||||||
2021 | 2020 | |||||||
Interest on lease liabilities | (201 | ) | (214 | ) | ||||
Income from sub-leasing right-of-use assets | 52 | 66 |
Nine months ended September 30, | ||||||||
2021 | 2020 | |||||||
Interest on lease liabilities | (614 | ) | (651 | ) | ||||
Income from sub-leasing right-of-use assets | 185 | 188 |
15. | Other liabilities |
Following is a summary of other liabilities:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Accruals and other accumulated expenses | 8,745 | 9,213 | ||||||
Accounts payable | 2,658 | 6,307 | ||||||
Others | 2,630 | 3,194 | ||||||
14,033 | 18,714 |
55
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)
16. | 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:
Three months ended September 30 | ||||||||
2021 | 2020 | |||||||
(Thousands of U.S. dollars) | ||||||||
Profit for the period | 15,731 | 15,444 | ||||||
(U.S. dollars) | ||||||||
Basic earnings per share | 0.41 | 0.39 | ||||||
Diluted earnings per share | 0.41 | 0.39 | ||||||
(Thousands of shares) | ||||||||
Weighted average of common shares outstanding applicable to basic EPS | 38,789 | 39,672 | ||||||
Effect of diluted securities: | ||||||||
Stock options and restricted stock units plan | - | - | ||||||
Adjusted weighted average of common shares outstanding applicable to diluted EPS | 38,789 | 39,672 |
Nine months ended September 30 | ||||||||
2021 | 2020 | |||||||
(Thousands of U.S. dollars) | ||||||||
Profit for the period | 42,631 | 47,852 | ||||||
(U.S. dollars) | ||||||||
Basic earnings per share | 1.08 | 1.21 | ||||||
Diluted earnings per share | 1.08 | 1.21 | ||||||
(Thousands of shares) | ||||||||
Weighted average of common shares outstanding applicable to basic EPS | 39,377 | 39,645 | ||||||
Effect of diluted securities: | ||||||||
Stock options and restricted stock units plan | - | - | ||||||
Adjusted weighted average of common shares outstanding applicable to diluted EPS | 39,377 | 39,645 |
56
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. | Fee and commission income |
Fee and commission income from contracts with customers broken down by main types of services according to the scope of IFRS 15, are detailed as follows:
Three months ended September 30, 2021 | ||||||||||||||||
Syndications |
Documentary and standby letters of credit |
Other Commissions, net | Total | |||||||||||||
Openning and confirmation | - | 2,674 | 555 | 3,229 | ||||||||||||
Negotiation and acceptance | - | 8 | - | 8 | ||||||||||||
Amendment | - | 364 | - | 364 | ||||||||||||
Structuring | 1,327 | - | - | 1,327 | ||||||||||||
Other | - | 4 | (180 | ) | (176 | ) | ||||||||||
1,327 | 3,050 | 375 | 4,752 |
Nine months ended September 30, 2021 | ||||||||||||||||
Syndications |
Documentary and standby letters of credit |
Other Commissions, net | Total | |||||||||||||
Openning and confirmation | - | 7,931 | 1,754 | 9,685 | ||||||||||||
Negotiation and acceptance | - | 37 | - | 37 | ||||||||||||
Amendment | - | 990 | (16 | ) | 974 | |||||||||||
Structuring | 1,828 | - | - | 1,828 | ||||||||||||
Other | - | 35 | (496 | ) | (461 | ) | ||||||||||
1,828 | 8,993 | 1,242 | 12,063 |
Three months ended September 30, 2020 | ||||||||||||||||
Syndications |
Documentary and standby letters of credit |
Other Commissions, net | Total | |||||||||||||
Openning and confirmation | - | 2,134 | 413 | 2,547 | ||||||||||||
Negotiation and acceptance | - | 11 | - | 11 | ||||||||||||
Amendment | - | 136 | - | 136 | ||||||||||||
Structuring | 63 | - | - | 63 | ||||||||||||
Other | - | 3 | (149 | ) | (146 | ) | ||||||||||
63 | 2,284 | 264 | 2,611 |
Nine months ended September 30, 2020 | ||||||||||||||||
Syndications |
Documentary and standby letters of credit |
Other Commissions, net | Total | |||||||||||||
Openning and confirmation | - | 5,919 | 933 | 6,852 | ||||||||||||
Negotiation and acceptance | - | 174 | - | 174 | ||||||||||||
Amendment | - | 406 | - | 406 | ||||||||||||
Structuring | 514 | - | - | 514 | ||||||||||||
Other | - | 36 | (358 | ) | (322 | ) | ||||||||||
514 | 6,535 | 575 | 7,624 |
57
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. | Fee and commission income (continued) |
The following table provides information on the ordinary income that is expected to be recognized on the contracts in force:
September 30, | ||||
2021 | ||||
Up to 1 year | 2,279 | |||
From 1 to 2 years | 267 | |||
2,546 |
18. | Business segment information |
The following table provides certain information regarding the Bank's operations by segment:
Three months ended September 30, 2021 | ||||||||||||
Commercial | Treasury | Total | ||||||||||
Interest income | 31,916 | 2,854 | 34,770 | |||||||||
Interest expense | (161 | ) | (12,530 | ) | (12,691 | ) | ||||||
Inter-segment net interest income | (10,469 | ) | 10,469 | - | ||||||||
Net interest income | 21,286 | 793 | 22,079 | |||||||||
Other income (expense), net | 4,939 | (188 | ) | 4,751 | ||||||||
Total income | 26,225 | 605 | 26,830 | |||||||||
Reversal of (provision for) credit losses | 115 | (886 | ) | (771 | ) | |||||||
Operating expenses | (7,874 | ) | (2,454 | ) | (10,328 | ) | ||||||
Segment profit (loss) | 18,466 | (2,735 | ) | 15,731 |
Nine months ended September 30, 2021 | ||||||||||||
Commercial | Treasury | Total | ||||||||||
Interest income | 94,819 | 7,033 | 101,852 | |||||||||
Interest expense | (492 | ) | (39,388 | ) | (39,880 | ) | ||||||
Inter-segment net interest income | (33,830 | ) | 33,830 | - | ||||||||
Net interest income | 60,497 | 1,475 | 61,972 | |||||||||
Other income (expense), net | 12,676 | (267 | ) | 12,409 | ||||||||
Total income | 73,173 | 1,208 | 74,381 | |||||||||
(Provision for) reversal of credit losses | (890 | ) | (1,265 | ) | (2,155 | ) | ||||||
Operating expenses | (22,902 | ) | (6,693 | ) | (29,595 | ) | ||||||
Segment profit (loss) | 49,381 | (6,750 | ) | 42,631 | ||||||||
Segment assets | 5,524,936 | 1,446,516 | 6,971,452 | |||||||||
Segment liabilities | 257,504 | 5,692,819 | 5,950,323 |
58
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. | Business segment information (continued) |
Three months ended September 30, 2020 | ||||||||||||
Commercial | Treasury | Total | ||||||||||
Interest income | 37,886 | 1,808 | 39,694 | |||||||||
Interest expense | (172 | ) | (16,914 | ) | (17,086 | ) | ||||||
Inter-segment net interest income | (16,513 | ) | 16,513 | - | ||||||||
Net interest income | 21,201 | 1,407 | 22,608 | |||||||||
Other income (expense), net | 2,929 | (348 | ) | 2,581 | ||||||||
Total income | 24,130 | 1,059 | 25,189 | |||||||||
(Provision for) reversal of credit losses | (1,430 | ) | (113 | ) | (1,543 | ) | ||||||
Gain (loss) on non-financial assets, net | 140 | - | 140 | |||||||||
Operating expenses | (6,507 | ) | (1,835 | ) | (8,342 | ) | ||||||
Segment profit (loss) | 16,333 | (889 | ) | 15,444 |
Nine months ended September 30, 2020 | ||||||||||||
Commercial | Treasury | Total | ||||||||||
Interest income | 136,690 | 6,500 | 143,190 | |||||||||
Interest expense | (521 | ) | (72,538 | ) | (73,059 | ) | ||||||
Inter-segment net interest income | (69,282 | ) | 69,282 | - | ||||||||
Net interest income | 66,887 | 3,244 | 70,131 | |||||||||
Other income (expense), net | 5,488 | (1,770 | ) | 3,718 | ||||||||
Total income | 72,375 | 1,474 | 73,849 | |||||||||
Reversal of (provision for) credit losses | 1,356 | (203 | ) | 1,153 | ||||||||
Operating expenses | (20,111 | ) | (7,039 | ) | (27,150 | ) | ||||||
Segment profit (loss) | 53,620 | (5,768 | ) | 47,852 | ||||||||
Segment assets | 4,657,429 | 1,647,046 | 6,304,475 | |||||||||
Segment liabilities | 106,921 | 5,163,939 | 5,270,860 |
59
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. | Business segment information (continued) |
Reconciliation on information on reportable segments |
Three months ended September 30 | ||||||||
2021 | 2020 | |||||||
Profit for the period | 15,731 | 15,444 |
Nine months ended September 30 | ||||||||
2021 | 2020 | |||||||
Profit for the period | 42,631 | 47,852 | ||||||
Assets: | ||||||||
Assets from reportable segments | 6,971,452 | 6,304,475 | ||||||
Other assets - unallocated | 5,628 | 6,719 | ||||||
Total assets | 6,977,080 | 6,311,194 | ||||||
Liabilities: | ||||||||
Liabilities from reportable segments | 5,950,323 | 5,270,860 | ||||||
Other liabilities - unallocated | 14,033 | 14,627 | ||||||
Total liabilities | 5,964,356 | 5,285,487 |
19. | Related party transactions |
The detail of the assets and liabilities with related private corporations and financial institutions is as follows:
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Assets | ||||||||
Demand deposits | 1,343 | 3,269 | ||||||
Loans, net | - | 22,499 | ||||||
Total asset | 1,343 | 25,768 | ||||||
Liabilities | ||||||||
Time deposits | 220,000 | 240,000 | ||||||
Total liabilities | 220,000 | 240,000 | ||||||
Contingencies | ||||||||
Stand-by letters of credit | 9,080 | 28,300 | ||||||
Loss allowance | (46 | ) | (60 | ) | ||||
Total contingencies | 9,034 | 28,240 |
60
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. | Related party transactions (continued) |
The detail of income and expenses with related parties is as follows:
Three months ended September 30 | ||||||||
2021 | 2020 | |||||||
Interest income | ||||||||
Loans | - | 239 | ||||||
Interest expense | ||||||||
Deposits | (398 | ) | (819 | ) | ||||
Net interest income (expenses) | (398 | ) | (580 | ) | ||||
Other income (expense) | ||||||||
Fees and commissions, net | 67 | 115 | ||||||
Net income from related parties | (331 | ) | (465 | ) |
Nine months ended September 30 | ||||||||
2021 | 2020 | |||||||
Interest income | ||||||||
Loans | 161 | 1,010 | ||||||
Interest expense | ||||||||
Deposits | (1,658 | ) | (2,129 | ) | ||||
Net interest income (expenses) | (1,497 | ) | (1,119 | ) | ||||
Other income (expense) | ||||||||
Fees and commissions, net | 185 | 299 | ||||||
Net income from related parties | (1,312 | ) | (820 | ) |
The total compensation paid to directors and the executives as representatives of the Bank amounted to:
Three months ended September 30 | ||||||||
2021 | 2020 | |||||||
Expenses: | ||||||||
Compensation costs to directors | 466 | 450 | ||||||
Compensation costs to executives | 931 | 620 |
Nine months ended September 30 | ||||||||
2021 | 2020 | |||||||
Expenses: | ||||||||
Compensation costs to directors | 1,173 | 1,249 | ||||||
Compensation costs to executives | 3,220 | 4,811 |
Compensation costs to directors and executives, include annual cash retainers and the cost of granted restricted stock and restricted stock units.
61
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. | 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 its consolidated financial performance.
21. | Applicable laws and regulations |
Liquidity index
In according with the established in Rule No. 2-2018 issued by the Superintendence of Banks of Panama (SBP), as of September 30, 2021 and December 31, 2020 the minimum LCR to be reported to the SBP was 65% for both periods. The Bank´s LCR as of September 30, 2021 and December 31, 2020 was 202% and 249%, respectively.
The Rule No. 4-2008 issued by the SBP, establishes that every general license or international license bank must maintain, always, 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 September 30, 2021 and December 31, 2020 was 72.91% and 79.99%, respectively.
Capital adequacy
In compliance with the established in the Banking Law of the Republic of Panama and the Rules No. 01-2015 and No. 03-2016 below, the information corresponding to the total capital adequacy index is presented:
September 30, 2021 |
December 31, 2020 | |||||||
Capital funds | 1,034,873 | 1,048,182 | ||||||
Risk-weighted assets | 6,106,811 | 5,187,054 | ||||||
Capital adequacy index | 16.95% | 20.21% |
Leverage ratio
The table below presents the Bank´s leverage ratio in compliance with Article No.17 of the Rule No. 1-2015:
September 30, 2021 | December 31, 2020 | |||||||
Ordinary capital | 973,554 | 912,164 | ||||||
Non-risk-weighted assets | 7,000,172 | 6,479,416 | ||||||
Leverage ratio | 12.84% | 14.08% |
62
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)
21. | Applicable laws and regulations (continued) |
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:
September 30, 2021 | ||||||||||||||||||||||||
Normal | Special Mention | Substandard | Doubtful | Unrecoverable | Total | |||||||||||||||||||
Loans at amortized cost | ||||||||||||||||||||||||
Corporations | 2,789,655 | 68,806 | 10,593 | - | - | 2,869,054 | ||||||||||||||||||
Financial Institutions: | ||||||||||||||||||||||||
Private | 1,962,252 | - | - | - | - | 1,962,252 | ||||||||||||||||||
State-owned | 431,571 | - | - | - | - | 431,571 | ||||||||||||||||||
2,393,823 | - | - | - | - | 2,393,823 | |||||||||||||||||||
Sovereign | 29,513 | - | - | - | - | 29,513 | ||||||||||||||||||
5,212,991 | 68,806 | 10,593 | - | - | 5,292,390 | |||||||||||||||||||
Allowance for loan losses IFRS (*): | 22,978 | 13,362 | 5,125 | - | - | 41,465 | ||||||||||||||||||
Loans at FVTPL | ||||||||||||||||||||||||
Financial Institutions: | ||||||||||||||||||||||||
Private | 5,223 | - | - | - | - | 5,223 | ||||||||||||||||||
Total loans | 5,218,214 | 68,806 | 10,593 | - | - | 5,297,613 |
December 31, 2020 | ||||||||||||||||||||||||
Normal | Special Mention | Substandard | Doubtful | Unrecoverable | Total | |||||||||||||||||||
Loans at amortized cost | ||||||||||||||||||||||||
Corporations | 2,147,846 | 9,281 | 10,593 | - | - | 2,167,720 | ||||||||||||||||||
Financial Institutions: | ||||||||||||||||||||||||
Private | 2,231,742 | - | - | - | - | 2,231,742 | ||||||||||||||||||
State-owned | 476,520 | - | - | - | - | 476,520 | ||||||||||||||||||
2,708,262 | - | - | - | - | 2,708,262 | |||||||||||||||||||
Sovereign | 35,415 | - | - | - | - | 35,415 | ||||||||||||||||||
4,891,523 | 9,281 | 10,593 | - | - | 4,911,397 | |||||||||||||||||||
Allowance for loan losses IFRS (*): | 34,720 | 1,857 | 4,588 | - | - | 41,165 | ||||||||||||||||||
Loans at FVTPL | ||||||||||||||||||||||||
Financial Institutions: | ||||||||||||||||||||||||
Private | 4,949 | - | - | - | - | 4,949 | ||||||||||||||||||
Total loans | 4,896,472 | 9,281 | 10,593 | - | - | 4,916,346 |
As of September 30, 2021, and December 31, 2020, there are no restructured loans.
(*) As of September 30, 2021, and December 31, 2020, there is no excess in the specific provision calculated in accordance with Agreement No. 8-2014 of the SBP, over the provision calculated in accordance with IFRS.
63
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)
21. | Applicable laws and regulations (continued) |
For statutory purposes only, non-accruing loans are presented by category as follows:
September 30, 2021 | ||||||||||||||||||||||||
Loans at amortized cost | Normal | Special Mention | Substandard | Doubtful | Unrecoverable | Total | ||||||||||||||||||
Impaired loans | - | - | 10,593 | - | - | 10,593 | ||||||||||||||||||
Total | - | - | 10,593 | - | - | 10,593 |
December 31, 2020 | ||||||||||||||||||||||||
Loans at amortized cost | Normal | Special Mention | Substandard | Doubtful | Unrecoverable | Total | ||||||||||||||||||
Impaired loans | - | - | 10,593 | - | - | 10,593 | ||||||||||||||||||
Total | - | - | 10,593 | - | - | 10,593 |
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Non-accruing loans: | ||||||||
Private corporations | 10,593 | 10,593 | ||||||
Total non-accruing loans | 10,593 | 10,593 | ||||||
Interest that would be reversed if the loans had been classified as non-accruing loans | 536 | 351 | ||||||
Income from collected interest on non-accruing loans | - | - |
64
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)
21. | Applicable laws and regulations (continued) |
Modified special mention loans
As of September 30, 2021, the Bank there are no modified special mention category loans.
In accordance with the requirements of Article 4-E of Rule No. 9-2020, a detail of the portfolio of modified special mention category loans and their respective provisions and regulatory reserves as of December 31, 2020, classified according to the three-stage model of IFRS 9 follows:
December 31, 2020 | ||||||||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Modified special mention loans | ||||||||||||||||
Modified loans | ||||||||||||||||
Corporate | - | 8,829 | - | 8,829 | ||||||||||||
(-) Modified loans secured by pledged deposits in the same bank up to the guaranteed amount | - | - | - | - | ||||||||||||
(+) Interest receivable | 7 | - | 7 | |||||||||||||
(-) Unearned interest and deferred fees | - | - | - | - | ||||||||||||
Total loan portfolio subject to provisions | ||||||||||||||||
Rule No. 9-2020 | - | 8,836 | - | 8,836 | ||||||||||||
Allowance | ||||||||||||||||
Allowance IFRS 9 | - | 1,767 | - | 1,767 | ||||||||||||
Collective allowance (complement to 1.5%) * | - | |||||||||||||||
Regulatory reserve (complement to 3%) * | - | |||||||||||||||
Total allowance and reserves | 1,767 |
* Because IFRS 9 provision for modified special mention loans by $1.7million exceeds the generic provision equivalent to the 3% required by Rule No. 9-2020, the Bank does not require additional complementary equity reserves to the existing provision.
65
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)
21. | Applicable laws and regulations (continued) |
As of September 30, 2021, and December 31, 2020, the total amount of the dynamic provision and the regulatory credit reserve calculated according to the guidelines of Rule No. 4-2013 of the SBP is $136 million for both years, appropriated from retained earnings for purposes of compliance with local regulatory requirements. This appropriation is restricted from dividend distribution in order to comply with local regulations.
The provision and reserve are detailed as follows:
September 30, 2021 | December 31, 2020 | |||||||
Dynamic provision | 136,019 | 136,019 | ||||||
Regulatory credit reserve | - | - | ||||||
136,019 | 136,019 |
Capital reserve
In addition to capital reserves required by regulations, the Bank maintains a capital reserve of $95.3 million, which was voluntarily established. Pursuant to Article No. 69 of the Banking Law, reduction of capital reserves requires prior approval of SBP.
22. | Subsequent events |
The Bank announced a quarterly cash dividend of $0.25 US dollar cents per share corresponding to the third quarter of 2021. The cash dividend was approved by the Board of Directors on October 27, 2021 and it was payable on November 23, 2021 to the Bank's stockholders as of November 9, 2021 record date.
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BLADEX - Banco Latinoamericano de Comercio Exterior SA published this content on 02 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2021 10:08:15 UTC.