A Summary Presentation & Update September, 2005. I II III IV V Index The...

A Summary Presentation & Update

September, 2005

I

II

III

IV

V

Index

The Company ......................... 3

Business Strategy ................. 12

Financial Results ................... 23

Capital Management ............... 32

Investment Considerations .... 38

Page

3

This presentation contains forward-looking statements of expected future developments. The Bank wishes to ensure that such statements are accompanied by meaningful cautionary statements pursuant to the safe harbor established by the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this presentation refer to the growth of the trade portfolio, the increase in the number of the Bank’s clients, the increase in activities engaged in by the Bank that are derived from the Bank’s trade finance client base, anticipated operating income in future periods, the improvement in the financial strength of the Bank and the progress the Bank is making. These forward-looking statements reflect the expectations of the Bank’s management and are based on currently available data; however, actual experience with respect to these factors is subject to future events and uncertainties, which could materially impact the Bank’s expectations. Among the factors that can cause actual performance and results to differ materially are as follows: the possibility that the Bank will need to renegotiate, restructure or write-off certain of its Argentine loans; the possibility of pre-payments; the anticipated growth of the Bank’s trade finance portfolio; the continuation of the Bank’s preferred creditor status; the effects of increased interest rates on the Bank’s financial condition; the implementation of the Bank’s strategies and initiatives, including its revenue diversification strategy; the pending applications in the United States to open a representative office in Miami, Florida; the adequacy of the Bank’s allowance for credit losses to address the likely impact of the Argentine crisis and other credit risks on the Bank’s loan portfolio; the necessity of making additional provisions for credit losses; the Bank’s ability to achieve future growth, to reduce its liquidity levels and increase its leverage; the Bank’s ability to maintain its investment-grade credit ratings; the availability and mix of future sources of funding for the Bank’s lending operations; and the adequacy of the Bank’s sources of liquidity to cover large deposit withdrawals.

I

II

III

IV

V

Index

The Company

Business Strategy

Financial Results

Capital Management

Investment Considerations

5

• Bladex is a supranational bank established in 1975 by Central Banks in Latin America and the Caribbean, to finance and promote trade in the Region

• Incorporated and headquartered in Panama, it started operations in 1979

• Shareholders include Central Banks and state entities in 23 countries in the Region, as well as local, regional, and international banks, along with private investors

The Company

Background

6

The Company

Company Highlights

• First Latin American bank listed in NYSE (1992)

• First Latin American bank rated “Investment Grade”

• Current credit ratings:

Credit Ratings as of June 30, 2005

Rating Agencies Short Term Long Term OutlookMoody's P-3 Baa3 StableStandard & Poor's A-3 BBB- Stable

7

Eight Directors are independent; one is part of Management

Eight Directors are independent; one is part of Management

The Company

Ownership and Board Composition

Board of Directors Composition:

Shareholder CompositionJune 30, 2005

75.1%

16.4%

8.5%

Class "A" Class "B" Class "E"

Class No. of Directors

Class "A" 3

Class "E" 5

All Classes 2

Total 10 *

Class “A” – Central Banks or designees (16.4%)Class “B” – Commercial Banks (8.5%)Class “E” – Investors “NYSE” (75.1%)

Class “A” – Central Banks or designees (16.4%)Class “B” – Commercial Banks (8.5%)Class “E” – Investors “NYSE” (75.1%)

8

The Company

Bladex: A Unique Company

By definition and vocation Focus on, and commitment to, Latin America

Knowledge of the Region More than 25 years of operation in 23 countries

Client franchise Strong customer loyalty, sterling client list

Shareholder mix State and private interests combined in a seamless fashion

Efficient operations A small team (159 people), with a wide reach and influence

9

The Company

Bladex: A Unique Company

World class Corporate Governance standards

Among the most international of Latin American companies

Recognized as key institution by the international financial community

World Bank, IDB, FMO, DEG, etc. have supported the company

Preferred creditor status

An investment-gate into the Region Among the very few Latin American brands recognized internationally

10

Jaime Rivera CEO

Rubens Amaral CCO

Ernesto Bruggia COO

Gregory Testerman SVP Treasury

The Company

Management Team

• 24 years in Bank of America in various capacities throughout the Region and in the U.S.

NameName TitleTitle ExperienceExperience Joined BLXJoined BLX

• Mar’02: COO• Jan’04: CEO

• General Manager of Banco do Brasil, New York Branch and Managing Director for North America since 2000

• Mar’04

• General Manager of Banco de la Provincia de Buenos Aires since 1999

• General Manager of Grupo BAPRO (holding company of BPBA), since November 1998

• Jul’04

• 17 years in Banco Santander Central Hispano in various capacities. Worked in Europe, Japan and U.S.

• Jan’05

Miguel A. Kerbes SVP Risk Mgmt.• Assistant Credit Director for the

Southern Cone Area of Banco Santander-Chile (1995-2000)

• Head of Credit Division at Banco Boston-Chile (1992-1995)

• 2000: VP• Jul’02: SVP

11

Carlos Yap SVP Finance

Miguel Moreno SVP Controller(Reports to the Audit Committee of the Board)

Ana María de Arias SVP - HHRR & Corp. Oper.

Joaquín UribeSVP Processes Eng. & IT

The Company

Management Team (cont.)

• 25 years working at Bladex in various capacities

NameName TitleTitle ExperienceExperience Joined BLXJoined BLX

• 1980• 1993: VP• Jul’02: SVP

• Partner and IT Consulting Manager for PwC, Bogotá, Colombia (1988-2001)

• VP of IT & Operations for Banco de Credito, Bogotá, Colombia (1987-1988)

• Sep’01

• VP of HHRR of Banco General, one of the most important banks in Panama (2000-2004) and as VPA (1999-2000)

• Panama Canal Commission in various capacities (1990-1999)

• Jun’04

• Citibank Colombia in various capacities (1997- 2001)

• Information Services Manager for System Integration and Project Quality Office at UNISYS Corporation, Colombia(1987- 1997)

• Sep’01: VP• Jul’02: SVP

12

The Company

Corporate Governance Highlights

• Internal controls designed and tested to be SOX 404 compliant— In March 2005, the SEC extended for one year the deadline for foreign private

issuers

• Directors’ independence definition, as well as Board Committee

structure and composition, meet NYSE standards

• Disclosure Committee operating at Bank level

• Ethics Committee and Code of Ethics in place

• “Whistleblower” program in place

• No AML or other regulatory issues outstanding

• Transparency:

Regulatory reporting Conference calls Prompt news

releases

Analyst reports Road shows

Rating agencies reports Website

I

II

III

IV

V

Index

The Company

Business Strategy

Financial Results

Capital Management


14

• Trade is the engine of economic growth in the Region – 20% plus p.a.

• Historically attractive risk/reward relationship for Bladex

• Four key success factors:

Business Strategy

Business Focus: Trade Finance Services

High VolumeLow financial

& operting cost

Pristine credit quality

Right capitalstructure

15

Business Strategy

A Growing Market

Source:

'1990 to 2003 data: CEPAL (Comisión Económica para América Latina y el Caribe)

'2004 to 2005 trade growth projections: based on data from UBS Publication (Latin American Economic Perspectives, 20-August-2004).

Source:


'2004 to 2005 trade growth projections: based on data from UBS Publication (Latin American Economic Perspectives, 20-August-2004).

Trade Flows - Latin America

0

100

200

300

400

500

600

700

800

900

1,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004F 2005F

US

$ b

illio

n

16

Business Strategy

A Growing Market

Source:


‘2003 data: World Trade Organization

Source:


‘2003 data: World Trade Organization

Intra-Regional Trade Flows - Latin America (Based on exports FOB)

0

10

20

30

40

50

60

70

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

US

$ b

illi

on

Bladex’s Special Competitive Advantage

17

Business Strategy

Strategic Approach

Client Focus

• Bladex is the Bank of banks in

the Region

• In addition, Bladex provides

trade services to corporations

through co-financing, syndicated

transactions, and bilateral

relationships

18

Business Strategy

Earnings Model – Strategic View

Core BusinessFinancial

Intermediation

Oth

erRelated

P/B

Relatively low

Relatively high

Services

19

Business Strategy

Earnings Model – Strategic View

Capital

Human Resources

Processes & Technology

Working Capital

Trade Finance - Corporate

OthersU.S.

Origination

Trade Finance -

Banks

Core- Financial Intermediation

E-learningPaymentsDigital Identity

InvestmentPortfolio

Distribution

LAECA Others

New Products and Initiatives

C

L

I

E

N

T

S

Bra

nd

Clie

nt F

ranc

hise

Gov

t. S

har

ehol

der

s

Kno

wle

dge

of

the

Reg

ion

20

Business Strategy

Earnings Model – Capital View

Capital Capital IntensiveIntensiveCapital Capital

IntensiveIntensive

Non CapitalNon CapitalIntensiveIntensive

Non CapitalNon CapitalIntensiveIntensive

Core Core Financial Financial

IntermediationIntermediation

Core Core Financial Financial

IntermediationIntermediation

OtherOtherOtherOther

15% - 20% p.a. growth

Margins stable at relatively thin levels

Eximbank structures

Country Risk Guarantees

L/C’s

Guarantees

U.S. Origination / Distribution

Payments

Digital Identity

E-learning

RevenueRevenueRevenueRevenue

10%ROE

15%ROE

21

Our intermediation business has strengthened:

• The trade portfolio grew 58% in the last two years (as of June 30, 2005).

Growth with banks in the trade portfolio alone in last year was 20%

• 19 new clients during the first six months of 2005 (out of a base of 161).

• Our liability borrowings margin decreased by 4 b.p. (18%) in the last year,

allowing us to be more competitive in more markets

Business Strategy

Financial Intermediation

22

Business Strategy

New Initiatives

1. Digital Identity / Certification:• Digital certification that will guarantee the security and trust in the

electronic transactions performed between clients and their trading partners, assuring the identity of the transaction originator.

2. Payments:• Bladex entered into a strategic alliance with Bank of America, to provide

our regional customers with world class electronic payments processing. • Focus is primarily on the processing of commercial and treasury payments

in US dollars.

3. U.S. Origination / Vendor Financing:• Strategic product for high volume exporters that mitigates foreign

exposure and increase trade flows with buyers overseas.

4. Investment Portfolio /Trading Desk:

• Investment, distribution and trading.

5. E-learning: • Educational on-line products with topics oriented to the banking industry.

23

Business Strategy

Competition

Competition – Financial Intermediation

• New entrants are a reality. Impact primarily on pricing, not volume yet

• Major competitors in traditional trade finance: Wachovia, Bank of New York, American Express, Bank of America (partner) HSBC, RBS, Standard Chartered, a few German banks

• Major competitors in structured trade finance: Hypo V., Calyon, Standard Bank, Santander (partner)

• Bladex competes successfully based on its unique features: client loyalty, commitment to the Region, preferred creditor status, market knowledge, and privileged access

Competition – New Initiatives

• In areas where it exists (payments), we work with very strong partners (i.e. Bank of America)

• In other areas: no significant competition (by design)

I

II

III

IV

V

Index

The Company

Business Strategy

Financial Results

Capital Management


25

Financial Results

Track Record

-

1

2

3

4

5

6

7

8

9

10

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 200430JUN05

US$ billion

(300)

(250)

(200)

(150)

(100)

(50)

-

50

100

150

US$ million

Assets Net Income

LATIN AMERICAN DEBT CRISIS

TEQUILA CRISIS

EMERGING MARKETS CRISIS

ARGENTINE CRISIS

26

Financial Results

Balance Sheet

(In US$ millions) 31-Dec-04 31-Mar-05 30-Jun-05 ASSETS

Cash and interest-bearing deposits with banks $155 $247 $164 Securities available for sale 165 147 58 Securities held to maturity 28 28 27

Loans 2,442 2,312 2,244 Allowance for loan losses (106) (82) (76) Unearned income (7) (5) (4) Loans, net $2,328 $2,225 $2,164

Other assets 57 127 87 TOTAL ASSETS $2,733 $2,774 $2,501

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits 864 823 905 Short-term borrowings 705 751 522 Medium and long-term borrowings and placements 404 389 341 Total deposits, short-term, medium and long-term borrowings and placements $1,972 $1,963 $1,768 Other liabilities 104 203 127 TOTAL LIABILITIES $2,077 $2,167 $1,895 TOTAL STOCKHOLDERS' EQUITY $656 $607 $605

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,733 $2,774 $2,501

At the end of,

27

Financial Results

Profit & Loss Statement

For the six months ended

(In US$ millions) DEC 31/03 DEC 31/04 MAR 31/05 JUN 30/05 JUN 30/05

INCOME STATEMENT DATA: NET INTEREST INCOME 54 42 11 10 21

Reversal of provision for loan losses 70 111 20 6 26 NET INTEREST INCOME AFTER REVERSAL OF PROVISION

FOR LOAN LOSSES 123 153 31 16 47

OTHER INCOME (EXPENSE):

Commission income, net 7 6 2 1 3 Reversal (provision) for losses on off-balance sheet credit risk (11) 1 3 (3) (0)Derivatives and hedging activities (8) 0 0 0 0Impairment (loss) on securities - Recovery (1) 0 10 0 10 Gain on the sale of securities available for sale 22 3 0 0 0 NET OTHER INCOME (EXPENSE) 11 10 15 (2) 13

TOTAL OPERATING EXPENSES (23) (21) (6) (6) (11)

NET INCOME $111 $142 $40 $8 $48

- - - -

Selected Financial RatiosNet income per share (EPS) $3.88 $3.61 $1.03 $0.21 $1.24 Return on average assets (ROA) 4.24% 5.83% 6.06% 1.29% 3.75%Return on average stockholder's equity (ROE) 23.91% 22.75% 24.43% 5.30% 15.25%Net interest margin (NIM) 1.87% 1.65% 1.66% 1.60% 1.63%Book value (period end) $14.84 $16.87 $15.62 $15.68 $15.68 Tier 1 capital to risk-weighted assets 35.4% 42.8% 41.6% 46.5% 46.5%

For the year ended For the quarter ended

28

Financial Results

Strong Trade Portfolio Growth

• Strong trade portfolio growth

• In our opinion, faster growth rates would not be prudent

under current risk environment

• Strong trade portfolio growth

• In our opinion, faster growth rates would not be prudent

under current risk environment

Credit Portfolio Outstanding (1)

1,719 1,7401,854 1,871

2,149 2,222 2,287646 524

511 418

506542 522482

446403

369

289 130 115

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05

(US$ million)

Trade Non-Trade Non-Accrual

2,710

2,944

2,768 2,658

(1) Credit portfolio includes book value of loans, fair value of investment securities, securities purchased under agreements to resell, acceptances and contingencies (including confirmed letters of credit, stand-by letters of credit, reimbursement undertakings and guarantees covering commercial and country risks and credit commitments).

2,894

3%

15%

23%

7%

1%

2,847

1%

2,925

3%

29

Financial Results

Loan Growth Perspectives

Loan growth focused on:

Country exposure allocation criteria:

GDP Business opportunities

Risk Levels Economic and political analysis

Portfolio management approach

Growth Growth Segment 1Segment 1


MexicoColombiaChileEl Salvador



BrazilPeruPanamaCosta Rica

30

Financial Results

Portfolio Concentration

Country Credit Portfolio(US$ million, except percentages)

Other$752 - 26%

Colombia$172- 6%

Mexico$231 - 8%

Chile$354 - 12%

Brazil$1,325 - 45%

Argentina $91 - 3%

CREDIT PORTFOLIO DISTRIBUTION BY COUNTRY

As of June 30, 2005

US$MM %

BRAZIL................................................................................................................................. $1,325 45.3%

CHILE................................................................................................................................... 354 12.1%

MEXICO........................................................................................................................... 231 7.9%

COLOMBIA...................................................................................................................... 172 5.9%

ECUADOR.......................................................................................................................... 125 4.3%

DOMINICAN REPUBLIC................................................................................................. 106 3.6%

ARGENTINA.......................................................................................................................... 91 3.1%

PANAMA..................................................................................................................................... 87 3.0%

EL SALVADOR............................................................................................................... 79 2.7%

PERU.................................................................................................................................................... 77 2.6%

COSTA RICA................................................................................................................... 71 2.4%

TRINIDAD & TOBAGO.................................................................................................. 59 2.0%

JAMAICA......................................................................................................................... 52 1.8%

GUATEMALA................................................................................................................ 44 1.5%

VENEZUELA...................................................................................................................... 22 0.7%

HONDURAS................................................................................................................... 18 0.6%

OTHER................................................................................................................................ 8 0.3%

NICARAGUA.................................................................................................................... 3 0.1%

TOTAL CREDIT PORTFOLIO .................................................................................. $2,925 100.0%

31

Financial Results

Exposure in Brazil

• Our largest exposure activity reflects the relative size of th economy,

growth and client franchise

• Target exposure is 40% - 50% of total portfolio.

• Accruing Brazilian credit portfolio:

• Average tenor of the loan portfolio: 413 days as of June 30, 2005

• Two non-accrual loans, one of which is current. Total $36 million

Brazil Dec-04 Mar-05 Jun-05

Client TypeFinancial Entities 87% 83% 81%Non-Financial Entities 13% 17% 19%

Transaction TypeTrade 94% 91% 91%Non-Trade 6% 9% 10%

32

Financial Results

Argentine Credit Portfolio

960878 846

774 758

584

452 435399

360327

240

828

494 462394 401

350272 240 222

178 156

4691

1,114

10241

1,002

202

13%

17%

49% 50%53%

51%

43%40%

45% 45% 45% 46%

36%

55% 55%

-

200

400

600

800

1,000

1,200

Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05

0%

10%

20%

30%

40%

50%

60%

Credit PortfolioNet Exposure (1)Reserve and fair value adjustments of investments as a % of nominal value

US$ million

(1) Exposure net of specif ic allow ances for credit losses and net of fair value adjustments on investment securities (impairment loss).

I

II

III

IV

V

Index

The Company

Business Strategy

Financial Results

Capital Management


34

Capital Management

Equity Levels Drivers

Capital

Basel II

Regulatory Capital Requirements

Rating agencies & creditors

perception

Future growth requirements

Economic capital (internal model)

35

Capital Management

Capital Management Guidelines

• Bladex seeks to balance risk and return considerations in order to:

– Withstand market volatility

– Maintain stable access to funding sources

– Provide a solid base to finance growth

– Promote share ownership by long-term investors

– Generate competitive returns on Shareholders’ Equity

• Capital management decisions follow from continued appraisal of above

considerations

• October 7, 2004 and April 11, 2005 payments of extraordinary dividends of

US$1.00 per common share and US$2.00 per common share, respectively,

and a US$50 million stock repurchase program, reflect above approach.

Since January 2004, have returned capital for a total of US$163 million

36

Capital Management

April through December, 2005

• Much of the Argentine recoveries originally scheduled for 2005 and 2006

have been realized in advance

• With the collection of the high-margin loans involved, core profitability

will come under pressure while the new portfolio and fee income

initiatives are built

• Critical success factor: inexpensive funding – for which a very strong

balance sheet will be required until profit & loss strengthens

• Number one priority: growth and improved profitability. Capital

Management actions will follow

• Doing the reverse could put the company in a difficult cycle

Weaker balance sheet

Smaller profit

Higher cost of funds

Even higher cost of funds

Smaller growth

…….

37

Capital Management

Historical Tier 1 – Basel I & II

Tier 1 Evolution

31%

28%26%

21%19%

17%20%

25%

18%16% 15%

35%

43%

46%

9%7% 8% 9% 8% 8% 9%

12% 11%9%

11%

23% 24% 24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 30-Jun-05

Tier 1 Ratio - Basel I

Tier 1 Ratio - Basel II *

38

Capital Management

Historical ROE

• Our business model has historically yielded ROE between 12% to 17%, even

in times of high competition.

• Our business model has historically yielded ROE between 12% to 17%, even

in times of high competition.

17.8% 17.6%

15.4%

12.2%

15.7%14.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1995 1996 1997 1998 1999 2000

I

II

III

IV

V

Index

The Company

Business Strategy

Financial Results

Capital Management


40


Why Bladex?

• Trade is the primary engine of growth in Latin America

• Preferred creditor status

• Transparency, world-class Corporate Governance standards

• Explicit support from multilateral agencies and shareholder governments

• Solid financials, investment grade

• US GAAP reporting

• Multiple regulators: SEC, Fed, NYSBC, Panamanian banking authorities

• Expanded research coverage

• Increasing market liquidity (47% increase in average daily volume in last year to 156 thousand shares/day)

• Regional play

• Defensive play

41

Thank you!!

A Summary Presentation & Update September, 2005. I II III IV V Index The...

Documents

Transcript of A Summary Presentation & Update September, 2005. I II III IV V Index The...