UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of November, 2016
Commission File Number 1-11414
BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A.
(Exact name of Registrant as specified in its Charter)
FOREIGN TRADE BANK OF LATIN AMERICA, INC.
(Translation of Registrant’s name into English)
Business Park Torre V, Ave. La Rotonda, Costa del Este
P.O. Box 0819-08730
Panama City, Republic of Panama
(Address of Registrant’s Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ¨ No x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ¨ No x
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 1, 2016
FOREIGN TRADE BANK OF LATIN AMERICA, INC. | |
(Registrant) |
By: | /s/ Pierre Dulin | |
Name: | Pierre Dulin | |
Title: | General Manager |
Banco Latinoamericano
de Comercio Exterior, S.A.
and Subsidiaries
Unaudited condensed consolidated interim statement of financial position as of September 30, 2016 and December 31, 2015, and related unaudited condensed consolidated interim statements of profit or loss, unaudited condensed consolidated interim statements of profit or loss and other comprehensive income, unaudited condensed consolidated interim statements of changes in equity and unaudited condensed consolidated interim statements of cash flows for the nine months ended September 30, 2016 and 2015.
Banco Latinoamericano de Comercio Exterior, S.A. and Subsidiaries
Unaudited condensed consolidated interim financial statements
2 |
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries |
Unaudited condensed consolidated interim statement of financial position |
September 30, 2016 and December 31, 2015 |
(In US$ thousand) |
September 30, | December 31, | |||||||||
Notes | 2016 | 2015 | ||||||||
Assets | ||||||||||
Cash and cash equivalents | 3,13 | 754,876 | 1,299,966 | |||||||
Financial Instruments: | 4,13 | |||||||||
At fair value through profit or loss | 4.1,4.2, 13 | 28 | 53,411 | |||||||
At fair value through OCI | 4.3,13 | 55,703 | 141,803 | |||||||
Securities at amortized cost, net | 4.4,13 | 88,866 | 108,215 | |||||||
Loans at amortized cost | 4.6 | 6,393,382 | 6,691,749 | |||||||
Less: | ||||||||||
Allowance for expected credit losses | 4.6 | 106,335 | 89,974 | |||||||
Unearned interest and deferred fees | 4.6 | 8,695 | 9,304 | |||||||
Loans at amortized cost, net | 6,278,352 | 6,592,471 | ||||||||
At fair value - Derivative financial instruments used for hedging – receivable | 4.8,4.9,13 | 27,369 | 7,400 | |||||||
Property and equipment, net | 6,654 | 6,173 | ||||||||
Intangibles, net | 3,086 | 427 | ||||||||
Other assets: | ||||||||||
Customers' liabilities under acceptances | 13 | 1,715 | 15,100 | |||||||
Accrued interest receivable | 13 | 45,296 | 45,456 | |||||||
Other assets | 5 | 25,135 | 15,794 | |||||||
Total of other assets | 72,146 | 76,350 | ||||||||
Total assets | 7,287,080 | 8,286,216 | ||||||||
Liabilities and stockholders' equity | ||||||||||
Deposits: | 6,13 | |||||||||
Noninterest-bearing - Demand | 1,325 | 639 | ||||||||
Interest-bearing - Demand | 251,211 | 243,200 | ||||||||
Time | 2,873,469 | 2,551,630 | ||||||||
Total deposits | 3,126,005 | 2,795,469 | ||||||||
At fair value – Derivative financial instruments used for hedging – payable | 4.8,4.9,13 | 34,652 | 29,889 | |||||||
Financial liabilities at fair value through profit or loss | 4.1,4.9,13 | - | 89 | |||||||
Securities sold under repurchase agreement | 4.9,7,13 | 101,403 | 114,084 | |||||||
Short-term borrowings and debt | 8.1,13 | 1,132,488 | 2,430,357 | |||||||
Long-term borrowings and debt, net | 8.2,13 | 1,831,372 | 1,881,813 | |||||||
Other liabilities: | ||||||||||
Acceptances outstanding | 13 | 1,715 | 15,100 | |||||||
Accrued interest payable | 13 | 22,000 | 17,716 | |||||||
Allowance for expected credit losses on off-balance sheet credit risk | 4.7 | 5,366 | 5,424 | |||||||
Other liabilities | 9 | 21,208 | 24,344 | |||||||
Total other liabilities | 50,289 | 62,584 | ||||||||
Total liabilities | 6,276,209 | 7,314,285 | ||||||||
Stockholders' equity: | 10,11,14 | |||||||||
Common stock | 279,980 | 279,980 | ||||||||
Treasury stock | 11 | (69,185 | ) | (73,397 | ) | |||||
Additional paid-in capital in excess of assigned value of common stock | 120,011 | 120,177 | ||||||||
Capital reserves | 95,210 | 95,210 | ||||||||
Retained earnings | 589,239 | 560,642 | ||||||||
Accumulated other comprehensive loss | 4.3,4.8,14 | (4,384 | ) | (10,681 | ) | |||||
Total stockholders' equity | 1,010,871 | 971,931 | ||||||||
Total liabilities and stockholders' equity | 7,287,080 | 8,286,216 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
3 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||
Notes | 2016 | 2015 | 2016 | 2015 | ||||||||||||||
Interest income: | 4.8 | |||||||||||||||||
Deposits | 1,142 | 564 | 3,206 | 1,484 | ||||||||||||||
At fair value through OCI | 457 | 1,355 | 1,956 | 4,944 | ||||||||||||||
At amortized cost | 61,218 | 53,789 | 179,286 | 155,758 | ||||||||||||||
Total interest income | 62,817 | 55,708 | 184,448 | 162,186 | ||||||||||||||
Interest expense: | 4.8 | |||||||||||||||||
Deposits | 5,329 | 3,287 | 14,970 | 8,478 | ||||||||||||||
Short-term borrowings and debt | 3,642 | 4,864 | 12,232 | 17,344 | ||||||||||||||
Long-term borrowings and debt | 14,026 | 10,488 | 39,722 | 28,663 | ||||||||||||||
Total interest expense | 22,997 | 18,639 | 66,924 | 54,485 | ||||||||||||||
Net interest income | 39,820 | 37,069 | 117,524 | 107,701 | ||||||||||||||
Other income: | ||||||||||||||||||
Fees and commissions, net | 3,371 | 7,461 | 10,178 | 12,870 | ||||||||||||||
Derivate financial instruments and foreign currency exchange | 4.8 | 204 | (902 | ) | (135 | ) | (397 | ) | ||||||||||
(Loss) Gain per financial instrument at fair value through profit or loss | (324 | ) | 7,709 | (4,091 | ) | 8,009 | ||||||||||||
(Loss) Gain per financial instrument at fair value through OCI | 69 | (65 | ) | (246 | ) | 364 | ||||||||||||
Gain on sale of loans at amortized cost | 87 | 208 | 490 | 720 | ||||||||||||||
Other income | 150 | 498 | 1,057 | 1,030 | ||||||||||||||
Net other income | 3,557 | 14,909 | 7,253 | 22,596 | ||||||||||||||
Total income | 43,377 | 51,978 | 124,777 | 130,297 | ||||||||||||||
Expenses: | ||||||||||||||||||
Impairment (recovery) loss from expected credit losses on loans at amortized cost | 4.6 | 5,077 | 8,761 | 17,186 | 15,380 | |||||||||||||
Impairment (recovery) loss from expected credit losses on investment securities | 4.3,4.4 | (210 | ) | (286 | ) | 276 | 543 | |||||||||||
(Recovery) Impairment loss from expected credit losses on loans commitments and financial guarantees contracts | 4.7 | (725 | ) | (6,740 | ) | (59 | ) | (5,069 | ) | |||||||||
Salaries and other employee expenses | 6,230 | 7,466 | 19,008 | 23,189 | ||||||||||||||
Depreciation of equipment and leasehold improvements | 376 | 338 | 1,039 | 1,063 | ||||||||||||||
Amortization of intangible assets | 222 | 125 | 425 | 447 | ||||||||||||||
Professional services | 1,290 | 1,206 | 2,614 | 3,182 | ||||||||||||||
Maintenance and repairs | 480 | 376 | 1,353 | 1,211 | ||||||||||||||
Other expenses | 2,646 | 3,360 | 9,234 | 9,593 | ||||||||||||||
Total expenses | 15,386 | 14,606 | 51,076 | 49,539 | ||||||||||||||
Profit for the period | 27,991 | 37,372 | 73,701 | 80,758 | ||||||||||||||
Earnings per share: | ||||||||||||||||||
Basic | 10 | 0.72 | 0.96 | 1.89 | 2.08 | |||||||||||||
Diluted | 10 | 0.71 | 0.96 | 1.88 | 2.07 | |||||||||||||
Weighted average basic shares | 10 | 39,102 | 38,969 | 39,059 | 38,909 | |||||||||||||
Weighted average diluted shares | 10 | 39,225 | 39,095 | 39,178 | 39,080 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
4 |
Notes | 2016 | 2015 | ||||||||
Profit for the period | 73,701 | 80,758 | ||||||||
Other comprehensive income (loss): | ||||||||||
Items that are or may be reclassified to consolidated statement of profit or loss: | ||||||||||
Net change in unrealized losses on financial instruments at fair value through OCI | 14 | 8,250 | (3,582 | ) | ||||||
Net change in unrealized losses on derivative financial instruments | 14 | (1,953 | ) | (2,151 | ) | |||||
Other comprehensive income (loss) | 14 | 6,297 | (5,733 | ) | ||||||
Total comprehensive income for the period | 79,998 | 75,025 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
5 |
Common stock | Treasury stock | Additional
paid- in capital in excess of assigned value of common stock | Capital
reserves | Retained
earnings | Accumulated
other comprehensive income (loss) | Total | ||||||||||||||||||||||
Balances at January 1, 2015 | 279,980 | (77,627 | ) | 119,644 | 95,210 | 501,669 | (7,837 | ) | 911,039 | |||||||||||||||||||
Profit for the period | - | - | - | - | 80,758 | - | 80,758 | |||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | (5,733 | ) | (5,733 | ) | |||||||||||||||||||
Issuance of restricted stock | - | 1,259 | (1,259 | ) | - | - | - | - | ||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 2,457 | - | - | - | 2,457 | |||||||||||||||||||||
Exercised options and stock units vested | - | 2,971 | (1,504 | ) | - | - | - | 1,467 | ||||||||||||||||||||
Dividends declared | - | - | - | - | (30,005 | ) | - | (30,005 | ) | |||||||||||||||||||
Balances at September 30, 2015 | 279,980 | (73,397 | ) | 119,338 | 95,210 | 552,422 | (13,570 | ) | 959,983 | |||||||||||||||||||
Balances at January 1, 2016 | 279,980 | (73,397 | ) | 120,177 | 95,210 | 560,642 | (10,681 | ) | 971,931 | |||||||||||||||||||
Profit for the period | - | - | - | - | 73,701 | - | 73,701 | |||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 6,297 | 6,297 | |||||||||||||||||||||
Issuance of restricted stock | - | 1,259 | (1,259 | ) | - | - | - | - | ||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 2,480 | - | - | - | 2,480 | |||||||||||||||||||||
Exercised options and stock units vested | - | 2,953 | (1,387 | ) | - | - | - | 1,566 | ||||||||||||||||||||
Dividends declared | - | - | - | - | (45,104 | ) | - | (45,104 | ) | |||||||||||||||||||
Balances at September 30, 2016 | 279,980 | (69,185 | ) | 120,011 | 95,210 | 589,239 | (4,384 | ) | 1,010,871 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
6 |
2016 | 2015 | |||||||
Cash flows from operating activities | ||||||||
Profit for the period | 73,701 | 80,758 | ||||||
Adjustments to reconcile profit for the period to net cash provided by operating activities: | ||||||||
Activities of derivative financial instruments and hedging | (18,947 | ) | (22,245 | ) | ||||
Depreciation of equipment and leasehold improvements | 1,039 | 1,094 | ||||||
Amortization of intangible assets | 425 | 416 | ||||||
Impairment loss from expected credit losses | 17,408 | (10,854 | ) | |||||
Net gain (loss) on sale of financial assets at fair value through OCI | 246 | (363 | ) | |||||
Compensation cost - share-based payment | 2,480 | 2,457 | ||||||
Interest income | (184,453 | ) | (162,186 | ) | ||||
Interest expense | 66,924 | 54,485 | ||||||
Net decrease (increase) in operating assets: | ||||||||
Net decrease (increase) in pledged deposits | (3,385 | ) | 5,355 | |||||
Financial instruments at fair value through profit or loss | 53,383 | (1,850 | ) | |||||
Net decrease (increase) in loans at amortized cost | 298,665 | (55,573 | ) | |||||
Other assets | 4,044 | 110,146 | ||||||
Net increase (decrease) in operating liabilities: | ||||||||
Net increase due to depositors | 330,536 | 608,814 | ||||||
Financial liabilities at fair value through profit or loss | (89 | ) | ||||||
Other liabilities | (16,850 | ) | (129,390 | ) | ||||
Cash provided by operating activities: | ||||||||
Interest received | 184,608 | 171,631 | ||||||
Interest paid | (62,640 | ) | (46,812 | ) | ||||
Net cash provided by operating activities | 747,095 | 605,883 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of equipment and leasehold improvements | (1,520 | ) | (427 | ) | ||||
Acquisition of intangible assets | (3,084 | ) | - | |||||
Proceeds from the redemption of of financial instruments at fair value through OCI | 77,286 | 126,090 | ||||||
Proceeds from the sale of financial instruments at fair value through OCI | 107,888 | 68,099 | ||||||
Proceeds from maturities of financial instruments at amortized cost | 44,075 | 29,923 | ||||||
Purchases of financial instruments at fair value through OCI | (91,972 | ) | (87,692 | ) | ||||
Purchases of financial instruments at amortized cost | (23,713 | ) | (35,082 | ) | ||||
Net cash provided by investing activities | 108,960 | 100,911 | ||||||
Cash flows from financing activities: | ||||||||
Net decrease in short-term borrowings and debt and securities sold under repurchase agreements | (1,310,550 | ) | (931,125 | ) | ||||
Proceeds from long-term borrowings and debt | 374,859 | 811,276 | ||||||
Repayments of long-term borrowings and debt | (425,301 | ) | (429,004 | ) | ||||
Dividends paid | (45,104 | ) | (30,005 | ) | ||||
Exercised stock options | 1,566 | 1,467 | ||||||
Net cash used in financing activities | (1,404,530 | ) | (577,391 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (548,475 | ) | 129,403 | |||||
Cash and cash equivalents at beginning of the period | 1,267,302 | 741,305 | ||||||
Cash and cash equivalents at end of the period | 718,827 | 870,708 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
7 |
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 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 officially 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 Superintendency 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 the Law Decree No. 9 of February 26, 1998, modified by the 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 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. 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 two subsidiaries: Bladex Representacao Ltda. and Bladex Investimentos Ltda. |
- | Bladex Representaçao Ltda., incorporated under the laws of Brazil on January 7, 2000, acts as the Bank’s representative office in Brazil. Bladex Representacao Ltda. is 99.999% owned by Bladex Head Office and the remaining 0.001% owned by Bladex Holdings Inc. |
- | Bladex Investimentos Ltda. was incorporated under the laws of Brazil on May 3, 2011. Bladex Head Office owned 99% of Bladex Investimentos Ltda., and Bladex Holdings Inc. owned the remaining 1%. This company had invested substantially all of its assets in an investment fund, Alpha 4x Latam Fundo de Investimento Multimercado, incorporated in Brazil (“the Brazilian Fund”), registered with the Brazilian Securities Commission (“CVM”, for its acronym in Portuguese). Bladex Investimentos Ltda. merged with Bladex Representacao Ltda. on April 2016, being the latter the extinct company under Brazilian law and prevailing the acquiring company Bladex Representacao Ltda. |
- | Bladex Development Corp. was incorporated under the laws 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. 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. |
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) |
1. | Corporate information (continued) |
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, and Monterrey, Mexico; in Lima, Peru; and in Bogota, Colombia.
These unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors on October 18, 2016.
2. | Basis of preparation of the consolidated financial statements |
2.1 | Statement of compliance |
These unaudited 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 of the disclosures required by IFRS for annual period consolidated financial statements are not included herein, these unaudited 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, 2015, contained in the Bank’s annual audited consolidated financial statements. The unaudited condensed consolidated interim statements of profit or loss, profit or loss and other comprehensive income, changes in equity and cash flows for the periods presented are not necessarily indicative of results expected for any future period.
2.2. | Future changes in applicable accounting policies |
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Bank financial statements are disclosed below. The Bank intends to adopt these standards, if applicable, when they become effective.
IFRS 16 Leases
IFRS 16 was issued in January 2016 and sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.
IFRS 16 is effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted for entities that apply IFRS 15 Revenue from Contracts with Customers at or before the date of initial application of IFRS 16. IFRS 16 supersedes IAS 17 – Leases. The Bank is evaluating the potential impact of this new standard in its consolidated financial statements.
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. | Cash and cash equivalents |
September 30, 2016 | December 31, 2015 | |||||||
Cash and due from banks | 287,044 | 2,601 | ||||||
Interest-bearing deposits in banks | 467,832 | 1,297,365 | ||||||
Total | 754,876 | 1,299,966 | ||||||
Less: | ||||||||
Pledged deposits | 36,049 | 32,664 | ||||||
Total cash and cash equivalents | 718,827 | 1,267,302 |
Interest-bearing deposits in banks
Demand deposits
As of September 30, 2016 and December 31, 2015, cash in banks balances correspond to bank deposits, bearing interest based on the daily rates determined by banks for between 0.01% and 0.40% and 0.01% and 0.35%, respectively.
Time deposits
As of September 30, 2016 and December 31, 2015, cash equivalents balances correspond to demand deposits (overnight), bearing an average interest rate of 0.50% to 0.57% and 0.40% to 0.52%, respectively.
On September 30, 2016 and December 31, 2015 the New York Agency had a pledged deposit with a carrying value of $2.8 million and $3.3 million, respectively, with the New York State Banking Department, as required by law since March 1994.
As of September 30, 2016 and December 31, 2015, the Bank had pledged deposits with a carrying value of $33.2 million and $29.3 million, respectively, to secure derivative financial instruments transactions and repurchase agreements.
4. | Financial instruments |
4.1 | Financial instruments at FVTPL - Fair value through profit or loss |
The fair value of financial liabilities at FVTPL is as follows:
September
30, | December 31, 2015 | |||||||
Assets | ||||||||
Foreign exchange forward | 28 | - | ||||||
Total | 28 | - | ||||||
Liabilities | ||||||||
Interest rate swaps | - | 15 | ||||||
Foreign exchange forward | - | 74 | ||||||
Total | - | 89 |
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) |
4. | Financial instruments |
4.1 | Financial instruments at FVTPL - Fair value through profit or loss (continued) |
As of September 30, 2016 and December 31, 2015, information on the nominal amounts of derivative financial instruments at FVTPL is as follows:
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
Nominal | Fair Value | Nominal | Fair Value | |||||||||||||||||||||
Amount | Asset | Liability | Amount | Asset | Liability | |||||||||||||||||||
Interest rate swaps | - | - | - | 14,000 | - | 15 | ||||||||||||||||||
Foreign exchange forward | 1,878 | 28 | - | 1,675 | - | 74 | ||||||||||||||||||
Total | 1,878 | 28 | - | 15,675 | - | 89 |
4.2 | Investment Funds at FVTPL - Fair value through profit or loss |
The Bank maintained an investment in the Alpha4X Feeder Fund (the “Feeder”) which was organized under a “Feeder-Master” structure. Under this structure, the Feeder invested all of its assets in the Master which in turn invested in various assets on behalf of its investor. At December 31, 2015, the investment funds consisted of the net asset value (NAV) of Bladex’s investment in the Feeder and in the Brazilian Fund.
The changes of the Bank´s investment in the Feeder were recorded in the consolidated statement of profit or loss of that fund in the “Gain (loss) per financial instruments at fair value through profit and loss” line item. The Feeder is not consolidated in the Bank’s financial statements as a result of the evaluation of control as per IFRS 10 “Consolidated Financial Statements” according to which the existing rights on the fund did not give the Bank the ability to direct the relevant activities of the fund nor the ability to use its power over the investee to affect its return. At December 31, 2015 the Bank had a participation in that fund of 47.71%.
Bladex also reported the changes in the NAV of the Brazilian Fund in the “Gain (loss) per financial instruments at fair value through profit and loss" line item, which the Bank did not consolidate, because the existing rights on this fund did not give the Bank the ability to direct its relevant activities nor the ability to use its power over the investee to affect its return. This investment was adjusted to recognize the Bank's participation in the profits and losses of the fund in the line “gain (loss) per financial instruments at fair value through profit or loss” of the consolidated statement of profit or loss.
The following table summarizes the balances of investments in investment funds:
September 30, 2016 | December 31, 2015 | |||||||
Alpha4X Feeder Fund | - | 49,585 | ||||||
Alpha4X Latam Fundo de Investimento and Multimercado | - | 3,826 | ||||||
- | 53,411 |
The Bank remained committed to being an investor of these funds until March 31, 2016 and was later redeemed completely.
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) |
4. | Financial instruments (continued) |
4.3 | Securities at fair value through other comprehensive income |
The amortized cost, related unrealized gross gain (loss) and fair value of securities at fair value through other comprehensive income by country risk and type of debt are as follows:
September 30, 2016 | ||||||||||||||||
Amortized | Unrealized | |||||||||||||||
Cost | Gain | Loss | Fair Value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 5,253 | - | 53 | 5,200 | ||||||||||||
Peru | 4,247 | 176 | - | 4,423 | ||||||||||||
Venezuela | 18,265 | 769 | - | 19,034 | ||||||||||||
27,765 | 945 | 53 | 28,657 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 8,221 | - | 131 | 8,090 | ||||||||||||
Chile | 5,241 | 120 | - | 5,361 | ||||||||||||
Colombia | 4,509 | 71 | - | 4,580 | ||||||||||||
Trinidad and Tobago | 9,389 | - | 374 | 9,015 | ||||||||||||
27,360 | 191 | 505 | 27,046 | |||||||||||||
55,125 | 1,136 | 558 | 55,703 |
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) |
4. | Financial instruments (continued) |
4.3 | Securities at fair value through other comprehensive income (continued) |
December 31, 2015 | ||||||||||||||||
Amortized | Unrealized | |||||||||||||||
Cost | Gain | Loss | Fair Value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 31,831 | - | 3,000 | 28,831 | ||||||||||||
Chile | 8,205 | - | 209 | 7,996 | ||||||||||||
Colombia | 17,815 | - | 7,110 | 10,705 | ||||||||||||
Honduras | 7,195 | - | 61 | 7,134 | ||||||||||||
Panama | 4,648 | - | 73 | 4,575 | ||||||||||||
Peru | 7,339 | - | 64 | 7,275 | ||||||||||||
Venezuela | 18,392 | - | 93 | 18,299 | ||||||||||||
95,425 | - | 10,610 | 84,815 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 11,625 | - | 1,285 | 10,340 | ||||||||||||
Chile | 10,536 | - | 323 | 10,213 | ||||||||||||
Colombia | 12,046 | - | 670 | 11,376 | ||||||||||||
Mexico | 17,272 | - | 681 | 16,591 | ||||||||||||
Trinidad and Tobago | 9,705 | - | 1,237 | 8,468 | ||||||||||||
61,184 | - | 4,196 | 56,988 | |||||||||||||
156,609 | - | 14,806 | 141,803 |
As of September 30, 2016 and December 31, 2015 securities at fair value through OCI with a carrying value of $52.9 million and $87.6 million, respectively, were pledged to secure repurchase transactions accounted for as secured financings.
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) |
4. | Financial instruments (continued) |
4.3 | Securities at fair value through other comprehensive income (continued) |
The following table discloses those securities that had unrealized losses for a period less than 12 months and for 12 months or longer:
September 30, 2016 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Gross Losses | Fair Value | Unrealized Gross Losses | Fair Value | Unrealized Gross Losses | |||||||||||||||||||
Corporate debt | - | - | 5,200 | 53 | 5,200 | 53 | ||||||||||||||||||
Sovereign debt | - | - | 17,105 | 505 | 17,105 | 505 | ||||||||||||||||||
Total | - | - | 22,305 | 558 | 22,305 | 558 |
December 31, 2015 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Gross Losses | Fair Value | Unrealized Gross Losses | Fair Value | Unrealized Gross Losses | |||||||||||||||||||
Corporate debt | 63,611 | 1,010 | 21,204 | 9,600 | 84,815 | 10,610 | ||||||||||||||||||
Sovereign debt | 23,468 | 846 | 33,520 | 3,350 | 56,988 | 4,196 | ||||||||||||||||||
Total | 87,079 | 1,856 | 54,724 | 12,950 | 141,803 | 14,806 |
The following table presents the realized gains and losses on sale of securities at fair value through other comprehensive income:
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Realized gain on sale of securities | 72 | 30 | 7,544 | 466 | ||||||||||||
Realized loss on sale of securities | (3 | ) | (95 | ) | (7,790 | ) | (102 | ) | ||||||||
Net gain (loss) on sale of securities at fair value through other comprehensive income | 69 | (65 | ) | (246 | ) | 364 |
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) |
4. | Financial instruments (continued) |
4.3 | Securities at fair value through other comprehensive income (continued) |
Securities at fair value through other comprehensive income classified by issuer’s credit quality indicators are as follows:
Rating(1) | September 30, 2016 | December 31, 2015 | ||||||
1-4 | 55,703 | 133,989 | ||||||
5-6 | - | 6,224 | ||||||
7 | - | 1,590 | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 55,703 | 141,803 |
(1) Current ratings as of September 30, 2016 and December 31, 2015, respectively.
The amortized cost and fair value of securities at fair value through other comprehensive income by contractual maturity as of September 30, 2016 and December 31, 2015 are shown in the following tables:
September 30, 2016 | ||||||||
Amortized Cost | Fair Value | |||||||
Due within 1 year | 21,188 | 21,866 | ||||||
After 1 year but within 5 years | 28,639 | 28,579 | ||||||
After 5 years but within 10 years | 5,298 | 5,258 | ||||||
55,125 | 55,703 |
December 31, 2015 | ||||||||
Amortized Cost | Fair Value | |||||||
Due within 1 year | 21,068 | 20,212 | ||||||
After 1 year but within 5 years | 79,689 | 69,625 | ||||||
After 5 years but within 10 years | 55,852 | 51,966 | ||||||
156,609 | 141,803 |
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) |
4. | Financial instruments (continued) |
4.3 | Securities at fair value through other comprehensive income (continued) |
The allowance for expected credit losses relating to securities at fair value through other comprehensive income, which is recorded in equity under accumulated other comprehensive income (loss), is as follow:
Stage 1 (1) | Stage 2 (2) (collectively assessed) | Stage 2 (2) (individually assessed) | Stage 3 (3) | Total | ||||||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 234 | 178 | - | 6,737 | 7,149 | |||||||||||||||
Transfer to lifetime expected credit losses | (30 | ) | 456 | - | - | 426 | ||||||||||||||
Transfer to credit-impaired financial assets | - | - | - | - | - | |||||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | - | |||||||||||||||
Net effect of changes in reserve for expected credit losses | (2 | ) | (107 | ) | - | - | (109 | ) | ||||||||||||
Financial assets that have been derecognized during the period | (162 | ) | (67 | ) | - | (6,737 | ) | (6,966 | ) | |||||||||||
Changes due to financial instruments recognized as of December 31, 2015: | (194 | ) | 282 | - | (6,737 | ) | (6,649 | ) | ||||||||||||
New financial assets originated or purchased | 28 | - | - | - | 28 | |||||||||||||||
Allowance for expected credit losses as of September 30, 2016 | 68 | 460 | - | - | 528 |
Stage 1 (1) | Stage 2 (2) (collectively assessed) | Stage 2 (2) (individually assessed) | Stage 3 (3) | Total | ||||||||||||||||
Allowance for expected credit losses as of December 31, 2014 | 701 | 1,408 | - | - | 2,109 | |||||||||||||||
Transfer to lifetime expected credit losses | (5,507 | ) | 5,507 | - | - | - | ||||||||||||||
Transfer to credit-impaired financial assets | - | (6,737 | ) | - | 6,737 | - | ||||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | - | |||||||||||||||
Financial assets that have been derecognized during the period | (277 | ) | - | - | - | (277 | ) | |||||||||||||
Changes due to financial instruments recognized as of December 31, 2014: | (5,784 | ) | (1,230 | ) | - | 6,737 | (277 | ) | ||||||||||||
New financial assets originated or purchased | 5,317 | - | - | - | 5,317 | |||||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 234 | 178 | - | 6,737 | 7,149 |
(1) | 12-month expected credit losses |
(2) | Lifetime expected credit losses |
(3) | Credit-impaired financial assets (lifetime expected credit losses) |
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) |
4. | Financial instruments (continued) |
4.4 | Securities at amortized cost |
The amortized cost, related unrealized gross gain (loss) and fair value of these securities by country risk and type of debt are as follows:
September 30, 2016 | ||||||||||||||||
Amortized | Unrealized | |||||||||||||||
Cost (1) | Gross Gain | Gross Loss | Fair Value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 4,623 | - | 84 | 4,539 | ||||||||||||
Panama | 3,000 | - | - | 3,000 | ||||||||||||
7,623 | - | 84 | 7,539 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 11,223 | 18 | 203 | 11,038 | ||||||||||||
Colombia | 30,009 | 378 | - | 30,387 | ||||||||||||
Mexico | 31,944 | - | 577 | 31,367 | ||||||||||||
Panama | 8,721 | 147 | - | 8,868 | ||||||||||||
81,897 | 543 | 780 | 81,660 | |||||||||||||
89,520 | 543 | 864 | 89,199 |
December 31, 2015 | ||||||||||||||||
Amortized | Unrealized | |||||||||||||||
Cost (2) | Gross Gain | Gross Loss | Fair Value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 1,484 | - | 383 | 1,101 | ||||||||||||
Costa Rica | 5,000 | - | - | 5,000 | ||||||||||||
Panama | 20,008 | 45 | - | 20,053 | ||||||||||||
26,492 | 45 | 383 | 26,154 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 21,903 | - | 3,260 | 18,643 | ||||||||||||
Colombia | 30,599 | - | 1,530 | 29,069 | ||||||||||||
Mexico | 20,871 | - | 1,684 | 19,187 | ||||||||||||
Panama | 8,876 | 4 | - | 8,880 | ||||||||||||
82,249 | 4 | 6,474 | 75,779 | |||||||||||||
108,741 | 49 | 6,857 | 101,933 |
(1) | Amounts do not include allowance for expected credit losses of US$654. |
(2) | Amounts do not include allowance for expected credit losses of US$526. |
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) |
4. | Financial instruments (continued) |
4.4 | Securities at amortized cost (continued) |
The amortized cost and fair value of securities at amortized cost by contractual maturity as of September 30, 2016 and December 31, 2015, gross of reserve for expected credit losses, are shown in the following tables:
September 30, 2016 | ||||||||
Amortized Cost | Fair Value | |||||||
Due within 1 year | 4,009 | 4,027 | ||||||
After 1 year but within 5 years | 80,206 | 79,903 | ||||||
After 5 years but within 10 years | 5,305 | 5,269 | ||||||
89,520 | 89,199 |
December 31, 2015 | ||||||||
Amortized Cost | Fair Value | |||||||
Due within 1 year | 28,454 | 28,474 | ||||||
After 1 year but within 5 years | 43,236 | 39,206 | ||||||
After 5 years but within 10 years | 37,051 | 34,253 | ||||||
108,741 | 101,933 |
As of September 30, 2016 and December 31, 2015 securities at amortized cost with a carrying value of $79.3 million and $56.3 million, respectively, were pledged to secure repurchase transactions accounted for as secured financings.
Securities at amortized cost classified by issuer’s credit quality indicators are as follows:
Rating(1) | September 30, 2016 | December 31, 2015 | ||||||
1-4 | 88,037 | 94,257 | ||||||
5-6 | 1,483 | 14,484 | ||||||
7 | - | - | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 89,520 | 108,741 |
(1) | Current ratings as of September 30, 2016 and December 31, 2015, respectively. |
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) |
4. | Financial instruments (continued) |
4.4 | Securities at amortized cost (continued) |
The allowance for expected credit losses relating to securities at amortized cost is as follow:
Stage 1 (1) | Stage 2 (2) (collectively assessed) | Stage 2 (2) (individually assessed) | Stage 3 (3) | Total | ||||||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 348 | 178 | - | - | 526 | |||||||||||||||
Transfer to lifetime expected credit losses | (43 | ) | 444 | - | - | 401 | ||||||||||||||
Transfer to credit-impaired financial assets | - | - | - | - | - | |||||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | - | |||||||||||||||
Net effect of changes in reserve for expected credit losses | 7 | (66 | ) | - | - | (59 | ) | |||||||||||||
Financial assets that have been derecognized during the period | (302 | ) | (28 | ) | - | - | (330 | ) | ||||||||||||
Changes due to financial instruments recognized as of December 31, 2015: | (338 | ) | 350 | - | - | 12 | ||||||||||||||
New financial assets originated or purchased | 116 | - | - | - | 116 | |||||||||||||||
Allowance for expected credit losses as of September 30, 2016 | 126 | 528 | - | - | 654 |
Stage 1 (1) | Stage 2 (2) (collectively assessed) | Stage 2 (2) (individually assessed) | Stage 3 (3) | Total | ||||||||||||||||
Allowance for expected credit losses as of December 31, 2014 | 276 | - | - | - | 276 | |||||||||||||||
Transfer to lifetime expected credit losses | (178 | ) | 178 | - | - | - | ||||||||||||||
Transfer to credit-impaired financial assets | - | - | - | - | - | |||||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | - | |||||||||||||||
Financial assets that have been derecognized during the period | (207 | ) | - | - | - | (207 | ) | |||||||||||||
Changes due to financial instruments recognized as of December 31, 2014: | (385 | ) | 178 | - | - | (207 | ) | |||||||||||||
New financial assets originated or purchased | 457 | - | - | - | 457 | |||||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 348 | 178 | - | - | 526 |
(1) | 12-month expected credit losses |
(2) | Lifetime expected credit losses |
(3) | Credit-impaired financial assets (lifetime expected credit losses) |
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) |
4. | Financial instruments (continued) |
4.5 | Recognition and derecognition of financial assets |
During the period ended September 30, 2016 and 2015, the Bank sold certain financial instruments measured at amortized cost. These sales were made on the basis of compliance with the Bank's strategy to optimize the loan portfolio.
The amounts and gains arising from the derecognition of these financial instruments are presented in the following table. These gains are presented within the line “gain on sale of loans” in the consolidated statement of profit or loss.
Assignments and Participations | Gains | |||||||
For the period ended September 30, 2016 | 84,075 | 435 | ||||||
For the period ended September 30, 2015 | 63,938 | 336 |
4.6 | Loans – at amortized cost |
The following table set forth details of the Bank’s gross loan portfolio:
September 30, 2016 | December 31, 2015 | |||||||
Corporations: | ||||||||
Private | 2,895,070 | 3,254,792 | ||||||
State-owned | 909,145 | 461,573 | ||||||
Banking and financial institutions: | ||||||||
Private | 1,709,638 | 1,974,960 | ||||||
State-owned | 557,163 | 612,677 | ||||||
Middle-market companies: | ||||||||
Private | 322,366 | 387,747 | ||||||
Total | 6,393,382 | 6,691,749 |
The composition of the gross loan portfolio by industry is as follows:
September 30, 2016 | December 31, 2015 | |||||||
Banking and financial institutions | 2,266,801 | 2,587,637 | ||||||
Industrial | 1,163,907 | 1,142,385 | ||||||
Oil and petroleum derived products | 1,124,504 | 828,355 | ||||||
Agriculture | 1,034,418 | 1,140,124 | ||||||
Services | 502,960 | 670,013 | ||||||
Mining | 60,000 | 110,655 | ||||||
Others | 240,792 | 212,580 | ||||||
Total | 6,393,382 | 6,691,749 |
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) |
4. | Financial instruments (continued) |
4.6 | Loans – at amortized cost (continued) |
Loans are reported at their amortized cost considering the principal outstanding amounts net of unearned interest, deferred fees and allowance for expected credit losses.
The amortization of net unearned interest and deferred fees are recognized as an adjustment to the related loan yield using the effective interest rate method.
The unearned discount interest and deferred commission amounted to $8,695 and $9,304 at September 30, 2016 and December 31, 2015, respectively
Loans classified by borrower’s credit quality indicators are as follows:
September 30, 2016 | ||||||||||||||||||||||||
Corporations | Banking and financial institutions | Middle-market companies | ||||||||||||||||||||||
Rating(1) | Private | State-owned | Private | State-owned | Private | Total | ||||||||||||||||||
1-4 | 1,980,670 | 748,040 | 1,456,785 | 250,304 | 177,004 | 4,612,803 | ||||||||||||||||||
5-6 | 861,636 | 161,105 | 252,853 | 306,859 | 110,362 | 1,692,815 | ||||||||||||||||||
7 | 38,400 | - | - | - | - | 38,400 | ||||||||||||||||||
8 | - | - | - | - | 35,000 | 35,000 | ||||||||||||||||||
9 | 10,056 | - | - | - | - | 10,056 | ||||||||||||||||||
10 | 4,308 | - | - | - | - | 4,308 | ||||||||||||||||||
Total | 2,895,070 | 909,145 | 1,709,638 | 557,163 | 322,366 | 6,393,382 |
December 31, 2015 | ||||||||||||||||||||||||
Corporations | Banking and financial institutions | Middle-market companies | ||||||||||||||||||||||
Rating(1) | Private | State-owned | Private | State-owned | Private | Total | ||||||||||||||||||
1-4 | 2,644,758 | 351,216 | 1,757,668 | 309,559 | 212,746 | 5,275,947 | ||||||||||||||||||
5-6 | 558,612 | 110,357 | 217,292 | 303,118 | 174,094 | 1,363,473 | ||||||||||||||||||
7 | 46,716 | - | - | - | - | 46,716 | ||||||||||||||||||
8 | - | - | - | - | - | - | ||||||||||||||||||
9 | - | - | - | - | - | - | ||||||||||||||||||
10 | 4,706 | - | - | - | 907 | 5,613 | ||||||||||||||||||
Total | 3,254,792 | 461,573 | 1,974,960 | 612,677 | 387,747 | 6,691,749 |
(1) | Current ratings as of September 30, 2016 and December 31, 2015, respectively. |
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) |
4. | Financial instruments (continued) |
4.6 | Loans – at amortized cost (continued) |
The following table provides a breakdown of gross loans by country risk:
September 30, 2016 | December 31, 2015 | |||||||
Country: | ||||||||
Argentina | 297,105 | 142,437 | ||||||
Belgium | - | 12,629 | ||||||
Bermuda | - | 19,600 | ||||||
Bolivia | 19,199 | 19,911 | ||||||
Brazil | 1,182,946 | 1,605,497 | ||||||
Chile | 145,177 | 195,290 | ||||||
Colombia | 673,754 | 620,547 | ||||||
Costa Rica | 434,363 | 341,490 | ||||||
Dominican Republic | 179,116 | 384,353 | ||||||
Ecuador | 194,989 | 169,164 | ||||||
El Salvador | 117,270 | 68,465 | ||||||
France | 1,500 | 6,000 | ||||||
Germany | 65,000 | 97,000 | ||||||
Guatemala | 374,959 | 457,700 | ||||||
Honduras | 91,643 | 118,109 | ||||||
Jamaica | 35,578 | 16,520 | ||||||
Mexico | 812,691 | 788,893 | ||||||
Nicaragua | 32,043 | 16,820 | ||||||
Panama | 480,312 | 455,405 | ||||||
Paraguay | 113,683 | 116,348 | ||||||
Peru | 605,923 | 511,250 | ||||||
Singapore | 50,552 | 11,655 | ||||||
Switzerland | 38,000 | 44,650 | ||||||
Trinidad and Tobago | 185,022 | 200,000 | ||||||
United States of America | 66,557 | 53,516 | ||||||
Uruguay | 196,000 | 218,500 | ||||||
Total | 6,393,382 | 6,691,749 |
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) |
4. | Financial instruments (continued) |
4.6 | Loans – at amortized cost (continued) |
The remaining loan maturities are summarized as follows:
September 30, 2016 | December 31, 2015 | |||||||
Current: | ||||||||
Up to 1 month | 983,436 | 1,031,608 | ||||||
From 1 month to 3 months | 1,203,625 | 1,336,901 | ||||||
From 3 months to 6 months | 1,430,788 | 1,094,885 | ||||||
From 6 months to 1 year | 1,032,822 | 1,170,114 | ||||||
From 1 year to 2 years | 835,098 | 1,000,553 | ||||||
From 2 years to 5 years | 783,283 | 967,416 | ||||||
More than 5 years | 36,566 | 37,943 | ||||||
6,305,618 | 6,639,420 | |||||||
Delinquent | 4,000 | - | ||||||
Impaired | 83,764 | 52,329 | ||||||
Total | 6,393,382 | 6,691,749 |
The fixed and floating interest rate distribution of the loan portfolio is as follows:
September 30, 2016 | December 31, 2015 | |||||||
Fixed interest rates | 2,964,135 | 3,177,147 | ||||||
Floating interest rates | 3,429,247 | 3,514,602 | ||||||
Total | 6,393,382 | 6,691,749 |
As of September 30, 2016 and December 31, 2015, 86% and 90%, respectively, of the loan portfolio at fixed interest rates have remaining maturities of less than 180 days.
An analysis of credit- impaired balances as of September 30, 2016 and December 31, 2015 is detailed as follows:
September 30, 2016 | 2016 | |||||||||||||||||||
Recorded investment | Unpaid principal balance | Related allowance Stage 3 | Average principal loan balance | Interest income recognized | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Private corporations | 48,764 | 26,762 | 33,993 | 21,591 | 321 | |||||||||||||||
Middle-market companies | 35,000 | 35,000 | 8,750 | 13,103 | 1,240 | |||||||||||||||
Total | 83,764 | 61,762 | 42,743 | 34,694 | 1,561 |
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) |
4. | Financial instruments (continued) |
4.6 | Loans – at amortized cost (continued) |
December 31, 2015 | 2015 | |||||||||||||||||||
Recorded investment | Unpaid principal balance | Related allowance Stage 3 | Average principal loan balance | Interest income recognized | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Private corporations | 51,422 | 4,706 | 20,703 | 9,946 | 230 | |||||||||||||||
Middle-market companies | 907 | 907 | 448 | 7,472 | 49 | |||||||||||||||
Total | 52,329 | 5,613 | 21,151 | 17,418 | 279 |
The following is a summary of information of interest amounts recognized using the effective interest rate method on the net carrying amount for those financial assets in Stage 3:
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Interest revenue calculated on the net carrying amount(net of credit allowance) | 720 | 75 | 1,561 | 215 |
The following table presents an aging analysis of the loan portfolio:
September 30, 2016 | ||||||||||||||||||||||||||||||||
91-120 days | 121-150 days | 151-180 days | Greater than 180 days | Total Past due | Delinquent | Current | Total Loans | |||||||||||||||||||||||||
Corporations | 2,449 | 1,502 | - | 32,813 | 36,764 | 4,000 | 3,805,116 | 3,845,880 | ||||||||||||||||||||||||
Banking and financial institutions | - | - | - | - | - | - | 2,225,136 | 2,225,136 | ||||||||||||||||||||||||
Middle-market companies | - | - | - | 35,000 | 35,000 | - | 287,366 | 322,366 | ||||||||||||||||||||||||
Total | 2,449 | 1,502 | - | 67,813 | 71,764 | 4,000 | 6,317,618 | 6,393,382 |
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) |
4. | Financial instruments (continued) |
4.6 | Loans – at amortized cost (continued) |
December 31, 2015 | ||||||||||||||||||||||||||||||||
91-120 days | 121-150 days | 151-180 days | Greater | Total Past due | Delinquent | Current | Total Loans | |||||||||||||||||||||||||
Corporations | - | - | - | 4,706 | 4,706 | - | 3,711,659 | 3,716,365 | ||||||||||||||||||||||||
Banking and financial institutions | - | - | - | - | - | - | 2,587,637 | 2,587,637 | ||||||||||||||||||||||||
Middle-market companies | - | - | - | 907 | 907 | - | 386,840 | 387,747 | ||||||||||||||||||||||||
Total | - | - | - | 5,613 | 5,613 | - | 6,686,136 | 6,691,749 |
As of September 30, 2016 and December 31, 2015 the Bank had credit transactions in the normal course of business with 14% and 16%, of its Class “A” and “B” stockholders. All transactions were made based on arm’s-length terms and subject to prevailing commercial criteria and market rates and were subject to all of the Bank’s Corporate Governance and control procedures. As of September 30, 2016 and December 31, 2015, approximately 7% and 9%, respectively, of the outstanding loan portfolio was placed with the Bank’s Class “A” and “B” stockholders and their related parties. As of September 30, 2016, the Bank was not directly or indirectly owned or controlled by another corporation or any foreign government, and no Class “A” or “B” shareholder was the registered owner of more than 3.5% of the total outstanding shares of the voting capital stock of the Bank.
The allowances for expected credit losses related to loans at amortized cost are as follows:
Stage 1 (1) | Stage 2 (2) (collectively assessed) | Stage 2 (2) (individually assessed) | Stage 3 (3) | Total | ||||||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 59,214 | 9,609 | - | 21,151 | 89,974 | |||||||||||||||
Transfer to lifetime expected credit losses | (8,743 | ) | 5,387 | 3,357 | - | 1 | ||||||||||||||
Transfer to credit-impaired financial assets | (7 | ) | (3,468 | ) | (2,024 | ) | 5,499 | - | ||||||||||||
Transfer to 12-month expected credit losses | 2,038 | (2,077 | ) | - | 38 | (1 | ) | |||||||||||||
Net effect of changes in reserve for expected credit losses | (37,117 | ) | 27,989 | 1,265 | 16,962 | 9,099 | ||||||||||||||
Financial assets that have been derecognized during the period | (52,417 | ) | (8,515 | ) | - | - | (60,932 | ) | ||||||||||||
Changes due to financial instruments recognized as of December 31, 2015: | (96,246 | ) | 19,316 | 2,598 | 22,499 | (51,833 | ) | |||||||||||||
New financial assets originated or purchased | 69,101 | - | - | - | 69,101 | |||||||||||||||
Write-offs | - | - | - | (907 | ) | (907 | ) | |||||||||||||
Allowance for expected credit losses as of September 30, 2016 | 32,069 | 28,925 | 2,598 | 42,743 | 106,335 |
(1) | 12-month expected credit losses |
(2) | Lifetime expected credit losses |
(3) | Credit-impaired financial assets (lifetime expected credit losses) |
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) |
4. | Financial instruments (continued) |
4.6 | Loans – at amortized cost (continued) |
Stage 1 (1) | Stage 2 (2) (collectively assessed) | Stage 2 (2) (individually assessed) | Stage 3 (3) | Total | ||||||||||||||||
Allowance for expected credit losses as of December 31, 2014 | 37,469 | 37,564 | - | 2,654 | 77,687 | |||||||||||||||
Transfer to lifetime expected credit losses | (9,147 | ) | 9,147 | - | - | - | ||||||||||||||
Transfer to credit-impaired financial assets | - | (24,186 | ) | - | 24,186 | - | ||||||||||||||
Transfer to 12-month expected credit losses | 101 | (101 | ) | - | - | - | ||||||||||||||
Financial assets that have been derecognized during the period | (31,774 | ) | (12,815 | ) | - | - | (44,589 | ) | ||||||||||||
Changes due to financial instruments recognized as of December 31, 2014: | (40,820 | ) | (27,955 | ) | - | 24,186 | (44,589 | ) | ||||||||||||
New financial assets originated or purchased | 62,565 | - | - | - | 62,565 | |||||||||||||||
Write-offs | - | - | - | (5,689 | ) | (5,689 | ) | |||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 59,214 | 9,609 | - | 21,151 | 89,974 |
(1) | 12-month expected credit losses |
(2) | Lifetime expected credit losses |
(3) | Credit-impaired financial assets (lifetime expected credit losses) |
4.7 | Instruments with off-balance sheet credit risk |
In the normal course of business, to meet the financing needs of its customers, the Bank is party to instruments with off-balance sheet credit risk. These instruments involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the consolidated 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 instruments with off-balance sheet credit risk are as follows:
September 30, 2016 | December 31, 2015 | |||||||
Confirmed letters of credit | 103,119 | 99,031 | ||||||
Stand-by letters of credit and guaranteed –Commercial risk | 138,672 | 158,599 | ||||||
Credit commitments | 50,958 | 189,820 | ||||||
Total | 292,749 | 447,450 |
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) |
4. | Financial instruments (continued) |
4.7 | Instruments with off-balance sheet credit risk (continued) |
As of September 30, 2016 and December 31, 2015 the remaining maturity profile of the Bank’s outstanding instruments with off-balance sheet credit risk is as follows:
Maturities | September 30, 2016 | December 31, 2015 | ||||||
Up to 1 year | 257,968 | 424,687 | ||||||
From 1 to 2 years | 34,203 | 22,185 | ||||||
From 2 to 5 years | - | - | ||||||
More than 5 years | 578 | 578 | ||||||
292,749 | 447,450 |
Instruments with off-balance sheet credit risk classified by issuer’s credit quality indicators are as follows:
Rating(1) | September 30, 2016 | December 31, 2015 | ||||||
1-4 | 112,824 | 276,860 | ||||||
5-6 | 115,513 | 170,590 | ||||||
7 | 64,412 | - | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 292,749 | 447,450 |
(1) Current ratings as of September 30, 2016 and December 31, 2015, respectively.
Letters of credit and guarantees
The Bank, on behalf of its clients base, advises and confirms letters of credit to facilitate foreign trade transactions. When confirming letters of credit, the Bank adds its own unqualified assurance that the issuing bank will pay and that if the issuing bank does not honor drafts drawn on the letter of credit, the Bank will. The Bank provides stand-by letters of credit and guarantees, which are issued on behalf of institutional clients in connection with financing between its clients and third parties. The Bank applies the same credit policies used in its lending process, and once issued the commitment is irrevocable and remains valid until its expiration. Credit risk arises from the Bank's obligation to make payment in the event of a client’s contractual default to a third party. Risks associated with stand-by letters of credit and guarantees are included in the evaluation of the Bank’s overall credit risk.
Credit commitments
Commitments to extend credit are binding legal agreements to lend to clients. Commitments generally have fixed expiration dates or other termination clauses and require payment of a fee to the Bank. As some commitments expire without being drawn down, the total commitment amounts do not necessarily represent future cash requirements.
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) |
4. | Financial instruments (continued) |
4.7 | Instruments with off-balance sheet credit risk (continued) |
As of September 30, 2016 and December 31, 2015 the breakdown of the Bank’s off-balance sheet exposure by country risk is as follows:
September 30, 2016 | December 31 2015 | |||||||
Country: | ||||||||
Argentina | - | 10,145 | ||||||
Bolivia | 158 | 1,261 | ||||||
Brazil | - | 17,291 | ||||||
Colombia | 85,831 | 96,085 | ||||||
Costa Rica | 4,005 | - | ||||||
Dominican Republic | 5,183 | 4,527 | ||||||
Ecuador | 90,352 | 88,585 | ||||||
El Salvador | 25 | 145 | ||||||
Guatemala | 1,300 | - | ||||||
Honduras | 484 | 876 | ||||||
Mexico | 13,727 | 46,994 | ||||||
Panama | 70,368 | 136,022 | ||||||
Paraguay | 5 | 43 | ||||||
Peru | 20,241 | 19,018 | ||||||
Singapore | - | 25,000 | ||||||
Switzerland | 1,000 | 1,000 | ||||||
United Kingdom | 70 | 70 | ||||||
Uruguay | - | 388 | ||||||
Total | 292,749 | 447,450 |
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) |
4. | Financial instruments (continued) |
4.7 | Instruments with off-balance sheet credit risk (continued) |
The allowances for credit losses related to instruments with off-balance sheet credit risk at September 30, 2016 and December 31, 2015 are as follows:
Stage 1 (1) | Stage 2 (2) (collectively assessed) | Stage 2 (2) (individually assessed) | Stage 3 (3) | Total | ||||||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 2,914 | 333 | 2,177 | - | 5,424 | |||||||||||||||
Transfer to lifetime expected credit losses | (646 | ) | 209 | 484 | - | 47 | ||||||||||||||
Transfer to credit-impaired instruments | - | - | - | - | - | |||||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | - | |||||||||||||||
Net effect of changes in reserve for expected credit loss | (401 | ) | (216 | ) | 1,765 | - | 1,148 | |||||||||||||
Instruments that have been derecognized during the period | (2,408 | ) | (252 | ) | - | - | (2,660 | ) | ||||||||||||
Changes due to instruments recognized as of December 31, 2015: | (3,455 | ) | (259 | ) | 2,249 | - | (1,465 | ) | ||||||||||||
New instruments originated or purchased | 1,407 | - | - | - | 1,407 | |||||||||||||||
Allowance for expected credit losses as of September 30, 2016 | 866 | 74 | 4,426 | - | 5,366 |
Stage 1 (1) | Stage 2 (2) (collectively assessed) | Stage 2 (2) (individually assessed) | Stage 3 (3) | Total | ||||||||||||||||
Allowance for expected credit losses as of December 31, 2014 | 7,079 | 2,794 | - | - | 9,873 | |||||||||||||||
Transfer to lifetime expected credit losses | - | (2,177 | ) | 2,177 | - | - | ||||||||||||||
Transfer to credit-impaired instruments | - | - | - | - | - | |||||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | - | |||||||||||||||
Instruments that have been derecognized during the period | (6,908 | ) | (284 | ) | - | - | (7,192 | ) | ||||||||||||
Changes due to instruments recognized as of December 31, 2014: | (6,908 | ) | (2,461 | ) | 2,177 | - | (7,192 | ) | ||||||||||||
New financial assets originated or purchased | 2,743 | - | - | - | 2,743 | |||||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 2,914 | 333 | 2,177 | - | 5,424 |
(1) | 12-month expected credit losses |
(2) | Lifetime expected credit losses |
(3) | Credit-impaired instruments (lifetime expected credit losses) |
The reserve for expected credit losses on off-balance sheet credit risk reflects the Bank’s Management estimate of expected credit losses on off-balance sheet credit risk items such as: confirmed letters of credit, stand-by letters of credit, guarantees and credit commitments.
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) |
4. | Financial instruments (continued) |
4.8 | Derivative financial instruments for hedging purposes |
As of September 30, 2016 and December 31, 2015, quantitative information on derivative financial instruments held for hedging purposes is as follows:
September 30, 2016 | ||||||||||||||||
Nominal | Carrying amount of the hedging instrument | Changes in fair value used for calculating hedge | ||||||||||||||
Amount | Asset | Liability | ineffectiveness | |||||||||||||
Fair value hedges: | ||||||||||||||||
Interest rate swaps | 828,733 | 9,688 | (2,035 | ) | 7,420 | |||||||||||
Cross-currency interest rate swaps | 295,287 | 11,874 | (28,058 | ) | 6,882 | |||||||||||
Cash flow hedges: | ||||||||||||||||
Interest rate swaps | 465,000 | 23 | (3,952 | ) | (1,937 | ) | ||||||||||
Cross-currency interest rate swaps | - | - | - | - | ||||||||||||
Foreign exchange forward | 370,253 | 5,784 | (456 | ) | 3,461 | |||||||||||
Net investment hedges: | ||||||||||||||||
Foreign exchange forward | 3,184 | - | (151 | ) | (435 | ) | ||||||||||
Total | 1,962,457 | 27,369 | (34,652 | ) | 15,391 |
December 31, 2015 | ||||||||||||||||
Nominal | Carrying amount of the hedging instrument | Changes in fair value used for calculating hedge | ||||||||||||||
Amount | Asset | Liability | Ineffectiveness | |||||||||||||
Fair value hedges: | ||||||||||||||||
Interest rate swaps | 886,631 | 2,549 | 1,444 | 647 | ||||||||||||
Cross-currency interest rate swaps | 214,067 | 322 | 23,710 | 14,731 | ||||||||||||
Cash flow hedges: | ||||||||||||||||
Interest rate swaps | 870,000 | 230 | 2,254 | (258 | ) | |||||||||||
Cross-currency interest rate swaps | 75,889 | 374 | 395 | 215 | ||||||||||||
Foreign exchange forward | 247,869 | 3,925 | 2,058 | 1,867 | ||||||||||||
Net investment hedges: | ||||||||||||||||
Foreign exchange forward | 3,818 | - | 28 | 28 | ||||||||||||
Total | 2,298,274 | 7,400 | 29,889 | 17,230 |
The hedging instruments presented in the tables above are located in the line item in the statement of financial position at fair value - Derivative financial instruments used for hedging – receivable or at fair value – Derivative financial instruments used for hedging – payable.
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. | Financial instruments (continued) |
4.8 | Derivative financial instruments for hedging purposes (continued) |
The gains and losses resulting from activities of derivative financial instruments and hedging recognized in the consolidated statements of profit or loss are presented below:
Three months ended at September 30, 2016 | ||||||||||||||
Gain (loss) recognized in OCI (effective portion) | Classification of gain (loss) | Gain (loss) reclassified from accumulated OCI to the consolidated statement of profit or loss | Gain (loss) recognized on derivatives (ineffective portion) | |||||||||||
Derivatives – cash flow hedge | ||||||||||||||
Interest rate swaps | 784 | Gain (loss) on interest rate swap | - | (265 | ) | |||||||||
Cross-currency interest rate swaps | (1,776 | ) | Gain (loss) on foreign currency | - | (86 | ) | ||||||||
Foreign exchange forward | 6,517 | Interest income – securities at FVOCI | - | - | ||||||||||
Interest income loans at amortized cost | (1,371 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 496 | - | ||||||||||||
Gain (loss) on foreign exchange | (1,375 | ) | - | |||||||||||
Total | 5,525 | (2,250 | ) | (351 | ) |
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. | Financial instruments (continued) |
4.8 | Derivative financial instruments for hedging purposes (continued) |
Nine months ended at September 30, 2016 | ||||||||||||||
Gain (loss) recognized in OCI (effective portion) | Classification of gain (loss) | Gain (loss) reclassified from accumulated OCI to the consolidated statement of profit or loss | Gain (loss) recognized on derivatives (ineffective portion) | |||||||||||
Derivatives – cash flow hedge | ||||||||||||||
Interest rate swaps | (1,674 | ) | Gain (loss) on interest rate swap | - | (1,226 | ) | ||||||||
Cross-currency interest rate swaps | (13 | ) | Gain (loss) on foreign exchange | - | (60 | ) | ||||||||
Foreign exchange forward | 4,641 | Interest income – securities at FVOCI | - | - | ||||||||||
Interest income loans at amortized cost | (3,127 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 847 | - | ||||||||||||
Gain (loss) on foreign currency exchange | 3,259 | - | ||||||||||||
Total | 2,954 | 979 | (1,286 | ) |
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. | Financial instruments (continued) |
4.8 | Derivative financial instruments for hedging purposes (continued) |
Three months ended at September 30, 2015 | ||||||||||||||
Gain (loss) recognized in OCI (effective portion) | Classification of gain (loss) | Gain (loss) reclassified from accumulated OCI to the consolidated statement of profit or loss | Gain (loss) recognized on derivatives (ineffective portion) | |||||||||||
Derivatives – cash flow hedge | ||||||||||||||
Interest rate swaps | (1,328 | ) | Gain (loss) on interest rate swap | - | - | |||||||||
Cross-currency interest rate swaps | 3,741 | Gain (loss) on foreign currency exchange | - | - | ||||||||||
Foreign exchange forward | 1,965 | Interest income – securities at FVOCI | (159 | ) | - | |||||||||
Interest income loans at amortized cost | (498 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | (18 | ) | - | |||||||||||
Gain (loss) on foreign currency exchange | 4,359 | - | ||||||||||||
Total | 4,378 | 3,684 | - | |||||||||||
Derivatives – net investment hedge | ||||||||||||||
Foreign exchange forward | 533 | - | - | |||||||||||
Total | 533 | - | - |
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. | Financial instruments (continued) |
4.8 | Derivative financial instruments for hedging purposes (continued) |
Nine months ended at September 30, 2015 | ||||||||||||||
Gain (loss) recognized in OCI (effective portion) | Classification of gain (loss) | Gain (loss) reclassified from accumulated OCI to the consolidated statement of profit or loss | Gain (loss) recognized on derivatives (ineffective portion) | |||||||||||
Derivatives – cash flow hedge | ||||||||||||||
Interest rate swaps | (1,593 | ) | Gain (loss) on interest rate swap | - | - | |||||||||
Cross-currency interest rate swaps | 6,787 | Gain (loss) on foreign currency exchange | - | - | ||||||||||
Foreign exchange forward | 3,571 | Interest income – securities at FVOCI | (694 | ) | - | |||||||||
Interest income loans at amortized cost | (1,161 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 77 | - | ||||||||||||
Gain (loss) on foreign currency exchange | 10,193 | - | ||||||||||||
Total | 8,765 | 8,415 | - | |||||||||||
Derivatives – net investment hedge | ||||||||||||||
Foreign exchange forward | 957 | - | - | |||||||||||
Total | 957 | - | - |
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. | Financial instruments (continued) |
4.8 | Derivative financial instruments for hedging purposes (continued) |
The Bank recognized in the consolidated statement of profit or loss the gain (loss) on derivative financial instruments and the gain (loss) of the hedged asset or liability related to qualifying fair value hedges, as follows:
September 30, 2016 | ||||||||||||||
Classification in consolidated statement of profit or loss | Gain (loss) on derivatives | Gain (loss) on hedge item | Net gain (loss) | |||||||||||
Derivatives – fair value hedge | ||||||||||||||
Interest rate swaps | Interest income – securities at FVOCI | (507 | ) | 1,243 | 736 | |||||||||
Interest income at amortized cost | (265 | ) | 1,803 | 1,538 | ||||||||||
Interest expenses – borrowings and debt | 3,945 | (21,193 | ) | (17,248 | ) | |||||||||
Derivative financial instruments and hedging | (3,369 | ) | 4,329 | 960 | ||||||||||
Cross-currency interest rate swaps | Interest income loans at amortized cost | (265 | ) | 673 | 408 | |||||||||
Interest expenses – borrowings and debt | 50 | (4,383 | ) | (4,333 | ) | |||||||||
Derivative financial instruments and hedging | (2,358 | ) | 1,970 | (388 | ) | |||||||||
Total | (2,769 | ) | (15,558 | ) | (18,327 | ) |
September 30, 2015 | ||||||||||||||
Classification in consolidated statement of profit or loss | Gain (loss) on derivatives | Gain (loss) on hedge item | Net gain (loss) | |||||||||||
Derivatives – fair value hedge | ||||||||||||||
Interest rate swaps | Interest income – securities at FVOCI | (828 | ) | 1,133 | 305 | |||||||||
Interest income loans at amortized cost | (307 | ) | 3,077 | 2,770 | ||||||||||
Interest expenses – borrowings and debt | 4,481 | (16,959 | ) | (12,478 | ) | |||||||||
Derivative financial instruments and hedging | 4,504 | (4,926 | ) | (422 | ) | |||||||||
Cross-currency interest rate swaps | Interest income at amortized cost | (131 | ) | 324 | 193 | |||||||||
Interest expenses – borrowings and debt | 840 | (3,090 | ) | (2,250 | ) | |||||||||
Derivative financial instruments and hedging | (14,711 | ) | 16,701 | 1,990 | ||||||||||
Total | (6,152 | ) | (3,740 | ) | (9,892 | ) |
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) |
4. | Financial instruments (continued) |
4.8 | Derivative financial instruments for hedging purposes (continued) |
For control purposes, derivative instruments are recorded at their nominal amount (“notional amount”) in memorandum accounts. Interest rate swaps are made either in a single currency or cross currency for a prescribed period to exchange a series of interest rate flows, which involve fixed for floating interest payments, and vice versa. The Bank also engages in certain foreign exchange trades to serve customers’ transaction needs and to manage foreign currency risk. All such positions are hedged with an offsetting contract for the same currency.
The Bank manages and controls the risks on these foreign exchange trades by establishing counterparty credit limits by customer and by adopting policies that do not allow for open positions in the credit and investment portfolio.
The Bank also uses foreign currency exchange contracts to hedge the foreign exchange risk associated with the Bank’s equity investment in a non-U.S. dollar functional currency foreign subsidiary. Derivative and foreign exchange instruments negotiated by the Bank are executed mainly over-the-counter (OTC). These contracts are executed between two counterparties that negotiate specific agreement terms, including notional amount, exercise price and maturity.
The maximum length of time over which the Bank has hedged its exposure to the variability in future cash flows on forecasted transactions is 7.44 years.
The Bank estimates that during remaining of 2016, approximately $1,052 reported as losses in OCI as of September 30, 2016 related to foreign exchange forward contracts, are expected to be reclassified into interest income as an adjustment to yield of hedged loans during the twelve-month period ending September 30, 2017.
The Bank estimates that during remaining of 2016, approximately $465 reported as losses in OCI as of September 30, 2016 related to foreign exchange forward contracts, are expected to be reclassified into interest income as an adjustment to yield of hedged deposits during the twelve-month period ending September 30, 2017.
Types of Derivatives and Foreign Exchange Instruments
Interest rate swaps are contracts in which a series of interest rate flows in a single currency are exchanged over a prescribed period. The Bank has designated a portion of these derivative instruments as fair value hedges and a portion as cash flow hedges. Cross currency swaps are contracts that generally involve the exchange of both interest and principal amounts in two different currencies. The Bank has designated a portion of these derivative instruments as fair value hedges and a portion as cash flow hedges. Foreign exchange forward contracts represent an agreement to purchase or sell foreign currency at a future date at agreed-upon terms. The Bank has designated these derivative instruments as cash flow hedges and net investment hedges.
In addition to hedging derivative financial instruments, the Bank has derivative financial instruments at FVTPL as disclosed in Note 4.1.
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) |
4. | Financial instruments (continued) |
4.9 | Offsetting of financial assets and liabilities |
In the ordinary course of business, the Bank enters into derivative financial instrument transactions and securities sold under repurchase agreements under industry standards agreements. Depending on the collateral requirements stated in the contracts, the Bank and counterparties can receive or deliver collateral based on the fair value of the financial instruments transacted between parties. Collateral typically consists of cash deposits and securities. The master netting agreements include clauses that, in the event of default, provide for close-out netting, which allows all positions with the defaulting counterparty to be terminated and net settled with a single payment amount.
The International Swaps and Derivatives Association master agreement (“ISDA”) and similar master netting arrangements do not meet the criteria for offsetting in the consolidated statement of financial position. This is because they create for the parties to the agreement, a right of set-off of recognized amounts that is enforceable only following an event of default, insolvency or bankruptcy of the Bank or the counterparties or following other predetermined events.
The following tables summarize financial assets and liabilities that have been offset in the consolidated statement of financial position or are subject to master netting agreements:
a) | Derivative financial instruments – assets |
September 30, 2016 | ||||||||||||||||||||||||
Gross amounts offset in the consolidated | Net amount of assets presented in the | Gross amounts not offset in the consolidated statement of financial position | ||||||||||||||||||||||
Description | Gross amounts assets | statement of financial position | consolidated statement of financial position | Financial instruments | Cash collateral received | Net Amount | ||||||||||||||||||
Derivative financial instruments-hedging | 27,369 | - | 27,369 | - | - | 27,369 | ||||||||||||||||||
Financial instruments at FVTPL | 28 | - | 28 | - | - | 28 | ||||||||||||||||||
Total | 27,397 | - | 27,397 | - | - | 27,397 |
December 31, 2015 | ||||||||||||||||||||||||
Gross amounts offset in the consolidated | Net amount of assets presented in the | Gross amounts not offset in the consolidated statement of financial position | ||||||||||||||||||||||
Description | Gross amounts assets | statement of financial position | consolidated statement of financial position | Financial instruments | Cash collateral received | Net Amount | ||||||||||||||||||
Derivative financial instruments-hedging | 7,400 | - | 7,400 | - | (690 | ) | 6,710 | |||||||||||||||||
Total | 7,400 | - | 7,400 | - | (690 | ) | 6,710 |
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) |
4. | Financial instruments (continued) |
4.9 | Offsetting of financial assets and liabilities (continued) |
The following table presents the reconciliation of assets that have been offset or are subject to master netting agreements to individual line items in the consolidated statement of financial position as of September 30, 2016 and December 31, 2015:
September 30, 2016 | ||||||||||||
Description | Gross amounts of assets | Gross amounts offset in the consolidated statement of financial position | Net amount of assets presented in the consolidated statement of financial position | |||||||||
Derivative financial instruments - hedging | 27,369 | - | 27,369 | |||||||||
Financial instruments at FVTPL | 28 | - | 28 | |||||||||
Total | 27,397 | - | 27,397 |
December 31, 2015 | ||||||||||||
Description | Gross amounts of assets | Gross amounts offset in the consolidated statement of financial position | Net amount of assets presented in the consolidated statement of financial position | |||||||||
Derivative financial instruments - hedging | 7,400 | - | 7,400 | |||||||||
Total | 7,400 | - | 7,400 |
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) |
4. | Financial Instruments (continued) |
4.9 | Offsetting of financial assets and liabilities (continued) |
b) | Financial liabilities and derivative financial instruments – liabilities |
September 30, 2016 | ||||||||||||||||||||||||
Gross amounts offset in the | Net amount of liabilities presented in the | Gross amounts not offset in the consolidated statement of financial position | ||||||||||||||||||||||
Description | Gross amounts of liabilities | consolidated statement of financial position | consolidated statement of financial position | Financial instruments | Cash collateral pledged | Net Amount | ||||||||||||||||||
Securities sold under repurchase agreements | 101,403 | - | 101,403 | (100,541 | ) | (862 | ) | - | ||||||||||||||||
Financial liabilities at FVTPL | - | - | - | - | - | - | ||||||||||||||||||
Derivative financial instruments - hedging | 34,652 | - | 34,652 | - | (32,387 | ) | 2,265 | |||||||||||||||||
Total | 136,055 | - | 136,055 | (100,541 | ) | (33,249 | ) | 2,265 |
December 31, 2015 | ||||||||||||||||||||||||
Gross amounts offset in the | Net amount of liabilities presented in the | Gross amounts not offset in the consolidated statement of financial position | ||||||||||||||||||||||
Description | Gross amounts of liabilities | consolidated statement of financial position | consolidated statement of financial position | Financial instruments | Cash collateral pledged | Net Amount | ||||||||||||||||||
Securities sold under repurchase agreements | 114,084 | - | 114,084 | (111,620 | ) | (2,463 | ) | 1 | ||||||||||||||||
Financial liabilities at FVTPL | 89 | - | 89 | - | - | 89 | ||||||||||||||||||
Derivative financial instruments - hedging | 29,889 | - | 29,889 | - | (26,899 | ) | 2,990 | |||||||||||||||||
Total | 144,062 | - | 144,062 | (111,620 | ) | (29,362 | ) | 3,080 |
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) |
4. | Financial Instruments (continued) |
4.9 | Offsetting of financial assets and liabilities (continued) |
The following table presents the reconciliation of liabilities that have been offset or are subject to master netting agreements to individual line items in the consolidated statement of financial position as of September 30, 2016 and December 31, 2015:
September 30, 2016 | ||||||||||||
Description | Gross amounts of liabilities | Gross amounts offset in the consolidated statement of financial position | Net amount of liabilities presented in the consolidated statement of financial position | |||||||||
Securities sold under repurchase agreements | 101,403 | - | 101,403 | |||||||||
Derivative financial instruments: | ||||||||||||
Financial liabilities at FVTPL | - | - | - | |||||||||
Derivative financial instruments - hedging | 34,652 | - | 34,652 | |||||||||
Total derivative financial instruments | 101,403 | - | 101,403 |
December 31, 2015 | ||||||||||||
Description | Gross amounts of liabilities | Gross amounts offset in the consolidated statement of financial position | Net amount of liabilities presented in the consolidated statement of financial position | |||||||||
Securities sold under repurchase agreements | 114,084 | - | 114,084 | |||||||||
Derivative financial instruments: | ||||||||||||
Financial liabilities at FVTPL | 89 | - | 89 | |||||||||
Derivative financial instruments - hedging | 29,889 | - | 29,889 | |||||||||
Total derivative financial instruments | 29,978 | - | 29,978 |
5. | Other assets |
Following is a summary of other assets as of September 30, 2016 and December 31, 2015:
September 30, 2016 | December 31, 2015 | |||||||
Accounts receivable | 10,733 | 6,428 | ||||||
Equity investment in a private fund (at cost) | 530 | 530 | ||||||
IT projects under development | 4,039 | 4,952 | ||||||
Other | 9,833 | 3,884 | ||||||
25,135 | 15,794 |
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) |
6. | Deposits |
The remaining maturity profile of the Bank’s deposits is as follows:
September 30, 2016 | December 31, 2015 | |||||||
Demand | 252,536 | 243,839 | ||||||
Up to 1 month | 1,173,812 | 1,492,175 | ||||||
From 1 month to 3 months | 727,737 | 475,611 | ||||||
From 3 month to 6 months | 272,549 | 319,995 | ||||||
From 6 month to 1 year | 458,804 | 263,849 | ||||||
From 1 year to 2 years | 190,000 | - | ||||||
From 2 years to 5 years | 50,567 | - | ||||||
3,126,005 | 2,795,469 |
The following table presents additional information regarding the Bank’s deposits:
September 30, 2016 | December 31, 2015 | |||||||
Aggregate amounts of time deposits of $100,000 or more | 3,125,644 | 2,794,912 | ||||||
Aggregate amounts of deposits in the New York Agency | 259,301 | 235,203 | ||||||
Interest expense paid to deposits in the New York Agency | 1,429 | 1,228 |
7. | Securities sold under repurchase agreements |
The Bank’s financing transactions under repurchase agreements amounted to $101.4 million and $114.4 million, as of September 30, 2016 and December 31, 2015, respectively.
During the periods ended September 30, 2016 and 2015, interest expense related to financing transactions under repurchase agreements totaled $835.2 and $176.0, respectively, corresponding to interest expense generated by the financing contracts under repurchase agreements. These expenses are included in the interest expense – short-term borrowings and debt line in the consolidated statements of profit or loss.
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) |
8. | Borrowings and debt |
8.1 | Short-term borrowings and debt |
Borrowings consist of long-term and syndicated loans obtained from international banks. Debt instruments consist of public and private issuances under the Bank's Euro Medium Term Notes Program (“EMTN”) as well as public issuances in the Mexican market. The breakdown of short-term (original maturity of less than one year) borrowings and debt, together with contractual interest rates, is as follows:
September 30, 2016 | December 31, 2015 | |||||||
Short-term Borrowings: | ||||||||
At fixed interest rates | 636,595 | 983,245 | ||||||
At floating interest rates | 413,093 | 871,522 | ||||||
Total borrowings | 1,049,688 | 1,854,767 | ||||||
Short-term Debt: | ||||||||
At fixed interest rates | 82,800 | 525,590 | ||||||
At floating interest rates | - | 50,000 | ||||||
Total debt | 82,800 | 575,590 | ||||||
Total short-term borrowings and debt | 1,132,488 | 2,430,357 | ||||||
Average outstanding balance during the period | 1,366,873 | 2,266,864 | ||||||
Maximum balance at any month-end | 1,876,322 | 2,856,507 | ||||||
Range of fixed interest rates on borrowing and debt in U.S. dollars | 0.95% to 1.38% | 0.53% to 1.21% | ||||||
Range of floating interest rates on borrowing in U.S. dollars | 0.97% to 1.29% | 0.67% to 1.24% | ||||||
Range of fixed interest rates on borrowing in Mexican pesos | 6.16 | % | 3.76% to 3.98% | |||||
Range of floating interest rate on borrowing in Mexican pesos | 5.20 | % | 3.90% to 4.17% | |||||
Range of fixed interest rate on debt in Japanese yens | - | 0.31% to 0.33% | ||||||
Weighted average interest rate at end of the period | 1.18 | % | 0.93 | % | ||||
Weighted average interest rate during the period | 1.05 | % | 0.85 | % |
The balances of short-term borrowings and debt by currency, is as follows:
September 30, 2016 | December 31 2015 | |||||||
Currency | ||||||||
US dollar | 1,129,300 | 2,402,701 | ||||||
Mexican peso | 3,188 | 14,366 | ||||||
Japanese yen | - | 13,290 | ||||||
Total | 1,132,488 | 2,430,357 |
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) |
8. | Borrowings and debt (continued) |
8.2 | Long-term borrowings and debt |
The breakdown of borrowings and long-term debt (original maturity of more than one year), together with contractual interest rates gross of prepaid commission of $5,797 and $7,017 as of September 30, 2016 and December 31, 2015, respectively, is as follows:
September 30, 2016 | December 31, 2015 | |||||||
Long-term Borrowings: | ||||||||
At fixed interest rates with due dates from December 2016 to September 2021 | 58,428 | 113,039 | ||||||
At floating interest rates with due dates from November 2016 to August 2019 | 636,919 | 695,837 | ||||||
Total borrowings | 695,347 | 808,876 | ||||||
Long-term Debt: | ||||||||
At fixed interest rates with due dates from October 2016 to March 2024 | 962,478 | 929,998 | ||||||
At floating interest rates with due dates from January 2018 to April 2019 | 179,344 | 149,956 | ||||||
Total long-term debt | 1,141,822 | 1,079,954 | ||||||
Total long-term borrowings and debt outstanding | 1,837,169 | 1,888,830 | ||||||
Average outstanding balance during the period | 1,904,577 | 1,589,451 | ||||||
Maximum outstanding balance at any month – end | 2,054,138 | 1,888,830 | ||||||
Range of fixed interest rates on borrowing and debt in U.S. dollars | 1.01% to 3.75% | 1.01% to 3.75% | ||||||
Range of floating interest rates on borrowing in U.S. dollars | 1.30% to 2.38% | 0.84% to 1.95% | ||||||
Range of fixed interest rates on borrowing in Mexican pesos | 4.30% to 7.30% | 4.30% to 5.95% | ||||||
Range of floating interest rates on borrowing and debt in Mexican pesos | 4.98% to 5.54% | 3.93% to 5.45% | ||||||
Range of fixed interest rate on debt in Japanese yens | 0.46% to 0.81% | 0.50% to 0.81% | ||||||
Range of fixed interest rate on debt in Euros | 3.75 | % | 0.40% to 3.75% | |||||
Weighted average interest rate at the end of the period | 2.76 | % | 2.62 | % | ||||
Weighted average interest rate during the period | 2.92 | % | 2.65 | % |
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) |
8. | Borrowings and debt (continued) |
8.2 | Long-term borrowings and debt (continued) |
The balances of long-term borrowings and debt by currency, is as follows:
September 30, 2016 | December 31, 2015 | |||||||
Currency | ||||||||
US dollar | 1,440,679 | 1,599,233 | ||||||
Mexican peso | 228,601 | 153,332 | ||||||
Japanese yen | 108,647 | 25,035 | ||||||
Euro | 59,242 | 111,230 | ||||||
Total | 1,837,169 | 1,888,830 |
The Bank's funding activities include: (i) EMTN, which may be used to issue notes for up to $2.3 billion, with maturities from 7 days up to a maximum of 30 years, at fixed or floating interest rates, or at discount, and in various currencies. The notes are generally issued in bearer or registered form through one or more authorized financial institutions; (ii) Short-and Long-Term Notes “Certificados Bursatiles” Program (the “Mexico Program”) in the Mexican local market, registered with the Mexican National Registry of Securities maintained by the National Banking and Securities Commission in Mexico (“CNBV”, for its acronym in Spanish), for an authorized aggregate principal amount of 10 billion Mexican pesos with maturities from one day to 30 years.
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, 2016, the Bank was in compliance with all covenants.
The future remaining maturities of long-term borrowings and debt outstanding as of September 30, 2016, are as follows:
Outstanding | ||||
Due in | ||||
2016 | 62,597 | |||
2017 | 459,609 | |||
2018 | 542,476 | |||
2019 | 348,093 | |||
2020 | 359,389 | |||
2021 | 5,763 | |||
2024 | 59,242 | |||
1,837,169 |
9. | Other liabilities |
September 30, 2016 | December 31, 2015 | |||||||
Accruals and other accumulated expenses | 5,327 | 9,676 | ||||||
Dividends payable | 145 | 146 | ||||||
Accounts payable | 13,138 | 11,096 | ||||||
Others | 2,598 | 3,426 | ||||||
21,208 | 24,344 |
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. | Earnings per share |
The following table presents a reconciliation of the income and share data used in the basic and diluted earnings per share (“EPS”) computations for the dates indicated:
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Profit for the period | 27,991 | 37,372 | 73,701 | 80,758 | ||||||||||||
Basic earnings per share | 0.72 | 0.96 | 1.89 | 2.08 | ||||||||||||
Diluted earnings per share | 0.71 | 0.96 | 1.88 | 2.07 | ||||||||||||
Weighted average common shares outstanding - applicable to basic | 39,102 | 38,969 | 39,059 | 38,909 | ||||||||||||
Effect of diluted securities: | ||||||||||||||||
Stock options and restricted stock units plans | 123 | 126 | 119 | 171 | ||||||||||||
Adjusted weighted average common shares outstanding applicable to diluted EPS | 39,225 | 39,095 | 39,178 | 39,080 |
11. | Capital and Reserves |
Common stock
The Bank’s common stock is divided into four categories:
1) | “Class A”; shares may only be issued to Latin American Central Banks or banks in which the state or other government agency is the majority shareholder. |
2) | “Class B”; shares may only be issued to banks or financial institutions. |
3) | “Class E”; shares may be issued to any person whether a natural person or a legal entity. |
4) | “Class F”; may only be issued to state entities and agencies of non-Latin American countries, including, among others, central banks and majority state-owned banks in those countries, and multilateral financial institutions either international or regional institutions. |
The holders of “Class B” shares have the right to convert or exchange their “Class B” shares, at any time, and without restriction, for “Class E” shares, at a rate of one-to-one.
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) |
11. | Capital and Reserves (continued) |
Common stock (continued)
The following table provides detailed information on the Bank’s common stock activity per class for each of the periods in the three-month period ended September 30, 2016:
(Share units) | “Clase A” | “Clase B” | “Clase E” | “Clase F” | Total | |||||||||||||||
Authorized | 40,000,000 | 40,000,000 | 100,000,000 | 100,000,000 | 280,000,000 | |||||||||||||||
Outstanding at January 1, 2015 | 6,342,189 | 2,479,050 | 29,956,100 | - | 38,777,339 | |||||||||||||||
Exchange | - | (4,581 | ) | 4,581 | - | - | ||||||||||||||
Restricted stock granted - directors | - | - | 57,000 | - | 57,000 | |||||||||||||||
Exercised stock options - compensation plans | - | - | 70,358 | - | 70,358 | |||||||||||||||
Restricted stock units – vested | - | - | 64,208 | - | 64,208 | |||||||||||||||
Outstanding at September 30, 2015 | 6,342,189 | 2,474,469 | 30,152,247 | - | 38,968,905 | |||||||||||||||
Outstanding at January 31, 2016 | 6,342,189 | 2,474,469 | 30,152,247 | - | 38,968,905 | |||||||||||||||
Restricted stock granted - directors | - | - | 57,000 | - | 57,000 | |||||||||||||||
Exercised stock options - compensation plans | - | - | 68,409 | - | 68,409 | |||||||||||||||
Restricted stock units – vested | - | - | 65,358 | - | 65,358 | |||||||||||||||
Outstanding at September 30, 2016 | 6,342,189 | 2,474,469 | 30,343,014 | - | 39,159,672 |
The following table presents information regarding shares repurchased but not retired by the Bank and accordingly classified as treasury stock:
“Class A” | “Class B” | “Class E” | Total | |||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Outstanding at January 1, 2015 | 318,140 | 10,708 | 589,174 | 16,242 | 2,295,186 | 50,677 | 3,202,500 | 77,627 | ||||||||||||||||||||||||
Restricted stock granted - directors | - | - | - | - | (57,000 | ) | (1,259 | ) | (57,000 | ) | (1,259 | ) | ||||||||||||||||||||
Exercised stock options - compensation plans | - | - | - | - | (70,358 | ) | (1,553 | ) | (70,358 | ) | (1,553 | ) | ||||||||||||||||||||
Restricted stock units – vested | - | - | - | - | (64,208 | ) | (1,418 | ) | (64,208 | ) | (1,418 | ) | ||||||||||||||||||||
Outstanding at September 30, 2015 | 318,140 | 10,708 | 589,174 | 16,242 | 2,103,620 | 46,447 | 3,010,934 | 73,397 | ||||||||||||||||||||||||
Outstanding at January 1, 2016 | 318,140 | 10,708 | 589,174 | 16,242 | 2,103,620 | 46,447 | 3,010,934 | 73,397 | ||||||||||||||||||||||||
Restricted stock granted - directors | - | - | - | - | (57,000 | ) | (1,259 | ) | (57,000 | ) | (1,259 | ) | ||||||||||||||||||||
Exercised stock options - compensation plans | - | - | - | - | (68,409 | ) | (1,510 | ) | (68,409 | ) | (1,510 | ) | ||||||||||||||||||||
Restricted stock units - vested | - | - | - | - | (65,358 | ) | (1,443 | ) | (65,358 | ) | (1,443 | ) | ||||||||||||||||||||
Outstanding at September 30, 2016 | 318,140 | 10,708 | 589,174 | 16,242 | 1,912,853 | 42,235 | 2,820,167 | 69,185 |
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) |
11. | Capital and Reserves (continued) |
Reserves
The Banking Law in the Republic of Panama requires banks with general banking license to maintain a total capital adequacy index that shall not be lower than 8% of total assets and off-balance sheet irrevocable contingency transactions, weighted according to their risk; and primary capital equivalent that shall not be less than 4.5% of its assets and off-balance sheet irrevocable contingency transactions, weighted according to their risk. As of September 30, 2016, the Bank’s total capital adequacy ratio is 16.03% which is in compliance with the minimum capital adequacy ratios required by the Banking Law in the Republic of Panama.
Restriction on retained earnings
As of September 30, 2016 and December 31, 2015, $46.7 million and $38.7 million, respectively of retained earnings are restricted from dividend distribution for purposes of complying with local regulatory requirements.
Additional paid-in capital
As of September 30, 2016 and December 31, 2015, the additional paid-in capital consists of additional cash contributions to the common capital paid by shareholders.
Dividends
As of September 30, 2016 and 2015, the dividends provided for or paid were as follows:
First Quarter | Second Quarter | Third Quarter | ||||||||||||||||||||||
Dividends | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Dividends provided for or paid during the quarter | 15,000 | - | 15,052 | 15,005 | 15,052 | 15,000 | ||||||||||||||||||
Dividend per share | 0.385 | - | 0.385 | 0.385 | 0.385 | 0.385 |
12. | Business segment information |
The Bank’s activities are managed and executed in two business segments: Commercial and Treasury. The business segment results are determined based on the Bank’s managerial accounting process as defined by IFRS 8 – Operating Segments, which assigns consolidated statement of financial positions, revenue and expense items to each business segment on a systematic basis.
The Bank’s net interest income represents the main driver of profits; therefore, the Bank presents its interest-earning assets by business segment, to give an indication of the size of business generating net interest income. Interest-earning assets also generate gains and losses on sales, such as for financial instruments at fair value through OCI and financial instruments at fair value through profit or loss, which are included in net other income, in the Treasury Segment. The Bank also discloses its other assets and contingencies by business segment, to give an indication of the size of business that generates net fees and commissions, also included in net other income, in the Commercial Business Segment.
The Commercial Business Segment incorporates all of the Bank’s financial intermediation and fees generated by the commercial portfolio. The commercial portfolio includes book value of loans, acceptances and contingencies. Profits from the Commercial Business Segment include net interest income from loans, fee income, impairment loss from expected credit losses on loans at amortized cost and off-balance sheet financial instruments, and allocated expenses.
The Treasury Business Segment incorporates deposits in banks and all of the Bank’s financial instruments at fair value through profit or loss, financial instruments at fair value through OCI and securities at amortized cost. Profits from the Treasury Business Segment include net interest income from deposits with banks, financial instruments at fair value through OCI and securities at amortized cost, derivative financial instruments foreign currency exchange, gain (loss) for financial instrument at fair value through profit or loss, gain (loss) for financial instrument at fair value through OCI, impairment loss for expected credit losses on investment securities, other income and allocated expenses.
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) |
12. | Business segment information (continued) |