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 August, 2017
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: August 1, 2017
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 June 30, 2017 and December 31, 2016, 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 six months ended June 30, 2017, 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 |
June 30, 2017 and December 31, 2016 |
(In US$ thousand) |
June 30, | December 31, | |||||||||
2017 | 2016 | |||||||||
Notes | (Unaudited) | (Audited) | ||||||||
Assets | ||||||||||
Cash and cash equivalents | 3,14 | 819,390 | 1,069,538 | |||||||
Financial Instruments: | 4,14 | |||||||||
At fair value through profit or loss | 4.1,4.7,14 | 13 | - | |||||||
At fair value through OCI | 4.2,14 | 16,435 | 30,607 | |||||||
Securities at amortized cost, net | 4.3,14 | 62,791 | 77,214 | |||||||
Loans at amortized cost | 4.5 | 5,570,315 | 6,020,731 | |||||||
Less: | ||||||||||
Allowance for expected credit losses | 4.5 | 115,607 | 105,988 | |||||||
Unearned interest and deferred fees | 4.5 | 6,723 | 7,249 | |||||||
Loans at amortized cost, net | 5,447,985 | 5,907,494 | ||||||||
At fair value - Derivative financial instruments used for hedging – receivable | 4.6,4.7,14 | 6,497 | 9,352 | |||||||
Property and equipment, net | 8,001 | 8,549 | ||||||||
Intangibles, net | 2,577 | 2,909 | ||||||||
Other assets: | ||||||||||
Customers' liabilities under acceptances | 14 | 5,194 | 19,387 | |||||||
Accrued interest receivable | 14 | 33,466 | 44,187 | |||||||
Other assets | 6 | 19,813 | 11,546 | |||||||
Total of other assets | 58,473 | 75,120 | ||||||||
Total assets | 6,422,162 | 7,180,783 | ||||||||
Liabilities and stockholders' equity | ||||||||||
Deposits: | 7,14 | |||||||||
Noninterest-bearing - Demand | 455 | 1,617 | ||||||||
Interest-bearing - Demand | 126,522 | 125,397 | ||||||||
Time | 3,226,578 | 2,675,838 | ||||||||
Total deposits | 3,353,555 | 2,802,852 | ||||||||
At fair value – Derivative financial instruments used for hedging – payable | 4.6,4.7,14 | 33,946 | 59,686 | |||||||
Financial liabilities at fair value through profit or loss | 4.1,4.7,14 | 27 | 24 | |||||||
Short-term borrowings and debt | 9.1,14 | 487,056 | 1,470,075 | |||||||
Long-term borrowings and debt, net | 9.2,14 | 1,485,707 | 1,776,738 | |||||||
Other liabilities: | ||||||||||
Acceptances outstanding | 14 | 5,194 | 19,387 | |||||||
Accrued interest payable | 14 | 12,953 | 16,603 | |||||||
Allowance for expected credit losses on loan commitments and financial guarantees contracts | 5 | 4,615 | 5,776 | |||||||
Other liabilities | 10 | 14,969 | 18,328 | |||||||
Total other liabilities | 37,731 | 60,094 | ||||||||
Total liabilities | 5,398,022 | 6,169,469 | ||||||||
Stockholders' equity: | 11,12,14 | |||||||||
Common stock | 279,980 | 279,980 | ||||||||
Treasury stock | 12 | (64,732 | ) | (69,176 | ) | |||||
Additional paid-in capital in excess of assigned value of common stock | 118,898 | 120,594 | ||||||||
Capital reserves | 95,210 | 95,210 | ||||||||
Retained earnings | 598,217 | 587,507 | ||||||||
Accumulated other comprehensive loss | 4.2,4.6,15 | (3,433 | ) | (2,801 | ) | |||||
Total stockholders' equity | 1,024,140 | 1,011,314 | ||||||||
Total liabilities and stockholders' equity | 6,422,162 | 7,180,783 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
3
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||||
Notes | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||
Deposits | 2,822 | 894 | 489 | 4,823 | 2,064 | 920 | ||||||||||||||||||||
At fair value through OCI | 126 | 548 | 1,728 | 296 | 1,499 | 3,589 | ||||||||||||||||||||
At amortized cost | 53,151 | 59,032 | 50,607 | 110,111 | 118,068 | 101,969 | ||||||||||||||||||||
Total interest income | 56,099 | 60,473 | 52,824 | 115,230 | 121,631 | 106,478 | ||||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||
Deposits | 11,593 | 5,089 | 2,738 | 17,800 | 9,641 | 5,191 | ||||||||||||||||||||
Short-term borrowings and debt | 2,487 | 3,735 | 5,837 | 6,055 | 8,590 | 12,480 | ||||||||||||||||||||
Long-term borrowings and debt | 12,674 | 13,463 | 9,442 | 27,598 | 25,696 | 18,175 | ||||||||||||||||||||
Total interest expense | 26,754 | 22,287 | 18,017 | 51,453 | 43,927 | 35,846 | ||||||||||||||||||||
Net interest income | 29,345 | 38,186 | 34,807 | 63,777 | 77,704 | 70,632 | ||||||||||||||||||||
Other income: | ||||||||||||||||||||||||||
Fees and commissions, net | 5,013 | 4,434 | 3,109 | 8,282 | 6,807 | 5,409 | ||||||||||||||||||||
Derivate financial instruments and foreign currency exchange | 473 | 500 | (339 | ) | 604 | (339 | ) | 505 | ||||||||||||||||||
(Loss) gain per financial instrument at fair value through profit or loss | (649 | ) | 416 | (2,205 | ) | (709 | ) | (3,767 | ) | 300 | ||||||||||||||||
Gain (loss) per financial instrument at fair value through OCI | (35 | ) | (30 | ) | 133 | 79 | (315 | ) | 429 | |||||||||||||||||
Gain on sale of loans at amortized cost | 12 | 303 | 305 | 98 | 403 | 512 | ||||||||||||||||||||
Other income | 255 | 556 | 284 | 609 | 907 | 532 | ||||||||||||||||||||
Net other income | 5,069 | 6,179 | 1,287 | 8,963 | 3,696 | 7,687 | ||||||||||||||||||||
Total income | 34,414 | 44,365 | 36,094 | 72,740 | 81,400 | 78,319 | ||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||
Impairment loss (recovery) from expected credit losses on loans at amortized cost | 4.5 | 5,666 | 9,966 | 11,649 | 9,619 | 12,109 | 6,619 | |||||||||||||||||||
(Recovery) impairment loss from expected credit losses on investment securities | 4.2,4.3 | (11 | ) | 479 | 1,659 | (465 | ) | 486 | 829 | |||||||||||||||||
Impairment loss (recovery) from expected credit losses on loans commitments and financial guarantees contracts | 5 | (1,324 | ) | 1,579 | (3,434 | ) | (1,161 | ) | 666 | 1,671 | ||||||||||||||||
Salaries and other employee expenses | 7,768 | 4,898 | 7,368 | 14,464 | 12,778 | 15,723 | ||||||||||||||||||||
Depreciation of equipment and leasehold improvements | 356 | 334 | 345 | 787 | 663 | 725 | ||||||||||||||||||||
Amortization of intangible assets | 178 | 91 | 173 | 379 | 203 | 322 | ||||||||||||||||||||
Other expenses | 4,300 | 4,746 | 4,816 | 8,178 | 8,785 | 9,044 | ||||||||||||||||||||
Total expenses | 16,933 | 22,093 | 22,576 | 31,801 | 35,690 | 34,933 | ||||||||||||||||||||
Profit for the period | 17,481 | 22,272 | 13,518 | 40,939 | 45,710 | 43,386 | ||||||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||
Basic | 11 | 0.44 | 0.57 | 0.35 | 1.04 | 1.17 | 1.12 | |||||||||||||||||||
Diluted | 11 | 0.44 | 0.57 | 0.35 | 1.04 | 1.17 | 1.11 | |||||||||||||||||||
Weighted average basic shares | 11 | 39,317 | 39,078 | 38,954 | 39,252 | 39,037 | 38,880 | |||||||||||||||||||
Weighted average diluted shares | 11 | 39,347 | 39,198 | 39,073 | 39,280 | 39,120 | 39,015 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
4
Notes | 2017 | 2016 | 2015 | |||||||||||
Profit for the period | 40,939 | 45,710 | 43,386 | |||||||||||
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 | 15 | 116 | 7,400 | 3,248 | ||||||||||
Net change in unrealized losses on derivative financial instruments | 15 | (748 | ) | (4,498 | ) | 200 | ||||||||
Other comprehensive income (loss) | 15 | (632 | ) | 2,902 | 3,448 | |||||||||
Total comprehensive income for the period | 40,307 | 48,612 | 46,834 |
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 | - | - | - | - | 43,386 | - | 43,386 | |||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 3,448 | 3,448 | |||||||||||||||||||||
Issuance of restricted stock | - | (1,514 | ) | (17 | ) | - | - | - | (1,531 | ) | ||||||||||||||||||
Compensation cost - stock options and stock units plans | - | 1,653 | 2,377 | - | - | - | 4,030 | |||||||||||||||||||||
Exercised options and stock units vested | - | 1,673 | (2,746 | ) | - | - | - | (1,073 | ) | |||||||||||||||||||
Repurchase of "Class B" and "Class E" common stock | - | - | - | - | - | - | - | |||||||||||||||||||||
Dividends declared | - | - | - | - | (15,000 | ) | - | (15,000 | ) | |||||||||||||||||||
Balances at June 30, 2015 | 279,980 | (75,815 | ) | 119,258 | 95,210 | 530,055 | (4,389 | ) | 944,300 | |||||||||||||||||||
Balances at January 1, 2016 | 279,980 | (73,397 | ) | 120,177 | 95,210 | 560,642 | (10,681 | ) | 971,931 | |||||||||||||||||||
Profit for the period | - | - | - | - | 45,710 | - | 45,710 | |||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 2,902 | 2,902 | |||||||||||||||||||||
Issuance of restricted stock | - | 1,259 | (1,259 | ) | - | - | - | - | ||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 1,689 | - | - | - | 1,689 | |||||||||||||||||||||
Exercised options and stock units vested | - | 1,538 | (1,449 | ) | - | - | - | 89 | ||||||||||||||||||||
Repurchase of "Class B" and "Class E" common stock | - | - | - | - | - | - | - | |||||||||||||||||||||
Dividends declared | - | - | - | - | (30,052 | ) | - | (30,052 | ) | |||||||||||||||||||
Balances at June 30, 2016 | 279,980 | (70,600 | ) | 119,158 | 95,210 | 576,299 | (7,779 | ) | 992,268 | |||||||||||||||||||
Balances at January 1, 2017 | 279,980 | (69,176 | ) | 120,594 | 95,210 | 587,507 | (2,801 | ) | 1,011,314 | |||||||||||||||||||
Profit for the period | - | - | - | - | 40,939 | - | 40,939 | |||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | (632 | ) | (632 | ) | |||||||||||||||||||
Issuance of restricted stock | - | 1,259 | (1,259 | ) | - | - | - | - | ||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 644 | - | - | - | 644 | |||||||||||||||||||||
Exercised options and stock units vested | - | 3,213 | (1,081 | ) | - | - | - | 2,132 | ||||||||||||||||||||
Repurchase of "Class B" and "Class E" common stock | - | (28 | ) | - | - | - | - | (28 | ) | |||||||||||||||||||
Dividends declared | - | - | - | - | (30,229 | ) | - | (30,229 | ) | |||||||||||||||||||
Balances at June 30, 2017 | 279,980 | (64,732 | ) | 118,898 | 95,210 | 598,217 | (3,433 | ) | 1,024,140 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
6
2017 | 2016 | 2015 | ||||||||||
Cash flows from operating activities | ||||||||||||
Profit for the period | 40,939 | 45,710 | 43,386 | |||||||||
Adjustments to reconcile profit for the period to net cash provided by (used in) operating activities: | ||||||||||||
Activities of derivative financial instruments used for hedging | (23,616 | ) | (5,790 | ) | (14,666 | ) | ||||||
Depreciation of equipment and leasehold improvements | 787 | 663 | 725 | |||||||||
Amortization of intangible assets | 379 | 203 | 322 | |||||||||
Impairment loss from expected credit losses | 7,993 | 13,261 | 9,119 | |||||||||
Net loss (gain) on sale of financial assets at fair value through OCI | (79 | ) | (30 | ) | (429 | ) | ||||||
Compensation cost - share-based payment | 644 | 1,007 | 1,491 | |||||||||
Interest income | (115,230 | ) | (121,631 | ) | (106,478 | ) | ||||||
Interest expense | 51,453 | 43,927 | 35,846 | |||||||||
Net decrease (increase) in operating assets: | ||||||||||||
Net (increase) decrease in pledged deposits | 13,615 | (4,850 | ) | 6,649 | ||||||||
Financial instruments at fair value through profit or loss | (13 | ) | 53,167 | 3,658 | ||||||||
Net decrease (increase) in loans at amortized cost | 449,890 | 170,666 | (224,996 | ) | ||||||||
Other assets | 5,925 | 5,013 | 96,840 | |||||||||
Net increase (decrease) in operating liabilities: | ||||||||||||
Net increase due to depositors | 550,703 | 410,831 | 730,251 | |||||||||
Financial liabilities at fair value through profit or loss | 3 | (89 | ) | 7 | ||||||||
Other liabilities | (17,486 | ) | (18,809 | ) | (61,042 | ) | ||||||
Cash provided by operating activities: | ||||||||||||
Interest received | 125,951 | 120,777 | 116,283 | |||||||||
Interest paid | (55,103 | ) | (46,217 | ) | (35,689 | ) | ||||||
Net cash provided by operating activities | 1,036,755 | 667,809 | 601,277 | |||||||||
Cash flows from investing activities: | ||||||||||||
Acquisition of equipment and leasehold improvements | (346 | ) | (89 | ) | (277 | ) | ||||||
Acquisition of intangible assets | (4 | ) | (7 | ) | - | |||||||
Proceeds from disposal of equipment and leasehold improvements | 64 | - | - | |||||||||
Proceeds from the redemption of of financial instruments at fair value through OCI | - | 70,341 | 94,557 | |||||||||
Proceeds from the sale of financial instruments at fair value through OCI | 14,488 | 78,450 | 47,035 | |||||||||
Proceeds from maturities of financial instruments at amortized cost | 14,879 | 29,075 | 13,335 | |||||||||
Purchases of financial instruments at fair value through OCI | - | (83,627 | ) | (88,224 | ) | |||||||
Purchases of financial instruments at amortized cost | - | (24,071 | ) | (21,929 | ) | |||||||
Net cash provided by investing activities | 29,081 | 70,072 | 44,497 | |||||||||
Cash flows from financing activities: | ||||||||||||
Net (decrease) increase in short-term borrowings and debt and securities sold under repurchase agreements | (983,019 | ) | (1,234,527 | ) | (583,565 | ) | ||||||
Proceeds from long-term borrowings and debt | 219,587 | 464,969 | 405,513 | |||||||||
Repayments of long-term borrowings and debt | (510,618 | ) | (299,607 | ) | (220,994 | ) | ||||||
Dividends paid | (30,294 | ) | (29,722 | ) | (29,863 | ) | ||||||
Exercised stock options | 2,003 | - | 1,382 | |||||||||
Net cash (used in) financing activities | (1,302,369 | ) | (1,098,887 | ) | (427,527 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | (236,533 | ) | (361,006 | ) | 218,247 | |||||||
Cash and cash equivalents at beginning of the period | 1,007,726 | 1,267,302 | 741,305 | |||||||||
Cash and cash equivalents at end of the period | 771,193 | 906,296 | 959,552 |
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 (until April 5, 2017); in Lima, Peru; and in Bogota, Colombia.
These unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors on July 18, 2017.
2. | Basis of preparation of the unaudited condensed consolidated interim financial statements |
2.1 | Statement of compliance |
These unaudited consolidated condensed 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, 2016, 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.
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 |
June 30, 2017 | December 31, 2016 | |||||||
Cash and due from banks | 20,684 | 89,656 | ||||||
Interest-bearing deposits in banks | 798,706 | 979,882 | ||||||
Total | 819,390 | 1,069,538 | ||||||
Less: | ||||||||
Pledged deposits | 48,197 | 61,812 | ||||||
Total cash and cash equivalents | 771,193 | 1,007,726 |
Interest-bearing deposits in banks
Demand deposits
As of June 30, 2017 and December 31, 2016, cash in banks balances correspond to bank deposits, bearing interest based on the daily rates determined by banks for between 0.25% to 1.30% and 0.01% to 0.77%, respectively.
Time deposits
As of June 30, 2017 and December 31, 2016, cash equivalents balances correspond to demand deposits (overnight), bearing an average interest rate of 1.30% and 0.83% to 0.88%, respectively.
Pledged deposits
June 30, 2017 | December 31, 2016 | |||||||
Pledged deposits: | ||||||||
New York(1) | 3,000 | 2,800 | ||||||
Panama(2) | 45,197 | 59,012 | ||||||
Total | 48,197 | 61,812 |
(1) | The New York Agency had a pledged deposit with the New York State Banking Department, as required by law since March 1994. |
(2) | The Bank had pledged deposits to secure derivative financial instruments transactions. |
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:
June 30, 2017 | December 31, 2016 | |||||||
Assets | ||||||||
Foreign exchange forward | 13 | - | ||||||
Total | 13 | - | ||||||
Liabilities | ||||||||
Foreign exchange forward | 27 | 24 | ||||||
Total | 27 | 24 |
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 (continued) |
4.1 | Financial instruments at FVTPL - Fair value through profit or loss (continued) |
The information on the nominal amounts of derivative financial instruments at FVTPL is as follows:
June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Nominal | Fair Value | Nominal | Fair Value | |||||||||||||||||||||
Amount | Asset | Liability | Amount | Asset | Liability | |||||||||||||||||||
Foreign exchange forward | 3,095 | 13 | 27 | 1,274 | - | 24 | ||||||||||||||||||
Total | 3,095 | 13 | 27 | 1,274 | - | 24 |
4.2 | 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:
June 30, 2017 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized Cost | Gain | Loss | Fair Value | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 2,931 | - | 40 | 2,891 | ||||||||||||
Chile | 5,206 | - | 18 | 5,188 | ||||||||||||
Trinidad and Tobago | 9,063 | - | 707 | 8,356 | ||||||||||||
17,200 | - | 765 | 16,435 |
December 31, 2016 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized Cost | Gain | Loss | Fair Value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 3,144 | - | 62 | 3,082 | ||||||||||||
Venezuela | 10,810 | 20 | 3 | 10,827 | ||||||||||||
13,954 | 20 | 65 | 13,909 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 2,926 | - | 140 | 2,786 | ||||||||||||
Chile | 5,229 | - | 59 | 5,170 | ||||||||||||
Trinidad and Tobago | 9,283 | - | 541 | 8,742 | ||||||||||||
17,438 | - | 740 | 16,698 | |||||||||||||
31,392 | 20 | 805 | 30,607 |
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) |
4.2 | Securities at fair value through other comprehensive income (continued) |
As of June 30, 2017 and December 31, 2016, there were no securities at fair value through OCI guaranteeing repurchase transactions.
The following table discloses those securities that had unrealized losses for a period less than 12 months and for 12 months or longer:
June 30, 2017 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Gross Losses | Fair Value | Unrealized Gross Losses | Fair Value | Unrealized Gross Losses | |||||||||||||||||||
Sovereign debt | 7,115 | 25 | 9,320 | 740 | 16,435 | 765 | ||||||||||||||||||
Total | 7,115 | 25 | 9,320 | 740 | 16,435 | 765 |
December 31, 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 | 1,805 | 3 | 3,082 | 62 | 4,887 | 65 | ||||||||||||||||||
Sovereign debt | 5,170 | 59 | 11,528 | 681 | 16,698 | 740 | ||||||||||||||||||
Total | 6,975 | 62 | 14,610 | 743 | 21,585 | 805 |
The following table presents the realized gains and losses on sale of securities at fair value through other comprehensive income:
Three months ended June 30, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Realized gain on sale of securities | 130 | 7,432 | 140 | |||||||||
Realized loss on sale of securities | (165 | ) | (7,462 | ) | (7 | ) | ||||||
Net (loss) gain on sale of securities at fair value through other comprehensive income | (35 | ) | (30 | ) | 133 |
Six months ended June 30, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Realized gain on sale of securities | 667 | 7,471 | 436 | |||||||||
Realized loss on sale of securities | (588 | ) | (7,786 | ) | (7 | ) | ||||||
Net gain (loss) on sale of securities at fair value through other comprehensive income | 79 | (315 | ) | 429 |
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) |
4.2 | 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) | June 30, 2017 | December 31, 2016 | ||||||
1-4 | 16,435 | 30,607 | ||||||
5-6 | - | - | ||||||
7 | - | - | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 16,435 | 30,607 |
(1) Current ratings as of June 30, 2017 and December 31, 2016, respectively.
The amortized cost and fair value of securities at fair value through other comprehensive income by contractual maturity are shown in the following tables:
June 30, 2017 | December 31, 2016 | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
Due within 1 year | - | - | - | - | ||||||||||||
After 1 year but within 5 years | 14,269 | 13,544 | 17,656 | 16,994 | ||||||||||||
After 5 years but within 10 years | 2,931 | 2,891 | 13,736 | 13,613 | ||||||||||||
17,200 | 16,435 | 31,392 | 30,607 |
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) |
4.2 | 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) | Stage 3 (3) | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 42 | 263 | - | 305 | ||||||||||||
Transfer to lifetime expected credit losses | - | - | - | - | ||||||||||||
Transfer to credit-impaired financial assets | - | - | - | - | ||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | ||||||||||||
Net effect of changes in reserve for expected credit losses | (1 | ) | 3 | - | 2 | |||||||||||
Financial assets that have been derecognized during the period | (11 | ) | - | - | (11 | ) | ||||||||||
Changes due to financial instruments recognized as of December 31, 2016: | (12 | ) | 3 | - | (9 | ) | ||||||||||
New financial assets originated or purchased | - | - | - | - | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Allowance for expected credit losses as of June 30, 2017 | 30 | 266 | - | 296 |
Stage 1 (1) | Stage 2 (2) | 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 | (31 | ) | 456 | - | 425 | |||||||||||
Transfer to credit-impaired financial assets | - | - | - | - | ||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | ||||||||||||
Net effect of changes in reserve for expected credit losses | (15 | ) | (168 | ) | - | (183 | ) | |||||||||
Financial assets that have been derecognized during the year | (174 | ) | (203 | ) | - | (377 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2015: | (220 | ) | 85 | - | (135 | ) | ||||||||||
New financial assets originated or purchased | 28 | - | - | 28 | ||||||||||||
Write-offs | - | - | (6,737 | ) | (6,737 | ) | ||||||||||
Allowance for expected credit losses as of December 31, 2016 | 42 | 263 | - | 305 |
(1) | 12-month expected credit losses. |
(2) | Lifetime expected credit losses. |
(3) | Credit-impaired financial assets (lifetime expected credit losses). |
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 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:
June 30, 2017 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized Cost (1) | Gross Gain | Gross Loss | Fair Value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 4,597 | 34 | 61 | 4,570 | ||||||||||||
4,597 | 34 | 61 | 4,570 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Colombia | 29,408 | 213 | - | 29,621 | ||||||||||||
Mexico | 20,370 | - | 314 | 20,056 | ||||||||||||
Panama | 8,564 | 304 | - | 8,868 | ||||||||||||
58,342 | 517 | 314 | 58,545 | |||||||||||||
62,939 | 551 | 375 | 63,115 |
December 31, 2016 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized Cost (2) | Gross Gain | Gross Loss | Fair Value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 4,614 | - | 146 | 4,468 | ||||||||||||
Panama | 3,000 | - | - | 3,000 | ||||||||||||
7,614 | - | 146 | 7,468 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 11,179 | 37 | 194 | 11,022 | ||||||||||||
Colombia | 29,812 | 34 | 280 | 29,566 | ||||||||||||
Mexico | 20,541 | - | 1,059 | 19,482 | ||||||||||||
Panama | 8,670 | 198 | - | 8,868 | ||||||||||||
70,202 | 269 | 1,533 | 68,938 | |||||||||||||
77,816 | 269 | 1,679 | 76,406 |
(1) | Amounts do not include allowance for expected credit losses of US$148. |
(2) | Amounts do not include allowance for expected credit losses of US$602. |
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 amortized cost (continued) |
The amortized cost and fair value of securities at amortized cost by contractual maturity are shown in the following tables:
June 30, 2017 | December 31, 2016 | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
Due within 1 year | - | - | 3,988 | 4,025 | ||||||||||||
After 1 year but within 5 years | 62,939 | 63,115 | 68,537 | 67,358 | ||||||||||||
After 5 years but within 10 years | - | - | 5,291 | 5,023 | ||||||||||||
62,939 | 63,115 | 77,816 | 76,406 |
As of June 30, 2017 and December 31, 2016, there were no securities at amortized cost, guaranteeing repurchase transactions.
Securities at amortized cost classified by issuer’s credit quality indicators are as follows:
Rating(1) | June 30, 2017 | December 31, 2016 | ||||||
1-4 | 61,455 | 76,333 | ||||||
5-6 | 1,484 | 1,483 | ||||||
7 | - | - | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 62,939 | 77,816 |
(1) | Current ratings as of June 30, 2017 and December 31, 2016, respectively. |
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) |
4.3 | 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) | Stage 3 (3) | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 99 | 503 | - | 602 | ||||||||||||
Transfer to lifetime expected credit losses | - | - | - | - | ||||||||||||
Transfer to credit-impaired financial assets | - | - | - | - | ||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | ||||||||||||
Net effect of changes in reserve for expected credit losses | 1 | (22 | ) | - | (21 | ) | ||||||||||
Financial assets that have been derecognized during the period | (11 | ) | (422 | ) | - | (433 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2016: | (10 | ) | (444 | ) | - | (454 | ) | |||||||||
New financial assets originated or purchased | - | - | - | - | ||||||||||||
Allowance for expected credit losses as of June 30, 2017 | 89 | 59 | - | 148 |
Stage 1 (1) | Stage 2 (2) | 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 | (5 | ) | (91 | ) | - | (96 | ) | |||||||||
Financial assets that have been derecognized during the year | (317 | ) | (28 | ) | - | (345 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2015: | (365 | ) | 325 | - | (40 | ) | ||||||||||
New financial assets originated or purchased | 116 | - | - | 116 | ||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 99 | 503 | - | 602 |
(1) | 12-month expected credit losses. |
(2) | Lifetime expected credit losses. |
(3) | Credit-impaired financial assets (lifetime expected credit losses). |
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 | Recognition and derecognition of financial assets |
During the periods ended June 30, 2017, 2016 and 2015, the Bank sold certain financial instruments in the secondary market 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 at amortized cost” in the consolidated statement of profit or loss.
Assignments and Participations | Gains | |||||||
For the period ended June 30, 2017 | 70,400 | 98 | ||||||
For the period ended June 30, 2016 | 53,900 | 326 | ||||||
For the period ended June 30, 2015 | 41,020 | 227 |
4.5 | Loans – at amortized cost |
The following table set forth details of the Bank’s gross loan portfolio:
June 30, 2017 | December 31, 2016 | |||||||
Corporations: | ||||||||
Private | 2,369,870 | 2,655,910 | ||||||
State-owned | 868,755 | 786,900 | ||||||
Banking and financial institutions: | ||||||||
Private | 1,629,497 | 1,738,999 | ||||||
State-owned | 456,093 | 544,877 | ||||||
Middle-market companies: | ||||||||
Private | 246,100 | 294,045 | ||||||
Total | 5,570,315 | 6,020,731 |
The composition of the gross loan portfolio by industry is as follows:
June 30, 2017 | December 31, 2016 | |||||||
Banking and financial institutions | 2,085,590 | 2,283,876 | ||||||
Industrial | 1,111,020 | 1,242,441 | ||||||
Oil and petroleum derived products | 975,877 | 788,186 | ||||||
Agricultural | 698,428 | 1,007,139 | ||||||
Services | 341,187 | 419,440 | ||||||
Mining | 195,000 | 54,000 | ||||||
Others | 163,213 | 225,649 | ||||||
Total | 5,570,315 | 6,020,731 |
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) |
4.5 | 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 $6,723 and $7,249 at June 30, 2017 and December 31, 2016, respectively.
Loans classified by borrower’s credit quality indicators are as follows:
June 30, 2017 | ||||||||||||||||||||||||
Corporations | Banking and financial institutions | Middle-market companies | ||||||||||||||||||||||
Rating(1) | Private | State-owned | Private | State-owned | Private | Total | ||||||||||||||||||
1-4 | 1,622,796 | 714,589 | 1,331,663 | 260,589 | 140,934 | 4,070,571 | ||||||||||||||||||
5-6 | 667,245 | 154,166 | 297,834 | 195,504 | 70,166 | 1,384,915 | ||||||||||||||||||
7 | 55,465 | - | - | - | - | 55,465 | ||||||||||||||||||
8 | 6,000 | - | - | - | - | 6,000 | ||||||||||||||||||
9 | - | - | - | - | - | - | ||||||||||||||||||
10 | 18,364 | - | - | - | 35,000 | 53,364 | ||||||||||||||||||
Total | 2,369,870 | 868,755 | 1,629,497 | 456,093 | 246,100 | 5,570,315 |
December 31, 2016 | ||||||||||||||||||||||||
Corporations | Banking and financial institutions | Middle-market companies | ||||||||||||||||||||||
Rating(1) | Private | State-owned | Private | State-owned | Private | Total | ||||||||||||||||||
1-4 | 1,714,936 | 646,797 | 1,457,984 | 259,981 | 174,107 | 4,253,805 | ||||||||||||||||||
5-6 | 863,937 | 140,103 | 281,015 | 284,896 | 84,938 | 1,654,889 | ||||||||||||||||||
7 | 58,673 | - | - | - | - | 58,673 | ||||||||||||||||||
8 | 4,000 | - | - | - | - | 4,000 | ||||||||||||||||||
9 | - | - | - | - | 35,000 | 35,000 | ||||||||||||||||||
10 | 14,364 | - | - | - | - | 14,364 | ||||||||||||||||||
Total | 2,655,910 | 786,900 | 1,738,999 | 544,877 | 294,045 | 6,020,731 |
(1)Current ratings as of June 30, 2017 and December 31, 2016, respectively.
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 | Loans – at amortized cost (continued) |
The following table provides a breakdown of gross loans by country risk:
June 30, 2017 | December
31, | |||||||
Country: | ||||||||
Argentina | 195,785 | 325,321 | ||||||
Belgium | 13,055 | 4,180 | ||||||
Bolivia | - | 18,318 | ||||||
Brazil | 1,039,084 | 1,163,825 | ||||||
Chile | 220,798 | 69,372 | ||||||
Colombia | 585,193 | 653,012 | ||||||
Costa Rica | 350,706 | 400,371 | ||||||
Dominican Republic | 79,311 | 243,696 | ||||||
Ecuador | 178,845 | 129,269 | ||||||
El Salvador | 86,578 | 104,723 | ||||||
Germany | 45,000 | 50,000 | ||||||
Guatemala | 273,195 | 315,911 | ||||||
Honduras | 50,497 | 72,319 | ||||||
Jamaica | 60,177 | 7,399 | ||||||
Luxembourg | 18,078 | 14,722 | ||||||
Mexico | 1,034,610 | 927,041 | ||||||
Nicaragua | 41,515 | 36,949 | ||||||
Panama | 425,626 | 498,651 | ||||||
Paraguay | 56,628 | 108,068 | ||||||
Peru | 484,064 | 467,408 | ||||||
Singapore | 33,293 | 70,204 | ||||||
Switzerland | - | 46,000 | ||||||
Trinidad and Tobago | 190,500 | 184,389 | ||||||
United States of America | 73,277 | 73,083 | ||||||
Uruguay | 36,500 | 36,500 | ||||||
Total | 5,570,315 | 6,020,731 |
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) |
4.5 | Loans – at amortized cost (continued) |
The remaining loan maturities are summarized as follows:
June 30, 2017 | December
31, | |||||||
Current: | ||||||||
Up to 1 month | 748,711 | 896,310 | ||||||
From 1 month to 3 months | 1,351,784 | 1,300,675 | ||||||
From 3 months to 6 months | 1,045,355 | 1,267,194 | ||||||
From 6 months to 1 year | 648,984 | 551,794 | ||||||
From 1 year to 2 years | 570,492 | 631,629 | ||||||
From 2 years to 5 years | 1,068,104 | 1,211,847 | ||||||
More than 5 years | 74,236 | 95,918 | ||||||
5,507,666 | 5,955,367 | |||||||
Impaired: | ||||||||
Delinquent with impairment | 6,000 | - | ||||||
Past due with impairment | 56,649 | 65,364 | ||||||
Total | 5,570,315 | 6,020,731 |
As of June 30, 2017 and December 31, 2016, the range of interest rates on loans fluctuates from 1.29% and 13.86% (2016: 1.21% y 12.69%).
The fixed and floating interest rate distribution of the loan portfolio is as follows:
June 30, 2017 | December
31, | |||||||
Fixed interest rates | 2,554,714 | 2,709,555 | ||||||
Floating interest rates | 3,015,601 | 3,311,176 | ||||||
Total | 5,570,315 | 6,020,731 |
As of June 30, 2017 and December 31, 2016, 93%, for both periods, of the loan portfolio at fixed interest rates has remaining maturities of less than 180 days.
An analysis of credit-impaired balances is detailed as follows:
June 30, 2017 | 2017 | |||||||||||||||||||
Recorded investment | Past due principal balance | Related allowance Stage 3 | Average principal loan balance | Interest income recognized | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Private corporations | 27,649 | 24,364 | 25,654 | 15,223 | 90 | |||||||||||||||
Middle-market companies | 35,000 | 35,000 | 19,942 | 35,000 | 763 | |||||||||||||||
Total | 62,649 | 59,364 | 45,596 | 50,223 | 853 |
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) |
4.5 Loans – at amortized cost (continued)
December 31, 2016 | 2016 | |||||||||||||||||||
Recorded investment | Past due principal balance | Related allowance Stage 3 | Average principal loan balance | Interest income recognized | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Private corporations | 30,364 | 18,364 | 23,174 | 12,500 | 408 | |||||||||||||||
Middle-market companies | 35,000 | 35,000 | 12,179 | 17,705 | 1,679 | |||||||||||||||
Total | 65,364 | 53,364 | 35,353 | 30,205 | 2,087 |
The following is a summary of information of interest amounts recognized on an effective interest basis on net carrying amount for those financial assets in Stage 3:
Three months ended June 30, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Interest revenue calculated on the net carrying amount (net of credit allowance) | 359 | 585 | 84 |
Six months ended June 30, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Interest revenue calculated on the net carrying amount (net of credit allowance) | 853 | 662 | 140 |
The following table presents an aging analysis of the loan portfolio:
June 30, 2017 | ||||||||||||||||||||||||||||||||
91-120 days | 121-150 days | 151-180 days | Greater than 180 days | Total Past due | Delinquent | Current | Total | |||||||||||||||||||||||||
Corporations | - | - | 3,285 | 18,364 | 21,649 | 6,000 | 3,210,976 | 3,238,625 | ||||||||||||||||||||||||
Banking and financial institutions | - | - | - | - | - | - | 2,085,590 | 2,085,590 | ||||||||||||||||||||||||
Middle-market companies | - | - | - | 35,000 | 35,000 | - | 211,100 | 246,100 | ||||||||||||||||||||||||
Total | - | - | 3,285 | 53,364 | 56,649 | 6,000 | 5,507,666 | 5,570,315 |
December 31, 2016 | ||||||||||||||||||||||||||||||||
91-120 days | 121-150 days | 151-180 days | Greater than 180 | Total Past due | Delinquent | Current | Total | |||||||||||||||||||||||||
Corporations | - | - | 4,000 | 14,364 | 18,364 | - | 3,424,446 | 3,442,810 | ||||||||||||||||||||||||
Banking and financial institutions | - | - | - | - | - | - | 2,283,876 | 2,283,876 | ||||||||||||||||||||||||
Middle-market companies | - | - | - | 35,000 | 35,000 | - | 259,045 | 294,045 | ||||||||||||||||||||||||
Total | - | - | 4,000 | 49,364 | 53,364 | - | 5,967,367 | 6,020,731 |
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) |
4.5 Loans – at amortized cost (continued)
As of June 30, 2017 and December 31, 2016, the Bank had credit transactions in the normal course of business with 16%, for both periods, respectively, 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 June 30, 2017 and December 31, 2016, approximately 8% and 10%, respectively, of the outstanding loan portfolio was placed with the Bank’s Class “A” and “B” stockholders and their related parties. As of June 30, 2017, 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) | Stage 3 (3) | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 29,036 | 41,599 | 35,353 | 105,988 | ||||||||||||
Transfer to lifetime expected credit losses – not credit-impaired | (19 | ) | 19 | - | - | |||||||||||
Transfer to lifetime expected credit losses - credit-impaired | - | (1,110 | ) | 1,110 | - | |||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | ||||||||||||
Net effect of changes in reserve for expected credit losses | (912 | ) | 9,740 | 9,133 | 17,961 | |||||||||||
Financial assets that have been derecognized during the period | (27,222 | ) | (4,347 | ) | - | (31,569 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2016: | (28,153 | ) | 4,302 | 10,243 | (13,608 | ) | ||||||||||
New financial assets originated or purchased | 23,227 | - | - | 23,227 | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Recoveries of amounts previously written off | - | - | - | - | ||||||||||||
Allowance for expected credit losses as of June 30, 2017 | 24,110 | 45,901 | 45,596 | 115,607 |
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) |
4.5 Loans – at amortized cost (continued)
Stage 1 (1) | Stage 2 (2) | 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 – not credit-impaired | (9,117 | ) | 9,119 | - | 2 | |||||||||||
Transfer to lifetime expected credit losses – not credit-impaired | (7 | ) | (6,317 | ) | 6,324 | - | ||||||||||
Transfer to 12-month expected credit losses | 2,038 | (2,077 | ) | 38 | (1 | ) | ||||||||||
Net effect of changes in reserve for expected credit losses | (39,621 | ) | 48,021 | 26,491 | 34,891 | |||||||||||
Financial assets that have been derecognized during the year | (65,640 | ) | (16,756 | ) | - | (82,396 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2015: | (112,347 | ) | 31,990 | 32,853 | (47,504 | ) | ||||||||||
New financial assets originated or purchased | 82,169 | - | - | 82,169 | ||||||||||||
Write-offs | - | - | (18,807 | ) | (18,807 | ) | ||||||||||
Recoveries of amounts previously written off | - | - | 156 | 156 | ||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 29,036 | 41,599 | 35,353 | 105,988 |
(1) | 12-month expected credit losses. |
(2) | Lifetime expected credit losses. |
(3) | Credit-impaired financial assets (lifetime expected credit losses). |
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 Derivative financial instruments for hedging purposes
Quantitative information on derivative financial instruments held for hedging purposes is as follows:
June 30, 2017 | ||||||||||||||||
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 | 367,700 | - | (1,636 | ) | 329 | |||||||||||
Cross-currency interest rate swaps | 318,067 | 1,902 | (27,601 | ) | 16,684 | |||||||||||
Cash flow hedges: | ||||||||||||||||
Interest rate swaps | 342,500 | 246 | (1,173 | ) | 369 | |||||||||||
Cross-currency interest rate swaps | 23,025 | 264 | - | 1,518 | ||||||||||||
Foreign exchange forward | 321,930 | 4,050 | (3,524 | ) | 3,750 | |||||||||||
Net investment hedges: | ||||||||||||||||
Foreign exchange forward | 1,964 | 35 | (12 | ) | 154 | |||||||||||
Total | 1,375,186 | 6,497 | (33,946 | ) | 22,804 |
December 31, 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 | 796,202 | 40 | (2,005 | ) | (2,199 | ) | ||||||||||
Cross-currency interest rate swaps | 291,065 | 2,561 | (44,944 | ) | (19,316 | ) | ||||||||||
Cash flow hedges: | ||||||||||||||||
Interest rate swaps | 752,000 | 323 | (1,699 | ) | 696 | |||||||||||
Cross-currency interest rate swaps | 23,025 | - | (1,254 | ) | (1,313 | ) | ||||||||||
Foreign exchange forward | 352,553 | 6,428 | (9,653 | ) | (5,093 | ) | ||||||||||
Net investment hedges: | ||||||||||||||||
Foreign exchange forward | 3,780 | - | (131 | ) | (415 | ) | ||||||||||
Total | 2,218,625 | 9,352 | (59,686 | ) | (27,640 | ) |
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.
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 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 June 30, 2017 | ||||||||||||||
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 | (431 | ) | Gain (loss) on interest rate swap | - | 51 | |||||||||
Cross-currency interest rate swaps | 86 | Gain (loss) on foreign currency exchange | - | 18 | ||||||||||
Interest income loans at amortized cost | (2,158 | ) | - | |||||||||||
Foreign exchange forward | 8,708 | Interest income – securities at FVOCI | - | - | ||||||||||
Interest income loans at amortized cost | (2,032 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 8,594 | - | ||||||||||||
Gain (loss) on foreign currency exchange | - | - | ||||||||||||
Total | 8,363 | 4,404 | 69 |
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) |
4.6 Derivative financial instruments for hedging purposes (continued)
Six months ended at June 30, 2017 | ||||||||||||||
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 | (815 | ) | Gain (loss) on interest rate swap | - | 284 | |||||||||
Cross-currency interest rate swaps | (1,333 | ) | Gain (loss) on foreign currency exchange | - | 43 | |||||||||
Interest income loans at amortized cost | (287 | ) | - | |||||||||||
Foreign exchange forward | (1,130 | ) | Interest income – securities at FVOCI | - | - | |||||||||
Interest income loans at amortized cost | (2,832 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | (18,575 | ) | - | |||||||||||
Gain (loss) on foreign currency exchange | - | - | ||||||||||||
Total | (3,278 | ) | (21,694 | ) | 327 |
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) |
4.6 Derivative financial instruments for hedging purposes (continued)
Three months ended at June 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 | (840 | ) | Gain (loss) on interest rate swap | - | (383 | ) | ||||||||
Cross-currency interest rate swaps | (1,025 | ) | Gain (loss) on foreign exchange | - | 89 | |||||||||
Interest income – loans at amortized cost | (1,003 | ) | - | |||||||||||
Forward foreign exchange | (661 | ) | Interest income – securities at FVOCI | 220 | - | |||||||||
Interest income – loans at amortized cost | - | - | ||||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 173 | - | ||||||||||||
Gain (loss) on foreign currency exchange | 694 | - | ||||||||||||
Total | (2,526 | ) | 84 | (294 | ) |
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) |
4.6 Derivative financial instruments for hedging purposes (continued)
Six months ended at June 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 | (2,458 | ) | Gain (loss) on interest rate swap | - | (961 | ) | ||||||||
Cross-currency interest rate swaps | 1,762 | Gain (loss) on foreign exchange | - | 26 | ||||||||||
Interest income – loans at amortized cost | - | - | ||||||||||||
Forward foreign exchange | (1,876 | ) | Interest income – securities at FVOCI | - | - | |||||||||
Interest income – loans at amortized cost | (1,755 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 350 | - | ||||||||||||
Gain (loss) on foreign currency exchange | 4,634 | - | ||||||||||||
Total | (2,572 | ) | 3,229 | (935 | ) |
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) |
4.6 Derivative financial instruments for hedging purposes (continued)
Three months ended at June 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 | 875 | Gain (loss) on interest rate swap | - | - | ||||||||||
Cross-currency interest rate swaps | 2,087 | Gain (loss) on foreign exchange | - | - | ||||||||||
Interest income – loans at amortized cost | - | - | ||||||||||||
Forward foreign exchange | 194 | Interest income – securities at FVOCI | (338 | ) | - | |||||||||
Interest income – loans at amortized cost | (417 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 95 | - | ||||||||||||
Gain (loss) on foreign currency exchange | 2,805 | - | ||||||||||||
Total | 3,156 | 2,145 | - | |||||||||||
Derivatives – net investment hedge | ||||||||||||||
Forward foreign exchange | (416 | ) | - | - | ||||||||||
Total | (416 | ) | - | - |
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) |
4.6 Derivative financial instruments for hedging purposes (continued)
Six months ended at June 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 | (264 | ) | Gain (loss) on interest rate swap | - | - | |||||||||
Cross-currency interest rate swaps | 3,046 | Gain (loss) on foreign exchange | - | - | ||||||||||
Interest income – loans at amortized cost | - | - | ||||||||||||
Forward foreign exchange | 1,607 | Interest income – securities at FVOCI | (535 | ) | - | |||||||||
Interest income – loans at amortized cost | (663 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 95 | - | ||||||||||||
Gain (loss) on foreign currency exchange | 5,833 | - | ||||||||||||
Total | 4,389 | 4,730 | - | |||||||||||
Derivatives – net investment hedge | ||||||||||||||
Forward foreign exchange | 424 | - | - | |||||||||||
Total | 424 | - | - |
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) |
4.6 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:
June 30, 2017 | ||||||||||||||
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 | (79 | ) | 277 | 198 | |||||||||
Interest income at amortized cost | (12 | ) | 158 | 146 | ||||||||||
Interest expenses – borrowings and debt | 976 | (10,206 | ) | (9,230 | ) | |||||||||
Derivative financial instruments and hedging | 593 | (379 | ) | 214 | ||||||||||
Cross-currency interest rate swaps | Interest income loans at amortized cost | (394 | ) | 716 | 322 | |||||||||
Interest expenses – borrowings and debt | 743 | (4,772 | ) | (4,029 | ) | |||||||||
Derivative financial instruments and hedging | 19,217 | (20,685 | ) | (1,468 | ) | |||||||||
Total | 21,044 | (34,891 | ) | (13,847 | ) |
June 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 | (362 | ) | 836 | 474 | |||||||||
Interest income – loans at amortized cost | (137 | ) | 1,508 | 1,371 | ||||||||||
Interest expenses – borrowings and debt | 2,889 | (14,126 | ) | (11,237 | ) | |||||||||
Derivative financial instruments and hedging | (1,404 | ) | 1,798 | 394 | ||||||||||
Cross-currency interest rate swaps | Interest income – loans at amortized cost | (137 | ) | 354 | 217 | |||||||||
Interest expenses – borrowings and debt | (36 | ) | (2,472 | ) | (2,508 | ) | ||||||||
Derivative financial instruments and hedging | (3,713 | ) | 3,213 | (500 | ) | |||||||||
Total | (2,900 | ) | (8,889 | ) | (11,789 | ) |
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) |
4.6 Derivative financial instruments for hedging purposes (continued)
June 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 | (599 | ) | 753 | 154 | |||||||||
Interest income at amortized cost | (215 | ) | 2,080 | 1,865 | ||||||||||
Interest expenses – borrowings and debt | 2,540 | (8,097 | ) | (5,557 | ) | |||||||||
Derivative financial instruments and hedging | (3,179 | ) | 3,420 | 241 | ||||||||||
Cross-currency interest rate swaps | Interest income loans at amortized cost | (122 | ) | 288 | 166 | |||||||||
Interest expenses – borrowings and debt | 813 | (2,359 | ) | (1,546 | ) | |||||||||
Derivative financial instruments and hedging | (13,353 | ) | 15,023 | 1,670 | ||||||||||
Total | (14,115 | ) | 11,108 | (3,007 | ) |
Derivatives financial position and performance
The following tables details the changes of the market value of the underlying item in the statement of financial position related to fair value hedges:
June 30, 2017 | ||||||||||
Fair value hedges | Carrying amount | Thereof accumulated fair value adjustments | Line item in the statement of financial position | |||||||
Interest rate risk | ||||||||||
Loans | 200 | 0.20 | Loans at amortized cost | |||||||
Issuances | 353,339 | (1,661 | ) | Short and long term borrowings and debt | ||||||
Foreign exchange rate risk and FX | ||||||||||
Securities at FVOCI | 12,336 | (186 | ) | Financial instruments at FVOCI | ||||||
Loans | (1,042 | ) | (191 | ) | Loans at amortized cost | |||||
Issuances | (25,760 | ) | (57 | ) | Short and long term borrowings and debt | |||||
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) |
4.6 Derivative financial instruments for hedging purposes (continued)
Derivatives financial position and performance (continued)
December 31, 2016 | ||||||||||
Fair value hedges | Carrying amount | Thereof accumulated fair value adjustments | Line item in the statement of financial position | |||||||
Interest rate risk | ||||||||||
Loans | 18,514 | 12 | Loans at amortized cost | |||||||
Issuances | 752,910 | 2,089 | Short and long term borrowings and debt | |||||||
Foreign exchange rate risk and FX | ||||||||||
Securities at FVOCI | 22,468 | (232 | ) | Financial instruments at FVOCI | ||||||
Loans | 1,469 | (618 | ) | Loans at amortized cost | ||||||
Issuances | 45,647 | 1,189 | Short and long term borrowings and debt | |||||||
The following tables detail the profile of the timing of the nominal amount of the hedging instrument:
June 30, 2017 | ||||||||||||||||
Risk type | Foreign Exchange risk | Interest rate risk | Foreign exchange and Interest rate risk | Total | ||||||||||||
Up to 1 month | 43,574 | - | - | 43,574 | ||||||||||||
31 to 60 days | 27,107 | 39,000 | - | 66,107 | ||||||||||||
61 to 90 days | 113,533 | 26,000 | 63 | 139,596 | ||||||||||||
91 to 180 days | 62,430 | 120,200 | - | 182,630 | ||||||||||||
181 to 365 days | 64,775 | 67,500 | 16,821 | 149,096 | ||||||||||||
1 to 2 years | 150,561 | 37,000 | 81,320 | 268,881 | ||||||||||||
2 to 5 years | 3,206 | 417,500 | 23,025 | 443,731 | ||||||||||||
More than 5 years | - | 3,000 | 78,571 | 81,571 | ||||||||||||
Total | 465,186 | 710,200 | 199,800 | 1,375,186 |
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) |
4.6 Derivative financial instruments for hedging purposes (continued)
Derivatives financial position and performance (continued)
Analysis of maturity of the derivatives by type of risk covered:
December 31, 2016 | ||||||||||||||||
Risk type | Foreign Exchange risk | Interest rate risk | Foreign exchange and Interest rate risk | Total | ||||||||||||
Up to 1 month | 66,149 | - | - | 66,149 | ||||||||||||
31 to 60 days | 33,393 | 85,000 | - | 118,393 | ||||||||||||
61 to 90 days | 24,093 | 60,000 | - | 84,093 | ||||||||||||
91 to 180 days | 71,533 | 745,080 | - | 816,613 | ||||||||||||
181 to 365 days | 109,228 | 160,422 | 189 | 269,839 | ||||||||||||
1 to 2 years | 92,115 | 50,000 | 24,948 | 167,063 | ||||||||||||
2 to 5 years | 73,311 | 434,500 | 96,218 | 604,029 | ||||||||||||
More than 5 years | - | 13,200 | 79,246 | 92,446 | ||||||||||||
Total | 469,822 | 1,548,202 | 200,601 | 2,218,625 |
The following tables detail the sources of ineffectiveness for our cash flow hedge positions:
June 30, 2017 | ||||||||||||||||||||
Type of risk hedge | USD-OIS | Tenor | Xccy basis | Credit spread | Total Ineffectiveness | |||||||||||||||
Interest rate risk | 9 | 301 | - | (16 | ) | 294 | ||||||||||||||
Foreign exchange risk | (3 | ) | - | 5 | - | 2 | ||||||||||||||
Total | 6 | 301 | 5 | (16 | ) | 296 |
December 31, 2016 | ||||||||||||||||||||
Type of risk hedge | USD-OIS | Tenor | Xccy basis | Credit spread | Total Ineffectiveness | |||||||||||||||
Interest rate risk | 19 | - | - | 604 | 623 | |||||||||||||||
Foreign exchange risk | 25 | - | (4 | ) | (5 | ) | 16 | |||||||||||||
Total | 44 | - | (4 | ) | 599 | 639 |
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) |
4.6 | 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 6.69 years.
The Bank estimates that approximately $733 reported as losses in OCI as of June 30, 2017, 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 June 30, 2018.
The Bank estimates that approximately $1,041of losses reported in OCI as of June 30, 2017, related to forward foreign exchange contracts are expected to be reclassified into interest expense as an adjustment to yield of hedged available-for-sale securities during the twelve-month period ending June 30, 2018.
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 held for trading purposes as disclosed in Note 4.1.
4.7 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.
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) |
4.7 | Offsetting of financial assets and liabilities (continued) |
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 |
June 30, 2017 | ||||||||||||||||||||||||
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 | ||||||||||||||||||
Financial assets at FVTPL | 13 | - | 13 | - | - | 13 | ||||||||||||||||||
Derivative financial instruments-hedging | 6,497 | - | 6,497 | - | (13,704 | ) | (7,207 | ) | ||||||||||||||||
Total | 6,510 | - | 6,510 | - | (13,704 | ) | (7,194 | ) |
December 31, 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 | 9,352 | - | 9,352 | - | - | 9,352 | ||||||||||||||||||
Total | 9,352 | - | 9,352 | - | - | 9,352 |
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) |
4.7 | Offsetting of financial assets and liabilities (continued) |
a) | Derivative financial instruments – assets (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:
June 30, 2017 | ||||||||||||
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 | |||||||||
Financial assets at FVTPL | 13 | - | 13 | |||||||||
Derivative financial instruments - hedging | 6,497 | - | 6,497 | |||||||||
Total | 6,510 | - | 6,510 |
December 31, 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 used for hedging | 9,352 | - | 9,352 | |||||||||
Total | 9,352 | - | 9,352 |
b) | Financial liabilities and derivative financial instruments – liabilities |
June 30, 2017 | ||||||||||||||||||||||||
Gross | Gross amounts offset in the consolidated | Net amount of liabilities presented in the consolidated | Gross amounts not offset in the consolidated statement of financial position | |||||||||||||||||||||
Description | amounts of liabilities | statement of financial position | statement of financial position | Financial instruments | Cash collateral pledged | Net Amount | ||||||||||||||||||
Financial liabilities at FVTPL | 27 | - | 27 | - | - | 27 | ||||||||||||||||||
Derivative financial instruments - hedging | 33,946 | - | 33,946 | - | (45,197 | ) | (11,251 | ) | ||||||||||||||||
Total | 33,973 | - | 33,973 | - | (45,197 | ) | (11,224 | ) |
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) |
4.7 Offsetting of financial assets and liabilities (continued)
b) | Financial liabilities and derivative financial instruments – liabilities (continued) |
December 31, 2016 | ||||||||||||||||||||||||
Gross | Gross amounts offset in the consolidated | Net amount of liabilities presented in the consolidated | Gross amounts not offset in the consolidated statement of financial position | |||||||||||||||||||||
Description | amounts of liabilities | statement of financial position | statement of financial position | Financial instruments | Cash collateral pledged | Net Amount | ||||||||||||||||||
Financial liabilities at FVTPL | 24 | - | 24 | - | - | 24 | ||||||||||||||||||
Derivative financial instruments - hedging | 59,686 | - | 59,686 | - | (59,012 | ) | 674 | |||||||||||||||||
Total | 59,710 | - | 59,710 | - | (59,012 | ) | 698 |
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:
June 30, 2017 | ||||||||||||
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 | |||||||||
Derivative financial instruments: | ||||||||||||
Financial liabilities at FVTPL | 27 | - | 27 | |||||||||
Derivative financial instruments used for hedging | 33,946 | - | 33,946 | |||||||||
Total derivative financial instruments | 33,973 | - | 33,973 |
December 31, 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 | |||||||||
Derivative financial instruments: | ||||||||||||
Financial liabilities at FVTPL | 24 | - | 24 | |||||||||
Derivative financial instruments used for hedging | 59,686 | - | 59,686 | |||||||||
Total derivative financial instruments | 59,710 | - | 59,710 |
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) |
5. | Loans commitments and financial guarantees contracts |
In the normal course of business, to meet the financing needs of its customers, the Bank is party to loans commitments and financial guarantees contracts. 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 loans commitments and financial guarantees contracts are as follows:
June 30, 2017 | December 31, 2016 | |||||||
Confirmed letters of credit | 254,071 | 216,608 | ||||||
Stand-by letters of credit and guaranteed – Commercial risk | 2,342 | 176,177 | ||||||
Credit commitments | 7,438 | 10,250 | ||||||
Total | 263,851 | 403,035 |
The remaining maturity profile of the Bank’s outstanding loans commitments and financial guarantees contracts is as follows:
Maturities | June 30, 2017 | December 31, 2016 | ||||||
Up to 1 year | 246,713 | 399,257 | ||||||
From 1 to 2 years | 13,000 | - | ||||||
From 2 to 5 years | 578 | 3,200 | ||||||
More than 5 years | 3,560 | 578 | ||||||
263,851 | 403,035 |
Loans commitments and financial guarantees contracts classified by issuer’s credit quality indicators are as follows:
Rating(1) | June 30, 2017 | December 31, 2016 | ||||||
1-4 | 95,181 | 145,255 | ||||||
5-6 | 168,670 | 193,368 | ||||||
7 | - | 64,412 | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 263,851 | 403,035 |
(1) | Current ratings as of June 30, 2017 and December 31, 2016, respectively. |
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) |
5. | Loans commitments and financial guarantees contracts (continued) |
The breakdown of the Bank’s loans commitments and financial guarantees contracts exposure by country risk is as follows:
June 30, 2017 | December
31, | |||||||
Country: | ||||||||
Argentina | 141 | - | ||||||
Bolivia | 62 | 190 | ||||||
Canada | 200 | 160 | ||||||
Colombia | 81,020 | 78,815 | ||||||
Costa Rica | 9,556 | 2,250 | ||||||
Dominican Republic | - | 26,787 | ||||||
Ecuador | 87,890 | 172,522 | ||||||
El Salvador | 1,339 | 1,305 | ||||||
Guatemala | 1,700 | 7,000 | ||||||
Honduras | 1,202 | 1,170 | ||||||
Mexico | 11,738 | 11,118 | ||||||
Panama | 40,283 | 39,756 | ||||||
Paraguay | 29 | - | ||||||
Peru | 27,946 | 42,764 | ||||||
Switzerland | - | 1,000 | ||||||
United Kingdom | - | 70 | ||||||
Uruguay | 745 | 18,128 | ||||||
Total | 263,851 | 403,035 |
Letters of credit and guarantees
The Bank, on behalf of its client’s 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.
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) |
5. | Loans commitments and financial guarantees contracts (continued) |
The allowances for credit losses related to loans commitments and financial guarantees contracts are as follows:
Stage 1 (1) | Stage 2 (2) | Stage 3 (3) | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 1,144 | 4,632 | - | 5,776 | ||||||||||||
Transfer to lifetime expected credit losses | (6 | ) | 6 | - | - | |||||||||||
Transfer to credit-impaired instruments | - | - | - | - | ||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | ||||||||||||
Net effect of changes in reserve for expected credit loss | (707 | ) | (254 | ) | - | (961 | ) | |||||||||
Instruments that have been derecognized during the period | (838 | ) | (370 | ) | - | (1,208 | ) | |||||||||
Changes due to instruments recognized as of December 31, 2016: | (1,551 | ) | (618 | ) | - | (2,169 | ) | |||||||||
New instruments originated or purchased | 1,008 | - | - | 1,008 | ||||||||||||
Allowance for expected credit losses as of June 30, 2017 | 601 | 4,014 | - | 4,615 |
Stage 1 (1) | Stage 2 (2) | Stage 3 (3) | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2015 | 2,914 | 2,510 | - | 5,424 | ||||||||||||
Transfer to lifetime expected credit losses | (646 | ) | 693 | - | 47 | |||||||||||
Transfer to credit-impaired instruments | - | - | - | - | ||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | ||||||||||||
Net effect of changes in reserve for expected credit loss | (748 | ) | 1,756 | - | 1,008 | |||||||||||
Instruments that have been derecognized during the year | (2,631 | ) | (326 | ) | - | (2,957 | ) | |||||||||
Changes due to instruments recognized as of December 31, 2015: | (4,025 | ) | 2,123 | - | (1,902 | ) | ||||||||||
New instruments originated or purchased | 2,254 | - | - | 2,254 | ||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 1,143 | 4,633 | - | 5,776 |
(1) | 12-month expected credit losses. |
(2) | Lifetime expected credit losses. |
(3) | Credit-impaired financial assets (lifetime expected credit losses). |
The reserve for expected credit losses on loans commitments and financial guarantees contracts reflects the Bank’s Management estimate of expected credit losses items such as: confirmed letters of credit, stand-by letters of credit, guarantees and credit commitments.
6. | Other assets |
Following is a summary of other assets:
June 30, 2017 | December 31, 2016 | |||||||
Accounts receivable | 5,815 | 5,413 | ||||||
IT projects under development | 4,751 | 4,199 | ||||||
Other (1) | 9,247 | 1,934 | ||||||
19,813 | 11,546 |
(1) | As of June 30, 2017, $7.6 million corresponds to financial leasing under development. |
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) |
7. | Deposits |
The maturity profile of the Bank’s deposits is as follows:
June 30, 2017 | December 31, 2016 | |||||||
Demand | 126,977 | 127,014 | ||||||
Up to 1 month | 1,229,202 | 1,201,328 | ||||||
From 1 month to 3 months | 546,026 | 463,479 | ||||||
From 3 month to 6 months | 593,547 | 336,627 | ||||||
From 6 month to 1 year | 591,268 | 436,884 | ||||||
From 1 year to 2 years | 215,131 | 190,000 | ||||||
From 2 years to 5 years | 51,404 | 47,520 | ||||||
3,353,555 | 2,802,852 |
The following table presents additional information regarding the Bank’s deposits:
June 30, 2017 | December 31, 2016 | |||||||
Aggregate amounts of time deposits of $100,000 or more | 3,353,099 | 2,802,474 | ||||||
Aggregate amounts of deposits in the New York Agency | 261,652 | 250,639 |
Three months ended June 30, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Interest expense paid to deposits in the New York Agency. | 847 | 464 | 310 |
Six months ended June 30, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Interest expense paid to deposits in the New York Agency. | 1,557 | 853 | 602 |
8. | Securities sold under repurchase agreements |
As of June 30, 2017 and December 31, 2016, the Bank does not have financing transactions under repurchase agreements.
As of June 30, 2017, the Bank did not incur interest expense generated by financing transactions under repurchase agreements. During the periods ended June 30, 2016 and 2015, interest expense related to financing transactions under repurchase agreements totaled $554 and $223, 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.
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) |
9. | Borrowings and debt |
9.1 | Short-term borrowings and debt |
The breakdown of short-term (original maturity of less than one year) borrowings and debt, together with contractual interest rates, is as follows:
June 30, 2017 | December 31, 2016 | |||||||
Short-term Borrowings: | ||||||||
At fixed interest rates | 192,256 | 788,075 | ||||||
At floating interest rates | 277,500 | 657,000 | ||||||
Total borrowings | 469,756 | 1,445,075 | ||||||
Short-term Debt: | ||||||||
At fixed interest rates | 17,300 | 25,000 | ||||||
At floating interest rates | - | - | ||||||
Total debt | 17,300 | 25,000 | ||||||
Total short-term borrowings and debt | 487,056 | 1,470,075 | ||||||
Average outstanding balance during the period | 839,856 | 1,348,230 | ||||||
Maximum balance at any month-end | 1,070,070 | 1,876,322 | ||||||
Range of fixed interest rates on borrowing and debt in U.S. dollars | 1.30% to 1.75% | 1.10% to 1.50% | ||||||
Range of floating interest rates on borrowing in U.S. dollars | 1.55% to 1.82% | 1.14% to 1.48% | ||||||
Range of fixed interest rates on borrowing in Mexican pesos | 6.16% to 7.49% | 6.16 | % | |||||
Range of floating interest rate on borrowing in Mexican pesos | - | 5.72 | % | |||||
Weighted average interest rate at end of the period | 1.70 | % | 1.30 | % | ||||
Weighted average interest rate during the period | 1.43 | % | 1.10 | % |
The balances of short-term borrowings and debt by currency, is as follows:
June 30, 2017 | December 31, 2016 | |||||||
Currency | ||||||||
US dollar | 477,800 | 1,470,000 | ||||||
Mexican peso | 9,256 | 75 | ||||||
Total | 487,056 | 1,470,075 |
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) |
9. | Borrowings and debt (continued) |
9.2 Long-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 borrowings and long-term debt (original maturity of more than one year), together with contractual interest rates gross of prepaid commission of $6,156 and $5,133 as of June 30, 2017 and December 31, 2016, respectively, is as follows:
June 30, 2017 | December 31, 2016 | |||||||
Long-term Borrowings: | ||||||||
At fixed interest rates with due dates from September 2017 to February 2022. | 76,817 | 61,148 | ||||||
At floating interest rates with due dates from November 2017 to March 2021. | 682,098 | 631,326 | ||||||
Total borrowings | 758,915 | 692,474 | ||||||
Long-term Debt: | ||||||||
At fixed interest rates with due dates from March 2018 to March 2024. | 530,975 | 921,479 | ||||||
At floating interest rates with due dates from January 2018 to March 2022. | 201,973 | 167,918 | ||||||
Total long-term debt | 732,948 | 1,089,397 | ||||||
Total long-term borrowings and debt outstanding | 1,491,863 | 1,781,871 | ||||||
Average outstanding balance during the period | 1,652,208 | 1,881,085 | ||||||
Maximum outstanding balance at any month – end | 2,010,078 | 2,054,138 | ||||||
Range of fixed interest rates on borrowing and debt in U.S. dollars | 1.35% to 3.25% | 2.85% to 3.75% | ||||||
Range of floating interest rates on borrowing in U.S. dollars | 2.07% to 2.75% | 1.66% to 2.49% | ||||||
Range of fixed interest rates on borrowing in Mexican pesos | 4.75% to 9.09% | 4.75% to 8.90% | ||||||
Range of floating interest rates on borrowing and debt in Mexican pesos | 7.57% to 8.06% | 6.19% to 6.54% | ||||||
Range of fixed interest rate on debt in Japanese yens | 0.46% to 0.81% | 0.46% to 0.81% | ||||||
Range of fixed interest rate on debt in Euros | 3.75 | % | 3.75 | % | ||||
Range of fixed interest rate on debt in Australian dollar | 3.33 | % | 3.33 | % | ||||
Weighted average interest rate at the end of the period | 3.34 | % | 2.98 | % | ||||
Weighted average interest rate during the period | 3.32 | % | 2.84 | % |
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) |
9. | Borrowings and debt (continued) |
9.2 | Long-term borrowings and debt (continued) |
The balances of long-term borrowings and debt by currency, is as follows:
June 30, 2017 | December 31, 2016 | |||||||
Currency | ||||||||
US dollar | 1,076,609 | 1,392,995 | ||||||
Mexican peso | 236,888 | 219,347 | ||||||
Japanese yen | 98,771 | 95,238 | ||||||
Euro | 56,534 | 52,574 | ||||||
Australian dollar | 23,061 | 21,717 | ||||||
Total | 1,491,863 | 1,781,871 |
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 June 30, 2017 the Bank was in compliance with all covenants.
The future maturities of long-term borrowings and debt outstanding as of June 30, 2017, are as follows:
Due in | Outstanding | |||
2017 | 55,983 | |||
2018 | 426,363 | |||
2019 | 363,837 | |||
2020 | 378,199 | |||
2021 | 200,893 | |||
2022 | 10,054 | |||
2024 | 56,534 | |||
1,491,863 |
46
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries |
Notes to the unaudited condensed consolidated interim financial statements |
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated) |
10. | Other liabilities |
Following is a summary of other liabilities:
June 30, 2017 | December 31, 2016 | |||||||
Accruals and other accumulated expenses | 2,928 | 4,170 | ||||||
Accounts payable | 9,662 | 11,179 | ||||||
Others | 2,379 | 2,979 | ||||||
14,969 | 18,328 |
11. | 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 | Six months ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |||||||||||||||||||
Profit for the period | 17,481 | 22,272 | 13,518 | 40,939 | 45,710 | 43,386 | ||||||||||||||||||
Basic earnings per share | 0.44 | 0.57 | 0.35 | 1.04 | 1.17 | 1.12 | ||||||||||||||||||
Diluted earnings per share | 0.44 | 0.57 | 0.35 | 1.04 | 1.17 | 1.11 | ||||||||||||||||||
Weighted average common shares outstanding - applicable to basic | 39,317 | 39,078 | 38,954 | 39,252 | 39,037 | 38,880 | ||||||||||||||||||
Effect of diluted securities: | ||||||||||||||||||||||||
Stock options and restricted stock units plans | 30 | 120 | 119 | 28 | 83 | 135 | ||||||||||||||||||
Adjusted weighted average common shares outstanding applicable to diluted EPS | 39,347 | 39,198 | 39,073 | 39,280 | 39,120 | 39,015 |
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. | 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.
The following table provides detailed information on the Bank’s common stock activity per class for each of the periods in the three-year period ended June 30, 2017, 2016 and 2015:
(Share units) | “Class A” | “Class B” | “Class E” | “Class 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 | |||||||||||||||
Conversions | - | - | - | - | - | |||||||||||||||
Repurchase common stock | - | - | - | - | - | |||||||||||||||
Restricted stock issued – directors | - | - | 57,000 | - | 57,000 | |||||||||||||||
Exercised stock options - compensation plans | - | - | 70,358 | - | 70,358 | |||||||||||||||
Restricted stock units – vested | - | - | 64,208 | - | 64,208 | |||||||||||||||
Outstanding at June 30, 2015 | 6,342,189 | 2,479,050 | 30,147,666 | - | 38,968,905 | |||||||||||||||
Outstanding at January 1, 2016 | 6,342,189 | 2,474,469 | 30,152,247 | - | 38,968,905 | |||||||||||||||
Conversions | - | - | - | - | - | |||||||||||||||
Restricted stock issued – directors | - | - | 57,000 | - | 57,000 | |||||||||||||||
Exercised stock options - compensation plans | - | - | - | - | - | |||||||||||||||
Restricted stock units – vested | - | - | 69,678 | - | 69,678 | |||||||||||||||
Outstanding at June 30, 2016 | 6,342,189 | 2,474,469 | 30,278,925 | - | 39,095,583 | |||||||||||||||
Outstanding at January 1, 2017 | 6,342,189 | 2,474,469 | 30,343,390 | - | 39,160,048 | |||||||||||||||
Repurchase common stock | - | (1,000 | ) | - | - | (1,000 | ) | |||||||||||||
Restricted stock issued – directors | - | - | 57,000 | - | 57,000 | |||||||||||||||
Exercised stock options - compensation plans | - | - | 74,995 | - | 74,995 | |||||||||||||||
Restricted stock units – vested | - | - | 70,519 | - | 70,519 | |||||||||||||||
Outstanding at June 30, 2017 | 6,342,189 | 2,473,469 | 30,545,904 | - | 39,361,562 |
48
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries |
Notes to the unaudited condensed consolidated interim financial statements |
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated) |
12. | Capital and Reserves (continued) |
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 | ||||||||||||||||||||||||
Repurchase of common stock | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restricted stock issued – directors | - | - | - | - |