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 May, 2018
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: May 7, 2018
FOREIGN TRADE BANK OF LATIN AMERICA, INC. | |
(Registrant) |
By: | /s/ Ana Graciela de Méndez | |
Name: | Ana Graciela de Méndez | |
Title: | CFO |
Banco Latinoamericano
de Comercio Exterior, S.A.
and Subsidiaries
Unaudited condensed consolidated interim statement of financial position as of March 31, 2018 and December 31, 2017, 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 three months ended March 31, 2018, 2017 and 2016
Banco Latinoamericano de Comercio Exterior, S.A.
and Subsidiaries
Unaudited condensed consolidated interim financial statements
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statement of financial position
March 31, 2018 and December 31, 2017
(In US$ thousand)
March 31, | December 31, | |||||||||
2018 | 2017 | |||||||||
Notes | (Unaudited) | (Audited) | ||||||||
Assets | ||||||||||
Cash and cash equivalents | 3,16 | 560,276 | 672,048 | |||||||
Financial Instruments: | 4,16 | |||||||||
At fair value through OCI | 4,16 | 24,313 | 25,135 | |||||||
Securities at amortized cost, net | 4,16 | 68,112 | 68,934 | |||||||
Loans | 4 | 5,225,324 | 5,505,658 | |||||||
Less: | ||||||||||
Allowance for expected credit losses | 4 | 82,670 | 81,294 | |||||||
Unearned interest and deferred fees | 4 | 5,927 | 4,985 | |||||||
Loans, net | 5,136,727 | 5,419,379 | ||||||||
Derivative financial instruments used for hedging – receivable | 4,14,16 | 14,682 | 13,338 | |||||||
Property and equipment, net | 7,120 | 7,420 | ||||||||
Intangibles, net | 5,115 | 5,425 | ||||||||
Other assets: | ||||||||||
Customers' liabilities under acceptances | 16 | 4,940 | 6,369 | |||||||
Accrued interest receivable | 16 | 34,725 | 30,872 | |||||||
Other assets | 6 | 19,035 | 18,827 | |||||||
Total of other assets | 58,700 | 56,068 | ||||||||
Total assets | 5,875,045 | 6,267,747 | ||||||||
Liabilities and stockholders' equity | ||||||||||
Deposits: | 7,15 | |||||||||
Noninterest-bearing - Demand | 407 | 420 | ||||||||
Interest-bearing - Demand | 41,594 | 81,644 | ||||||||
Time | 2,772,214 | 2,846,780 | ||||||||
Total deposits | 2,814,215 | 2,928,844 | ||||||||
Derivative financial instruments used for hedging – payable | 4,14,16 | 12,469 | 34,943 | |||||||
Financial liabilities through profit or loss | 4,16 | - | - | |||||||
Securities sold under repurchase agreement | 4,8,16 | 49,316 | - | |||||||
Short-term borrowings and debt | 9,16 | 776,967 | 1,072,723 | |||||||
Long-term borrowings and debt, net | 9,16 | 1,123,908 | 1,138,844 | |||||||
Other liabilities: | ||||||||||
Acceptances outstanding | 16 | 4,940 | 6,369 | |||||||
Accrued interest payable | 16 | 17,005 | 15,816 | |||||||
Allowance for expected credit losses on loan commitments and financial guarantees contracts | 5 | 7,423 | 6,845 | |||||||
Other liabilities | 10 | 22,066 | 20,551 | |||||||
Total other liabilities | 51,434 | 49,581 | ||||||||
Total liabilities | 4,828,309 | 5,224,935 | ||||||||
Stockholders' equity: | ||||||||||
Common stock | 12 | 279,980 | 279,980 | |||||||
Treasury stock | 13 | (60,671 | ) | (63,248 | ) | |||||
Additional paid-in capital in excess of assigned value of common stock | 12 | 120,319 | 119,941 | |||||||
Capital reserves | 95,210 | 95,210 | ||||||||
Dymanic provision | 20 | 108,756 | 108,756 | |||||||
Regulatory credit reserve | 20 | 18,748 | 20,498 | |||||||
Retained earnings | 20 | 480,778 | 479,712 | |||||||
Accumulated other comprehensive income (loss) | 4,14 | 3,616 | 1,963 | |||||||
Total stockholders' equity | 1,046,736 | 1,042,812 | ||||||||
Total liabilities and stockholders' equity | 5,875,045 | 6,267,747 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
3 |
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of profit or loss
For the three months ended March 31, 2018, 2017 and 2016
(In US$ thousand, except per share amounts)
Notes | 2018 | 2017 | 2016 | |||||||||||
Interest income: | ||||||||||||||
Deposits | 2,939 | 2,001 | 1,171 | |||||||||||
At fair value through OCI | 123 | 170 | 950 | |||||||||||
Securities at amortized cost | 485 | 533 | 784 | |||||||||||
Loans | 53,890 | 56,427 | 58,253 | |||||||||||
Total interest income | 57,437 | 59,131 | 61,158 | |||||||||||
Interest expense: | ||||||||||||||
Deposits | 14,004 | 6,207 | 4,552 | |||||||||||
Short and long-term borrowings and debt | 16,843 | 18,492 | 17,088 | |||||||||||
Total interest expense | 30,847 | 24,699 | 21,640 | |||||||||||
Net interest income | 26,590 | 34,432 | 39,518 | |||||||||||
Other income: | ||||||||||||||
Fees and commissions, net | 3,059 | 3,269 | 2,373 | |||||||||||
Loss on derivative financial instruments and foreign currency exchange, net | 4 | 1,666 | 131 | (839 | ) | |||||||||
(Loss) gain per financial instrument at fair value through profit or loss | (62 | ) | (60 | ) | (4,183 | ) | ||||||||
Gain (loss) on sale of securities at fair value through OCI | 4 | - | 114 | (285 | ) | |||||||||
Gain on sale of loans | 4 | (625 | ) | 86 | 100 | |||||||||
Other income | 115 | 354 | 351 | |||||||||||
Net other income | 4,153 | 3,894 | (2,483 | ) | ||||||||||
Total income | 30,743 | 38,326 | 37,035 | |||||||||||
Expenses: | ||||||||||||||
Impairment loss from expected credit losses on loans at amortized cost | 4 | 1,377 | 3,953 | 2,143 | ||||||||||
(Recovery) impairment loss from expected credit losses on investment securities | 4 | (25 | ) | (454 | ) | 7 | ||||||||
Impairment loss (recovery) from expected credit losses on loan commitments and financial guarantee contracts | 5 | 579 | 163 | (913 | ) | |||||||||
Salaries and other employee expenses | 10,094 | 6,696 | 7,880 | |||||||||||
Depreciation of equipment and leasehold improvements | 323 | 431 | 329 | |||||||||||
Amortization of intangible assets | 338 | 201 | 113 | |||||||||||
Other expenses | 3,559 | 3,878 | 4,038 | |||||||||||
Total expenses | 16,245 | 14,868 | 13,597 | |||||||||||
Profit for the period | 14,498 | 23,458 | 23,438 | |||||||||||
Earnings per share: | ||||||||||||||
Basic | 11 | 0.37 | 0.60 | 0.60 | ||||||||||
Diluted | 11 | 0.37 | 0.60 | 0.60 | ||||||||||
Weighted average basic shares | 11 | 39,466 | 39,188 | 38,997 | ||||||||||
Weighted average diluted shares | 11 | 39,492 | 39,296 | 39,121 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
4 |
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of profit or loss and other comprehensive income
For the three months ended March 31, 2018, 2017 and 2016
(In US$ thousand)
Notes | 2018 | 2017 | 2016 | |||||||||||
Profit for the period | 14,498 | 23,458 | 23,438 | |||||||||||
Other comprehensive income (loss): | ||||||||||||||
Items that will not reclassified subsequently to profit and loss: | ||||||||||||||
Change in fair value for revaluation by equity instrument to FVOCI, net of hedging | 14 | (623 | ) | - | - | |||||||||
Items that are or may be reclassified subsequently to profit and loss: | ||||||||||||||
Change in fair value for revaluation y debt instrument, net of hedging | 14 | 1,291 | 937 | 1,801 | ||||||||||
Reclasification adjustment for gains (losses) included in the profit | 14 | 1,160 | (2,485 | ) | 207 | |||||||||
Exchange difference in conversion of foreign operating currency | (175 | ) | - | - | ||||||||||
Other comprehensive income (loss) | 14 | 1,653 | (1,548 | ) | 2,008 | |||||||||
Total comprehensive income for the period | 16,151 | 21,910 | 25,446 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
5 |
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of changes in stockholders's equity
For the three months ended March 31, 2018, 2017 and 2016
(In US$ thousand)
Common stock | Treasury stock | Additional
paid- common stock | Capital reserves | Dymanic
provision | Regulatory
credit reserve | Retained
earnings | Accumulated income (loss) | Total | ||||||||||||||||||||||||||||
Balances at January 1, 2016 | 279,980 | (73,397 | ) | 120,177 | 95,210 | 30,788 | 7,920 | 521,934 | (10,681 | ) | 971,931 | |||||||||||||||||||||||||
Profit for the period | - | - | - | - | - | - | 23,438 | - | 23,438 | |||||||||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | - | - | 2,008 | 2,008 | |||||||||||||||||||||||||||
Issuance of restricted stock | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 659 | - | - | - | - | - | 659 | |||||||||||||||||||||||||||
Exercised options and stock units vested | - | 1,433 | (1,433 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||
Repurchase of "Class B" and "Class E" common stock | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Regulatory reserve | - | - | - | - | - | 6,381 | (6,381 | ) | - | - | ||||||||||||||||||||||||||
Dymanic provision | - | - | - | - | 830 | - | (830 | ) | - | - | ||||||||||||||||||||||||||
Dividends declared | - | - | - | - | - | - | (15,000 | ) | - | (15,000 | ) | |||||||||||||||||||||||||
Balances at March 31, 2016 | 279,980 | (71,964 | ) | 119,403 | 95,210 | 31,618 | 14,301 | 523,161 | (8,673 | ) | 983,036 | |||||||||||||||||||||||||
Balances at January 1, 2017 | 279,980 | (69,176 | ) | 120,594 | 95,210 | 43,826 | 18,633 | 525,048 | (2,801 | ) | 1,011,314 | |||||||||||||||||||||||||
Profit for the period | - | - | - | - | - | - | 23,458 | - | 23,458 | |||||||||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | - | - | (1,548 | ) | (1,548 | ) | |||||||||||||||||||||||||
Issuance of restricted stock | - | 1,005 | (1,005 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 419 | - | - | - | - | - | 419 | |||||||||||||||||||||||||||
Exercised options and stock units vested | - | 471 | (127 | ) | - | - | - | - | - | 344 | ||||||||||||||||||||||||||
Repurchase of "Class B" and "Class E" common stock | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Regulatory reserve | - | - | - | - | - | (10,967 | ) | 10,967 | - | - | ||||||||||||||||||||||||||
Dymanic provision | - | - | - | - | 983 | - | (983 | ) | - | - | ||||||||||||||||||||||||||
Dividends declared | - | - | - | - | - | - | (15,078 | ) | - | (15,078 | ) | |||||||||||||||||||||||||
Balances at March 31, 2017 | 279,980 | (67,700 | ) | 119,881 | 95,210 | 44,809 | 7,666 | 543,413 | (4,349 | ) | 1,018,910 | |||||||||||||||||||||||||
Balances at January 1, 2018 | 279,980 | (63,248 | ) | 119,941 | 95,210 | 108,756 | 20,498 | 479,712 | 1,963 | 1,042,812 | ||||||||||||||||||||||||||
Profit for the period | - | - | - | - | - | - | 14,498 | - | 14,498 | |||||||||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | - | - | 1,653 | 1,653 | |||||||||||||||||||||||||||
Issuance of restricted stock | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Compensation cost - stock options and stock units plans | - | - | 124 | - | - | - | - | - | 124 | |||||||||||||||||||||||||||
Exercised options and stock units vested | - | 2,577 | 254 | - | - | - | - | - | 2,831 | |||||||||||||||||||||||||||
Repurchase of "Class B" and "Class E" common stock | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Regulatory reserve | - | - | - | - | - | (1,750 | ) | 1,750 | - | - | ||||||||||||||||||||||||||
Dymanic provision | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Dividends declared | - | - | - | - | - | - | (15,182 | ) | - | (15,182 | ) | |||||||||||||||||||||||||
Balances at March 31, 2018 | 279,980 | (60,671 | ) | 120,319 | 95,210 | 108,756 | 18,748 | 480,778 | 3,616 | 1,046,736 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
6 |
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Unaudited condensed consolidated interim statements of cash flows
For the three months ended March 31, 2018, 2017 and 2016
(In US$ thousand)
2018 | 2017 | 2016 | ||||||||||
Cash flows from operating activities | ||||||||||||
Profit for the period | 14,498 | 23,458 | 23,438 | |||||||||
Adjustments to reconcile profit for the year to net cash provided by (used in) operating activities: | ||||||||||||
Activities of derivative financial instruments used for hedging | (21,776 | ) | (1,450 | ) | (13,038 | ) | ||||||
Depreciation of equipment and leasehold improvements | 323 | 431 | 328 | |||||||||
Amortization of intangible assets | 338 | 201 | 113 | |||||||||
Loss for disposal of equipment and leasehold improvements | - | 4 | - | |||||||||
Loss for disposal of intangible assets | - | - | - | |||||||||
Impairment loss from expected credit losses | 1,931 | 4,116 | 1,237 | |||||||||
Net (gain) loss on sale of financial assets at fair value through OCI | - | 114 | (285 | ) | ||||||||
Compensation cost - share-based payment | 124 | 419 | 659 | |||||||||
Interest income | (57,437 | ) | (59,131 | ) | (61,159 | ) | ||||||
Interest expense | 30,847 | 24,699 | 21,640 | |||||||||
Net decrease (increase) in operating assets: | ||||||||||||
Net decrease (increase) in pledged deposits | 36,685 | 7,270 | 4,125 | |||||||||
Financial instruments at fair value through profit or loss | - | - | (4,084 | ) | ||||||||
Net decrease (increase) in loans at amortized cost | 281,276 | 281,123 | 157,702 | |||||||||
Other assets | 1,221 | 9,854 | (27,216 | ) | ||||||||
Net increase (decrease) in operating liabilities: | ||||||||||||
Net increase due to depositors | (114,629 | ) | 378,404 | 277,910 | ||||||||
Financial liabilities at fair value through profit or loss | - | (24 | ) | (89 | ) | |||||||
Other liabilities | 86 | (17,073 | ) | 11,322 | ||||||||
Cash provided by operating activities | 173,487 | 652,415 | 392,603 | |||||||||
Interest received | 53,584 | 58,870 | 58,879 | |||||||||
Interest paid | (29,658 | ) | (20,492 | ) | (17,823 | ) | ||||||
Net cash provided by operating activities | 197,413 | 690,793 | 433,659 | |||||||||
Cash flows from investing activities: | ||||||||||||
Acquisition of equipment and leasehold improvements | (21 | ) | (198 | ) | 60 | |||||||
Acquisition of intangible assets | (27 | ) | - | (7 | ) | |||||||
Proceeds from the redemption of of financial instruments at fair value through OCI | - | - | 14,000 | |||||||||
Proceeds from the sale of financial instruments at fair value through OCI | 679 | 6,459 | 51,449 | |||||||||
Proceeds from maturities of financial instruments at amortized cost | 849 | 11,084 | 8,600 | |||||||||
Purchases of financial instruments at fair value through OCI | - | - | (124,640 | ) | ||||||||
Purchases of financial instruments at amortized cost | - | - | (8,226 | ) | ||||||||
Net cash provided by investing activities | 1,480 | 17,345 | (58,764 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Net decrease in short-term borrowings and debt and securities sold under repurchase agreements | (246,440 | ) | (708,512 | ) | (901,296 | ) | ||||||
Proceeds from long-term borrowings and debt | 95,000 | 255,547 | 268,206 | |||||||||
Repayments of long-term borrowings and debt | (109,936 | ) | (29,051 | ) | (281,199 | ) | ||||||
Dividends paid | (15,183 | ) | (15,077 | ) | 14,958 | |||||||
Exercised stock options | 2,577 | 344 | - | |||||||||
Repurchase of common stock | - | - | - | |||||||||
Net cash used in financing activities | (273,982 | ) | (496,749 | ) | (899,331 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | (75,089 | ) | 211,389 | (524,436 | ) | |||||||
Cash and cash equivalents at beginning of the pereiod | 618,807 | 1,007,726 | 1,267,302 | |||||||||
Cash and cash equivalents at end of the period | 543,718 | 1,219,115 | 742,866 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
7 |
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
1. | Corporate information |
Banco Latinoamericano de Comercio Exterior, S. A. (“Bladex Head Office” and together with its subsidiaries “Bladex” or the “Bank”), headquartered in Panama City, Republic of Panama, is a specialized multinational bank established to support the financing of 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 Superintendence of Banks of Panama (the “SBP”).
In the Republic of Panama, banks are regulated by the SBP through Executive Decree No. 52 of April 30, 2008, which adopts the unique text of 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 Bladex Representacao 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 Securities and Exchange Commission of Brazil (“CVM”, for its acronym in Portuguese). Bladex Investimentos Ltda. merged with Bladex Representacao Ltda. on April 2016, being the former 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. |
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”).
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) |
The Bank has representative offices in Buenos Aires, Argentina; in Mexico City; in Lima, Peru; and in Bogota, Colombia.
These unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors on April 10, 2018.
2. | Basis of preparation of the consolidated financial statements |
2.1 | Statement of compliance |
These unaudited consolidated interim financial statements of Banco Latinoamericano de Comercio Exterior, S. A. and its subsidiaries have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34) issued by the International Accounting Standards Board ("IASB"). As all 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, 2017, 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.
3. | Cash and cash equivalents |
March 31, 2018 | December 31, 2017 | |||||||
Cash and due from banks | 10,190 | 11,032 | ||||||
Interest-bearing deposits in banks | 550,086 | 661,016 | ||||||
Total | 560,276 | 672,048 | ||||||
Less: | ||||||||
Pledged deposits | 16,557 | 53,241 | ||||||
Total cash and cash equivalents | 543,719 | 618,807 |
The following table presents the details on interest-bearing deposits in banks and pledged deposits:
March 31, 2018 | December 31, 2017 | |||||||||||||||
Amount | Range Interest rate | Amount | Range Interest rate | |||||||||||||
Interest-bearing deposits in banks: | ||||||||||||||||
Demand deposits(1) | 550,086 | 0.25% a 1.68% | 661,016 | 0.25% a 1.55% | ||||||||||||
Time deposits(2) | - | - | - | - | ||||||||||||
Total | 550,086 | 661,016 | ||||||||||||||
Pledged deposits: | ||||||||||||||||
New York(3) | 3,000 | - | 3,000 | - | ||||||||||||
Panama(4) | 13,557 | 1.68 | % | 50,241 | 1.42 | % | ||||||||||
Total | 16,557 | 53,241 |
(1) | Demand deposits with bearing interest based on the daily rates determined by banks. |
(2) | Time deposits “overnight” calculated on an average interest rate. |
(3) | The New York Agency had a pledged deposit with the New York State Banking Department, as required by law since March 1994. |
(4) | The Bank had pledged deposits to secure derivative financial instruments transactions. |
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)
4. | Financial instruments |
Financial instruments at fair value through other comprehensive income “FVOCI”
The amortized cost, related unrealized gross gain (loss) and fair value of financial instruments at fair value through other comprehensive income by country risk and type of debt are as follows:
Equity Investment at FVOCI
March 31, 2018 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized cost | Gain | Loss | Fair value | |||||||||||||
Equity investments (1) | ||||||||||||||||
Brazil | 8,402 | - | 556 | 7.846 | ||||||||||||
8,402 | - | 556 | 7,846 |
Securities at FVOCI
March 31, 2018 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized cost | Gain | Loss | Fair value | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 2,940 | - | 48 | 2,892 | ||||||||||||
Chile | 5,171 | - | 135 | 5,036 | ||||||||||||
Trinidad and Tobago | 8,729 | - | 190 | 8,539 | ||||||||||||
16,840 | - | 373 | 16,467 | |||||||||||||
25,242 | - | 929 | 24,313 |
Equity Investment at FVOCI
December 31, 2017 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized cost | Gain | Loss | Fair value | |||||||||||||
Equity investments (1) | ||||||||||||||||
Brazil | 8,630 | - | 228 | 8,402 | ||||||||||||
8,630 | - | 228 | 8,402 |
Securities at FVOCI
December 31, 2017 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized cost | Gain | Loss | Fair value | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 2,937 | 29 | 12 | 2,954 | ||||||||||||
Chile | 5,182 | - | 35 | 5,147 | ||||||||||||
Trinidad and Tobago | 8,843 | - | 211 | 8,632 | ||||||||||||
16,962 | 29 | 258 | 16,733 | |||||||||||||
25,592 | 29 | 486 | 25,135 |
(1) | Equity instruments were initially recognized at fair value. These equity instruments correspond to equity securities classified with the irrevocable option of changes in OCI. |
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) |
Financial instruments at fair value through other comprehensive income (continued)
Securities at FVOCI (continued)
As of March 31, 2018, securities at fair value through other comprehensive income with a carrying value of $ 5.0 million, were pledged to secure repurchase transactions accounted for as secured financings. As of December 31, 2017, there were no securities at fair value through other comprehensive income accounted for as secured financings.
The following table discloses those securities that had unrealized losses for a period less than 12 month and for 12 months or longer:
March 31, 2018 | ||||||||||||||||||||||||
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 | 6,964 | 150 | 9,503 | 223 | 16,467 | 373 | ||||||||||||||||||
Total | 6,964 | 150 | 9,503 | 223 | 16,467 | 373 |
December 31, 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 | 5,147 | 35 | 9,616 | 223 | 14,763 | 258 | ||||||||||||||||||
Total | 5,147 | 35 | 9,616 | 223 | 14,763 | 258 |
The following table presents the realized gains and losses on sale of securities at fair value through other comprehensive income:
Three months ended March 31st | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Realized gain on sale of securities | - | 161 | 39 | |||||||||
Realized loss on sale of securities | - | (47 | ) | (324 | ) | |||||||
Net gain (loss) on sale of securities at fair value through other comprehensive income | - | 114 | (285 | ) |
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) |
Financial instruments at fair value through other comprehensive income (continued)
Securities at FVOCI (continued)
Securities at fair value through other comprehensive income classified by issuer’s credit quality indicators are as follows:
Rating(1) | March 31, 2018 | December 31, 2017 | ||||||
1-4 | 16,467 | 16,733 | ||||||
5-6 | - | - | ||||||
7 | - | - | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 16,467 | 16,733 |
(1) Current ratings as of March 31, 2018 and December 31, 2017, 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:
March 31, 2018 | December 31, 2017 | |||||||||||||||
Amortized cost | Fair value | Amortized cost | Fair value | |||||||||||||
Due within 1 year | - | - | - | - | ||||||||||||
After 1 year but within 5 years | 16,839 | 16,467 | 16,962 | 16,733 | ||||||||||||
After 5 years but within 10 years | - | - | - | - | ||||||||||||
16,839 | 16,467 | 16,962 | 16,733 |
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) |
Financial instruments at fair value through other comprehensive income (continued)
Securities at FVOCI (continued)
The significant changes in the gross carrying amount of securities at fair value through other comprehensive income during the period that contributed to changes in the loss allowance, is provided at the table below:
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Gross carrying amount as of December 31, 2017 | 13,779 | 2,954 | - | 16,733 | ||||||||||||
Transfer in book value to stage 2 | - | - | - | - | ||||||||||||
Transfer to lifetime expected credit losses - credit-impaired | - | - | - | - | ||||||||||||
Transfer in book value to stage 1 | - | - | - | - | ||||||||||||
Financial assets that have been derecognized during the period | (204 | ) | (62 | ) | - | (266 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2017 | (204 | ) | (62 | ) | - | (266 | ) | |||||||||
New financial assets originated or purchased | - | - | - | - | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Gross carrying amount as of March 31, 2018 | 13,575 | 2,892 | - | 16,467 |
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Gross carrying amount as of December 31, 2016 | 27,821 | 2,786 | - | 30,607 | ||||||||||||
Transfer in book value to stage 2 | - | - | - | - | ||||||||||||
Transfer to lifetime expected credit losses – not credit-impaired | - | - | - | - | ||||||||||||
Transfer in book value to stage 1 | - | - | - | - | ||||||||||||
Financial assets that have been derecognized during the year | (14,042 | ) | 168 | - | (13,874 | ) | ||||||||||
Changes due to financial instruments recognized as of December 31, 2016 | (14,042 | ) | 168 | - | (13,874 | ) | ||||||||||
New financial assets originated or purchased | - | - | - | - | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Gross carrying amount as of December 31, 2017 | 13,779 | 2,954 | - | 16,733 |
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) |
Securities at FVOCI (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, 2017 | 24 | 198 | - | 222 | ||||||||||||
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 | ) | 4 | - | 3 | |||||||||||
Financial assets that have been derecognized during the year | - | - | - | - | ||||||||||||
Changes due to financial instruments recognized as of December 31, 2017: | (1 | ) | 4 | - | 3 | |||||||||||
New financial assets originated or purchased | - | - | - | - | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Allowance for expected credit losses as of March 31, 2018 | 23 | 202 | - | 225 |
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 | (6 | ) | (65 | ) | - | (71 | ) | |||||||||
Financial assets that have been derecognized during the year | (12 | ) | - | - | (12 | ) | ||||||||||
Changes due to financial instruments recognized as of December 31, 2016: | (18 | ) | (65 | ) | - | (83 | ) | |||||||||
New financial assets originated or purchased | - | - | - | - | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Allowance for expected credit losses as of December 31, 2017 | 24 | 198 | - | 222 |
(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) |
Investment 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, excluding the amounts of allowance for expected credit losses are as follows:
March 31, 2018 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized
cost (1) |
Gross gain |
Gross loss | Fair value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 1,486 | - | 20 | 1,466 | ||||||||||||
Panama | 9,478 | - | - | 9,478 | ||||||||||||
10,964 | - | 20 | 10,944 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Colombia | 28,799 | - | 247 | 28,552 | ||||||||||||
Mexico | 20,116 | - | 558 | 19,558 | ||||||||||||
Panama | 8,403 | - | 49 | 8,354 | ||||||||||||
57,318 | - | 854 | 56,464 | |||||||||||||
68,282 | - | 874 | 67,408 |
December 31, 2017 | ||||||||||||||||
Unrealized | ||||||||||||||||
Amortized
cost (2) |
Gross gain |
Gross loss | Fair value | |||||||||||||
Corporate debt: | ||||||||||||||||
Brazil | 1,485 | 3 | - | 1,488 | ||||||||||||
Panama | 9,978 | - | - | 9,978 | ||||||||||||
11,463 | 3 | - | 11,466 | |||||||||||||
Sovereign debt: | ||||||||||||||||
Brazil | 29,006 | 67 | 16 | 29,057 | ||||||||||||
Mexico | 20,203 | - | 167 | 20,036 | ||||||||||||
Panama | 8,458 | - | 11 | 8,447 | ||||||||||||
57,667 | 67 | 194 | 57,540 | |||||||||||||
69,130 | 70 | 194 | 69,006 |
(1) | Amounts do not include allowance for expected credit losses of US170. |
(2) | Amounts do not include allowance for expected credit losses of US$196. |
As of March 31, 2018, securities at amortized cost with a carrying value of $ 46.5 million, were pledged to secure repurchase transactions accounted for as secured financial liabilities. As of December 31, 2017, there were no securities at amortized cost accounted for as secured financial liabilities.
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) |
Investment 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:
March 31, 2018 | December 31, 2017 | |||||||||||||||
Amortized
cost (1) | Fair value | Amortized cost (2) | Fair value | |||||||||||||
Due within 1 year | 7,278 | 7,278 | 7,978 | 7,978 | ||||||||||||
After 1 year but within 5 years | 61,004 | 60,130 | 61,152 | 61,028 | ||||||||||||
After 5 years but within 10 years | - | - | - | - | ||||||||||||
68,282 | 67,408 | 69,130 | 69,006 |
Securities at amortized cost classified by issuer’s credit quality indicators are as follows:
Rating(3) | March 31, 2018 | December 31, 2017 | ||||||
1-4 | 57,318 | 57,667 | ||||||
5-6 | 10,964 | 11,463 | ||||||
7 | - | - | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 68,282 | 69,130 |
(3) | Current ratings as of March 31, 2018 and December 31, 2017, respectively. |
(1) | Amounts do not include allowance for expected credit losses of US170. |
(2) | Amounts do not include allowance for expected credit losses of US$196. |
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) |
Investment securities- at amortized cost (continued)
The significant changes in the gross carrying amount of securities at amortized cost during the period that contributed to changes in the loss allowance, is provided at the table below:
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Gross carrying amount as of December 31, 2017 | 67,645 | 1,485 | - | 69,130 | ||||||||||||
Transfer in book value to stage 2 | - | - | - | - | ||||||||||||
Transfer to lifetime expected credit losses - credit-impaired | - | - | - | - | ||||||||||||
Transfer in book value to stage 1 | - | - | - | - | ||||||||||||
Financial assets that have been derecognised during the period | (1,049 | ) | 1 | - | (1,048 | ) | ||||||||||
Changes due to financial instruments recognized as of December 31, 2017 | (1,049 | ) | 1 | - | (1,048 | ) | ||||||||||
New financial assets originated or purchased | 200 | - | - | 200 | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Gross carrying amount as of March 31, 2018 | 66,796 | 1,486 | - | 68,282 |
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Gross carrying amount as of December 31, 2016 | 65,154 | 12,687 | - | 77,841 | ||||||||||||
Transfer in book value to stage 2 | - | - | - | - | ||||||||||||
Transfer to lifetime expected credit losses – not credit-impaired | - | - | - | - | ||||||||||||
Transfer in book value to stage 1 | - | - | - | - | ||||||||||||
Financial assets that have been derecognized during the year | (7,487 | ) | (11,202 | ) | - | (18,689 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2016 | (7,487 | ) | (11,202 | ) | - | (18,689 | ) | |||||||||
New financial assets originated or purchased | 9,978 | - | - | 9,978 | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Gross carrying amount as of December 31, 2017 | 67,645 | 1,485 | - | 69,130 |
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) |
Investment 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, 2017 | 144 | 52 | - | 196 | ||||||||||||
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 | ) | - | (23 | ) | |||||||||
Financial assets that have been derecognized during the period | (6 | ) | - | - | (6 | ) | ||||||||||
Changes due to financial instruments recognized as of December 31, 2017: | (7 | ) | (22 | ) | - | (29 | ) | |||||||||
New financial assets originated or purchased | 2 | - | - | 2 | ||||||||||||
Allowance for expected credit losses as of March 31, 2018 | 139 | 30 | - | 169 |
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 | (16 | ) | (29 | ) | - | (45 | ) | |||||||||
Financial assets that have been derecognized during the year | (18 | ) | (422 | ) | - | (440 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2016: | (34 | ) | (451 | ) | - | (485 | ) | |||||||||
New financial assets originated or purchased | 79 | - | - | 79 | ||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 144 | 52 | - | 196 |
(1) | 12-month expected credit losses. |
(2) | Lifetime expected credit losses. |
(3) | Credit-impaired financial assets (lifetime expected credit losses). |
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) |
Recognition and derecognition of financial assets
During the periods ended March 31, 2018, 2017 and 2016, 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 (losses) | |||||||
For the year ended March 31, 2018 | 41,667 | (625 | ) | |||||
For the year ended March 31, 2017 | 64,400 | 86 | ||||||
For the year ended March 31, 2016 | 13,800 | 56 |
Loans – at amortized cost
The following table set forth details of the Bank’s gross loan portfolio:
March 31, 2018 | December 31, 2017 | |||||||
Corporations: | ||||||||
Private | 1,667,575 | 1,882,846 | ||||||
State-owned | 877,213 | 723,267 | ||||||
Banking and financial institutions: | ||||||||
Private | 1,987,807 | 2,083,795 | ||||||
State-owned | 472,555 | 573,649 | ||||||
Middle-market companies: | ||||||||
Private | 220,174 | 242,101 | ||||||
Total | 5,225,324 | 5,505,658 |
The composition of the gross loan portfolio by industry is as follows:
March 31, 2018 | December 31, 2017 | |||||||
Banking and financial institutions | 2,460,362 | 2,657,444 | ||||||
Industrial | 799,218 | 772,238 | ||||||
Oil and petroleum derived products | 924,274 | 735,413 | ||||||
Agricultural | 444,117 | 501,241 | ||||||
Services | 221,834 | 430,717 | ||||||
Mining | 224,921 | 231,687 | ||||||
Others | 150,598 | 176,918 | ||||||
Total | 5,225,324 | 5,505,658 |
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.
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) |
Loans – at amortized cost (continued)
As of March 31, 2018, and December 31, 2017, the unearned discount interest and deferred commission amounted to $5,927 and $4,985, respectively.
Loans classified by borrower’s credit quality indicators are as follows:
March 31, 2018 | ||||||||||||||||||||||||
Corporations | Banking and financial
institutions | Middle-market companies | ||||||||||||||||||||||
Rating(1) | Private | State-owned | Private | State-owned | Private | Total | ||||||||||||||||||
1-4 | 1,235,700 | 675,829 | 1,709,544 | 313,891 | 138,965 | 4,073,929 | ||||||||||||||||||
5-6 | 408,116 | 201,384 | 278,263 | 158,664 | 46,209 | 1,092,636 | ||||||||||||||||||
7 | - | - | - | - | - | - | ||||||||||||||||||
8 | 19,275 | - | - | - | - | 19,275 | ||||||||||||||||||
9 | - | - | - | - | - | - | ||||||||||||||||||
10 | 4,484 | - | - | - | 35,000 | 39,484 | ||||||||||||||||||
Total | 1,667,575 | 877,213 | 1,987,807 | 472,555 | 220,174 | 5,225,324 |
December 31, 2017 | ||||||||||||||||||||||||
Corporations | Banking and financial
institutions | Middle-market companies | ||||||||||||||||||||||
Rating(1) | Private | State-owned | Private | State-owned | Private | Total | ||||||||||||||||||
1-4 | 1,336,032 | 563,877 | 1,729,592 | 361,236 | 147,212 | 4,137,949 | ||||||||||||||||||
5-6 | 523,055 | 159,390 | 354,203 | 212,413 | 59,889 | 1,308,950 | ||||||||||||||||||
7 | - | - | - | - | - | - | ||||||||||||||||||
8 | 23,759 | - | - | - | - | 23,759 | ||||||||||||||||||
9 | - | - | - | - | - | - | ||||||||||||||||||
10 | - | - | - | - | 35,000 | 35,000 | ||||||||||||||||||
Total | 1,882,846 | 723,267 | 2,083,795 | 573,649 | 242,101 | 5,505,658 |
(1) Current ratings as of March 31, 2018 and December 31, 2017, respectively.
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) |
Loans – at amortized cost (continued)
The following table provides a breakdown of gross loans by country risk:
March 31, 2018 | December 31, 2017 | |||||||
Country: | ||||||||
Argentina | 345,382 | 294,613 | ||||||
Belgium | 10,167 | 11,368 | ||||||
Bolivia | 5,000 | 15,000 | ||||||
Brazil | 911,948 | 1,019,466 | ||||||
Chile | 247,641 | 170,827 | ||||||
Colombia | 660,382 | 829,136 | ||||||
Costa Rica | 426,632 | 356,459 | ||||||
Dominican Republic | 176,804 | 249,926 | ||||||
Ecuador | 76,929 | 94,315 | ||||||
El Salvador | 41,901 | 55,110 | ||||||
Germany | 32,500 | 37,500 | ||||||
Guatemala | 243,362 | 309,024 | ||||||
Honduras | 48,498 | 74,476 | ||||||
Jamaica | 21,594 | 24,435 | ||||||
Luxembourg | 18,029 | 19,924 | ||||||
Mexico | 801,815 | 850,463 | ||||||
Nicaragua | 23,690 | 29,804 | ||||||
Panama | 382,318 | 500,134 | ||||||
Paraguay | 80,847 | 59,536 | ||||||
Peru | 312,385 | 211,846 | ||||||
Singapore | 47,500 | 54,500 | ||||||
Switzerland | 100,000 | 3,687 | ||||||
Trinidad and Tobago | 175,000 | 175,000 | ||||||
United States of America | 20,000 | 44,109 | ||||||
Uruguay | 15,000 | 15,000 | ||||||
Total | 5,225,324 | 5,505,658 |
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) |
Loans – at amortized cost (continued)
The remaining loan maturities are summarized as follows:
March 31, 2018 | December 31, 2017 | |||||||
Current: | ||||||||
Up to 1 month | 813,070 | 846,993 | ||||||
From 1 month to 3 months | 1,302,076 | 1,079,793 | ||||||
From 3 months to 6 months | 964,120 | 1,175,801 | ||||||
From 6 months to 1 year | 749,886 | 922,711 | ||||||
From 1 year to 2 years | 442,023 | 392,456 | ||||||
From 2 years to 5 years | 875,631 | 989,222 | ||||||
More than 5 years | 19,759 | 39,923 | ||||||
5,166,565 | 5,446,899 | |||||||
Impaired | 58,759 | 58,759 | ||||||
Total | 5,225,324 | 5,505,658 |
As of March, 31 2018 and December 31, 2017, the range of interest rates on loans fluctuates from 1.75% and 11.73% (2017: 1.35% y 11.52%).
The fixed and floating interest rate distribution of the loan portfolio is as follows:
March 31, 2018 | December 31, 2017 | |||||||
Fixed interest rates | 2,265,935 | 2,378,509 | ||||||
Floating interest rates | 2,959,389 | 3,127,149 | ||||||
Total | 5,225,324 | 5,505,658 |
As of March 31, 2018, and December 31, 2017, 89% and 85%, 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:
March 31, 2018 | 2018 | |||||||||||||||||||
Recorded investment | Past due principal balance | Related Stage 3 | Average principal loan balance | Balance interest | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Private corporations | 23,759 | - | 7,676 | 23,759 | 438 | |||||||||||||||
Middle-market companies | 35,000 | 35,000 | 22,564 | 35,000 | 3,314 | |||||||||||||||
Total | 58,759 | 35,000 | 30,240 | 58,759 | 3,752 |
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) |
Loans – at amortized cost (continued)
December 31, 2017 | 2017 | |||||||||||||||||||
Recorded investment | Past due principal balance | Related Stage 3 | Average principal loan balance | Balance interest recognized | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Private corporations | 23,759 | - | 7,468 | 5,988 | 229 | |||||||||||||||
Middle-market companies | 35,000 | 35,000 | 20,527 | 35,000 | 3,028 | |||||||||||||||
Total | 58,759 | 35,000 | 27,995 | 40,988 | 3,257 |
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 March 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Interest revenue calculated on the net carrying amount (net of credit allowance) | 495 | 490 | 77 |
The following table presents an aging analysis of the loan portfolio:
March 31, 2018 | ||||||||||||||||||||||||||||||||
91-120 days | 121-150 days | 151-180 days | Greater than
180 | Total Past due | Delinquent | Current | Total | |||||||||||||||||||||||||
Corporations | - | - | - | - | - | - | 2,554,183 | 2,554,183 | ||||||||||||||||||||||||
Banking and financial institutions | - | - | - | - | - | - | 2,450,967 | 2,450,967 | ||||||||||||||||||||||||
Middle-market companies | - | - | - | 35,000 | 35,000 | - | 185,174 | 220,174 | ||||||||||||||||||||||||
Total | - | - | - | 35,000 | 35,000 | - | 5,190,324 | 5,225,324 |
December 31, 2017 | ||||||||||||||||||||||||||||||||
91-120 days | 121-150 days | 151-180 days | Greater than
180 | Total Past due | Delinquent | Current | Total | |||||||||||||||||||||||||
Corporations | - | - | - | - | - | - | 2,606,113 | 2,606,113 | ||||||||||||||||||||||||
Banking and financial institutions | - | - | - | - | - | - | 2,657,444 | 2,657,444 | ||||||||||||||||||||||||
Middle-market companies | - | - | - | 35,000 | 35,000 | - | 207,101 | 242,101 | ||||||||||||||||||||||||
Total | - | - | - | 35,000 | 35,000 | - | 5,470,658 | 5,505,658 |
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) |
Loans – at amortized cost (continued)
As of March 31, 2018 and December 31, 2017, the Bank had credit transactions in the normal course of business with 16% and 21%, 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 March 31, 2018, and December 31, 2017, approximately 9% and 14%, respectively, of the outstanding loan portfolio was placed with the Bank’s Class “A” and “B” stockholders and their related parties. As of March 31, 2018, 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.
Modified financial assets
The following table refer to modified financial assets, where modification does not result in de-recognition:
Modified financial assets (with loss allowance based on lifetime ECL) modified during the period | March 31, 2018 | December 31, 2017 | ||||||
Gross carrying amount before modification | - | 8,855 | ||||||
Loss allowance before modification | - | (3,344 | ) | |||||
Net amortized cost before modification | - | 5,511 | ||||||
Gross carrying amount after modification | - | 4,484 | ||||||
Loss allowance after modification | - | (4,484 | ) | |||||
Net amortized cost after modification | - | - |
For the modified financial assets during the year 2017, were received other real estate owned for $ 5,119.
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) |
Loans – at amortized cost (continued)
The significant changes in the gross carrying amount of financial assets during the period that contributed to changes in the loss allowance, is provided at the table below:
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Gross carrying amount as of December 31, 2017 | 4,839,227 | 607,672 | 58,759 | 5,505,658 | ||||||||||||
Transfer in book value to stage 2 | ||||||||||||||||
Transfer to lifetime expected credit losses - credit-impaired | - | - | - | - | ||||||||||||
Transfer in book value to stage 1 | 13,000 | (13,000 | ) | - | - | |||||||||||
Financial assets that have been derecognized during the period | (1,783,568 | ) | (164,866 | ) | - | (1,948,434 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2017 | (1,770,568 | ) | (177,866 | ) | - | (1,948,434 | ) | |||||||||
New financial assets originated or purchased | 1,668,100 | - | - | 1,668,100 | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Gross carrying amount as of March 31, 2018 | 4,736,759 | 429,806 | 58,759 | 5,225,324 |
Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
Gross carrying amount as of December 31, 2016 | 5,019,368 | 935,999 | 65,364 | 6,020,731 | ||||||||||||
Transfer in book value to stage 2 | (41,167 | ) | 41,167 | - | - | |||||||||||
Transfer to lifetime expected credit losses – not credit-impaired | - | (46,673 | ) | 46,673 | - | |||||||||||
Transfer in book value to stage 1 | 8,000 | (8,000 | ) | - | - | |||||||||||
Financial assets that have been derecognized during the year | (4,214,697 | ) | (314,821 | ) | (53,278 | ) | (4,582,796 | ) | ||||||||
Changes due to financial instruments recognized as of December 31, 2016 | (4,247,864 | ) | (328,327 | ) | (6,605 | ) | (4,582,796 | ) | ||||||||
New financial assets originated or purchased | 4,067,723 | - | - | 4,067,723 | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Gross carrying amount as of December 31, 2017 | 4,839,227 | 607,672 | 58,759 | 5,505,658 |
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) |
Loans – at amortized cost (continued)
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, 2017 | 19,821 | 33,477 | 27,996 | 81,294 | ||||||||||||
Transfer to lifetime expected credit losses – not credit-impaired | - | - | - | - | ||||||||||||
Transfer to lifetime expected credit losses - credit-impaired | - | - | - | - | ||||||||||||
Transfer to 12-month expected credit losses | 1,664 | (1,664 | ) | - | - | |||||||||||
Net effect of changes in reserve for expected credit losses | (1,625 | ) | 4,251 | 2,245 | 4,871 | |||||||||||
Financial assets that have been derecognized during the period | (5,590 | ) | (5,712 | ) | - | (11,302 | ) | |||||||||
Changes due to financial instruments recognized as of December 31, 2017 | (5,551 | ) | (3,125 | ) | 2,245 | (6,431 | ) | |||||||||
New financial assets originated or purchased | 7,807 | - | - | 7,807 | ||||||||||||
Write-offs | - | - | - | - | ||||||||||||
Recoveries of amounts previously written off | - | - | - | - | ||||||||||||
Allowance for expected credit losses as of March 31, 2018 | 22,077 | 30,352 | 30,241 | 82,670 |
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 | (672 | ) | 672 | - | - | |||||||||||
Transfer to lifetime expected credit losses – not credit-impaired | - | (12,845 | ) | 12,845 | - | |||||||||||
Transfer to 12-month expected credit losses | 1,428 | (1,428 | ) | - | - | |||||||||||
Net effect of changes in reserve for expected credit losses | (2,900 | ) | 18,227 | 20,257 | 35,584 | |||||||||||
Financial assets that have been derecognized during the year | (24,434 | ) | (11,321 | ) | (8,333 | ) | (44,088 | ) | ||||||||
Changes due to financial instruments recognized as of December 31, 2016 | (26,578 | ) | (6,695 | ) | 24,769 | (8,504 | ) | |||||||||
New financial assets originated or purchased | 17,363 | - | - | 17,363 | ||||||||||||
Write-offs | - | (1,427 | ) | (32,126 | ) | (33,553 | ) | |||||||||
Recoveries of amounts previously written off | - | - | - | - | ||||||||||||
Allowance for expected credit losses as of December 31, 2017 | 19,821 | 33,477 | 27,996 | 81,294 |
(1) | 12-month expected credit losses. |
(2) | Lifetime expected credit losses. |
(3) | Credit-impaired financial assets (lifetime expected credit losses). |
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) |
Derivative financial instruments for hedging purposes
Quantitative information on derivative financial instruments held for hedging purposes is as follows:
March 31, 2018 | ||||||||||||||||
Carrying amount of the hedging instrument | ||||||||||||||||
Nominal Amount | Asset | Liability | Changes
in fair calculating
hedge | |||||||||||||
Fair value hedges: | ||||||||||||||||
Interest rate swaps | 373,500 | 122 | (4,592 | ) | (111 | ) | ||||||||||
Cross-currency swaps | 241,108 | 2,925 | (8,088 | ) | 21,320 | |||||||||||
Cash flow hedges: | ||||||||||||||||
Interest rate swaps | 690,000 | 830 | (916 | ) | 314 | |||||||||||
Cross-currency swaps | 23,025 | 709 | - | (170 | ) | |||||||||||
Foreign exchange forward | 202,035 | 7,183 | (725 | ) | 128 | |||||||||||
Net investment hedges: | ||||||||||||||||
Foreign exchange forward | 8,427 | 111 | (53 | ) | 113 | |||||||||||
Total | 1,538,095 | 11,880 | (14,374 | ) | 21,594 |
December 31, 2017 | ||||||||||||||||
Carrying amount of the
hedging instrument | ||||||||||||||||
Nominal Amount | Asset | Liability | Changes
in fair calculating
hedge | |||||||||||||
Fair value hedges: | ||||||||||||||||
Interest rate swaps | 367,500 | - | (4,361 | ) | (2,394 | ) | ||||||||||
Cross-currency swaps | 306,961 | 3,672 | (30,154 | ) | 15,900 | |||||||||||
Cash flow hedges: | ||||||||||||||||
Interest rate swaps | 595,000 | 127 | (428 | ) | 995 | |||||||||||
Cross-currency swaps | 23,025 | 879 | - | 2,132 | ||||||||||||
Foreign exchange forward | 225,388 | 8,610 | - | 11,835 | ||||||||||||
Net investment hedges: | ||||||||||||||||
Foreign exchange forward | 9,243 | 50 | - | 181 | ||||||||||||
Total | 1,527,117 | 13,338 | (34,943 | ) | 28,649 |
The hedging instruments presented in the tables above are 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.
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) |
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:
March 31, 2018 | ||||||||||||||
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 – cash flow hedge | ||||||||||||||
Interest rate swaps | (1,543 | ) | Gain (loss) on interest rate swap | - | - | |||||||||
Cross-currency swaps | 184 | Gain (loss) on foreign currency exchange | - | 4 | ||||||||||
Interest income – loans | 418 | - | ||||||||||||
Foreign exchange forward | (2,624 | ) | Interest income – securities at FVOCI | - | - | |||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 1,110 | - | ||||||||||||
Gain (loss) on foreign currency exchange | (3,374 | ) | - | |||||||||||
Total | (3,983 | ) | (1,846 | ) | 4 | |||||||||
Derivatives – net investment hedge | ||||||||||||||
Forward foreign exchange | 9 | |||||||||||||
Total | 9 |
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) |
Derivative financial instruments for hedging purposes (continued)
March 31, 2017 | ||||||||||||||
Gain (loss) recognized in OCI (effective portion) | Classification of gain (loss) | Gain
(loss) accumulated
OCI | Gain
(loss) derivatives | |||||||||||
Derivatives – cash flow hedge | ||||||||||||||
Interest rate swaps | (384 | ) | Gain (loss) on interest rate swap | - | 233 | |||||||||
Cross-currency swaps | (1,419 | ) | Gain (loss) on foreign currency exchange | - | 4624 | |||||||||
Interest income – loans | 1,871 | - | ||||||||||||
Foreign exchange forward | (9,838 | ) | Interest income – securities at FVOCI | - | - | |||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | (800 | ) | - | |||||||||||
Gain (loss) on foreign currency exchange | (27,169 | ) | - | |||||||||||
Total | (11,641 | ) | (26,098 | ) | 268 | |||||||||
Derivatives – net investment hedge | ||||||||||||||
Forward foreign exchange | (277 | ) | ||||||||||||
Total | (277 | ) |
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) |
Derivative financial instruments for hedging purposes (continued)
March 31, 2016 | ||||||||||||||
Gain (loss) recognized in OCI (effective portion) | Classification of gain (loss) | Gain
(loss) accumulated
OCI | Gain (loss) recognized on derivatives (ineffective portion) | |||||||||||
Derivatives – cash flow hedge | ||||||||||||||
Interest rate swaps | (1,618 | ) | Gain (loss) on interest rate swap | - | (578 | ) | ||||||||
Cross-currency swaps | 2,787 | Gain (loss) on foreign exchange | - | (64 | ) | |||||||||
Interest income – loans | (752 | ) | - | |||||||||||
Forward foreign exchange | (1,214 | ) | Interest income – securities at FVOCI | - | - | |||||||||
Interest income – loans | (4,751 | ) | - | |||||||||||
Interest expense – borrowings and debt | - | - | ||||||||||||
Interest expenses – deposits | 1,672 | - | ||||||||||||
Gain (loss) on foreign currency exchange | 9,097 | - | ||||||||||||
Total | (45 | ) | 6,018 | (642 | ) | |||||||||
Derivatives – net investment hedge | ||||||||||||||
Forward foreign exchange | - | |||||||||||||
Total | - |
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) |
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:
March 31, 2018 | ||||||||||||||
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 | (21 | ) | 97 | 76 | |||||||||
Interest income – loans | - | 6 | 6 | |||||||||||
Interest expenses – borrowings and debt | (167 | ) | (3,049 | ) | (3,216 | ) | ||||||||
Derivative financial instruments and hedging | 102 | 345 | 447 | |||||||||||
Cross-currency swaps | Interest income – loans | (308 | ) | 548 | 240 | |||||||||
Interest expenses – borrowings and debt | 230 | (201 | ) | 29 | ||||||||||
Derivative financial instruments and hedging | (2,921 | ) | 3,200 | 279 | ||||||||||
Total | (3,085 | ) | 946 | (2,139 | ) |
March 31, 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 | (47 | ) | 169 | 122 | |||||||||
Interest income – loans | 10 | 141 | 151 | |||||||||||
Interest expenses – borrowings and debt | (261 | ) | (7,058 | ) | (7,319 | ) | ||||||||
Derivative financial instruments and hedging | (648 | ) | 765 | 117 | ||||||||||
Cross-currency swaps | Interest income – loans | (102 | ) | 119 | 17 | |||||||||
Interest expenses – borrowings and debt | 268 | (1,837 | ) | (1,569 | ) | |||||||||
Derivative financial instruments and hedging | 13,101 | (13,021 | ) | 80 | ||||||||||
Total | 12,321 | (20,722 | ) | (8,401 | ) |
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) |
Derivative financial instruments for hedging purposes (continued)
March 31, 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 | (198 | ) | 426 | 228 | |||||||||
Interest income at amortized cost | (36 | ) | 831 | 795 | ||||||||||
Interest expenses – borrowings and debt | 1,679 | (7,063 | ) | (5,384 | ) | |||||||||
Derivative financial instruments and hedging | (7,186 | ) | 8,208 | 1,022 | ||||||||||
Cross-currency swaps | Interest income loans at amortized cost | (42 | ) | 119 | 77 | |||||||||
Interest expenses – borrowings and debt | (148 | ) | (1,837 | ) | (1,985 | ) | ||||||||
Derivative financial instruments and hedging | 7,131 | (6,801 | ) | 330 | ||||||||||
Total | 1,200 | (6,117 | ) | (4,917 | ) |
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:
March 31, 2018 | ||||||||||
Fair value hedges | Carrying amount | Thereof accumulated fair value adjustments | Line item in the statement of financial
position | |||||||
Interest rate risk | ||||||||||
Loans | 6,000 | - | Loans | |||||||
Issuances | 355,000 | (7,358 | ) | Short and long-term borrowings and debt | ||||||
Foreign exchange rate risk and FX | ||||||||||
Securities at FVOCI | 11,987 | 138 | Financial instruments at FVOCI | |||||||
Loans | 17,955 | 104 | Loans | |||||||
Issuances | (219,755 | ) | 2,711 | Short and long-term borrowings and debt |
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) |
Derivative financial instruments for hedging purposes (continued)
Derivatives financial position and performance (continued)
December 31, 2017 | ||||||||||
Fair value hedges | Carrying amount | Thereof accumulated fair value adjustments | Line item in the statement of financial
position | |||||||
Interest rate risk | ||||||||||
Loans | - | - | Loans | |||||||
Issuances | 355,000 | (4,411 | ) | Short and long-term borrowings and debt | ||||||
Foreign exchange rate risk and FX | ||||||||||
Securities at FVOCI | 12,369 | (32 | ) | Financial instruments at FVOCI | ||||||
Loans | 25,027 | 744 | Loans | |||||||
Issuances | (249,328 | ) | (2,301 | ) | Short and long-term borrowings and debt |
The following tables detail the profile of the timing of the nominal amount of the hedging instrument:
March 31, 2018 | ||||||||||||||||
Risk type | Foreign Exchange risk | Interest rate risk | Foreign exchange and Interest rate risk | Total | ||||||||||||
Up to 1 month | 27,520 | - | - | 27,520 | ||||||||||||
31 to 60 days | 26,105 | - | - | 26,105 | ||||||||||||
61 to 90 days | 6,233 | 137,500 | - | 143,733 | ||||||||||||
91 to 180 days | 5,306 | 75,000 | 8,127 | 88,433 | ||||||||||||
181 to 365 days | 68,952 | 342,500 | - | 411,452 | ||||||||||||
1 to 2 years | 154,163 | 71,500 | 73,193 | 298,856 | ||||||||||||
2 to 5 years | 4,413 | 437,000 | 31,816 | 473,229 | ||||||||||||
More than 5 years | - | - | 68,768 | 68,768 | ||||||||||||
Total | 292,692 | 1,063,500 | 181,904 | 1,538,096 |
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) |
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, 2017 | ||||||||||||||||
Risk type | Foreign Exchange risk | Interest rate risk | Foreign exchange and Interest rate risk | Total | ||||||||||||
Up to 1 month | 69,459 | - | - | 69,459 | ||||||||||||
31 to 60 days | 26,104 | - | - | 26,104 | ||||||||||||
61 to 90 days | 1,729 | 185,000 | 16,821 | 203,550 | ||||||||||||
91 to 180 days | 16,567 | 137,500 | - | 154,067 | ||||||||||||
181 to 365 days | 68,952 | 202,500 | 8,127 | 279,579 | ||||||||||||
1 to 2 years | 178,331 | 21,500 | 73,193 | 273,024 | ||||||||||||
2 to 5 years | 4,413 | 416,000 | 24,872 | 445,285 | ||||||||||||
More than 5 years | - | - | 76,049 | 76,049 | ||||||||||||
Total | 365,555 | 962,500 | 199,062 | 1,527,117 |
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 5.95 years.
The Bank estimates that approximately $237 reported as losses in OCI as of March 31, 2018, 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 year ending December 31, 2019.
The Bank estimates that approximately $2,524 of losses reported in OCI as of March 31, 2018, 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 year ending December 31, 2019.
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) |
Derivative financial instruments for hedging purposes (continued)
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.
Offsetting of financial assets and liabilities
In the ordinary course of business, the Bank enters into derivative financial instrument transactions and securities sold under repurchase agreements under industry standards agreements. Depending on the collateral requirements stated in the contracts, the Bank and counterparties can receive or deliver collateral based on the fair value of the financial instruments transacted between parties. Collateral typically consists of cash deposits and securities. The master netting agreements include clauses that, in the event of default, provide for close-out netting, which allows all positions with the defaulting counterparty to be terminated and net settled with a single payment amount.
The International Swaps and Derivatives Association master agreement (“ISDA”) and similar master netting arrangements do not meet the criteria for offsetting in the consolidated statement of financial position. This is because they create for the parties to the agreement a right of set-off of recognized amounts that is enforceable only following an event of default, insolvency or bankruptcy of the Bank or the counterparties or following other predetermined events.
The following tables summarize financial assets and liabilities that have been offset in the consolidated statement of financial position or are subject to master netting agreements:
a) | Derivative financial instruments – assets |
March 31, 2018 | ||||||||||||||||||||||||
Gross amounts offset in the consolidated | Net
amount of in the | Gross amounts not offset
in the consolidated statement of financial position | ||||||||||||||||||||||
Description | Gross amounts | statement of financial position | consolidated statement of financial position | Financial instruments | Cash collateral received | Net Amount | ||||||||||||||||||
Derivative financial instruments used for hedging – receivable – at fair value | 14,682 | - | 14,682 | - | (30,388 | ) | (15,706 | ) | ||||||||||||||||
Total | 14,682 | - | 14,682 | - | (30,388 | ) | (15,706 | ) |
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) |
Offsetting of financial assets and liabilities (continued)
a) | Derivative financial instruments – assets (continued) |
December 31, 2017 | ||||||||||||||||||||||||
Gross amounts offset in the consolidated | Net
amount of 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 received | Net Amount | ||||||||||||||||||
Derivative financial instruments used for hedging – receivable – at fair value | 13,338 | - | 13,338 | - | (22,304 | ) | (8,966 | ) | ||||||||||||||||
Total | 13,338 | - | 13,338 | - | (22,304 | ) | (8,966 | ) |
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:
March 31, 2018 | ||||||||||||
Description | Gross amounts of assets | Gross
amounts statement of financial position | Net
amount of assets in the consolidated statement of financial position | |||||||||
Derivative financial instruments used for hedging – receivable – at fair value | 14,682 | - | 14,682 | |||||||||
Total | 14,682 | - | 14,682 |
December 31, 2017 | ||||||||||||
Description | Gross amounts of assets | Gross amounts offset
in the | Net
amount of assets in
the consolidated | |||||||||
Derivative financial instruments used for hedging – receivable – at fair value | 13,338 | - | 13,338 | |||||||||
Total | 13,338 | - | 13,338 |
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) |
Offsetting of financial assets and liabilities (continued)
b) | Financial liabilities and derivative financial instruments – liabilities |
March 31, 2018 | ||||||||||||||||||||||||
Gross amounts offset in the | Net
amount Presented in the | Gross amounts not offset in the consolidated statement of financial position | ||||||||||||||||||||||
Description | Gross amounts of liabilities | consolidated statement of financial position | consolidated statement of financial position | Financial instruments | Cash collateral pledged | Net Amount | ||||||||||||||||||
Securities sold under repurchase agreements | 49,316 | - | 49,316 | (49,316 | ) | - | - | |||||||||||||||||
Derivative financial instruments used for hedging – payable – at fair value | 12,469 | - | 12,469 | - | (29,161 | ) | (16,692 | ) | ||||||||||||||||
Total | 61,785 | - | 61,785 | (49,316 | ) | (29,161 | ) | (16,692 | ) |
December 31, 2017 | ||||||||||||||||||||||||
Gross amounts offset in the | Net amount of liabilities presented in the | Gross amounts not offset in the consolidated statement of financial position | ||||||||||||||||||||||
Description | Gross amounts of liabilities | consolidated statement of financial position | consolidated statement of financial position | Financial instruments | Cash collateral pledged | Net Amount | ||||||||||||||||||
Derivative financial instruments used for hedging – payable – at fair value | 34,943 | - | 34,943 | - | (50,241 | ) | (15,298 | ) | ||||||||||||||||
Total | 34,943 | - | 34,943 | - | (50,241 | ) | (15,298 | ) |
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) |
Offsetting of financial assets and liabilities (continued)
b) | Financial liabilities and derivative financial instruments – liabilities (continued) |
The following table presents the reconciliation of liabilities that have been offset or are subject to master netting agreements to individual line items in the consolidated statement of financial position:
March 31, 2018 | ||||||||||||
Description | Gross amounts of liabilities | Gross amounts offset in the consolidated statement of financial position | Net
amount of in
the consolidated | |||||||||
Securities sold under repurchase agreements | 49,316 | - | 49,316 | |||||||||
Derivative financial instruments: | ||||||||||||
Derivative financial instruments used for hedging – payable – at fair value | 12,469 | - | 12,469 | |||||||||
Total derivative financial instruments | 12,469 | - | 12,469 |
December 31, 2017 | ||||||||||||
Description | Gross amounts of liabilities | Gross amounts offset in the consolidated statement of financial position | Net
amount of in
the consolidated | |||||||||
Derivative financial instruments: | ||||||||||||
Derivative financial instruments used for hedging – payable – at fair value | 34,943 | - | 34,943 | |||||||||
Total derivative financial instruments | 34,943 | - | 34,943 |
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)
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 more than 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:
March 31, 2018 | December 31, 2017 | |||||||
Confirmed letters of credit | 291,172 | 273,449 | ||||||
Stand-by letters of credit and guaranteed – Commercial risk | 180,053 | 168,976 | ||||||
Credit commitments | 30,577 | 45,578 | ||||||
Total | 501,802 | 488,003 |
The remaining maturity profile of the Bank’s outstanding loans commitments and financial guarantees contracts is as follows:
Maturities | March 31, 2018 | December 31, 2017 | ||||||
Up to 1 year | 471,224 | 457,168 | ||||||
From 1 to 2 years | - | 257 | ||||||
From 2 to 5 years | 30,000 | 30,000 | ||||||
More than 5 years | 578 | 578 | ||||||
Total | 501,802 | 488,003 |
Loans commitments and financial guarantees contracts classified by issuer’s credit quality indicators are as follows:
Rating(1) | March 31, 2018 | December 31, 2017 | ||||||
1-4 | 178,048 | 151,934 | ||||||
5-6 | 323,754 | 336,069 | ||||||
7 | - | - | ||||||
8 | - | - | ||||||
9 | - | - | ||||||
10 | - | - | ||||||
Total | 501,802 | 488,003 |
(1) Current ratings as of March 31, 2018 and December 31, 2017, respectively.
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 (continued) |
The breakdown of the Bank’s loans commitments and financial guarantees contracts exposure by country risk is as follows:
March 31, 2018 | December 31, 2017 | |||||||
Country: | ||||||||
Argentina | 7,341 | 7,546 | ||||||
Bolivia | 291 | 200 | ||||||
Canada | 425 | 425 | ||||||
Chile | - | 15,000 | ||||||
Colombia | 91,021 | 91,020 | ||||||
Costa Rica | 18,355 | 19,848 | ||||||
Dominican Republic | 23,107 | - | ||||||
Ecuador | 243,246 | 252,800 | ||||||
El Salvador | 585 | 767 | ||||||
Guatemala | 11,700 | 11,788 | ||||||
Honduras | 1,110 | 890 | ||||||
Mexico | 47,769 | 35,643 | ||||||
Panama | 32,405 | 31,260 | ||||||
Paraguay | - | 22 | ||||||
Peru | 377 | 17,618 | ||||||
Uruguay | 24,430 | 3,176 | ||||||
Total | 501,802 | 488,003 |
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.
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 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, 2017 | 1,358 | 5,487 | - | 6,845 | ||||||||||||
Transfer to lifetime expected credit losses | - | - | - | - | ||||||||||||
Transfer to credit-impaired instruments | - | - | - | - | ||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | ||||||||||||
Net effect of changes in reserve for expected credit loss | (200 | ) | (17 | ) | - | (217 | ) | |||||||||
Instruments that have been derecognized during the period | (827 | ) | - | - | (827 | ) | ||||||||||
Changes due to instruments recognized as of December 31, 2017: | (1,027 | ) | (17 | ) | - | (1,044 | ) | |||||||||
New instruments originated or purchased | 1,623 | - | - | 1,623 | ||||||||||||
Allowance for expected credit losses as of March 31, 2018 | 1,954 | 5,470 | - | 7,424 |
Stage 1 (1) | Stage 2 (2) | Stage 3 (3) | Total | |||||||||||||
Allowance for expected credit losses as of December 31, 2016 | 1,143 | 4,633 | - | 5,776 | ||||||||||||
Transfer to lifetime expected credit losses | (1 | ) | 1 | - | - | |||||||||||
Transfer to credit-impaired instruments | - | - | - | - | ||||||||||||
Transfer to 12-month expected credit losses | - | - | - | - | ||||||||||||
Net effect of changes in reserve for expected credit loss | (54 | ) | 853 | - | 799 | |||||||||||
Instruments that have been derecognized during the year | (971 | ) | - | - | (971 | ) | ||||||||||
Changes due to instruments recognized as of December 31, 2016: | (1,026 | ) | 854 | - | (172 | ) | ||||||||||
New instruments originated or purchased | 1,241 | - | - | 1,241 | ||||||||||||
Allowance for expected credit losses as of December 31, 2017 | 1,358 | 5,487 | - | 6,845 |
(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.
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)
6. | Other assets |
Following is a summary of other assets:
March 31, 2018 | December 31, 2017 | |||||||
Accounts receivable | 7,008 | 6,793 | ||||||
Real estate owned (1) | 5,119 | 5,119 | ||||||
IT projects under development | 1,531 | 1,405 | ||||||
Other (2) | 5,377 | 5,510 | ||||||
19,035 | 18,827 |
(1) Other real estate owned as dation in payment.
(2) As of March 31, 2018, and December 31, 2017, $1.7 million corresponds to leasing under development.
7. | Deposits |
The maturity profile of the Bank’s deposits is as follows:
March 31, 2018 | December 31, 2017 | |||||||
Demand | 42,001 | 82,064 | ||||||
Up to 1 month | 1,088,761 | 1,147,772 | ||||||
From 1 month to 3 months | 557,901 | 492,205 | ||||||
From 3 months to 6 months | 355,430 | 411,159 | ||||||
From 6 months to 1 year | 591,750 | 571,500 | ||||||
From 1 year to 2 years | 27,063 | 76,422 | ||||||
From 2 years to 5 years | 151,309 | 147,722 | ||||||
2,814,215 | 2,928,844 |
The following table presents additional information regarding the Bank’s deposits:
March 31, 2018 | December 31, 2017 | |||||||
Aggregate amounts of time deposits of $100,000 or more | 2,813,808 | 2,928,425 | ||||||
Aggregate amounts of deposits in the New York Agency | 250,941 | 266,158 |
Three months ended March 31st | ||||||||||||
2018 |
2017 |
2016 | ||||||||||
Interest expense paid to deposits in the New York Agency. | 1,153 | 710 | 388 |
8. | Securities sold under repurchase agreements |
The Bank’s financial liabilities under repurchase agreements amounted to $49,316 as of March 31, 2018.
As of December 31, 2017, the Bank does not have financing transactions under repurchase agreements.
During the periods ended March 31, 2018 and 2016, interest expense related to financing transactions under repurchase agreements totaled $32 and $270, respectively, corresponding to interest expense generated by the financing contracts under repurchase agreements. These expenses are included in the interest expense – short-term and long-termborrowings and debt line in the consolidated statements of profit or loss.
As of March 31, 2017, the Bank did not incur in any interest expense generated by financial liabilities under repurchase agreements.
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)
9. | Borrowings and debt |
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:
March 31, 2018 | December 31, 2017 | |||||||
Short-term Borrowings: | ||||||||
At fixed interest rates | 125,625 | 429,069 | ||||||
At floating interest rates | 610,447 | 633,154 | ||||||
Total borrowings | 736,072 | 1,062,223 | ||||||
Short-term Debt: | ||||||||
At fixed interest rates | 13,500 | 10,500 | ||||||
At floating interest rates | 27,395 | - | ||||||
Total debt | 40,895 | 10,500 | ||||||
Total short-term borrowings and debt | 776,967 | 1,072,723 | ||||||
Average outstanding balance during the period | 984,930 | 710,021 | ||||||
Maximum balance at any month-end | 1,057,619 | 1,072,723 | ||||||
Range of fixed interest rates on borrowing and debt in U.S. dollars | 1.95 | % | 1.60% to 1.95 | % | ||||
Range of floating interest rates on borrowing in U.S. dollars | 2.04% to 2.47 | % | 1.77% to 2.08 | % | ||||
Range of fixed interest rates on borrowing in Mexican pesos | 8.19% to 8.27 | % | 7.92 | % | ||||
Range of floating interest rate on borrowing in Mexican pesos | 8.12% to 8.19 | % | 7.68% to 7.89 | % | ||||
Weighted average interest rate at end of the period | 2.93 | % | 2.16 | % | ||||
Weighted average interest rate during the period | 2.67 | % | 1.66 | % |
The balances of short-term borrowings and debt by currency, is as follows:
March 31, 2018 | December 31, 2017 | |||||||
Currency | ||||||||
US dollar | 643,500 | 1,044,500 | ||||||
Mexican peso | 133,467 | 28,223 | ||||||
Total | 776,967 | 1,072,723 |
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 (continued) |
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 $3,760 and $4,211 as of March 31, 2018 and December 31, 2017, respectively, is as follows:
March 31, 2018 | December 31, 2017 | |||||||
Long-term Borrowings: | ||||||||
At fixed interest rates with due dates from April 2018 to February 2022 | 73,362 | 44,011 | ||||||
At floating interest rates with due dates from August 2019 to March 2021 | 429,000 | 379,000 | ||||||
Total borrowings | 502,362 | 423,011 | ||||||
Long-term Debt: | ||||||||
At fixed interest rates with due dates from July 2018 to March 2024 | 518,164 | 532,305 | ||||||
At floating interest rates with due dates from April 2019 to January 2023 | 107,142 | 187,739 | ||||||
Total long-term debt | 625,306 | 720,044 | ||||||
Total long-term borrowings and debt | 1,127,668 | 1,143,055 | ||||||
Less: Prepaid commission | (3,760 | ) | (4,211 | ) | ||||
Total long-term borrowings and debt, net | 1,123,908 | 1,138,844 | ||||||
Net average outstanding balance during the year | 1,111,615 | 1,477,788 | ||||||
Maximum outstanding balance at any month – end | 1,144,448 | 2,010,078 | ||||||
Range of fixed interest rates on borrowing and debt in U.S. dollars | 1.35% to 3.25 | % | 1.35% to 3.25 | % | ||||
Range of floating interest rates on borrowing and debt in U.S. dollars | 2.62% to 3.49 | % | 2.61% to 3.01 | % | ||||
Range of fixed interest rates on borrowing in Mexican pesos | 5.05% to 9.09 | % | 4.89% to 9.09 | % | ||||
Range of floating interest rates on borrowing and debt in Mexican pesos | 8.44 | % | 7.99% to 8.00 | % | ||||
Range of fixed interest rate on debt in Japanese yens | 0.46% to 0.50 | % | 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 | 3.73 | % | 3.60 | % | ||||
Weighted average interest rate during the period | 3.69 | % | 3.43 | % |
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) |
Long-term borrowings and debt (continued)
The balances of long-term borrowings and debt by currency, excluding prepaid commission, is as follows:
March 31, 2018 | December 31, 2017 | |||||||
Currency | ||||||||
US dollar | 845,914 | 753,981 | ||||||
Mexican peso | 110,504 | 206,750 | ||||||
Japanese yen | 84,419 | 98,711 | ||||||
Euro | 63,796 | 60,178 | ||||||
Australian dollar | 23,035 | 23,435 | ||||||
Total | 1,127,668 | 1,143,055 |
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 March 31, 2018, the Bank was in compliance with all covenants.
The future payments of long-term borrowings and debt outstanding as of March 31, 2018, are as follows:
Payments | Outstanding | |||
2018 | 17,945 | |||
2019 | 367,253 | |||
2020 | 452,723 | |||
2021 | 200,898 | |||
2022 | 10,053 | |||
2023 | 15,000 | |||
2024 | 63,796 | |||
1,127,668 |
45 |
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10. | Other liabilities |
Following is a summary of other liabilities:
March 31, 2018 | December 31, 2017 | |||||||
Accruals and other accumulated expenses | 5,619 | 8,018 | ||||||
Accounts payable | 13,377 | 9,307 | ||||||
Others | 3,070 | 3,226 | ||||||
22,066 | 20,551 |
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:
March 31, 2018 | March 31, 2017 | March 31, 2016 | ||||||||||
(Thousands of U.S. dollars) | ||||||||||||
Profit for the period | 14,498 | 23,458 | 23,438 | |||||||||
(U.S. dollars) | ||||||||||||
Basic earnings per share | 0.37 | 0.60 | 0.60 | |||||||||
Diluted earnings per share | 0.37 | 0.60 | 0.60 | |||||||||
(Share units) | ||||||||||||
Weighted average common shares outstanding - applicable to basic | 39,466 | 39,188 | 38,997 | |||||||||
Effect of diluted securities: | ||||||||||||
Stock options and restricted stock units plan | 26 | 108 | 124 | |||||||||
Adjusted weighted average common shares outstanding applicable to diluted EPS | 39,492 | 39,296 | 39,121 |
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)
12. | Capital and additional paid-in capital in excess |
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-years ended March 31, 2018, 2017and 2016:
(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, 2016 | 6,342,189 | 2,474,469 | 30,152,247 | - | 38,968,905 | |||||||||||||||
Conversions | - | - | - | - | - | |||||||||||||||
Restricted stock issued – directors | - | - | - | - | - | |||||||||||||||
Exercised stock options - compensation plans | - | - | - | - | - | |||||||||||||||
Restricted stock units – vested | - | - | 91,454 | - | 91,454 | |||||||||||||||
Outstanding at March 31, 2016 | 6,342,189 | 2,474,469 | 30,243,701 | - | 39,060,359 | |||||||||||||||
Outstanding at January 1, 2017 | 6,342,189 | 2,474,469 | 30,343,390 | - | 39,160,048 | |||||||||||||||
Restricted stock issued – directors | - | - | - | - | - | |||||||||||||||
Exercised stock options - compensation plans | - | - | 1,616 | - | 1,616 | |||||||||||||||
Restricted stock units – vested | - | - | 65,265 | - | 65,265 | |||||||||||||||
Outstanding at March 31, 2017 | 6,342,189 | 2,474,469 | 30,410,271 | - | 39,226,929 | |||||||||||||||
Outstanding at January 1, 2018 | 6,342,189 | 2,408,806 | 30,677,840 | - | 39,428,835 | |||||||||||||||
Conversions | - | (64,386 | ) | 64,386 | - | - | ||||||||||||||
Repurchase common stock | - | - | - | - | - | |||||||||||||||
Restricted stock issued – directors | - | - | - | - | - | |||||||||||||||