Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

Banco Latinoamericano de Comercio Exterior, S.A (NYSE:BLX)

Q4 2013 Earnings Call

February 14, 2014 11:00 am ET

Executives

Rubens V. Amaral - Chief Executive Officer and Director

Christopher Schech - Chief Financial Officer and Senior Vice President

Analysts

Tito Labarta - Deutsche Bank AG, Research Division

Monika Tarr

Christopher Delgado - JP Morgan Chase & Co, Research Division

Frank Charles DiLorenzo - Singular Research

Marjorie de Arguello

Arthur Everett Byrnes - Deltec Asset Management, LLC

Operator

Hello, everyone, and welcome to Bladex's Fourth Quarter and Full Year 2013 Conference Call on today, the 14th of February, 2014. This call is being recorded and is for investors and analysts only. If you are a member of the media, you are invited to listen only. Bladex has prepared a PowerPoint presentation to accompany their discussion. It is available throughout the webcast and on the bank's corporate website at www.bladex.com.

Joining us today are Mr. Rubens Amaral, Chief Executive Officer of Bladex; and Mr. Christopher Schech, Chief Financial Officer. Their comments will be based on the earnings release, which was issued yesterday. A copy of the long version is available on the corporate website.

Any comments made by the executive officers today may include forward-looking statements. These are defined by the Private Securities Litigation Reform Act of 1995. They are based on information and data that is currently available. However, the actual performance may differ due to various factors, which are cited in the Safe Harbor statement in the press release.

And with that, I am pleased to turn the call over to Mr. Rubens Amaral for his presentation.

Rubens V. Amaral

Thank you, David. Good morning to everyone, and thanks for taking the time to attend our call today. I am pleased to share with you another quarter of continued improvement in our business results. Our credit origination remains strong with a solid pipeline of transactions, which allowed Bladex to disburse an additional $3.5 billion in the fourth quarter 2013, bringing us to an aggregate level of $14.3 billion for the full year. It is a new record for the bank.

On the other hand, we continued to work to improve our net interest margin but, as a bank that focuses on trade finance, where the majority of our transactions are short term in nature, we're dealing every day with relatively low spreads, even more so in a situation of ample liquidity, as was the case in the fourth quarter and throughout 2013. Nevertheless, we continue to improve our portfolio mix, disbursing last year a total of $1.5 billion in transactions whose maturities exceeded 1 year. These transactions, and a more competitive cost of funds, helped us to show a slight improvement in our margins year-on-year.

I'm also pleased to report that our loan syndication platform has gained momentum in 2013, winning 10 mandates with 6 already executing in 2013 and 4 being executed as we speak. This activity reinforces our regional franchise as we service our client network in the different countries throughout the region, and also distribute the majority of these transactions within Latin America, meeting the needs of Latin American investors.

We are -- we also have an interesting pipeline of potential transactions under negotiation. These bodes well for another successful year of further improving our fee income, one of our commitments with you. As was the case in the third quarter, the not-so-bright side was -- were the disappointing results of our investment in the fund. As we have indicated in the past, we remain committed to our exit strategy and will continue to reduce our investment accordingly.

The Board of Directors continues to increase the quarterly dividend as a result of improved business results, and also the bright prospects we see for our organization. Our dividend yield is quite attractive at 5-plus percent. And in 2013, the share price appreciated by 30%, which in our opinion, indicates competitive total shareholder returns.

I'd like to mention briefly how we are seeing the year ahead. We expect another challenging year for Latin America, as most economies will grow below their potential, and the effects of the tapering and a slowdown in China's growth continue to impact the region. The overall projected growth for the region, depending on the different statistics and projections you have, it's around 2% to 2.5%, which signals potential growth of trade flows of around 6% to 10% for 2014. Our initial projection, support Bladex start growth at 13%, as we continue to see demand from our client base and our pipeline looks strong as mentioned before. We continue to monitor constantly the quality of our portfolio, and we do not expect any meaningful change in our provisions requirements, except if we continue to grow, eventually we'll have to adjust provisions accordingly.

Lastly, we are very pleased with our efforts to improve efficiency throughout the organization. We have retrained our personnel and redesigned our most important operational processes. We expect this to have positive effects, both on the generation of new revenues and the reduction of expenses, as we continue with our objective of getting excellence -- operational excellence, doing more with less.

Overall, I am pleased with the results of the quarter and the full year, and very glad to report that to you today. And I remain optimistic about the prospects for 2014.

I will now turn it over to Christopher to guide you through our presentation and to provide you with more colors about our results. Thank you. Christopher, please.

Christopher Schech

Thank you, Rubens. Hello, and good morning, everyone. Thank you for joining us on the call today. In discussing our fourth quarter and full year results, I will focus as usual, on the main aspects that have impacted our results. And I will base myself off the earnings call presentation that we have uploaded to our website, together with the earnings release, and which is being webcast as we speak.

So before we go into more detail, let's start on Page 7 with a quick rundown of the key financial highlights and drivers that shaped this quarter and the year 2013.

The fourth quarter 2013 closed with net income to Bladex shareholders of $23.9 million compared to $22.8 million in the previous quarter and compared to $24.6 million in the fourth quarter of 2012. Full year net income reached $84.8 million compared to $93 million in the year 2012. The result of 2012 included nonrecurring items and positive performance in non-core activities that did not repeat in 2013.

In order to accurately present performance in our recurring business activities, we focused on business net income, which is recurring net income derived from our principal business activities of financial intermediation, which earn net interest, commission and fee income. We also refer to it as core income or income from core activities. And this business net income developed steadily over the year 2013, reaching $27.2 million in the fourth quarter, some 22% higher than in the fourth quarter of 2012.

For the full year 2013, business net income grew 7% year-on-year to $89.4 million. The positive performance trends in our business activities are reflected in the year-on-year rise of net interest margin, even as fourth quarter NIM came under pressure due to excessive liquidity levels encountered in a number of markets in which we operate.

Overall return on assets and return on equity metrics also improved quarter-on-quarter, but full year ROA and ROE were below prior-year levels as the net results from nonrecurring and non-core activities swung to a loss in 2013 compared to the sizable nonrecurring gains of 2012.

Efficiency metrics indicate that progress was made in our business, which we view as the beginning of the payoff of our efforts to contain costs, while revenues and business scale continue to grow. We put more capital to work in 2013, increasing leverage a bit, but our Tier 1 capitalization remained at comfortable levels, reaching 15.9% at the end of the fourth quarter.

So let's look into full year results in a bit more detail, moving to the next slide, Page 8, which shows the evolution of net income in 2013. While net interest income and fee income grows in the year, benefiting from portfolio growth and stronger fee generation activities, and while 2013 expenses were actually lower than in the prior year, we did have a slight increase of provisions in 2013 compared to substantial reversals of provisions recorded in the year 2012. Similarly, other income, which encompasses nonrecurring items and non-core activities, this other income swung to a loss in 2013 after a significant profit in 2012, a year in which we recorded gains on the sale of our old headquarters, for example. In addition, our participation in the investment funds was profitable in 2012, while it lost money in 2013.

The next page, Page 9, shows you the same income walk, but this time for the fourth quarter compared to the previous quarter, and compared to the fourth quarter of a year ago. In Q4 '13, net interest income dropped compared to the third quarter because of lower average portfolio balances and lower average margins, as we continued with a more selective approach towards loan origination. This was compensated by higher fee income and other income. The latter benefiting from lower losses from our participation in the investment funds, gains on the sale of bonds and the net effects of valuations of our interest rate and cross-currency coverage protecting our exposures. We also had a lesser requirement of provisions for generic reserves as a function of our portfolio mix of country and client exposures, and also because recoveries recorded in the quarter strengthened our reserve base.

Compared to the fourth quarter of 2012, we had higher net interest income from higher average portfolio balances in the fourth quarter of 2013. Fees and commissions rose as well from greater letters of credit activity and expenses were sharply lower than compared to the fourth quarter of a year ago. These effects were, however, offset by significantly lower reversals of provisions and a loss from our remaining participation in the investment funds.

Moving on to Page 10. We show the evolution of net interest income and net interest margins. Year-on-year, this evolution was quite positive, whether we take accounting adjustments into consideration or not, as both metrics showed year-on-year improvement. While net interest income increased mainly on the basis of rising average portfolio balances, the net interest margin rose mainly because of lower average funding costs.

Looking at the quarterly variations, we saw a continuation of the weaker margin trends that had intensified late in the third quarter. We recorded a slowdown in net interest income and margins in the fourth quarter compared to the third quarter, as both lending rates and market-based rates were lower given abundance -- availability of liquidity in the market throughout most of the quarter. Average portfolio balances were also lower as we slowed origination, giving priority to better priced transactions. Average funding costs declined marginally, but not enough to immediately offset lower lending rates.

As the gradual reduction of quantitative easing by the Fed towards the end of the quarter provided more clarity regarding rate movements going forward, we since have observed some improvement in lending rates, prompting us to ramp up our origination efforts again. This brought the pace of disbursements up in the fourth quarter and to a new historic high, as Rubens already mentioned, a high of $14.3 billion disbursed in the year 2013. And you can see more about that later on Page 12.

But before that, on Page 11, a quick discussion of our efficiency levels, which saw moderate improvement in the year 2013. The overall efficiency ratio, which includes also nonrecurring and non-core elements, this overall efficiency ratio improved over prior-year levels. But especially the business efficiency ratio, which looked at our recurring base of expenses and revenues, showed a meaningful improvement, which, and you heard Ruben talk about this a few moments ago, we expect to see accelerate over the next months and quarters as we implement Lean Six Sigma process improvements designed to reduce internal processing cycle times and to increase the speed of delivery of our products and services.

On Page 12 then, as mentioned just a moment ago, we show our disbursement patterns. The 26% year-on-year increase in annual disbursements illustrates how we expanded our origination capacity without the need for structural or expense-based increases. And while, by the nature of our business, we remain principally a short-term lender, the disbursement patterns also illustrate our efforts to optimize our portfolio mix towards greater earnings capacity and stability by increasing our focus on longer-tenor transactions.

On Page 13, we highlight our fee and commission income business, which generated income growth of 36% in 2013 compared to the year 2012. The quarterly income evolution trend was also quite robust, driven by higher average portfolio balances in our letters of credit business and our structured finance and syndications platform, which successfully executed a series of transactions, moving from a start-up phase in 2012 into full growth mode in 2013. This momentum continues into 2014 as Rubens already mentioned. These transactions showcase Bladex's capacity in terms of breadth and depth to structure customized financial solutions for its clients in diverse countries and covering an array of industry sectors.

On Page 14, we talk about our non-core income, primarily resulting from non-core -- nonrecurring items as mentioned earlier, and the remaining passive investment in the investment funds formerly owned by Bladex, which were sold earlier in the year. These nonrecurring results showed an unfavorable swing in 2013 compared to the previous year, as we mentioned earlier. Accounting rules require us to continue to consolidate the Feeder Fund as long as our interest in the fund remains greater than 50%. We will continue with contractual redemptions to bring down our exposure until our final redemption in April of 2016 at the very latest.

And so finally, on Page 15, we highlight our focus on total shareholder return. The decision of our Board of Directors to authorize an increase of the quarterly dividend payment to $0.35 a share underscores our policy of rewarding shareholders and highlights our prospects to continue to improve our business results.

I now will hand it over to Rubens to sum up our conclusions, which are on Page 16. Thank you.

Rubens V. Amaral

So, thank you, Christopher. So a very good year, although, as Christopher highlighted, we had some headwinds coming through on our investment fund, but we're well positioned to benefit in 2014 off a strong pipeline of transactions, which in our view, will put Bladex again in a growth mode and ready to benefit from the growth that we're going to have -- going to see in Latin America and investments in infrastructure.

So we are now ready for your questions, and we hope to have the answers you're seeking. So I'll turn back to David. So David, can you help us with the Q&A session, please?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Tito Labarta with the Deutsche Bank.

Tito Labarta - Deutsche Bank AG, Research Division

I have 2 questions. First, just want to get a little bit more color on your outlook for net interest margin. We did see some pressure on the quarter, although you did mention that this started to improve towards the end of the quarter. How do you see that going forward? Do you think there will be some continued pressure? And in the past, you've mentioned eventually getting to about a 2% net interest margin. Do you think that's still possible for 2014? So if you can please give some more color on that. And then the second question, more just in terms of what's been going on with the Panama Canal. I know it's not a huge portion of your business, but maybe you can give some color on that -- and if that does impact your business any way with some of the delays in the construction that has been going on there?

Rubens V. Amaral

Okay. Thank you, Tito. A pleasure talking to you. I'll start with your second question, and then Christopher will address the issue of our margins. Yes. The issue about the Panama Canal, it's an issue. Definitely, it calls our attention, and we are following closely. But it doesn't impact our business as we don't have any association with the financing of the canal. We are concerned to see a positive resolution because that impacts the country as a whole. But as I have mentioned to you, we are not involved in any shape or form in the financing of the Canal.

Christopher Schech

And regarding your question, Tito, regarding the interest margins. Yes, I did mention that in -- towards the end of the quarter, the fourth quarter, after the Fed clearly defined a new direction in rate movements with the commencement of tapering, we did see a pickup in lending margins. So we were drawn back to -- first of all, demand picked up as well because everybody is now looking to put their financing house in order and trying to take advantage of still fairly low rates that we see, especially in the short end of the curve. But nevertheless, we did see a pickup in margins, which has extended into today, actually. And so from that perspective, we are optimistic about being able to improve our net interest margins because on the funding side, we don't see, really, the significant increase in margins at all. We continue with our funding process as planned, and so to the extent, of course, that we see more longer-tenor business coming on the balance sheet, we'll also increase the appropriate funding into those tenors, and so that is going underway as planned. So in summary, we are fairly optimistic that we will be able to continue with the overall year-on-year expansion of our net interest margins. And so, so far, it's looking okay.

Tito Labarta - Deutsche Bank AG, Research Division

And just to follow on in both of those questions, actually. On the net interest margin, do you think you can reach that 2% level, which you mentioned in the past, in 2014? Or is that, now, maybe a longer-term goal? And then just following up on the Panama Canal. I mean I understand you're not involved in the financing. I was thinking more just kind of like indirect impact with like trade flows and if that has any impact on exports/imports in the region, and any maybe indirect impact you have because of what's going on there.

Rubens V. Amaral

Well, in terms of the Canal, Tito, of course, the postponement of a solution will lead to an important delay in the expansion of the Canal, and that will limit the trade flows. That is a natural consequence. But as far as what we see in Panama, we see the free trade zone in Panama working normally. And we see the movement -- the regular movement we're seeing in the Canal, we haven't seen any slowing down other than the one caused by the slowing down of the global economy. So overall, the free trades on Panama continues to do okay. The limitation they have, it's something that we know from some time, is the sales to Venezuela, which is a big problem for them to deal with because Venezuela is facing its challenges, as we all know. But other than that, in terms of the project itself and a reduction in the trade flows, we didn't see that happening because of the postponement of a solution for the Canal. And in terms of the 2%, this is not a long-term goal, this is our goal, and we -- as we continue to deploy more medium-term funding, as we continue to increase the mix of our portfolio, which we believe this year we'll see a more pronounced growth in that direction, our aim is to get to the 2% sooner rather than later. So we have discussed with our board that we're pushing towards that target, and we expect to reach the end of 2014 at that level.

Operator

Our next question comes from Monika Tarr with the Royal Bank of Scotland.

Monika Tarr

I just wanted to ask what your plans are in terms of growing your portfolio in terms of financial institutions versus corporates. And also, if you have any expectations around the tenors. And lastly, how you see your plans in Argentina.

Rubens V. Amaral

Okay. Thank you, Monika. Nice talking to you. Argentina, I'll start with the second one. Argentina -- the third one, Argentina is going through several different challenges. We have been present in Argentina since the inception of the bank, and we have been comfortable and continued to finance Argentina in what we do best, that is trade finance. So normally, you see Bladex involved in the financing of exports and in financing of imports in what we call strategic for the country. So we are associated with the country, continue to be, and we don't see any immediate danger to our portfolio in terms of financing the exports and financing, what we call, I told you in imports, is strategic for the country. And as you know, Argentina now is very dependent on import of oil and this is something that we're helping them quite a bit. So in that sense, we don't see any major problems. And naturally, the country is facing some difficulties in the political arena, and this is something that we'll see how it plays out. But we don't see that even with the more different obstacles Argentines are facing today in the political arena, we don't see any immediate danger to what we do because this is the strength of the Argentine economy, financing the exports, and mainly associated with the commodity flows coming out from Argentina and securing the oil supplies. So it's very important to continue to provide and feeding the energy matrix of the country. In terms of our portfolio mix, between financial institutions and corporations, we have informed the market before that it's our target to continue to move into more transactions with the corporations, so much so that today, 62% of our portfolio, it's corporations; 38%, financial institutions, give or take, and we're continuing that trend. We have 2 types of companies we deal with: The large corporations and the middle market companies. We are looking selectively to continue to do business with the middle market companies, while improving -- increasing, I'm sorry, the transactions for the corporations, that's our target. But the financial institutions remain a very important market for us. And what you see is that Bladex is now providing a different type of service to the financial institutions by offering them the possibility of having access to the loan syndication facilities, accessing liquidity pools throughout the region. So several of the transactions that we did last year were with financial institutions of countries in Central America trying to access liquidity pools elsewhere in Latin America. So we'll continue to work with them in that direction as we work to add more value to them in this different type of business that for us is very good in terms of generating fee income. And in terms of tenors, naturally, we are, by nature, a short-term trade bank. But we're looking at diversifying the tenors, both with financial institutions and with corporations. With corporations, as they expand their production capacity, as they look more into becoming more regional, financing their process of integration into Latin America, and with the financial institutions as they also seek to expand and to have a better liability management. So overall, you will see us moving towards a increasing of our tenors in the financing to both financial institutions and corporations. I hope I have answered your questions.

Operator

Our next question comes from Chris Delgado with JPMorgan.

Christopher Delgado - JP Morgan Chase & Co, Research Division

Just a quick question, kind of a follow-up to what you just mentioned. Fee income has been quite good in 2013 and I know it's a business that you are looking to build. So I just wanted to get a sense of your outlook for 2014 in that business.

Rubens V. Amaral

Well, in terms of fee income?

Christopher Delgado - JP Morgan Chase & Co, Research Division

Yes.

Rubens V. Amaral

Okay. Well, our outlook is very positive. As I mentioned to you last year during my presentation, we had 10 transactions, which was a record for us in terms of winning mandates. We executed very successfully 6 mandates. We're very pleased to be now being shown at the league tables of Dealogic. So you can see and check that Bladex is among the top 20 institutions participating in this type of transactions. And we have developed a very interesting pipeline. And one of the good things about this is that we have been referred clients by other clients, and also by other financial institutions that, as we said in the past, our sweet spot for this are the transactions between $50 million to $200 million. And several of the major financial institutions, they are not interested in this type of amounts and we're getting referrals, including from financial institutions, which is very good. So the prospects is very good. We have challenging targets for this year, and we expect to do very well in terms of the fee income coming from this syndication platform, but also, coming from the letters of credit as we continue our effort to increase our participation in the issuance of letters of credits to corporations. So as we diversify more our portfolio towards corporations, we hope to increase also our fee income coming from letters of credit. But as far as the syndications platform, it looks quite interesting for 2014.

Operator

Our next question comes from Frank DiLorenzo with Singular Research.

Frank Charles DiLorenzo - Singular Research

I just have a follow-up to the prior question regarding your service fees and commissions. The growth was solid last year relative to 2012. Do you have a longer-term goal from the standpoint of what a realistic normalized growth rate could be for that component of your income?

Rubens V. Amaral

Thanks, Frank, for your question. It is an interesting question in terms of long-term goal. What we are seeking, in terms of fee income and the goal, is to get to a coverage ratio of our operating expenses. So we are looking for, in a long-term goal, to get to a level that allows us to get to at least 70% of coverage ratio of our recurrent expenses. So that's the way we are working. Last year, if I'm not mistaken, was 38% of coverage fee to our operating expenses. And we are in solid footing to increase that this year and to get to at least the level of 70% in the near 2 to 3 years' period. To -- after that, to continue our effort to eventually get to 100%. But the more medium-term goal, it's 70%.

Operator

[Operator Instructions] Our next question comes from Marjorie Arguello with BG Valores.

Marjorie de Arguello

My question was regarding the non-core losses. Can you expand a little bit more on that? Like what specific non-core businesses did you guys lost money on?

Christopher Schech

Yes. If you don't mind, I'll take the question, this is Christopher. By non-core, we refer what is not our international intermediation business. And so in the past, Bladex used to have an asset management unit, which set up a investment fund that was marketed through third parties in order to attract these third-party monies. We realized our -- after a number of years that our strategic goals of achieving inflows into this fund were not materializing. And so at the end of last year, the decision was made to divest this unit. We concluded that divestiture on April 1 of last year, 2013, and that exit was a structured exit. We reduced our exposure to the funds because the fund, in previous times, really only had our money, Bladex's money, and very little third-party monies in the fund. And so it was 98% or more our money. So we reduced our exposure as -- and then at the same time, found another anchor investor who invested in that fund. And so the idea is to continually reduce our investment in the fund, maintaining a commitment to stay invested for up to 3 years and we're marching towards that goal in making our final redemption in early 2016. And so that was a business that was originally set up in order to achieve fee income by managing third-party monies, and which in reality to Bladex, include quite substantial trading gains in the past, but not much more and so, hence, our decision to divest. I hope this explains it.

Operator

Mr. DiLorenzo, your line is open for follow-up.

Frank Charles DiLorenzo - Singular Research

Just to one other question regarding foreign exchange. It's fluctuated as far as having a loss over the past few years. Can you kind of fill us in what you might see along those lines this year? And if there's anything you're doing to try and mitigate that potential risk?

Christopher Schech

Again, I would like to take that question. Frank, you're referring to the losses coming from these non-core activities, the investment fund?

Frank Charles DiLorenzo - Singular Research

Right, right.

Christopher Schech

Okay. So, I mean, we are now a passive investor. We have no interference in how this fund is managed and run. And so we, of course, expect the fund to do better and be able to attract third-party inflows, which would allow us to even reduce our exposure more rapidly. I don't know exactly what the prospects of that happening are going to be this year, for sure, we would expect an improvement in the trading performance, which would benefit the Bank. But for our intents and purposes, we don't count on upside from this fund. We focus on our core business, our main business activities and try to optimize that -- those results. So realistically, I can't offer you any expectations as to what the fund will -- how it will perform. If you go back in time, we've had very good years, very, very good years. We've had some down years. Last year was certainly a down year. And so given the nature of that type of business, which was the main reason to divest it, it could come back and help us. But for sure, the exposure overall to this type of activity is much less now than it used to be in the past. And it will continue to be reducing over the course of time.

Frank Charles DiLorenzo - Singular Research

Okay. There's another similar related question. What I had meant was just the gain/loss on foreign currency exchange, you usually report that and I'm just wondering, for 2014, what you see along those lines, if there's risk there or if you're mitigating that risk relative to the last few years.

Christopher Schech

I apologize, I evidently didn't hear you well enough. Well, regarding to FX exposures, one of the benefits of being invested in Bladex is not to incur FX exposures because our business is, in primary terms, dollarized. 90-plus percent of our lending is in the U.S. dollar, so we don't really incur any exposures. And in those few instances where we do lend in local currency and in those instances where we fund ourselves in currency other than the U.S. dollar, we immediately swap these amounts back into the U.S. dollar and also taking care of the interest rate risk on the way as well. So net-net, our exposures are well covered. And of course, coverage is never 100% perfect, there's always some level of ineffectiveness involved in these coverages, which are reflected in the P&L. And the effects of that depend on whether you have exposures on the actives, on the lending side or on the liability side. And so that can vary also over the course of time. Net-net, for us, the impact will never be really material. We've shown that in the past when there were major disruptions in FX movements. And again, we don't expect any major impact on our P&L going forward, either.

Operator

[Operator Instructions] Our next question comes from Arthur Byrnes with Deltec.

Arthur Everett Byrnes - Deltec Asset Management, LLC

Can you explain to us who runs this discontinued fund and what the actual dollar exposure that Bladex has to it, continues to be?

Rubens V. Amaral

Yes, Arthur. Good morning. The fund has been -- we sold the fund last year, or the asset management company rather, to the management of the company, plus XL insurance company. That's an association between the previous management of the managers of the fund and XL company. In terms of our exposure to the fund, Christopher, please?

Christopher Schech

Yes. We -- since we have a participation in the main fund of greater than 50%, we consolidate the entire fund. And so once you exclude the minority interest, what used to be called minorities interest, now it has a fancier name, but if you exclude the third-party interest in that fund, our net exposure is $63 million at the close of 2013.

Arthur Everett Byrnes - Deltec Asset Management, LLC

And are you on a specific schedule? You keep saying you'll be out of it by '16 at the latest. Is there some formula that you're going out on or how does that work?

Christopher Schech

Yes. There is a formula. It depends on potential inflows into the fund, which would allow us to redeem $1 for every $2 that go into the fund. That is 1 part of the mechanism. But even in the absence of inflows of third-party monies, we have contractual annual redemptions that allow us to reduce our net exposure. And the anniversary of these redemptions are always on April 1.

Arthur Everett Byrnes - Deltec Asset Management, LLC

And lastly, the fund is a Latin American equity fund or a debt fund or what is it?

Christopher Schech

No. It is a pan-Latin American fund. It used to be of that nature when we owned this unit. I don't believe it has changed its focus. It's focused on Latin American risk. It is not an equity fund. It is -- it does not do stock picking, but it takes positions in foreign exchange, it takes positions in all kinds of financial instruments, fixed income as well, but not equities.

Operator

[Operator Instructions] At this time, we have no other questioners in the queue, so I will turn the call back over to Mr. Amaral for closing remarks.

Rubens V. Amaral

Thank you, David. Thank you, all of you, to participate today in our call about the fourth quarter and the full year results of 2013. As I mentioned before, although we see another challenging year, our organization, our bank's well positioned to benefit from what could be a smaller growth in the region, but also, that could lead to an important growth in terms of trade flows. And Bladex, it is prepared to benefit from that, and looking to really change the portfolio mix and improve our net interest margin, and continue to build on our fee income. And doing that, as I mentioned initially in my remarks, with a goal to be much more efficient. And we hope that the markets will continue to recognize the performance of the organization, and we're looking forward to talking to you about the improved results of the first quarter when we meet again in April. Thank you very much. Have all a good day.

Operator

Ladies and gentlemen, that concludes today's presentation. You may disconnect your phone lines, and thank you for joining us this morning.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Banco Latinoamericano de Comercio Exterior, S.A Management Discusses Q4 2013 Results - Earnings Call Transcript
This Transcript
All Transcripts