Banco Latinoamericano de Exportaciones SA Q1 2008 Earnings Call Transcript

| About: Banco Latinoamericano (BLX)

Banco Latinoamericano de Exportaciones SA (NYSE:BLX)

Q1 2008 Earnings Call

April 16, 2008 11:00 am ET


Melanie Carpenter - Managing Partner, i-advize Corporate Communications

Jaime Rivera - CEO

Jaime Celorio - CFO


Fred Kirby - EverKey Global

Anurag Bhagwanji with Porto Orlin

Jeremy Hellman - Singular Research


Good day everyone. Welcome to the BLADEX’s Conference Call. As a reminder today's call is being recorded. At this time, I would like to turn the conference over to Miss. Melanie Carpenter. Ma'am you may begin your conference.

Melanie Carpenter

Thank you. Good morning everyone, and welcome to the BLADEX’s first quarter 2008 conference call on this 16th of April of 2008. This call is for investors and analysts only. And if you are a member of the media, you are invited to listen-only, if you have any questions, please follow-up with our advice after this call.

Joining us today from Panama City, are Mr. Jaime Rivera, the Chief Executive Officer and Mr. Jaime Celorio, the Chief Financial Officer; and Mr. [Louis Sampos] from the Central Bank of Paraguay. He is representing the Class-A of BLADEX shareholders and Mr. Rivera, Mr. Celorio following the annual shareholder's meeting that just finished yesterday. The different comments will be based on the earnings released yesterday, and a copy of the long version is available on the website at

Any comments that they make today may include forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. And those comments are based on information and data that is currently available. However, the actual performance may differ due to various factors, and these are cited in the Safe Harbor Statement in the press release.

And with that, it's my pleasure to turn it over to Mr. Jaime Rivera for his comments. Please go ahead, Jaime.

Jaime Rivera

Thank you, Melanie, and good morning, ladies and gentlemen. As usual we thank you very much for the time that you take, and your continuous interest in the results and the well-being of our company.

During the next 20 minutes or so, I will try to provide you with some insights into what has been the market environment in which we have been operating because I think that, this quarter in particular, that is more important than in other occasions. And I would then ask Mr. Jaime Celorio, our new CFO to provide you with some color or for what lies behind the numbers that we just reported.

It has been a certainly extraordinary quarter. I don't want to cover every aspect of the operation, as that would take us much too long and use too much of your time. We will be glad to resolve any doubt that you might have regarding both strategic tactics and the results during the question-and-answer period.

So allow me to start please by saying a few words about the market environment in Latin America in general, and the market environment within the trade finance market in Latin America in particular, because that is the one that drives the results of our company.

On a purely macro level for Latin America and its prospects going forward, certainly for the remainder of this year, we happened for once to be in agreement with the experts and we think that the difficult situation that is being faced in some sections of the financial markets in the United States and parts of Europe, while it certainly is going to have an impact and will certainly be felt in Latin America, it is not going to have a significant impact as previous crises have had on the region.

And let me tell you, our opinion as to why we believe this is going to be the case. Firstly, objectively, the level of foreign indebtedness in the region is now much lower than at any time in the past. Secondly, the foreign exchange reserves, just about every one of our central banks are at record levels and this provides people in the region with confidence in their local currency. This in turn, and this I believe, has not been given due importance in the press that we have read.

This degree of confidence in our own local currencies provides individual countries with a significant pool of owned liquidity that they can count on too, in a way we place the short-terms or the lessons that is quickly available in the international markets. This is new. This has never happened. We have never been in such a situation, not at least the retired members since I started in the business.

The fiscal account, the government budgets in general, in equilibrium or relatively close to equilibrium, and like any person or company, whenever you don't spend much more than what you've taken in revenue, this provides you with a stronger position to be able to withstand and sharpens your economy.

Regardless of what is heard -- as far as remittance flows starting to diminish and backlog in the horizon regarding, I can tell you from what we have seen, remittance flows, yes, the rate at which they are increasing has slowed down, but they are still stable. There is no country in the region that so far has suffered on account of our reduction in remittance flows. And even if remittance flows were to slow down over the remainder of the year as a result of what is happening in the United States, the question of the amount of the remittance flow is so large that we at BLADEX don’t believe that this would have much of a detrimental impact.

And lastly and very importantly, are that our terms of exchange in Latin America in general are certainly the strongest and the most favorable I have seen in my career, and according to the people in the know, they are in fact the strongest that the region has experienced in over a century. Nobody believes that this is likely to change significantly to the negative anytime soon. The experts don’t believe this will change, and so I don’t believe, and so either from what our customers are telling us, or what I am seeing, whenever I visit customers. And, what I saw on my visit to China, and what I just heard this weekend from the legation in China that visited us at Bladex and with whom we spent a good few hours discussing issues of this nature.

So from a point of view of macroeconomic trend, while there is probably going to be a decrease in economic growth rates for the region as a whole, that means coming down from somewhere around 5% or 6% to somewhere around 4% or 5%. Yes, a decrease, but nothing that the region cannot handle and certainly nothing that -- also put the (inaudible) operate the region in that situation where a slowdown in growth places our portfolio in any short cause danger.

So, that's the market as a whole and how we view it and how we feel it, and how we feel as we talk to clients, and as we're more discreet and talk to government officials and as we literally drive the field and look at the activity going on.

In our business as far as origination of business is concerned, and in our business as far as our ability to continue expanding our portfolio of clients is concerned, we have not felt to-date any impact. This doesn't mean that we might not feel an impact in the remaining months of the year. Yes, we might, but as of to-date, it's business as usual.

We are operating in that environment where foreign trade, which is for us a drive to our business, of course, it's moving forward and growing quite healthily, particularly because even if volumes might be remaining the same, the price of commodities in general have increased,. So the nominal need for dollars to be financed is in fact increasing along with increasing prices.

So, we believe that foreign trade in Latin America is probably going to increase at a rate approximately, well, maybe lower than what we've seen in the last couple of years, but certainly exceeding the 10% growth rate that we need to continue fueling our growth rate at an attractive level.

And while I'm on the business of the business environment, let me take up something that is directly related to it and a question that arises quite frequently and I think intelligently so. And that relates to our credit quality.

Statistically, well, bankers certainly in Bladex, and I am sure that many of you in the audience know banking as well as we do, statistically, it is quite improbable that any bank should retain a portfolio with zero price fuel loans and no-restructure loans in its portfolio for as long as we have.

On the other hand, we have no indication, none whatsoever, that any of our loans are in any danger of deteriorating. We review this quite constantly. But the fact is that companies and banks in Latin America, the ones that we work with, continue to exhibit low leverage in historical and absolute terms. They continue to generate adequate cash flow and they continue to have a market for their products.

We therefore, feel confident in the credit quality of our portfolio. It should not be an issue. So, with those as a general background to the Latin American market and to the foreign trade market and to the impact of those trends in our credit quality, which is of course, the health of our company, let me tell you something about my view of the specifics of the first quarter as is relates to each of our business line.

Let me start by making a very objective statement. This is the best first quarter of the year that we have had in the four years I've had the privilege of joining the company as the CEO. It's also the first time where we have the first quarter of the year improve over the fourth quarter of the pervious year.

Traditionally and seasonally, the first quarter has always tended to be the weakest of our quarters. All other things being equal, and I know, we all know, not all things remain equal, the result what we just produced is fairly a very good and encouraging start to the year.

Having said that, let me give you a couple of comments on each of our business lines. In the commercial division and as Mr. Celorio will indicate and support with figures in a few minutes, we benefited from a strong business flow. The business flow is now stronger than it's been really in the last four years, and from rapidly increasing pricing.

We reprise about $300 million worth of maturing loans every month, and we have been reprising them at levels which are very much stronger than the levels at which loans are maturing. The spreads are increasing. For the first time in four years, we have gained the ability to import pricing, which of course represents a dramatic change, the 180 degree change from a type of environment that we have faced over the last four years.

So, the commercial addition is benefiting, not only from the gain in the number of clients that we have generated or produced in the last couple of years, but, it is also benefiting from improved pricing and a wider range of products. Not only are we doing letters of credit, but we are also doing pre-export financing.

And for instance, our leasing operation is doing quite well. The leasing operation as you might remember was started about a year and a half ago. It started small but it's already generating a couple of million dollars a year for us, with clients that we know well because we have worked with them in trade finance as well, and it's growing rapidly and it’s a business that we think is like the rest of our business.

It's already self-sustaining, and as long as the environment that we're operating in continues, we should see increased contribution from this and other business lines in the commercial division over the remainder of the year. Again, a solid first quarter, and nothing in the horizon would indicate that the trends in the commercial division ought to change. That covers the commercial division, let me take or make a few comments regarding our other two lines of business, treasury and asset management.

The first thing that I want about treasury is that, it is treasury’s main responsibility and main reason for being, to guard the bank's liquidity. I don't have to, but I will remind you that the last quarter in particular, brought to light the tremendous importance of maintaining a strong liquidity for any financial institution that wants to continue existing in the medium term.

Ever since August, we have been increasing our liquidity towards the end of the year. Again it is the first time since I came to this institution, that we kept more than $0.5 billion in cash balances in the reserve. We are going to continue keeping a strong liquidity position as long as we feel that the situation in the international market remains cloudy.

We are not going to wait until the horizon becomes completely clear and the sun shines again, but we would like to be able to project and feel confident about the next couple of months in the markets before we start converting some of that liquidity to earning assets, which by the way we could do very easily. We know there is a cost for maintaining that liquidity, but it’s a cost that we are willing to pay, because the downside risk of not running a strong liquidity position and condition such as the one we are facing, the cost could be very high.

The silver lining to the strong liquidity or rather difficult liquidity conditions that are faced by the market is the fact that while Bladex has a very strong liquidity position, many of our competitors, are facing just the opposite situation. Not only are they facing liquidity constraints, some of them, in some markets are also having questions and issues relating to their solvency. This of course has made them or forced them to retract from some segments of the market including Latin America. As a result, this has also reinforced our ability to virtually gain more clients and secondly, and equally importantly impost our requirement regarding pricing and tender.

Again, it is the first time in four years that we faced such a situation, and as you can imagine, if you think back, what we have done in the last four years, where we have done significant progress along all lines certainly swimming against the trend, now that we are swimming with the current on our back, we are being able to run quite fast and this of course makes us feel good about the prospects for the remainder of this year, all things being equal.

In addition to being charged with keeping the liquidity of the bank, maintaining the liquidity of the bank began seeing the liquidity of the bank, our treasury sells our business for us and the bank’s main business that we run in treasury and we've done that successfully for three years, has to do with our available for sales portfolio.

For more than three years now we have been buying solid credits, whenever the market for some reason or another becomes a seller. We buy these securities when prices aren’t that steep. We realize good intermediations spread for how very long it takes for prices to recover, and whenever prices go beyond the point at which we've bought them, we realize gains on sale. This has become one of the core strengths of the company. We've been doing it for now for over 2.5 years and we continue doing that.

In fact now as during the first quarter, the deleveraging effect that took place in the markets, people had to sell perfectly good assets in order to create liquidity at their own headquarters. Or at least this is our view as to what happened, and this brought, as a result, an opportunity for us to buy very strong credit, of people and companies that we know at what -- in historical terms were very cheap prices. So we bought more than $227 million worth of available for sale securities during the quarter. We now have a balance in available for sale securities, which approaches the 15% threshold that we have set for ourselves as far as maximum concentration in this type of paper.

We believe because we bought these securities while blood was flowing in the streets on accounts of a battle going on up north that when liquidity returns to normal and people start buying again, they will begin by buying some of the strongest names in their region, which are exactly the once that we have in our portfolio. As that's happened in the past, we believe that in time, we will be able to realize what could be quite attractive and interesting gains on sales.

According to our calculations even if the prices of the securities return to what used to be the price levels only 9 or 10 months ago, the impact to our P&L whenever we sell these things could be significant. In the meantime two things are happening. Our first is volatility with the available sale securities is continued, blood is still flowing in the streets, liquidity in the international markets is still not settled. And as a result, the mark-to-markets on the available for sale securities has been negative. It has been negative in the years past as well. But given our very strong capitalization it hasn’t made an impact of more than 1% of our tier 1 ratio.

The OCI amount has already started to improve. Mr. Celorio will give you details. One of these grades, one of these months, it will become positive and we'll sell again at a good price. So, I'm very excited about this opportunity because I know it will eventually make a significant difference at some point in the future. Again, a line of business that we know well and have proven for more than two years that we know how it runs.

It is important, however, to realize that we can only engage in this activity because we have three things going for us. Firstly and most importantly, we have a very strong capital position, therefore, we can afford to leave and carry the impact on our OCI accounts in our capital.

Secondly, we have a strong liquidity position, which allows us to buy these securities and not have to depend, or not have to sell them at any point to maintain our liquidity, our liquidities independent of our available for sale portfolio.

And thirdly, we have the ability to wait as long as necessary for the market to settle because our other business lines; commercial and asset management are doing very well. And in the meantime, because we bought this security so cheaply, we're realizing some really good and attractive spreads on them.

So pressure is doing well. We're making money. We're buying an inventory of what we believe is going to be in relation as to eventually realize good gains on the sales from the instrument. And most importantly, first, we have to sell this obligation of strengthening our liquidity in spite of what going on in the market.

The third line of business that I'd like to discuss has to do with asset management. I believe that as the results of this quarter was again nicely positive, this should lay to rest any doubt as to our ability to run this business as a volatile activity. But we have demonstrated I believe that we very much know what we're doing.

Asset management, the way we operate it, is a volatile business and we know that. But I believe that the record now shows that this is a stream of income that the company can count on. We can count on not on a quarter-to-quarter basis because I'm sure one of these quarters, things won't go all away, but we now have a long enough track record to convince and establish that this is one way that it can actually be counted on as part of the core business of the company.

I had told you last quarter that we were going to start selling the fund to third-party investors. We did so. We did our tour in Europe and I'm happy to report that things went well and that we hope to have a commitment in principle for the first third-party investor to join us during the month of May. I imagine we will start small but given the results that we have today, our expectations are that the business will grow and this will provide us with a nice and stable source of free income.

The question of course, is how fast will this grow? Last quarter, all I knew that we were probably going to be able to get the first investor of this quarter, that is going to take place. We'll see over the next quarter or so, how much more money we can bring in. All indications are that if we continue showing the results that we're showing to-date, it should grow pretty nicely.

So, in business terms then, we're doing very well across all our business lines. Commercial division is doing well. The prospects for the commercial division look very good. The treasury division is doing very well. The prospects for the tertiary division look very well. The asset management operation has been doing well, and the prospects for asset management operation look good.

You know me. I generally like to include in my comments to you the challenges that we see facing us ahead. This business, it involves risk. And by definition then, there are things that are sometimes are within our control and sometimes outside of our control that do represent challenges that we need to overcome.

The only one that I can think of worth mentioning is the impact that the lowering of the general interest rate on the part of the Federal Reserve in the Unites States will eventually have on our capital. We are a strongly capitalized company, and of course to the extent that the general interest rates come down, that impacts the return we get over that particular capital.

We believe and certainly the first quarter proved so that the increase in pricing in our asset side ought to offset the decrease in the interest rates and therefore the decrease in our earnings from capital, but we will see how the rest of the year goes. It really depends on how long we can continue to reprise the portfolio.

We believe that the situation in the market is not likely to improve from the liquidity perspective over the next few quarters. If you, on the other hand, believe that this is a three-month type of affair and by the beginning of this summer things should go back to normal, we could face challenges in the second half of the year offsetting that general decrease in the fed funds rate.

Again, we don't believe that it's going to be the case, but that is what we may face going forward. Other than that, I don't see any cloud in the horizon, not in the Latin American horizon. But in nautical terms, and you know I have a propensity to do so, I think that we are navigating relatively calm waters with the wind on our back, and we are using a very strong ship.

There is however a very bad storm up to the north, and we can lose sight of the fact that we might at some point feel the impact of the storm. And we are managing the bank accordingly.

So, with this I'm going to ask Mr. Jaime Celorio, our new CFO, to provide some color to the actual figures for the quarter. This is Mr. Celorio's first year communication with the market. Jaime, as I announced last quarter, joined us from with Merrill Lynch. We went to a very careful search in order to locate someone that we saw fulfills the requirements of the type of person we are looking for Bladex.

Needless to say, Mr. Celorio's professional experience is first rate. His technical skills are first rate. His contacts in the market are first rate. His reputation in the market is first rate.

More than that, however, what I like about him is that he is an innovator, which for a company like Bladex who lives and thrives on change, is very, very important. And since he joined the company, I have been pleasantly surprised, because he has also a very healthy unwillingness to accept the status quo, which is also from the perspective of the way we operate, very important.

So with that, ladies and gentlemen, I will ask our new revel in the house, Mr. Jaime Celorio, to paint for you his view on the quarter. Jaime, please.

Jaime Celorio

Thank you very much, Jaime. I used to have a smile in my face basically with those numbers that I'm going to describe now, but I have a double smile in my face. Thanks very much for your comment.

I am very happy to announce basically the results of Bladex. It's basically special for me to be in my first [premier] Jaime mentioned. We've strong results in this challenging environment. So, I really have a contact with some of you and for those of you which I haven't met, I'll be assured to meet them and get to know you very soon and enhance the relationship.

I am going to be short in my presentation and divide this in two parts. First, I'm going to mention about the drivers of our results. And secondly, I'm going to give some flavor in terms of the business segments and in terms of numbers that Jaime already mentioned.

So while mentioning the drivers, I'm going to mention that during the first quarter, we continue to maintain a very balanced fee growth, asset quality and profitability. And there are five main drivers, the first one being revenue growth. How? Through expanding our prime base and market trust.

Second, the asset quality. How again? We got healthy core franchise growth and inclusion of our spreads. The third is balanced and disciplined funding. Again, how? By optimizing our balance sheet. The fourth one is basically our increasing profitability. And again, we are doing this by operating excellence, investing intelligently in the markets and also by investing in talent and infrastructure. And last, but not at least, I want to mention that we have a robust capitalization, and we've been improving also our efficiency level.

Now, I'm going to basically describe, as far as the drivers, and as far as the flavor in terms of our business segment. Our first division or one of the divisions that we call basically the intermediation business is our commercial division. In this line we have been showing an average portfolio of 18% a year ago and this represents almost $4 billion. And as mentioned before, there is an increase lending of spreads. In the last quarter we had an average increase basically of 22 basis points. We have also an increase in commission income and letters of credit as well as guarantees.

So it's also important to mention, we keep increasing our corporate clients, now they represent 52% and they used to represent 49% in the last quarter of last year. So these actually represent how we been able to gain market share. In terms of the allowance of credit losses, we haven't been changing them basically. They are unchanged versus last quarter, and we keep basically the same ratio that represents 2%.

In terms of the treasury division, what we've had in the treasure division; it's an increase of liquidity, we almost have 500 million, and we keep basically this liquidity in order to keep our feel for growing, and we also managed to match our assets, and our wealth and liabilities by optimizing our balance sheet.

In terms of the available credit portfolio, as Jaime already mentioned, we increased the portfolio 48%, this represents $227 million and this is important to mention that we mart to market this portfolio. The effect is represented in OCI accounts. We used to have basically an increase in the levels from last year, in December we closed close to $10 million, which are right now in the levels of $25 million and I can tell that as of today we are back in the levels of the end of 2007. So this too is basically the volatility that we have. But since we have a strong balance sheet, we've been able basically to keep this portfolio growing.

On the other hand, we have some liquidity ratio that has improved from a 7% a year ago, to a 10% at the end of this quarter.

We have reduction in [technical difficulty] $100 million and at this point it is important just to mention there is…


Ladies and gentlemen, please stay connected, we’ve seem to lost our connection to the main conference. Just a moment.

Jaime Celorio



If somebody is in the line disconnected. We are back in conference. Please continue/

Jaime Celorio

Okay, guys. I will not start again; I'll just follow basically where we were cut down. I was mentioning about the effect in our deposits and I was actually about to mention that we have also an increase in terms of our funding capacity on a line that announced last year from a cooperation agreement that we have with China Development Bank. We have basically a facility that is a medium term facility of $200 million. So we also brought this one during the third quarter.

In terms of the asset management division, we have basically strong revenues of $5 million year-to-date, which represent a 3.8% year-to-date percentage, and results as you can see, has been very higher versus last quarter and versus last year and the division has been able to prove that at least couple of quarters has been able to consistent and as of today, we have a track record.

In terms of operating income and return in equity. You can take a look at the graph that are in the press release, you can see that basically we have a trend since 2005.

And from an expense point of view we have been able to manage a discipline in expense controls. We have an improved efficiency ratio, basically versus the first quarter of last year where we used to have 35% and basically versus the last quarter of ’07 where we used to have 40%. These days we have 32%. The reason why is because we normally have a season with higher expenses during the last quarter, and also because we have one-time event, especially for some accruals that we made regarding vacations for employees during the last part of last year. So, I tried to make a chart. We’ve got to back to business. We’ve got to take advantage of our business opportunities that we see facing along and the increasing spread. So thank you very much everyone.

Jaime Rivera

Ladies and Gentlemen, we will be glad to take up any questions that you might have please.

Question-and-Answer Session


(Operator Instructions) And our first question comes from [Fred Kirby] with EverKey Global. Please go ahead.

Fred Kirby - EverKey Global



Please go ahead sir.

Fred Kirby - EverKey Global

A couple of questions for you. One, I wondered, can you just review to what degree do you think it will kind of cyclical play on the trade financing side given that historically spreads came in a lot from where they were in the 90s. Mainly due to foreign bank competition or local competition and given the constraints in the U.S Domicile banks, whether you're starting to see, it sounds like spreads or widening, whether you think they really is a countercyclical story here for you guys as what kind of cyclical really is on the back of the U.S. not as acceleration in growth in Latin America?

Jaime Rivera

Okay. Fred, thank you. Actually I believe it's a bit of both. Clearly, a part of the reason why spreads have increased is because there are now fewer people serving the markets and the market at the time when the need for financing on the part of the market is actually increasing. So we've had a double working in our favor. Again prices for the materials that we finance have increased. So therefore, in dollar terms the same volume necessitates more financing.

And secondly, yes, there is the impact of people or banks in the U.S. and in Europe. By the way, some of our main competitors in Europe have decided to pull back while they deal with problems at home. More fundamentally, however, I believe that the lessons of the last six months have brought about what is in some banks a radical change in the way they view risk and return, and the place where they put the minimum pricing thresholds.

So to that extent, I'm hoping that this would be more permanent. What we all hope is a temporary certain liquidity situation. The risk and return I hope would be for some time more in equilibrium than it had being in the last four years. Does that more or less answer your questions?

Fred Kirby - EverKey Global

Yeah. That answers my question just a second follow-up. You mentioned what percent the balance is going up on the back of commodity prices, what percent of the trade financing that you are doing is related to unfinished commodities versus and if you could even talk about soft commodities agriculture versus finished good?

Jaime Rivera

I don't…

Fred Kirby - EverKey Global


Jaime Rivera

Go ahead.

Fred Kirby - EverKey Global

And then, finally if could just give us some update. I used to follow this more closely long ago, but in terms of non-performing loans, do you have any non-performing loans, any material at all? On asset quality you mentioned the situation is very strong, but I just wondered if --?

Jaime Rivera

Okay. Now, firstly, your second question is the easiest one to answer. No, we don't have any. Zero.

Fred Kirby - EverKey Global


Jaime Rivera

Not a cent. On the question of commodities, most of our activity, the exporters, the large exporters that we finance are taking place in South America. So therefore, we are talking about grains, iron, unfinished commodities. The one country where we have, our activity is geared around finished products, of course, is Mexico. 80% of Mexican export represents manufactured good. But Mexico is relatively small but growing part of our business. Most of our commodity exposure relates to sorghum, corn, sugar, aluminum, oil and iron, right.

Fred Kirby - EverKey Global

Okay. Thank you so much guys.

Jaime Rivera

Sure, Mr. Kirby.


Thank you for question, sir. Next question comes from [Anurag Bhagwanji with Porto Orlin]. Please go ahead, sir.

Anurag Bhagwanji with Porto Orlin

Good afternoon, gentleman.

Jaime Rivera

Good afternoon, Anurag. How are you?

Anurag Bhagwanji with Porto Orlin

Good. My first question was regarding the relationship between spreads and margins. So if I heard you correctly you mentioned that spread is expanded by about 22 basis points, whereas the margins expanded by about eight basis points quarter-on-quarter. I'm assuming this has some impact on increase in liquidity. Is it possible to quantify that impact if the liquidity ratio had stayed where it was in Q4, how much NIM sort of moved up?

Jaime Rivera

It is possible to quantify, we will place it on our website. Clearly, that would have helped. That would have worked even more to an advantage. There was a cost in keeping that liquidity high. We'll calculate the number and we'll place it in our website, probably tomorrow. Would that be sufficient for you?

Anurag Bhagwanji with Porto Orlin

Absolutely fine, Mr. Rivera. And my second question was, did I hear that correctly Mr. Celorio mentioning that OCI account as of now has gone back to where it was on 31 December, is that correct?

Jaime Rivera

It is correct.

Anurag Bhagwanji with Porto Orlin

Okay. So it's now negative 10 million?

Jaime Rivera

Negative 10 million on our portfolio, which is much larger.

Anurag Bhagwanji with Porto Orlin

Sure. That's very helpful.

Jaime Rivera


Anurag Bhagwanji with Porto Orlin

Thanks a lot gentleman and all the best.

Jaime Rivera

Anurag, no, and by the way, our bet off course, it's not our bet, our belief is that when investor start buying again, the first thing they're going to do is buy some of the type of assets that we have in that portfolio. Prices don't have to move up much before we realize significant gains on that. My only question is, will that take one quarter or one year? And in the end it doesn't really matter because in the mean time we're making very good money on it.

Anurag Bhagwanji with Porto Orlin

Yeah. As long as you have that sort of holding capacity that you do have, you really don't know how much of what you should have.

Jaime Rivera

That's correct. It's like to have a 19% or 20% Tier 1 ratio, one-year engaged in this.

Anurag Bhagwanji with Porto Orlin

Yeah. Thanks a lot Mr. Rivera.

Jaime Rivera

Sure. You're welcome.


(Operator Instructions)

Our next question comes from Jeremy Hellman with Singular Research. Please go ahead.

Jeremy Hellman - Singular Research

Hi. Good morning, everybody.

Jaime Rivera

Good morning, Jeremy. How are you?

Jeremy Hellman - Singular Research

Very good. I wanted to talk a little bit about the asset management business and your external fund raising. Is that by designing you did not disclose the amount of investment that you're going to be picking up in May?

Jaime Rivera

It is by design. We want to have --.

Jaime Celorio

It is our funds in Europe. It will probably start small, but I'm happy and we're happy, because the name is an important name, and like anything else, in every business I think, the first step is probably the most important one to take. We went on a tour in Europe and came back with one investor. That to us was a good start.


(Operator Instructions)

There are no further questions in the queue at this point.

Jaime Rivera

Well, ladies and gentlemen, thank you very much for having participated in the call. I'm actually quite happy and very excited about the way things went during the quarter. And as I hope I've transmitted to you, we're very excited about the prospect for the company going forward. The start, both the ones that we have failed and the ones that we don't control are aligned for the company in probably the best way they have been in at least four years.

In fact, in my perspective as a CEO, I believe that this quarter demonstrates and it's a combination of the first phase of the transformation that we started working on four years ago when we started off, and remember this is where we started off, a completely monoline, mono-client type of institution.

All we used to do, less than four years ago, in fact, was finance banks through simple short-term loans. We've come a long way from that. And I think that the result of this quarter demonstrate that. Two things: firstly, we have the right strategy; and secondly and perhaps more importantly that we know how to execute.

With ups and downs, the motto has become self-sustaining. I believe that if the situation in the market holds, the prospects for the company over the short and even medium term in terms of improving profitability are solid.

We are, of course, not satisfied with where we are at 12% ROE. It's certainly a lot better than it used to be in the past and making $20 million a quarter is a lot more than the $7 million or $8 million a quarter that we were making two years ago. It's still however not where we want the company to be.

So, we're already working on the next phase, because we'd like to see a similar quantity increase in profitability over the next two years, and that's the challenge. Fortunately we're facing this challenge under much better stronger conditions than we had two years ago.

We have more options in terms of more alternatives, more clients, better presence, and a much improved reputation of brands. The Bladex brand in the region now carry significantly more weight than in the past, which means and that makes it much easier for us to attract business, attract clients, attract potential partners, look into new investors, fund the new investments, et cetera.

We are working on 2010 already, and I'll promise to you that the shareholders in the market in general our aim is to build quality in the way we run the company and the result, something similar in relative terms to what we'd been over the last couple of years. That's what we are working on. We are very excited, because we see a lot of opportunities. We are exploring them.

I have spoken before about the factoring business. That's about to come to fruition. I hope we have some news to report to you next quarter when we meet. Ever since we started looking at this project, the prospect for growth in that activity have become even better than they were when we started looking at it.

Like that, we are looking at another couple of new business lines, staying within what we know how to do, that we think are going to provide the company with a real kick over the next couple of years, all of which we do indicate that regardless of the quantitative movement that we have seen in the share price in the last two days, Bladex remains one of the best bargains in the universe. And this is our metrics that we are going to bring forth to the market.

We are planning to do seven road shows this year. We did three last year. We are bringing the word out to mostly former shareholders of Bladex, people that worked with us in the past, that did very well while they worked with us, but because of some reason I know have not been following Bladex in the last two years.

The couple of people that we have contacted informally so far have been extremely interested when we tell them about the changes that have gone in Bladex. And in fact, if you haven't looked at Bladex for two years, some people hardly recognize the company at all and so have demonstrated great interest in hearing our story. What we believe this is going to bring about is an increase in our shareholding, which would be reflected firstly in increased liquidity; something that we know our shareholders would benefit and would ease their minds. But secondly of course is the more people we bring in, is the price of the share, the price of the stock ought to benefit as well.

So not only are we concentrating on the business itself. We are also going to be spending significantly more time telling the story of the seven road shows. I'm going to participate personally in at least three. Mr. Celorio would do the rest and hopefully as this story gets out. We don’t believe it is out to the extent that it should be. We should see an immediate and important impact on the value of our share because quite frankly given the results and the trend that we have been able to show, we believe that BLADEX remains a bargain and we don't want that to remain the case for much longer.

So, for those of you who have been with us, thank you very much for your confidence. I think it's been rewarded, we're very confident about the future going forward, both the short-term future and in the medium-term. We have a very strong company, a very strong brand, a very strong franchise. Our skills have been proven and the wind is on our back.

So with that I thank you for attention and I look forward to talking to you again certainly in the course of this conference next quarter. Some of you would be talking to I'm sure, during the road-shows that are coming up both in the West Coast and in the East Coast.

Thank you very much. I wish you all success. Best of luck and we'll see each other next quarter.


Thank you ladies and gentlemen. This does conclude today's teleconference. You may now disconnect.

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