Bladex (NYSE: BLX) reported Q4 EPS of $0.40, versus $0.56 reported last year. Revenue for the quarter came in at $25.3 million versus the consensus estimate of $28.06 million.

• Bladex's Commercial Portfolio growth accelerated during 4Q20, up 9% QoQ to reach $5.6 billion at year-end, driven by higher loan origination (+18% QoQ), with a continued emphasis on defensive sectors and under stricter credit underwriting standards. In addition, considering the 69% QoQ increase in the Investment Portfolio, mostly focused on highly liquid corporate debt securities rated above 'A-', the Bank's Credit Portfolio totaled $5.9 billion at the end of the 4Q20 (+12% QoQ).
• During 4Q20, Bladex sustained preceding quarterly trend in collecting virtually all loan maturities (99% in 4Q20 and since the onset of Covid-19), evidencing the high quality of the Bank's borrower base and short-term nature of its business.
• As of December 31, 2020, Bladex's Commercial Portfolio remained well-diversified and focused on high quality exposures, with 59% in investment grade countries, 54% with financial institutions and 16% with sovereign and state-owned corporations. In addition, exposure to higher risk sectors has been downsized since the onset of Covid-19, such as sugar (-43%) and airlines (-67%), now representing 1% and 0.9% of the total portfolio, respectively.
• Lower Loan Portfolio balances and the collection of loans in higher risk sectors and countries resulted in a $1.5 million net reversal of credit reserves for FY20. As of December 31, 2020, asset quality remained sound with $11 million recorded as a credit-impaired loan ("NPL"), representing 0.22% of the total Loan Portfolio, compared to zero NPLs in the previous quarter and $62 million or 1.05% of the total Loan Portfolio a year ago.
• Bladex maintained a sound and diversified funding structure in 4Q20, primarily supported by the continued growth of its deposit base (+3 QoQ; +9% YoY), coupled with ample and constant access to interbank and debt capital markets. In turn, the Bank reduced its liquidity position, which stood at $1.0 billion (17% of Total Assets) at year-end.
• Bladex's Profit for 4Q20 was $15.7 million (+2% QoQ), totaling $63.6 million for FY20 (-26% YoY), denoting sustainable results as Bladex's unique business model represents a key advantage in a year deeply impacted by Covid-19 pandemic and prevailing market uncertainty.
• Net Interest Income ("NII") for 4Q20 was nearly stable QoQ (-1%), impacted by lower 'NIM' on lower rates, offseting the effects of higher average lending volumes. FY20 NII & NIM were below pre-Covid levels (-16% YoY and -33 bps YoY, respectively), as a result of the Bank's defensive approach to favor liquidity over loan growth during most part of the year, coupled with the impact of decreased market rates.
• Fees and commissions income totaled $2.8 million for 4Q20, up 7% QoQ, driven by higher fees from the letters of credit business. FY20 fees and commissions were 33% lower YoY mostly on the absence of mandated structured transactions in a year impacted by market uncertainty.
• FY20 Operating Expenses decreased 8% YoY, mainly on lower variable compensation and other savings in the current context. FY20 Efficiency Ratio stood at 37.6%, on lower total revenues on the account of the Bank's implemented measures to mitigate the risks associated to Covid-19 pandemic. 4Q20 Efficiency Ratio was 40% on seasonal higher operating expenses while revenues remained stable QoQ.

CEO's Comments

Mr. Jorge Salas, Bladex's Chief Executive Officer said: "2020 proved to be a very challenging year for Bladex's markets, as Latin American economic growth was severely impacted from high uncertainty and volatility derived from the deep effects of the Covid-19 pandemic, evidenced by the estimates of 7.4% GDP regional contraction. Notwithstanding, Bladex's unique business model – characterized by its short-term trade nature and high-quality borrower base – proved to be a fundamental and differentiating advantage throughout the year, allowing us to swiftly recompose the risk in our portfolio, while working closely and attending our clients' needs under tighter credit underwriting standards, as we also strengthen our liquidity levels, supported by broad access to debt capital markets and the continued support of deposits from our Class A shareholders."

Mr. Salas added: "During the fourth quarter, we continued the preceding quarterly trend of higher disbursements, resulting in a Commercial Portfolio growth of 13% compared to the lowest level at the end of the first half of the year, complemented by the increase of our credit investments with good quality LatAm bond instruments and by the creation of a highly liquid corporate debt securities portfolio, allowing us to gradually reduce the cash balances while still preserving a solid liquidity level. Bladex's solid financial position remains, despite all the challenges faced throughout a very complex economic year, and is underlined by the Bank's ability to deliver sustainable and quality results, with a healthier and well-diversified asset composition, and a stronger funding structure with increased tenors and diversification."

Mr. Salas concluded: "We remain prudently cautious in the face of the uncertainty that still lies ahead for this year 2021. I am extremely proud of and thankful to all my colleagues at Bladex, and of the way they have come together to navigate the storm so far, quickly adapting to the unprecedented circumstances, working from home and keeping safe, while remaining strongly committed and successfully serving our clients, standing by them during these trying times. We will continue to promote foreign trade and economic integration in our Region, committed to the best long-term interest of our shareholders."

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