Banco Latinoamericano de Comercio Exterior, S.A (NYSE:BLX) Q2 2019 Earnings Conference Call Transcript

Jul 19, 2019 • 11:00 am ET

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Banco Latinoamericano de Comercio Exterior, S.A (NYSE:BLX) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

[Operator Instructions] We have no questions in the queue at this time.

Executive
Gabriel Tolchinsky

Thank you, everybody. I believe that there is a question coming in.

Operator
Operator

Yes, we did have someone. We have a question from Robert Tate, Global Rational Capital.

Executive
Gabriel Tolchinsky

Thank you very much.

Analyst
Robert Tate

Hi, I am Robert. Hi, Gabriel, Ana, thank you so much and [Technical Issues] well this quarter, again, just want to congratulate you on the good results.

Executive
Gabriel Tolchinsky

Thank you, Robert.

Executive
Ana Graciela de Mendez

Thank you, Robert.

Analyst
Robert Tate

Yes.

Very much appreciated.

[Technical Issues] So as I mentioned, you've done [Technical Issues] despite the headwinds and the track to achieve a 10% or double-digit return on equity. And I was just wondering, so and you've [Technical Issues] how are you able to do so? Well, despite the difficult environment and why are they not more underperforming loans, and given that [Technical Issues]. How did you mentioned in the first part of your call?

Executive
Gabriel Tolchinsky

Okay. Thank you for your question, Robert. Some of your comments were cut off, because of bad communication. But I think, I got the gist of the question and let me start answering by saying that in this environment, we need to, of course, have very sturdy and strict credit underwriting standards. And we do so, and also pay good attention to overall portfolio allocation. We are reducing exposure in countries like Argentina, because of that potential for volatility, particularly from the political side. But we're able to increase exposure in Central America, and the Caribbean, where our margins are very good, and we have very good presence in those countries.

So from a big picture portfolio allocation, we're able to navigate Latin America based on where the appropriate risk reward is and from a more micro level, we have been doing very good transactions, as Ana Graciela mentioned we've done two significant syndicated transactions at good margin levels that is added to our portfolio. Overall, we are able to still find our good spots within what we consider an overall challenging environment. Challenging doesn't always mean that it will translate to NPLs, it just means that we need to be careful on how we underwrite the bulk of our portfolio, it's short-term in nature.

As we mentioned before, around 79% of our exposure matures within a year. That means that we have the capacity to move around and stay away from difficult situation very much a product of the de-risking that we took on starting in 2017, all the way through 2018, and are able to really have constructed a portfolio that we feel very comfortable with and able to adjust exposure accordingly based on changing macro and micro wins.

Analyst
Robert Tate

Right. Yes. Thank you, Gabriel. And just a question for you both, the H2 exposure. [Technical Issues] that's quite an important category, I think and perhaps one that [Technical Issues] just wondering, if you could just describe the general composition of [Technical Issues] country?

Executive
Ana Graciela de Mendez

Yes. Robert, thank you. Yes, Stage 2 exposure, this is a category under IFRS 9,