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

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Q & A
Executive
Ana Graciela de Mendez

as I mentioned. And basically the accounting standard, what it asks is that in any case, where we see that exposures or the conditions of the exposures changed with respect to when they were originated, it implies that we have to move from allocating credit reserves on a one year basis rather than on lifetime. So when we put the exposures from Stage 1 to Stage 2, it means that some conditions have deteriorated to this portfolio, since these loans were originated.

Now, what does this translate to is that whenever we risk area determines that there has been certain deterioration in a country or an industry, that means that -- or we give an internal downgrade to the country risk, all the exposure that are closely associated to this country exposure is analyzed and then it's put on these Stage 2 category until it matures, because it was originated in different risk conditions. But it -- I emphasize that this exposure is performing and in our perspective, it continues to be with very good clients and it continues to follow very strict credit procedures in terms of the underwriting that Gabriel mentioned.

So it's just an accounting rule that we have to follow. We do have a small portion of this portfolio, which we have in our watchlist. Like I mentioned, we continue to get paid on that, and it's a very small portion of that. I think it -- at the end of the quarter, it totaled $30 million. So in general terms, it's nothing, that we particularly worry about in terms of -- it's just an accounting standard that we have to follow. I don't know, Gabriel if you --

Executive
Gabriel Tolchinsky

I think that summarizes it very well. Thank you.

Analyst
Robert Tate

Yes, [Technical Issues] in that category, I presume it would be, you know, countries like maybe Argentina and industries, perhaps, sugar and maybe oil and gas. Is that correct. Or what industries and countries within that category of [Technical Issues]

Executive
Gabriel Tolchinsky

A significant amount of the exposure there is Argentina and Costa Rica, both countries that were downgraded in the last few months. And that is the bulk of the increase. But the underlying credit are not only performing, those are good credit with absolutely no delays, and we don't have any concerns as to the capacity of these borrowers to repay their debts.

Analyst
Robert Tate

Okay, okay, great. Just on the provision for the [Technical Issues] three of last year, I think the [Technical Issues] exposure and from what I understand [Technical Issues] particular loan went from 75% in quarter four of last year [Technical Issues]. I think it's about 85% now. Just looking at your numbers [Technical Issues]

Executive
Ana Graciela de Mendez

We're kind of losing you, Robert.

Executive
Gabriel Tolchinsky

I'm sorry, Robert. We're -- we've lost you.

Analyst
Robert Tate

[Technical Issues] the impairments of the sugar loan, I think it's at 85% provision. Is that about right at the moment?

Executive
Gabriel Tolchinsky

That is about right.

Executive
Ana Graciela de Mendez

Yes, that's correct.

Analyst
Robert Tate

Okay, okay. And then [Technical Issues]

Executive
Gabriel Tolchinsky

Robert? I'm so