• Commercial Portfolio Growth: Increased by 18%, reaching $10 billion.
• Non-Performing Loans: Close to 0%.
• Deposits Growth: Increased by 23% for year-end closing balances and 33% in average balances.
• Tier One Capital Ratio: 15.5%.
• Net Interest Margin: Stable at 2.47% for the year.
• Fee Income Growth: Increased by 37% compared to the previous year.
• Efficiency Ratio: Below 27%.
• Annual Net Income: $206 million, a 24% increase from the previous year.
• Return on Equity: 16.2%, up 153 basis points from 2023.
• Total Credit Portfolio: $11.2 billion, an 18% increase from the prior year.
• Net Interest Income: $259 million, an 11% increase from the prior year.
• Fee-Based Revenue: $44 million for the year, a 37% annual growth.
• Non-Performing Loans Ratio: 0.2% of total exposure.
• Total Expenses: $80.5 million, an 11% annual increase.
• Quarterly Dividend Increase: From $0.50 to $0.625 per share.

• Warning! GuruFocus has detected 6 Warning Signs with BLX.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Banco Latinoamericano de Comercio Exterior SA (NYSE:BLX) achieved a record-breaking year in 2024, with net income reaching $206 million, marking a 24% increase from the previous year.
• The commercial portfolio grew by 18%, reaching a record of $10 billion, with strong growth in Brazil, the Dominican Republic, and Guatemala.
• Non-performing loans remained minimal, close to 0%, highlighting strong risk management practices.
• Deposits increased significantly by 23% for year-end closing balances and 33% in average balances, surpassing the guidance of 30% growth.
• The efficiency ratio improved to 26.5% in 2024, compared to 27.2% in 2023, despite investments in transformation.

Negative Points

• Net income in the fourth quarter was down 3% compared to the previous quarter, primarily due to higher expenses related to ongoing strategic initiatives.
• The net interest margin is expected to compress in 2025 due to tighter lending spreads and anticipated rate cuts by the Federal Reserve.
• There is potential risk from US foreign trade policies, particularly tariffs, which could impact the economic trajectory in Latin America.
• The seasonal factors led to slightly lower deposit levels at the end of December compared to the third quarter.
• Higher expenses were reported in 2024, driven by increased headcount and ongoing investments in technology and business initiatives.

Q & A Highlights

Q: Can you comment on the factors driving the net interest margin (NIM) contraction estimate for 2025 and the potential impact of the new trade finance platform on fee income? A: Ana Mendez, CFO: We observed tighter lending spreads due to a competitive market environment and increased access to US dollar financing. Our guidance assumes lending spreads remain at current levels and includes a 100 basis points reduction in Fed rates. Jorge Salas, CEO: We expect fee income to increase by around 10% in 2025, driven by the new trade finance platform and continued growth in letters of credit fees.

Q: How do tariffs and trade policies affect Bladex's outlook, particularly regarding Mexico? A: Jorge Salas, CEO: Mexico is our second-largest exposure, with 78% of it being short-term. Only 10% of our Mexican exposure is with companies exporting to the US. We have conducted stress tests and are confident in the resilience of these companies. We anticipate opportunities for other Latin American countries to increase exports to the US if tariffs are imposed on Mexico.

Q: Why is the return on equity (ROE) guidance for 2026 lower than the current level? A: Jorge Salas, CEO: The 2026 guidance was based on a normalized Fed fund rate of 2.5%, which hasn't materialized. Given current information, we expect profitability to be at the higher end of the 13% to 15% range for 2026, driven by strategic initiatives and platform implementations.

Q: What is the status of the trade finance and treasury platforms, and will they be deployed in all operating countries? A: Samuel Canineu, Chief Commercial Officer: The trade finance platform is country-agnostic and will initially be piloted with key clients before wider deployment. The goal is to have all clients using the platform eventually.

Q: What countries are expected to lead portfolio growth in 2025, and what are the targets for credit provisions? A: Samuel Canineu, Chief Commercial Officer: Growth is expected to be balanced across countries, with opportunities in Mexico, Central America, and countries like Argentina and El Salvador. Jorge Salas, CEO: We anticipate credit provisions for 2025 to be similar to 2024, around $17 to $20 million, given the projected growth and country mix.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.