Bladex, Inc. Class E

Good morning, ladies and gentlemen, and welcome to BloodX fourth quarter 2023 earnings conference call. A slide presentation is accompanying today's webcast and is also available on the investor section of the company's website at www.bloodx.com. There will be an opportunity for you to ask questions at the end of today's presentation. Please note, today's conference call is being recorded. As a reminder, all participants will be in listen-only mode. I would now like to turn the call over to Mr. Jorge Salas, CEO. Sir, please go ahead.

Good morning and thank you everyone for joining us today to discuss our 2023 fourth quarter results. I am thrilled to share today not only the highlights of an exceptional quarter, but also the milestones of a truly all-around record-breaking year for Gladix. I will begin with a review of our achievements in 2023 before handing it over to Annie, our CFO, who will share the details of our quarterly results. Afterwards, I will also share some insights into our outlook for 2024, including an update of our dividend policy and guidance for the year. 2023 was extraordinary for Vladens. Simply put, no matter which KPI you look at, last year was, without any doubt, the best in our bank's history. After two years into the execution of a five-year strategic plan, Bladex is a different bank. While Bladex remained decidedly committed to its DNA as the trade bank for LATAM, with a business model that is intrinsically low risk, our bank is now consistently following its strategic plan aimed at achieving sustainable mid-teen returns. Our plan is seated in the minds of a renewed management rewarded through a recently redesigned variable compensation program that is clearly aligned with long-term objectives of our shareholders. Let's take a quick overview of our year. Our credit book grew 9% year-on-year and 3% just last quarter. Moreover, the commercial portfolio is up 30% since we began executing the plan a couple of years ago. Today, our $9.5 billion credit portfolio is not only at record high, but more importantly, it is as diversified and as healthy as it has ever been, with NPLs close to zero. Deposits, on the other hand, rose 38% year on year to over 4 billion for the first time ever in our bank's history. This not only further reinforces our robust funding structure, but also reflects the ample upside of cross-selling to our existing clients, as well as the confidence that a wide number of investors from different geographies place on us. After an already strong 2022, 2023 was also very remarkable in terms of new client onboarded, as well as accelerating the cross-sell of other products such as letters of credit, deposits, and syndications. On the profitability front, I am happy to report that net interest income amounted to $233 million, which represents a 58% increase year over year. Furthermore, our net interest margin also reached an all-time high of 2.5%, a 78 basis point improvement from the previous year. Additionally, our focus on fee income also yielded remarkable results, with an increase of 64% from 2022 reaching a record level of $32.5 million. This resulted in net incomes soaring 81% to a historic record of $166 million for the year. Annie will share details on all this soon. Let's move to slide two, please. Couple of things here. First, after two years in our journey, you can see that we are at a pivotal juncture transitioning from the optimization phase to the expansion phase of our strategic plan. Second, today we are within the higher end of the range of profitability targets for 2026. Main goals during the optimization phase have been successfully achieved. Our use of capital today is more efficient and we have streamlined key processes to ensure faster client onboarding and enhance operational capabilities. The effective completion of this first phase has allowed us to both significantly grow our customer base in strategic markets and also increase lending margins through an efficient pricing policy on a larger flying base. The expansion phase, on the other hand, will focus on broadening our product offering. As we have continually stated, we are convinced that there is significant upside potential in three main areas. One, complementing our bilateral short-term plain vanilla trade lending with buy and sell side working capital solutions for our corporate clients. Second, there's also substantial upside in incorporating treasury products to better serve our clients' needs. And finally, there is additional upside potential in opportunistically engaging in selected project and acquisition finance deals. Last year, we started making progress in all three fronts. For instance, we are already at the initial phase of our vendor selection process for our treasury software. We anticipate that for the next couple of years, Vladex will be closely working with IT vendors in order to make sure that the bank's product suite expansion has a robust and scalable backend. Also, on the accounts receivable discount front, for example, our recent partnership with Greenbridge Capital in Chile is particularly exciting. This alliance will allow us to launch a domestically A-rated private credit vehicle that will enable us to penetrate the Chilean factoring market with healthy margins and robust credit quality as the discounted receivables come from top local corporates. Furthermore, this alliance also holds a promising potential for scaling into new markets in the region. On the project finance side, our newly established project finance and infrastructure team had an outstanding first year having already executed eight new transactions and increasing top line revenue by six fold versus 2022. Our accomplishments included the co-leadership of a $395 million deal in the Dominican Republic for a key multinational client in the renewable energy sector. This new project finance portfolio is already well diversified, covering sectors like renewable energy, oil and gas, digital infrastructure, roads, ports, and logistics. As we have explained before, the rationale behind this opportunistic initiative is twofold. First, to the extent that project finance transactions tend to be for longer turner than the typical trade finance deals, they provide additional stability to our loan portfolio. And secondly, these types of transactions will keep enhancing profitability through better spread and substantial structuring fees. I'm going to leave it here for now and turn the call to Annie, our CFO, who will walk you through the results in detail. Annie?

Thank you, Jorge, and good morning to everyone. I am now happy to give you more color on these outstanding results for our bank, both for the fourth quarter and full year 2023, in which we achieved historical records in several financial metrics, as Jorge mentioned. So let's please move to slide four. Net income reached record levels totaling over $46 million for the fourth quarter and $166 million for the full year 2023, representing annual increases of 50% and of 81% respectively. Quarterly net income has increased consistently over the last two years as a result of strong business volumes, higher margins and fees, resulting from the successful execution of our strategic plan and a favorable market environment denoted by higher interest rates and sound economic and trade growth across markets in Latin America. These recurrent operating results drove an annualized return on equity of 15.5% for the fourth quarter and of 14.7% for the year, the latter representing an annual increase of close to six percentage points. Let me now walk you through our balance sheet and profit and loss statements, underlining the main items driving this exceptional performance. So moving on to slide five, total assets amounted to $10.7 billion at year end, an increase of 16% from 2022. on the back of a robust long portfolio balance complemented by a stable portfolio of investment securities and a sound liquidity position. The bank's cash position, mostly placed with the Federal Reserve Bank of New York, led to liquidity levels of 19% of total assets and 45% of deposits at year end. These ratios reflect our prudent liquidity management approach, given the wholesale nature of our business model. It's worth mentioning that Bladex follows Basel Methodology's liquidity coverage ratio as required by Panama's banking regulator. The commercial portfolio, including loans and off-balance sheet letters of credits and guarantees, once again achieved record levels, reaching $8.5 billion at year end, up 11% from 2022. In the next slide, the commercial portfolio, which constitutes the bank's core business, continues to be short-term in nature. with an average remaining tenure of 13 months. At year end, 69% of the portfolio was scheduled to mature in the next 12 months. This portfolio is well diversified across countries and industries in the Latin America and Caribbean region. with top exposures in Brazil at 13%, Colombia at 12%, and Mexico at 11%, complemented by relevant exposures in other Central and South American countries. Throughout the year 2023, new client onboarding and product cross-selling continue to drive strong business volumes, particularly in the letter of credit business and vendor finance, both closely related to short-term commodity trade financing. Bladex also maintains a $1 billion investment securities portfolio, providing further country risk diversification and mostly consisting of eligible assets to be discounted at the Fed discount window through our New York agency. At year end, 73% of this portfolio was placed with non-LATAM issuers, mostly from the U.S., and 99% was comprised of securities held to maturity accounted for at amortized cost, with the remaining 1% accounted for at fair value through OCI, with a market value close to par at 100%. Overall, 81% of the investment portfolio is placed with investment-grade issuers. The average remaining tenor of the portfolio is less than 2.5 years. On slide 7, funding sources remain well diversified across products, geographies, and tenors. Deposits, representing 49% of total funding at year-end, set a new record, surpassing $4.4 billion, up by 38% year over year. This significant growth reflects the combined effect of our cross-selling strategy and the success of our Yankee CD program, which provides granularity to our funding base. together with the continued relevant participation of our central bank Class A shareholders. These deposits are overall short-term in nature, with a combined average original maturity of more than four months at year-end, representing a cost-effective, recurrent and stable funding source. As of year-end, short-term borrowings and debt represented 19% of the bank's funding base. This consists of both facilities from correspondent banks and issuances in the public and private format, with tenors of up to one year. Bladex maintains an ample base of correspondent banks worldwide. Bladex also complements its robust deposit base with long-term borrowings and debt, representing 29% of the bank's total funding at year end. The bank has currently outstanding public bonds in the US, Mexican, and Panamanian debt capital markets, as well as public placements under our EMTN program in multiple geographies. Bladex also has a fluent access to the international loan market through both syndicated and bilateral facilities. Our equity position continues to be enhanced by earnings generation and reflects the bank's internal risk appetite. We aim to maintain our capital ratios at current levels, even as we continue to grow our business and our balance sheet. Now turning to slide eight, over the last several quarters, net interest spread, or NIS, the assets and liabilities average rate differential, has shown an increase in trend. reaching 1.92% for the fourth quarter and 1.84% for the full year, up by 45 basis points from 2022. Higher lending spreads, efficient cost of funds given a higher deposit base, and a proactive management of the short-turner interest rate gap in an increasing rate environment stand as the main drivers of this positive NIS trend. So moving to the next slide. This NIS growth, along with higher average volumes, have boosted net interest income, or NII, being responsible for 61% of NII annual growth and reflecting successful strategy execution, particularly with regards to new client onboarding, cross-selling efforts, which include higher deposits from our client base, and a strict emphasis on pricing, profitability, and capital optimization at a transaction level. In turn, higher market interest rates have also had a positive impact on our net interest income, accounting for 39% of NII growth during the year. Given the short tenor of our balance sheet, both assets and liabilities have mostly fully repriced at higher market rates. Overall average average asset base rates for 2023 have increased by over 300 basis points compared to the prior year generating increased revenues from the share of assets funded by our equity. Overall. Net interest income for the year, totaling $233 million, increased by $85 million, or 58% year-over-year, reaching an annual net interest margin of 2.49%, up by 78 basis points from 2022, driving strong top-line performance as it represents close to 90% of total revenues. Moving on to slide 10, fee income has also shown a strong performance throughout 2023, having increased 64% year over year, driven primarily by higher activity on the letter of credit and loan syndication lines of business, both pillars of our business plan. This is also a reflection of the bank's focus on enhancing gross selling ratios across our customer base. In the specific case of loan syndications, during the fourth quarter, we structured two new transactions, driving the reported $3.5 million in fees for the quarter. As shown on slide 11, Most of the credit portfolio, that is 96%, is classified as low risk or Stage 1 as defined by IFRS 9, while another 4% is classified as Stage 2, representing credits with increased risk since origination and which are all performing. Overall, credit provision charges for the fourth quarter were close to $10 million, mostly reflecting the increased balance in Stage 2 exposure to $369 million. On the other hand, only a minimal 0.1% of total exposure remains classified as impaired credits or NPLs, amounting to $10 million, with a total reserve coverage of over 6.5 times. On slide 12, strong revenue growth continues to have a positive impact on the bank's efficiency level. allowing the cost-to-income ratio to remain at around 27% throughout all four quarters of 23. During the fourth quarter, expenses increased by 10% from the preceding quarter, mostly due to the ramp-up of projects related to strategy execution. Expenses for the whole year 2023 increased by 32%, mostly due to a higher salary base from new hires as our workforce increased by close to 50% over the last two years, congruent with our focus on strengthening Bladex's execution capabilities as outlined in our strategic plan. In addition, in 2023, there was an increase in performance-based variable compensation directly related to the bank's strong results. With this, I would like to turn the call back to Jorge. Thank you.