Banco Latinoamericano de Comercio Exterior, S.A.

Good morning, ladies and gentlemen, and welcome to Bladex First Quarter 2026 Earnings Conference Call. A slide presentation is accompanied in today's webcast and is also available on the Investors section of the company's website, www.bladex.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 a listen-only mode. I would now like to turn the call over to Mr. Jorge Salas, Chief Executive Officer. Sir, please go ahead.

Good morning, everyone, and thank you for joining us today to discuss Blythe's results for the first quarter of 2026. I will begin with a brief overview of our quarter, then Annette, our CFO, will walk you through the financials in greater detail. After that, I will come back with an update on strategy execution, some thoughts on the macro environment, and our outlook for the rest of the year. Finally, we will open the line for questions. We began 2026 with a very strong quarter in terms of balance sheet growth. while maintaining solid profitability in a highly competitive environment with very tight spreads and wide-open capital markets for lifetime issuers. The main highlight of the quarter was the continued expansion of our commercial portfolio. We reached a record of $12 billion, up 8% quarter-over-quarter and 13% year-over-year. This was fully in line with the growth path we have been discussing in previous quarters and supported by the additional capital flexibility provided by the AT1 issuance completed last year. Growth was driven mainly by medium-term transactions across Colombia, Brazil, and Guatemala. On the funding side, deposits once again reached record levels. closing the quarter at $7.3 billion, up 11% quarter-over-quarter and 25% year-over-year. This strong performance was broad-based across all depositors segments, with Yankee CDs standing out, surpassing $1.7 billion. This reflects continued client activity, the strength of our franchise and our ability to continue growing deposits at very competitive spreads, which has also helped support margins in the current rate environment. Turning to revenues, net interest income totaled $70 million, down slightly in the quarter as the balance sheet continues to absorb the full repricing of last year's rate cuts. Latin America has been one of the more resilient regions in a volatile global environment. That has translated into strong liquidity, tighter spreads, and increasing competition. Even in that context, we were able to maintain our net interest margin at 2.34% supported by disciplined balance sheet management. Strong asset growth, deposit increase, and active liquidity management help offset pressure on spreads. P generation in the first quarter typically runs below fourth quarter levels in our two main fee businesses, letters of credit and syndications. So this seasonal pattern is not unusual. Importantly, when compared with the first quarter of last year, the underlying trend remains clearly positive. We continue to see healthy pipeline in fees for the second quarter, which is consistent with how activity is evolving. Expenses also reflected the usual seasonality at the start of the year. That said, we do expect expenses to increase slightly over the coming quarters as we continue to execute the investment plan contemplated for the rest of the year. Efficiency levels for 2026 will remain within guidance at roughly 28%. Net income for the quarter reached $56.4 million. Return on equity was 14.2%. in our Tier 1 ratio close to quarter at 17.9%, allowing us to continue supporting growth from a position of strength. So overall, this was a quarter of strong growth and solid profitability despite a more competitive revenue environment. With that, let me now hand it over to Annette for a more detailed review of the financial results. Annette, please go ahead.

Thank you, Jorge, and good morning, everyone. Let me walk you through financial highlights for the first quarter of 2026. From a financial perspective, this quarter represents a solid start of the year. We continue to grow the balance sheet with discipline while maintaining stable profitability in a lower rate environment, supported by continuous strengthening of our funding mix and solid free generation despite first quarter seasonality. Starting with earnings and returns, Bladex delivered net income of $56.4 million, up 9% year-over-year, and broadly stable quarter-over-quarter, reflecting the consistency of our core earnings generation. Importantly, return on average assets remained stable at 1.8%, even as we continued to grow the balance sheet. This reflects the bank's ability to expand while preserving sustainable profitability. Return on adjusted equity stood at 14.2% in line with the previous quarter and within our 2026 guidance range, reflecting stable earnings generation. As usual, first quarter results should be assessed in context. The period is typically seasonally softer, particularly for fee income, and this quarter we operated in a lower interest rate environment. which naturally plays some pressure in spreads and returns. As we will see through today's presentation, despite this backdrop, our first quarter performance reflected the benefits of disciplined balance sheet growth, stable net interest income, continued funding optimization, and higher fee generation compared to the same period last year. Let's now turn to balance sheet growth and commercial activity. The commercial portfolio reached $12 billion, increasing 13% year-over-year with growth across both loans and contingencies. Within this total, loan balances closed at $9.7 billion, reflecting continued execution of our commercial pipeline, while contingent exposures reached $2.1 billion. The quarter's performance was supported by the execution of a strong pipeline of medium-term transactions, including activity originated through our structuring and distribution team. At the same time, our focus remains on selective origination and efficient capital rotation, with 64% of exposures maturing in less than one year, supporting flexibility, disciplined risk management, and repricing capacity. From a composition perspective, diversification remains a key strength. Country exposures are well distributed with no single country representing more than 15% of total exposure. Guatemala, Brazil, Colombia, and Mexico remain among our main markets, while the overall mix reflects a balanced regional footprint. Industry diversification also remains strong. Financial institutions represent 25% of total exposure, while corporate lending is well-spread across sectors linked to regional economic activity and trade flows. Starting this quarter, our commercial exposure includes a small bond position, COGOS and LATAM issuers, recorded at fair value through OCI, totaling $234 million. This represents a tactical capital deployment tool, allowing us to selectively capture opportunities within our existing credit framework while continuing to prioritize loan growth. The Fair Value OCI classification also provides flexibility to manage these positions over time, including adjusting exposures as credit or market conditions evolve consistent with our risk-adjusted returns objectives. With that, let me now turn to liquidity and the investment portfolio. As we continue to grow the balance sheet, maintaining a strong liquidity position remains a key part of our funding and risk management discipline. At quarter end, liquid assets, $2 billion, representing 14.5% of total assets, remaining well within regulatory requirements and providing flexibility to support commercial growth while preserving present liquidity buffers. The composition of liquidity remains highly conservative, with around 80% placed at the Federal Reserve Bank of New York, and the remainder primarily held with high-quality counterparties and multilateral institutions. The Treasury investment portfolio closed the quarter at $1.44 billion, increasing 14% year-over-year. The investment book remained 96% investment-grade, geographically diversified outside Latin America, and short in duration, with an average maturity of approximately 1.5 years. These characteristics make it a strong complement to our liquidity structure, providing earning support and contingent funding capacity, as these securities are eligible for access to the Federal Reserve discount window through our New York agency. Overall, liquidity and investments continue to provide flexibility, resilience, and earning support as we grow the balance sheet. Turning to asset quality, credit quality remains strong and stable, consistent with the bank's disciplined approach to origination, underwriting, and ongoing monitoring. At quarter end, total credit exposure reached $13.5 billion, with the vast majority remaining in Stage 1. representing 97.5% of total exposure. Stage two exposures representing 2.2%, or approximately 300 million, while the stage three remain minimal at 0.3%, or around 39 million. This continues to reflect the high quality profile of the credit books. From a reserve perspective, total allowances reach 112 million, with a coverage ratio of 0.83%, broadly stable compared to the previous quarter. In addition, coverage of impaired credits remains strong at 2.9 times, reflecting a present reserve position. The increase in Stage 2 during the quarter primarily reflects our proactive credit assessment of selected exposures in the context of a somewhat more challenging operating environment. Importantly, impaired credits remain stable, and no material credit events were recorded during the quarter. Asset quality, therefore, remains a core strength of the bank, supported by high-quality exposures, prudent reserve coverage, and continued proactive risk management. Let's now move to the funding side of the balance sheet. We continue to see strong momentum in deposit growth. which remains the foundation of our funding strategy. Deposits reached a record level of $7.3 billion, representing 63% of total funding, increasing both in scale and relevance within our liability structure. Growth was broad-based, driven by corporate deposits, financial institutions, and multilateral clients, while Class A shareholder deposits continue to provide a stable and efficient anchor. In addition, Yankee cities reached a record level of $1.7 billion, further enhancing the diversification and duration of our deposit base. As a result, deposits continue to support balance sheet growth through a more stable and cost-efficient funding structure, which remain an important driver of our ability to sustain margin within our guidance expectations. Beyond deposits, we continued to actively diversify our medium-term funding sources. During the quarter, we executed an additional tranche under our Middle Eastern syndicated loan, alongside other bilateral transactions, further expanding our investor base. More recently, we completed another successful issuance in the Mexican market of roughly $250 million. which was swapped into US dollars at a cost well within our US dollar curve. This transaction reflects our continued access to diversified funding sources, as well as our ability to capture attractive opportunities while optimizing our cost of funds. This quarter results show continued progress in strengthening the liability side of the balance sheet, improving the quality, diversification, and duration of our funding, while reinforcing the role of deposits in supporting both margin sustainability and balance sheet growth. Let me now turn to capital. Our capital position remains strong and well above our target levels, providing ample capacity to support continued balance sheet growth. At quarter-end, our Basel III Tier I ratio increased to 17.9% from 17.4% at year-end 2025. while our regulatory capital adequacy ratio under Panama's banking framework stood at 14.7%, well above the regulatory minimum. It is important to note that these two ratios are based on different methodologies and therefore do not necessarily move in the same direction quarter to quarter. The Panama regulatory ratio follows a more standardized framework, while the Basel III ratio is more risk-sensitive and better captures changes in the underlying risk profile of our exposures. In the first quarter, the increase in the Basel III ratio was driven mainly by lower risk-weighted asset intensity, reflecting the regular revision of our internal risk parameters, incorporating the continuous strong performance of the credit book. Looking ahead, we continue to expect disciplined capital deployment through 2026, in line with our broader strategic execution. As capital is deployed, we will expect Basel III Tier 1 ratio to gradually move towards our 15% to 16% Tier 1 guidance range, which remains the appropriate operating level for the bank. Our capital position remains strong and continues to provide ample capacity to support growth while preserving balance sheet resilience. Moving now to net interest margin and spreads. During the quarter, net interest margin stood at 2.34%, while net interest spread was 1.69%, reflecting resilient performance in what remains a challenging rate environment. Margins continue to be shaped by several dynamics. The rate cuts implemented in the fourth quarter of 2025 have had some impact on NIM, while ample market liquidity and strong competition for quality assets continue to pressure loan pricing, particularly in short-term lending. In addition, while loan averages balances remain broadly stable, supporting consistent net interest income, most of the incremental balance growth was concentrated towards the end of the quarter. Therefore, the earnings contribution from this growth was only partially captured in the first quarter NII, with a fuller impact expected to be reflected in subsequent periods. At the same time, these pressures have been partially upset by the execution of medium-term transactions, which contribute to a more stable margin and support overall asset deals. On the liability side, Continued deposit growth helps support balance sheet growth more efficiently, reinforcing a more stable and cost-efficient funding structure. Taken together, these factors demonstrate the resilience of our margin performance and the benefits of actively managing both sides of the balance sheet. Let me now turn to free incomes. In the first quarter, fees and commissions reached $13.1 million, up 24% year-over-year, despite this being a seasonally softer period for fee generation. Letter of credits and guarantee remain the main source of fees, generating $7.4 million in the quarter. This activity remains closely tied to our core trade finance business. First quarter was affected by seasonality, but we see a good momentum as we move to the second quarter, supported by higher transaction volumes and increasing but gradual benefits of our trade platform. Trade commitments and other commissions were another important contributor, reaching $2.7 million, more than doubling compared to the same period last year. This reflects the growing relevance of medium-term transactions and committed facilities within our line offering. Our structuring and distribution team also continued to contribute to fee income, generating 3.1 million during the quarter, supported by two transactions closed in Costa Rica and Colombia. Importantly, this was achieved despite some transactions closings shifting from the first quarter into the second quarter, While fee recognition in this business can vary depending on execution timing, the syndicated loan pipeline remains solid. In addition, client derivatives are a part of our strategy to further diversify non-interest income. We are seeing growing client demand, particularly in connection with transaction execution. The pipeline remains active And while the timing of individual transactions may shift across quarters, we expect this business to begin contributing more visibly as execution builds over the upcoming quarters. Taken together, the income continues to show solid growth and increasing diversification, supported by trade-related activity, committed facilities, and structuring capabilities. with gradual contribution from client derivatives as activity builds through the year. To close, let me turn to operating expenses and efficiency. Operating expenses for the quarter were 22 million, reflecting the usual first quarter seasonality, while also incorporating the impact of the strategic initiatives that have moved into production, including higher depreciation, IT-related expenses, and the talent required to support execution. In that context, the first quarter expense base reflects the operating impact of initiatives already underway. The efficiency ratio for the quarter was 26.5%, remaining well aligned with our full year guidance of approximately 28%, and reflecting the bank's ability to absorb strategic investment while maintaining cost discipline. As we move through the year, we will continue investing selectively in technology capabilities, talent, and execution capacity required to deliver on our strategic priorities while maintaining a strong focus on operating efficiency. In conclusion, the first quarter reflected disciplined balance sheet growth, resilient margins, strong fee generation relative to seasonal patterns, continued funding momentum, and a solid capital position. With that, I will now turn the call back to Jorge for his closing remarks.

Thank you very much, Annette. Let me briefly touch on strategy execution and make a couple of comments on the environment we're operating in. We continue to make good progress on our letters of credit platform. Processing times have consistently come down from almost five hours to about one hour per transaction. This productivity improvement has allowed us to handle smaller tickets profitably, deepen penetration with existing clients as we start to scale the layers of credit business. As outlined in our Investor Day last month, transactional deposits are a key component in the new phase of our strategy. In that sense, we have already onboarded our first correspondent banking plan, still in pilot phase, and we're currently working on the second one. We now have the governance in place to incorporate additional correspondent banking plans during the year in a disciplined way. And we continue to see strong pipeline of interested financial institutions in the region for these services, which we see, of course, as very encouraging. Turning to the macro environment, while global geopolitical and financial conditions have clearly become more volatile, our region continues to show resilience, supported by healthy fundamentals, stable trade flows, and a positive investor sentiment. The reason is clear. Latin America's direct trade exposure with the Persian Gulf is very limited, and the region as a whole is a net commodity exporter. Higher commodity prices are historically beneficial for blacks. Obviously, net commodity importers, mainly Central American and Caribbean countries, will face some headwinds. The ultimate question, of course, is how long will this last? In any case, our view is that this environment reinforces the importance of disciplined lending and highlights the value of our ability to actively adjust regional exposures given the short-term duration of our lending portfolio. So, when we look at the year as a whole, our view remains unchanged. The first quarter was consistent with our expectations, and we continue to make progress on the strategic front that support the next phase of the bank. For that reason, and based on what we have seen so far in the year, we reaffirm our full year guidance. We do so with confidence while remaining realistic about the competitive environment and the external conditions. With that, please open the call for questions, operator.

Thank you very much for the presentation. We will now begin the Q&A section for Investors and Analysts. If you wish to ask a question, please press the button Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. There is also the possibility to ask your question through the Q&A icon at the bottom of the screen. You may select the icon and type your question with your name and company. Written questions that are not addressed during the earnings call will be returned by the Investor Relations Team. Our first question comes from Inigo Vega with Jefferies. Just a couple of comments on two areas. One, level of worry on the 70 BPS sequential increase in Stage 2 loans in the quarter. And second, why RWAs under Basel III are down 2% quarter-on-quarter when commercial portfolio is up 80% quarter-on-quarter? Only are WAs under Panama aligned with asset growth?

Yes, thank you, Inigo. I'll tackle the first question on asset quality, and I'm going to let Annette, our CFO, tackle the copper ratios questions. The short answer is we're not worried. Asset quality remains very strong. The Stage 2 increase reflects more of a proactive risk management approach than any deterioration. We're just being more cautious on selected exposures, basically in Brazil. But we do expect normalization rather than deterioration going forward. I mean, the cost of risk is consistent with the disciplined underwriting of lives, and that, as I always say, has not changed and will not change. And then you want to... Talk about capital ratios?

Sure. Yeah, as we mentioned in the call, we follow two different methodologies. One is the regulatory methodology that are bank-regulated, that is contingency of banks. And we also, for reference purposes, also follow Basel III Tier 1 ratio. And these are different methodologies. The Panamanian local regulator ratio is based on a more standardized approach. where exposures are assigned regulatory risk weights based on their categories. While the Basel III Tier 1 ratio is more risk sensitive, it reflects more directly the underlying risk profile of the portfolio, including the bar work quality, country risk, tenure, profitability of default, and other characteristics. This is why these two ratios can move differently in a given quarter. In the first quarter, our Basel III ratio improved despite the balance sheet growth because of the weighted asset intensity that we had in the portfolio. This is reflected on the strong historical credit performance that we have that incorporated. This was incorporated in the regular revision of our internal risk parameters. Also, the Ecuador country upgrade during the quarter also impacted the Basel III ratio. And obviously, the quality and the mix of the new excursors that we put in the balance sheet also affect the Basel III ratio. On the other hand, the Ecuador upgrade that was given, it is reflected in the Basel III framework, as we mentioned before, but it does not have the same impact under the Panamanian ratio. And this is one of the reasons why these two ratios behave differently from one quarter to the other. Looking ahead, however, we still expect Basel III Tier 1 ratio to gradually normalize toward our 15% to 16% target range as we continue to deploy the capital while maintaining ample capacity for discipline expansion.

And I think that's it. I mean, the main point is growth in assets does not necessarily imply, you know, higher capital consumption. It's more about... quality and mix are critical.

Thank you. Our next question comes from Ricardo Buspilho with BTG. You can open your line.

Hi, everyone, and thank you for the opportunity of making questions. I have two here on my side. So first, as you mentioned in the presentation, we saw a higher concentration of credit transactions coming out. more towards the end of the quarter, which had a negative impact on NIM. So, it would be helpful if you could comment on what would be the NIM, like, excluding this effect, just so we can think a little bit about how is the starting point for NIM in Q2, and everyone can have their own assumption in terms of rate cuts, but the baseline is also helpful. And for my second question, during the quarter, we saw a strong sequential growth in credit commitments and guaranteeing the balance sheet. And when we see the revenues, we saw 14% quarter-over-quarter reduction, right? So it would be great if Sam could walk us through in more details how the monetization cycle of this product works and how seasonality plays out throughout the year so we can have a better color on this line. Thank you very much.

Sam, you want to talk about the commitments, and then Annette will talk about NII.

Sure. Thanks for the question, Ricardo. I'll start with your question on commitments, and then I can talk a little bit about the overall letters of credit and guarantees, also business evolution. So our The commitment fees that you see there is coming from committed but unfunded exposure that is indeed growing and is in line with the expansion of our project finance and infrastructure and syndicated loan businesses. For project finance and infra, for example, it's very common that part of the facility amount will be disbursed not in one go, but rather as CapEx is being deployed. On syndicated loans, those tend to be bigger facilities, so it's common to give the client a couple months to fund the transaction. Also, those are commitments that will be funded in due time. They'll be loans. And the commitment period in those cases is much shorter than the tenor of the actual facilities. And most importantly, of course, it generates fees, and those tend to be 30% to 40% of the loan margin. I think finally, and it's very important, the commitments that we have there They're not to liquidity backstop facilities, which is a type of exposure that we don't like, as they tend to be used when the underlying credit has deteriorated. So, bottom line there is, yes, it's very much commitment. Fees should continue to grow as the project finance and the syndicated business grow. In terms of levels of credit and guarantees, yeah, the reduction in this quarter versus the previous quarter is or purchase two quarters is more in line with seasonality. I think there are certain types of letters of credit that they are issued more to meet the second and third quarter. So this is a business that will continue, obviously, to focus, as you know, on more new clients, and we do expect a pickup or return to normal levels as the year progresses. So I think that's important to mention as well.

Yeah. Hi, Ricardo. Thank you for your question. Regarding the NIEM and NII during the first quarter, as we mentioned in the call, we've been proactively managing our balance sheet, both the asset size and the liability, which allow us to – maintain a resilient NEM as we execute through the year. As we mentioned, our current NEM is affected by the rate cuts that we received towards the end of 2025. And this has an impact in this quarter NEM. It also, it is affected by the ample liquidity and competition for asset quality in the region. So we are seeing that especially in the short term of our lending exposure. And also, The fact that, as we mentioned in the call, some of this growth was towards the end of the quarter. So we are respecting that growth to reflect in the upcoming quarter, providing a sustainable net interest income to the bank. We were able to offset some of these negative pressures by deploying steadily the execution of the medium-term transactions on the loan side. which provides a more stable balances and also margins, which was also offset by the growing participation of deposits, and also the efficient liquidity management within the balance sheet. So with this name of around 2.3%, which remains within our guidance, we feel confident that the guidance for 2026 will remain around 230, as we have mentioned before. But more importantly, it is It's also important to take into consideration that we are complementing our revenues with the growth of the fees, as Sam just mentioned, in order to make the bank less sensitive to rate movements and provide a more stable profitability for the bank.

Thank you. That's very clear. And if I may do a quick follow-up on this last point. Assuming that if you get to a scenario where you don't have rate cuts, not only in K2, but throughout this year, do you believe there is upside risk to the guidance, both in NIM and ROE?

Well, as we're seeing, as we've been mentioning for the last couple of quarters, we are seeing, we see that as an upside, although we are seeing a lot of pressure on margins. So I think most likely, I mean, we're already seeing a benefit from the higher for longer rate. However, I mean, these have been offset a little bit by the pressure we have seen on the loans origination. So for now, I would say it has remained kind of like a neutral impact.

Yeah, so much I watch it. Perfect. Thank you.

Our next question comes from Natalia Corfield with J.P. Morgan.

Hi, everybody. Thank you for taking my question. I am going to go back to capitalization. Just to be sure on the decline on your Panama ratio and also wouldn't be Is ratio, the Panamanian one, more relevant than the Basel III since your requirements are based on Panama? Those are my two questions.

Hi, Natalia. Both methodologies are important to the bank. Obviously, we're a local bank in Panama regulated by a superintendency, and it's our priority not only to comply with the ratios but have ample control buffers versus the minimum requirements. And that has been the way the bank manages its capitalization levels. And yes, we are, and our 81 transaction is based on our regulatory ratio, which we follow and monitor closely. The fact that we include our Basel III ratio in all our presentations to investors, this provides a more a standardized reference point for investors to be able to compare to other peers in the region. Since, as we mentioned in the call, the methodologies are not different and some characteristics of our balance sheet are not very well perceived by the local regulator ratio. But basically, those are the two reasons why we follow and comply with both methodologies.

Perfect. And then if you could go again through the reasons for the decline on the Panamanian ration, that would be great.

This responds directly to the growth of the balance sheet that we saw between the first quarter and the first quarter, which was around 8%.

But it's almost independent of the country race.

Yeah.

That's why we tracked the other one. It doesn't actually improve some of our assets.

Yeah.

Yeah.

It is very neutral to all the exposure outside Panama, especially the corporate positions. It does not differentiate between ratings or if it's investment grade or non-investment grade. So those are the characteristics that the Basel III does incorporate into the calculation, while the Panamanian ratio is more for local banks, and it's more detailed about the positions that you have locally than the positions that you have cross-border.

Yeah, it's almost designed almost for local banks with with a larger local exposure. And in that sense, Blythe is, you know, an outlier in Panama. I mean, our Panama exposure, as you know, is less than 5% today.

Okay, no, understood. Just making a point that the Basel III one is great that you do it, but looking through Latin America, I've seen that each country has its own Basel III. regulations. Like, I think it's each country adapted, and then also, I know your effort to be able to display something that's comparable, but at the end of the day, I find hard to compare positive ratios across Latin America. Just a comment. But thank you very much for your answers.

Thank you, Natalia.

Thank you.

Our next question comes from Andres Soto with Santander.

Good morning, Jorge, Annette, Anita, and team. Thank you for the presentation. My first question is regarding your top-line growth. We saw a strong performance this quarter, and at the same time, you are mentioning a tougher competitive environment. At what point do you believe this competition will make a dent on your long-growth expectations, or you believe that the risk-adjusted returns that you are getting now are attractive and you will continue to grow at the current pace, or is your growth driven by the new products that you are introducing in your product offerings?

Thank you, Andres. I'm going to let Samuel, our chief commercial, talk about growth in the lending portfolio.

Thanks, Andres. I think we're very confident to meet our guidance in terms of growth for the year. As you know, our exposure is very short-term, so the landscape can change quarter to quarter. With that said, we have some ways to mitigate that, which is, on one side, build a solid, medium-term, more value-added pipeline, which is the case right now in project finance infrastructure, in syndicated loans. I think so we're well, I think, prepared to continue deploying at the speed that we're deploying according to the guidance. And we've also been working very hard to build the short-term pipeline, which is the pipeline for short-term transactions that is more, I would say, even more affected by the competitive landscape. I think the way to do that is through our product strategy that we have. spoke a lot about in our investor day, particularly structured trade and working capital solutions that also been growing at a good speed and with a, I would say, promising pipeline. I think, last but not least, I think the increase in oil prices come as a good tailwind in that respect, right? Because a lot of our short-term or part of our short-term exposure is really financing cargos, and those cargos are bigger in size right now. So that helps us as well.

I guess also, Andres, it's very important for us, you know, the quality and the durability of earnings is what is important, not just scale, not just scale.

That's very clear. And connecting this with my question on fees, we also saw a strong fee on a year-over-year basis, and I appreciate the explanation that Sam provided regarding these products being fee-rich and providing for those up front and then on lending down the road. Is the current pace for income growth sustainable given the strategy for entering into these products such as better credit syndication, et cetera, or are there any one-offs in the quarter that we should normalize going forward?

No, no, no one-offs. I mean, the first quarter is typically, as Annette mentioned a minute ago, softer than normal. than most in both of our fee businesses. But the point is some transactions shifted into the second quarter, so it's more a timing effect than a slowdown. Fees, as you mentioned, fees are up 24% year on year. So the momentum is good. And I guess the bottom line is that fees are becoming more, you know, structural revenue component over time. So no one-off up to now. And if something comes up, of course, we'll mention it as a one-off. But we're confident with the guidance on peace.

Yeah, thank you, Jorge. No, my question was actually sort of the opposite sense, given that the strong performance this quarter that I was looking for is non-recruiting factors explaining the 24% year-in-year growth on the P-Income side. Okay.

Yeah, that's very clear.

Thank you.

Our next question comes from Daniel Mora with CreditCorp Capital.

Hi, good morning, and thank you for participating. I have a couple of questions. The first one is, Considering that 18% of the portfolio is related to oil and gas, did you see or do you see any tailwinds or headwinds derived from the conflict between the United States and Iran? Or if there is any other sector or country that should be heavily impacted, but they high the international prices? I know that you mentioned a couple of points on this matter, but if we can go deeper, it will be great. Thank you. And my second question is, what would be those elements that could take the 2026 ROE closer to the 15% upper band of the guidance, considering that long growth has been quite strong, NIM despite the pressure and interest rate has been, you have been able to defend the NIM and FIS, even though the first quarter is is softer due to seasonability effects. It continues to grow by 25%. So, if it is a strong performance, what could be even better to take the ROE to 15%? Thank you so much.

Sam, you want to go ahead and talk about the oil and gas-related exposure?

Sure. I think it's a great question. I think on a net basis, it's It's much more of a tailwind rather than a headwind. The reason why is, for example, on the, let's say, exposure that is more long-term, that tends to be linked to E&P investments, they are, you know, we're financing the lowest-cost producers in the region, the most competitive fields. and of course with the current, even though the oil prices are more on a spot basis rather than, let's say, long-term forwards, but they are very positive for them, so I think it reduces the risk of the portfolio. On the other hand, as I mentioned, also for the business, the trade business that is very short-term, the size of the cargoes, the typical cargo is higher, so the The demand tends to be higher, so I think positive in that sense. Of course, part of our business is we're taking risk on the importers of petroleum products, mostly in Central America. Yes, you could argue that that can increase inflation in those countries and reduce profitability, but in those cases, we're really dealing with the most cases national oil companies. of very solid countries, which, let's say, it's more beneficial that we're financing bigger amounts than detrimental that can impact their, you know, their numbers, their credit quality. So, I think on a net basis, definitely positive.

I think the short-turner of a portfolio and their ability to reprice and reposition quickly is the key. I mean, the focus is is not predicting geopolitics, but managing how shocks translate into spread, trade flows, and inclined rates, and we have the ability to do that, and we've been showing that. Regarding the first question, thank you. Our next question was about, no, I think your second question was about upside on the ROE guidance. I guess it's a balance between, you know, higher for longer and the margin pressures. I mean, you have, you know, both playing at the same time. And let's see, you know, what ends up happening. I mean, it's hard to predict at this point. Okay, perfect. Thank you very much. Thank you. Thank you, Adrian.

Okay, our next question comes from Patrick Abraham with Bulwer Capital. Has the bank started looking at Venezuela as an opportunity for investment? And what is your outlook for the country?

That's a good question. I mean, Venezuela might represent an upside scenario for blacks. It is not included in our projections of us today. I mean, we are very actively assessing the risks and the opportunities. Blacks used to be very active in Venezuela in the oil and gas sector and also with FIs and LCs. I mean, Venezuela used at some point to represent even 4% and 5% of our total portfolio. Today, our exposure is zero. We know the country well, and it's more a matter of, you know, timing on when to go back in.

Thank you. That's all the questions we have for today. I will pass the line back to the Blydex team for their concluding remarks.

Well, thank you all for your questions and your time today. We appreciate your continued interest in our bank. If the year started in line with our expectations, then we remain focused on executing with discipline. Thank you again and have a good day.