Bladex, Inc. Class E

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.