Bladex, Inc. Class E

Good morning, ladies and gentlemen, and welcome to the Bladex Second Quarter 2026 Earnings Conference Call. A slide presentation is accompanied today's webcast and is also available on the Vestor 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 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 VLAIX's results for the second quarter of 2026. I will begin with the key highlights for the quarter and then Annette, our CFO, will walk you through the financials in more detail. After that, I will come back and provide a quick update on our strategic execution, our view of the macro environment, and our outlook for the rest of the year. Finally, we will open the call for questions. Let me start with the headline. Thank you for joining us. The commercial portfolio reached a record of $13 billion, up 8% from March, 20% year over year, and 17% since year end. Both loans and contingencies also closed at new heights. This is exactly the kind of disciplined capital deployment we had in mind when we completed the 81 issuance last year. We're putting the capital work to support growth while maintaining a strong capital position. On the funding side, deposits reached a record of $7.9 billion, 8% sequentially and 20% since December. Funding kept pace with the expansion of the commercial portfolio and our diversified deposit base continues to provide a solid foundation for balance sheet growth. Turning to revenues, net interest income reached another new high, increasing 4% for the first quarter, supported by higher average loan balances and disciplined balance sheet management. At the same time, margins remain under pressure. Net interest margin declined by 10 basis points to 224%, mainly reflecting higher average liquidity and continued competitive pressures on spreads. This remains consistent with the environment we discussed during the first border call. Non-interest income is perhaps the biggest highlight of the quarter. It is also a fundamental part of the strategy presented at the Invest Today. The focus is to diversify the bank's revenue base, which is particularly important when there is margin compression. This focus is clearly turning into visible results. Non-interest income reached a record of $25.1 million for the quarter, up 86% from the first quarter and represented 26% of total revenues in the quarter. This is meaningful progress in making our earnings less dependent on interest margins. Just a few years ago, non-interest income over total income was close to 15%. Our loan syndications team had one of the best quarters ever, and the client derivative business is also starting to gain traction in line with plan. The pilot transactions continue to perform well and are primarily linked to structured transactions of our clients. Annette will take you through the composition of non-interest income and the activity in these businesses in more detail in a few minutes. Expenses, on the other hand, increased as expected as we continue to execute our strategic initiatives. Revenues, however, grew faster than costs. As a result, efficiency improved meaningfully to 24.1% for the quarter. Now, as we have said before, we do expect expenses to increase in the second half of the year as we continue to execute the investment plan contemplated for 2026. Provisions also increased during the quarter, mainly as a result of the strong portfolio growth in our prudent approach to risk management. Overall, asset quality remains sound. Finally, net income reached a record of $66.5 million, up 18% from the first quarter, which translates into a return on equity of 16.4%. Our Tier 1 capital ratio closed the quarter at 16.6%, still comfortably above our target and providing capacity to continue supporting disciplined growth. This was an all around excellent quarter. We put capital to work, broaden our revenue base, and improve profitability and efficiency despite continued pressure on margins. With that overview, let me now hand it over to Annette for a more detailed review of the financial results. Annette, your turn.

Thank you, Jorge, and good morning, everyone. The second quarter was another strong period for Vladex, with several key balance sheet and revenue metrics reaching new highs. Commercial activity and deposits continued to spend, net interest income increased, and fee generation was particularly strong, while asset quality and capital remained sound. Turning to our financial performance, net income reached $66.5 million, up 18% from the first quarter. Return on average assets was 2%, while adjusted return on equity improved to 16.4. For the first half of the year, net income totaled $122.8 million, resulting in a return on average assets of 1.9% and an adjusted return on equity of 15.3%. Given the transactional nature of structuring revenues, the quarterly contribution of non-interest income would naturally vary. Even so, based on our first-half performance and expectations for the remainder of the year, we are reaffirming our full-year adjusted ROE guidance of 14% to 15%. Let me now walk you through the key drivers behind these results, beginning with the commercial portfolio. The commercial portfolio ended the quarter at $13 billion, up 8% from the first quarter and 20% year-over-year. Growth was broad-based across loan and contingencies, reflecting continued execution across our core markets. Loan increased to $10.5 billion, up 8% from the first quarter and 22% year-over-year, while contingencies reached $2.3 billion, increasing 11% from the first quarter and 5% year-over-year. Importantly, average loan balances increased steadily throughout the quarter, providing the primary support for higher net interest income despite continued pressure on lending spreads. Commercial activity remained healthy across both trade finance and medium-term lending. This quarter's strong growth was driven by strategic industries and high-quality client relationships that support sustainable net interest income generation rather than by pursuing bullion for its own sake. We also continue to originate medium-term transactions with attractive risk-adjusted returns, supporting a more balanced asset mix and enhancing the quality of earnings over time. At the same time, strong trade-related activity preserved the portfolio's predominantly short-dated profile, with approximately 65% of the portfolio scheduled to mature within the next 12 months. Looking ahead, we expect portfolio growth to continue at a steady and disciplined pace, consistent with our long-term strategy. Quarter-over-quarter growth was led by Panama and Argentina, with additional contribution from Dominican Republic, Peru, and Brazil. The portfolio remained well diversified across countries and industries. No single country accounted for more than 14% of total exposure. Financial institutions represent 27% of the portfolio, while corporate exposures continue to reflect the diversity of regional trade flows. The commercial bond portfolio remained broadly stable at $226 million. Given current market conditions, we continue to prioritize lending opportunities over incremental investment purchases. This quarter demonstrates our ability to grow the portfolio while maintaining discipline underwriting, broad diversification, and prudent capital deployment. Turning now to liquidity and the treasury investment portfolio. At quarter end, liquidity assets total approximately 1.9 billion, representing 13.3% of total assets and remaining well within regulatory requirements and our risk appetite. Our liquidity profile remains conservative. A significant portion is held at the Federal Reserve Bank of New York, with the remainder primarily placed with high-quality financial institutions and multilateral organizations. The Treasury investment portfolio totaled $1.4 billion at quarter-end. It remains highly investment-grade, short in duration, and broadly diversified outside Latin America. In addition to providing credit diversification, the portfolio serves as a source of contingent liquidity, as these securities are eligible to be pledged through our New York agency at deferred reserve discount window. Turning now to asset quality. Overall, credit quality remains sound, supported by disciplined underwriting, broad portfolio diversification, and proactive credit risk management. At quarter end, 98.4% of total credit exposure, or $14.2 billion, remained in Stage 1. Stage 2 exposures declined to 1.1%, or $162 million, reflecting credit improvements, repayments, maturities, and the migration of a previously identified exposure to Stage 3. Stage 3 exposure increased to 0.5%, or 75 million, primarily reflecting the migration of that exposure which had been under enhanced monitoring. As part of our proactive risk management approach, we reduced the overall exposure by selling the bilateral loan component. The remaining deferred payment letter credit exposure was reclassified to Stage 3 and remains currently reserved. Importantly, this migration was limited to a single exposure and does not reflect a broader deterioration in the portfolio. Provisioning expense totaled $8.6 million, compared with $4.7 million in the first quarter. Stage 1 provisioning accounted for $6.4 million, primarily reflecting continued portfolio growth. The remaining provision expense was largely associated with the specific exposure discussed earlier. As a result, cost of risk was 26 basis points compared with 14 basis points in the previous quarter. The quarter also included $8.6 million in write-off related to two fully reserved commercial loans. Because these write-offs were charged against existing allowances, they had no additional impact on second quarter results. We also recorded 1.1 million in recoveries from previously written off loans. As a result, total reserve ended the quarter at 93.8 million, providing 1.25 times coverage of impaired credits. These actions reflect our proactive approach to credit risk management, identifying potential deterioration early Actively reducing exposure when appropriate and maintaining prudent reserve levels. Together with disciplined underwriting and a well-diversified portfolio, they continue to support a sound asset quality profile. Turning now to funding. Deposits remain one of the quarter's key strengths and continue to serve as a central pillar of our funding strategy. Deposits reached a new high of $7.9 billion at quarter end, increasing 8% from the first quarter and representing approximately 64% of total funding. Our deposit base remains well diversified. Central Bank and Class A shareholders accounted for 34% of deposits, while financial institutions represented 27%, corporations 23%, brokers 15%, and multilateral institutions 1%. Yankee CD balances also reached a new high, ending the quarter at nearly $2 billion. Continued demand reflects the strength of our distribution platform across America, Europe, and Asia. During the quarter, we also introduced green Yankee CDs with proceeds allocated to eligible green assets originated by our commercial team. This initiative further broadens our investor base while expanding our sustainable funding alternatives. Beyond deposits, we continue to selectively evaluate medium-term funding opportunities that enhance diversification, extend funding duration, and improve overall funding efficiency. Let me now turn to capital. The Basel III Tier 1A ratio ended the quarter at 16.6% compared with 17.9% in the first quarter and remains above our 15 to 16% operating range. The regulatory capital adequacy ratio under Panama's framework stood at 14.3%, well above the regulatory minimum. The movement in Tier 1 reflects the continued deployment of capital to support commercial portfolio growth, particularly in medium-term transactions. This is consistent with the strategy we outlined following the 81 issuance and with our expectations that capital ratios would gradually move toward our operating range as we put the capital to work. Our capital base continues to provide ample capacity to support future growth, absorb potential volatility, and maintain the financial flexibility expected by our stakeholders. Moving now to net interest income and margins. Net interest income increased to $73.3 million, up 4% from the first quarter. Higher average loan balances more than offset tighter lending spreads, allowing net interest income to grow despite continued pressure on margins. Net interest margin was 2.24% during the quarter, down 10 basis points from the first quarter, while net interest spread declined to 1.64%. The declining NIM primarily reflect higher average liquidity and continued competitive pressure on short-term lending spreads, as abundant regional liquidity and strong demand for high-quality assets continue to affect pricing. Against this backdrop, we remain disciplined in our approach to short-term lending, pursuing transactions at tighter spread only where risk-adjusted returns remain attractive. These additional volumes generate incremental net interest income while preserving the flexibility to reprice the portfolio as market conditions evolve. At the same time, medium-term origination with attractive risk-adjusted returns provided an additional earning contribution and helped partially offset the pressure on short-term lending spreads. On the funding side, continued deposit growth increased the contribution of lower-cost funding to the balance sheet, partially offsetting the impact of tighter asset spreads. At this time, we are maintaining our full year NIEM guidance while continuing to monitor competitive conditions, portfolio repricing, and funding costs closely. Let me now turn to non-interest income, one of the key highlights of the quarter and an increasingly important contributor to our financial performance. Non-interest income, excluding the impact of hedging derivative, reached $25.1 million, up 86% from the first quarter. Within this total, fees and commissions amounted to $23.3 million. Letter of credits and guarantees generated The quarter also benefited from the distribution of a letter of credit facility originated by our trade finance team. Credit commitments contributed $5.2 million, providing a stable and recurring source of income, primarily from credit finance transactions and medium-term committed facilities. Structuring and distribution generated $7.9 million in upfront structuring and syndication fees. During the quarter, the team completed seven transactions across six countries, supporting both financial institutions and corporate clients. Year to date, Bladex has mobilized approximately 2.2 billion while returning only 26% of that volume in our balance sheet, highlighting the capital efficient nature of this business. Client derivative generated an additional 1.3 million during the quarter. As Jorge mentioned, the pilot transactions continue to perform well and are primarily linked to structured transactions for our clients. This activity continues to progress in line with the strategy we presented at the investor day. As a result, non-interest income excluding hedging derivative represented 25.4% of total revenues. Reinforcing the diversification of our earnings and underscoring is increasingly meaningful contribution to profitability. Turning now to expenses and efficiency. Operating expenses total 23.8 million, up 8% from the first quarter. For the first half, expenses remain aligned with our 2026 plan, while revenue growth outpaced expense growth. This generated positive operating leverage and improved the efficiency ratio to 24.1% from 26.5% in the prior quarter. As Jorge noted, expense execution is seasonally weighted toward the second half of the year as a strategic initiative moving to implementation. At this time, we continue to expect full-year efficiency ratio to remain within our guidance range of 27% to 28%. As we invest, cost discipline remains a management priority. We are allocating resources selectively with a clear focus on operating leverage and efficiency. In closing, the second quarter demonstrated strong and balanced execution across the franchise, reinforcing our confidence in the full-year outlook and in our ability to continue delivering disciplined, profitable growth while preserving the strength of our balance sheet. This concludes my review of the second quarter financial results. Jorge, back to you.