Q4 2024 Banco Latinoamericano de Comercio Exterior SA Earnings Call
Good morning, ladies and gentlemen, and welcome to BLADEC's fourth quarter 2024 earnings conference call.
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.
Speaker Change: I would now like to turn the call over to Mr. Jorge Salas, Chief Executive Officer. Sir, please go ahead.
Jorge Salas: Good morning, everyone. And thank you for joining us today to discuss Blacks' fourth quarter and four-year results for 2024.
Jorge Salas: I'm here today with a few members of my executive team, including Annette Van Horde, who will soon assume a CFO position starting this April.
Jorge Salas: I will begin with an overview of what has been another record-breaking year for Blacks.
Jorge Salas: Following that, I will update you on the progress of our strategic plan.
Jorge Salas: Then Ani, our CFO, will provide a detailed analysis of our financial results for both the quarter and the year.
Jorge Salas: Finally, I will discuss today's macroeconomic and trade environment and share our guidance for 2025 before we open the call for questions.
Jorge Salas: In 2024, BLAD-X reached a historic milestone with an exceptional performance across all key metrics, surpassing the ambitious goals we have set for the year.
Jorge Salas: Building on a record year in 2023, we continue to push boundaries and achieve new heights. Throughout 2024, our commercial portfolio grew by 18 percent, reaching a record of $10 billion.
Jorge Salas: This growth was particularly strong in Brazil, the Dominican Republic, and Guatemala, reflecting our robust expansion, profitability, and diversification.
Jorge Salas: Similarly, deposits experienced significant increase of 23% for year-end closing balances and a 33% in average balances for the year, surpassing our guidance of 30% growth for average balances.
Jorge Salas: Due to seasonal factors, deposit levels as of the end of December were slightly lower compared to those at the end of the third quarter. However, average balances continue to rise during this period.
Jorge Salas: Furthermore, for the first weeks of 2025, deposits have resumed their growth, increasing their share in the bank's total funding sources.
Jorge Salas: Additionally, our capital ratio remains strong with a 2-1 capital ratio of 15.5%, which is well within our defined target.
Jorge Salas: In terms of profitability, net interest income has maintained an upward trend, supported by increased volumes and effective funding cost management, resulting in a stable net interest margin of 2.47% for the year.
Jorge Salas: In 2024, fee income also reached unprecedented levels, growing by 37% compared to the previous year. Annie will share more details about fees later on in the presentation.
Jorge Salas: Importantly, our efficiency ratio stood below 27% despite the investments in transformation and in line with the guidance we provided.
All that combined?
Jorge Salas: resulted in an all-time high annual net income of $206 million.
Jorge Salas: marketing a 24% increase from the previous year and then return on equity.
16.2%, which is 153% basis points higher than in 2023.
Jorge Salas: Moving on to slide 2, we are now 3 years into our 5 year strategic plan, which we started executing in 2022.
Jorge Salas: Clearly, results have exceeded expectations. During this period, we have achieved several critical milestones.
Jorge Salas: As we have mentioned in the past, the idea of the plan has always been to take advantage of Blacks' structural comparative advantages, making our bank significantly more profitable, more efficient, and increasing its product offering.
but changing neither.
Jorge Salas: This enables us to swiftly adjust credit exposures in order to ensure that we concentrate on transactions and relationships where the risk-return balance is optimal.
Jorge Salas: The first phase of the plan now successfully concluded, focused on efficiency. Today, we have a much more efficient deployment of our balance sheet in terms of use of capital in the region and overall capital levels.
Jorge Salas: We have also optimized key processes of the bank, allowing us to reduce client onboarding times by 52%, expand our client base by 70%, and increase our deposit base by 78%.
Jorge Salas: We are currently in phase two of our plan that centers in the expansion of our product offering.
Jorge Salas: To that end, we are deploying the technological platforms necessary to scale our initiatives.
Jorge Salas: One of these is our trade finance platform. That project is 56% complete and is scheduled to be launched in the second half of the year.
Jorge Salas: This new platform will substantially transform our letters of credit unit by providing a state-of-the-art digital client interface and enhancing transaction processing capabilities for working capital solutions.
Jorge Salas: Additionally, our new treasury platform implementation is in its initial stage. We are finalizing adjustments with our provider to ensure a seamless rollout and expect to complete its first phase of deployment by mid-2026.
Jorge Salas: This initiative will enhance our ability to offer FX and derivative products, facilitate lending in local currencies, as well as to allow to expand our range of investment products.
Jorge Salas: The remarkable results we have achieved throughout 2024 are essentially the result of a successful execution of the first phase of our strategic plan, and also to a lesser extent of the favorable interest rate environment that we have experienced during the year.
Jorge Salas: As we advance into Phase 2, we expect to see additional benefits, especially from non-interest income generation, as these capabilities are rolled out in the upcoming quarters.
Jorge Salas: Let me now hand it over to Ani, our CFO, for a detailed financial analysis. Ani, please go ahead.
Ani: Thank you, Jorge and good morning to everyone. Let's now move to slide four.
Ani: Jorge just highlighted a record-breaking result for the year, with net income reaching $206 million and a return on equity of 16.2%, up from 14.7% last year.
Ani: This strong performance was driven by sustained business growth, higher revenues, improved efficiency, and well-contained credit costs.
Ani: I will now provide further details on each of these components.
Ani: Quarterly profits in 2024 consistently exceeded the $50 million mark, extending the positive trend of prior years.
Ani: In the fourth quarter, our profitability continued to be supported by strong top-line performance, with net income reaching $51.5 million, an 11% increase year-over-year.
Ani: Compared to the previous quarter, net income was down 3%, primarily due to higher expenses related to our ongoing strategic initiatives, which I will discuss shortly.
Ani: Let's now take a closer look at our balance sheet growth and other key drivers of profitability, starting with the credit portfolio on slide five.
First, I want to clarify our approach to portfolio management.
Ani: Our credit portfolio comprises both the commercial portfolio, managed by our commercial team, and the investment securities portfolio, managed by Treasury.
Ani: The commercial portfolio, which represents the bank's core business activity in Latin America, includes loans and off-balance sheet instruments, such as letters of credit.
Ani: At year end, our total credit portfolio stood at close to $11.2 billion.
Ani: reflecting an 18% increase from the prior year, mainly driven by loan growth of $1.2 billion or 16% year over year.
Ani: The consistent quarterly expansion throughout the year underscores the strength of our client relationships and market demand.
Ani: As shown in the bottom right chart, our commercial portfolio remains well diversified and primarily short-term in nature, with 73% scheduled to mature within the next year and an average remaining tenor of approximately 12 months.
Ani: This shortener structure enables us to maintain an agile business model, allowing us to swiftly adjust exposures and optimize risk-adjusted returns.
Ani: The composition of our investment securities portfolio, illustrated in the top right chart, reflects a focus on investment-grade non-LATAM issuers primarily in the US.
thereby further diversifying our overall country risk exposure.
Ani: Additionally, this portfolio serves as a liquidity buffer, as most of these securities are booked in our New York agency and are eligible collateral at the Fed's discount window.
Ani: The portfolio has an average remaining duration of about two years.
Our funding structure, presented in slide six.
Ani: As part of our strategic initiatives, Ladex has significantly increased deposits from corporate clients over recent quarters, enhancing our funding stability while strengthening client relationships.
Ani: Our Yankee CD program, which operates out of our New York agency, remains a key component of this growth, representing 22% of total deposits and providing dispersion to our deposit base.
Ani: These transactions highlight blacks is strong access to global liquidity, reinforcing our funding profile and investor base diversification.
Ani: Turning to our capital position on slide seven.
Ani: <unk> equity base continues to be strengthened by robust earnings generation.
Ani: In light of our strong financial results.
Ani: Stained performance our board of directors approved an increase in our quarterly dividend from <unk> 50 per share to <unk> 62, and a half cents per share.
Ani: Representing a 45% payout on Ford.
Ani: Quarter earnings.
Ani: This decision reflects our confidence in <unk> earnings trajectory and our commitment to delivering value to shareholders.
Ani: While maintaining a strong capitalization.
Ani: Aligned with our target at current levels.
Ani: Ensuring financial flexibility to support strategic growth initiatives.
Ani: And sustain our investment grade ratings.
Ani: Let's now discuss our P&L performance.
Ani: Starting on slide eight.
Ani: With the evolution of net interest income and margins.
Ani: Since the launch of our strategic plan in 2022.
Ani: Net interest income or NII has nearly tripled.
Ani: Driven by asset growth improved lending spreads and higher U S dollar interest rate environment. During this period.
Ani: <unk> benefits, our short term balance sheet repricing structure.
Ani: Throughout 2024.
Ani: Quarterly NII consistently outperformed 2023 levels.
Ani: Closing the fourth quarter at $67 million.
Ani: Up 2% year over year.
Ani: And stable compared to the preceding quarter.
Ani: Full year, NII reached $259 million and 11% increase from the prior year.
Ani: This revenue growth during 2024.
Ani: Was largely driven by higher average loan balances.
Ani: Which increased by 11% annually.
Net interest margin for the year stood at 247%.
Ani: In line with our guidance and relatively stable year over year.
Ani: Let's now review fee income performance on slide nine.
Ani: Fee based revenue remains strong.
Ani: <unk> nearly $12 million in the fourth quarter.
Ani: And totaling $44 million for the year.
Ani: Marking an impressive 37% annual growth.
Ani: Letters of credit fees remain a key driver.
Ani: Reaching $7 million in the fourth quarter and totaling $26 5 million for the year.
Ani: Up 24% year over year.
Ani: Growth in this segment reflects continued success in cross selling process efficiencies and new client acquisitions.
Ani: Loan structuring fees also had a standout quarter.
Ani: With four transactions generating $3 7 million in fees.
Ani: For the full year, we executed 12 transactions totaling $2 5 billion.
Ani: Generating a record $10 $2 million in fees.
Ani: 38% from 2023.
Ani: With continued strength in credit commitments and other fees.
Ani: <unk> transaction based business continues to expand.
Ani: Supported by enhancements in our Syndications and project finance teams.
Ani: This momentum is already evident in 2025.
Ani: With a strong start in the first couple of months.
Our loan structuring and syndications team has already closed four transactions across the Dominican Republic, Mexico, Costa Rica and Brazil.
Ani: Totaling $468 million and generating approximately $2 million in fees.
Ani: Looking ahead.
Ani: We see continued strength in our pipeline.
Ani: Supported by solid sponsors across multiple countries in the region.
Ani: Including those in a promising path to economic recovery such as Argentina.
Ani: Moving on to asset quality as shown on slide 10.
Ani: <unk> disciplined risk management framework continues to deliver outstanding credit performance.
Ani: At year end nonperforming loans remained minimal at just 0.2% of total exposure.
Ani: Amounting to $17 million with a robust reserve coverage of nearly five times.
Ani: Low risk credits for stage, one comprised 96, 4% of our credit portfolio.
Ani: Stage two credits accounted for three 5%.
Ani: All of which remain performing.
Ani: Total credit provisions for the year amounted to $17 3 million.
Ani: Primarily driven by portfolio growth with the portion allocated to select stage three exposures.
Ani: Importantly, we recorded no write offs during the year and recovered $1 4 million.
Ani: From previously written off credits.
Ani: Finally, let me provide an update on expense evolution and efficiency as shown on slide 11.
Ani: Total expenses for 2024 reached $85 million.
Ani: Reflecting an 11% annual increase.
Ani: This was primarily driven by higher salary expenses due to increased head count.
Ani: Aligning with our strategy to strengthen execution capabilities.
Ani: Additionally, ongoing investments in technology and business initiatives as outlined in our strategic plan.
Ani: <unk> to the increase.
Ani: These strategic investments have supported higher business volumes expanded product offerings and.
Ani: And client growth over the past few years.
Ani: Leading to revenue growth that continues to outpace expense increases.
Ani: As a result, our efficiency ratio improved to 26, 5% in 2024.
Ani: Compared to 27, 2% in 2023.
Ani: In the fourth quarter of 2020 for expenses total close to $23 million.
Representing a 7% year over year increase.
Ani: And a 9% rise quarter on quarter.
Ani: This increase reflects the continued execution of our strategy.
Ani: Along with the seasonal impact of higher year end expenses.
Jorge Salas: With that I'd like to turn the call back to Jorge. Thank you very much. Thank you.
Jorge Salas: Before wrapping up I want to briefly refer to the macroeconomic context and in particular to the implications for Latin America.
Jorge Salas: President Trump's America first pause.
Jorge Salas: There is no doubt the U S. Foreign policy will remain crucial influencing the region's economic trajectory.
Jorge Salas: There are two relevant dimensions here. The first one is related to the government's immigration policy and the second is of course trade policy.
Jorge Salas: Regarding immigration policy, we think that the massive rotations of illegal immigrants from Latin American countries may end up having a negative effect on the floor of remittances for the region to the extent that the number of people in the U S. We send money home.
Jorge Salas: This reduced.
Jorge Salas: Our remittances, which were $160 billion.
Jorge Salas: For 2024.
Jorge Salas: Our no doubt and economic pillar for several countries in the region, particularly in Central America.
Jorge Salas: Having said that we see the economic impact more in the medium term as mass deportations continued to exceed what they have been in previous administrations in any case. It is something that we are permanently monitoring.
Jorge Salas: Regarding foreign trade policy and the impact of tariffs and potential tariffs, we will the impact will depend on how long they stay in place and the potential offset from dollar appreciation.
Jorge Salas: It is hard to predict at this point what is going to end up happening in the case of Mexico and the U S biggest trade partner, we believe that the end game of the Trump administration is a renegotiation of the U S. MCA agreement. This review is scheduled for 2026 and it is likely that the.
Jorge Salas: <unk> will use this opportunity to extract concessions we.
Jorge Salas: We anticipate that discussion surrounding tariffs on Canada, and Mexico will persist.
Until the eventual renegotiation of the U S MCA.
Jorge Salas: It is possible that such review is brought forward this would be positive in terms of reducing economic uncertainty.
Jorge Salas: In such scenario tariffs will not be in place long enough to have a material negative effect on the economy.
Jorge Salas: But if on the contrary they are here to stay supply chain disruptions will occur and this in turn will raise inflation and lower economic activity.
Jorge Salas: It is worth mentioning that our portfolio in Mexico is predominantly short term as much as 80% short term lending comprise of low leverage very solid and well positioned corporations, who are resilient and have demonstrated the ability to withstand stress scenarios in the past.
Jorge Salas: Yeah.
Jorge Salas: In any case the reality is that given the short term nature of the bulk of our credit portfolio and the presence of <unk> across different sectors and countries in the region. We are confident that we will demonstrate once again that we have the ability to very quickly and profitably.
Jorge Salas: Relocate our exposures to those companies that will be better positioned to take advantage of the new trade dynamics in the reach.
Jorge Salas: Moving onto the last slide slide 13.
Jorge Salas: In line with that our projections for 2025 anticipate a commercial portfolio growth of 10% to 12%.
Jorge Salas: Average deposits are expected to increase.
Jorge Salas: 15% to 17% with a net interest margin in the two 3% area.
Jorge Salas: Despite continued investments in it platforms, we aim to maintain our efficiency ratio at around 27%.
Jorge Salas: And achieve a return on equity between 15, and 16%, while keeping our Basel III capital ratio between the range of 15% to 16% and this of course assume that the dividend that we chose the care is maintained throughout the quarters during the year.
Jorge Salas: As I said, we are confident in our ability to adapt to the changes of the new trade reality.
Jorge Salas: Maintaining operational efficiency and size profitable opportunities as they arise and they will arise.
Jorge Salas: Finally, I want to express my gratitude to our clients our shareholders the employees and their trust and support during 2024 together, we have built a strong foundation for continued success.
Jorge Salas: I'm going to leave it here and ask the operator to please open the call for questions. Thank you very much.
Jorge Salas: Operator, you May now open the call.
Jorge Salas: 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 click on race hand. If your question has already been answered you can leave the queue by clicking on put hand down.
Jorge Salas: There's 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.
Jorge Salas: Written questions that are not addressed during the earnings call will be retained by the Investor Relations team.
Speaker Change: Our first question comes from <unk> <unk> with BTG.
Speaker Change: Hi, everyone and thank you for the work to the field, making questions I have shown here on my side. So first can you. Please comment why does imply in your NIM contraction next estimates for <unk> five in terms of fed fund rate reduction.
It seems that its pricing a little bit more than just the reduction in the reference rates I'll, let you have your color on what.
Speaker Change: What could be eventually drive anymore.
Speaker Change: <unk>.
Speaker Change: And the NIM contraction.
Speaker Change: And secondly, you mentioned that the loan structuring and syndication business has been performing very well and the start of the year right then.
Speaker Change: If you could comment a little bit of what could be potential drivers far far far at this dynamic and also taking into account a more potentially more active deal flow in this segment and also the launch of the new trade finance platform. This year, how should we expect.
Speaker Change: Fee income to perform against.
Speaker Change: Turning to any floor right should we have.
Speaker Change: Deceleration.
Speaker Change: More towards like a growth of 30% and there will be more closer to the 5% of what we see are are towards the 20% any color will be very helpful. Thank you.
Speaker Change: Ricardo three great questions.
Speaker Change: The one on the net interest margin compression you are right.
Speaker Change: Not only.
Speaker Change: Fed funds rate.
Speaker Change: Compressing I'm going to let Ernie speak about that.
Speaker Change: Then on <unk>.
Speaker Change: Syndications, we do have we do have a very strong.
Speaker Change: Pipeline going forward.
Speaker Change: A summary of our chief commercial officer.
Speaker Change: Tackle that one and then I'll talk a little bit about piece at the end so Andy wanted to tackle the <unk> net interest margin.
Andy: Sure Jorge.
Speaker Change: Turning to cash flow.
Speaker Change: Yes.
Speaker Change: You will mention we did see some tighter lending spreads towards the end of the year.
Speaker Change: More competitive market environment with Latin American issuers.
Speaker Change: More active in the capital markets and much wider availability of U S auto financing in fact, four four for the guidance that we put in this year we're assuming.
Speaker Change: The.
Speaker Change: The lending spreads remain.
Speaker Change: At those level globally with growth seen some more pressure, but in our estimation.
Speaker Change: We hope to keep it away.
Speaker Change: And then like you mentioned in the second aspect would be that the 100 basis point reduction debt.
Speaker Change: Already.
Speaker Change: Lower towards the end of last year and that has started.
Speaker Change: Started to impact our overall asset yields and then reducing the benefit of the equity invested in those assets.
Speaker Change: But of course, our diabetes also.
Speaker Change: Going to reprice.
Speaker Change: <unk> also very quickly.
Speaker Change: Remember that.
Speaker Change: We do have a very short term with pricing structure in our balance sheet.
Speaker Change: So both assets and liabilities adjunct.
Speaker Change: I would say, mostly within a 10 to.
Speaker Change: One year or less than a year.
Speaker Change: So that's what we have been seeing.
Speaker Change: On the syndication side.
Speaker Change: Both indications.
These are obviously dependent on market conditions, and particularly on the investment and M&A activity across the region.
Speaker Change: With that said when you look at the historical figures of the business you can see the.
Speaker Change: Annual income has been around the 5 million Mark.
Speaker Change: In the last couple of years, we've seen an important increase.
Speaker Change: Versus the historical five meter mark very much in line with the strategic changes that are being made.
Speaker Change: We have created businesses that bring higher fees like project financing infrastructure as well as we've been bringing professionals with more experience and structuring and distributing more complex transaction, which essentially brings.
Speaker Change: Higher fees as well.
Speaker Change: That is to say that we believe that the current growth.
Speaker Change: I will never should be sustainable and trending upward.
Speaker Change: Equal of course.
Speaker Change: Sure.
Speaker Change: Back to your other fee generating.
Speaker Change: Business, such as the layers of credit business like mentioned before.
Speaker Change: We continue to strengthen the basis.
Speaker Change: Our debates and not only in terms of development, which was already mentioned, but also very much.
Speaker Change: Focus on Onboarding new.
Speaker Change: Letters of credit clients.
Speaker Change: As well as our strong focus on cross selling to existing clients and I think we have made great strides on that and continue.
Speaker Change: To see good momentum.
Simon: Thank you Simon.
Simon: Our phone and perfect day rate for the C. Three question.
Simon: So so fees increased more than 30% this year, meaning 2024, we are expecting around 10% increase.
Simon: Or.
Simon: 2025 after that about 30%.
It will really depend on syndications in the pipeline that Sam mentioned, we do foresee that the letters of credit fees will continue their upward trend.
Simon: <unk>.
Simon: As clients.
Simon: Start onboarding, our new platform and it will take some time.
Simon: But we're confident that we can do at least 10% more footprint and gratifying.
Speaker Change: Sorry could you ask that answers guys. Thank you very much.
Ricardo: Thank you Ricardo.
Speaker Change: Our next question comes from capital valid email.
Speaker Change: He says Hello, Ana and Jorge Congratulations on executing your strategic plan successfully up to this point I have two questions first how do you see the current Trump administration tariffs affecting <unk> outlook.
Speaker Change: You have guided for around 230% NIM, how do you see NII as as a part of this 2025 guidance.
Speaker Change: Okay. Thank you Ricardo.
Speaker Change: Going to tackle the first one on Mexico, and Mexico exposure.
Speaker Change: I believe that the second one.
Speaker Change: As already mentioned.
Speaker Change: While some of it was mentioned in the previous question by BARDA BTG analyst.
Speaker Change: Guarding Mexico, our second biggest exposure.
Speaker Change: Countrywide, it's 12% of our portfolio.
Speaker Change: Now as.
Speaker Change: As I mentioned.
Speaker Change: 78% of that exposure is short term.
Speaker Change: And only 10% of that exposure is play with companies.
Speaker Change: That export to the U S.
Speaker Change: So I mean these are these are very solid companies, we have made different stress that are struggling.
Speaker Change: Our EBITDA with different levels of tariffs and a group of comfortable.
Speaker Change: Their resilience, we are talking about net debt to EBITDA ratio at around three five times, even in the stress scenario. So these are in general as I said low leverage corporations that have demonstrated resilience in past periods of uncertainty and so.
Speaker Change: We're confident about our Mexico.
Speaker Change: Portfolio.
Speaker Change: And you want to.
Speaker Change: Yes, just to comment on.
Speaker Change: On.
Speaker Change: Projections for the name of <unk> like I said, we anticipate.
Speaker Change: We continue Huntington pressuring our lending spreads and.
Speaker Change: And we also are.
Speaker Change: We are projecting for two additional.
Speaker Change: You bet.
Speaker Change: The rate cuts.
Speaker Change: It was 25 basis points each for the second half of the year.
Speaker Change: That's embedded in that projection.
Speaker Change: And with respect to the net interest spread earned and Nia.
Speaker Change: We do foresee that that should remain.
Speaker Change: Around fourth quarter levels at 169, perhaps a couple of basis points lower than that.
Speaker Change: Thank you.
Speaker Change: Next question.
Speaker Change: Comes from Patrick Brown.
Patrick Brown: Congratulations on the excellent results, we see that we see that you are already at 16% ROE. According to the slide three however, youre guidance is 13, 15% for 2026 why are you expecting less profitability in the future.
Patrick Brown: Thank you for that question good question.
Patrick Brown: Gotten that question before.
Patrick Brown: Remember that 2026 guidance you saw on slide three that was given back in 2022, and an investor day presentation.
Patrick Brown: When we launched this plan for the first time.
Now our predictions back then assume normalized level of fed fund rates to 5%.
Patrick Brown: Which of course, we all know.
Patrick Brown: What happens now.
Patrick Brown: With the information we have today.
Patrick Brown: Considering everything else equal we feel comfortable that the profitability will be in the higher end of that range for sure in 2000 practices.
Patrick Brown: And the reason is very straightforward I mean, so far three years of execution.
Patrick Brown: We have an aggregate.
Patrick Brown: Round numbers here almost double the size of our balance sheet.
Patrick Brown: Keeping.
Patrick Brown: We've seen npls zero with double almost double fee income.
Patrick Brown: With more than triple net.
Patrick Brown: Net income.
Patrick Brown: And all of this has been done.
Patrick Brown: Without even implementing the great Northern trust with that.
Patrick Brown: Remember as I said earlier, the purpose of the tools and the whole plan is to basically.
Patrick Brown: Enhanced.
Patrick Brown: The ability of this bank to scale and to bring fee income through ultimately.
Patrick Brown: Make our results less dependent on market rate constraints. So so quite honestly is hard not to be optimistic about the potential of this bank in this unique franchise going forward.
Speaker Change: Thank you.
Danielle: Our next question comes from Danielle <unk> with credit Corp.
Speaker Change: Hi, good morning until further presentation after us.
Speaker Change: Two questions. The first one is regarding <unk>.
Speaker Change: Paul <unk>.
Speaker Change: Foreign credit outlook in Latin America.
Just similar to the case of Mexico, I would like to understand what is the exposure on the pilot portion of the loan portfolio to trade with the United States or if you feel there is any more exposure regarding clients between countries that are not exposed to into United states, but it could be impacted by that pump.
Speaker Change: Moving my first question and the second one is regarding.
Speaker Change: Our finance and Treasury performance I would like to note that starting with each one.
Speaker Change: Also.
Speaker Change: The deployment of those platforms will be in all the countries in which you operate.
Speaker Change: Who are we will do is start loading in a few countries. Thank you Josh.
Josh: Thank you.
Speaker Change: Great questions first one regarding <unk>.
Josh: Exports.
Josh: To the U S.
Josh: It's mostly Mexico.
Josh: And that's where we've done most of our stress test so we're not.
Josh: We're not worried about.
Josh: <unk> been imposed in other countries at this node now if you think about it.
Josh: Okay.
Josh: Tariffs are imposed in Mexico and China.
Josh: For sure at this point this will mean that this country, who likely loose.
Josh: Market share in U S imports so that opens the opportunity for other countries in Latam to export to the U S.
Josh: So for example, we believe Brazil could benefit and this is in short term.
Josh: Is it good redirect experts of oral or agricultural products due to the U S also within Central America and the Caribbean.
Josh: The potential to increase their market share in the U S market for food.
Josh: Or even light light manufacturing, but what I'm trying to say is that blocks the ability to position itself to.
Josh: To be able to finance and data advantage of the new trade dynamics in the region because again of those short term.
Josh: Nature of the portfolio. So we see from our end given.
Josh: The short term nature, we see more opportunities here.
Speaker Change: With that volatility than anything else you want to add something muscle cyclic question, yes, Sir.
Josh: Second question.
Josh: Yeah.
Josh: The platform that we're launching with.
Josh: With CGI initially with letters of credit.
Josh: The country agnostic.
Josh: U S dollars as hard currency. So we could do is offshore so we could virtually doing then in the countries that we operate while we will do is start piloting with our closest relationships are the more meaningful in that business and then starts.
Josh: Deploying through the rest of the clients the idea to have.
Josh: All of our clients operating through that platform.
And with time, we believe we can get there but of course will take some time.
Josh: Hi.
Josh: I don't know if that answers your question.
Josh: That's perfect. Thank you very.
Josh: Thank you.
Josh: Okay. Thank you.
Josh: Next question.
Speaker Change: Our next question comes from filing Tina Madden with Banco Columbia.
Tina Madden: I have two questions first what countries do you expect to lead portfolio growth in 2025 do you expect any particular focus what would be the reason for such focus and second do you expect to continue reducing provision, but would be our target for CLR.
Tina Madden: 2025 2026.
Tina Madden: Okay.
Speaker Change: Sam tackle the first one on arm portfolio grow that.
Tina Madden: That's his area and then I'll.
Speaker Change: Talk a little bit about.
Our provisions.
Speaker Change: For 'twenty.
Speaker Change: We're trending pretty flat, okay, but overall on average we believe growth should continue to be balanced throughout the countries in which we operate.
Speaker Change: We're obviously monitoring very closely what opportunities this more volatile geopolitical context and potential escalation of trade work and bring to us in.
Speaker Change: In times like this from global investors tend to wait on the site, which could bring opportunity for us to move quickly.
Speaker Change: As all of us.
Speaker Change: Mexico could be one of such countries as he has great corporations will survive no matter what.
Speaker Change: We also continued to see central American conglomerates, expanding outside the region, North and South we're working hard to capture some of those opportunities to finance M&A, particularly.
Tina Madden: Finally, like our CFO already mentioned.
Tina Madden: We see a promising path of economic recovery in countries, such as Argentina announced Salvador, we don't lend to move aggressively in those countries, but there could be good opportunities to grow from where we are to date with the best credits in each of those loans.
Greg Sam: Greg Sam Thank you <unk>.
Regarding research Amendment remember, we served our model base.
Speaker Change: I believe we served in 2023 were.
Greg Sam: <unk> below $30 million.
Greg Sam: $8 million.
Greg Sam: And keep in mind.
Greg Sam: We had one non banca five number of roaming loan there in Mexico.
Greg Sam: Most of that hitting in 2023.
Greg Sam: 'twenty 'twenty four it was $17 million.
Greg Sam: So given.
We are predicting a similar growth.
And similar country mix, we believe that reserved for 2025 should be around what they were for <unk> in the 17% to $20 million.
Greg Sam: Are there any other questions.
Greg Sam: Please hold while we poll for questions.
Speaker Change: Our next question comes from David Li <unk>.
Speaker Change: Thank you very much and congratulations on the great results.
Speaker Change: 2024.
Speaker Change: I have three questions. The first question is <unk>.
Speaker Change: Some of what has been said in today's presentation.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: The concentrated portfolio. So I'd like to know what is the largest concentration you have and how you manage loan concentration.
Speaker Change: Second question.
Speaker Change: There was a great increase in credit commitment fees this year and I'd like to know if that implies any changes in the portfolio makeup for next year.
Speaker Change: And finally third question.
Speaker Change: Most of your investment portfolio is.
Speaker Change: 92%, if it is held to maturity securities and <unk>.
Speaker Change: In which country is.
Speaker Change: Most of this held to maturity portfolio held and are there any changes contemplated.
Speaker Change: Thank you.
Speaker Change: Thank you very much very good direction.
Speaker Change: First one regarding the loan concentration Brazil.
Speaker Change: First of all keep in mind. This is a wholesale bank. So we're naturally.
Speaker Change: Are concentrated.
Speaker Change: Because of the nature of the business.
Speaker Change: We are a few saw.
Speaker Change: Very diversified in terms of countries and also in terms of.
Speaker Change: Sectors, we feel very comfortable that our top exposures.
Speaker Change: Art either.
Speaker Change: Sovereign or companies.
Speaker Change: Normally short term or have very strong.
Sure.
Speaker Change: The concentration.
Speaker Change: It's always something that we are.
Speaker Change: Monitory at credit committee level of the risk level and also at the board.
And regarding the second question was about can you remember the second question with EMEA.
Speaker Change: EMEA limited.
Sam: Im going to let Sam talk about commitment fee they have.
Speaker Change: Increase in <unk>.
Speaker Change: We expect.
Speaker Change: A good performance of the commitment fees to the extent that we're growing our operating finance business with them you can get more color on that sure I think the first is I think it is important to make clear that we're not.
Speaker Change: The typical wholesale banking that are have a very active.
Speaker Change: Our material.
Speaker Change: On the.
Speaker Change: Book of a contingency at airlines, our backstop facilities Rcs. Some funded ourselves we don't have much of those we don't know for adults.
Speaker Change: Yes.
Speaker Change: The nature of our.
Speaker Change: Commitment commitments may come from yet Theyre growing from the project finance debt.
Speaker Change: Typically when a project when we find the project not.
Speaker Change: The needs of the projects are being.
Speaker Change: These viruses construction builds up so there is some delay draw down term loans as we call and those are project finance is still very small on the in terms of the total book, but that business is growing.
Speaker Change: So what is growing with the growth of the.
Speaker Change: Yes.
Speaker Change: Letters of credit business, we're seeing also opportunities too in some of the tenders around the countries that we operate some of the traders asked for.
Speaker Change: Our commitment right before the tender open. So those are very short term commitments and we like those and also debt guarantees that we're going to be the bank of choice for the issuance of the letter of credit that we look for those so I think thats another.
Source of where those are coming and third less important than the others. But also we continue to be on the lookout in the secondary market and we have found over to Les.
Speaker Change: A few years some really good opportunities.
Dubai.
Speaker Change: <unk> facilities at discounts.
Speaker Change: There is some of the numbers or the growth to come from let's say opportunistic purchases as well so I think business.
Speaker Change: With a bit of the picture on the commitment.
Speaker Change: Business site.
Speaker Change: Thank you. The third question was regarding the investment portfolio.
Speaker Change: That is in fact, both of it helped.
Speaker Change: <unk> held through to maturity.
Speaker Change: It's mostly in the U S I'm going to let.
Speaker Change: Our head of Treasury and capital markets give a little bit more color on that.
Eduardo: Eduardo you want to share some thoughts.
Eduardo: Yes. Thank you Jorge NSF Walker explains most of the portfolio.
While the issuance outside of Latin America.
Eduardo: It's a portfolio of a very short duration average duration is two years and more.
Eduardo: Most of it is investment grade more than 80%, we see these portfolios and so diversification of credit exposures outside of the region.
Eduardo: We remember that by our by laws, we can only lend in member countries, but these portfolio will be predominantly invested outside the region provides a source of diversification.
Speaker Change: As <unk> explained before.
Speaker Change: Also because most of these amendments at all of these bonds are.
Speaker Change: Global agencies are most of them are investment grade.
Speaker Change: Or a vehicle.
Speaker Change: We can access that the fed discount window in this equation of market disruption so.
Speaker Change: In short most of the disposal of our U S <unk>.
Speaker Change: Our exposure in the European and Japanese insurers.
Speaker Change: Mostly more than 80% investment grade thank you.
Speaker Change: Thank you very much.
Okay.
Speaker Change: Okay.
Speaker Change: Okay. Thank you very much that's all the questions we have for today.
Speaker Change: Past the line back to Jorge Salas for their concluding remarks.
Speaker Change: Thank you Sophia before we conclude today's call.
Speaker Change: I wanted to take a moment to acknowledge someone very specialty blacks.
Speaker Change: As we announced back in November.
Speaker Change: After an extraordinary 35 year career in blind.
Speaker Change: <unk>, our CFO has decided to step down.
Speaker Change: While <unk> remains with us until April ensuring a more smooth transition going at this has been.
Her last earnings call.
Speaker Change: And he has been an integral part of glasses leadership driving the bank's financial performance with excellence integrity and.
Speaker Change: True commitment to our strategic vision.
Under our help.
Speaker Change: We have delivered record breaking results as you've seen and position the bank for.
Speaker Change: Our continued success.
Speaker Change: On behalf of the entire management team and the board.
Speaker Change: I want to extend my deepest gratitude to planning for.
Speaker Change: Her years of dedication and invaluable contributions.
Speaker Change: We will Miss your leadership.
Speaker Change: More than anything we will Miss you as a colleague and as a friend.
Speaker Change: At the same time I want to take this opportunity to welcome our net.
Speaker Change: In her new role.
Speaker Change: Our net brings a wealth of experience and deep knowledge of our business and I have no doubt that.
Speaker Change: We will continue to build on the strong foundation that Ami have established.
Speaker Change: And you were in February.
Speaker Change: Sure. Thank you Jorge and thank you all it has been an incredible journey at Atlantic I am deeply grateful for the privilege of working with such a.
Speaker Change: Talented committed team.
Speaker Change: This past year have been filled with challenges milestones and achievements that I am immensely proud of.
Speaker Change: Want to thank our investors our board my colleague and especially my team for their support trust and collaboration.
Speaker Change: <unk> is an excellent decision is in an excellent position for the future.
And I have no doubt that the bank will continue to thrive under his leadership and the outstanding team we have built.
Speaker Change: I am especially delighted.
Speaker Change: To see my close colleague and friend and net.
Speaker Change: Take on this role confident that her expertise and vision will continue dragging <unk> forward.
Speaker Change: Thank you.
Speaker Change: And at <unk>.
Jorge Salas: Hi, everyone. Thank you Jorge and thank you and while annual leave big shoes to fill and honor misstep in Greensboro and continue building upon the strong foundation in our plants.
Speaker Change: <unk>.
Speaker Change: Already backlog presentation, I'm working closely with our own guidance knowledge and leadership are being in dialogue and look forward to continuing to execute our strategy and drive long term value for all our shareholders clients and our stakeholders.
On behalf of the accounting.
Speaker Change: All the best in your next aspect and thank you for everything.
Speaker Change: Great. Thank you both.
Speaker Change: This concludes the call. Thank.
Speaker Change: Thank you everyone.
Speaker Change: Here in the next call.
Speaker Change: Goodbye, Thank you and good day.
Speaker Change: Thank you for this conference call is now closed you may disconnect and have a nice day.
Speaker Change: [music].