Hello, everyone, and welcome to the Bladex’s First Quarter 2016 Conference Call on today, the 15th of April 2016. This call is being recorded and is for investors and analysts only. If you are a member of the media, you are invited to listen only. Bladex has prepared a PowerPoint presentation to accompany their discussion. It is available through the webcast on the bank’s corporate website at www.bladex.com. Joining us today are Mr. Rubens Amaral, Chief Executive Officer of Bladex; and Mr. Christopher Schech, Chief Financial Officer. Their comments will be based on the earnings release, which was issued yesterday. A copy of the long version is available on the corporate website. Any comments made by the Executive Officers today may include forward-looking statements. These are defined by the Private Securities Litigation Reform Act of 1995. They are based on information and data that is currently available. However, the actual performance may differ due to various factors, which are cited in the Safe Harbor statement in the press release. With that, I’m pleased to turn over the call to Mr. Rubens Amaral. Sir, please begin.

Thank you, Katie. Good morning, everyone, and thanks for attending our earnings call for the first quarter of 2016. I’m pleased to report that we delivered strong business results in a quarter that traditionally has been the slowest one in our region. Our business earnings per share for the quarter was $0.72 and the business return on equity reached a 11.6%, which demonstrates the bank’s ability to generate earnings on a stable basis even in a quarter when seasonality as alluded to before reduces the volume of business. I do recognize that the net income has been negatively impacted this quarter because of the losses in investment fund where Bladex was one of the anchor investors. On the bright side, it’s over. These losses are now nonrecurring, as our commitment to remain investor expired on April 1, and we have made our final redemption accordingly. As this is the last time we will address this particular subject, I’d like to point out that this investment has provided a total return since its inception in 2006 of over 70%, representing an important contribution to our earnings over the last 10 years. Let me move on to briefly comment about our business performance in the first quarter. We continue to generate top revenue growth and the prospects for fee income is very good albeit the modest performance in this quarter. As you already saw in our release, our business net income, i.e., net income before the performance of the investment in the fund has increased by a 11% quarter-on-quarter and by 2% year-on-year. We have been able to achieve this result and so highlighted [ph] for 2016, as highlighted in our previous call is very clear. First, to be more selective on new products focusing on our traditional business of trade finance…

Thank you very much, Rubens. Hello and good morning, everyone, and thank you for joining us on the call today. And in discussing our first quarter results for 2016, I will focus on the main aspects that have impacted our results and I will make reference to the earnings call presentation that we have uploaded through our website, which is being webcast as we speak. So, Rubens, already mentioned, most of the highlights of this quarter, so let’s just do a quick rundown of the key financial metrics you will find on Page 4 of the presentation. The first quarter of 2016 closed with net profit of $23.4 million compared to $23.2 million in the previous quarter and compared to $29.9 million in the first quarter of 2016. As I will explain later in more detail, the main drivers of this quarter’s performance were accelerating net interest income and margins in our core business and provisions and reserve levels increased only moderately and that was partially offset by negative results from our participation in investment funds. As Rubens has already highlighted, these non-core items will not make any impact on our results going forward. As we have proceeded to divest our interest in its entirety following the expiration of the contractual lockup period during which we maintain a minimum investment in these funds. And while disappointed in the more recent result of that investment, we do acknowledge actually Ruben’s comment as well that the overall inception today return of this initiative has proved to be highly accretive to Bladex. That follows my usual statement I make to preface the discussion of our financial performance. As we said it last time and that is in order to accurately present performance in our recurring business activities, we focus on what we call,…

Thanks, Christopher. Ladies and gentlemen, we are ready for the questions.

Thank you, sir. At this time we’ll open the floor for questions. [Operator Instructions] Our first question comes from Catalina Araya from JPMorgan.

Hi, good morning, Rubens, and Christopher. So my first question, you did talk about reducing the exposure to 20%, that mean, you’re pretty much there at 21%. So just wondering now if the impeachment goes through, do you see new opportunities or growth in Brazil? And I just wanted to know how we should think about this growth under this scenario? And then my second question just going back to the divestiture of the investment fund over the last two quarters, we certainly heard the bottom line with losses. But going forward, how should we think of this result in the treasury line? I mean, you guys won’t be taking active positions on investments, right? It should be mostly just focused on ALM. So I just want to see how a more normalized number would be in the next quarters? Thank you.

Hi, Catalina, good morning. Nice talking to you. First of all, regard to the impeachment question in Brazil, we look at our business and we see what’s going on in the country. And our focus is to do good transactions with good credit quality clients. So in respective of the situation today, we continue to have an important styles of business in that country. But we are adjusting to make sure that we have in our books the best type of clients possible. So naturally, if there’s a change in the political scenario and perception in terms of risk change and the new revenue really starts to present some meaningful progress in terms of tackling what is the important and structural reforms that country needs to go through, definitely there will be opportunities. But we don’t see any resumption in the short-term scenario for more aggressive growth in Brazil. We’ll continue, as I said before to do good transactions with good credit quality names in the country. We are very pleased that that continues to the case. We’re very pleased also that we have been able to adjust margin set, as we have highlighted several times during our comments – initial comments. But the impeachment, I think, it’s one of the first step to normalization in Brazil that will require quite a bit of time because this year, irrespective of the impeachment, the country will still pose a recession two years in a row with the recession really impact the economy and there will be need to really tackle the more structural reforms, so the country will again grow in the way everybody expected and particularly myself being a Brazilian, I love to see Brazil thriving and that’s struggling a serious right now. In terms of investment in the fund that you asked, as I mentioned the bright side of this is – it’s over, okay, so no more market risk volatility in our quarterly results coming from the fund. We still have a very small available for sale portfolio and investments securities that eventually might impact results, but it’s very limited in the nature and we are exiting this portfolio. Today, it’s a very small portfolio compared to what it used to be in the past. So I think and we’ll continues to rather as Christopher now alluded to in our initial comments that we are back to Bladex, and Bladex means doing our trade finance, okay, engaging in taking risk in Latin America where we know very well how to manage those risks. So I would recommend you to focus on our core business trends, which are very good. The pipeline for the second quarter, it’s a very strong pipeline both for the traditional business as well as syndication business, quite bodes well for a very good second quarter as well.

Okay, thank you. But just to get a sense of an absolute number on the treasury line, we should think something like zero to $1 million a quarter like relatively flat, like relatively no income from there?

Catalina, if you allow me out, I can maybe shed some more light on this; this is Christopher. Yes, the treasury division will not post huge numbers anymore that’s for sure and it will be much more stable. We do expect the present division to deliver positive results on kind of two things, a small and it’s a very domestic portfolio both helps maturity and available for sale or fair value to OCI as it’s called in IFRS. And that should be just starting a little bit the interest income line with modest revenues there after this one for sure. And you mentioned also ALM, the Asset Liability Management, as you know we run very small gap. So it’s the gap between six-month LIBOR and three-month LIBOR. So you should not expect the huge numbers still either. Hopefully, they will be positive as you know our portfolio with prices very rapidly. And we do expect our Chilean people to do good enough job to not be on the wrong side of these small gaps. And so net-net you should maybe expect anywhere from 500,000 to $1.5 million of quarterly net income. And thereby yes, things go better on the – if you’re on the right side of these small gaps and maybe a little bit more, but certainly not much beyond that. So if I don’t know if that helps you.

Yes, thank you.

Thank you. Our next question comes from Luis Adaime from Newfoundland Capital Management

Hi, good morning everyone. Just what if – to ask if you could give us little bit more color on that upstream exposure that you had there was – or just in general that was going through higher provisioning and just credit deterioration. Have you had write-downs in that specific sector i.e., increase in provisioning to that specific sector and just overall for the upstream sector exposure, how you are seeing on credit quality evolving in the first quarter or throughout 2016 so far?

Good morning, Luis. Thanks for your question. We’re very comfortable with our upstream exposure. As we have highlighted before a very good credit quality in terms of the clients we’ve been with. There is one particular transaction that presents a little bit more challenge that overall we’re not that concerned, because it’s well provisioned and the bulk of our exposure with this one counterparty, which basically letters of credit, so which is basically company continues to perform. There won’t be any problems with the credit. So we don’t see moving forward any deterioration in our upstream portfolio. We have been very careful in terms of the new transactions we engage with, and has to be with companies that are not leveraged to an extent that’s not acceptable within our guidelines. Of course, the oil prices will play a very important role and the competitive advantage we saw of this company will be a key in our decision making process in terms of whether or not increasing our exposure. But I can guarantee to you that’s not our objective to improve exposure to this segment.

All right. Thank you very much. That’s very helpful. Thank you.

Thank you, Luis.

[Operator Instructions] Our next question comes from Ryan Rechkemmer from Drystone LLC.

Good morning. Thanks for taking my question. First, I’m curious what visibility Bladex has into the sector exposures of that natural institution borrowers, specifically to the oil and gas sector and then what – that you could possibly provide in that regard? And then I’ll ask my second question later.

Okay. So let me understand, are you asked about financial institutions, first?

That’s right, Bladex’s financial institution customers?

Well, yes, this is Christopher again. I said in my comments that if you look at the composition of our commercial portfolio, we did see a decline with the advice of financial institutions. And I mentioned that this has seasonal reason and if it does happen that routinely in Latin America that towards the end of the year financial institutions will take more cash on its books and that is – that’s something that we will – higher degrees of demand to our money in the region. And that’s offset as the New Year commences. And so this has – this is what I alluded to in terms of the seasonal effect that I want to give this out of proportion, but clearly the balances that we have in places with financial institutions are the more actively managed both in terms of changes from the first quarter, whereas the commercial business with the corporate business is much more transaction base and more of a guidance towards the actually nature of business activity in the region enhance my comment that based on the solidity of the balance with the Corporate segment that we should be looking forward to moderate growth. I don’t know if it presents you.

Okay. So we have Bladex’s exposure to the oil and gas sector directly? But can we see through to what is the credit exposure of Bladex’s financial institution customers in turn to the oil and gas sector?

I mean to the extent that we extend Bladex’s financial institutions contractual language that specifies general business purposes. We actually have been [Technical Difficulty] seeing exactly what they’re using our funds for – that is different to a trade finance facility of course where we do have all the information that pertains to the use of terms made by the institution. And so it’s kind of hard for us to really tell you, whether these funds are used by these institutions to support their oil and gas price or not.

I cannot tell more color to that. I think Christopher catching me a very important point. And I think a question was driving to that point as basically we try to focus our financing through finance institutions on the trade finance portfolio. And when you look majority of our financing is trade finance and one is trade finance we know exactly well what we’re doing as Christopher has mentioned. So we know that there is no excess of exposure in that sense to oil and gas industry. But we have also limited non-trade transactions that we do working capital facilities, but they are very short-term in nature, so which in our view basically that involved to support the tax of portfolios that would be involved with the oil and gas industry. Overall, when we look to this financial institutions, they haven’t been seen it importantly by what has happened to the oil and gas industry. In our credit reviewing process, we look carefully to see what kind of exposure they have and whether they had impact of impairment because of oil and gas and that’s one while we have reviewed with the institutions that we have deal with, we don’t see that problem. I don’t know whether that gives you a benefit.

Okay, that helps. Thanks. And then secondly, observing that credit disbursements to Brazil are now in the low single-digit – are in single-digits in general as a percent of total disbursement and that still Brazil comprises 21% of the total commercial portfolio, presumably the longer-term credit had original terms that were really meaningfully greater than here. So my question is, our new credit disbursement in Brazil are they similarly long-term natured that Brazil in – remains as a large part of the total commercial portfolio or else will the Bank be rolling off more of that exposure in future or else increasing its falling off shorter-term credit disbursements to Brazil to maintain its exposure to Brazil? Thanks.

Thanks Ryan, that’s a good questions. With the quality of the exposure in Brazil and the nature of exposure in Brazil, as I mentioned in my initial remarks, we are going back to basics and basics for Bladex means financing short-term to refinance. So in Brazil particularly, as I mentioned in the first question, our focus is in good credit quality names and focus on short-term trade finance. So this question is Brazil in order to this quarter were very small. The total disbursement for South American countries excluding Colombia, Peru, and Chile was just 15% being Brazil very small portion of that only $94 million in terms of disbursements and primarily short-term trade finance. So that’s our focus and any opportunity whether the company that it has competitive advantage that is not highly dependent on Brazil revenues that is diversified and that presents to us in opportunity to do new region financially might consider. But I can guarantee to you, this is not our focus. And we will continue to monitor closely the exposure to Brazil. As I mentioned in my first call of the year commenting about 2015 and said if conditions do not improve, we will continue to monitor exposures and see our benefit exposure even reducing further because the good names we have in our portfolio, they pay. So and that’s what we saw this quarter. We had a net reduction in Brazil of $176 million, if I’m not mistaken in terms of total exposure of Brazil. That is the only $94 million in disbursements. So it means that we had payments in excess of $200 million to offset that is smaller growth that we saw in Brazil of new disbursements rather if you will in Brazil. So we assure that our focus in short-term trade finance and we’re working to reduce the average lack of the loss. Then in Brazil, honestly, I’m very practical because 72% of the portfolio is trade finance and close to 60% of the portfolio matures within a year. So you see that, if we decide to really hit the brakes and you can hit the brakes and reduce drastically our exposure to there. Hopefully, as I mentioned in the other question as well, Brazil will have a change that will steer a new action and the structure reforms that can really help the country to change this – this has aimed for the country has been for last year.

Okay, thank you very much.

You’re welcome.

Thank you. Our next question comes from Catalina Araya from J.P. Morgan.

Hi, thanks. I just wanted to follow-up talking a bit about credit exposure. Just I was curious, if you guys have an internal goal to increase your exposure in Argentina and what would it be right now it is around 3%? What would it be a long-term goal for ex-credit exposure in that country? Thank you.

Thank you, Catalina. As I mentioned in my initial call of the year, we’re looking at what’s going on in Argentina. And monitoring closely the government can deliver on it’s campaign promises of really having market discipline and better management of the public finances. And so far it seems that they’re moving in the right direction. As I mentioned to you, we’re very careful. We know how things can change rapidly in terms of misperception. But one that we’re seeing in Argentina, it’s a transformation – important transformation and a readiness and a political support to engage into the reforms with the country needs. So, I mean, that’s the case. We have decided to very cautiously to do more business in Argentina and the business we’re doing there and no more than a trade finance up to one year, because we have a lot of strong grain and agricultural exports in Argentina, that cycle have started to expect now, so that there will be demand for that type of growth. I think what’s relative to the exposure in Argentina business $200 million, I would say and you could see as a slowing growth growing to $300 million over the course of the next quarters. It’s not something that’s going to be huge at the beginning. But as the country improves, definitely, we’ll move towards increasing, but we again what I call I’d like to emphasize that back to the basics of Bladex financing trade and short-term trade.

Thank you. Very clear.

Thank you.

[Operator Instructions]. Our next question comes from Zane Keller of Barrow Hanley.

Hi, good morning, and thank you for taking my call. Actually, I had two questions, I think are pretty closely related. The first is, what you plan on doing with the capital that you were deemed from the hedge fund, I think it’s about $50 million. Is that the candidate for a special dividend, or do you think you’ll be able to profitably deploy it? And then the second question, I think, is very closely related is, if you look at the leverage for the bank, it went down, I think, fairly significantly for one quarter. How do you see that evolving going forward? And do you think you can achieve its a low double-digit ROE, if leverage remains kind of depressed as it’s been? Thank you.

Thank you, Zane, for your question. First of all, you know that we’re back to operate in the emerging market 100% of our exposure as in one particular emerging market, based in the country that doesn’t have a central bank, because it’s a dollar-based economy, therefore, we don’t have the lender of less resort. So and because of this components we still – we’re a wholesale banking with our bank. We don’t have funds from retail depositors. So, all this is combined really require that Bladex because of the nature of this institution Bladex has a better capital base. So it really continue to attract new funding – the necessary funding for our transaction. So there’s this consideration that we always knew to take into consideration in terms of our capital base that will be always a little bit higher than the average bank in the street. So that that’s an important consideration for us. Second, I’d like to leverage the balance sheet as much as possible within those prudent management of the capital to bank, we’re below nine times in terms of leverage. So you have seen in the past the bank leveraging between, let’s say, 9 and 9.5 times. This would be a very comfortable level of leverage for us that we can consider, but as Christopher pointed out, because of abating considerations the risk weighted assets increased. And one of the things I want to make sure is that, we are within the tranche of what we’re breaking agency is also understand in terms of the minimum levels of capitalization, which is the second constraint we have in terms of the joint of capital. So what I can tell you is, it’s our target to leverage the balance sheet of the bank. Unfortunately, we are in a situation, in an environment that you need to be a little more careful, but always it’s related to deploy this capital as soon as possible and as safe as possible. Secondly, back in the past provided shareholders with extraordinary dividends, as you asked before even buy back and programs. At this time, at this juncture, we simply have a strong capital base and it’s important for us to really go through this more challenging times for Latin America. And as we move out of this and we’ll see how much we can deploy. You can get to a point, we understand that we need to return capital then the Board is very clear guidelines across those new yield. But our objective today is to make sure, we have a strong capital base to support our transition in this more challenging period of Latin America. So we didn’t have any regulatory problems. We don’t have any rating agencies issues, and then we deploy straight fully that our view is to use this capital as soon as possible.

Great. Thanks for the detail. I guess, just a follow-up on that, if you look historically the banks generally increase its dividend or review the dividend in November, is this, I guess, ongoing process, or is there something that the bank looks just once a year? Can you just give me a sense of how often that the dividend would be reviewed and possibly considered for an increase?

Okay. Our dividend policy is to pay always a dividend. And we review that on a quarterly basis and that’s based on the results of the bank. Unfortunately, the last two quarters, you have seen that we have been hit by those nonrecurring losses and that the Board understood that it is advisable at this moment to keep the actual level of dividends. But as we see the progress and that has been our commitment to our shareholders, we will share, increasingly, the results of the bank with yourselves. So as we deliver and present this good results and that’s what we’re aiming at, we will be able to increase the dividends.

Okay. Thank you.

Welcome.

[Operator Instructions] At this time I’m showing no further questions. I’ll now return the call back over to Mr. Amaral.

Thank you, Katie. Thank you all of you to attending our earnings call today. As I mentioned initially, we’re very pleased that the trends – the core trends of our business are solid and we are providing new with good returns, and we will be working diligently to leverage the balance sheet with banking prudent and safely and we will be sharing with you the results of these as we have been doing always. So thank you ladies and gentlemen. Have a good day, and looking forward to talking to you for the second quarter of 2016.

Thank you, ladies and gentlemen. This concludes today’s teleconference. You may now disconnect.