Hello, everyone, and welcome to Bladex' Fourth Quarter 2017 Conference Call on this 9th day of February 2018. 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 and on the bank's corporate website at www.bladex.com. Joining us today are the following executives of Bladex, Mr. Rubens Amaral, Chief Executive Officer; Mr. Gabriel Tolchinsky, Chief Operating Officer and incoming CEO; and Mrs. Ana Graciela de Mendez, Chief Financial Officer. Their comments will be based on the earnings release which was issued earlier today. 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. And with that, I am pleased to turn the call over to Mr. Rubens Amaral for his presentation.

Thanks, Chantel. Good morning, everyone. Thanks for joining us this morning. I’m very pleased today to have with me Gabi and Ani, our Chief Operating Officer, Gabi and incoming CEO and Ana Graciela, our new Chief Financial Officer. We structured this call a little different this time to provide you with information about not only the Bank, but what’s going on with the transition. Ana Graciela will provide you with the details of our performance, and then Gabi will provide you with his views of how to take the Bank forward. But let’s go to the earnings results. Earlier today, we reported earnings of $20.6 million for the fourth quarter or $0.52 per share. The full year results reached $82 million representing a return on equity of 8 percent, return on assets of 1.2 percent, a strong capitalization with a Tier 1 capital ratio at 21.1 percent and nonperforming loans ratio down to 1.07 percent. As you see in the press release, the fourth quarter results continued the positive trend of our business that we reported in the third quarter. Let me comment on the main highlights in Q4. The credit portfolio was up by 5 percent at year end and average balances up by 3 percent. This reaffirms the more favorable environment in Latin America, which led to an increased deal flow and contributed to the reversal of the trend of declining balance we observed in previous quarters. This performance was achieved as we de-risked the portfolio throughout 2017. Our credit disbursements reached almost $4 billion in Q4, bringing the total annual disbursements to $14.6 billion, a strong growth of 21.9 percent when compared to 2016. The reason the disbursements didn’t translate into higher balances as expected was primarily due to the high levels of liquidity available to the…

Thank you very much, Rubens, and good morning, everyone. I am honored to speak to you this first time as CFO and our Bank’s results for the fourth quarter and year 2017, and certainly look forward to continuing an open and transparent format of communication going forward. Now, I will go over the most relevant aspects driving our quarterly and annual results, referring to the webcast presentation that has been uploaded on our website, and to the earnings report released earlier today. Now, please refer to the Bank’s financial performance overview on Page 5 of the presentation. The Bank achieved a solid quarter-on-quarter commercial portfolio growth of 5 percent, supported by increased origination of 9 percent, reversing a two-year downward quarterly trend. Credit demand strengthened toward the end of the year, and we saw economic outlook improve for the region. Net interest income and financial margins were positively impacted by improved earning asset yields and a more favorable mix towards higher average loan volumes during the quarter. Nonetheless, we continue to experience pressure on lending spreads for shorter tenors, combined with high levels of U.S. dollar liquidity in key markets. Our funding remains solid and diversified across geographies and tenors. We continue to experience inflows of low-cost deposits, along with overall low average spreads based on borrowings. A narrow interest rate gap structure enables us to pass along increases in our base funding rates, that is LIBOR, to our asset-based rates. In general, our asset liability structure tends to benefit net interest income in a rising interest rate environment. Fee income showed strong quarter-on-quarter and annual growth. Our structuring and syndications desk continues to put forth a solid pipeline and delivered 2 closings during the fourth quarter for a total of 7 closed deals in 2017. Fees also benefited from…

Thank you, Ani. Good morning. It’s a pleasure to address you in this conference call. This is my first earnings call since having been nominated to take on the CEO position. And let me say it from the outset, I’m truly honored by the nomination and look forward to many more opportunities to talk about the results that Bladex delivers to shareholders. The challenge of leading an organization like Bladex, I believe, is to be both mindful of its story, a crucial role that Bladex played as a conduit between the international capital markets and the financing of Latin American trade, particularly during years in which capital was not flowing to the region, and of the need to develop growth strategies that will enable us to more consistently deliver double-digit return on equities to our shareholders. In my opinion, these goals are not mutually exclusive. In fact, strengthening the legacy aspect of our Bank, ensuring the continuity that our clients and our shareholders expect, is consistent with what is and will continue to be Bladex’ secret sauce - strong client relationships and regional scope for value in Latin American credit risk. As I mentioned before, I’m proud to be part of such a storied and prestigious institution. Bladex’ mission and vision statement have somewhat evolved over the almost 40 years the Bank has been operating, but it’s always been centered around the financing of Latin American trade transactions and regional integration. We have under our belt 40 years of operating in more than 19 jurisdictions in Latin America and the Caribbean in just about every industry sector, during very diverse economic cycles, turning on portfolio loans over more than once a year, gives us a wealth of data for valuing what we called the Latin American risk matrix. Bladex is…

Thanks, Gabi. Thanks, ladies and gentlemen, for your patience today, with a little more information from our side. But we’re now ready for your questions, and hopefully, we can have the answers.

[Operator Instructions]. Our first question will come from Tito Labarta, Deutsche Bank.

Hi, good morning, everyone. Thank you for the call. A couple of questions. You saw some decent pickup in loan growth in the quarter. Given the global economy improving, what kind of growth can we expect this year in loans? And kind of along those lines, you have a very high capital ratio today. I know, in the past, you’ve talked about increasing dividends only when your core results improve. But given the high capital base and relatively low ROE today, does it make sense to pay some additional dividends to reduce that capital base, particularly if you're not going to grow significantly? So I just want to understand those dynamics. And then also a second question in terms of your asset quality. You mentioned -- no real concerns, you mentioned. But how quickly can asset quality improve as things get better? And what should that mean for your provision levels this year?

Okay Tito, thanks for your questions. I will give you an overview, and then as far as what we plan for 2018, I will defer to Gabi, so he can answer that part of the question. We have a more favorable environment in Latin America. That bodes well for Bladex. We have seen that picking up in the fourth quarter. In fact, if you remember well, in all our calls this past year, Tito, I alluded to the fact that disbursements were increasing quite rapidly. But unfortunately, we had a lot of prepayments. If you combine, just to give you a sense of what it means, if we combine what I said in my initial remarks, the prepayments of maturities in 2018 and beyond, the prepayments that we had within the year, it’s more than $1.5 billion. So, it is really important to take that into consideration, because if that was not the case, our balances would be reflecting a much different story at the end of 2017. So that’s why, at the end of the day, we end up with a much stronger capitalization than we would have liked at the end of 2017, of 21.1 percent. So, having said that, everything that we are planning for to put that capital to good use, you know this bank, and you know that we have been in this process of de-risking the portfolio for the last two years, very focused on short-term trade finance, and renegotiating all the problematic credits we had in the last two years. So, our focus was much more in cleaning and strengthening the balance sheet so we could grow. We have the basis now to grow. We have a favorable environment to grow, so I’m pretty sure what Gabi has in his hand is a tremendous opportunity to make it happen. So having said that, I will ask Gabi to comment on his theories in terms of growth and his theories in terms of what we can do with the capital.

Thank you, Rubens. Hi, Tito. How are you? Well, let me start by saying I believe that overall growth expectations for Latin America are around 1.9 percent, somewhere around there. I think that for all the reasons that Rubens alluded to, we are in a very good place to be able to not only participate in that growth, but you know, maybe also, apply a multiplier. I don’t know if we are going to be able to, although certainly we’ll try to, stay within our standard 3-4 times multiplier effect as it relates to GDP growth, but we definitely are in a very good position from a balance sheet strength perspective to be able to start growing very nicely, as credit demand in the region starts picking up again. I think we see positive things happening in major economies like in Brazil, but we also have a few warning areas that we should be mindful of. We have an election in Mexico coming up, things that we should be quite mindful of, and one thing that we definitely intend to continue is a very prudent risk management approach and very solid overall risk underwriting methodology. So as such, we’re going to grow with overall increase in overall demand, but we’re going to do that in a very prudent way. Now, as far as capital base, we definitely have a challenge in front of us to be able to deploy more of our capital. We intend to do so, and I think, if I may, to get a little bit of a honeymoon as far as plans to return capital, let me first try to see if we can actually deploy successfully in the next couple of years, so that by then we’ll be able to see if indeed we have too much capital, and we need to return some to investors, or we’ve been able to grow our book of business to reflect our capital level today, and what will be our capital level in the future, which hopefully will grow with retained earnings. Rubens Amaral: And just adding, Tito, to that If you add to what Gabi just commented to my comments about the prepayments, and we see that eventually, depending on what happens in the more developed world in terms of papering the fiscal stimulus in different parts of the world, this liquidity should be less, and if the liquidity is less, then we shouldn’t experience the same high level of prepayment, which can really help us in deploying this capital.

And the second question regarding asset quality and provisions? How do you see that evolving this year?

Okay, I’m sorry. I forgot that point, Tito. Thanks for reminding me. In my comments and in press release, we're talking about a cleaner balance sheet, and we are very pleased with all the restructuring that we engaged in. And we see the credits really now in the process of undertaking the collection that will happen over time. And sometimes, these negotiations, they have grace periods that we need to wait, but overall, they are moving quite well. Ana Graciela mentioned that we finalized one important credit recovery in Panama. That was very good for us. So that was real recuperation of a credit. And we see a few other actions being taken in other countries where we could get back some of the exposure we had in these countries because of the guarantees we have been able to get and eventually use these guarantees to recover portion of this credit. So, I think as far as the restructuring process and collection process goes, you can expect 2018 to provide us with positive or good surprises. As far as the position of provisioning, you now that our provisions will vary according to the loan growth. And we are in a coverage ratio of what we call the generic reserves for the portfolio around 1 percent. That reflects quite well our probability of default, but eventually, because of this negative cycle, we need to continue to reinforce that. So we will continue to adjust provisions according to our growth, with the bias towards really strengthening the cushion we have in provisions, so if something happens, we are well covered. So it is the function of the growth, and hopefully we are going to have a good growth this year, and then we’re going to see healthy provisions being generated, not the kind of provisions that you don’t like, and we, even less, that is the fiscal reserves for problematic credits.

Okay, thank you very much. OperatorThank you. Our next question will come from Yuri Fernandes, JP Morgan.

Hello, gentlemen. Just to follow up on Tito’s question on loan growth, I heard Gabriel mentioning three to four times multiplier. That isn’t the real GDP, right, for like the region? That’s the first question. The second question is about the margins. If you can provide some outlook for 2018, if you can see the NIMs coming back from the current 1.8 back to 2 percent level or something like this, as the outlook seems to be more be more favorable. That’s the second question. And third, on expenses, I get confused on your speech on G&A. On one hand, I understand that you are focused on cost control, and this has been the case for 2017. But you also see some investments on a better operating platform that I totally understand. I think that’s super important for the company. So those two things in consideration, can you provide some guidance on your G&A, how you see efficiency, because my view here is that as your top line recovers, we should see efficiency coming back to the low 30 percent level or maybe high 20 percent levels. So just if you can comment if that rationale makes sense, and how you’re seeing expenses evolving? Thank you.

Thank you, Yuri. Let me tell you. First of all, in terms of growth, you know what Gabi alluded to with normally trade flows grow a multiple of the underlying GDP growth of 3 to 4 times. So we were talking about the trade flows growth of 8 percent. And then normally, it’s a good proxy for you when you look to the growth of the Bank. And moving forward, the Bank will really benefit from the more favorable environment and will put its workforce to really work on origination. As I mentioned in my remarks, that’s why we did this restructuring within the Bank, so we could really leave the people at the office to do the origination and to get to that level of growth that we all expect the Bank to have moving forward. So, in terms of margins, I think we are forecasting for the year very stable margins, because at the end of the day, when you do, as we did in the last two years, a more focused approach on short-term trade finance, your margins naturally come under pressure. But as the scenario improves, the environment is more favorable, and we really can look at the regional integration and work more with the companies and their medium-term needs that is important for the margins and then can really help us to have some adjustment up in the margins. In terms of funding, we have a very stable funding base. Our cost is very stable. You saw that we have increased our deposits. That is very important in terms of the cost structure. We have, coming from the funding then, just impacts of the base rate that are -- because of the way our assets and liabilities are structured, they are really absorbed immediately and then, as Ana Graciela has mentioned before, impacts well. So we see a combination, a growth, a stable margin and NIMs picking up a little bit. It’s going to take, I think, sometime for us to go back to the 2 percent level that you asked. So let’s see how we perform in the coming quarters, but that is our objective, because our business model we work with, this NIM of 2 percent, the ideal target. As far as expenses are concerned, we had this specific non-recurring item, as you mentioned, and you’re totally right in your line of thinking. We’re focused on increasing our top revenues. And then make sure we go back to the levels that we have seen before, but I think this is all forward looking. I want Gabi to complement and give his own personal views how we are going to approach gross margins and expenses.

Thank you, Rubens. Hi, Yuri. I would say in answer to your question, yeah, what I was referring to, the potential for a multiplier that would be on real GDP growth, not nominal, of course. And Rubens explained as well, as far as the relationship GDP growth and overall growth in trade flows, and how that often becomes a proxy for the development of our loan book. So, I think our expectation is margins could continue to be somewhat under pressure, but it’s sometimes very difficult to tell in an environment where the pie grows overall. We all know that when the pie is not growing, and the markets have significant liquidity, then it becomes a very hyper competitive almost environment in which everyone is trying to put their balance sheet to work. Needless to say, that once we get going in terms of economic growth that should relieve somewhat the pressure that we’ve seen on overall lending spreads. Have we seen that materialize yet? Not to the full extent – we’ve seen some of that in the fourth quarter, but needless to say, we’d like to see more of it. In terms of overall expenses and our focus on cost controls, the Bank has made quite significant investments in technology over the past few years. And I think the angle that we’re bringing to the equation is efficiencies through workflow processes and procedures that better enable us to use some of the technology that we’ve acquired over the past few years. So, we don’t expect expenses to be impacted by the acquisition of new technology platforms. We just want to work better and really put a lot of emphasis on the way we work to better take advantage of the technology we have in front of us. So in terms of expectations for efficiency levels, it is definitely our goal to bring down efficiencies below the 30 percent level, and that’s something we’re very keen on seeing again.

Clear, gentlemen. If I may, a last one, and I guess, this is an easy one. On ROEs, I get that the one you are putting here is for a better 2018, and I guess, macro will help. But looking to ROEs, do you think it's the year that the ROEs will go back to the double-digit levels, like close to 10%, something like this?

We will definitely do our best. It is our goal to deliver double-digit ROEs for our investors and for our shareholders. And it becomes a function very much of being able to deploy our capital efficiently. We are seeing the green shoot as it relates to overall growth in the economy, and that gets us very positive. And we believe that we are in a very good position to take advantage of that growth. So, it is our expectation that we should be able to start delivering double-digit ROEs. Again, I hope that becomes sooner rather than later.

Okay, thank you.

Our next question will come from Greg Eisen, Singular Research.

I want to focus on the expenses from this past quarter. The salaries line and the other expenses line were on the high side versus what you've averaged. Could you tell us how much of those two categories were nonrecurring items in terms of how we should look at the future, I mean? And then I have a follow-up on that.

Okay. I'll take that, Greg. In terms of salary, you could consider most of the increase as part of the nonrecurring line. And with respect to other operating expenses, we usually have a seasonally higher fourth quarter, which then translate into somewhat lower quarterly expenses in the third quarter and first quarter of the year. And that's basically due to an increased invoice coming into the bank towards the end of the year. It's really seasonal. If you see the behavior -- the historical behavior, that's usually the case, and that pretty much explains why there was an increase in other expenses with respect to third quarter, which was particularly low. So, when you look at the annual basis, that's what you should be looking at. We don't expect, overall, to increase both in neither one of those line items going forward. But you do see some seasonality when it comes to quarter-on-quarter analysis. Overall, for the year, if you take out the $3.2 million that we put aside on this restructuring that we went through in 2017, you actually see a 4% decline in overall expenses year-on-year, and that is a trend that we are actually looking for, at least to maintain the same level or even be able to reduce the level of expenses going forward.

Okay. So the total restructuring cost then were $3.2 million, if I look at it versus -- for the whole year?

For the whole year, correct.

Right, and as a follow-up to that, do you right now anticipate any non-recurring salary costs to be booked in the first quarter of 2018 as a result of these changes that you’ve made internally?

No, actually, we already did all the changes that we have made were the expenses related to that. We took those on the last quarter of last year. So we don’t anticipate for the first quarter to have any additional restructuring charges on that.

Rubens was kind enough to leave me the savings and take the hit for 2017.

Very good, very good. Turning to the credit losses, you have multiple line items in the whole credit provision section. One of the line items is Provision for Losses on Off Balance Sheet Financial Instruments.

Right.

That number this quarter was $2.01 million. Could you explain what was behind that this quarter? That was far greater than the normal, just the loan loss provision, which was a reversal.

Right. Yeah, we actually usually analyze both those line items together, and we see that as an overall commercial portfolio reserve. But you’re right. The off-balance sheet really relates to letters of credit, and we did see some upwards trend in the LC balances towards the end of the year. So, it’s a natural shift from one quarter to the other in terms of the growth that we experienced this particular quarter in certain countries that by nature, the countries that do use the LC business are usually higher risk. So, any growth would probably have an impact on reserves. And that’s basically the reason why we increased those reserves. Overall, when we look at the reserves of the portfolio, they remain relatively stable.

Okay, so that part of the provision was not a specific loss provision, but rather a non-allocated provision if I read you correctly.

That is –

That’s a part of the growth in the LC balances.

That is correct.

Good.

That's part of the general -- what we call Stage 1 under IFRS 9, normal provisional requirement. It related to, as Rubens alluded to, the normal growth of the portfolio.

Okay, okay. I think everyone else has asked the rest of my questions right now. Thank you very much.

Thank you, Gregg.

Thank you.

[Operator Instructions]. Speakers, at this time, we have no questions in the queue.

Okay, Chantel. So, ladies and gentlemen, thank you, thanks for your attention today. And as I bid farewell to this organization, Bladex, dear to my heart, I would like to thank you for your support and confidence throughout the last six years, and express my gratitude to the Board of Directors and a special thanks to the talented people that make Bladex a leading financial institution in Latin America. Thank you very much. Have a great day.

Thank you very much. Ladies and gentlemen, at this time, this conference has now concluded. You may disconnect your phone lines and have a great weekend. Thank you.