Hello, everyone, and welcome to Bladex's Second Quarter 2021 Conference call on this 28th day of July 2021. 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 Mr. Jorge Salas, Chief Executive Officer; and Mrs. Ana Graciela de Méndez, Chief Financial Officer. Their comments will be based on the earnings release, which was issued earlier today and is available on the corporate website. The following statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934.

Thank you, Nick. And good morning, everyone, joining us to discuss our second quarter results. As usual, I'm here with our CFO, Ana Méndez and a few members of my executive team. So let's begin with Slide 3 and let's dive right into the main messages that we would like to convey today. The title of this slide provides a good summary, improved results, consistent growth, and pristine asset quality. Growth in Latin America is starting to regain traction as the economies reopen, commodity prices hit record levels, and remittances are also at record highs. As a matter of fact, just yesterday, the IMF revised for the second time this year its growth projections for 2021 for Latin America from 4.6% in April to 5.8%, with the two biggest economies in the region, Mexico and Brazil, growing at 6.3% and 5.3% respectively. Having said that, daily new infections peaked only a month ago, since the vaccine rollout has been in general very slow in most countries, without the exception of Chile and Uruguay. So we remain cautiously optimistic and well-positioned to keep growing and taking advantage of the opportunities that keep arising every day. In this context, we grew our loan portfolio and our investment portfolio for the fourth quarter in a row, while keeping asset quality sound with only 0.2% of NPLs to total loans. Second quarter results improved, revenue increased 17% and also our net profit increased 10% quarter-on-quarter. Ana will share the details of our P&L later on in the presentation. Also during the second quarter, we created a new executive position, EVP of Strategy and PMO to further align our organizational structure and endurance by our execution capabilities. A couple of new value-added structure services that were driven by this unit are now in place. Ana…

Thank you, Ana. So summarizing, the second quarter of the year is, we think, a clear demonstration of that lives continues to trend in the right direction. Keeping sound asset quality on a book of business that continues to grow, serving top-notch corporations, taking advantage of our unique competitive position in a region where we have operated for over 40 years, and that is clearly showing strong tailwinds.

And at this time, we will open the floor for questions. . Our first question comes from Jim Marrone with Singular Research. Please go ahead.

I guess, maybe the first question that I have is just in regards to going forward with respect to interest rates. So it's widely known that central banks will start raising interest rates to address the current inflationary environment. So I'm just looking at how Bladex is looking to capitalize on the increase in interest rates going forward? And maybe if you can just provide some color, both on the asset side as well as on the liability side of your balance sheet?

Yes, sure, sure. Excellent question. There's clearly inflation pressure in many regions of the world for a couple of reasons. One is the disruption in supply chains because of logistical reasons, sanitary reasons and even climate reasons. The truth is that supply chain disruption is putting pressure on costs. And in order to protect margins, the pressure is being translated through the value chain and consumer prices. Also, there's a demand shock, basically because of the growth in the U.S. and China, which is also being translated into inflationary pressures. Now in Latin America, most countries are facing inflationary pressures for both internal and external, that is to say, commodities prices. Interest rates have been recently adjusted upward in Brazil, in Mexico and in Chile, and we expect the same for the rest of the region in the second half of the year. This is obviously -- but to the extent that we don't have -- we don't assume FX risk, this is obviously positive for Bladex's business model. As long as we see -- as long as we have moderate inflation. So on the asset side, I think it's very clear that we can potentially increase our margins as rates go up in local currency, and we have already seen that happening in most of the countries in the regions where we have exposure. Just Brazil, we have 20% of our portfolio. Chile, we have 10% of our portfolio. So that's obviously going to be beneficial for our profitability. Ana Graciela de Méndez: Yes. I may add on the fact if you asked for the impact on both assets and liabilities. As you know, we do keep a mostly floating rate book. So as U.S. dollar rates go up, we should be able to benefit, obviously, from re-pricing on both sides of the balance sheet with a net positive effect in net interest income on margin.

Yes. Okay. Great. And just in regards to your credit quality. So you say it's very good. And your NPL's have remained steady. I'm just curious, just as far as that credit quality, is it mainly concentrated on large enterprises? Or is there a significant exposure to small business and just seeing going forward, how is that going to impact as we come out of this recovery with the shakeout of small businesses, the reopening? Just can you provide some color on your credit quality as far as the mix and where you see it going forward?

Yes. That's also a very good question. And I'm going to try to take a step back, so you understand where a bit of a historical context of our risk appetite in our performance. Short answer is, it's basically big corporations and banks. So very little -- actually, no small NIM businesses because we exited that market back in 2018. So -- but after the big loss in 2018, the bank started de-risking. And that meant reducing exposures in countries like Argentina, reducing exposure to smaller corporates and also not engaging in long-term transactions that involve naked commodity risk. 2019 ended with a clean book, an ROE of almost 9%. Then when I came in, in March, the pandemic hit, and we decided for obvious reasons to de-risk even further. Shortening the tenor, even more, increasing our liquidity at the expense of the size of the book, and that was huge. That was $1.5 billion in two months. So 25% of the book and we shifted to more FI and exited riskier sectors like mining and retail and airlines. And then as the pandemic has evolved, and the uncertainty has slowly dissipated, we have, as you saw in the presentation, increased the size of our loan portfolio, reduced the excess liquidity to normalized levels and increase the size of the investment portfolio. Now going forward, as the region shows stronger signs of recovery, we are now in a position to take additional controlled risk in two main ways. One is returning to our historical mix of FI and corporate and also return to our historical level of corporate as opposed to -- I mean, long-term versus shorter-term. Now, this is all big corporations that normally have sales over $300 million that have access to local and international capital markets. We are not venturing into small and medium businesses. We will continue to complement this strategy with value-added products, like the one I showed before in the presentation. I don't know if that answers your question.

Our next question was submitted by from Elm Ridge. Could you provide some information on what makes up the $4.4 million charge to other comprehensive loss on the balance sheet? Ana Graciela de Méndez: Yes, sure. Thank you for the question. Yes, we do keep some derivatives. This, in particular, for us to swap to cover certain liabilities that we have in Mexican pesos. And they are accounted for as cash flow hedges. So the valuation of this derivative is recorded in other comprehensive income in our equity, and that basically explains the change. It's the change in valuation of this derivative, which tend to -- as they are actually economically very well covered. But in the interim during the life of these derivatives and the underlying exposures, they may have certain volatility that is reflected in OCI. I don't know if that answers the question.

Due to temporary ineffectiveness. Ana Graciela de Méndez: Yes, due to temporary ineffectiveness. But they tend to correct over time. And since they are economically matched, at the end they should go close to zero at maturity.

. And it appears that we have no additional questions at this time.

Okay. If there are no further questions, thank you for your participation. Stay safe and have a great day. Thank you. Ana Graciela de Méndez: Thank you.

Thank you, ladies and gentlemen, this concludes today's teleconference. You may now disconnect.