Good morning, ladies and gentlemen, and welcome to Bladex Second Quarter 2024 Earnings Conference Call. A slide presentation is accompanying today's webcast and is also available on the Investors section of the company's website, www.bladex.com. There will be an opportunity for you to ask questions at the end of today's presentation. Please note, today's conference call is being recorded. As a reminder, all participants will be in a listen only mode. I would now like to turn the call over to Mr. Jorge Salas, Chief Executive Officer. Sir, please go ahead.

Good morning, everyone, and thank you for joining us today for our second quarter 2024 earnings call. I'll start by summarizing our performance for the quarter. Then, as usual, Annie, our CFO, will provide a detailed analysis of our financial statements. After that, I will update you on a key initiative from our strategic plan before we open the call for questions. So, moving on to slide two. Here you can find a high-level summary of our quarterly results. I'm pleased to report that they are very much aligned and even slightly better than the guidance that we provided at the beginning of the year. Our commercial portfolio achieved a solid 6% growth quarter-on-quarter, primarily driven by our unfunded business, that includes loan commitments and also letters of credit. Deposits kept growing steadily and have reached a record level of $5.3 billion, an increase from the last quarter and an impressive 29% year-on-year growth. This $500 million surge marks our largest quarterly deposit increase since the implementation of our strategic plan a couple of years ago. This growth was largely fueled by deposits from corporate clients and financial institution clients as well as our Yankee CD program. Deposits provided by Central Bank's Class A shareholders also increased by 18% during last quarter. Back in 2021, deposit growth was identified as a key goal of our strategic plan, not only from the point of view of further enhancing the diversification of our funding sources, but also from the cost efficiency perspectives. With this purpose in mind, the Bank focus on reengineering and automating key processes to support higher transactional levels, while also implementing a targeted commercial plan with clear KPI for deposits and the balanced workers of our front line teams. There is still a lot of work to be done…

Thank you, Jorge, and good morning, everyone. Let's now move to slide three. As Jorge mentioned, the Bank has maintained a strong performance trend with quarterly net income reaching over $50 million for the second consecutive quarter, marking an annual increase of 35%. These results represent a 2% return on assets and a 16% ROE and add up to a $101.4 million net income for the first half of the year, up by 37% from last year. Jorge has touched upon the main drivers of this bottom line performance, so let me expand on it a bit more, starting with our asset growth and composition on slide four. Loans increased by 9% on an annual basis and were up by 1% from the previous quarter. Including off balance sheet items, commercial portfolio grew by 13% from last year. During this second quarter, we have observed a substantial increase in liquidity in our operating markets, leading to heightened competition and margin pressure. Nonetheless, we continue to see demand and business growth, particularly in our trade-related lines of business, such as letters of credit confirmation and the discounting of cross-border receivables or vendor finance. This growth is driven by our efforts to add new clients and cross-sell as well as by increased structured transactions on both products, all while maintaining our focus on providing tailor-made solutions for our clients. We were also able to increase longer-tenor transactions with a robust performance of our newly formed project finance and infrastructure business, along with the ones originated through our syndications desk, where we see a strong pipeline going forward. Overall, average loans and lending spreads remained stable quarter-on-quarter and denote an increase from last year. In the next slide, we present our commercial portfolio on the right, which continues to be well diversified throughout…

Thank you very much Annie. Before we open the call for questions, I'd like to share an important update on the progress of Phase 2 of our 2026 Strategic Plan. As I mentioned in our last call, and in line with our goal to maintain our position as a leading provider of trade finance solutions in LatAm, I'm excited to announce that after a careful vendor selection process, Bladex has selected the state-of-the-art trade platform developed by the top IT consulting firm CGI to optimize our processing and management of letters of credit and working capital solutions. This award-winning platform is utilized by major banks supporting foreign trade in over 85 countries across Asia, Europe, North America and Oceania. But Bladex will be the first Latin American bank to adopt this world-class technology. This trade platform will significantly enhance efficiency, security and transparency in Bladex's operation, enabling our corporate clients to manage their financial needs swiftly and accurately on a single integrated global platform. The implementation of this project started just a few days ago with a dedicated multidisciplinary team from both institutions collaborating over the next 10 to 12 months to deploy this advanced trade finance technology under the supervision of Bladex's PMO office. We will keep you updated on the progress of this and other key projects. I'm going to leave it here for now and open the call for questions. Operator?

Thank you very much for the presentation. We will now begin the Q&A section for investors and analysts. [Operator Instructions] Our first question comes from Inigo Vega with Jefferies. You can open your microphone.

Hi, good morning all. This is Inigo Vega from Jefferies. Very quick three questions. First one is on the super high growth we've seen in commitments and guarantees off-balance sheet. I see that growth is much higher than on-balance sheet lending. Can you say where is it coming from? Is it commitments? Is it less updates? And if there's any concentration in any particular country? Second one is on the partnership on the trade finance platform you mentioned with GCI. Can you sort of give some color on when would we expect some revenue or additional revenues from this? What is the pipeline of new products? I understand you can launch new products with the platform. So if you can give us some color on that would be super helpful. And the last one is on competition. You mentioned the market is competitive. Capital markets are wide open. I've seen that lending yields are down like 4 bps in the quarter. It's not a lot, but if you can sort of comment on where is the competitive environment today, and where do you see the competitive environment over the next few months? That's all for me.

Hola Inigo. Great questions. Let me start by the last one on margins. Sam, our Chief Commercial Officer, is here with me. He is going to tackle that one, and then I'm going to talk about the other two questions on off balance sheet and the trade finance platform. So, Sam, do you want to tackle the first one?

Sure. Thanks, Jorge. We're definitely facing a very competitive environment on lending, which was already referred by you and Annie in your initial remarks. Besides the pressures of excess liquidity in U.S. dollar in general and a much more active international DCM market, the other point of pressure has been more favorable local markets for borrowers compared to U.S. dollars, as some countries have started to cut rates before the Fed. Despite such pressures, however, we're happy with how we have been able to hold up our net interest margins rather stable, and that is partially due to the continuous rollout of this strategic plan. Special mention here to the strengthening of our syndication practice, which was already mentioned that not only bring fees but also deals with higher margins, given their medium-term nature for the most part as well as the good ramp-up of our project finance and infrastructure business. Case in point, the closing of the refinancing of the AERODOM transaction in the Dominican Republic, Aeropuertos Dominicanos which we acted as one of the joint lead arrangers in a $440 million credit facility to support the first-class global sponsor in a country that has a quite pungent economy, particularly fed by the international tourism that has been -- that has grown infrastructure needs. We do expect the margin pressures to continue, but we also do expect the rollouts of the new strategy with transactions that comes with the higher margins to continue as well and to counter that pressure. I feel that we continue to be navigating well and we -- I hope to continue -- to stay like that. Thank you.

Okay, that's -- that answer your question, Inigo? I mean...

Absolutely. Super helpful. Yes, very clear.

Let me talk now about the increase in the off-balance sheet item. It was a significant increase about 33%, as you mentioned. The bulk of that is related to one off, I'm going to say, very short-term trade-related opportunistic transactions that involve one of our Class A shareholders. Those are mostly letters of credit. Those are responsible for the bulk of our Stage 1 reserves this quarter, but it's more due to the country risk rating, and I'm talking about Argentina here. We're basically financing imports related to the most basic energy needs in the country. I mean, essential for the country to run. Bladex has done this many times over the year with impeccable track record. If you think about it, Inigo, this is our bread and butter, very short term, trade-related and attractive returns. Don't forget, we also have preferred creditor status in that country. So, that's basically it. We are following the developments in Argentina closely and we believe that the country is going in the right direction, and there might be more opportunities there going forward. As far as the CGI investment on the trade finance platform, let me just share some key assumptions of the business case behind the investment. We believe that once the platform is up and running, we can be able to process 2.5 times the transactional volume we are -- just on letters of credit that we are processing today. We expect that to be there about 2 times, 2.5 times in approximately two years. It's very clear that the demand is there even with our current customer base. So, without growing our customer base, it's very clear that we can reach that volume. Now, the average dollar amount of the, let's say, the incremental transactions will be substantially smaller, maybe half the size of -- per ticket. But the average fee on those tickets tends to be higher. Also, the other important thing is that we will not need to keep adding people to the team to handle this, say, this incremental volume. All this is just on the letters of credit. On the supply chain finance, the rationale is similar. I mean, it will be able to boost our current vendor finance business very efficiently. In other words, making -- being able to process more volume of smaller tickets with minimal headcount increase. In any case, we expect the incremental revenues just on the letter of credit business will be enough to pay back the cost of the whole platform in about 18 months. That's basically the rationale for the trade finance platform. It's CGI, and it's -- we're very excited with it.

Sounds great. I mean, thanks very much again for all the details and comprehensive answers. Thank you, thank you so much.

Our next question comes from Valentina Marin from Grupo Bancolombia. Her question is, taking into account the economic and political context in EU where inflation has had favorable behavior, and it's expected that the Fed will cut rates in September. And at the same time, the commercial tensions, rates in -- commercial tensions that have been generated, how do you see this impacting the countries in the region?

Yes, let me take a -- talk a little bit about how we see the region on a country-by-country basis. First of all, regarding rates, it's clear that Central Banks in advanced economies have started to ease their monetary cycles. And that, of course, will impact Central Banks in the region, perhaps later than we originally thought. So, real interest rates in the region may remain restrictive towards the end of the year. Now, on a country-specific basis, we see -- we have like three groups of countries. So first, Uruguay, Guatemala where we have grown a lot, Costa Rica, Paraguay, Dominican Republic also an important country for us, are perhaps the best prepared in terms of economic fundamentals and policy response from -- so that will be the first, let's say, strategic group for us. Second, obviously, Brazil and Mexico remain important for us due to their size. They do face clear fiscal and political risks. Then we have -- so another group of countries where we have Chile, Peru, Colombia and Panama. There are persistent political risk and, I will say, weak growth outlooks. And then we have Ecuador, Argentina, El Salvador, Bolivia, where we have minimal exposure. Those are countries that face structural challenges and are undergoing significant economic adjustments. I mean, those are the countries that -- now, in any case, I think it's always important, Valentina, to keep in mind that our client base consists of large, solid corporations and banks that we have a very long-term relationships with most of them and very deep knowledge. Sam, do you want to add something?

Yes. I think it's -- just to finalize the answer to this question, I think it's very important also to remind that in times of a little bit more noise in the region, that's when really Bladex can take a more opportunistic approach and find profitable transactions that have short-term duration. And historically, those have been good times for Bladex as liquidity from, let's say, the global players tend to dry up. So we're positioned to capture, if that indeed happens.

Good point.

Okay. Thank you very much. That's all the questions we have for today. I'll pass the line back to Mr. Jorge Salas for the concluding remarks.

Okay. So, thank you for joining. In summary, I'm going to say another great quarter for Bladex with over $50 million in net income and over 16% ROE. Strategic initiatives on our business plan keep yielding very tangible, sustainable results. Deposit balances are record levels. Fees are record levels. The team as a whole is very motivated, very focused on the implementation of key projects in this phase of the plan. Credit quality remains sound and a top priority, and we're looking forward to share more progress on our plan in our next call. That's it for us. Thank you very much, and see you in the next call. Goodbye.

Bladex conference call is now concluded. You may disconnect and have a nice day.