SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 Or 15d-16 Of The
Securities Exchange Act of 1934
Long Form Press Release
BANCO LATINOAMERICANO DE EXPORTACIONES, S.A.
(Exact name of Registrant as specified in its Charter)
LATIN AMERICAN EXPORT BANK
(Translation of Registrant's name into English)
Calle 50 y Aquilino de la Guardia
Apartado 6-1497
El Dorado, Panama City
Republic of Panama
(Address of Registrant's Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
Form 20-F |X| Form 40-F |_|
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing information to the Commission
pursuant to Rule 12g-3-2(b) under the Securities Exchange Act of 1934.)
Yes |_| No |X|
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b). 82__.)
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
February 17, 2004
Banco Latinoamericano de Exportaciones, S.A.
By: /s/ Pedro Toll
Name: Pedro Toll
Title: General Manager
2
FOR IMMEDIATE RELEASE
BANCO LATINOAMERICANO DE EXPORTACIONES, S.A. ("BLADEX")
REPORTS FULL YEAR 2003 RECORD NET INCOME OF US$111.5 MILLION
4Q03 Financial Highlights
o Net Income was US$16.2 million in the 4Q03, compared to US$17.8 million
for the 3Q03, and US$15.0 million for the 4Q02.
o For the year, net income was US$111.5 million, compared to a loss of
US$268.8 million in 2002.
o Short-term trade loans increased to US$1.4 billion, or 21%, for the
quarter, and 77% from year-end 2002.
o The Bank reversed the declining trend of its overall loan portfolio, as
total loans grew 6% for the quarter.
o The Bank sold US$15 million in nominal value of Argentine loans during the
fourth quarter of 2003. Exposure in the country (net of allowance for
credit losses and impairment loss) is US$240 million, down 39% from a year
ago.
Panama City, Republic of Panama, February 17, 2004 - Banco Latinoamericano de
Exportaciones, S.A. ("BLADEX" or "the Bank") (NYSE: BLX), a multinational bank
specializing in trade finance for Latin America and the Caribbean, announced
today its results for the fourth quarter and full year periods ended December
31, 2003. The Bank's financial statements are prepared in accordance with U.S.
GAAP, and are stated in U.S. dollars.
The Bank reported net income of US$16.2 million for the fourth quarter of 2003,
or US$0.41 per share, compared to net income of US$17.8 million, or US$0.45 per
share, in the previous quarter, and net income of US$15.0 million, or US$0.85
per share, in the fourth quarter of 2002.
Net income for the fourth quarter of 2003 reflected the sale, and partial
payment, of Argentine loans, which generated reversals of the allowance for loan
losses. In addition, the Bank increased reserve coverage for certain Argentine
borrowers, and reduced generic reserves related to certain countries (mainly
Brazil). The net impact of these factors on earnings was a gain of US$9.5
million for the quarter.
For the full year 2003, the Bank achieved record net income of US$111.5 million,
or US$3.88 per share, compared to a US$268.8 million loss, or US$15.56 per
share, for 2002. The loss in 2002 reflected US$278.8 million of provisions for
credit losses, and a US$44.3 million charge resulting from impairment losses on
securities, both related to the Bank's Argentine portfolio.
3
Key Figures
--------------------------------------------------------------------------------
2002 2003 4Q02 3Q03 4Q03
--------------------------------------------------------------------------------
Net Income (In US$ millions) (268.8) 111.5 15.0 17.8 16.2
EPS* (15.56) 3.88 0.85 0.45 0.41
Tier 1 Capital Ratio 15.3% 35.4% 15.3% 37.8% 35.4%
Equity to Assets Ratio 11.2% 22.8% 11.2% 23.1% 22.8%
Return on Average Equity n.s.** 23.9% 18.7% 12.6% 11.2%
Net interest margin 1.5% 1.9% 1.8% 2.0% 2.1%
--------------------------------------------------------------------------------
* Earnings per share calculations are based on the average number of shares
outstanding during each period. During the fourth quarter of 2003 the
average number of common shares was 39.3 million, compared to 39.3 million
in the third quarter of 2003, and compared to 17.3 million during the
fourth quarter of 2002.
** The abbreviation n.s. means not significant.
Comments from the Chief Executive Officer
Jaime Rivera, Chief Executive Officer of BLADEX stated, "We had a good year in
2003. The strong performance that we posted was the result of seamless and
disciplined execution of our strategy. As we look back at the value added by
BLADEX during the year, we can summarize the effort in both quantitative and
qualitative terms. In terms of the former, we can identify three main
components:
First was the growth of our core business. During 2003, our overall short-term
trade finance loan balances increased 77%, a remarkable achievement in light of
the weak economic environment that prevailed in the region. Notably, the fourth
quarter was the first in several periods in which we showed overall growth in
our loan portfolio.
The second key financial driver of our performance was the management of our
Argentine portfolio. We began 2003 with a net exposure of US$394 million, and
ended the year with a net exposure of US$240 million, a reduction of 39%.
Furthermore, during 2003 we restructured 80% of our portfolio in the country.
During the first quarter of 2004, we began receiving the initial repayments of
principal under some of these restructurings.
The third financial value driver of our performance was the combination of our
capital management and our performance in terms of return on equity. In terms of
our capitalization, June 27, 2003 marked a turning point for BLADEX with the
success of its US$147 million rights offering. This event brought our Tier 1
Ratio from its weakest point in the year to its strongest ever (35.4%). Working
off this strong capitalization, we were still able to deliver a solid 24% ROE
and, based on the quality of our core business, announced last week the
resumption of our practice of paying shareholder dividends. Further capital
management actions will depend on the establishment of a positive track record
in both our core revenue growth and principal repayments in respect of our
restructured Argentine portfolio.
4
As for the qualitative aspects of our work, most importantly, we have hired Mr.
Rubens Amaral to spearhead the execution of our commercial strategy. Mr. Amaral,
formerly head of the North America operations at Banco do Brasil, will assume
the position of BLADEX's Chief Commercial Officer beginning March 1, 2004. Mr.
Amaral's successful track record, vision, energy and drive, along with his
knowledge of the region and of the type of business we plan to develop, will
accelerate the execution of our business plans.
On the qualitative front as well, we completed the first of a three-part brand
study, the results of which will allow us to strengthen our position and add
value to our brand in 2004 and beyond.
Finally, today we are launching our new corporate website at www.blx.com. We
hope the new design and improved content, including our Code of Ethics and
Corporate Governance Guidelines, will afford the market access to more timely
and complete information about our company.
During 2004, we will continue to work towards our ultimate goal of becoming the
leading trade finance house in the Region, while creating substantial value for
our shareholders, and making improved opportunities for the people of the region
a reality. To this end, we have the financial and human resources in place, have
a well defined strategy to implement, have identified effective tactics and,
most importantly, have the clients and execution skills to achieve our goals."
5
[The following table was represented by a bar chart in the printed material.]
Loan and Investment Portfolio Evolution
In US$ millions Dec-02 Mar-03 Jun-03 Sep-03 Dec-03
------ ------ ------ ------ ------
% Short-Term Trade
Financing Growth 9% 11% 21% 9% 21%
Medium-Term Lending and
Short Term Non-Trade
Lending 1,293 1,081 878 796 684
Argentine Portfolio 801 777 589 427 408
Short-Term Trade 786 873 1,058 1,151 1,390
- Balances at End of Period
[The following table was represented by a bar chart in the printed material.]
Loan and Investment Portfolio Disbursements
US$ million
-----------
3qtr02 550
4qtr02 682
1qtr03 583
2qtr03 746
3qtr03 733
4qtr03 958
-Includes disbursements of loans and investments.
6
[The following table was represented by a bar chart in the printed material.]
Non-Argentine Loan and Investment Portfolio
Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Trade loans average days
to maturity ................ 140 126 128 124 116 117 120 115 118 130 125 138
Trade loans outstanding
balance (In US$ millions)... 1,134 1,101 1,169 1,201 1,231 1,236 1,237 1,277 1,318 1,165 1,084 1,472
NET INTEREST INCOME
Net interest income in the fourth quarter of 2003 amounted to US$13.3 million,
compared to US$13.4 million in the third quarter of 2003, and US$15.2 million in
the fourth quarter of 2002. The US$1.9 million decline in the fourth quarter of
2003 compared to the fourth quarter of 2002 was mainly due to lower average loan
volumes (volumes picked up only during the last three weeks of December), and
lower interest rates, which generated a lower return on the Bank's liquidity.
Net interest income for the full year 2003 was US$54.0 million, compared to
US$64.8 million for 2002. This US$10.8 million decline was mainly due to lower
average loan volumes during 2003 ($2.2 billion million in 2003 versus $3.4
billion in 2002).
Net interest margin
The table below provides the net interest margin (net interest income divided by
the average balance of interest-earning assets), and net interest spread
(average yield earned on interest-earning assets, less the average rate paid on
interest-bearing liabilities) for the periods indicated:
-------------------------------------------------------------------------
2002 2003 4Q02 3Q03 4Q03
-------------------------------------------------------------------------
Net Interest Margin 1.48% 1.87% 1.75% 1.96% 2.07%
Net Interest Spread 0.96% 1.23% 1.11% 1.31% 1.41%
-------------------------------------------------------------------------
4Q03 vs. 3Q03
The increases in net interest margin and net interest spread for the
fourth quarter of 2003, compared to the third quarter of 2003, were due to
increased interest collections on the Bank's non-accruing portfolio, an
effect that was partially offset by lower lending margins on the accruing
portfolio. The average net lending spread over LIBOR of the Bank's
accruing loan and
7
investment portfolio declined from 1.46% in the third quarter of 2003, to
1.37% in the fourth quarter of 2003.
2003 vs. 2002
The increase of 39 basis points in net interest margin for the full year
2003 compared to the full year 2002 was mainly due to increased interest
collections on non-accruing assets in 2003.
COMMISSION INCOME
The following table shows the components of commission income for the periods
indicated:
-----------------------------------------------------------------------------
(In US$ thousands) 2002 2003 4Q02 3Q03 4Q03
-----------------------------------------------------------------------------
Letters of credit 3,655 4,242 1,206 1,092 794
Guarantees:
Country risk coverage business 1,997 1,251 380 309 309
Other guarantees 2,305 936 246 242 145
Loans 968 1,459 260 270 346
----- ----- ----- ----- ---
-----------------------------------------------------------------------------
Total Commission Income 8,925 7,889 2,092 1,913 1,595
===== ===== ===== ===== =====
-----------------------------------------------------------------------------
Commission income for the year 2003 decreased by 12% compared to the previous
year, mostly due to decreased volumes in guarantees issued. The decline in
letters of credit revenue during the fourth quarter of 2003 was mainly due to
lower volumes in the Dominican Republic.
PROVISIONS FOR CREDIT LOSSES
During 2002, the Bank increased provisions for credit losses by US$278.8
million, mostly related to the Bank's Argentine credit portfolio. During 2003,
the Bank reversed US$58.9 million of its allowance for credit losses, mostly as
a result of the sale of Argentine loans at prices above their respective net
book values.
OPERATING EXPENSES
The following table shows a breakdown of the components of total operating
expenses for the periods indicated:
--------------------------------------------------------------------------------
(In US$ thousands) 2002 2003 4Q02 3Q03 4Q03
--------------------------------------------------------------------------------
Salaries and other employee expenses 9,874 11,390 2,466 2,103 4,298
Depreciation of premises and equipment 1,418 1,512 391 378 381
Professional services 2,395 3,147 -436 632 984
Maintenance and repairs 916 1,166 257 292 335
Other operating expenses 4,656 5,346 1,099 1,350 1,813
------ ------ ----- ----- -----
Total Operating Expenses 19,259 22,561 3,777 4,755 7,812
====== ====== ===== ===== =====
--------------------------------------------------------------------------------
4Q03 vs. 3Q03
Salaries and other employee expenses for the third and fourth quarter of
2003 include provisions for variable compensation, and severance
provisions of US$0.3 million and US$2.1 million,
8
respectively. Professional services expenses for the fourth quarter of
2003 increased by US$0.4 million (56%), compared to the third quarter of
2003, mainly due to fees related to recruiting key personnel, and legal
fees related to SEC regulatory requirements. Other operating expenses for
the fourth quarter of 2003 increased by US$463 million (34%), compared to
the third quarter of 2003, primarily due to expenses related to the brand
image initiative being conducted by the Bank.
2003 vs. 2002
For the full year of 2003, total operating expenses were US$22.6 million,
compared to US$19.3 million in 2002. Salaries and other employee expenses
for 2002 and 2003 include variable compensation provisions and severance
provisions of US$1.2 million and US$3.7 million, respectively. Excluding
the impact of these provisions, salaries and other employee expenses for
the full year of 2003 decreased by 12% compared to full year of 2002.
Professional services and maintenance and repairs expenses for the full
year of 2003 increased by $1.0 million (30%), compared to the full year of
2002, primarily due to consulting fees related to new compensation plans,
recruiting of key personnel, external audit and information technology
projects, and systems security work. Other operating expenses for the full
year of 2003 increased by $0.7 million (15%), mainly due to higher
insurance premiums for Directors and Officers.
BUSINESS OVERVIEW
The Bank's business activities are focused on providing trade financing and
services to banks and strategic corporations in Latin America. The geographical
composition (excluding the non-accruing portfolio in Argentina) of the Bank's
net credit portfolio by type of client and exposure, as of December 31, 2003,
was as follows:
----------------------------------------------------------------------------------------------------------------
Caribbean
and
Dominican Central South Total Total
Brazil Mexico Republic America America Other (*) 12/31/03 09/30/03
----------------------------------------------------------------------------------------------------------------
Banks 77% 33% 100% 44% 65% 100% 68% 75%
Other 23% 67% 0% 56% 35% 0% 32% 25%
----------------------------------------------------------------------------------------------------------------
Trade 81% 82% 72% 99% 54% 5% 73% 70%
Non-Trade 19% 18% 28% 1% 46% 95% 27% 30%
----------------------------------------------------------------------------------------------------------------
(*) Other - consists of reverse repurchase agreements classified as U.S. country
risk of US$132 million and guarantees for US$7 million issued to a multilateral
bank in Honduras.
During the fourth quarter of 2003, the Bank's exposure to non-financial entities
as a percentage of its total portfolio increased from 25% at September 30, 2003
to 32% at December 31, 2003, mainly due to higher
9
trade lending activity to state-owned petroleum companies in Mexico, Brazil,
Trinidad and Tobago, and Costa Rica.
As of December 31, 2003, 93% of the Bank's credit portfolio (excluding
Argentina) was scheduled to mature on or before December 31, 2004.
A per country distribution of the maturity profile of the Bank's medium-term
exposure at December 31, 2003 is presented below:
(In US$ millions, except percentages)
--------------------------------------------------------------------------------
Medium term
portfolio Past
Country outstanding 2004 2005 2006 2007 Due
--------------------------------------------------------------------------------
Brazil $315 $239 $37 $17 $21 $1
Colombia 43 9 7 - 27 -
Costa rica 2 2 - - - -
Dominican Republic 10 10 - - - -
El Salvador 1 1 - - - -
Jamaica 0 0 - - - -
Mexico 87 40 13 3 29 -
Nicaragua 6 6 - - - -
Peru 13 6 8 - - -
Venezuela 61 51 8 2 - -
Total $538 $364 $73 $22 $77 $1
---- ---- --- --- --- --
Percentage (%) 100% 68% 14% 4% 14% 0%
--------------------------------------------------------------------------------
The Bank's total assets and contingencies, and risk-weighted assets, as of
December 31, 2003 were as follows:
(In US$ millions, except percentages)
--------------------------------------------------------------------------------
Total Assets and Risk
Contingencies - Weighted
Country Nominal Amount (1) % Assets %
--------------------------------------------------------------------------------
Argentina $440 16% $435 28%
Brazil 1,121 40% 444 28%
Chile 133 5% 62 4%
Dominican Republic 37 1% 6 0%
Mexico 219 8% 164 10%
Venezuela 61 2% 61 4%
Other Countries (2) 778 28% 403 26%
--------------------------------------------------------------------------------
Total Credit Portfolio $2,788 100% $1,575 100%
--------------------------------------------------------------------------------
Other (3) $329 $75
--------------------------------------------------------------------------------
(1) Excludes fair value adjustments in the aggregate amount of US$3 million
allocated as follows: -US$5 million in Argentina, US$1 million in Brazil,
US$5 million in Mexico and US$2 million in Colombia.
(2) Other countries - includes securities purchased under agreements to resell
of US$132 million classified as US country risk, and US$7 million in
guarantees issued to a multilateral bank in Honduras.
(3) Other - consists of cash and due from banks, interest-bearing deposits
with banks, unearned income, premises and equipment, accrued interest
receivable, derivatives, credit commitments, and other assets.
10
ARGENTINE EXPOSURE
The Bank's US$240 million exposure in Argentina, net of allowance for credit
losses, represented 41% of the total equity capital of the Bank as of December
31, 2003, compared to 48% as of September 30, 2003, and 120% as of December 31,
2002.
The Bank's net exposures in Argentina as of December 31, 2003 and September 30,
2003 are presented in the following tables:
[The following table was represented by a bar chart in the printed material.]
Argentine Exposure
In US$ millions Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03
------ ------ ------ ------ ------ ------ ------ ------ ------
Nominal Value 1,155 1,001 961 929 847 824 618 457 440
Net Exposure (1) 1,002 828 494 462 394 401 350 272 240
Reserve and mark to
market as a % of
nominal value 13% 17% 49% 50% 53% 51% 43% 40% 45%
(1) Exposure net of specific allowances for credit losses and net of fair
value adjustments on investment securities (mark-to-market).
-------------------------------------------------------------------------------------------------------
Acceptances Repurchase
(In US$ millions) Loans Investments and Contingencies Total Agreements
-------------------------------------------------------------------------------------------------------
Nominal Value (gross portfolio) 398 10 32 440 132
Impairment loss n.a. (5) n.a. (5) -
---- ---- ---- ----- -----
Credit Portfolio at Dec. 31, 2003 398 5 32 435 132
Specific allowance for credit losses (175) n.a. (20) (195) -
Collateral (U.S. Treasury Strips) - - - - (132)
---- ---- ---- ----- -----
-------------------------------------------------------------------------------------------------------
Net Exposure at Dec. 31, 2003 223 5 11 240 0
---- ---- ---- ----- -----
-------------------------------------------------------------------------------------------------------
Net Exposure at Sept. 30, 2003 251 5 16 272 0
---- ---- ---- ----- -----
-------------------------------------------------------------------------------------------------------
As of December 31, 2003, the Bank's gross portfolio in Argentina amounted to
US$440 million, a reduction of US$407 million, or 48%, compared to December 31,
2002. This reduction was mainly due to the sale of Argentine assets with a face
value of US$308 million, the proceeds of which exceeded their carrying value
(net of previously established loan loss allowances and fair value adjustments).
The following table shows detailed information on these sales during 2003:
11
-------------------------------------------------------
(In US$ millions) Loans Investments Total
-------------------------------------------------------
Principal (Nominal Value) 214 93 308
Specific Credit Allowance (171) n.a. (171)
Impairment losses n.a. (75) (75)
----- ---- -----
Net Carrying Value (A) 43 18 62
----- ---- -----
Sale proceeds (B) 106 41 146
----- ---- -----
-------------------------------------------------------
Gain on sales (B-A) 63 22 85
----- ---- -----
-------------------------------------------------------
The Bank's entire exposure in Argentina continues to be dominated in U.S.
dollars. The Argentine portfolio distribution by industry type as of December
31, 2003 was as follows:
(In US$ millions, except percentages)
--------------------------------------------------------------------------------
Claims
(Gross Portfolio)
Industry As of Dec.31/03 %
--------------------------------------------------------------------------------
Non-Financial Entities
Beverage $27 6%
Telecommunications 4 1%
Food production 15 3%
Mining and oil and gas extraction 51 12%
Primary metal manufacturing 8 2%
Utilities 49 11%
--------------------------------------------------------------------------------
Total Non-Financial Entities $153 35%
--------------------------------------------------------------------------------
Financial Institutions
Controlled subsidiaries of major US and European Banks $63 14%
State owned banks supported by third party paper 66 15%
State owned banks 158 36%
--------------------------------------------------------------------------------
Total Financial Institutions $286 65%
--------------------------------------------------------------------------------
Total $440 100%
--------------------------------------------------------------------------------
In addition, as of December 31, 2003, the Bank had reverse repurchase agreements
with Argentine counterparties totaling US$132 million, which were fully
collateralized with U.S. Treasury securities, an amount unchanged from September
30, 2003 and December 31, 2002. These assets are classified as U.S. country
risk.
Interest payments on Argentine credits (loans and securities) are recorded on a
cash basis. The Bank collected interest from Argentine borrowers of
approximately US$5 million during the fourth quarter 2003, and US$24 million for
the year ended December 31, 2003. The ratio of interest collected from Argentine
borrowers to total interest payments due and payable from these borrowers during
the fourth quarter 2003 was 98%, compared to 97% during the third quarter 2003,
81% during the second quarter of 2003, and 74% during the first quarter of 2003.
These figures exclude interest payments received during each
12
quarter that correspond to interest owed from prior quarters. Although
significant amounts of interest have been received on a consistent basis from
most of the Bank's clients in the country, the ultimate collection of principal
on these loans is evaluated separately.
The Bank continues working with its Argentine clients to renegotiate and
restructure their obligations. From this perspective, the composition and
maturity profile of the Argentine portfolio as of December 31, 2003 was as
follows:
(In US$ millions, except percentages)
--------------------------------------------------------------------------------
Assets maturing in year ended
Outstanding ------------------------------
As of 2007- Past
Status Dec. 31, 2003 % 2004 2005 2006 2010 Due
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Performing under original
terms $36 8% $11 $11 $12 $2 -
Restructured and performing
under renegotiated terms 351 80% 77 62 73 139 -
In negotiations to be
restructured (current in
interest) 18 4% 18 - - - -
Not restructured and not
paying interest 34 8% 5 8 - - 22
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total $440 100% $111 $80 $85 $142 $22
--------------------------------------------------------------------------------
The portfolio of restructured and performing loans, under the renegotiated
terms, has an average life of 2.3 years. No restructurings have involved
discounts or losses of principal. Assets not restructured and not paying
interest consist of obligations from three companies in the utilities sector.
BRAZIL EXPOSURE
At December 31, 2003 and September 30, 2003, the Bank's net exposure in Brazil
was as follows:
(In US$ millions)
-----------------------------------------------------------------------------
At December 31, 2003 Loans Investments Contingencies Total
-----------------------------------------------------------------------------
Nominal Value 1,011 15 94 1,121
Fair value adjustments n.a 1 n.a 1
----- --- --- -----
Credit Portfolio at Dec. 31, 2003 1,011 16 94 1,122
Allowance for credit losses (33) n.a (2) (35)
-----------------------------------------------------------------------------
Net Exposure at Dec. 31, 2003 978 16 93 1,087
===== === === =====
-----------------------------------------------------------------------------
Net Exposure at Sept. 30, 2003 966 22 89 1,078
===== === === =====
-----------------------------------------------------------------------------
As of December 31, 2003, the Bank's credit exposure in Brazil was composed of
77% obligations due from banks and 23% from non-financial entities. As of
December 31, 2003, the trade finance segment of the Brazilian credit portfolio
was 81%, compared to 76% as of September 30, 2003, and to 63% as of December 31,
2002.
As of December 31, 2003, 69% of the outstanding Brazilian non-trade credit
portfolio, in the amount of US$150 million, was scheduled to mature on or before
December 31, 2004.
At the end of the fourth quarter of 2003, the Brazilian portfolio had no past
due interest amounts and included one impaired loan on non-accruing status in
the amount of US$47 million to a Brazilian
13
corporation, for which the Bank has established a specific allowance for
possible loan losses. During the fourth quarter of 2003, the Bank collected
interest income on a cash basis of US$1.6 million from this borrower. On
December 29, 2003, this Brazilian corporation reached an agreement with its
private creditors to reschedule approximately US$787 million of outstanding debt
over the next five years, which is expected to resolve all outstanding defaults
and accelerations with creditors. In addition, the parent company of this
Brazilian corporation has agreed on the terms of the restructuring of its
outstanding loans owed to a Brazilian state-owned bank.
LIQUIDITY
During the third quarter of 2003, the Bank reduced its liquidity funds to
gradually match historical levels. The Bank's net cash position (cash due from
banks, plus interest bearing deposits with banks) as a percentage of its overall
balance sheet was 9.9% at the end of the fourth quarter of 2003, compared to
10.5% as of September 30, 2003, and 16.4% as of December 31, 2002, respectively.
The Bank's net cash position represented 36% of deposits as of December 31,
2003, compared to 42% as of September 30, 2003, and 87% a year ago.
During the year, deposits increased by 27% to US$703 million. The increase in
deposits was mostly due to new deposits from central banks of the region and
state-owned companies.
ASSET QUALITY
The Bank's US$258.3 million allowance for credit losses as of December 31, 2003
compares to an allowance of US$272.3 million as of September 30, 2003, and
US$453.1 million as of December 31, 2002. The decrease in the fourth quarter of
2003 was principally due to the sale of Argentine loans with specific allowances
totaling US$12.5 million. The following table sets forth changes in the Bank's
allowance for credit losses for the quarters ended at the dates indicated:
(In US$ millions)
------------------------------------------------------------------------------------------------------------------
30-JUN-02 30-SEP-02 31-DEC-02 31-MAR-03 30-JUN-03 30-SEP-03 31-DEC-03
------------------------------------------------------------------------------------------------------------------
Allowance for credit losses
At beginning of period 214.7 474.6 474.9 453.1 445.6 322.8 272.3
Provisions charged to expense (1) 259.9 0.0 -1.2 0.3 -44.6 -5.1 -9.4
Credit recoveries 0.0 0.3 0.0 0.0 0.0 2.0 0
Credits written-off against the 0.0 0.0 -20.6 -7.8 -78.2 -47.4 -4.6
allowance
------------------------------------------------------------------------------------------------------------------
Balance at end of period 474.6 474.9 453.1 445.6 322.8 272.3 258.3
------------------------------------------------------------------------------------------------------------------
(1) Includes reversals in the provision for loan losses of US$44.1 million,
US$9.9 million and US$8.7 million as a result of the sale of Argentine
loans during the 2Q03, 3Q03 and 4Q03, respectively.
14
At December 31, 2003, the allowance for credit losses and net exposure on a per
country basis was as follows:
------------------------------------------------------------------------------------------------------------------------
Claims Fair Value Credit Allowance Net
(Nominal Value) Adjustments Exposure for credit losses Exposure
------------------------------------------------------------------------------------------------------------------------
Argentina 440 (5) 435 (195) 240
Brazil 1,121 1 1,122 (35) 1,087
Other Countries 1,228 6 1,234 (28) 1,207
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Total 2,788 3 2,791 (258) 2,533
------------------------------------------------------------------------------------------------------------------------
PERFORMANCE AND CAPITAL RATIOS
At the end of the fourth quarter of 2003, the number of common shares
outstanding was 39.4 million, compared to 17.3 million common shares outstanding
at December 31, 2002, reflecting a 22 million increase in the number of shares
resulting from the issuance of new equity capital in the amount of US$147
million at the end of the second quarter of 2003.
The return on average shareholder's equity and the return on average assets for
the fourth quarter of 2003 were 11.2% and 2.7%, respectively, compared to 12.6%
and 2.8%, respectively, for the third quarter of 2003, and 18.7% and 1.9%,
respectively, for the fourth quarter of 2002. The higher figures in the previous
quarters are mostly a reflection of the lower capitalization levels prior to the
June 27, 2003 rights offering.
The ratio of common equity to total assets at the close of the fourth quarter
2003 was 22.8%, compared to 23.1% at the close of the third quarter 2003 and
11.2% at the close of the fourth quarter 2002. Although the Bank is not subject
to the capital adequacy requirements of the Federal Reserve Board, if the
Federal Reserve Board risk-based capital adequacy requirements were applied, the
Bank's Tier 1 and Total Capital Ratios as of December 31, 2003, would have been
35.4% and 36.7%, respectively, compared to 37.8% and 39.0%, respectively, as of
September 30, 2003, and compared to 15.3% and 16.5%, respectively, as of
December 31, 2002.
MR. RUBENS AMARAL
Beginning March 1, 2004, Mr. Amaral will join the Bank as Chief Commercial
Officer, to take charge of executing its business strategy. In this capacity, he
will have responsibility for the sales force, product development, the Bank's
New York Agency and the representative offices in the Region. Mr. Amaral, who
served on BLADEX's Board of Directors, has over 25 years of experience in the
international banking field, having held various positions within Banco do
Brasil, including General Manager of the New York Branch and Managing Director
of North America operations. His vast experience with Brazil and the Latin
American markets in general, as well as his intimate familiarity with the Bank,
make him a particularly valuable addition to BLADEX's management team.
15
RECENT EVENTS
o New CEO - As previously announced, Mr. Jaime Rivera took over the role of
CEO of BLADEX on January 1, 2004.
o Strategic Alliances - On January 9, 2004, BLADEX and Trade Source
International ("TSI") announced a strategic alliance to offer the Bank's
clients TSI's suite of global trade finance services. The services include
creating export-credit agency financing and payment solutions for
trade-related transactions.
o Options Program for Senior Management - During the fourth quarter of 2003,
the Company established an indexed options program for senior management.
Details will be provided in the proxy statement related to the 2003 Annual
Stockholders meeting.
o Annual Shareholders Meeting - BLADEX will hold its Annual Shareholders
Meeting on April 14, 2004, at the Marriott Hotel in Panama City. Among the
matters up for vote by Class E shareholders is the election of Directors
to fill two Board positions currently held by representatives of Class B
shareholders who, according to the Company's Articles of Incorporation,
will lose these positions, since the Class B shares now represent less
than 10% of the Bank's outstanding shares.
ABOUT BLADEX
BLADEX is a multinational bank originally established by the Central Banks of
Latin American and Caribbean countries to promote trade finance in the Region.
Based in Panama, its shareholders include central and commercial banks in 23
countries of the region, as well as international banks and private investors.
As of December 31, 2003, over its 24 years of operations, BLADEX had disbursed
accumulated credits of over US$124 billion in the region.
16
--------------------------------------------------------------------------------
This press release contains forward-looking statements of expected future
developments. The Bank wishes to ensure that such statements are accompanied by
meaningful cautionary statements pursuant to the safe harbor established by the
Private Securities Litigation Reform Act of 1995. The forward-looking statements
in this press release refer to the acceleration of the execution of the Bank's
business plans, the strengthening of the Bank's position, and additional value
of the Bank's brand, resulting from the Bank's brand study, and the ability of
the Bank to achieve its goal of becoming the leading trade finance house in the
region. These forward-looking statements reflect the expectations of the bank's
management and are based on currently available data; however, actual experience
with respect to these factors is subject to future events and uncertainties,
which could materially impact the Bank's expectations. Among the factors that
can cause actual performance and results to differ materially are as follows: a
decline in the willingness of international lenders and depositors to provide
funding to the Bank, causing a contraction of the bank's credit portfolio,
adverse economic or political developments in the region, particularly in
Argentina or Brazil, which could increase the level of impaired loans in the
Bank's loan portfolio and, if sufficiently severe, result in the Bank's
allowance for probable credit losses being insufficient to cover losses in the
portfolio, unanticipated developments with respect to international banking
transactions (including among other things, interest rate spreads and
competitive conditions), a change in the Bank's credit ratings, events in
Argentina and Brazil or other countries in the region unfolding in a manner that
is detrimental to the Bank, or which might result in adequate liquidity being
unavailable to the Bank, or the Bank's operations being less profitable than
anticipated.
--------------------------------------------------------------------------------
There will be a conference call on February 18, 2004 at 11:00 a.m. ET in the
U.S. (11:00 a.m. Panamanian time). For those interested in participating, please
call (800) 447-0521 in the United States or if outside the United States, please
dial the applicable international access code + U.S. country code followed by
(847) 413-3238. All participants should give the conference name "BLADEX
Quarterly Call" or the conference ID#8380127 to the telephone operator five
minutes before the call is set to begin. There will also be a live audio webcast
of the event at www.blx.com.
The BLADEX Quarterly Earnings Report Conference Call will be available for
review on Conference Replay one hour after the conclusion of the conference
call. Please dial (888) 843-8996 and follow the instructions. The Conference ID#
for the call that will be replayed is 8380127.
17
CONSOLIDATED STATEMENT OF OPERATIONS EXHIBIT I
-------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
-----------------------------------------------------
(A) (B) (C)
Dec. 31, 2002 Sept. 30, 2003 Dec. 31, 2003
-------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA:
Interest income ............................................. $32,710 $22,769 $21,522
Interest expense (1) ........................................ (17,544) (9,339) (8,253)
----------- ------------ -----------
NET INTEREST INCOME ......................................... 15,166 13,430 13,270
Provision for loan losses ................................... (688) 10,093 14,661
----------- ------------ -----------
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR
LOAN LOSSES ................................................. 14,478 23,523 27,930
OTHER INCOME (EXPENSE):
Commission income, net ...................................... 2,083 1,782 1,400
Provision for losses on off-balance sheet credit risk. ...... 1,881 (5,043) (5,127)
Derivatives and hedging activities .......................... (367) (6,667) (199)
Impairment loss on securities ............................... (8) (75) 0
Gain on early extinguishment of debt ........................ 0 0 0
Gain on sale of securities available for sale ............... 64 8,860 0
Gain (loss) on foreign currency exchange .................... 330 176 3
Other income ................................................ 430 2 38
----------- ------------ -----------
NET OTHER INCOME (EXPENSE) .................................. 4,412 (965) (3,886)
OPERATING EXPENSES:
Salaries and other employee expenses ........................ (2,466) (2,103) (4,298)
Depreciation of premises and equipment ...................... (391) (378) (381)
Professional services ....................................... 436 (632) (984)
Maintenance and repairs ..................................... (257) (292) (335)
Other operating expenses .................................... (1,099) (1,350) (1,813)
----------- ------------ -----------
TOTAL OPERATING EXPENSES .................................... (3,777) (4,755) (7,812)
INCOME (LOSS) FROM CONTINUING OPERATIONS .................... $15,113 $17,803 $16,233
DISCONTINUED OPERATIONS:
Loss from operations and disposal of business segment ....... (103) 0 0
----------- ------------ -----------
NET INCOME (LOSS) ........................................... $15,010 $17,803 $16,233
=========== ============ ===========
NET INCOME (LOSS) AVAILABLE FOR COMMON
STOCKHOLDERS ............................................... $14,755 $17,803 $16,233
PER COMMON SHARE DATA:
Net income (loss), after Preferred Stock dividend ........... 0.85 0.45 0.41
Diluted earnings (losses) per share ......................... 0.85 0.45 0.41
COMMON SHARES OUTSTANDING:
Period average .............................................. 17,343 39,343 39,343
PERFORMANCE RATIOS:
Return on average assets .................................... 1.93% 2.83% 2.71%
Return on average common stockholders' equity. .............. 18.69% 12.65% 11.15%
Net interest margin. ........................................ 1.75% 1.96% 2.07%
Net interest spread. ........................................ 1.11% 1.31% 1.41%
Total operating expenses to total average assets ............ 0.49% 0.76% 1.31%
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
(C) -(B) (C) -(A)
CHANGE % CHANGE %
--------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA:
Interest income ............................................. ($1,246) (5)% ($11,187) (34)%
Interest expense (1) ........................................ 1,086 (12) 9,291 (53)
------------ -----------
NET INTEREST INCOME ......................................... (160) (1) (1,896) (13)
Provision for loan losses ................................... 4,567 45 15,349 n.s (*)
------------ -----------
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR
LOAN LOSSES ................................................. 4,407 19 13,453 93
OTHER INCOME (EXPENSE):
Commission income, net ...................................... (382) (21) (683) (33)
Provision for losses on off-balance sheet credit risk ....... (84) 2 (7,008) (373)
Derivatives and hedging activities .......................... 6,467 (97) 168 (46)
Impairment loss on securities ............................... 75 (100) 8 (100)
Gain on early extinguishment of debt ........................ 0 n.a. 0 n.a. (*)
Gain on sale of securities available for sale ............... (8,860) (100) (64) (100)
Gain (loss) on foreign currency exchange .................... (174) (99) (327) (99)
Other income ................................................ 36 n.s (392) (91) (*)
------------ -----------
NET OTHER INCOME (EXPENSE) .................................. (2,921) 303 (8,298) (188)
OPERATING EXPENSES:
Salaries and other employee expenses ........................ (2,195) 104 (1,832) 74
Depreciation of premises and equipment ...................... (3) 1 10 (3)
Professional services ....................................... (353) 56 (1,421) (326)
Maintenance and repairs ..................................... (43) 15 (78) 30
Other operating expenses .................................... (463) 34 (714) 65
------------ -----------
TOTAL OPERATING EXPENSES .................................... (3,056) 64 (4,034) 107
INCOME (LOSS) FROM CONTINUING OPERATIONS .................... ($1,570) (9) $1,120 7
DISCONTINUED OPERATIONS:
Loss from operations and disposal of business segment ....... 0 n.a. 103 (100) (*)
------------ -----------
NET INCOME (LOSS) ........................................... ($1,570) (9) $1,223 8
============ ===========
NET INCOME (LOSS) AVAILABLE FOR COMMON
STOCKHOLDERS ............................................... ($1,570) (9)% $1,478 10%
--------------------------------------------------------------------------------------------------------------------------------
(1) For 2002, commission expenses related to borrowings and placements were
re-classified from commission expense and other charges to interest
expense to conform with the presentation for 2003 in accordance with US
GAAP.
(*) The meanings of the abbreviations for the percentage change of periods
presented are as follows: n.s means not significant and n.a means not
applicable.
18
CONSOLIDATED BALANCE SHEET EXHIBIT II
-----------------------------------------------------------------------------------------------------------------------
AT THE END OF,
-----------------------------------------------------
(A) (B) (C)
Dec. 31, 2002 Sept. 30, 2003 Dec. 31, 2003
-----------------------------------------------------------------------------------------------------------------------
(In US$ thousands, except percentages)
ASSETS
Cash and due from banks ............................... $ 828 $ 1,110 $ 868
Interest-bearing deposits with banks .................. 483,436 259,042 253,946
Securities purchased under agreements to resell ....... 132,022 132,022 132,022
Securities available for sale ......................... 149,159 54,006 48,341
Securities held to maturity ........................... 11,555 38,581 29,452
Loans ................................................. 2,516,512 2,151,755 2,275,031
Less:
Allowance for loan losses .......................... (429,720) (243,479) (224,347)
Unearned income .................................... (9,485) (3,654) (4,282)
---------- ---------- ----------
Loans, net ......................................... 2,077,307 1,904,621 2,046,402
Customers' liabilities under acceptances .............. 34,840 44,511 29,006
Premises and equipment ................................ 5,087 4,367 4,119
Accrued interest receivable ........................... 15,412 12,015 10,931
Derivatives financial instruments - assets ............ 6,571 1,654 2,256
Other assets .......................................... 13,050 7,204 6,214
---------- ---------- ----------
TOTAL ASSETS .......................................... $2,929,267 $2,459,133 $2,563,556
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing - Demand ....................... 23,102 16,554 19,370
Interest-bearing - Time ............................ 528,871 596,144 683,585
---------- ---------- ----------
Total Deposits ........................................ 551,973 612,698 702,955
Short-term borrowings and placements .................. 647,344 596,698 687,214
Medium and long-term borrowings and placements ........ 1,285,493 573,689 485,516
Acceptances outstanding ............................... 34,840 44,511 29,006
Accrued interest payable .............................. 11,872 5,479 5,432
Derivatives financial instruments - liabilities ....... 20,020 8,866 13,021
Reserve for losses on off-balance sheet credit risk ... 23,370 28,837 33,973
Other liabilities ..................................... 12,955 10,121 11,163
Redeemable preferred stock (1) ........................ 0 10,474 10,946
---------- ---------- ----------
Total other liabilities ............................... 103,057 108,289 103,542
TOTAL LIABILITIES ..................................... $2,587,868 $1,891,374 $1,979,227
---------- ---------- ----------
REDEEMABLE PREFERRED STOCK (1) ........................ $ 12,476 $ 0 $ 0
STOCKHOLDERS' EQUITY
Common stock, no par value ............................ 133,235 279,976 279,978
Treasury stock ........................................ (85,634) (85,634) (85,570)
Capital surplus ....................................... 145,490 133,717 133,817
Capital reserves ...................................... 95,210 95,210 95,210
Accumulated other comprehensive income (loss) ......... (118) 8,974 9,876
Retained earnings ..................................... 40,740 135,515 151,017
---------- ---------- ----------
TOTAL STOCKHOLDERS' EQUITY ........................... $ 328,923 $ 567,759 $ 584,329
---------- ---------- ----------
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK,
AND STOCKHOLDERS' EQUITY ........................... $2,929,267 $2,459,133 $2,563,556
========== ========== ==========
-----------------------------------------------------------------------------------------------------------------------
(C) -(B) (C) -(A)
CHANGE % CHANGE %
-----------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks ............................... ($ 242) (22)% $ 40 5%
Interest-bearing deposits with banks .................. (5,096) (2) (229,490) (47)
Securities purchased under agreements to resell ....... 0 0 0 0
Securities available for sale ......................... (5,665) (10) (100,818) (68)
Securities held to maturity ........................... (9,129) (24) 17,897 155
Loans ................................................. 123,276 6 (241,481) (10)
Less:
Allowance for loan losses .......................... 19,132 (8) 205,373 (48)
Unearned income .................................... (628) 17 5,203 (55)
-------- ---------
Loans, net ......................................... 141,780 7 (30,905) (1)
Customers' liabilities under acceptances .............. (15,505) (35) (5,834) (17)
Premises and equipment ................................ (248) (6) (968) (19)
Accrued interest receivable ........................... (1,084) (9) (4,481) (29)
Derivatives financial instruments - assets ............ 602 36 (4,315) (66)
Other assets .......................................... (990) (14) (6,836) (52)
-------- ---------
TOTAL ASSETS .......................................... $104,422 4% ($365,711) (12)%
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing - Demand ....................... 2,817 17% (3,732) (16)%
Interest-bearing - Time ............................ 87,441 15 154,714 29
-------- ---------
Total Deposits ........................................ 90,257 15 150,982 27
Short-term borrowings and placements .................. 90,516 15 39,870 6
Medium and long-term borrowings and placements ........ (88,172) (15) (799,977) (62)
Acceptances outstanding ............................... (15,505) (35) (5,834) (17)
Accrued interest payable .............................. (48) (1) (6,440) (54)
Derivatives financial instruments - liabilities ....... 4,155 47 (6,999) (35)
Reserve for losses on off-balance sheet credit risk ... 5,136 18 10,603 45
Other liabilities ..................................... 1,042 10 (1,792) (14)
Redeemable preferred stock (1) ........................ 472 5 10,946 0
-------- ---------
Total other liabilities ............................... (4,747) (4) 484 0
TOTAL LIABILITIES ..................................... $ 87,853 5% ($608,641) (24)%
-------- ---------
REDEEMABLE PREFERRED STOCK (1) ........................ 0 0% (12,476) 0%
STOCKHOLDERS' EQUITY
Common stock, no par value
Treasury stock
Capital surplus
Capital reserves
Accumulated other comprehensive income (loss)
Retained earnings
TOTAL STOCKHOLDERS' EQUITY ........................... $ 16,569 3% $ 255,405 78%
-------- ---------
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK,
AND STOCKHOLDERS' EQUITY ......................... $ 104,422 4% ($365,711) (12)%
======== =========
-----------------------------------------------------------------------------------------------------------------------
(1) SFAS 150 regarding the inclusion of reedemable preferred stock as part of
the "other liability" line item was effective as of July 1, 2003.
SUMMARY CONSOLIDATED FINANCIAL DATA
(Consolidated Statements of Operations, Balance Sheet, and Selected Financial Ratios) EXHIBIT III
-----------------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
2002 2003
-----------------------------------------------------------------------------------------------------------------------------------
(In US$ thousands, except per share amounts & ratios)
INCOME STATEMENT DATA:
Net interest income (1) ...................................................... $ 64,779 $ 53,987
Provision for loan losses and off-balance sheet credit risk .................. (278,756) 58,905
Commission income net (1) .................................................... 8,886 7,446
Derivatives and hedging activities ........................................... (341) (7,988)
Impairment loss on securities ................................................ (44,268) (953)
Gain on early extinguishment of debt ......................................... 1,430 789
Gain on sale of securities available for sale ................................ 184 22,211
Gain (loss) on foreign currency exchange ..................................... 301 (382)
Other income ................................................................. 553 42
Operating expenses ........................................................... (19,259) (22,561)
----------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS ..................................... ($ 266,492) $ 111,496
DISCONTINUED OPERATIONS:
Loss from operations and disposal of business segment ..................... (2,346) 0
----------- ----------
NET INCOME (LOSS) ............................................................ ($ 268,838) $ 111,496
=========== ==========
Net income (loss) available for common stockholders .......................... ($ 269,850) $ 111,130
BALANCE SHEET DATA:
Loans, net ................................................................... 2,077,307 2,046,402
Securities purchased under agreements to resell .............................. 132,022 132,022
Investment securities ........................................................ 160,714 77,793
Total assets ................................................................. 2,929,267 2,563,556
Deposits ..................................................................... 551,973 702,955
Short-term borrowings and placements ......................................... 647,344 687,214
Medium and long-term borrowings and placements ............................... 1,285,493 485,516
Redeemable preferred stock (2) ............................................... 0 10,946
Total liabilities ............................................................ 2,587,868 1,979,227
Redeemable preferred stock ................................................... 12,476 0
Common stockholders' equity .................................................. 328,923 584,329
PER COMMON SHARE DATA:
Net income (loss), after Preferred Stock dividend ............................ (15.56) 3.88
Diluted earnings (losses) per share .......................................... (15.56) 3.88
Book value (period average) .................................................. 25.66 16.19
Book value (period end) ...................................................... 18.91 14.84
COMMON SHARES OUTSTANDING:
Period average ............................................................... 17,343 28,675
Period end ................................................................... 17,343 39,353
SELECTED FINANCIAL RATIOS:
PERFORMANCE RATIOS:
Return on average assets ..................................................... -6.47% 4.24%
Return on average stockholders' equity ....................................... -60.48% 23.91%
Net interest margin .......................................................... 1.48% 1.87%
Net interest spread .......................................................... 0.96% 1.23%
Total operating expenses to total average assets ............................. 0.46% 0.86%
ASSET QUALITY RATIOS:
Non-accruing loans and investments to total loan and investment portfolio ... 25.93% 18.14%
Net charge offs to total loan and investment portfolio ....................... 0.73% 5.48%
Allowance for loan losses to total loans ..................................... 17.14% 9.88%
Allowance for loan losses to non-accruing loans .............................. 62.15% 50.43%
Allowance for losses on off-balance sheet credit risk to total
contingencies .............................................................. 5.53% 11.10%
CAPITAL RATIOS:
Stockholders' equity to total assets ......................................... 11.23% 22.79%
Tier 1 capital to risk-weighted assets ....................................... 15.26% 35.42%
Total capital to risk-weighted assets ........................................ 16.51% 36.67%
-----------------------------------------------------------------------------------------------------------------------------------
(1) For 2002, commission expenses related to borrowings and placements were
re-classified from commission expense and other charges to interest
expense to conform with the presentation for 2003 in accordance with US
GAAP.
(2) SFAS 150 regarding the inclusion of reedemable preferred stock as part of
the "other liability" line item was effective as of July 1, 2003.
CONSOLIDATED STATEMENT OF OPERATIONS EXHIBIT IV
-----------------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR
ENDED DECEMBER 31,
----------------------------------
2002 2003 CHANGE %
-----------------------------------------------------------------------------------------------------------------------------------
(In US$ thousands, except percentages)
INCOME STATEMENT DATA:
Interest income ................................................... $165,800 $ 98,395 ($ 67,405) (41)
Interest expense (1)............................................... (101,021) (44,408) 56,613 (56)
--------- -------- -------- ----
NET INTEREST INCOME................................................ 64,779 53,987 (10,792) (17)
Provision for loan losses.......................................... (272,586) 69,508 342,094 (125)
--------- -------- -------- ----
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR LOAN LOSSES......... (207,807) 123,495 331,302 (159)
OTHER INCOME (EXPENSE):
Commission income, net............................................. 8,886 7,446 (1,441) (16)
Provision for losses on off-balance sheet credit risk.............. (6,170) (10,603) (4,433) 72
Derivatives and hedging activities................................. (341) (7,988) (7,647) n.s(*)
Impairment loss on securities...................................... (44,268) (953) 43,315 (98)
Gain on early extinguishment of debt............................... 1,430 789 (641) (45)
Gain on sale of securities available for sale...................... 184 22,211 22,027 n.s(*)
Gain (loss) on foreign currency exchange........................... 301 (382) (682) (227)
Other income ...................................................... 553 42 (510) (92)
--------- -------- -------- ----
NET OTHER INCOME (EXPENSE)......................................... (39,425) 10,562 49,987 (127)
OPERATING EXPENSES:
Salaries and other employee expenses............................... (9,874) (11,390) (1,517) 15
Depreciation of Premises and Equipment............................. (1,418) (1,512) (94) 7
Professional services.............................................. (2,395) (3,147) (752) 31
Maintenance and repairs............................................ (916) (1,166) (250) 27
Other operating expenses........................................... (4,656) (5,346) (690) 15
--------- -------- -------- ----
TOTAL OPERATING EXPENSES........................................... (19,259) (22,561) (3,302) 17
INCOME (LOSS) FROM CONTINUING OPERATIONS........................... ($266,492) $111,496 $377,988 (142)
DISCONTINUED OPERATIONS:
Loss from operations and disposal of business segment.............. (2,346) 0 2,346 (100)
--------- -------- -------- ----
NET INCOME (LOSS).................................................. ($268,838) $111,496 $380,334 (141)
========= ======== ======== ====
-----------------------------------------------------------------------------------------------------------------------------------
(1) For 2002, commission expenses related to borrowings and placements were
re-classified from commission expense and other charges to interest
expense to conform with the presentation for 2003 in accordance with US
GAAP.
(*) The meanings of the abbreviations for the percentage change of periods
presented are as follows: n.s means not significant and n.a means not
applicable.
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES EXHIBIT V
------------------------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED,
---------------------------------------------------------------------------------------
December 31, 2002 September 30, 2003 December 31, 2003
------------------------- ------------------------ --------------------------
AVERAGE AVG. AVERAGE AVG. AVERAGE AVG.
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
------------------------------------------------------------------------------------------------------------------------------------
(In US$ thousands, except percentages)
INTEREST EARNING ASSETS
Interest-bearing deposits with
banks.................................. $487,325 $1,824 1.46% $317,169 $824 1.02% $301,941 $720 0.93%
Securities purchased under
agreements to resell................... 132,022 788 2.34 132,022 642 1.90 132,022 624 1.85
Loans, net of discount................... 1,891,845 19,183 3.97 1,630,161 13,854 3.33 1,556,705 12,096 3.04
Impaired loans........................... 729,279 7,199 3.86 523,420 5,765 4.31 460,126 6,599 5.61
Investment securities.................... 196,915 3,716 7.38 111,003 1,683 5.93 90,135 1,484 6.44
--------------------------- --------------------------- ---------------------------
TOTAL INTEREST EARNING ASSETS............ $3,437,387 $32,710 3.72% $2,713,775 $22,769 3.28% $2,540,929 $21,522 3.31%
--------------------------- --------------------------- ---------------------------
Non interest earning assets.............. $72,677 $54,146 $59,504
Allowance for loan losses................ (449,118) (278,190) (235,680)
Other assets............................. 21,694 8,305 8,768
---------- ---------- ----------
TOTAL ASSETS............................. $3,082,640 $2,498,036 $2,373,521
---------- ---------- ----------
INTEREST BEARING LIABILITITES
Deposits................................. $550,778 $2,386 1.70% $559,101 $1,638 1.15% $636,163 $1,915 1.18%
Short-term borrowings and placements..... 721,825 4,379 2.37 565,633 2,796 1.93 513,653 2,138 1.63
Medium and long-term borrowings
and placements......................... 1,358,701 10,779 3.10 712,697 4,905 2.69 536,080 3,834 2.80
Redeemable preferred stock (1)........... 0 0 n.a. 10,696 0 0.00 10,405 366 13.75
--------------------------- --------------------------- ---------------------------
TOTAL INTEREST BEARING LIABILITIES (2)... $2,631,304 $17,544 2.61% $1,848,128 $9,339 1.98% $1,696,301 $8,253 1.90%
--------------------------- --------------------------- ---------------------------
Non interest bearing liabilities
and other liabilities.................. $125,564 $91,526 $99,738
TOTAL LIABILITIES........................ 2,756,868 1,939,654 1,796,038
REDEEMABLE PREFERRED STOCK (1)........... 12,562 0 0
STOCKHOLDERS' EQUITY..................... 313,211 558,382 577,483
TOTAL LIABILITIES, REDEEMABLE PREFERRED ---------- ---------- ----------
STOCK AND STOCKHOLDERS' EQUITY........... $3,082,640 $2,498,036 $2,373,521
---------- ---------- ----------
NET INTEREST SPREAD...................... 1.11% 1.31% 1.41%
---- ---- ----
NET INTEREST INCOME AND NET
INTEREST MARGIN........................ $15,166 1.75% $13,430 1.96% $13,270 2.07%
--------------- ---------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
(1) SFAS 150 regarding the inclusion of reedemable preferred stock as part of
the "other liability" line item was effective as of July 1, 2003.
(2) For 2002, commission expenses related to borrowings and placements were
re-classified from commission expense and other charges to interest
expense to conform with the presentation for 2003 in accordance with US
GAAP.
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES EXHIBIT VI
---------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2002 2003
---------------------------- -----------------------------
AVERAGE AVG. AVERAGE AVG.
BALANCE INTEREST RATE BALANCE INTEREST RATE
---------------------------------------------------------------------------------------------------------------------------
(In US$ thousands, except percentages)
INTEREST EARNING ASSETS
Interest-bearing deposits with banks......................... $563,265 $9,717 1.70% $401,159 $4,621 1.14%
Securities purchased under agreements to resell.............. 182,258 4,660 2.52 132,022 2,619 1.96
Loans, net of discount....................................... 2,944,712 117,450 3.93 1,654,002 59,240 3.53
Impaired loans............................................... 418,900 16,572 3.90 572,812 24,086 4.15
Investment securities........................................ 255,285 17,402 6.72 124,686 7,830 6.19
---------------------------- -----------------------------
TOTAL INTEREST EARNING ASSETS................................ $4,364,420 $165,800 3.75% $2,884,681 $98,395 3.36%
---------------------------- -----------------------------
Non interest earning assets.................................. $76,074 $56,553
Allowance for loan losses.................................... (323,110) (324,758)
Other assets................................................. 34,667 14,428
---------- ----------
TOTAL ASSETS................................................. $4,152,052 $2,630,904
---------- ----------
INTEREST BEARING LIABILITITES
Deposits..................................................... $791,601 $15,283 1.90% $573,348 $7,348 1.26%
Short-term borrowings and placements......................... 1,218,036 33,555 2.72 604,209 12,050 1.97
Medium and long-term borrowings and placements............... 1,568,723 52,183 3.28 867,599 24,644 2.80
Redeemable preferred stock (1)............................... 0 0 n.a. 5,319 366 6.78
---------------------------- -----------------------------
TOTAL INTEREST BEARING LIABILITIES (2)....................... $3,578,360 $101,021 2.78% $2,050,474 $44,408 2.14%
---------------------------- -----------------------------
Non interest bearing liabilities and other liabilities....... $113,911 $109,584
TOTAL LIABILITIES............................................ 3,692,271 2,160,058
REDEEMABLE PREFERRED STOCK (1)............................... 13,624 5,982
STOCKHOLDERS' EQUITY......................................... 446,157 464,864
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK
---------- ----------
AND STOCKHOLDERS' EQUITY..................................... $4,152,052 $2,630,904
---------- ----------
NET INTEREST SPREAD.......................................... 0.96% 1.23%
---- ----
NET INTEREST INCOME AND NET
INTEREST MARGIN............................................ $64,779 1.48% $53,987 1.87%
--------------- ----------------
----------------------------------------------------------------------------------------------------------------------------
(1) SFAS 150 regarding the inclusion of reedemable preferred stock as part of
the "other liability" line item was effective as of July 1, 2003.
(2) For 2002, commission expenses related to borrowings and placements were
re-classified from commission expense and other charges to interest
expense to conform with the presentation for 2003 in accordance with US
GAAP.
CONSOLIDATED STATEMENT OF OPERATIONS
(In US$ thousands, except percentages & ratios) EXHIBIT VII
------------------------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
YEAR -------------------------------------------------------- YEAR
ENDED ENDED
DEC 31/02 DEC 31/02 MAR 31/03 JUN 30/03 SEP 30/03 DEC 31/03 DEC 31/03
----------------------------------------------------------------------------------
INCOME STATEMENT DATA:
Interest income................................ $165,800 $32,710 $27,840 $26,265 $22,769 $21,522 $98,395
Interest expense (1)........................... (101,021) (17,544) (14,069) (12,748) (9,339) (8,253) (44,408)
----------------------------------------------------------------------------------
NET INTEREST INCOME ........................... 64,779 15,166 13,770 13,517 13,430 13,270 53,987
Provision for loan losses...................... (272,586) (688) 7,325 37,429 10,093 14,661 69,508
----------------------------------------------------------------------------------
NET INTEREST INCOME (LOSS) AFTER PROVISION
FOR LOAN LOSSES.................... (207,807) 14,478 21,096 50,946 23,523 27,930 123,495
OTHER INCOME (EXPENSE):
Commission income.............................. 8,886 2,083 2,430 1,835 1,782 1,400 7,446
Provision for losses on off-balance sheet
credit risk............................ (6,170) 1,881 (7,642) 7,209 (5,043) (5,127) (10,603)
Derivatives and hedging activities............. (341) (367) (802) (320) (6,667) (199) (7,988)
Impairment loss on securities.................. (44,268) (8) (3) (875) (75) 0 (953)
Gain on early extinguishment of debt........... 1,430 0 0 789 0 0 789
Gain on sale of securities available
for sale..................................... 184 64 0 13,351 8,860 0 22,211
Gain (loss) on foreign currency exchange....... 301 330 (27) (534) 176 3 (382)
Other income................................... 553 430 (91) 93 2 38 42
----------------------------------------------------------------------------------
NET OTHER INCOME (EXPENSE)..................... (39,425) 4,412 (6,135) 21,547 (965) (3,886) 10,562
TOTAL OPERATING EXPENSES....................... (19,259) (3,777) (4,585) (5,410) (4,755) (7,812) (22,561)
----------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS....... (266,492) 15,113 10,376 67,084 17,803 16,233 111,496
DISCONTINUED OPERATIONS:
Loss from operations and disposal of
business segment............................. (2,346) (103) 0 0 0 0 0
----------------------------------------------------------------------------------
NET INCOME (LOSS).............................. ($268,838) $15,010 $10,376 $67,084 $17,803 $16,233 $111,496
========= ======= ======= ======= ======= ======= ========
NET INCOME (LOSS) AVAILABLE FOR
COMMON STOCKHOLDERS.......................... ($269,850) $14,755 $10,127 $66,899 $17,803 $16,233 $111,130
-----------------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
PER COMMON SHARE DATA
Net income (loss) after preferred stock
dividend..................................... ($15.56) $0.85 $0.58 $3.65 $0.45 $0.41 $3.88
PERFORMANCE RATIOS
Return on average assets....................... -6.47% 1.93% 1.46% 9.79% 2.83% 2.71% 4.24%
Return on average common stockholder's
equity....................................... -60.48% 18.69% 12.13% 70.25% 12.65% 11.15% 23.91%
Net interest margin............................ 1.48% 1.75% 1.73% 1.78% 1.96% 2.07% 1.87%
Net interest spread............................ 0.96% 1.11% 1.13% 1.18% 1.31% 1.41% 1.23%
Total operating expenses to average assets..... 0.46% 0.49% 0.65% 0.79% 0.76% 1.31% 0.86%
------------------------------------------------------------------------------------------------------------------------------------
(1) For 2002, commission expenses related to borrowings and placements were
re-classified from commission expense and other charges to interest
expense to conform with the presentation for 2003 in accordance with US
GAAP.
CREDIT PORTFOLIO
DISTRIBUTION BY COUNTRY
(In US$ millions)
EXHIBIT VIII
-----------------------------------------------------------------------------------------------------------------
AMOUNT OUTSTANDING
---------------------------------------------------------------
(A) (B) (C)
COUNTRY 31DEC02 30SEP03 31DEC03 (C) - (B) (C) - (A)
---------------------------------------------------------------
ARGENTINA..................................... $774 $452 $435 ($17) ($339)
BOLIVIA....................................... 14 0 0 0 (14)
BRAZIL........................................ 1,115 1,140 1,122 (18) 6
CHILE......................................... 49 44 133 90 84
COLOMBIA...................................... 105 94 123 29 19
COSTA RICA.................................... 49 32 75 43 26
DOMINICAN REPUBLIC............................ 220 135 37 (98) (184)
ECUADOR....................................... 79 64 87 23 8
EL SALVADOR................................... 9 21 31 10 22
GUATEMALA..................................... 29 32 36 4 7
JAMAICA....................................... 22 23 25 2 3
MEXICO........................................ 230 203 223 20 (7)
NICARAGUA..................................... 12 10 14 4 2
PANAMA........................................ 19 44 44 (0) 25
PARAGUAY...................................... 2 1 0 (1) (2)
PERU.......................................... 115 103 106 3 (8)
TRINIDAD & TOBAGO............................. 84 77 100 23 16
VENEZUELA..................................... 168 81 61 (20) (107)
OTHER (1)..................................... 136 132 139 7 3
------ ------ ------ ---- -----
TOTAL CREDIT PORTFOLIO (2)...................... $3,232 $2,689 $2,791 $102 ($441)
UNEARNED INCOME (3)............................. ($9) ($4) ($4) ($1) $5
------ ------ ------ ---- -----
TOTAL CREDIT PORTFOLIO,
NET OF UNEARNED INCOME.................... $3,222 $2,686 $2,787 $101 ($435)
====== ====== ====== ==== =====
----------------------------------------------------------------------------------------------------------------
(1) Includes: (i) securities purchased under agreements to resell with
Argentine counterparties of US$132 million at December 31, 2003, which
were fully collaterized with US Treasury securities, and which the Bank
classifies as US country risk; (ii) guarantees issued for US$7 million at
December 31, 2003 to a Multilateral Bank in Honduras with shareholder
composition of 16% in Guatemala, Costa Rica, El Salvador, Honduras,
Nicaragua, 11% in Taiwan, and 9% in Mexico.
(2) Includes book value of loans, fair value of investment securities,
securities purchased under agreements to resell, customer liabilities'
under acceptances, and contingencies, including confirmed letters of
credit, stand-by letters of credit and guarantees covering commercial and
country risks. Excludes credit commitments in the amount of US$56 million
at December 31, 2003, of which US$32 million were in Brazil and US$24
million in Mexico.
(3) Represents unearned income for loans.