Banco Latinoamericano de Comercio Exterior Q4 Earnings Call Highlights

by · The Markets Daily

Banco Latinoamericano de Comercio Exterior (NYSE:BLX) executives said the bank posted a fourth consecutive year of record results in 2025, citing double-digit portfolio growth, rising deposit funding, and a continued shift toward fee-based income despite a declining interest-rate backdrop.

On the company’s fourth-quarter earnings call, CEO Jorge Salas and CFO Annette detailed performance across profitability, balance sheet growth, asset quality, and capital, while also outlining management’s 2026 outlook amid expectations for additional Federal Reserve rate cuts and continued spread pressure in Latin America.

Record 2025 results, led by portfolio growth and fee income

Management reported 2025 net income of $227 million, up 10% year-over-year, with a return on equity (ROE) of 15.4%. Annette said adjusted ROE was 15.8% for the year, reflecting what she called “strong and consistent profitability” supported by portfolio growth, record net interest income and non-interest income, disciplined costs, and “well-contained credit costs.”

In the fourth quarter, the bank generated $56 million in net income, which Annette described as “one of the strongest quarters” in the bank’s history, supported by interest and fee income.

Salas said the bank met all key metrics embedded in its 2025 guidance despite what he characterized as high global liquidity, declining market rates, and elevated geopolitical volatility.

Balance sheet expansion and funding shift toward deposits

Executives said the commercial portfolio grew 11.5% year-over-year in 2025. Annette put total credit portfolio balances at $12.6 billion, up 12%, driven by roughly $800 million of loan growth (10%) and a 21% increase in contingent business.

Growth was described as geographically and sector-diversified. Salas highlighted loan growth led by Guatemala, Colombia, Mexico, the Dominican Republic, and Argentina. Annette also cited Guatemala, Argentina, and Colombia as key geographic drivers during the year, with the Dominican Republic contributing in the fourth quarter, and noted the client base expanded 9%.

On funding, deposits increased 22% year-over-year and represented 62% of total funding at year-end, according to Annette. Management emphasized the role of Class A shareholder deposits as an anchor (35% of total deposits), while deposits from financial institutions rose to 27% and corporate deposits were about 24% in the fourth quarter. The bank’s Yankee CD program reached $1.5 billion by year-end; Yankee CDs represented 23% of total deposits, with roughly 13% distributed through brokers.

Beyond deposits, the bank pointed to two 2025 transactions that broadened funding sources: a Costa Rican colones issuance under its Panamanian program (which management said was the first foreign-currency bond issued in Panama’s market) and a $150 million, three-year global syndicated loan that included first-time participation from several Middle Eastern banks.

Margin resilience amid rate cuts and competition

Management said net interest income rose 5% year-over-year to another record, even as the Federal Reserve cut rates by 75 basis points during 2025 and by 175 basis points since late 2024. Salas said the year-end net interest margin (NIM) was 2.36%, “slightly above guidance,” and Annette said the fourth quarter produced the strongest margin of the year at 2.39%.

Annette attributed fourth-quarter margin strength to several factors, including increased medium-term transactions deployed during the quarter, a more “efficient level of liquidity” compared with the third quarter (when the bank carried extra liquidity amid the AT1 process), and higher average deposit balances that helped the cost of funds. She also said net interest spread declined modestly to 1.67% from 1.75% in the prior year due to rate and funding repricing dynamics.

In discussion of the medium-term environment, management acknowledged significant market pressure on spreads. Executives said they expect additional rate cuts to influence results in 2026, but argued the bank’s strategy of focusing on more structured and value-added transactions has helped stabilize margins relative to broader market compression.

Non-interest income growth and diversification efforts

Salas said non-interest income set a new record in 2025, rising 54% year-over-year and reaching 20% of total revenues (from 13% four years earlier, according to his remarks). Annette reported non-interest income of $68.4 million for the full year, representing close to 19% of total revenues, up from 15% in 2024.

Management pointed to strength in two main fee-generating businesses:

  • Letters of credit: Salas said fees rose 20% year-over-year, alongside the implementation of a new trade platform.
  • Syndications/structuring: Salas said fee generation increased more than 70%, with a record 13 transactions across 11 countries totaling over $5 billion.

Annette added that fees and commissions tied to trade finance and structuring activities generated $59 million in 2025, including $31.8 million from letters of credit and guarantees. She said the bank generated $17.7 million in upfront structuring and syndication fees, underwriting about 30% of the roughly $5 billion transaction volume and retaining about 24% on balance sheet. Credit commitment fees contributed $11.6 million, secondary market loan activity added $2.6 million, and derivatives income totaled $1.1 million, which she described as modest but strategically important ahead of a treasury platform deployment planned for the second half of 2026.

In the Q&A, management said 2026 fee income is expected to be “around what we saw” in 2025 in relative terms, noting that 2025 included one-off transactions, and indicating a target of roughly 18% to 20% of revenue for next year, with higher nominal value expected.

Asset quality, capital actions, dividends, and 2026 guidance

Asset quality was described as “very strong and stable.” Annette said Stage 1 exposures were 98.2% of the credit portfolio at quarter-end, while Stage 2 declined to 1.5% from 2.6% in the third quarter. She said a single exposure of approximately $20 million migrated to Stage 3, which ended the quarter at 0.3% of the total portfolio. Total allowance for credit losses was $107 million, representing 276% of impaired credits, and the bank recorded $0.6 million in recoveries during the fourth quarter related to a loan previously written off.

On capital, Salas highlighted the bank’s first AT1 issuance in September 2025 as a step to strengthen the capital structure. Annette said capital deployment began through new medium-term transactions, reducing the Basel III Tier 1 ratio from 18.1% to 17.4%. The bank’s Panama regulatory capital adequacy ratio stood at 15.5%, above the required minimum.

The board approved an increase in the quarterly cash dividend to $0.6875 per share from $0.625, representing 46% of fourth-quarter earnings, management said.

Looking ahead, the bank guided to 2026 commercial portfolio growth of 13% to 15%, with average deposit growth at a similar pace. Management forecast NIM around 2.3%, an efficiency ratio in the 28% area, ROE between 14% and 15%, and Tier 1 capital in the 15% to 16% range. Executives characterized 2026 as a “transition year,” with continued investment in strategic IT platforms and a focus on disciplined pricing and prudent risk management in a highly liquid, competitive environment.

About Banco Latinoamericano de Comercio Exterior (NYSE:BLX)

Banco Latinoamericano de Comercio Exterior SA, commonly known as BLADEx and traded on the New York Stock Exchange under the symbol BLX, is a multilateral financial institution dedicated to promoting foreign trade and regional integration in Latin America and the Caribbean. Headquartered in Panama City, the bank provides specialized trade finance solutions to corporate clients and financial institutions, helping to facilitate cross-border transactions across key markets in the region. Its services encompass import and export financing, supply chain solutions, project and structured finance, as well as treasury and risk management products.

Established in 1977 by a consortium of 20 Latin American and Caribbean governments in partnership with the Inter-American Development Bank (IDB), BLADEx has a mandate to support economic development through trade facilitation.

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