Hello, everyone, and welcome to Bladex's Second Quarter 2020 Conference Call. On the 28th day of July 2020, this call is being recorded and is for investors and analysts only. If you are a member of the media, you are invited to listen-only. Bladex has prepared a PowerPoint presentation to accompany their discussion today. It is available through the webcast and on the bank's corporate website at www.bladex.com. Joining us today is Mr. Jorge Salas, Chief Executive Officer; and Ms. Ana Graciela de Méndez, Chief Financial Officer. These comments will be based on the earnings release, which was issued earlier today and is available on the corporate website. The following statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995 and the Section 21E of the Security Exchange Act of 1934. In these communications, we may make certain statements that are forward-looking such as statements regarding Bladex's future results plans and anticipated trends in the market affecting its results and financial condition. These forward-looking statements are Bladex's expectations on the day of the initial broadcast of this conference call. And Bladex does not undertake to update these expectations based on subsequent events or knowledge. Various risks uncertainties and assumptions are detailed in the bank's press release and filings with the Securities and Exchange Commission. Should one or more of these risks and uncertainties materialize or should any of the underlying assumptions prove incorrect actual results may differ significantly from the results expressed or implied in these communications. And with that, I am pleased to turn the call over to Mr. Salas. Please go ahead.

Thank you, Cary, and good morning, everyone for joining us today to discuss our second quarter results. Today, I'm joined by Ana Graciela de Méndez, our CFO; and a few members of the team. This morning I will be talking about our balance sheet management during the quarter. And then Ani will discuss the P&L implications of it. After Ani's remarks, I will make some closing comments and then I will open it up for questions. Before we dive into the balance sheet, I want to update you on our business continuity plan. The fact is that close to 95% of our staff is still working from the home and our BCP remains in place. We continue to serve our customers without any interruptions while keeping our employees safe and very engaged. I would like to start my comments today by referring to the main message we conveyed a little over three months ago in our last call when discussing our first quarter results. As some of you may recall back in April, we emphasized that beyond the bank's historically solid capital levels, our business model allowed for the unique ability and I want to stress, the unique ability to rapidly adapt to changing market conditions. I'm going to take it a step further now and argue that our business model becomes a comparative advantage that is especially relevant in the current context. Let me elaborate a little bit more on this. We all know that catering exclusively to corporate clients significantly reduces the credit risk in the portfolio. Approximately half of our portfolio is comprised of financial institutions. And the other half are basically top-tier corporations in the region. Bladex has zero exposure to the retail or small business segments which have been impacted the most by the crisis.…

Thank you, Annie. So to put this all together, I will say that the high-quality of our client base and the levers embedded in our business model have allowed us to successfully navigate this crisis up until now. Significantly increasing liquidity in a matter of weeks and collecting over 99% of maturities close to $2 million across all industries all countries in a timely matter is perhaps the clearest demonstration of that. Having said that, we're cognizant of the significant challenges that lie ahead. 2020 GDP estimates for the region are close to negative 9.5% now. Moreover most of the countries in Latin America have limited fiscal room and are still trying to figure out how to gradually reopen their economies, while keeping the spread of the virus under control. In this context after more than three years of conducting business in America in several negative cycles in regions Bladex has a good understanding of the changing circumstances and the macroeconomic dynamics of the different countries in the region. Moreover being a long-standing ally of our clients throughout many of these crisis gives us a good grasp of their strengths and their challenges. We believe that in general our clients mostly industry leaders in their respective markets with ample liquidity and funding sources will not only be able to navigate the crisis, but are well-positioned to take advantage of the opportunities that will arise for them in their sectors. Bladex will continue to be there supporting them. I'll now open it up for questions. Thank you.

At this time, we would like to open the floor for questions. [Operator Instructions] Looks like our first question will be from Jim Marrone from Singular Research.

Yes. Thank you for taking my question. So I guess, my first question it would be in regards to slide number 11. So it's just looking at the favorable interest rate gap position in the decreasing market rate environment and the widening of lending spreads. So I think I also heard the comment that you've increased some of the loan capacity to certain sectors. Perhaps if you can just comment again perhaps on the sectors and which sectors are seen as more favorable? And which ones are going forward? And maybe if you can discuss again the country, exposures and what your position in the future? And then I have a follow-up question after that.

Okay. So thank you for your questions. That's several questions in one if I understood correctly. Ani, why don't you start with the interest rate and spreads question and then I'll tap into the sector's questions. Ana Graciela de Méndez: Sure. So as I mentioned the net interest margin in general has been impacted due to the asset completion the change in mix because we did increase our average liquidity and decreased average loans. And of course, liquidity yielding close to 19 basis points has had an impact in the net interest margin. But I also mentioned that, we have seen a widening of net lending spread and that you can see in the graph, in that page 11 that you mentioned that we increased the differential between lending in that and funding rates by about 46 basis points, I'm sorry to 199%. So at the end of the day, the combination of both the impact of lowering interest rates in our balance sheet, which I also mentioned was favorably during the second quarter because the liabilities re-priced faster. And then on the other hand, our lending did decrease. So this widening of spreads did not fully impact the net interest margin at least not yet. So, I don't know if – if that is clear enough? Or if you want a follow-up question or maybe Jorge you can address then the country and sector question.

Yeah. That's fine. The next question could be answered yes.

Yeah. So, regarding the sectors. So, we see demand in top tier banks so lower risk. Those are systemically important banks in low risk countries with a central bank with a lot of higher power. Then, we have the food industry. We have the utilities, I mean, power generation distribution, communications those are oil and gas imports. I mean, those are all sectors where we're seeing a lot of demand.

Okay. Very good. And just one other question in regards to governments in the countries that you operate. So there seems to be a growing concern in regards to the large amount of deficit and debt that governments are taking on in order to stimulate the economy and kind of ride through this pandemic. So, can you just maybe provide just some brief comments on how the rising government debt and deficits could impact the operations of Bladex?

I mean, certainly, it's – it's very difficult times to for most countries in Latin America. Also, it seems like the epicenter of the pandemic has moved to Latin America. So that places even more challenges. Now, the most vulnerable countries we see are Argentina in Ecuador, due to their weakness in their fundamentals and they need to restructure their debt. We've been reducing exposure in both countries even before the pandemic started more in accordance to our historically conservative approach. But I mean, we lend in say in 17 different countries. I mean, they're all different realities. In effect as we mentioned before the shift on our lending strategy has been more towards, investment grade countries, which is almost 60% of the portfolio today. But, yes, certainly important challenges in most countries. We've seen also devaluations of their currency in protecting their international reserves. And we've also seen very active multilateral aid, especially from the IMF very recently. I don't know if that answers your question?

Yes. That's great. Thank you for the comments.

Thank you. It does look like we have a web question. And it says, I understand the need for liquidity, but with $2 billion in cash earning less than 0.2% and with only $450 million in the market cap trading at 57% discount to book. Has there been any consideration of any stock repurchases, considering it would result in 9% return from dividends and increased net book value per share. Thank you.

I will let -- sure, yes. Ani, why don't you answer that? Ana Graciela de Méndez: Okay. Yes first of all on the liquidity, of course, we do see the liquidity position, obviously, temporary while this crisis has -- particularly during the second quarter there was a short visibility of the impact going forward. We have reinforced our funding structure even more and we continue to maintain a very diversified funding structure. We are also seeing new lending opportunities, which we still tend to get or go into new lending or increased lending under still prudent credit underwriting standards. But we do expect that the liquidity that you saw of over $2 billion should be a top that should start to -- to start to reduce and we should start to see increase in lending going forward at a slow pace, I might add. So just to point out that the liquidity position is pretty much temporary that on one side. And then, on the other side, on capital management overall, we do discuss this on a quarterly basis with our Board. Both in capital management in general and dividends, as we just saw, in particular, the bank has historically and in recent years maintained a very solid capital position. That's pretty much characteristic due to the fact that we do operate in a very volatile region. And more so in this -- in the current context. So we -- as I said before, as we increased our assets, our lending, our risk-weighted assets should adapt to more recent past level and which should decrease our capitalization in terms of the capital ratio somehow. But still -- we will still continue to have and manage the bank very conservatively in terms of our capital position. And as it has been our recent history for -- as an indication I can tell you that in the last five years our Tier 1 capital ratio has been 19% on average. So that gives you an indication of how we have managed the bank and the importance that we give to our solid capital position. I don't know if that answers the question

Thank you. Our next audio question will come from Pavel Oliva from Rockhill Global.

Hi, good morning. I wanted to follow-up on that question. You reduced the dividend I think a quarter or two quarters ago and given how well you manage the asset quality and liquidity do you -- and where the share price is what would it take to restore the dividend back? One. And two, have you at least discussed with the Board that the buyback possibility because from a shareholder standpoint, it's probably the best investment you can make at this point. Thank you.

Yes, I mean it's a very good question. First of all as you all know the dividend policy is up to the Board and it's a quarterly decision based on the results for quarter, so I prefer not to speculate on until we did this. We did maintain the dividend from last quarter, but more with the historically high levels of capitalization of the bank are a reflection of the volatile nature the region we operate in. And I can tell you though that capital preservation will continue to be a priority for sure during this time at least until we have some more visibility on how this whole situation is going to evolve. And we have yes ongoing conversations with the Board on obviously the future of the bank. I want to stress though that we do have a very robust pipeline and are ready to grow our balance sheet again.

Great. Thank you.

Thank you. Our next question will be from José [Indiscernible] from MetLife.

Yes. Hi. Thank you for taking my question. Do you hear me?

We do.

Yes. I just wanted to follow-up on your country concentration specifically on Argentina. Does that increase -- does that increasing the closure have more to do with the loan shrinking or is there more lending in the country? And if it's the latter, could you please give some detail on where you're lending just given the fact that you downwardly revised the outlook for the country? Thank you.

Sure. So, in Argentina, it's more shrinkage than -- I mean in absolute terms, we decrease -- I mean Argentina at the end of June, we had $180 million as opposed to $226 million at the end of December 2019. And we have previously by the end of 2018; we have above $600 million. So, main part of it is explained by the largest integrated oil company in the country, state-owned that had history of no default even under sovereign default in the past. So with oil prices picking up now, we feel fairly comfortable with that exposure.

Thank you.

Thank you. Our next question will be from Robert Tate from Global Rational Capital.

Hi, there. Can you hear me?

Yes. Hi, Robert. How are you?

Hi, Jorge and hi, Ana. Yeah, I just had two questions and then one request. So, firstly, I would just like to congratulate you on the Conservative loan portfolio. It seems that the past work you've done to reduce the risk has paid off with very low impairments. And also, your presentation is quite nicely set out and informative. So, thank you for that. So Jorge, I just have a question for you and maybe Ana can comment as well. Please would you elaborate on the magnitude and recoverability of the airline loans? And please could you comment on the impairment indicators? And to what extent provisions have been raised for these loans? For example, in Latin financed like from news it was reported that Bladex made a small $30 million loan to LATAM airlines in January 2020, and I presume they are indicated for this loan because the airline filed for Chapter 11 credit protection. So, obviously I don't expect to go to any detail in any particular loan, but just generally, if you could just comment on the magnitude and recoverability of the airline loans and impairment indicators and whether there's any provisions raised so far?

Yes. Thank you, Robert. That's a very relevant question. Good news, we've been successfully reducing our exposure in the airlines industry as much as 54% quarter-on-quarter. So, we do have exposure with two of the main airlines in the region. One is headquartered in Panama and the other one in Chile. And yes, there is, obvious impairments on the one Chile. And I can tell you that we are actively monitoring the Chapter 11 process on LATAM. But we feel comfortable with the research we have there.

Okay. Thank you. The second question is just based on your comments on the loan portfolio and the conservative nature of your balance sheet at the moment. It appears to me that the likelihood of Bladex, having a surprising, large loan impairment at this point is fairly low despite the magnitude of this crisis. Would you agree with this assessment? Or is that too difficult to say even at this point?

I would agree. Obviously, we cannot rule that out. I mean, it's very uncertain times. We are monitoring our portfolio very, very closely. We're talking to our clients on a regular basis. We believe we have good provisioning. But, I mean the truth is -- is that -- I mean nobody knows when this is going to end. So aggregate demand is it's a concern going forward, but we do feel very comfortable with the health of the loan portfolio today.

Okay. Thank you. Sorry. Ana Graciela de Méndez: If you allow me. Yes, I just want to add that as you know we follow IFRS 9 accounting norm. So we already incorporate forward-looking expected trade losses in our reserve model. So in the allowance for credit losses that we have as of June 30, 2020, we have already incorporated these forward-looking expectations in our reserves as it pertains to the current portfolio. So I can also add that Stage 1 and 2 excluding the NPLs that we got rid of during the quarter Stage 1 and 2 reserves coverage has gone up by 30% since the beginning of the year or 22 basis points. So we have been incorporating forward-looking expectations of our portfolio in the analysis of countries and sectors and client specifics. So I just wanted to add that.

Okay. Thank you, Ana. Great. And then just one last request. I just want to mirror the comments or made by the other call in regards to dividends and share buybacks. In particular, the share buybacks and the comment that it would be difficult to find a better investment at this point in time. So, I mean, is there -- if it's possible to even just to have a discussion with the Board on those points, obviously, the dividend is discussed constantly. But share buybacks I don't think that Bladex has done a share buyback before. And I expect part of the reason is also just because of the liquidity of the shares. But if it's possible to have a discussion with the Board, I think the shareholders will probably appreciate that.

I'm sure. I mean, we do have open discussions with the Board about this topic and other relevant topics. I can tell you today the focus is to keep navigating the storm the way we're doing it. But certainly that discussion takes place. Sorry, but I cannot elaborate more on that.

Thank you.

Thank you. [Operator Instructions] I'm showing no further questions in the queue at this time. I'd like to turn it back over to our speakers for closing remarks.

Yes. So if there are no more questions, I want to thank you for joining the call. Thank you for the support in Bladex, and please stay safe and healthy. Thank you very much everybody. Ana Graciela de Méndez: Thank you. Good morning.

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