Executive Summary / Key Takeaways

• Bladex is undergoing a significant transformation, leveraging strategic technological investments to solidify its position as a specialized, agile leader in Latin American trade finance, driving record profitability and enhancing capital efficiency.
• The bank achieved record net income of $64 million and an 18.5% Return on Equity in Q2 2025, propelled by robust commercial portfolio growth and a surge in fee income, notably from a landmark $1.6 billion syndicated facility.
• Key technological differentiators, including the newly launched CGI -powered trade finance platform, are set to significantly scale transactional volume, enhance client experience, and diversify revenue streams, with non-interest income targeted to reach 18% of total revenues by 2026.
• Despite a competitive and volatile macroeconomic landscape, Bladex's agile, short-term, and diversified credit portfolio, coupled with strong deposit growth and prudent capital management, positions it for sustained profitability and resilience.
• Management projects continued growth for 2025, with commercial portfolio expansion of 10-12%, average deposit growth of 15-17%, and an ROE between 15-16%, underscoring confidence in its strategic execution and the long-term potential of its specialized franchise.

A Specialized Powerhouse in Latin American Trade Finance

Banco Latinoamericano de Comercio Exterior, S. A. (NYSE:BLX), or Bladex, stands as a unique institution in the financial landscape of Latin America and the Caribbean. Established in 1979 by the region's central banks, its foundational mission was to promote foreign trade and economic integration. This deep-rooted mandate has shaped Bladex into a specialized wholesale bank, serving large financial institutions, corporations, sovereigns, and state-owned entities across 23 Latin American and Caribbean countries. Its listing on the New York Stock Exchange since 1992, and later on the Mexican Stock Exchange, underscores its commitment to international capital markets.

Bladex's overarching strategy, initiated in 2022 as a five-year plan, aims to significantly enhance profitability, efficiency, and product offerings without altering its core customer profile or the short-term, diversified nature of its commercial portfolio. This strategic evolution is critical in a competitive environment marked by increased dollar liquidity and active debt capital markets for Latin American issuers. The bank's ability to swiftly adjust credit exposures to capitalize on favorable risk-return balances is a testament to its agile business model.

Technological Edge: Fueling Future Growth and Efficiency

A cornerstone of Bladex's transformation is its aggressive investment in technological differentiation, particularly in its core trade finance and nascent treasury operations. The bank's partnership with CGI (GIB), a global leader in trade finance technology, culminated in the successful launch of a state-of-the-art trade finance platform in Q2 2025. This platform, the first of its kind adopted by a Latin American bank, is a significant competitive advantage.

The new trade platform offers tangible and quantifiable benefits. It is designed to process 2.5 times the current transactional volume in letters of credit (LCs) within approximately two years, enabling the bank to handle a higher throughput of smaller, yet higher-margin, transactions with minimal additional headcount. This digital interface significantly enhances efficiency, security, and the overall client experience, while simultaneously reducing operational risk. Management anticipates that the incremental revenues from the letters of credit business alone will be sufficient to achieve a payback on the platform's cost within approximately 18 months.

Concurrently, Bladex is developing a new treasury platform, with its first phase expected by mid-2026. This initiative aims to expand the bank's offerings in FX and derivative products and facilitate local currency lending, always with full FX hedging. This strategic move is poised to unlock a new and relevant source of non-interest income, further diversifying Bladex's revenue streams and reducing its sensitivity to market interest rate fluctuations. These technological advancements are not merely upgrades; they represent a fundamental shift in Bladex's operational capabilities, strengthening its competitive moat and positioning it for scalable, profitable growth.

Robust Financial Performance Amidst Dynamic Markets

Bladex's strategic initiatives have translated into exceptional financial performance, particularly evident in its recent results. The second quarter of 2025 marked one of the strongest quarters in the bank's history, delivering a record net income of $64 million, representing a 24% increase from the first quarter and a 28% rise year-over-year. This performance drove an impressive 18.5% Return on Equity (ROE), the highest quarterly ROE in over two decades. Even excluding the significant contribution from a landmark structured transaction, the quarter would still have been a record performance, highlighting the underlying strength of its diversified commercial activity.

The commercial portfolio expanded to $10.8 billion in Q2 2025, an 18% increase year-over-year, with broad-based growth across the region, particularly in Central America. This growth was supported by a robust off-balance sheet business, which rose 25% year-over-year. For the full year 2024, the commercial portfolio reached a record $10 billion, growing 18% annually.

Fee income has emerged as a critical driver of profitability, aligning with Bladex's strategy to reduce dependence on market rates. In Q2 2025, fee income reached a record $20 million, surging 88% quarter-over-quarter and 59% year-over-year. A significant portion of this was attributed to Bladex's role as global coordinator and mandated lead arranger for a $1.6 billion syndicated facility for Staatsolie, Suriname's national oil company—the largest syndicated facility in the bank's 46-year history. Beyond this transaction, recurring fees from letters of credit also saw strong growth, up 20% year-over-year to $7.8 million in Q2 2025. For the full year 2024, fee income reached an unprecedented $44 million, a 37% annual increase.

Net interest income (NII) totaled nearly $68 million in Q2 2025, up 8% year-over-year, with a net interest margin (NIM) of 2.36%. This stability in margins, despite a competitive lending environment, reflects disciplined pricing and effective funding cost management. Deposits have been instrumental in this, reaching $6.4 billion in Q2 2025, representing 62% of total funding and growing 23% year-over-year. This strong deposit base, including a 30% increase in corporate client deposits over the last 12 months, is key to controlling funding costs and enhancing financial flexibility.

Operational efficiency has also seen significant improvement. The efficiency ratio stood at a record 23.1% in Q2 2025, a 380 basis point gain from the prior quarter and comfortably within the full-year guidance. For 2024, the efficiency ratio improved to 26.5% from 27.2% in 2023, as revenue growth outpaced an 11% increase in expenses, primarily driven by strategic investments in headcount and technology.

Capital Strength and Risk Management

Bladex maintains a robust capital position, crucial for supporting its growth initiatives and defending its investment-grade ratings (BBB/Baa2/BBB by S&P/Moody's/Fitch). Total equity reached $1.4 billion in Q2 2025, up 12% year-over-year. The CET1 ratio remained solid at 15%, and the total capital adequacy ratio improved to 13.9%, both well above regulatory minimums. The successful pricing of its inaugural US$200 million Additional Tier 1 (AT1) Notes offering in September 2025, which was more than three times oversubscribed, further optimized its capital structure and strengthened its capital base in full compliance with Basel III.

Asset quality remains exceptional, reflecting a disciplined and proactive approach to risk. Non-performing loans (NPLs) were close to 0% in Q2 2025, with Stage 3 exposures totaling only $19 million (0.2% of total exposure) and a robust reserve coverage of 5 times. Nearly 98% of the portfolio is classified as Stage 1 (low risk), with no signs of deterioration. Provisions for credit losses totaled $5 million in Q2 2025, primarily for strengthening reserves in higher-risk Stage 2 profiles rather than new downgrades.

The bank's investment portfolio, exceeding $1.3 billion in Q2 2025, is short in duration (average 2 years) and concentrated in investment-grade non-LatAm issuers, mostly from the U.S., providing both liquidity and credit diversification. These securities are eligible for the Fed discount window, further reinforcing Bladex's strong liquidity position.

Competitive Landscape and Strategic Positioning

Bladex operates in a competitive landscape dominated by global banking giants like Banco Santander (SAN), BBVA (BBVA), Citigroup (C), and JPMorgan Chase (JPM), alongside regional and local players. While these larger institutions offer broader services and benefit from greater scale, Bladex carves out a distinct and defensible niche through its specialized focus on Latin American trade finance.

Bladex's core competitive advantage lies in its deep regional expertise, established network, and specialized regulatory licenses. This allows it to offer tailored bilateral loans, structured credits, and financial guarantees that often provide greater flexibility and accessibility for regional clients. Its profound understanding of Latin American regulations and trade dynamics fosters stronger client loyalty, particularly in volatile markets where global players might be more cautious. While Bladex may lag in overall scale and the sheer breadth of product diversification compared to its global counterparts, its focused approach can lead to more efficient operations within its core segments. For instance, its cost structure for specialized trade services can be highly competitive.

The ongoing technological transformation, particularly with the new trade finance platform, is crucial for Bladex to enhance its operational efficiency and product delivery, addressing historical gaps in technological integration compared to digitally advanced competitors like BBVA. This investment aims to counter margin pressures from increased market liquidity and active debt capital markets by driving higher-margin, fee-based transactions and improving processing speed. The bank's agile business model, characterized by a short-term portfolio, enables it to quickly reallocate exposures to capitalize on market dislocations and new trade dynamics, such as potential nearshoring trends or shifts in commodity exports.

Indirect competitors, including fintech platforms and emerging blockchain solutions, pose a different challenge by offering alternative, often faster and cheaper, digital methods for international transactions. Bladex's strategic investment in its new trade platform is a direct response to these trends, aiming to integrate world-class technology to maintain its competitive edge and capture new transactional volumes.

Outlook and Guidance: A Path to Sustainable Growth

Bladex's management expresses strong confidence in its ability to sustain its growth trajectory, underpinned by the successful execution of its strategic plan. For 2025, the bank projects commercial portfolio growth of 10% to 12% and average deposits to increase by 15% to 17%. The net interest margin is expected to be in the 2.3% area, factoring in continued pressure on lending spreads and anticipated Fed rate cuts in the second half of the year.

Despite ongoing investments in IT platforms, Bladex aims to maintain its efficiency ratio at around 27% for 2025, demonstrating a commitment to cost discipline alongside strategic expansion. The projected Return on Equity for 2025 is between 15% and 16%, with the Basel III capital ratio maintained within the same range. Fee income is expected to increase by approximately 10% in 2025, building on the strong 2024 performance, driven by the scaling of the new trade finance platform and a robust syndications pipeline. Management targets non-interest income to gradually climb from its current 13% to 18% of total revenues by the end of 2026, further diversifying the bank's earnings profile.

Conclusion

Bladex is in the midst of a compelling transformation, strategically leveraging its unique mandate and technological investments to enhance its specialized role in Latin American trade finance. The bank's recent record-breaking financial performance, particularly in profitability and fee income, validates the effectiveness of its disciplined strategic execution. With the successful deployment of its new trade finance platform and the upcoming treasury platform, Bladex is poised to unlock significant additional upside, particularly in non-interest income, making its results less susceptible to market rate fluctuations.

While geopolitical risks and a competitive lending environment present ongoing challenges, Bladex's agile business model, robust capital position, and exceptional asset quality provide a strong foundation for resilience. The bank's commitment to technological leadership and its deep regional expertise are powerful differentiators, enabling it to adapt to evolving trade dynamics and capitalize on new opportunities. For discerning investors, Bladex represents a compelling opportunity to participate in the growth of Latin American trade, driven by a focused strategy and a clear roadmap for sustainable, high-quality returns.