Foreign Filer Report • Jul 28, 2008
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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 of 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
P.O. Box 0819-08730
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__.)
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.
July 28, 2008
Banco Latinoamericano de Exportaciones, S.A.
| By: |
|---|
| Name: Pedro |
| Toll |
| Title: Deputy Manager |
BLADEX REPORTS SECOND QUARTER NET INCOME OF $26.3 MILLION
COMPARED WITH $19.2 MILLION FOR THE PRIOR QUARTER.
ROE WAS 16.7%, COMPARED TO 12.6% IN THE FIRST QUARTER.
Panama City, Republic of Panama, July 28, 2008 – Banco Latinoamericano de Exportaciones, S.A. (NYSE: BLX) (“Bladex” or the “Bank”) announced today its results for the second quarter ended June 30, 2008.
Second Quarter Business Highlights
Net income of $26.3 million, an increase of 37% compared to the first quarter 2008, and 3% lower than the second quarter 2007, principally due to lower trading gains.
Net operating revenue (1) of $36.4 million, an increase of 28% from the first quarter 2008, and unchanged from the second quarter 2007, reflecting strong growth in the Bank’s intermediation business.
Return on average equity (“ROE”) of 16.7%, compared to 12.6% in the first quarter 2008, and 18.0% in the second quarter 2007.
Commercial Division’s net operating income (2) was $12.9 million, versus $14.7 million in the previous quarter. Net interest income on lending spreads (3) increased 27% as a result of higher lending spreads (4) (27 bps, or 22%), and a 4% growth on the average commercial portfolio.
Treasury Division’s net operating income was $3.0 million, an increase of $2.0 million compared to the first quarter 2008, and a decrease of $1.1 million from the second quarter 2007 due to lower gains on the sale of securities.
Asset Management Division’s net operating income was $10.1 million, an increase of $6.5 million from the first quarter 2008, and a decrease of $1.9 million from the second quarter 2007, driven by trading gains.
As of June 30, 2008, the Bank had zero credit in non-accrual or past due status.
As of June 30, 2008, liquidity (5) stood at $372 million, representing 7% of total assets. During the quarter, deposits increased $379 million (28%) to $1,736 million.
The Bank’s efficiency ratio (6) was 29%, compared to 32% in the first quarter 2008, and 28% in the second quarter 2007. Tier 1 capital ratio stood at 19%.
Mr. Jaime Rivera, Bladex’s Chief Executive Officer, stated the following regarding the quarter’s results: “ We are very pleased with the results for the quarter which were solid across all business lines. This performance demonstrates once more Bladex’s ability to take advantage of a Latin American market that continues to grow, and a business franchise that continues to strengthen.
In broad terms, while we are mindful of both the stress placed on large segments of the financial industry and the implications for the economy as a whole, the current scenario has resulted in opportunities for the Region, which Bladex is uniquely well positioned to realize.
Consistent with this favorable scenario, the Bank’s intermediation business continues to grow, with lending margins widening at an accelerating rate and fee revenue building momentum. Bladex’s Asset Management Division posted another quarter of solid results, and concerns regarding credit quality within Bladex’s portfolio remain a non-issue. On the liability side, the Bank’s deposit base increased at the faster pace that we have seen in years, and our liquidity position remains strong.
As satisfied as Bladex is with the current results, we place great importance on the permanent nature of our improving market share, which we believe will continue to benefit the Bank through the next phase of the credit cycle.”
RESULTS BY BUSINESS SEGMENT
The Commercial Division incorporates the Bank’s financial intermediation and fee generation activities. Net operating income includes net interest income from loans, fee income, and net allocated operating expenses.
| (US$
million) | 2Q07 | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Commercial
Division: | | | | | | |
| Net
interest income on lending spreads (3) | $ 7.3 | $ | 10.6 | $ | 13.5 | |
| Net
interest income on allocated capital (7) | 8.1 | | 8.8 | | 5.4 | |
| Net
Interest Income | $ 15.4 | $ | 19.4 | $ | 18.9 | |
| Non-interest
operating income (8) | 1.4 | | 1.8 | | 1.9 | |
| Net
operating revenues | $ 16.8 | $ | 21.2 | $ | 20.8 | |
| Operating
expenses | (6.7 | ) | (6.5 | ) | (7.9 | ) |
| Net
Operating Income | $ 10.1 | $ | 14.7 | $ | 12.9 | |
Net operating income for the second quarter 2008 reached $12.9 million, representing an increase of 28%, compared to second quarter 2007, and a decrease of 12% from the first quarter 2008. With respect to the previous quarter, weighted average lending spreads increased 27 bps (22%), while the average commercial portfolio growth was 4%. Combining these factors resulted in a $2.9 million, or 27% growth in net interest income on lending spreads. These increases were offset by $3.4 million in lower yields on allocated capital due to lower market interest rates.
Weighted average lending spreads on new disbursements were 1.93%, a 41 bps, or 27%, increase with respect to the previous quarter.
2
The following graph illustrates lending spreads’ quarterly trend:
The average commercial portfolio grew 4% during the quarter and 15% during the last year. End of period growth during the quarter was 8%.
3
The commercial portfolio includes letters of credit, country risk guarantees and loan commitments pertaining to the Bank’s traditional intermediation activities.
See Exhibit X for information related to the Bank’s commercial portfolio distribution by country.
During the second quarter 2008, the Bank disbursed credits amounting to $2 billion, unchanged when compared to the previous quarter. Please refer to Exhibit XII for the Bank’s distribution of credit disbursements by country.
As of June 30, 2008, the corporate market segment represented 55% of the Bank’s total commercial portfolio, compared to 53% as of March 31, 2008, and 49% a year ago.
The commercial portfolio as a whole continues to be short-term and trade-related in nature, with 70% of credits maturing within one year, and 66% representing trade financing operations.
As of June 30, 2008, the Bank had zero credits in non-accruing or past-due status.
The Treasury Division incorporates the Bank’s investment securities activities. Net operating income is presented net of allocated operating expenses, and includes net interest income on investment securities, and net gains on sale of securities available for sale.
| (US$
million) | 2Q07 | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury
Division: | | | | | | |
| Net
interest income | $ 1.1 | $ | 2.2 | $ | 2.1 | |
| Non-interest
operating income (8) | 3.9 | | 0.2 | | 2.7 | |
| Net
operating revenues | $ 5.1 | $ | 2.3 | $ | 4.7 | |
| Operating
expenses | (1.0 | ) | (1.4 | ) | (1.8 | ) |
| Net
Operating Income | $ 4.1 | $ | 1.0 | $ | 3.0 | |
Net operating income totaled $3.0 million, representing an increase of $2.0 million from the first quarter 2008, and a decrease of $1.1 million from the second quarter 2007. These variations mostly reflected different levels of gains on sales of securities in the referenced quarters.
The quarter-end securities available for sale portfolio totaled $737 million, representing an increase of 6% from March 31, 2008. As of June 30, 2008, the securities portfolio represented 14% of the Bank’s total credit portfolio, and consisted of Latin American securities (please refer to Exhibit XI for a per country distribution of the investment securities in the available for sale portfolio).
In its available for sale portfolio, and in order to hedge the instruments’ interest rate risk, the Bank enters into interest rate swap agreements to convert them from fixed interest to floating rate instruments. The available for sale portfolio is marked-to-market, and the impact thereof is recorded in capital through the other comprehensive income account (please refer to Exhibit I).
4
As of June 30, 2008, deposit balances totaled $1,736 million, a $379 million (28%) increase compared to the previous quarter, and $356 million (26%) higher than the second quarter 2007, mostly reflecting $240 million in new deposits from central banks.
The Asset Management Division incorporates the Bank’s asset management activities. Net operating income is presented net of allocated operating expenses, and includes net interest income on trading assets and investment in mutual funds, as well as trading gains and other related income (loss).
| (US$
million) | 2Q07 | | | | 2Q08 | |
| --- | --- | --- | --- | --- | --- | --- |
| Asset
Management Division: | | | | | | |
| Net
interest income | $ 0.2 | $ | (0.4 | ) | $ (0.8 | ) |
| Non-interest
operating income (8) | 14.3 | | 5.4 | | 11.7 | |
| Net
operating revenues | $ 14.5 | $ | 4.9 | | $ 10.8 | |
| Operating
expenses | (2.5 | ) | (1.3 | ) | (0.8 | ) |
| Net
Operating Income | $ 12.0 | $ | 3.6 | | $ 10.1 | |
Net operating income in the second quarter 2008 totaled $10.1 million, representing an increase of 182% compared to the previous quarter, and a 16% decrease from the second quarter 2007, driven by trading gains.
In April 2008, Bladex Offshore Feeder Fund (the "Fund") registered with the Cayman Islands Monetary Authority under the Cayman Islands Mutual Funds Law. On May 1, 2008, the Fund began receiving third party investments. In May 2008, Bladex also began accounting for the Fund and its related companies in accordance with the specialized accounting guidance in the AICPA Audit and Accounting Guide, Audits of Investment Companies.
As of June 30, 2008, investment in mutual funds totaled $144 million compared to the Fund’s net asset value of $133 million and $122 million, as of March 31, 2008 and June 30, 2007, respectively.
5
CONSOLIDATED RESULTS OF OPERATIONS
KEY FINANCIAL FIGURES AND RATIOS
| (US$
million, except percentages and per share amounts) | 2Q07 | 1Q08 | 2Q08 |
| --- | --- | --- | --- |
| Net
Interest Income | $ 16.7 | $ 21.1 | $ 20.1 |
| Net
Operating Income by Business Segment: | | | |
| Commercial
Division | $ 10.1 | $ 14.7 | $ 12.9 |
| Treasury
Division | $ 4.1 | $ 1.0 | $ 3.0 |
| Asset
Management Division | $ 12.0 | $ 3.6 | $ 10.1 |
| Net
Operating Income | $ 26.1 | $ 19.2 | $ 25.9 |
| Net
Income | $ 27.0 | $ 19.2 | $ 26.3 |
| Net
Income per Share (9) | $ 0.74 | $ 0.53 | $ 0.72 |
| Book
Value per common share (period end) | $ 16.68 | $ 16.73 | $ 17.74 |
| Return
on Average Equity (“ROE”) | 18.0 % | 12.6 % | 16.7 % |
| Operating
Return on Average Equity ("Operating ROE") | 17.4 % | 12.6 % | 16.5 % |
| Return
on Average Assets (“ROA”) | 2.7 % | 1.6 % | 2.0 % |
| Net
Interest Margin | 1.70 % | 1.77 % | 1.56 % |
| Tier
1 Capital (10) | $ 606 | $ 608 | $ 645 |
| Total
Capital (11) | $ 642 | $ 647 | $ 688 |
| Risk-Weighted
Assets | $ 2,862 | $ 3,112 | $ 3,392 |
| Tier
1 Capital Ratio (10) | 21.2 % | 19.6 % | 19.0 % |
| Total
Capital Ratio (11) | 22.4 % | 20.8 % | 20.3 % |
| Stockholders’
Equity to Total Assets | 14.4 % | 12.0 % | 11.9 % |
| Liquid
Assets / Total Assets (5) | 7.6 % | 9.7 % | 6.9 % |
| Liquid
Assets / Total Deposits | 23.2 % | 36.3 % | 21.5 % |
| Non-Accruing
Loans to Total Loans, net | 0.0 % | 0.0 % | 0.0 % |
| Allowance
for Loan Losses to Total Loan Portfolio | 2.0 % | 1.9 % | 1.7 % |
| Allowance
for Losses on Off-Balance Sheet Credit Risk to Total
Contingencies | 2.6 % | 3.5 % | 4.0 % |
| Total
Assets | $ 4,205 | $ 5,090 | $ 5,407 |
6
The following graphs illustrate Net Operating Income and the Return on Average Stockholders’ Equity trends from 2005 through 2008:
7
NET INTEREST INCOME AND MARGINS
| (In US$ million, except percentages) | 2Q07 | 1Q08 | |||
|---|---|---|---|---|---|
| Net | |||||
| Interest Income | |||||
| Commercial | |||||
| Division | $ 15.4 | $ 19.4 | $ | 18.9 | |
| Treasury | |||||
| Division | 1.1 | 2.2 | 2.1 | ||
| Asset | |||||
| Management Division | 0.2 | (0.4 | ) | (0.8 | ) |
| Consolidated | $ 16.7 | $ 21.1 | $ | 20.1 | |
| Net | |||||
| Interest Margin * | 1.70 % | 1.77 | % | 1.56 | % |
Net interest income during the second quarter 2008 reached $20.1 million, a decrease of 5% compared to the previous quarter driven by lower yield on the Bank’s available capital as market interest rates decreased. This factor was partially offset by a larger average loan portfolio and wider lending spreads.
The $3.4 million, or 20%, increase in net interest income compared to the second quarter of 2007 mostly reflects an increased average loan portfolio, and higher lending spreads, partly offset by a lower yield on the Bank’s available capital.
FEES AND COMMISSIONS
| (US$
million) | 2Q07 | 1Q08 | 2Q08 |
| --- | --- | --- | --- |
| Letters
of credit | $ 0.7 | $ 1.0 | $ 1.2 |
| Guarantees | 0.2 | 0.4 | 0.3 |
| Loans | 0.2 | 0.2 | 0.2 |
| Other * | 0.4 | 0.2 | 0.6 |
| Fees
and Commissions, net | $ 1.5 | $ 1.8 | $ 2.4 |
Fees and commissions in the second quarter 2008 increased 35%, or $0.6 million, compared to the previous quarter, and 59%, or $0.9 million, from a year ago mostly due to the increased commission income from letters of credit, and management fee related to the Asset Management Division.
8
PORTFOLIO QUALITY AND PROVISION FOR CREDIT LOSSES
| (In
US$ million) | 30-Jun-07 | | | | | | | 30-Jun-08 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Allowance
for Loan Losses: | | | | | | | | | |
| Balance
at beginning of the period | $ 56.6 | $ | 69.0 | $ | 72.6 | $ | 69.6 | $ 69.9 | |
| Provisions
(reversals) | 6.2 | | 3.4 | | (3.0 | ) | 0.0 | (3.2 | ) |
| Recoveries | 6.2 | | 0.3 | | 0.0 | | 0.2 | 3.1 | |
| End
of period balance | $ 69.0 | $ | 72.6 | $ | 69.6 | $ | 69.9 | $ 69.8 | |
| Reserve
for Losses on Off-balance Sheet Credit Risk: | | | | | | | | | |
| Balance
at beginning of the period | $ 21.0 | $ | 13.5 | $ | 10.5 | $ | 13.7 | $ 13.7 | |
| Provisions
(reversals) | (7.6 | ) | (3.0 | ) | 3.2 | | 0.0 | 2.5 | |
| End
of period balance | $ 13.5 | $ | 10.5 | $ | 13.7 | $ | 13.7 | $ 16.2 | |
| Total
Allowance for Credit Losses | $ 82.5 | $ | 83.1 | $ | 83.4 | $ | 83.6 | $ 86.0 | |
The allowance for credit losses amounted $86.0 million, an increase of 3% from March 31, 2008. The ratio of the allowance for credit losses to the commercial portfolio was 1.9%, compared to 2.0% as of March 31, 2008 and 2.1% as of June 30, 2007.
OPERATING EXPENSES AND EFFICIENCY LEVEL
| (US$
million) | 2Q07 | 1Q08 | 2Q08 |
| --- | --- | --- | --- |
| Salaries
and other employee expenses | $ 6.2 | $ 5.5 | $ 5.0 |
| Depreciation, amortization and impairment | 0.6 | 0.7 | 1.6 |
| Professional
services | 1.2 | 0.7 | 1.2 |
| Maintenance
and repairs | 0.3 | 0.3 | 0.4 |
| Other
operating expenses | 1.9 | 2.0 | 2.2 |
| Total
Operating Expenses | $ 10.3 | $ 9.2 | $ 10.5 |
The Bank’s efficiency ratio was 29% in the second quarter 2008, compared to 32% in the first quarter 2008 and 28% in the second quarter 2007.
Total operating expenses for the second quarter 2008 were $10.5 million, an increase of $1.2 million compared to the previous quarter, mainly due to a write-off related to an information technology application reported in depreciation, amortization and impairment expenses.
9
OTHER EVENTS
§ Common Dividend Payment: On July 15, 2008, the Bank’s Board of Directors declared regular quarterly dividend of US$0.22 per share corresponding to the second quarter 2008 to stockholders of record as of July 21, 2008, payable on July 31, 2008.
§ Asset Management Division: On July 10, 2008, Bladex announced the incorporation of Mr. Tulio P. Vera to Bladex Asset Management (BAM). Mr. Vera joins the Division as Chief Strategist and Head of Client Relations, and will be responsible for identifying and analyzing opportunities in the Latin American investment space. Prior to Bladex, Mr. Vera worked with Merrill Lynch as a Managing Director, Chief Global Emerging Market Macro and Debt Strategist.
Ratings Assigned: On July 7, 2008, Fitch Ratings assigned the following ratings to Bladex: Foreign Currency Long-Term Issuer Default Rating (IDR) – ‘BBB’, Foreign Currency Short-Term IDR – ‘F-2, Individual Rating – ‘C’, Support Rating – ‘5’, Support Floor – ‘NF’. The outlook is stable.
§ Ratings Upgrade: On May 13, 2008, Standard & Poor’s Rating Services upgraded Bladex’s long-term issuer credit rating to ‘BBB’ from ‘BBB-‘ and its short-term issuer credit rating to ‘A-2’ from ‘A-3’. The outlook is stable.
Note: Various numbers and percentages set forth in this press release have been rounded and, accordingly, may not total exactly.
Footnotes:
(1) Net Operating Revenue refers to net interest income plus non-interest operating income.
(2) Net Operating Income refers to net interest income plus non-interest operating income, minus operating expenses.
(3) Net interest income on lending spreads refers to interest income on weighted average net lending spreads of average loan portfolio, plus loan commissions.
(4) Lending spreads refer to loan portfolio weighted average lending spread over weighted average Libor-based cost rate, excluding loan commission.
(5) Liquidity ratio refers to liquid assets as a percentage of total assets. Liquid assets consist of investment-grade ‘A’ securities, and cash and due from banks, excluding cash balances in the Asset Management Division.
(6) Efficiency ratio refers to consolidated operating expenses as a percentage of net operating revenues. Excluding the Asset Management Division’s net revenues and expenses, the efficiency ratio is 38%, 34% and 35% for second quarter 2008, first quarter 2008 and second quarter 2007, respectively.
(7) Net interest income on allocated capital is calculated based on capital assigned to support the loan portfolio.
(8) Non-interest operating income refers to net other income (expense) excluding reversals (provisions) for credit losses and recoveries (impairment) on assets. By business segment, non-interest operating income includes:
Commercial Division: fees and commissions net and related other income (expense), net.
Treasury Division: net gains on sale of securities available for sale, activities of hedging derivative instruments and gain (loss) on foreign currency expense.
Asset Management Division: trading gains and related other income (expense), net.
10
(9) Net Income per Share calculations are based on the average number of shares outstanding during each period.
(10) Tier 1 Capital refers to total stockholders’ equity.
Tier 1 Capital ratio refers to Tier 1 Capital as a percentage of risk weighted assets.
Risk-weighted assets are calculated based on US Federal Reserve Board and Basel I capital adequacy guidelines.
(11) Total Capital refers to total stockholders’ equity plus Tier 2 Capital based on US Federal Reserve Board and Basel I capital adequacy guidelines.
Total Capital ratio refers to Total Capital as a percentage of risk weighted assets.
(12) Operating ROE: Annualized net operating income divided by average stockholders’ equity.
SAFE HARBOR STATEMENT
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 growth of the credit portfolio, including the trade portfolio, the increase in the number of the Bank’s corporate clients, the positive trend of lending spreads, the increase in activities engaged in by the Bank that are derived from the Bank’s client base, anticipated operating income and return on equity in future periods, including income derived from the Treasury Division and Asset Management Division, the improvement in the financial and performance strength of the Bank and the progress the Bank is making. 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: the anticipated growth of the Bank’s credit portfolio; the continuation of the Bank’s preferred creditor status; the impact of increasing/decreasing interest rates and of improving macroeconomic environment in the Region on the Bank’s financial condition; the execution of the Bank’s strategies and initiatives, including its revenue diversification strategy; the adequacy of the Bank’s allowance for credit losses; the need for additional provisions for credit losses; the Bank’s ability to achieve future growth, to reduce its liquidity levels and increase its leverage; the Bank’s ability to maintain its investment-grade credit ratings; the availability and mix of future sources of funding for the Bank’s lending operations; potential trading losses; the possibility of fraud; and the adequacy of the Bank’s sources of liquidity to replace large deposit withdrawals.
About Bladex
Bladex is a supranational bank originally established by the Central Banks of Latin American and Caribbean countries to support trade finance in the Region. Based in Panama, its shareholders include central banks and state-owned entities in 23 countries in the Region, as well as Latin American and international commercial banks, along with institutional and retail investors. Through June 30, 2008, Bladex had disbursed accumulated credits of over $156 billion.
11
Conference Call Information
There will be a conference call to discuss the Bank’s quarterly results on Tuesday, July 29, 2008, at 11:00 a.m., New York City time (Eastern Time). For those interested in participating, please dial (800) 311-9401 in the United States or, if outside the United States, (334) 323-7224. Participants should use conference ID# 8034, and dial in five minutes before the call is set to begin. There will also be a live audio web cast of the conference at www.bladex.com .
The conference call will become available for review on Conference Replay one hour after its conclusion, and will remain available through September 28, 2008. Please dial (877) 919-4059 or (334) 323-7226, and follow the instructions. The Conference ID# for the replayed call is 42697683.
For more information, please access www.bladex.com or contact:
Mr. Jaime Celorio
Chief Financial Officer
Bladex
Calle 50 y Aquilino de la Guardia
P.O. Box: 0819-08730
Panama City, Panama
Tel: (507) 210-8563
Fax: (507) 269-6333
E-mail address: [email protected]
Investor Relations Firm:
i-advize Corporate Communications, Inc.
Mrs. Melanie Carpenter / Mr. Peter Majeski
82 Wall Street, Suite 805
New York, NY 10005
Tel: (212) 406-3690
E-mail address: [email protected]
12
EXHIBIT I
CONSOLIDATED BALANCE SHEETS
| AT THE END OF, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (A) | (B) | (C) | (C) - (B) | (C) - (A) | ||||||||||
| Jun. 30, 2007 | Mar. 31, 2008 | Jun. 30, 2008 | CHANGE | % | CHANGE | % | ||||||||
| (In | ||||||||||||||
| US$ million) | ||||||||||||||
| ASSETS: | ||||||||||||||
| Cash | ||||||||||||||
| and due from banks | $ 326 | $ | 539 | $ | 349 | $ | (190 | ) | (35 | )% | $ 23 | 7 | % | |
| Trading | ||||||||||||||
| assets | 143 | 29 | 0 | (29 | ) | (100 | ) | (143 | ) | (100 | ) | |||
| Securities | ||||||||||||||
| available for sale | 168 | 695 | 737 | 41 | 6 | 568 | 338 | |||||||
| Securities | ||||||||||||||
| held to maturity | 0 | 0 | 29 | 29 | 0 | 29 | n.m. | (*) | ||||||
| Investment | ||||||||||||||
| in mutual funds | 0 | 0 | 144 | 144 | 0 | 144 | n.m. | (*) | ||||||
| Loans | 3,415 | 3,775 | 4,105 | 330 | 9 | 689 | 20 | |||||||
| Less: | ||||||||||||||
| Allowance | ||||||||||||||
| for loan losses | (69 | ) | (70 | ) | (70 | ) | 0 | (0 | ) | (1 | ) | 1 | ||
| Unearned | ||||||||||||||
| income and deferred loan fees | (4 | ) | (7 | ) | (6 | ) | 0 | (6 | ) | (2 | ) | 51 | ||
| Loans, | ||||||||||||||
| net | 3,342 | 3,698 | 4,029 | 330 | 9 | 686 | 21 | |||||||
| Customers' | ||||||||||||||
| liabilities under acceptances | 21 | 35 | 31 | (3 | ) | (9 | ) | 11 | 52 | |||||
| Premises | ||||||||||||||
| and equipment, net | 10 | 10 | 8 | (2 | ) | (16 | ) | (1 | ) | (15 | ) | |||
| Accrued | ||||||||||||||
| interest receivable | 52 | 52 | 59 | 7 | 14 | 7 | 14 | |||||||
| Other | ||||||||||||||
| assets | 144 | 32 | 21 | (11 | ) | (35 | ) | (123 | ) | (85 | ) | |||
| TOTAL | ||||||||||||||
| ASSETS | $ 4,205 | $ | 5,090 | $ | 5,407 | $ | 317 | 6 | % | $ 1,202 | 29 | % | ||
| LIABILITIES | ||||||||||||||
| AND STOCKHOLDERS' EQUITY: | ||||||||||||||
| Deposits: | ||||||||||||||
| Demand | $ 109 | $ | 94 | $ | 104 | $ | 9 | 10 | % | $ (5 | ) | (5 | ) | |
| Time | 1,272 | 1,263 | 1,633 | 370 | 29 | 361 | 28 | |||||||
| Total | ||||||||||||||
| Deposits | 1,381 | 1,357 | 1,736 | 379 | 28 | 356 | 26 | |||||||
| Trading | ||||||||||||||
| liabilities | 178 | 23 | 0 | (23 | ) | (100 | ) | (178 | ) | (100 | ) | |||
| Securities | ||||||||||||||
| sold under repurchase agreements | 113 | 529 | 458 | (70 | ) | (13 | ) | 345 | 306 | |||||
| Short-term | ||||||||||||||
| borrowings | 945 | 1,204 | 1,230 | 26 | 2 | 285 | 30 | |||||||
| Long-term | ||||||||||||||
| debt and borrowings | 813 | 1,220 | 1,202 | (18 | ) | (1 | ) | 389 | 48 | |||||
| Acceptances | ||||||||||||||
| outstanding | 21 | 35 | 31 | (3 | ) | (9 | ) | 11 | 52 | |||||
| Accrued | ||||||||||||||
| interest payable | 36 | 36 | 43 | 7 | 20 | 7 | 20 | |||||||
| Reserve | ||||||||||||||
| for losses on off-balance sheet credit risk | 13 | 14 | 16 | 3 | 18 | 3 | 21 | |||||||
| Other | ||||||||||||||
| liabilities | 99 | 65 | 44 | (20 | ) | (31 | ) | (55 | ) | (55 | ) | |||
| TOTAL | ||||||||||||||
| LIABILITIES | $ 3,599 | $ | 4,482 | $ | 4,762 | $ | 281 | 6 | % | $ 1,164 | 32 | % | ||
| STOCKHOLDERS' | ||||||||||||||
| EQUITY: | ||||||||||||||
| Common | ||||||||||||||
| stock, no par value, assigned value of US$6.67 | 280 | 280 | 280 | |||||||||||
| Additional | ||||||||||||||
| paid-in capital in exces of assigned value | 135 | 135 | 136 | |||||||||||
| Capital | ||||||||||||||
| reserves | 95 | 95 | 95 | |||||||||||
| Retained | ||||||||||||||
| earnings | 231 | 257 | 274 | |||||||||||
| Accumulated | ||||||||||||||
| other comprehensive income (loss) | (1 | ) | (25 | ) | (6 | ) | ||||||||
| Treasury | ||||||||||||||
| stock | (134 | ) | (134 | ) | (134 | ) | ||||||||
| TOTAL | ||||||||||||||
| STOCKHOLDERS' EQUITY | $ 606 | $ | 608 | $ | 645 | $ | 37 | 6 | % | $ 39 | 6 | % | ||
| TOTAL | ||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | $ 4,205 | $ | 5,090 | $ | 5,407 | $ | 317 | 6 | % | $ 1,202 | 29 | % |
(*) "n.m." means not meaningful.
EXHIBIT II
CONSOLIDATED STATEMENTS OF INCOME
| FOR THE THREE MONTHS ENDED | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (A) | (B) | (C) | (C) - (B) | (C) - (A) | ||||||||||
| Jun. 30, 2007 | Mar. 31, 2008 | Jun. 30, 2008 | CHANGE | % | CHANGE | % | ||||||||
| (In US$ thousand, except per share data) | ||||||||||||||
| INCOME | ||||||||||||||
| STATEMENT DATA: | ||||||||||||||
| Interest | ||||||||||||||
| income | $ 63,243 | $ | 67,850 | $ | 60,629 | $ | (7,221 | ) | (11 | )% | $ (2,614 | ) | (4 | )% |
| Interest | ||||||||||||||
| expense | (46,497 | ) | (46,733 | ) | (40,513 | ) | 6,220 | (13 | ) | 5,984 | (13 | ) | ||
| NET | ||||||||||||||
| INTEREST INCOME | 16,745 | 21,118 | 20,116 | (1,002 | ) | (5 | ) | 3,370 | 20 | |||||
| Reversal | ||||||||||||||
| (provision) for loan losses | (6,235 | ) | 0 | 3,204 | 3,204 | n.m. | (*) | 9,439 | (151 | ) | ||||
| NET | ||||||||||||||
| INTEREST INCOME AFTER REVERSAL | ||||||||||||||
| FOR | ||||||||||||||
| LOAN LOSSES | 10,510 | 21,118 | 23,319 | 2,202 | 10 | 12,809 | 122 | |||||||
| OTHER | ||||||||||||||
| INCOME (EXPENSE): | ||||||||||||||
| Reversal | ||||||||||||||
| (provision) for losses on off-balance sheet credit risk | 7,581 | 0 | (2,513 | ) | (2,513 | ) | n.m. | (*) | (10,094 | ) | (133 | ) | ||
| Fees | ||||||||||||||
| and commissions, net | 1,525 | 1,799 | 2,421 | 622 | 35 | 896 | 59 | |||||||
| Activities | ||||||||||||||
| of hedging derivatives instruments | 1 | (52 | ) | (27 | ) | 25 | (49 | ) | (28 | ) | (2,747 | ) | ||
| Recoveries | ||||||||||||||
| (impairment), on assets | (500 | ) | 0 | (339 | ) | (339 | ) | n.m. | (*) | 161 | (32 | ) | ||
| Trading | ||||||||||||||
| gains | 14,278 | 5,350 | 216 | (5,134 | ) | (96 | ) | (14,062 | ) | (98 | ) | |||
| Net | ||||||||||||||
| gains on sale of securities available for sale | 3,906 | 0 | 2,095 | 2,095 | n.m. | (*) | (1,812 | ) | (46 | ) | ||||
| Net | ||||||||||||||
| gains on mutual funds | 0 | 0 | 10,960 | 10,960 | n.m. | (*) | 10,960 | n.m. | (*) | |||||
| Gain | ||||||||||||||
| (loss) on foreign currency exchange | (56 | ) | 184 | 554 | 370 | 201 | 610 | (1,084 | ) | |||||
| Other | ||||||||||||||
| income (expense), net | 0 | 40 | 30 | (11 | ) | (27 | ) | 30 | 27,385 | |||||
| NET | ||||||||||||||
| OTHER INCOME (EXPENSE) | 26,734 | 7,321 | 13,396 | 6,075 | 83 | (13,338 | ) | (50 | ) | |||||
| OPERATING | ||||||||||||||
| EXPENSES: | ||||||||||||||
| Salaries | ||||||||||||||
| and other employee expenses | (6,234 | ) | (5,530 | ) | (4,970 | ) | 560 | (10 | ) | 1,264 | (20 | ) | ||
| Depreciation, | ||||||||||||||
| amortization and impairment | (639 | ) | (682 | ) | (1,648 | ) | (966 | ) | 142 | (1,008 | ) | 158 | ||
| Professional | ||||||||||||||
| services | (1,223 | ) | (737 | ) | (1,241 | ) | (504 | ) | 68 | (19 | ) | 2 | ||
| Maintenance | ||||||||||||||
| and repairs | (279 | ) | (300 | ) | (365 | ) | (64 | ) | 21 | (86 | ) | 31 | ||
| Other | ||||||||||||||
| operating expenses | (1,887 | ) | (1,988 | ) | (2,228 | ) | (240 | ) | 12 | (341 | ) | 18 | ||
| TOTAL | ||||||||||||||
| OPERATING EXPENSES | (10,262 | ) | (9,237 | ) | (10,452 | ) | (1,215 | ) | 13 | (190 | ) | 2 | ||
| NET | ||||||||||||||
| INCOME | $ 26,983 | $ | 19,202 | $ | 26,264 | $ | 7,062 | 37 | % | $ (719 | ) | (3 | )% | |
| PER | ||||||||||||||
| COMMON SHARE DATA: | ||||||||||||||
| Net | ||||||||||||||
| income per share | 0.74 | 0.53 | 0.72 | |||||||||||
| Diluted | ||||||||||||||
| earnings per share | 0.73 | 0.53 | 0.72 | |||||||||||
| Average | ||||||||||||||
| basic shares | 36,335 | 36,370 | 36,370 | |||||||||||
| Average | ||||||||||||||
| diluted shares | 37,062 | 36,370 | 36,423 | |||||||||||
| PERFORMANCE | ||||||||||||||
| RATIOS: | ||||||||||||||
| Return | ||||||||||||||
| on average assets | 2.7 | % | 1.6 | % | 2.0 | % | ||||||||
| Return | ||||||||||||||
| on average stockholders' equity | 18.0 | % | 12.6 | % | 16.7 | % | ||||||||
| Net | ||||||||||||||
| interest margin | 1.70 | % | 1.77 | % | 1.56 | % | ||||||||
| Net | ||||||||||||||
| interest spread | 0.76 | % | 1.14 | % | 1.09 | % | ||||||||
| Operating | ||||||||||||||
| expenses to total average assets | 1.01 | % | 0.76 | % | 0.80 | % |
(*) "n.m." means not meaningful.
EXHIBIT III
SUMMARY OF CONSOLIDATED FINANCIAL DATA
(Consolidated Statements of Income, Balance Sheets, and Selected Financial Ratios)
| FOR THE SIX MONTHS ENDED JUNE 30, — 2007 | 2008 | |||
|---|---|---|---|---|
| (In | ||||
| US$ thousand, except per share amounts & ratios) | ||||
| INCOME | ||||
| STATEMENT DATA: | ||||
| Net | ||||
| interest income | $ 33,821 | $ | 41,233 | |
| Fees | ||||
| and commissions, net | 2,800 | 4,220 | ||
| Reversal | ||||
| of provision for loan and off-balance sheet credit losses, | ||||
| net | 2,150 | 690 | ||
| Activities | ||||
| of hedging derivatives instruments | (483 | ) | (78 | ) |
| Recoveries | ||||
| (impairment), on assets | (500 | ) | (339 | ) |
| Trading | ||||
| gains | 15,286 | 5,566 | ||
| Net | ||||
| gains on sale of securities available for sale | 6,605 | 2,095 | ||
| Net | ||||
| gains on mutual funds | 0 | 10,960 | ||
| Gain | ||||
| (loss) on foreign currency exchange | (56 | ) | 738 | |
| Other | ||||
| income (expense), net | 41 | 70 | ||
| Operating | ||||
| expenses | (17,847 | ) | (19,688 | ) |
| NET | ||||
| INCOME | $ 41,817 | $ | 45,466 | |
| BALANCE | ||||
| SHEET DATA (In US$ millions): | ||||
| Investment | ||||
| securities and trading assets | 311 | 766 | ||
| Loans, | ||||
| net | 3,342 | 4,029 | ||
| Total | ||||
| assets | 4,205 | 5,407 | ||
| Deposits | 1,381 | 1,736 | ||
| Trading | ||||
| liabilities | 178 | 0 | ||
| Securities | ||||
| sold under repurchase agreements | 113 | 458 | ||
| Short-term | ||||
| borrowings | 945 | 1,230 | ||
| Long-term | ||||
| debt and borrowings | 813 | 1,202 | ||
| Total | ||||
| liabilities | 3,599 | 4,762 | ||
| Stockholders' | ||||
| equity | 606 | 645 | ||
| PER | ||||
| COMMON SHARE DATA: | ||||
| Net | ||||
| income per share | 1.15 | 1.25 | ||
| Diluted | ||||
| earnings per share | 1.13 | 1.25 | ||
| Book | ||||
| value (period average) | 16.39 | 17.10 | ||
| Book | ||||
| value (period end) | 16.68 | 17.74 | ||
| (In | ||||
| US$ thousand): | ||||
| Average | ||||
| basic shares | 36,332 | 36,370 | ||
| Average | ||||
| diluted shares | 36,853 | 36,397 | ||
| Basic | ||||
| shares period end | 36,348 | 36,371 | ||
| SELECTED | ||||
| FINANCIAL RATIOS: | ||||
| PERFORMANCE | ||||
| RATIOS: | ||||
| Return | ||||
| on average assets | 2.1 | % | 1.8 | % |
| Return | ||||
| on average stockholders' equity | 14.2 | % | 14.7 | % |
| Net | ||||
| interest margin | 1.76 | % | 1.67 | % |
| Net | ||||
| interest spread | 0.82 | % | 1.12 | % |
| Operating | ||||
| expenses to total average assets | 0.91 | % | 0.78 | % |
| ASSET | ||||
| QUALITY RATIOS: | ||||
| Non-accruing | ||||
| loans to total loans, net of discounts (1) | 0.0 | % | 0.0 | % |
| Charge | ||||
| offs net of recoveries to total loan portfolio (1) | 0.0 | % | -0.1 | % |
| Allowance | ||||
| for loan losses to total loan portfolio (1) | 2.0 | % | 1.7 | % |
| Allowance | ||||
| for losses on off-balance sheet credit risk to total | ||||
| contingencies | 2.6 | % | 4.0 | % |
| CAPITAL | ||||
| RATIOS: | ||||
| Stockholders' | ||||
| equity to total assets | 14.4 | % | 11.9 | % |
| Tier | ||||
| 1 capital to risk-weighted assets | 21.2 | % | 19.0 | % |
| Total | ||||
| capital to risk-weighted assets | 22.4 | % | 20.3 | % |
(1) Loan portfolio is presented net of unearned income and deferred loan fees.
EXHIBIT IV
CONSOLIDATED STATEMENTS OF INCOME
| | FOR
THE SIX MONTHS ENDED
JUNE 30, — 2007 | 2008 | | CHANGE | | % | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (In
US$ thousand) | | | | | | | | |
| INCOME
STATEMENT DATA: | | | | | | | | |
| Interest
income | $ 124,236 | $ | 128,479 | $ | 4,243 | | 3 | % |
| Interest
expense | (90,414 | ) | (87,246 | ) | 3,169 | | (4 | ) |
| NET
INTEREST INCOME | 33,821 | | 41,233 | | 7,412 | | 22 | |
| Provision
for loan losses | (11,589 | ) | 3,204 | | 14,793 | | (128 | ) |
| NET
INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 22,232 | | 44,437 | | 22,205 | | 100 | |
| OTHER
INCOME (EXPENSE): | | | | | | | | |
| Reversal
for losses on off-balance sheet credit risk | 13,739 | | (2,513 | ) | (16,252 | ) | (118 | ) |
| Fees
and commissions, net | 2,800 | | 4,220 | | 1,420 | | 51 | |
| Derivatives
and hedging activities | (483 | ) | (78 | ) | 405 | | (84 | ) |
| Recoveries
(impairment), on assets | (500 | ) | (339 | ) | 161 | | (32 | ) |
| Trading
gains | 15,286 | | 5,566 | | (9,720 | ) | (64 | ) |
| Net
gains on sale of securities available for sale | 6,605 | | 2,095 | | (4,511 | ) | (68 | ) |
| Net
gains on mutual funds | 0 | | 10,960 | | 10,960 | | n.m. | (*) |
| Gain
(loss) on foreign currency exchange | (56 | ) | 738 | | 794 | | (1,422 | ) |
| Other
income (expense), net | 41 | | 70 | | 29 | | 72 | |
| NET
OTHER INCOME (EXPENSE | 37,432 | | 20,718 | | (16,714 | ) | (45 | ) |
| OPERATING
EXPENSES: | | | | | | | | |
| Salaries
and other employee expenses | (10,497 | ) | (10,499 | ) | (3 | ) | 0 | |
| Depreciation,
amortization and impairment | (1,267 | ) | (2,329 | ) | (1,063 | ) | 84 | |
| Professional
services | (1,963 | ) | (1,979 | ) | (16 | ) | 1 | |
| Maintenance
and repairs | (570 | ) | (665 | ) | (96 | ) | 17 | |
| Other
operating expenses | (3,551 | ) | (4,216 | ) | (664 | ) | 19 | |
| TOTAL
OPERATING EXPENSES | (17,847 | ) | (19,688 | ) | (1,841 | ) | 10 | |
| NET
INCOME | $ 41,817 | $ | 45,466 | $ | 3,650 | | 9 | % |
(*) "n.m." means not meaningful.
EXHIBIT V
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES
| FOR THE THREE MONTHS ENDED, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| June 30, 2007 | March 31, 2008 | June 30, 2008 | |||||||
| AVERAGE | AVG. | AVERAGE | AVG. | AVERAGE | AVG. | ||||
| BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | |
| (In US$ million) | |||||||||
| INTEREST | |||||||||
| EARNING ASSETS | |||||||||
| Interest-bearing | |||||||||
| deposits with banks | $ 290 | $ 4.0 | 5.50 % | $ 443 | $ 3.8 | 3.36 % | $ 382 | $ 2.1 | 2.20 % |
| Loans, | |||||||||
| net of unearned income & deferred loan fees | 3,321 | 54.1 | 6.44 | 3,701 | 55.4 | 5.92 | 3,966 | 49.7 | 4.96 |
| Trading | |||||||||
| assets | 110 | 1.6 | 5.80 | 29 | 0.1 | 1.61 | 42 | 0.0 | 0.08 |
| Investment | |||||||||
| securities | 241 | 3.6 | 5.84 | 615 | 8.6 | 5.53 | 783 | 8.8 | 4.45 |
| TOTAL | |||||||||
| INTEREST EARNING ASSETS | $ 3,961 | $ 63.2 | 6.32 % | $ 4,787 | $ 67.9 | 5.61 % | $ 5,172 | $ 60.6 | 4.64 % |
| Investment | |||||||||
| in mutual funds | 0 | 0 | 42 | ||||||
| Non | |||||||||
| interest earning assets | 75 | 108 | 80 | ||||||
| Allowance | |||||||||
| for loan losses | (56 | ) | (70 | ) | (70 | ) | |||
| Other | |||||||||
| assets | 76 | 85 | 41 | ||||||
| TOTAL | |||||||||
| ASSETS | $ 4,055 | $ 4,911 | $ 5,265 | ||||||
| INTEREST | |||||||||
| BEARING LIABILITITES | |||||||||
| Deposits. | $ 1,341 | $ 18.1 | 5.33 % | $ 1,435 | $ 13.7 | 3.79 % | $ 1,601 | $ 11.7 | 2.88 % |
| Trading | |||||||||
| liabilities | 88 | 1.4 | 6.24 | 45 | 0.7 | 6.20 | 12 | 0.1 | 2.62 |
| Securities | |||||||||
| sold under repurchase agreement and short-term borrowings | 1,123 | 15.6 | 5.49 | 1,655 | 18.8 | 4.49 | 1,697 | 16.0 | 3.73 |
| Long-term | |||||||||
| debt and borrowings | 760 | 11.5 | 5.98 | 1,006 | 13.5 | 5.32 | 1,209 | 12.8 | 4.18 |
| TOTAL | |||||||||
| INTEREST BEARING LIABILITIES | $ 3,311 | $ 46.5 | 5.56 % | $ 4,141 | $ 46.7 | 4.46 % | $ 4,519 | $ 40.5 | 3.55 % |
| Non | |||||||||
| interest bearing liabilities and other liabilities | $ 142 | $ 157 | $ 115 | ||||||
| TOTAL | |||||||||
| LIABILITIES | 3,453 | 4,298 | 4,635 | ||||||
| STOCKHOLDERS' | |||||||||
| EQUITY | 603 | 613 | 631 | ||||||
| TOTAL | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | $ 4,055 | $ 4,911 | $ 5,265 | ||||||
| NET | |||||||||
| INTEREST SPREAD | 0.76 % | 1.14 % | 1.09 % | ||||||
| NET | |||||||||
| INTEREST INCOME AND NET INTEREST | |||||||||
| MARGIN | $ 16.7 | 1.70 % | $ 21.1 | 1.77 % | $ 20.1 | 1.56 % |
(*) "n.m." means not meaningful.
EXHIBIT VI
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES
| FOR THE SIX MONTHS ENDED, | ||||||
|---|---|---|---|---|---|---|
| June 30, 2007 | June 30, 2008 | |||||
| AVERAGE | AVG. | AVERAGE | AVG. | |||
| BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | |
| (In | ||||||
| US$ million) | ||||||
| INTEREST | ||||||
| EARNING ASSETS | ||||||
| Interest-bearing | ||||||
| deposits with banks | $ 260 | $ 7.1 | 5.41 % | $ 412 | $ 5.9 | 2.82 % |
| Loans, | ||||||
| net of unearned income & deferred loan fees | 3,194 | 104.1 | 6.48 | 3,833 | 105.1 | 5.42 |
| Trading | ||||||
| assets | 116 | 4.1 | 7.06 | 35 | 0.1 | 0.70 |
| Investment | ||||||
| securities | 310 | 8.9 | 5.75 | 699 | 17.4 | 4.93 |
| TOTAL | ||||||
| INTEREST EARNING ASSETS | $ 3,880 | $ 124.2 | 6.37 % | $ 4,980 | $ 128.5 | 5.10 % |
| Investment | ||||||
| in mutual funds | 0 | 21 | ||||
| Non | ||||||
| interest earning assets | 86 | 94 | ||||
| Allowance | ||||||
| for loan losses | (54 | ) | (70 | ) | ||
| Other | ||||||
| assets | 60 | 63 | ||||
| TOTAL | ||||||
| ASSETS | $ 3,973 | $ 5,088 | ||||
| INTEREST | ||||||
| BEARING LIABILITITES | ||||||
| Deposits | $ 1,250 | $ 33.4 | 5.32 % | $ 1,518 | $ 25.4 | 3.31 % |
| Trading | ||||||
| liabilities | 73 | 2.3 | 6.38 | 28 | 0.8 | 5.45 |
| Securities | ||||||
| sold under repurchase agreement and short-term borrowings | 1,243 | 34.3 | 5.48 | 1,676 | 34.8 | 4.10 |
| Long-term | ||||||
| debt and borrowings | 675 | 20.4 | 6.01 | 1,107 | 26.3 | 4.70 |
| TOTAL | ||||||
| INTEREST BEARING LIABILITIES | $ 3,241 | $ 90.4 | 5.55 % | $ 4,330 | $ 87.2 | 3.99 % |
| Non | ||||||
| interest bearing liabilities and other liabilities | $ 136 | $ 136 | ||||
| TOTAL | ||||||
| LIABILITIES | 3,377 | 4,466 | ||||
| STOCKHOLDERS' | ||||||
| EQUITY | 596 | 622 | ||||
| TOTAL | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | $ 3,973 | $ 5,088 | ||||
| NET | ||||||
| INTEREST SPREAD | 0.82 % | 1.12 % | ||||
| NET | ||||||
| INTEREST INCOME AND NET INTEREST MARGIN | $ 33.8 | 1.76 % | $ 41.2 | 1.67 % |
(*) "n.m." means not meaningful
EXHIBIT VII
CONSOLIDATED STATEMENT OF INCOME
(In US$ thousand, except ratios)
| SIX MONTHS | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ENDED | FOR THE THREE MONTHS ENDED | ENDED | ||||||||||||
| JUN 30/07 | JUN 30/07 | SEP 30/07 | DEC 31/07 | MAR 31/08 | JUN 30/08 | JUN 30/08 | ||||||||
| INCOME | ||||||||||||||
| STATEMENT DATA: | ||||||||||||||
| Interest | ||||||||||||||
| income | $ 124,236 | $ | 63,243 | $ | 68,641 | $ | 71,992 | $ | 67,850 | $ | 60,629 | $ | 128,479 | |
| Interest | ||||||||||||||
| expense | (90,414 | ) | (46,497 | ) | (51,020 | ) | (52,864 | ) | (46,733 | ) | (40,513 | ) | (87,246 | ) |
| NET | ||||||||||||||
| INTEREST INCOME | 33,821 | 16,745 | 17,622 | 19,127 | 21,118 | 20,116 | 41,233 | |||||||
| Reversal | ||||||||||||||
| (provision) for loan losses | (11,589 | ) | (6,235 | ) | (3,384 | ) | 2,980 | 0 | 3,204 | 3,204 | ||||
| NET | ||||||||||||||
| INTEREST INCOME AFTER REVERSAL (PROVISION) FOR LOAN LOSSES | 22,232 | 10,510 | 14,237 | 22,107 | 21,118 | 23,319 | 44,437 | |||||||
| OTHER | ||||||||||||||
| INCOME (EXPENSE): | ||||||||||||||
| Reversal | ||||||||||||||
| (provision) for losses on off-balance sheet credit risk | 13,739 | 7,581 | 2,964 | (3,235 | ) | 0 | (2,513 | ) | (2,513 | ) | ||||
| Fees | ||||||||||||||
| and commissions, net | 2,800 | 1,525 | 1,173 | 1,582 | 1,799 | 2,421 | 4,220 | |||||||
| Derivatives | ||||||||||||||
| and hedging activities | (483 | ) | 1 | (294 | ) | (212 | ) | (52 | ) | (27 | ) | (78 | ) | |
| Recoveries | ||||||||||||||
| (impairment) on assets | (500 | ) | (500 | ) | 0 | 0 | 0 | (339 | ) | (339 | ) | |||
| Trading | ||||||||||||||
| gains | 15,286 | 14,278 | 5,104 | 3,475 | 5,350 | 216 | 5,566 | |||||||
| Net | ||||||||||||||
| gains on sale of securities available for sale | 6,605 | 3,906 | 288 | 2,226 | 0 | 2,095 | 2,095 | |||||||
| Net | ||||||||||||||
| gains on mutual funds | 0 | 0 | 0 | 0 | 0 | 10,960 | 10,960 | |||||||
| Gain | ||||||||||||||
| (loss) on foreign currency exchange | (56 | ) | (56 | ) | (9 | ) | 181 | 184 | 554 | 738 | ||||
| Other | ||||||||||||||
| income (expense), net | 41 | 0 | 17 | (64 | ) | 40 | 30 | 70 | ||||||
| NET | ||||||||||||||
| OTHER INCOME (EXPENSE) | 37,432 | 26,734 | 9,242 | 3,954 | 7,321 | 13,396 | 20,718 | |||||||
| TOTAL | ||||||||||||||
| OPERATING EXPENSES | (17,847 | ) | (10,262 | ) | (8,652 | ) | (10,527 | ) | (9,237 | ) | (10,452 | ) | (19,688 | ) |
| NET | ||||||||||||||
| INCOME | $ 41,817 | $ | 26,983 | $ | 14,827 | $ | 15,534 | $ | 19,202 | $ | 26,264 | $ | 45,466 | |
| SELECTED | ||||||||||||||
| FINANCIAL DATA | ||||||||||||||
| PER | ||||||||||||||
| COMMON SHARE DATA | ||||||||||||||
| Net | ||||||||||||||
| income per share | $ 1.15 | $ | 0.74 | $ | 0.41 | $ | 0.43 | $ | 0.53 | $ | 0.72 | $ | 1.25 | |
| PERFORMANCE | ||||||||||||||
| RATIOS | ||||||||||||||
| Return | ||||||||||||||
| on average assets | 2.1 | % | 2.7 | % | 1.4 | % | 1.3 | % | 1.6 | % | 2.0 | % | 1.8 | % |
| Return | ||||||||||||||
| on average stockholders' equity | 14.2 | % | 18.0 | % | 9.6 | % | 9.9 | % | 12.6 | % | 16.7 | % | 14.7 | % |
| Net | ||||||||||||||
| interest margin | 1.76 | % | 1.70 | % | 1.65 | % | 1.69 | % | 1.77 | % | 1.56 | % | 1.67 | % |
| Net | ||||||||||||||
| interest spread | 0.82 | % | 0.76 | % | 0.73 | % | 0.84 | % | 1.14 | % | 1.09 | % | 1.12 | % |
| Operating | ||||||||||||||
| expenses to average assets | 0.91 | % | 1.01 | % | 0.80 | % | 0.91 | % | 0.76 | % | 0.80 | % | 0.78 | % |
EXHIBIT VIII
BUSINESS SEGMENT ANALYSIS
(In US$ million)
| FOR THE SIX MONTHS ENDED — JUN 30/07 | JUN 30/08 | FOR THE THREE MONTHS ENDED — JUN 30/07 | MAR 31/08 | JUN 30/08 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| COMMERCIAL | ||||||||||
| DIVISION: | ||||||||||
| Net | ||||||||||
| interest income (1) | $ 30.2 | $ | 38.3 | $ 15.4 | $ | 19.4 | $ 18.9 | |||
| Non-interest | ||||||||||
| operating income (2) | 2.7 | 3.7 | 1.4 | 1.8 | 1.9 | |||||
| Operating | ||||||||||
| expenses (3) | (12.9 | ) | (14.4 | ) | (6.7 | ) | (6.5 | ) | (7.9 | ) |
| Net | ||||||||||
| operating income (4) | 20.1 | 27.5 | 10.1 | 14.7 | 12.9 | |||||
| Reversal | ||||||||||
| (provision) for loan and off-balance sheet credit losses, | ||||||||||
| net | 2.2 | 0.7 | 1.3 | 0.0 | 0.7 | |||||
| Impairment | ||||||||||
| on assets | (0.5 | ) | (0.3 | ) | (0.5 | ) | 0.0 | (0.3 | ) | |
| NET | ||||||||||
| INCOME | $ 21.7 | $ | 27.9 | $ 10.9 | $ | 14.7 | $ 13.2 | |||
| Average | ||||||||||
| interest-earning assets (5) | 3,194 | 3,833 | 3,321 | 3,701 | 3,966 | |||||
| End-of-period | ||||||||||
| interest-earning assets (5) | 3,411 | 4,098 | 3,411 | 3,768 | 4,098 | |||||
| TREASURY | ||||||||||
| DIVISION: | ||||||||||
| Net | ||||||||||
| interest income (1) | $ 2.5 | $ | 4.2 | $ 1.1 | $ | 2.2 | $ 2.1 | |||
| Non-interest | ||||||||||
| operating income (2) | 6.2 | 2.8 | 3.9 | 0.2 | 2.7 | |||||
| Operating | ||||||||||
| expenses (3) | (1.9 | ) | (3.1 | ) | (1.0 | ) | (1.4 | ) | (1.8 | ) |
| Net | ||||||||||
| operating income (5) | 6.7 | 3.9 | 4.1 | 1.0 | 3.0 | |||||
| NET | ||||||||||
| INCOME | $ 6.7 | $ | 3.9 | $ 4.1 | $ | 1.0 | $ 3.0 | |||
| Average | ||||||||||
| interest-earning assets (6) | 516 | 1,044 | 450 | 967 | 1,121 | |||||
| End-of-period | ||||||||||
| interest-earning assets (6) | 399 | 1,115 | 399 | 1,183 | 1,115 | |||||
| ASSET | ||||||||||
| MANAGEMENT DIVISION: | ||||||||||
| Net | ||||||||||
| interest income (1) | $ 1.1 | $ | (1.3 | ) | $ 0.2 | $ | (0.4 | ) | $ (0.8 | ) |
| Non-interest | ||||||||||
| operating income (2) | 15.3 | 17.0 | 14.3 | 5.4 | 11.7 | |||||
| Operating | ||||||||||
| expenses (3) | (3.0 | ) | (2.1 | ) | (2.5 | ) | (1.3 | ) | (0.8 | ) |
| Net | ||||||||||
| operating income (4) | 13.4 | 13.6 | 12.0 | 3.6 | 10.1 | |||||
| NET | ||||||||||
| INCOME | $ 13.4 | $ | 13.6 | $ 12.0 | $ | 3.6 | $ 10.1 | |||
| Average | ||||||||||
| interest-earning assets (7) | 169 | 102 | 190 | 119 | 85 | |||||
| Average | ||||||||||
| investment in mutual funds | 0 | 21 | 0 | 0 | 42 | |||||
| Total | ||||||||||
| average interest-earning assets and investment in mutual | ||||||||||
| funds | 169 | 123 | 190 | 119 | 127 | |||||
| End-of-period | ||||||||||
| interest-earning assets (7) | 237 | 0 | 237 | 80 | 0 | |||||
| End-of-period | ||||||||||
| investment in mutual funds | 0 | 144 | 0 | 0 | 144 | |||||
| Total | ||||||||||
| end-of period interest-earning assets and investment in mutual | ||||||||||
| funds | 237 | 144 | 237 | 80 | 144 | |||||
| CONSOLIDATED: | ||||||||||
| Net | ||||||||||
| interest income (1) | $ 33.8 | $ | 41.2 | $ 16.7 | $ | 21.1 | $ 20.1 | |||
| Non-interest | ||||||||||
| operating income (2) | 24.2 | 23.6 | 19.7 | 7.3 | 16.2 | |||||
| Operating | ||||||||||
| expenses (3) | (17.8 | ) | (19.7 | ) | (10.3 | ) | (9.2 | ) | (10.5 | ) |
| Net | ||||||||||
| operating income (4) | 40.2 | 45.1 | 26.1 | 19.2 | 25.9 | |||||
| Reversal | ||||||||||
| (provision) for loan and off-balance sheet credit losses, | ||||||||||
| net | 2.2 | 0.7 | 1.3 | 0.0 | 0.7 | |||||
| Recoveries | ||||||||||
| (impairment), on assets | (0.5 | ) | (0.3 | ) | (0.5 | ) | 0.0 | (0.3 | ) | |
| NET | ||||||||||
| INCOME | $ 41.8 | $ | 45.5 | $ 27.0 | $ | 19.2 | $ 26.3 | |||
| Average | ||||||||||
| interest-earning assets | 3,880 | 4,980 | 3,961 | 4,787 | 5,172 | |||||
| End-of-period | ||||||||||
| interest-earning assets | 4,048 | 5,213 | 4,048 | 5,031 | 5,213 |
The bank has aligned its operations into three major business segments, based on the nature of clients, products and on credit risk standards.
Interest expenses are allocated based on average credits.
(1) Interest income on interest-earning assets, net of allocated cost of funds.
(2) Non-interest operating income consists of net other income (expense), excluding reversals of provisions for credit losses and impairment on assets
(3) Operating expenses are calculated based on average credits.
(4) Net operating income refers to net income excluding reversals of provisions for credit losses and impairment on assets.
(5) Includes loans, net of unearned income and deferred loan fees.
(6) Includes cash and due from banks, interest-bearing deposits with banks, securities available for sale and held to maturity.
(7) Includes cash and due from banks, interest-bearing deposits with banks, and trading securities of Asset Management Division.
EXHIBIT IX
CREDIT PORTFOLIO
DISTRIBUTION BY COUNTRY
(In US$ million)
| AT THE END OF, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (A) 30JUN07 | (B) 31MAR08 | (C) 30JUN08 | Change in Amount | |||||||
| COUNTRY | Amount | % of Total Outstanding | Amount | % of Total Outstanding | Amount | % of Total Outstanding | (C) - (B) | (C) - (A) | ||
| ARGENTINA | $ 247 | 6.0 | $ 310 | 6.4 | $ 273 | 5.2 | $ (37 | ) | $ 27 | |
| BOLIVIA | 5 | 0.1 | 0 | 0.0 | 5 | 0.1 | 5 | 0 | ||
| BRAZIL | 1,467 | 35.7 | 1,714 | 35.2 | 1,801 | 34.3 | 87 | 334 | ||
| CHILE | 161 | 3.9 | 53 | 1.1 | 52 | 1.0 | (1 | ) | (110 | ) |
| COLOMBIA | 347 | 8.5 | 629 | 12.9 | 514 | 9.8 | (116 | ) | 166 | |
| COSTA | ||||||||||
| RICA | 63 | 1.5 | 96 | 2.0 | 256 | 4.9 | 160 | 193 | ||
| DOMINICAN | ||||||||||
| REPUBLIC | 108 | 2.6 | 81 | 1.7 | 80 | 1.5 | (1 | ) | (28 | ) |
| ECUADOR | 136 | 3.3 | 151 | 3.1 | 174 | 3.3 | 23 | 37 | ||
| EL | ||||||||||
| SALVADOR | 32 | 0.8 | 62 | 1.3 | 73 | 1.4 | 11 | 41 | ||
| GUATEMALA | 102 | 2.5 | 119 | 2.4 | 175 | 3.3 | 56 | 73 | ||
| HONDURAS | 50 | 1.2 | 56 | 1.1 | 56 | 1.1 | 1 | 6 | ||
| JAMAICA | 38 | 0.9 | 70 | 1.4 | 85 | 1.6 | 15 | 47 | ||
| MEXICO | 390 | 9.5 | 492 | 10.1 | 497 | 9.5 | 5 | 107 | ||
| NICARAGUA | 12 | 0.3 | 20 | 0.4 | 5 | 0.1 | (14 | ) | (6 | ) |
| PANAMA | 178 | 4.3 | 227 | 4.6 | 226 | 4.3 | (1 | ) | 48 | |
| PERU | 465 | 11.3 | 646 | 13.3 | 680 | 12.9 | 34 | 215 | ||
| TRINIDAD | ||||||||||
| & TOBAGO | 142 | 3.5 | 26 | 0.5 | 92 | 1.8 | 67 | (49 | ) | |
| URUGUAY | 0 | 0.0 | 4 | 0.1 | 0 | 0.0 | (4 | ) | 0 | |
| VENEZUELA | 159 | 3.9 | 94 | 1.9 | 141 | 2.7 | 47 | (17 | ) | |
| OTHER | 5 | 0.1 | 25 | 0.5 | 67 | 1.3 | 43 | 62 | ||
| TOTAL | ||||||||||
| CREDIT PORTFOLIO (1) | $ 4,106 | 100 % | $ 4,874 | 100 % | $ 5,252 | 100 % | $ 378 | $ 1,145 | ||
| UNEARNED | ||||||||||
| INCOME AND COMMISSION (2) | (4 | ) | (7 | ) | (6 | ) | 0 | (2 | ) | |
| TOTAL | ||||||||||
| CREDIT PORTFOLIO, NET OF UNEARNED INCOME AND COMMISSION | $ 4,102 | $ 4,867 | $ 5,245 | $ 378 | $ 1,143 |
(1) Includes book value of loans, fair value of selected investment securities, acceptances, and contingencies (including confirmed letters of credit, stand-by letters of credit, and guarantees covering commercial and country risks, credit default swaps and credit commitments).
(2) Represents unearned income and commission on loans.
EXHIBIT X
COMMERCIAL PORTFOLIO
DISTRIBUTION BY COUNTRY
(In US$ million)
| AT THE END OF, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (A) 30JUN07 | (B) 31MAR08 | (C) 30JUN08 | Change in Amount | |||||||
| COUNTRY | Amount | % of Total Outstanding | Amount | % of Total Outstanding | Amount | % of Total Outstanding | (C) - (B) | (C) - (A) | ||
| ARGENTINA | $ 232 | 5.9 | $ 291 | 7.0 | $ 273 | 6.1 | $ (17 | ) | $ 41 | |
| BOLIVIA | 5 | 0.1 | 0 | 0.0 | 5 | 0.1 | 5 | 0 | ||
| BRAZIL | 1,400 | 35.6 | 1,541 | 36.9 | 1,640 | 36.3 | 99 | 240 | ||
| CHILE | 119 | 3.0 | 10 | 0.2 | 9 | 0.2 | (1 | ) | (110 | ) |
| COLOMBIA | 344 | 8.7 | 394 | 9.4 | 336 | 7.4 | (58 | ) | (8 | ) |
| COSTA | ||||||||||
| RICA | 63 | 1.6 | 96 | 2.3 | 237 | 5.3 | 141 | 174 | ||
| DOMINICAN | ||||||||||
| REPUBLIC | 93 | 2.4 | 70 | 1.7 | 69 | 1.5 | (1 | ) | (24 | ) |
| ECUADOR | 136 | 3.5 | 151 | 3.6 | 174 | 3.8 | 23 | 37 | ||
| EL | ||||||||||
| SALVADOR | 32 | 0.8 | 40 | 1.0 | 34 | 0.8 | (6 | ) | 2 | |
| GUATEMALA | 102 | 2.6 | 113 | 2.7 | 134 | 3.0 | 20 | 32 | ||
| HONDURAS | 50 | 1.3 | 56 | 1.3 | 56 | 1.3 | 1 | 6 | ||
| JAMAICA | 38 | 1.0 | 70 | 1.7 | 85 | 1.9 | 15 | 47 | ||
| MEXICO | 379 | 9.6 | 416 | 10.0 | 420 | 9.3 | 4 | 40 | ||
| NICARAGUA | 12 | 0.3 | 20 | 0.5 | 5 | 0.1 | (14 | ) | (6 | ) |
| PANAMA | 158 | 4.0 | 149 | 3.6 | 149 | 3.3 | 1 | (9 | ) | |
| PERU | 465 | 11.8 | 616 | 14.8 | 651 | 14.4 | 34 | 186 | ||
| TRINIDAD | ||||||||||
| & TOBAGO | 142 | 3.6 | 26 | 0.6 | 92 | 2.0 | 67 | (49 | ) | |
| URUGUAY | 0 | 0.0 | 4 | 0.1 | 0 | 0.0 | (4 | ) | 0 | |
| VENEZUELA | 159 | 4.0 | 94 | 2.3 | 141 | 3.1 | 47 | (17 | ) | |
| OTHER | 5 | 0.1 | 20 | 0.5 | 1 | 0.0 | (19 | ) | (5 | ) |
| TOTAL | ||||||||||
| COMMERCIAL PORTFOLIO (1) | $ 3,935 | 100 % | $ 4,176 | 100 % | $ 4,512 | 100 % | $ 336 | $ 577 | ||
| UNEARNED | ||||||||||
| INCOME AND COMMISSION (2) | (4 | ) | (7 | ) | (6 | ) | 0 | (2 | ) | |
| TOTAL | ||||||||||
| COMMERCIAL PORTFOLIO, NET OF UNEARNED INCOME AND | ||||||||||
| COMMISSION | $ 3,931 | $ 4,169 | $ 4,506 | $ 337 | $ 575 |
(1) Includes book value of loans, acceptances, and contingencies (including confirmed letters of credit, stand-by letters of credit, and guarantees covering commercial and country risks and credit commitments).
(2) Represents unearned income and commission on loans.
EXHIBIT XI
AVAILABLE FOR SALE PORTFOLIO
DISTRIBUTION BY COUNTRY
(In US$ million)
| COUNTRY | AT
THE END OF, — (A) Jun. 30, 2007 | (B) Mar. 31, 2008 | (C) Jun. 30, 2008 | (C) - (B) | | (C) - (A) | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| ARGENTINA | $ 15 | $ 20 | $ 0 | $ (20 | ) | $ (15 | ) |
| BRAZIL | 67 | 173 | 161 | (12 | ) | 94 | |
| CHILE | 42 | 43 | 42 | (0 | ) | 0 | |
| COLOMBIA | 0 | 232 | 175 | (58 | ) | 175 | |
| COSTA
RICA | 0 | 0 | 19 | 19 | | 19 | |
| DOMINICAN
REPUBLIC | 15 | 11 | 11 | (0 | ) | (3 | ) |
| EL
SALVADOR | 0 | 22 | 38 | 16 | | 38 | |
| GUATEMALA | 0 | 6 | 41 | 36 | | 30 | |
| MEXICO | 11 | 76 | 77 | 2 | | 58 | |
| PANAMA | 20 | 78 | 77 | (1 | ) | 77 | |
| PERU | 0 | 30 | 29 | (1 | ) | 29 | |
| OTHER | 0 | 5 | 67 | 61 | | 67 | |
| TOTAL
AVAILABLE FOR SALE PORTFOLIO | $ 168 | $ 695 | $ 737 | $ 41 | | $ 568 | |
EXHIBIT XII
CREDIT DISBURSEMENTS
DISTRIBUTION BY COUNTRY
(In US$ million)
| COUNTRY | QUARTERLY INFORMATION — (A) 2QTR07 | (B) 1QTR08 | (C) 2QTR08 | (C)
- (B) | | (C)
- (A) | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| ARGENTINA | $ 108 | $ 94 | $ 46 | $ (48 | ) | $ (61 | ) |
| BOLIVIA | 0 | 0 | 5 | 5 | | 5 | |
| BRAZIL | 369 | 375 | 399 | 24 | | 30 | |
| CHILE | 73 | 0 | 0 | (0 | ) | (73 | ) |
| COLOMBIA | 177 | 156 | 40 | (116 | ) | (137 | ) |
| COSTA
RICA | 70 | 113 | 248 | 135 | | 177 | |
| DOMINICAN
REPUBLIC | 128 | 118 | 80 | (38 | ) | (48 | ) |
| ECUADOR | 111 | 96 | 112 | 17 | | 1 | |
| EL
SALVADOR | 20 | 29 | 26 | (3 | ) | 6 | |
| GUATEMALA | 48 | 61 | 101 | 40 | | 53 | |
| HONDURAS | 51 | 24 | 40 | 15 | | (11 | ) |
| JAMAICA | 45 | 79 | 99 | 20 | | 54 | |
| MEXICO | 263 | 115 | 256 | 141 | | (7 | ) |
| NICARAGUA | 2 | 19 | 0 | (19 | ) | (2 | ) |
| PANAMA | 38 | 33 | 28 | (5 | ) | (10 | ) |
| PERU | 411 | 537 | 203 | (334 | ) | (208 | ) |
| TRINIDAD
& TOBAGO | 89 | 53 | 160 | 107 | | 71 | |
| URUGUAY | 0 | 4 | 3 | (1 | ) | 3 | |
| VENEZUELA | 19 | 86 | 53 | (33 | ) | 34 | |
| OTHER | 5 | 7 | 62 | 55 | | 56 | |
| TOTAL
CREDIT DISBURSED | $ 2,028 | $ 2,000 | $ 1,962 | $ (38 | ) | $ (66 | ) |
Includes book value of loans, fair value of selected investment securities, and contingencies (including confirmed letters of credit, stand-by letters of credit, guarantees covering commercial and country risks, credit default swaps and credit commitments).
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