FOREIGN TRADE BANK OF LATIN AMERICA, INC.

6-K 1 tm2131381d3_6k.htm FORM 6-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

For the month of November, 2021

Commission File Number 1-11414

BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A.

(Exact name of Registrant as specified in its Charter)

FOREIGN TRADE BANK OF LATIN AMERICA, INC.

(Translation of Registrant’s name into English)

Business Park Torre V, Ave. La Rotonda, Costa del Este

P.O. Box 0819-08730

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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ¨ No x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ¨ No x

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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, thereunto duly authorized.

Date: November 1, 2021

FOREIGN TRADE BANK OF LATIN AMERICA, INC.
(Registrant)
By:	/s/ Ana Graciela de Méndez
Name:	Ana Graciela de Méndez
Title:	CFO

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Banco Latinoamericano de Comercio Exterior, S.A. and Subsidiaries

Unaudited condensed consolidated interim financial statements as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020

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Banco Latinoamericano de Comercio Exterior, S.A. and Subsidiaries

Contents

Unaudited condensed consolidated interim statement of financial position	3
Unaudited condensed consolidated interim statement of profit or loss	4
Unaudited condensed consolidated interim statement of comprehensive income	5
Unaudited condensed consolidated interim statement of changes in equity	6
Unaudited condensed consolidated interim statement of cash flows	7
Notes to the unaudited condensed consolidated interim financial statements	8

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Unaudited condensed consolidated interim statement of financial position

September 30, 2021 and December 31, 2020

(In thousands of US dollars)

	Notes
Assets
Cash and due from banks	4,5	663,975		863,812
Securities and other financial assets, net	3,4,6	772,957		398,068
Loans, net	3,4,7	5,268,827		4,896,647
Customers' liabilities under acceptances	3,4	239,544		74,366
Derivative financial instruments - assets	3,4,10	7,124		27,778
Equipment and leasehold improvements, net		15,294		16,213
Intangibles, net		1,658		1,984
Investment properties		2,050		3,214
Other assets	11	5,651		6,816
Total assets		6,977,080		6,288,898
Liabilities and Equity
Liabilities:
Demand deposits		431,874		170,660
Time deposits		2,946,944		2,968,240
	3,4,12	3,378,818		3,138,900
Interest payable		3,027		1,975
Total deposits		3,381,845		3,140,875
Securities sold under repurchase agreements	3,4,13	330,998		10,663
Borrowings and debt, net	4,14	1,960,699		1,985,070
Interest payable		9,813		9,175
Acceptance outstanding	3,4	239,544		74,366
Derivative financial instruments - liabilities	3,4,10	23,770		9,211
Allowance for loan commitments and financial guarantees contracts losses	3,4	3,654		2,904
Other liabilities	15	14,033		18,714
Total liabilities		5,964,356		5,250,978
Equity:
Common stock		279,980		279,980
Treasury stock		(84,366	)	(57,999	)
Additional paid-in capital in excess of value assigned to common stock		119,627		120,414
Capital reserves	21	95,210		95,210
Regulatory reserves	21	136,019		136,019
Retained earnings		477,109		464,088
Other comprehensive income (loss)		(10,855	)	208
Total equity		1,012,724		1,037,920
Total liabilities and equity		6,977,080		6,288,898

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Unaudited condensed consolidated interim statements of profit or loss

For the three and nine months ended September 30, 2021 and 2020

(In thousands of US dollars, except per share data and number of shares)

	Notes	For the three months ended September 30, — 2021	2020		2021		2020
Interest income:
Deposits		287		897		904		4,272
Securities		2,567		911		6,129		2,228
Loans		31,916		37,886		94,819		136,690
Total interest income	18	34,770		39,694		101,852		143,190
Interest expense:
Deposits		(3,093	)	(4,400	)	(10,034	)	(21,553	)
Borrowings and debt		(9,598	)	(12,686	)	(29,846	)	(51,506	)
Total interest expense	18	(12,691	)	(17,086	)	(39,880	)	(73,059	)
Net interest income		22,079		22,608		61,972		70,131
Other income (expense):
Fees and commissions, net	17	4,752		2,611		12,063		7,624
Gain (loss) on financial instruments, net	9	(112	)	(437	)	51		(4,744	)
Other income, net		111		407		295		838
Total other income, net	18	4,751		2,581		12,409		3,718
Total revenues		26,830		25,189		74,381		73,849
(Provision for) reversal of credit losses	3,18	(771	)	(1,543	)	(2,155	)	1,153
Gain (loss) on non-financial assets, net		-		140		-		-
Operating expenses:
Salaries and other employee expenses		(5,952	)	(4,626	)	(16,764	)	(15,804	)
Depreciation of investment properties, equipment and improvements		(622	)	(1,116	)	(2,132	)	(2,705	)
Amortization of intangible assets		(99	)	(185	)	(623	)	(562	)
Other expenses		(3,655	)	(2,415	)	(10,076	)	(8,079	)
Total operating expenses	18	(10,328	)	(8,342	)	(29,595	)	(27,150	)
Profit for the period		15,731		15,444		42,631		47,852
Per share data:
Basic earnings per share (in US dollars)	16	0.41		0.39		1.08		1.21
Diluted earnings per share (in US dollars)	16	0.41		0.39		1.08		1.21
Weighted average basic shares (in thousands of shares)	16	38,789		39,672		39,377		39,645
Weighted average diluted shares (in thousands of shares)	16	38,789		39,672		39,377		39,645

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Unaudited condensed consolidated interim statements of profit or loss and other comprehensive income

For the three and nine months ended September 30, 2021 and 2020

(In thousands of US dollars)

2021		2020		2021		2020
Profit for the period	15,731		15,444		42,631		47,852
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss:
Change in fair value on equity instrument at FVOCI, net of hedging	-		-		-		546
Items that are or may be reclassified subsequently to profit or loss:
Change in fair value on financial instruments, net of hedging	(2,205	)	(1,698	)	(11,555	)	(3,080	)
Reclassification of gains (losses) on financial instruments to the profit or loss	80		(261	)	44		(606	)
Exchange difference in conversion of foreign currency operation	-		(122	)	448		(793	)
Other comprehensive income (loss)	(2,125	)	(2,081	)	(11,063	)	(3,933	)
Total comprehensive income for the period	13,606		13,363		31,568		43,919

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Unaudited condensed consolidated interim statements of changes in equity

For the nine months ended September 30, 2021 and 2020

(In thousands of US dollars)

Balances at January 1, 2020	279,980	(59,669	)	120,362		95,210	136,019	446,083		(1,818	)	1,016,167
Profit for the period	-	-		-		-	-	47,852		-		47,852
Other comprehensive income (loss)	-	-		-		-	-	-		(4,535	)	(4,535	)
Transfer of fair value on equity instrument at FVOCI	-	-		-		-	-	(602	)	602		-
Compensation cost - stock options and stock units plans	-	-		1,291		-	-	-		-		1,291
Exercised options and stock units vested	-	280		(280	)	-	-	-		-		-
Dividends declared	-	-		-		-	-	(35,068	)	-		(35,068	)
Balances at September 30, 2020	279,980	(57,866	)	119,850		95,210	136,019	458,265		(5,751	)	1,025,707
Balances at January 1, 2021	279,980	(57,999	)	120,414		95,210	136,019	464,088		208		1,037,920
Profit for the period	-	-		-		-	-	42,631		-		42,631
Other comprehensive income (loss)	-	-		-		-	-	-		(11,063	)	(11,063	)
Transfer of fair value on equity instrument at FVOCI	-	-		-		-	-	-		-		-
Issuance of restricted stock	-	1,392		(1,392	)	-	-	-		-		-
Compensation cost - stock options and stock units plans	-	-		1,493		-	-	-		-		1,493
Exercised options and stock units vested	-	888		(888	)	-	-	-		-		-
Repurchase of "Class B" and "Class E" common stock	-	(28,647	)	-		-	-	-		-		(28,647	)
Dividends declared	-	-		-		-	-	(29,611	)	-		(29,611	)
Balances at September 30, 2021	279,980	(84,366	)	119,627		95,210	136,019	477,109		(10,855	)	1,012,724

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Unaudited condensed consolidated interim statements of cash flows

For the nine months ended September 30, 2021 and 2020

(In thousands of US dollars)


Cash flows from operating activities
Profit for the period	42,631		47,852
Adjustments to reconcile profit for the period to net cash provided by (used in) operating activities:
Depreciation of equipment and leasehold improvements	2,132		2,705
Amortization of intangible assets	623		562
Provision for (reversal of) credit losses	2,155		(1,153	)
(Gain) unrealized loss on financial instruments at fair value through profit or loss	(172	)	2,986
Realized gain on financial instruments at fair value through profit or loss	-		(484	)
Gain net on sale of financial assets at fair value through OCI	(14	)	-
Gain on sale of financial instruments at amortized cost	(333	)	-
Compensation cost - share-based payment	1,493		1,291
Net changes in hedging position and foreign currency	(906	)	4,240
Loss for disposal of equipment and leasehold improvements	256		6
Interest income	(101,852	)	(143,190	)
Interest expense	39,880		73,059
Net decrease (increase) in operating assets:
Pledged deposits	(13,823	)	(23,952	)
Loans	(385,063	)	1,236,130
Other assets	1,179		2,602
Net increase (decrease) in operating liabilities:
Due to depositors	239,918		166,859
Other liabilities	(4,937	)	(2,587	)
Cash flows provided by operating activities	(176,833	)	1,366,926
Interest received	111,545		146,677
Interest paid	(38,915	)	(77,981	)
Net cash (used in) provided by operating activities	(104,203	)	1,435,622
Cash flows from investing activities:
Acquisition of equipment and leasehold improvements	(307	)	(601	)
Acquisition of intangible assets	(297	)	-
Proceeds from the redemption of securities at fair value through OCI	10,000		-
Proceeds from redemption of securities at amortized cost	81,116		44,577
Proceeds from the sale of securities at fair value through OCI	33,492		1,882
Proceeds from the sale of securities at amortized cost	16,369		-
Purchases of securities at fair value through OCI	(9,999	)	(103,600	)
Purchases of securities at amortized cost	(512,051	)	(89,182	)
Net cash provided by investing activities	(381,677	)	(146,924	)
Cash flows from financing activities:
Increase (decrease) in securities sold under repurchase agreements	320,336		(29,867	)
Net increase (decrease) in short-term borrowings and debt	37,222		(1,162,760	)
Proceeds from long-term borrowings and debt	167,675		386,096
Repayments of long-term borrowings and debt	(194,094	)	(246,982	)
Payments of leases liabilities	(916	)	(820	)
Dividends paid	(29,356	)	(34,818	)
Repurchase of common stock	(28,647	)	-
Net cash provided by (used in) financing activities	272,220		(1,089,151	)
(Decrease) increase net in cash and cash equivalents	(213,660	)	199,547
Cash and cash equivalents at beginning of the period	846,008		1,159,718
Cash and cash equivalents at end of the period	632,348		1,359,265

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Corporate information

Banco Latinoamericano de Comercio Exterior, S. A. (“Bladex Head Office” and together with its subsidiaries “Bladex” or the “Bank”), headquartered in Panama City, Republic of Panama, is a specialized multinational bank established to support the financing of foreign trade and economic integration in Latin America and the Caribbean (the “Region”). The Bank was established pursuant to a May 1975 proposal presented to the Assembly of Governors of Central Banks in the Region, which recommended the creation of a multinational organization to increase the foreign trade financing capacity of the Region. The Bank was organized in 1977, incorporated in 1978 as a corporation pursuant to the laws of the Republic of Panama, and initiated operations on January 2, 1979. Under a contract law signed in 1978 between the Republic of Panama and Bladex, the Bank was granted certain privileges by the Republic of Panama, including an exemption from payment of income taxes in Panama.

The Bank operates under a general banking license issued by the National Banking Commission of Panama, predecessor of the Superintendence of Banks of Panama (the “SBP”).

In the Republic of Panama, banks are regulated by the SBP through Executive Decree No. 52 of April 30, 2008, which adopts the unique text of Law Decree No. 9 of February 26, 1998, modified by Law Decree No. 2 of February 22, 2008. Banks are also regulated by resolutions and agreements issued by this entity. The main aspects of this law and its regulations include: the authorization of banking licenses, minimum capital and liquidity requirements, consolidated supervision, procedures for management of credit, liquidity and market risks, measures to prevent money laundering, the financing of terrorism and related illicit activities, and procedures for banking intervention and liquidation, among others.

Bladex Head Office’s subsidiaries are the following:

Bladex Holdings Inc. is a wholly owned subsidiary, incorporated under the laws of the State of Delaware, United States of America (USA), on May 30, 2000. Bladex Holdings Inc. has ownership in Bladex Representaçao Ltda.
Bladex Representaçao Ltda, incorporated under the laws of Brazil on January 7, 2000, acts as the Bank’s representative office in Brazil. Bladex Representaçao Ltda. is 99.999% owned by Bladex Head Office and the remaining 0.001% is owned by Bladex Holdings Inc.
Bladex Development Corp. was incorporated under the laws of the Republic of Panama on June 5, 2014. Bladex Development Corp. is 100% owned by Bladex Head Office.
BLX Soluciones, S.A. de C.V., SOFOM, E.N.R. (“BLX Soluciones”) was incorporated under the laws of Mexico on June 13, 2014. BLX Soluciones is 99.9% owned by Bladex Head Office, and Bladex Development Corp. owns the remaining 0.1%. The company specializes in offering financial leasing and other financial products such as loans and factoring.

Bladex Head Office has an agency in New York City, USA (the “New York Agency”), which began operations on March 27, 1989. The New York Agency is principally engaged in financing transactions related to international trade, mostly the confirmation and financing of letters of credit for customers in the Region. The New York Agency also has authorization to book transactions through an International Banking Facility (“IBF”).

The Bank has representative offices in Buenos Aires, Argentina; in Mexico City, Mexico; and in Bogota, Colombia, and has a representative license in Lima, Peru.

These unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors on October 19, 2021.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Basis of preparation of the consolidated financial statements

2.1 Statement of compliance

These condensed consolidated interim financial statements of Banco Latinoamericano de Comercio Exterior, S. A. and its subsidiaries have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34) issued by the International Accounting Standards Board ("IASB"). As all the disclosures required by IFRS for annual period consolidated financial statements are not included herein, these condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2020, contained in the Bank’s annual audited consolidated financial statements. The condensed consolidated interim statements of profit or loss, other comprehensive income, changes in equity and cash flows for the periods presented are not necessarily indicative of results expected for any future period.

Financial risk

This note presents information about the Bank’s exposure to financial risks and the Bank’s management of capital.

A. Credit risk

i. Credit quality analysis

The following tables set out information about the credit quality of financial assets measured at amortized cost, and securities at FVOCI. Unless specifically indicated, for financial assets the amounts in the table represent the outstanding balances. For loan commitments and financial guarantee contracts, the amounts in the table represent the amounts committed or guaranteed, respectively.

Loans at amortized cost

September 30, 2021	PD Ranges	Stage 1	Stage 2		Stage 3		Total
Grades 1 - 4	0.03 - 0.74	2,652,930		-		-		2,652,930
Grades 5 - 6	0.75 - 3.80	2,306,667		94,099		-		2,400,766
Grades 7 - 8	3.81 - 34.51	133,108		94,993		10,593		238,694
		5,092,705		189,092		10,593		5,292,390
Loss allowance		(19,341	)	(17,000	)	(5,124	)	(41,465	)
Total		5,073,364		172,092		5,469		5,250,925

December 31, 2020	PD Ranges	Stage 1	Stage 2		Stage 3		Total
Grades 1 - 4	0.03 - 0.74	2,582,794		-		-		2,582,794
Grades 5 - 6	0.75 - 3.95	1,928,142		167,996		-		2,096,138
Grades 7 - 8	3.96 - 30.67	102,532		119,340		10,593		232,465
Grades 9 - 10	30.68 - 100	-		-		-		-
		4,613,468		287,336		10,593		4,911,397
Loss allowance		(16,661	)	(19,916	)	(4,588	)	(41,165	)
Total		4,596,807		267,420		6,005		4,870,232

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

Loan commitments, financial guarantees issued and customers’ liabilities under acceptances

September 30, 2021	12-month PD Ranges	Stage 1	Stage 2		Stage 3	Total
Commitments and contingencies
Grades 1 - 4	0.03 - 0.74	353,107		-		-	353,107
Grades 5 - 6	0.75 - 3.80	218,102		19,486		-	237,588
Grades 7 - 8	3.81 - 34.51	64,961		-		-	64,961
		636,170		19,486		-	655,656
Customers' liabilities under acceptances
Grades 1 - 4	0.03 - 0.74	46,129		-		-	46,129
Grades 5 - 6	0.75 - 3.80	-		-		-	-
Grades 7 - 8	3.81 - 34.51	193,415		-		-	193,415
		239,544		-		-	239,544
		875,714		19,486		-	895,200
Loss allowance		(3,348	)	(306	)	-	(3,654	)
Total		872,366		19,180		-	891,546

December 31, 2020	12-month PD Ranges	Stage 1	Stage 2		Stage 3	Total
Commitments and contingencies
Grades 1 - 4	0.03 - 0.74	245,927		-		-	245,927
Grades 5 - 6	0.75 - 3.95	198,638		38,446		-	237,084
Grades 7 - 8	3.96 - 30.67	81,887		-		-	81,887
		526,452		38,446		-	564,898
Customers' liabilities under acceptances
Grades 1 - 4	0.03 - 0.74	1,498		-		-	1,498
Grades 5 - 6	0.75 - 3.95	723		-		-	723
Grades 7 - 8	3.96 - 30.67	72,145		-		-	72,145
		74,366		-		-	74,366
		600,818		38,446		-	639,264
Loss allowance		(2,426	)	(478	)	-	(2,904	)
Total		598,392		37,968		-	636,360

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

B. Credit risk (continued)

Securities at amortized cost

September 30, 2021	12-month PD Ranges	Stage 1	Stage 2	Stage 3	Total
Grades 1 - 4	0.03 - 0.74	384,143		-	-	384,143
Grades 5 - 6	0.75 - 3.80	188,626		-	-	188,626
		572,769		-	-	572,769
Loss allowance		(1,777	)	-	-	(1,777	)
Total		570,992		-	-	570,992

December 31, 2020	12-month PD Ranges	Stage 1	Stage 2		Stage 3	Total
Grades 1 - 4	0.03 - 0.74	108,505		-		-	108,505
Grades 5 - 6	0.75 - 3.95	50,562		5,007		-	55,569
		159,067		5,007		-	164,074
Loss allowance		(462	)	(33	)	-	(495	)
Total		158,605		4,974		-	163,579

Securities at fair value through other comprehensive income (FVOCI)

September 30, 2021	12-month PD Ranges	Stage 1	Stage 2	Stage 3	Total
Grades 1 - 4	0.03 - 0.74	194,805		-	-	194,805
		194,805		-	-	194,805
Loss allowance		(26	)	-	-	(26	)
Total		194,779		-	-	194,779

December 31, 2020	12-month PD Ranges	Stage 1	Stage 2	Stage 3	Total
Grades 1 - 4	0.03 - 0.74	231,348		-	-	231,348
		231,348		-	-	231,348
Loss allowance		(43	)	-	-	(43	)
Total		231,305		-	-	231,305

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

The following table presents information of the current and past due balances of loans at amortized cost in stages 1, 2 and 3:

Stage 1	Stage 2	Stage 3	Total
Current	5,092,705	189,092	10,593	5,292,390

| | Stage
1 | Stage
2 | Stage
3 | Total |
| --- | --- | --- | --- | --- |
| Current | 4,613,468 | 287,336 | 10,593 | 4,911,397 |

As of September 30, 2021, and December 31, 2020, other financial assets were not past due nor impaired.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

The following table presents an analysis of counterparty credit exposures arising from derivative transactions. The Bank's derivative fair values are generally secured by cash.

| Notional
value USD | Derivative financial instruments - fair value asset | Derivative financial instruments - fair value liabilities | | |
| --- | --- | --- | --- | --- |
| Interest rate swaps | 60,000 | 1,095 | (738 | ) |
| Cross-currency swaps | 671,160 | 5,369 | (23,032 | ) |
| Foreign exchange forwards | 40,244 | 660 | - | |
| Total | 771,404 | 7,124 | (23,770 | ) |

| Notional
value USD | Derivative financial instruments - fair value asset | Derivative financial instruments - fair value liabilities | | |
| --- | --- | --- | --- | --- |
| Interest rate swaps | 145,667 | 1,831 | (1,774 | ) |
| Cross-currency swaps | 565,997 | 25,947 | (3,848 | ) |
| Foreign exchange forwards | 71,353 | - | (3,589 | ) |
| Total | 783,017 | 27,778 | (9,211 | ) |

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

ii. Loss allowances

The following tables show reconciliations from the opening to the closing balance of the loss allowance by class of financial instrument.

Loans at amortized cost

| Allowance for expected credit losses as
of December 31, 2020 | 16,661 | | 19,916 | | 4,588 | 41,165 | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Transfer to lifetime expected credit losses | (158 | ) | 158 | | - | - | |
| Net effect of changes in allowance for expected credit losses | (545 | ) | (2,431 | ) | 376 | (2,600 | ) |
| Financial instruments
that have been derecognized during the period | (10,934 | ) | (643 | ) | - | (11,577 | ) |
| New financial assets originated or purchased | 14,317 | | - | | - | 14,317 | |
| Write-offs | - | | - | | - | - | |
| Recoveries | - | | - | | 160 | 160 | |
| Allowance for expected credit losses as of September 30,
2021 | 19,341 | | 17,000 | | 5,124 | 41,465 | |

| Allowance for expected credit losses as
of December 31, 2019 | 28,892 | | 15,842 | | 54,573 | | 99,307 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Transfer to lifetime expected credit losses | (886 | ) | 886 | | - | | - | |
| Transfer to credit-impaired financial instruments | - | | (2,100 | ) | 2,100 | | - | |
| Net effect of
changes in allowance for expected credit losses | 134 | | 13,443 | | (118 | ) | 13,459 | |
| Financial instruments
that have been derecognized during the year | (24,307 | ) | (3,729 | ) | - | | (28,036 | ) |
| New financial assets originated or purchased | 12,828 | | - | | - | | 12,828 | |
| Write-offs | - | | (4,426 | ) | (52,106 | ) | (56,532 | ) |
| Recoveries | - | | - | | 139 | | 139 | |
| Allowance
for expected credit losses as of December 31 ,
2020 | 16,661 | | 19,916 | | 4,588 | | 41,165 | |

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

Loan commitments, financial guarantee contracts and customers’ liabilities under acceptances

| Allowance for expected credit losses as
of December 31, 2020 | 2,426 | | 478 | | - | 2,904 | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Transfer to lifetime expected credit losses | (53 | ) | 53 | | - | - | |
| Net effect of changes in reserve for expected credit losses | (27 | ) | (97 | ) | - | (124 | ) |
| Financial instruments
that have been derecognized during the period | (1,470 | ) | (128 | ) | - | (1,598 | ) |
| New instruments originated or purchased | 2,472 | | - | | - | 2,472 | |
| Allowance for expected credit losses as of September 30,
2021 | 3,348 | | 306 | | - | 3,654 | |

| Allowance for expected credit losses as
of December 31, 2019 | 2,683 | | 361 | | - | 3,044 | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Transfer to lifetime expected credit losses | (96 | ) | 96 | | - | - | |
| Net effect of changes in reserve for expected credit losses | 37 | | 42 | | - | 79 | |
| Financial instruments
that have been derecognized during the year | (1,864 | ) | (21 | ) | - | (1,885 | ) |
| New instruments originated or purchased | 1,666 | | - | | - | 1,666 | |
| Allowance for expected credit losses as of December 31,
2020 | 2,426 | | 478 | | - | 2,904 | |

Field: Page; Sequence: 17; Value: 2

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Field: Split-Segment; Name: 4

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

Securities at amortized cost

| Allowance
for expected credit losses as of December 31, 2020 | 462 | | 33 | | - | 495 | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Net effect of changes in allowance for expected  credit losses | (19 | ) | - | | - | (19 | ) |
| Financial instruments that have been derecognized during the period | (149 | ) | (33 | ) | - | (182 | ) |
| New financial assets originated or purchased | 1,483 | | - | | - | 1,483 | |
| Allowance
for expected credit losses as of September 30 , 2021 | 1,777 | | - | | - | 1,777 | |

Allowance for expected credit losses as of December 31, 2019	103		10		-	113
Transfer to lifetime expected credit losses	(10	)	10		-	-
Net effect of changes in allowance for expected  credit losses	15		23		-	38
Financial instruments that have been derecognized during the year	(76	)	(10	)	-	(86	)
New financial assets originated or purchased	430		-		-	430
Allowance
for expected credit losses as of December 31 , 2020	462		33		-	495

Securities at fair value through other comprehensive income (FVOCI)

| Allowance
for expected credit losses as of December 31, 2020 | 43 | | - | - | 43 | |
| --- | --- | --- | --- | --- | --- | --- |
| Financial instruments that have been derecognized during the period | (17 | ) | - | - | (17 | ) |
| Allowance
for expected credit losses as of September 30 , 2021 | 26 | | - | - | 26 | |

Field: Page; Sequence: 18; Value: 2

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Field: /Page

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

Securities at fair value through other comprehensive income (FVOCI)

	Stage 1	Stage 2	Stage 3	Total
Allowance for expected credit losses as of December 31, 2019	-	-	-	-
Financial instruments that have been derecognized during the year	43	-	-	43
Allowance for expected credit losses as of December 31, 2020	43	-	-	43

The following table provides a reconciliation between:

Amounts shown in the previous tables reconciling opening and closing balances of loss allowance per class of financial instrument; and
The (reversal) provision for credit losses’ line item in the condensed consolidated interim statement of profit or loss and other comprehensive income.

September 30, 2021	Loans at amortized cost	Loan commitments and financial guarantee contracts		At amortized cost		FVOCI		Total
Net effect of changes in allowance for expected credit losses	(2,600	)	(124	)	(19	)	-		(2,743	)
Financial instruments that have been derecognized during the year	(11,577	)	(1,598	)	(182	)	(17	)	(13,374	)
New financial assets originated or purchased	14,317		2,472		1,483		-		18,272
Total	140		750		1,282		(17	)	2,155

September 30, 2020	Loans at amortized cost	Loan commitments and financial guarantee contracts		At amortized cost		FVOCI	Total
Net effect of changes in allowance for expected credit losses	10,196		(109	)	22		-	10,109
Financial instruments that have been derecognized during the year	(21,747	)	(1,797	)	(76	)	-	(23,620	)
New financial assets originated or purchased	11,151		950		242		15	12,358
Total	(400	)	(956	)	188		15	(1,153	)

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

iii. Credit-impaired financial assets

The following table sets out a reconciliation of changes in the net carrying amount of allowance for credit losses for credit-impaired loans.

Credit-impaired loans and advances at beginning of period	4,588	54,573
Classified as credit-impaired during the period	-	2,100
Change in allowance for expected credit losses	191	(744	)
Recoveries of amounts previously written off	160	139
Interest income	185	626
Write-offs	-	(52,106	)
Credit-impaired loans and advances at end of period	5,124	4,588

During the year ended December 31, 2020, the sale of the outstanding credit-impaired loan in Stage 3, classified at amortized cost, was made for $11.6 million. This sale resulted in a write off against the allowance for credit losses of $ 52.1 million.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

iv. Concentrations of credit risk

The Bank monitors concentrations of credit risk by sector, industry and by country. An analysis of concentrations of credit risk from loans, loan commitments, financial guarantees and investment securities is as follows.

Concentration by sector and industry

Loans at amortized cost		Loan commitments and financial guarantee contracts		At amortized cost		FVOCI
September 30, 2021	December 31, 2020	September 30, 2021	December 31, 2020	September 30, 2021	December 31, 2020	September 30, 2021	December 31, 2020
Carrying amount - principal	5,292,390	4,911,397	239,544	74,366	572,769	164,074	194,805	231,348
Amount committed/guaranteed	-	-	655,656	564,898	-	-	-	-
Concentration by sector
Corporations:
Private	1,888,788	1,425,929	478,017	276,249	337,396	56,979	59,530	60,403
State-owned	980,266	741,791	59,396	92,299	46,447	29,985	-	23,858
Financial institutions:		-
Private	1,962,252	2,231,742	76,288	65,434	111,184	33,715	-	-
State-owned	431,571	476,520	281,499	205,282	44,167	28,276	135,275	141,974
Sovereign	29,513	35,415	-	-	33,575	15,119	-	5,113
Total	5,292,390	4,911,397	895,200	639,264	572,769	164,074	194,805	231,348
Concentration by industry
Financial institutions	2,393,823	2,708,262	357,787	270,716	155,351	61,991	135,275	141,974
Manufacturing	1,188,192	760,985	323,860	173,493	183,082	66,053	44,922	45,654
Oil and petroleum derived products	932,026	586,030	107,286	98,189	60,433	20,911	14,608	38,607
Agricultural	307,661	336,715	-	-	-	-	-	-
Services	195,441	264,597	54,971	63,086	66,331	-	-	-
Mining	102,973	94,955	-	-	14,876	-	-	-
Sovereign	29,513	35,415	-	-	33,575	15,119	-	5,113
Other	142,761	124,438	51,296	33,780	59,121	-	-	-
Total	5,292,390	4,911,397	895,200	639,264	572,769	164,074	194,805	231,348

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

Risk rating and concentration by country

Loans at amortized cost		Loan commitments and financial guarantee contracts		At amortized cost		FVOCI
September 30, 2021	December 31, 2020	September 30, 2021	December 31, 2020	September 30, 2021	December 31, 2020	September 30, 2021	December 31, 2020
Carrying amount - principal	5,292,390	4,911,397	239,544	74,366	572,769	164,074	194,805	231,348
Amount committed/guaranteed	-	-	655,656	564,898	-	-	-	-
Rating
1-4	2,652,930	2,582,794	399,236	247,425	384,143	108,505	194,805	231,348
5-6	2,400,766	2,096,138	237,588	237,807	188,626	55,569	-	-
7-8	238,694	232,465	258,376	154,032	-	-	-	-
Total	5,292,390	4,911,397	895,200	639,264	572,769	164,074	194,805	231,348
Concentration by country
Argentina	97,087	130,944	-	-	-	-	-	-
Australia	-	-	-	-	9,968	-	-	-
Belgium	17,131	9,807	-	-	-	-	-	-
Bolivia	10,000	12,000	2,800	2,800	-	-	-	-
Brazil	1,061,704	971,652	80,000	50,000	98,049	41,128	-	-
Canada	-	-	-	-	4,987	-	-	-
Chile	592,924	533,945	20,684	7,911	100,438	11,992	-	28,972
Colombia	598,264	714,258	50,333	50,333	34,997	29,998	-	-
Costa Rica	163,475	146,200	29,794	56,876	3,972	-	-	-
Dominican Republic	270,162	202,433	16,500	16,500	4,977	-	-	-
Ecuador	31,365	45,511	261,896	165,275	-	-	-	-
El Salvador	81,500	40,000	4,333	1,087	-	-	-	-
France	109,169	150,810	57,904	84,862	-	-	-	-
Germany	-	-	7,000	-	-	-	-	-
Guatemala	347,284	281,485	64,995	43,845	3,080	-	-	-
Honduras	24,620	10,199	1,175	345	-	-	-	-
Hong Kong	6,000	1,800	-	-	-	-	-	-
Israel	-	-	-	-	4,989	-	-	-
Jamaica	36,988	23,274	-	-	-	-	-	-
Luxembourg	117,600	50,000	-	-	-	-	-	-
Mexico	860,838	607,099	4,298	4,995	46,262	43,910	-	-
Nicaragua	-	-	-	-	-	-	-	-
Panama	211,368	241,097	62,548	61,435	12,919	10,399	-	-
Paraguay	46,093	100,816	9,380	11,800	-	-	-	-
Peru	231,954	272,752	75,608	47,245	58,306	26,647	-	-
Singapore	121,336	75,095	-	-	-	-	-	-
Trinidad and Tobago	133,413	165,995	20,000	-	-	-	-	-
United States of America	45,000	113,816	-	-	189,825	-	88,759	89,794
United Kingdom	5,204	10,409	19,981	-	-	-	-	-
Uruguay	71,911	-	105,971	33,955	-	-	-	-
Multilateral	-	-	-	-	-	-	106,046	112,582
Total	5,292,390	4,911,397	895,200	639,264	572,769	164,074	194,805	231,349

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Field: Split-Segment; Name: 5

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

v. Offsetting financial assets and liabilities

The following tables include financial assets and liabilities that are offset in the condensed consolidated interim financial statement or subject to an enforceable master netting arrangement:

a) Derivative financial instruments – assets

September 30, 2021	Gross	Gross amounts offset in the consolidated statement of	Net amount of assets presented in the consolidated	Gross amounts not offset in the consolidated statement of financial position
Description	amounts of assets	financial position	statement of financial position	Financial instruments	Cash collateral received	Net Amount
Derivative financial instruments
used for hedging	7,124	-	7,124	-	(4,990	)	2,134
Total	7,124	-	7,124	-	(4,990	)	2,134

December 31, 2020	Gross	Gross amounts offset in the consolidated statement of	Net amount of assets presented in the consolidated	Gross amounts not offset in the consolidated statement of financial position
Description	amounts of assets	financial position	statement of financial position	Financial instruments	Cash collateral received	Net Amount
Derivative financial instruments
used for hedging	27,778	-	27,778	-	(24,720	)	3,058
Total	27,778	-	27,778	-	(24,720	)	3,058

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

A. Credit risk (continued)

b) Securities sold under repurchase agreements and derivative financial instruments – liabilities

| September 30,
2021 | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Gross amounts offset in the consolidated | Net amount of liabilities presented in the | | Gross amounts not offset in the consolidated statement of financial position | | | | |
| Description | Gross amounts of liabilities | statement of financial position | consolidated statement of financial position | | Financial instruments | Cash collateral pledged | Net Amount | | |
| Securities sold under repurchase
agreements | (330,998 | ) | - | (330,998 | ) | 358,674 | 765 | 28,441 | |
| Derivative financial instruments used
for hedging | (23,770 | ) | - | (23,770 | ) | - | 20,862 | (2,908 | ) |
| Total | (354,768 | ) | - | (354,768 | ) | 358,674 | 21,627 | 25,533 | |

| December 31,
2020 | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Gross amounts offset in the consolidated | Net amount of liabilities presented in the | | Gross amounts not offset in the consolidated statement of financial position | | | | |
| Description | Gross amounts of liabilities | statement of financial position | consolidated statement of financial position | | Financial instruments | Cash collateral pledged | Net Amount | | |
| Securities sold under repurchase
agreements | (10,663 | ) | - | (10,663 | ) | 11,998 | 18 | 1,353 | |
| Derivative financial instruments used
for hedging | (9,211 | ) | - | (9,211 | ) | - | 7,786 | (1,425 | ) |
| Total | (19,874 | ) | - | (19,874 | ) | 11,998 | 7,804 | (72 | ) |

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

B. Liquidity risk

i. Exposure to liquidity risk

The following table details the Bank's liquidity ratios, described in the previous paragraph, as of September 30, 2021, and December 31, 2020, respectively:

At the end of the period	201.90 %	249.42 %
Period average	125.04 %	115.98 %
Maximum of the period	306.82 %	249.42 %
Minimum of the period	73.82 %	53.26 %

The following table includes the Bank’s liquid assets by geographical location:

| (in millions of USD dollars) | September 30,
2021 — Cash
and due from banks | Securities
FVOCI | Total | December 31,
2020 — Cash
and due from banks | Securities
FVOCI | Total |
| --- | --- | --- | --- | --- | --- | --- |
| United State of America | 568 | 41 | 609 | 740 | 90 | 830 |
| Other O.E.C.D countries | - | 19 | 19 | 100 | - | 100 |
| Latin America | 14 | - | 14 | 6 | - | 6 |
| Other countries | 50 | - | 50 | - | - | - |
| Multilateral | - | 135 | 135 | - | 112 | 112 |
| Total | 632 | 195 | 827 | 846 | 202 | 1,048 |

The following table includes the Bank’s demand deposits from customers and its ratio to total deposits from customers:

(in millions of USD dollars) — Demand liabilities and “overnight”	514	171
% Demand liabilities and "overnight" to total deposits	15.21 %	5.44 %

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

B. Liquidity risk (continued)

The liquidity requirements resulting from the Bank’s demand deposits from customers is satisfied by the Bank’s liquid assets as follows:

(in millions of USD dollars) — Total liquid assets	827	1,048
% Total assets to total liabilities	24.48 %	33.40 %
% Total liquid assets in the Federal Reserve of the United
States of America	68.53 %	65.68 %

Even though the average term of the Bank's assets exceeds the average term of its liabilities, the associated liquidity risk is diminished by the short-term nature of a significant portion of the loan portfolio, since the Bank is primarily engaged in financing foreign trade.

The following table includes the carrying amount for the Bank’s loans and securities short-term portfolio with maturity within one year based on their original contractual term together with its average remaining term:

| (in millions of USD dollars) — Loan portfolio at amortized cost and securities
portfolio less than/equal to 1 year according to its original terms | 3,312 | 3,114 |
| --- | --- | --- |
| Average term (days) | 186 | 195 |

The following table includes the carrying amount for the Bank’s loans and securities medium term portfolio with maturity over one year based on their original contractual terms together with their average remaining term:

| (in millions of USD dollars) — Loan portfolio at amortized cost and securities
portfolio greater than/equal to 1 year according to its original terms | 2,748 | 2,193 |
| --- | --- | --- |
| Average term (days) | 1,380 | 1,382 |

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Field: /Page

Field: Split-Segment; Name: 6

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

B. Liquidity risk (continued)

ii. Maturity analysis for financial liabilities and financial assets

The following table details the future undiscounted cash flows of assets and liabilities grouped by their remaining maturity with respect to the contractual maturity:

| Description | September 30,
2021 — Up
to 3 months | 3
to 6 months | | 6
months to 1 year | | 1
to 5 years | | More
than 5 years | | Gross
inflows (outflows) | | Carrying amount | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Assets | | | | | | | | | | | | | | |
| Cash and due from
banks | 663,986 | | - | | - | | - | | - | | 663,986 | | 663,975 | |
| Securities and other financial
assets, net | 21,316 | | 38,950 | | 131,241 | | 607,933 | | - | | 799,440 | | 772,957 | |
| Loans, net | 2,262,094 | | 1,056,656 | | 683,660 | | 1,377,733 | | 144,594 | | 5,524,737 | | 5,268,827 | |
| Derivative
financial instruments - assets | 1,755 | | - | | - | | 5,369 | | - | | 7,124 | | 7,124 | |
| Total | 2,949,151 | | 1,095,606 | | 814,901 | | 1,991,035 | | 144,594 | | 6,995,287 | | 6,712,883 | |
| Liabilities | | | | | | | | | | | | | | |
| Deposits | (3,202,832 | ) | (155,638 | ) | (15,473 | ) | (9,665 | ) | - | | (3,383,608 | ) | (3,381,845 | ) |
| Securities sold under repurchase
agreements | (146,615 | ) | (149,808 | ) | - | | (35,515 | ) | - | | (331,938 | ) | (330,998 | ) |
| Borrowings and debt, net | (252,445 | ) | (255,837 | ) | (450,242 | ) | (1,093,351 | ) | (30,138 | ) | (2,082,013 | ) | (1,970,512 | ) |
| Derivative
financial instruments - liabilities | - | | - | | (11,323 | ) | (11,785 | ) | (662 | ) | (23,770 | ) | (23,770 | ) |
| Total | (3,601,892 | ) | (561,283 | ) | (477,038 | ) | (1,150,316 | ) | (30,800 | ) | (5,821,329 | ) | (5,707,125 | ) |
| Contingencies | | | | | | | | | | | | | | |
| Confirmed lettes of credit | 206,155 | | 46,783 | | 3,367 | | - | | - | | 256,305 | | 256,305 | |
| Stand-by letters of credit and
guarantees | 8,440 | | 58,588 | | 120,026 | | 12,178 | | - | | 199,232 | | 199,232 | |
| Credit commitments | 54,286 | | 20,000 | | 52,500 | | 73,333 | | - | | 200,119 | | 200,119 | |
| Total | 268,881 | | 125,371 | | 175,893 | | 85,511 | | - | | 655,656 | | 655,656 | |
| Net
position | (921,622 | ) | 408,952 | | 161,970 | | 755,208 | | 113,794 | | 518,302 | | 350,102 | |

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

B. Liquidity risk (continued)

ii. Maturity analysis for financial liabilities and financial assets (continued)

| Description | December 31,
2020 — Up
to 3 months | 3
to 6 months | | 6
months to 1 year | | 1
to 5 years | | More
than 5 years | | Gross
inflows (outflows) | | Carrying amount | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Assets | | | | | | | | | | | | | | |
| Cash and due from
banks | 863,831 | | - | | - | | - | | - | | 863,831 | | 863,812 | |
| Securities and other financial
assets, net | 11,541 | | 20,961 | | 60,311 | | 312,027 | | - | | 404,840 | | 398,068 | |
| Loans, net | 1,712,049 | | 998,923 | | 1,255,069 | | 293,489 | | 1,156,625 | | 5,416,155 | | 4,896,647 | |
| Derivative
financial instruments - assets | - | | 119 | | 129 | | 26,691 | | 839 | | 27,778 | | 27,778 | |
| Total | 2,587,421 | | 1,020,003 | | 1,315,509 | | 632,207 | | 1,157,464 | | 6,712,604 | | 6,186,305 | |
| Liabilities | | | | | | | | | | | | | | |
| Deposits | (2,678,292 | ) | (166,832 | ) | (293,306 | ) | (6,638 | ) | - | | (3,145,068 | ) | (3,140,875 | ) |
| Securities sold under repurchase
agreements | - | | (5,784 | ) | (4,977 | ) | - | | - | | (10,761 | ) | (10,663 | ) |
| Borrowings and debt, net | (166,034 | ) | (60,816 | ) | (456,932 | ) | (1,425,806 | ) | (24,922 | ) | (2,134,510 | ) | (1,994,245 | ) |
| Derivative
financial instruments - liabilities | (3,020 | ) | (1,081 | ) | (71 | ) | (5,039 | ) | - | | (9,211 | ) | (9,211 | ) |
| Total | (2,847,346 | ) | (234,513 | ) | (755,286 | ) | (1,437,483 | ) | (24,922 | ) | (5,299,550 | ) | (5,154,994 | ) |
| Contingencies | | | | | | | | | | | | | | |
| Confirmed lettes of credit | 167,301 | | 29,466 | | 20,015 | | - | | - | | 216,782 | | 216,782 | |
| Stand-by letters of credit and
guarantees | 35,041 | | 106,943 | | 55,963 | | 12,550 | | - | | 210,497 | | 210,497 | |
| Credit commitments | - | | - | | 4,286 | | 133,333 | | - | | 137,619 | | 137,619 | |
| Total | 202,342 | | 136,409 | | 80,264 | | 145,883 | | - | | 564,898 | | 564,898 | |
| Net
position | (462,267 | ) | 649,081 | | 479,959 | | (951,159 | ) | 1,132,542 | | 848,156 | | 466,413 | |

The amounts in the tables above have been compiled as follows:

Type of financial instrument	Basis on which amounts are compiled
Financial assets and liabilities	Undiscounted cash flows, which include estimated interest
payments.
Issued financial guarantee contracts, and loan commitments	Earliest possible contractual
maturity. For issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which
the guarantee could be called.
Derivative financial liabilities and financial assets	Contractual undiscounted
cash flows. The amounts shown are the gross nominal inflows and outflows for derivatives that simultaneously settle gross or net
amounts.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

B. Liquidity risk (continued)

iii. Liquidity reserves

As part of the management of liquidity risk arising from financial liabilities, the Bank holds liquid assets comprising cash and cash equivalents.

The following table sets out the components of the Banks’s liquidity reserves:

2021		2020
Amount	Fair Value	Amount	Fair Value
Balances with Federal Reserve of the United States
of America	566,849	566,849	688,612	688,612
Cash
and due from banks (1)	65,499	65,499	157,396	157,396
Total Liquidity reserves	632,348	632,348	846,008	846,008

(1) Excludes pledged deposits.

iv. Financial assets available to support future funding

The following table sets out the Bank’s financial assets available to support future funding:

| September 30,
2021 — Guaranteed | Available
as collateral | |
| --- | --- | --- |
| Cash and due from banks | 31,627 | 632,348 |
| Notional of investment securities | 338,081 | 393,460 |
| Loans at amortized cost | - | 5,292,390 |
| Total assets | 369,708 | 6,318,198 |

| December 31,
2020 — Guaranteed | Available
as collateral | |
| --- | --- | --- |
| Cash and due from banks | 17,804 | 846,008 |
| Notional of investment securities | 11,450 | 371,900 |
| Loans at amortized cost | - | 4,911,397 |
| Total assets | 29,254 | 6,129,305 |

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

C. Market risk

i. Interest rate risk

The following is a summary of the Bank’s interest rate gap position for the financial assets and liabilities based on their next repricing date:

| Description | September 30,
2021 — Up
to 3 months | 3
to 6 months | | 6
months to 1 year | | 1
to 5 years | | More
than 5 years | | Non
interest rate risk | | Total | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Assets | | | | | | | | | | | | | | |
| Cash and due from
banks | 661,742 | | - | | - | | - | | - | | 2,233 | | 663,975 | |
| Securities and other financial
assets, net | 8,085 | | 26,832 | | 100,449 | | 632,208 | | - | | - | | 767,574 | |
| Loans | 3,734,592 | | 1,112,458 | | 263,870 | | 179,499 | | 7,194 | | - | | 5,297,613 | |
| Total assets | 4,404,419 | | 1,139,290 | | 364,319 | | 811,707 | | 7,194 | | 2,233 | | 6,729,162 | |
| Liabilities | | | | | | | | | | | | | | |
| Demand deposits and time deposits | (3,198,437 | ) | (155,164 | ) | (15,400 | ) | (9,500 | ) | - | | (317 | ) | (3,378,818 | ) |
| Securities sold under repurchase
agreements | (146,517 | ) | (149,453 | ) | - | | (35,028 | ) | - | | - | | (330,998 | ) |
| Borrowings
and debt, net | (933,228 | ) | (47 | ) | (106,466 | ) | (904,389 | ) | (16,569 | ) | - | | (1,960,699 | ) |
| Total liabilities | (4,278,182 | ) | (304,664 | ) | (121,866 | ) | (948,917 | ) | (16,569 | ) | (317 | ) | (5,670,515 | ) |
| Net effect
of derivative financial instruments held for interest risk management | 1,095 | | - | | (11,323 | ) | (6,415 | ) | (662 | ) | - | | (17,306 | ) |
| Total
interest rate sensitivity | 127,332 | | 834,626 | | 231,130 | | (143,625 | ) | (10,037 | ) | 1,916 | | 1,041,341 | |

| Description | December 31,
2020 — Up
to 3 months | 3
to 6 months | | 6
months to 1 year | | 1
to 5 years | | More
than 5 years | | Non
interest rate risk | | Total | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Assets | | | | | | | | | | | | | | |
| Demand deposits and
time deposits | 859,481 | | - | | - | | - | | - | | 4,331 | | 863,812 | |
| Securities and other financial
assets | 9,554 | | 9,139 | | 55,960 | | 320,769 | | - | | - | | 395,422 | |
| Loans | 3,468,477 | | 895,794 | | 434,813 | | 117,262 | | - | | - | | 4,916,346 | |
| Total assets | 4,337,512 | | 904,933 | | 490,773 | | 438,031 | | - | | 4,331 | | 6,175,580 | |
| Liabilities | | | | | | | | | | | | | | |
| Demand deposits and time deposits | (2,675,867 | ) | (166,317 | ) | (290,000 | ) | (6,500 | ) | - | | (216 | ) | (3,138,900 | ) |
| Securities sold under repurchase
agreements | - | | (5,728 | ) | (4,935 | ) | - | | - | | - | | (10,663 | ) |
| Borrowings
and debt | (1,103,703 | ) | (45,859 | ) | (16,511 | ) | (794,522 | ) | (24,475 | ) | - | | (1,985,070 | ) |
| Total liabilities | (3,779,570 | ) | (217,904 | ) | (311,446 | ) | (801,022 | ) | (24,475 | ) | (216 | ) | (5,134,633 | ) |
| Net effect
of derivative financial instruments held for interest risk management | (3 | ) | (373 | ) | 58 | | 15,982 | | 839 | | - | | 16,503 | |
| Total
interest rate sensitivity | 557,939 | | 686,656 | | 179,385 | | (347,009 | ) | (23,636 | ) | 4,115 | | 1,057,450 | |

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Field: Split-Segment; Name: 7

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

C. Market risk (continued)

Following is an analysis of the Bank’s sensitivity to the most likely increase or decrease in market interest rates at the reporting date, assuming no asymmetrical movements in yield curves and a constant financial position:

| September 30,
2021 | Change in interest
rate — +50
bps | 2,511 | | 16,064 |
| --- | --- | --- | --- | --- |
| | -50 bps | (2,014 | ) | 6,362 |
| December 31,
2020 | +50 bps | 1,182 | | 16,618 |
| | -50 bps | (5,161 | ) | 107 |

Interest rate movements affect reported equity in the following ways:

Retained earnings: increases or decreases in net interest income and in fair values of derivatives reported in profit or loss;
Fair value reserve: increases or decreases in fair values of financial assets at FVOCI reported directly in equity; and
Hedging reserve: increases or decreases in fair values of hedging instruments designated in qualifying cash flow hedge relationships.

This sensitivity provides a consideration of changes in interest rates, considering last period interest rate volatility.

ii. Foreign exchange risk

The following table presents the maximum exposure amount in foreign currency of the Bank’s carrying amount of total assets and liabilities, excluding derivative financial assets and liabilities, based on their fair value.

Brazilian Real	European Euro	Japanese Yen	Colombian Peso	Mexican Peso		Other Currencies (1)	Total
Exchance rate	5.44	1.16	111.30	3,816.79	20.64
Assets
Cash and due from banks	-	8	1	26	10,994		143	11,172
Loans	-	-	-	-	151,030		-	151,030
Total Assets	-	8	1	26	162,024		143	162,202
Liabilities
Borrowings and debt	-	-	-	-	(161,940	)	-	(161,940	)
Total liabilities	-	-	-	-	(161,940	)	-	(161,940	)
Net currency position	-	8	1	26	84		143	262

(1) It includes other currencies such as: Argentine pesos, Australian dollar, Swiss franc, Sterling pound, Peruvian soles, and Chinese renminbi.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Financial risk (continued)

C. Market risk (continued)

ii. Foreign exchange risk (continued)

Brazilian Real	European Euro	Japanese Yen	Colombian Peso	Mexican Peso		Other Currencies (1)	Total
Exchance rate	5.19	1.22	103.23	3,430.19	19.92
Assets
Cash and due from banks	81	13	1	20	1,615		80	1,810
Loans	-	-	-	-	182,395		-	182,395
Total Assets	81	13	1	20	184,010		80	184,205
Liabilities
Borrowings and debt	-	-	-	-	(183,863	)	-	(183,863	)
Total liabilities	-	-	-	-	(183,863	)	-	(183,863	)
Net currency position	81	13		20	147		80	342

(1) It includes other currencies such as: Argentine pesos, Australian dollar, Swiss franc, Sterling pound, Peruvian soles, and Chinese renminbi.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Fair value of financial instruments

A. Recurring valuation

Financial instruments measured at fair value on a recurring basis by caption on the condensed consolidated interim statement of financial position using the fair value hierarchy are described below:

Level 1	Level 2	Level 3	Total
Assets
Securities and other financial assets:
Securities at FVOCI - Corporate debt	-	194,805	-	194,805
Securities at FVOCI - Sovereign debt	-	-	-	-
Loans at fair value through profit or loss	-	-	5,223	5,223
Total securities and other financial assets	-	194,805	5,223	200,028
Derivative financial instruments - assets:
Interest rate swaps	-	1,095	-	1,095
Cross-currency swaps	-	5,369	-	5,369
Foreign exchange forwards	-	660	-	660
Total derivative financial instrument assets	-	7,124	-	7,124
Total assets at fair value	-	201,929	5,223	207,152
Liabilities
Derivative financial instruments - liabilities:
Interest rate swaps	-	738	-	738
Cross-currency swaps	-	23,032	-	23,032
Foreign exchange forwards	-	-	-	-
Total derivative financial instruments - liabilities	-	23,770	-	23,770
Total liabilities at fair value	-	23,770	-	23,770

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Fair value of financial instruments (continued)

A. Recurring valuation (continued)

Level 1	Level 2	Level 3	Total
Assets
Securities and other financial assets:
Securities at FVOCI - Corporate debt	-	226,235	-	226,235
Securities at FVOCI - Sovereign debt	-	5,113	-	5,113
Loans at fair value through profit or loss	-	-	4,949	4,949
Total securities and other financial assets	-	231,348	4,949	236,297
Derivative financial instruments - assets:
Interest rate swaps	-	1,831	-	1,831
Cross-currency swaps	-	25,947	-	25,947
Foreign exchange forwards	-	-	-	-
Total derivative financial instrument assets	-	27,778	-	27,778
Total assets at fair value	-	259,126	4,949	264,075
Liabilities
Derivative financial instruments - liabilities:
Interest rate swaps	-	1,774	-	1,774
Cross-currency swaps	-	3,848	-	3,848
Foreign exchange forwards	-	3,589	-	3,589
Total derivative financial instruments - liabilities	-	9,211	-	9,211
Total liabilities at fair value	-	9,211	-	9,211

Fair value calculations are provided only for a limited portion of assets and liabilities. Due to the wide range of valuation techniques and the degree of subjectivity used for estimates, comparisons of fair value information disclosed by the Bank with those of other companies may not be meaningful for comparative analysis.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Fair value of financial instruments (continued)

B. Non-recurring valuation

The following table provides information on the carrying value and the estimated fair value of the Bank’s financial instruments that are not measured on a recurring basis:

Carrying value	Fair value	Level 1	Level 2	Level 3
Assets
Cash and deposits on banks	663,975	663,975	-	663,975	-
Securities at amortized cost (1)	577,426	577,261	-	567,582	9,679
Loans at amortized cost, net (2)	5,263,604	5,348,107	-	5,348,107	-
Customers' liabilities under acceptances	239,544	239,544	-	239,544	-
Investment properties	2,050	2,050	-	-	2,050
Liabilities
Deposits	3,381,845	3,381,845	-	3,381,845	-
Securities sold under repurchase agreements	330,998	330,998	-	330,998	-
Borrowings and debt, net (3)	1,942,816	1,940,103	-	1,940,103	-
Customers' liabilities under acceptances	239,544	239,544	-	239,544	-

Carrying value	Fair value	Level 1	Level 2	Level 3
Assets
Cash and deposits on banks	863,812	863,812	-	863,812	-
Securities at amortized cost (1)	165,564	168,110	-	157,698	10,412
Loans at amortized cost, net (2)	4,891,698	4,972,599	-	4,972,599	-
Customers' liabilities under acceptances	74,366	74,366	-	74,366	-
Investment properties	3,214	3,214	-	-	3,214
Liabilities
Deposits	3,140,875	3,140,875	-	3,140,875	-
Securities sold under repurchase agreements	10,663	10,663	-	10,663	-
Borrowings and debt, net (3)	1,966,271	1,989,719	-	1,989,719	-
Customers' liabilities under acceptances	74,366	74,366	-	74,366	-

(1) The carrying value of securities at amortized cost is net of accrued interest receivable of $6.4 million and the allowance for expected credit losses of $1.7 million as of September 30, 2021 (accrued interest receivable of $1.9 million and the allowance for expected credit losses of $0.4 million as of December 31, 2020).

(2) The carrying value of loans at amortized cost is net of accrued interest receivable of $20.9 million, the allowance for expected credit losses of $41.4 million and unearned interest and deferred fees of $8.2 million for September 30, 2021 (accrued interest receivable of $27.3 million, the allowance for expected credit losses of $41.1 million and unearned interest and deferred fees of $5.8 million for December 31, 2020).

(3) Borrowings and debt exclude lease liabilities for an amount of $17.8 million and $18.7 million as of September 30, 2020 and December 31, 2020, respectively.

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Field: /Page

Field: Split-Segment; Name: 8

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Fair value of financial instruments (continued)

C. Level 3 - Fair value measurement

The following table presents the movement of a level 3 financial instruments measured at fair value:

At December 31, 2019	6,492		-		6,492
Additions	1,433		5,750		7,183
Net changes in fair value(1)	(2,175	)	(801	)	(2,976	)
Sales	(5,750	)	-		(5,750	)
At December 31, 2020	-		4,949		4,949
Additions	-		-		-
Net changes in fair value(1)	-		274		274
Sales	-		-		-
At September 30, 2021	-		5,223		5,223

(1) The fair value of the instrument includes interest receivable.

For financial instruments measured at fair value in level 3 category, the Bank uses the following methodologies and inputs using present value techniques.

Loans at fair value through profit or loss - Level 3

In 2020, the Bank realized the sale of the debt instrument measured at fair value through profit or loss for $5.8 million. As a result, the Bank recognized a loan and classified it at fair value through profit or loss with a carrying amount of $5.2 million and $4.9 million as of September 30, 2021 and December 31, 2020, respectively.

Inputs used in the fair value measurement are detailed as follows:

Observable inputs	Unobservable inputs
- Forward interest rate referenced to 12M USD Libor	- Discount rate or discount margin of floating rate bond "USD US composite B+" with credit risk similar to the instrument analyzed adjusted by the country risk premium.

Fair value measurement sensitivity to unobservable inputs – discount rate	2021	2020
A significant increase in volatility would result in a
lower fair value	6.86%
- 7.48%	3.128% to 8.89%

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Fair value of financial instruments (continued)

C. Level 3 - Fair value measurement (continued)

Management used market data published in Bloomberg for the construction of the discount curve, which allows for a more accurate measurement of the instrument.

Although the Bank believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different fair value measurements. For fair value measurements in level 3, changing one or more of the assumptions used would have the following effects.

| Loans
at fair value through profit or loss | Effect on profit or loss | |
| --- | --- | --- |
| + 100 bps to the observable and unobservable inputs | (130 | ) |
| - 100 bps to the observable and unobservable inputs | 134 | |

Cash and due from banks

The following table presents the details of interest-bearing deposits in banks and pledged deposits:

2021	2020
Unrestricted deposits with the Federal Reserve of the United States of America	566,849	688,612
Cash and non-interest-bearing deposits in other banks	2,233	4,331
Cash and interest-bearing deposits in other banks (1)	94,893	170,869
Total cash and due from banks	663,975	863,812
Less:
Time deposits with original maturity over 90 days and other restricted deposits (1)	31,627	17,804
Total cash and due from banks in the consolidated statement of cash flows	632,348	846,008

(1) Includes restricted deposit of $10.0 million for both periods with the New York State Banking Department under March 1994 legislation and margin call deposits collateralizing derivative financial instrument transactions demand deposits based on daily rates determined by banks.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Cash and due from banks (continued)

The following table presents the pledged deposits classified by country risk:

2021	2020
Country:
United
States of America (1)	11,485	11,515
Switzerland	7,787	3,027
Netherlands	3,290	334
Japan	3,060	1,330
France	2,980	50
Mexico	1,700	790
United Kingdom	710	130
Spain	315	18
Germany	300	-
Canada	-	610
Total	31,627	17,804

(1) Includes pledged deposits of $10.0 million for both periods, with the New York State Banking Department under March 1994 legislation and deposits pledged to guarantee derivative financial instrument transactions.

Securities and other financial assets, net

Securities and other financial assets are presented as follows:


At September 30, 2021		With changes in other comprehensive income (loss)			With
Carrying amount	Amortized cost		Recyclable to profit and loss		Non-recyclable to profit and loss	changes
in profit or loss	Total
securities and other financial assets, net
Principal	572,769		194,805		-	-	767,574
Interest receivable	6,434		726		-	-	7,160
Reserves (1)	(1,777	)	(26	)	-	-	(1,803	)
	577,426		195,505		-	-	772,931


At December 31, 2020		With changes in other comprehensive income (loss)			With
Carrying amount	Amortized cost		Recyclable to profit and loss		Non-recyclable to profit and loss	changes
in profit or loss	Total
securities and other financial assets, net
Principal	164,074		231,348		-	-	395,422
Interest receivable	1,985		1,156		-	-	3,141
Reserves (1)	(495	)	(43	)	-	-	(538	)
	165,564		232,461		-	-	398,025

(1) The loss allowance for losses for securities at FVOCI is included in equity in the condensed consolidated interim statement of financial position in the line Other comprehensive income.

Field: Page; Sequence: 38; Value: 2

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Field: /Page

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Securities and other financial assets, net (continued)

As of December 31, 2020, the Bank sold 261,164 shares, which were designated at their initial recognition at fair value with changes in other comprehensive income due to market changes affecting the liquidity of the instrument.

The cumulative fair value of the shares sold was $1.7 million, and the cumulative loss recognized in other comprehensive income was $602 thousand, transferred to retained earnings.

Securities and other financial assets by contractual maturity are shown in the following table:

At September 30, 2021	With changes in other comprehemsive income		With
	Amortized cost	Recyclable to profit ans loss	Non-recyclable to profit and loss	changes in profit or loss	Total securities and other financial assets, net
Due within 1 year	37,533	107,988	-	-	145,521
After 1 year but within 5 years	535,236	86,817	-	-	622,053
Balance - principal	572,769	194,805	-	-	767,574

At December 31, 2020	With changes in other comprehemsive income		With
	Amortized cost	Recyclable to profit ans loss	Non-recyclable to profit and loss	changes in profit or loss	Total securities and other financial assets, net
Due within 1 year	40,625	34,027	-	-	74,652
After 1 year but within 5 years	123,449	197,321	-	-	320,770
Balance - principal	164,074	231,348	-	-	395,422

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Securities and other financial assets, net (continued)

The following table includes the securities pledged to secure repurchase transactions accounted for as secured pledged:

	Amortized cost		Fair value	Total		Amortized cost		Fair value	Total
Securities pledged to secure repurchase transactions	358,674		-	358,674		11,998		-	11,998
Securities sold under repurchase agreements	(330,998	)	-	(330,998	)	(10,663	)	-	(10,663	)

Loans

The following table presents the loan portfolio according to its classification and subsequent measurement:

2021			2020
Loans at amortized cost	5,292,390		4,911,397
Interest receivable	20,912		27,350
Loss allowances	(41,465	)	(41,165	)
Unearned interest and deferred fees	(8,233	)	(5,884	)
Loans at amortized cost, net	5,263,604		4,891,698
Loans at fair value through profit or loss (1)	5,223		4,949
Loans, net	5,268,827		4,896,647

(1) The Bank realized the sale of debt instruments measured at fair value through profit or loss for $5.8 million. As a result, the Bank recognized a loan and classified it at fair value through profit or loss with a carrying amount of $5.2 million and $4.9 million as of September 30, 2021 and December 31, 2020, respectively.

Field: Page; Sequence: 40; Value: 2

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Field: Split-Segment; Name: 9

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Loans (continued)

The fixed and floating interest rate distribution of the loan portfolio is as follows:

2020	2020
Fixed interest rates	2,930,034	2,544,544
Floating interest rates	2,367,579	2,371,802
Total	5,297,613	4,916,346

As of September 30, 2021, and December 31, 2020, 84% and 41% of the loan portfolio at fixed interest rates has remaining maturities of less than 180 days. The range of interest rates on loans fluctuates from 0.41 % to 9.75 % (December 31, 2020 0.43% to 9.70 % ).

The following table details information relating to loans granted to class A and B shareholders:

2021	20120
Class A and B shareholder loans	393,199	522,316
% Loans to class A and B shareholders over total loan portfolio	7%	11%
% Class A and B stockholders with loans over number of class A and B stockholders	10%	12%

Modified financial assets

The following table refers to modified financial assets during the period, where modification does not result in de-recognition:

Gross carrying amount before modification	65,000		8,829
Allowance loss before modification (1)	(12,739	)	(1,796	)
Net amortized cost before modification	52,261		7,033
Gross carrying amount after modification	65,000		8,829
Allowance loss after modification (2)	(12,699	)	(1,802	)
Net amortized cost after modification	52,301		7,027

(1) Expected credit loss for 12 months.

(2) Expected credit loss within the life of the financial asset.

Recognition and derecognition of financial assets

During the period ended December 31, 2020, a Stage 3 impaired loan was sold for $11.6 million and a Stage 2 loan with a significant increase in credit risk was sold for $13.2 million, both classified at amortized cost. This resulted in a write-off against reserves of $56.1 million. These sales were made based on compliance with the Bank's strategy to optimize credit risk of its loan portfolio.

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| Banco Latinoamericano
de Comercio Exterior, S. A. and Subsidiaries |
| --- |
| Notes to the unaudited
condensed consolidated interim financial statements |
| (Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated) |

Loan commitments and financial guarantee contracts

In the normal course of business, to meet the financing needs of its customers, the Bank is party to loan commitments and financial guarantee contracts. These instruments involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the condensed consolidated interim statement of financial position. Credit risk represents the possibility of loss resulting from the failure of a customer to perform in accordance with the terms of a contract.

The Bank’s outstanding loan commitments and financial guarantee contracts are as follows:

2021	2020
Documentary letters of credit	256,305	216,782
Stand-by letters of credit and guarantees - commercial risk	199,232	210,497
Credit commitments	200,119	137,619
Total loans commitments and financial guarantee contracts	655,656	564,898

The remaining maturity profile of the Bank’s outstanding loan commitments and financial guarantee contracts is as follows:

	September 30,	December 31,
Maturities	2021	2020
Up to 1 year	570,144	419,015
From 1 to 2 years	85,512	75,883
Over 2 to 5 years	-	70,000
Total	655,656	564,898

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Gain (loss) on financial instruments, net

The following table sets forth the details for the gain or loss on financial instruments recognized in the condensed consolidated interim statements of profit or loss:

2021		2020
Loss on derivative financial instruments and foreign currency exchange, net	(118	)	(357	)
Unrealized gain (loss) on financial instruments at fair value through profit or loss	509		(159	)
Realized (loss) gain on financial instruments at fair value through profit or loss	(836	)	79
Gain on sale of financial instruments at amortized cost	333		-
	(112	)	(437	)

2021		2020
Gain (loss) on derivative financial instruments and foreign currency exchange, net	1,201		(2,242	)
Unrealized gain (loss) on financial instruments at fair value through profit or loss	172		(2,986	)
Realized (loss) gain on financial instruments at fair value through profit or loss	(1,669	)	484
Gain on sale of financial instruments at amortized cost	333		-
Realized gain on financial instruments at fair value through OCI	14		-
	51		(4,744	)

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Field: /Page

Derivative financial instruments

The following table details quantitative information on the notional amounts and carrying amounts of the derivative instruments used for hedging by type of risk hedged and type of hedge:

Nominal	Carrying amount of hedging instruments
amount	Asset (1)	Liability (2)
Interest rate risk
Fair value hedges	40,000	1,095	-
Cash flow hedges	20,000	-	(738	)
Interest rate and foreign exchange risk
Fair value hedges	343,687	378	(17,993	)
Cash flow hedges	327,473	4,991	(5,039	)
Foreign exchange risk
Cash flow hedges	40,244	660	-
	771,404	7,124	(23,770	)

Nominal	Carrying amount of hedging instruments
amount	Asset (1)	Liability (2)
Interest rate risk
Fair value hedges	85,667	1,831	(233	)
Cash flow hedges	60,000	-	(1,541	)
Interest rate and foreign exchange risk
Fair value hedges	344,489	2,856	(3,848	)
Cash flow hedges	221,508	23,091	-
Foreign exchange risk
Cash flow hedges	71,353	-	(3,589	)
	783,017	27,778	(9,211	)

(1) Included in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.

(2) Included in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.

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Derivative financial instruments (continued)

A. Fair value hedges (continued)

The following table details the notional amounts and carrying amounts of derivative instruments used in fair value hedges by type of risk and hedged item, along with the changes during the periods used to determine and recognize the ineffectiveness of the hedge:

Nominal	Carrying amount of hedging instruments			Changes in fair value used to calculate hedge		Ineffectiveness recognized in
amount	Asset (1)	Liability (2)		ineffectiveness (3)		profit or loss (3)
Interest rate risk
Borrowings and debt	40,000	1,095	-		1		14
Interest rate and foreign exchange risk
Loans	3,273	378	-		21		(95	)
Borrowings and debt	340,414	-	(17,993	)	(15,961	)	679
Total	383,687	1,473	(17,993	)	(15,939	)	598

Nominal	Carrying amount of hedging instruments			Changes in fair value used to calculate hedge		Ineffectiveness recognized in
amount	Asset (1)	Liability (2)		ineffectiveness (3)		profit or loss (3)
Interest rate risk
Loans	10,667	-	(132	)	84		1
Securities at FVOCI	5,000	-	(101	)	(29	)	(20	)
Borrowings and debt	70,000	1,831	-		199		(27	)
Interest rate and foreign exchange risk
Loans	4,075	356	-		178		(149	)
Borrowings and debt	340,414	2,500	(3,848	)	(2,524	)	(468	)
Total	430,156	4,687	(4,081	)	(2,092	)	(663	)

(1) Included in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.

(2) Included in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.

(3) Included in the condensed consolidated interim statement of profit or loss is the line Loss on financial instruments, net.

Field: Page; Sequence: 45; Value: 2

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Field: /Page

Field: Split-Segment; Name: 10

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Derivative financial instruments (continued)

A. Fair value hedges (continued)

The following table details the notional amounts and carrying amounts of the fair value hedged items by type of risk and hedged item, along with the changes during the period used to determine and recognize the ineffectiveness of the hedge:

| | Carrying
amount of hedged items | | | Line in the consolidated statement of financial position
that includes the | Accumulated
amount of fair value hedge adjustments included in the | | Change
in fair value of the hedged items used | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | Asset | Liability | | carrying amount of the hedged items | carrying
amount of the hedged items | | to
calculate hedge ineffectiveness (1) | |
| Interest rate risk | | | | | | | | |
| Borrowings and debt | - | (41,134 | ) | Borrowings and debt, net | (28 | ) | 13 | |
| Interest rate and foreign exchange risk | | | | | | | | |
| Loans | 2,935 | - | | Loans, net | (770 | ) | (116 | ) |
| Borrowings and debt | - | (322,395 | ) | Borrowings and debt, net | 17,722 | | 16,640 | |
| Total | 2,935 | (363,529 | ) | | 16,924 | | 16,537 | |

| Carrying amount of hedged items | | | | Line in the consolidated statement
of financial position that includes the | Accumulated amount of fair value hedge adjustments included
in the | Change
in fair value of the hedged items used | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Asset | Liability | | | carrying amount of the hedged item | carrying amount of the hedged items | to calculate hedge ineffectiveness (1) | | |
| Interest rate risk | | | | | | | | |
| Loans | 10,837 | - | | Loans, net | 74 | | (83 | ) |
| Securities at FVOCI | 5,113 | - | | Securities and other financial assets, net | 85 | | 9 | |
| Borrowings and debt | - | (71,937 | ) | Borrowings and debt, net | (292 | ) | (226 | ) |
| Interest rate and foreign exchange risk | | | | | | | | |
| Loans | 3,789 | - | | Loans, net | (654 | ) | (327 | ) |
| Borrowings and debt | - | (339,688 | ) | Borrowings and debt, net | 1,083 | | 2,056 | |
| Total | 19,739 | (411,625 | ) | | 296 | | 1,429 | |

(1) Included in the condensed consolidated interim statement of profit or loss is the line Loss on financial instruments, net.

Field: Page; Sequence: 46; Value: 2

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Field: /Page

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Derivative financial instruments (continued)

A. Fair value hedges (continued)

The following table details the maturity of the notional amount for the derivative instruments used in fair value hedges:

Maturity	September 30, 2021 — Interest rate swaps	Foreign exchange and interest rate risks	Total
Fair value hedge
Less than 1 year	40,000	271,646	311,646
Over 1 to 2 years	-	3,273	3,273
Over 2 to 5 years	-	68,768	68,768
Total	40,000	343,687	383,687

Maturity	December 31, 2020 — Interest rate swaps	Foreign exchange and interest rate risks	Total
Fair value hedge
Less than 1 year	85,667	-	85,667
Over 1 to 2 years	-	271,646	271,646
Over 2 to 5 years	-	72,843	72,843
Total	85,667	344,489	430,156

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Field: /Page

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Derivative financial instruments (continued)

B. Cash flow hedges

The following table details the notional amounts and carrying amounts of derivative instruments used in cash flow hedges by type of risk and hedged item, along with the changes during the period used to determine and recognize the ineffectiveness of the hedge:

| Nominal | Carrying
amount of hedging instruments | | | Change in fair value used for calculating hedge | | Changes
in the fair value of the hedging instruments recognized in | | Ineffectiveness recognized in | | Amount reclassified from the hedge reserve to profit | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| amount | Asset (1) | Liability (2) | | ineffectiveness | | OCI (3) | | profit
or loss (4) | | or loss (4) | | |
| Interest rate risk | | | | | | | | | | | | |
| Borrowings and debt | 20,000 | - | (738 | ) | 364 | | 362 | | (2 | ) | (423 | ) |
| Interest rate and foreign exchange risk | | | | | | | | | | | | |
| Borrowings and debt | 327,473 | 4,991 | (5,039 | ) | (25,180 | ) | (24,931 | ) | 249 | | - | |
| Foreign exchange risk | | | | | | | | | | | | |
| Loans | 40,244 | 660 | - | | 705 | | 702 | | (3 | ) | (3,589 | ) |
| Total | 387,717 | 5,651 | (5,777 | ) | (24,111 | ) | (23,867 | ) | 244 | | (4,012 | ) |

| Nominal | Carrying amount of hedging instruments | | | Change in fair value used for calculating hedge | | Changes
in the fair value of the hedging instruments recognized in | | Ineffectiveness recognized in | Amount reclassified from the hedge reserve to profit | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| amount | Asset (1) | Liability (2) | | ineffectiveness | | OCI (3) | | profit or loss (4) | or loss (4) | | |
| Interest rate risk | | | | | | | | | | | |
| Borrowings and debt | 60,000 | - | (1,541 | ) | (443 | ) | (442 | ) | 1 | (75 | ) |
| Interest rate and foreign exchange risk | | | | | | | | | | | |
| Borrowings and debt | 221,508 | 23,091 | - | | 23,380 | | 23,481 | | 101 | (1,697 | ) |
| Foreign exchange risk | | | | | | | | | | | |
| Loans | 71,353 | - | (3,589 | ) | (3,466 | ) | (3,465 | ) | 1 | (1,927 | ) |
| Borrowings and debt | - | - | - | | - | | - | | - | - | |
| Total | 352,861 | 23,091 | (5,130 | ) | 19,471 | | 19,574 | | 103 | (3,699 | ) |

(1) Included in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.

(2) Included in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.

(3) Included in equity in the condensed consolidated interim statement of financial position on the line Other comprehensive income.

(4) Included in the condensed consolidated interim statement of profit or loss under the line Loss on financial instruments, net.

Field: Page; Sequence: 48; Value: 2

Field: Sequence; Type: Arabic; Name: PageNo 46 Field: /Sequence

Field: /Page

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Derivative financial instruments (continued)

B. Cash flow hedges (continued)

The following table details the nominal amounts and carrying amounts of the cash flow hedged items by type of risk and hedged item, along with the changes during the period used to determine and recognize the ineffectiveness of the hedge:

Carrying amount of hedged items				Line in the consolidated statement of financial position that includes the carrying amount of the	Change in the fair value of the hedged items used to calculate the hedge	Cash flow hedge
Asset	Liability			hedged items	ineffectiveness	reserve
Interest rate risk
Borrowings and debt	-	(20,042	)	Borrowings and debt, net	(362	)	650
Interest rate and foreign exchange risk
Borrowings and debt	-	(340,964	)	Borrowings and debt, net	24,931		10,329
Foreign exchange risk
Loans	39,472	-		Loans, net	(702	)	339
Total	39,472	(361,006	)		23,867		11,318

| Carrying
amount of hedged items | | | | Line in the consolidated statement of financial position that includes the carrying
amount of the | Change in the fair value of the hedged items used to calculate the
hedge | Cash flow hedge | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Asset | Liability | | | hedged items | ineffectiveness | reserve | | |
| Interest rate risk | | | | | | | | |
| Borrowings and debt | - | (20,045 | ) | Borrowings and debt, net | 442 | | 1,440 | |
| Interest rate and foreign exchange risk | | | | | | | | |
| Borrowings and debt | - | (243,817 | ) | Borrowings and debt, net | (23,481 | ) | (1,980 | ) |
| Foreign exchange risk | | | | | | | | |
| Loans | 74,509 | - | | Loans, net | 3,465 | | 562 | |
| Total | 74,509 | (263,862 | ) | | (19,574 | ) | 22 | |

Field: Page; Sequence: 49; Value: 2

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Field: /Page

Field: Split-Segment; Name: 11

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Field: Rule-Page

Field: /Rule-Page

Derivative financial instruments (continued)

B. Cash flow hedge (continued)

The following table details the maturity of the derivative instruments used in cash flow hedges:

Maturity	September 30, 2021 — Foreign exchange risk	Interest rate swaps	Foreign exchange and interest rate risks	Total
Cash flow hedge
Less than 1 year	40,244	-	-	40,244
Over 1 to 2 years	-	20,000	30,332	50,332
Over 2 to 5 years	-	-	280,072	280,072
More than 5 years	-	-	17,069	17,069
Total	40,244	20,000	327,473	387,717

| Maturity | December
31, 2020 — Foreign exchange risk | Interest rate swaps | Foreign exchange and interest rate risks | Total |
| --- | --- | --- | --- | --- |
| Cash flow hedge | | | | |
| Less than 1 year | 71,353 | 40,000 | - | 111,353 |
| Over 2 to 5 years | - | 20,000 | 197,854 | 217,854 |
| More than 5 years | - | - | 23,654 | 23,654 |
| Total | 71,353 | 60,000 | 221,508 | 352,861 |

Field: Page; Sequence: 50; Value: 2

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Field: /Page

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Field: Rule-Page

Field: /Rule-Page

Other assets

Following is a summary of other assets:

2021	2020
Accounts receivable	940	938
Prepaid expenses	1,296	2,541
Prepaid fees and commissions	312	486
Interest receivable - deposits	23	8
IT projects under development	439	218
Severance fund	1,964	1,927
Other	677	698
	5,651	6,816

Deposits

The maturity profile of the Bank’s deposits, excluding interest payable, as follows:

2021	2020
Demand	431,874	170,660
Up to 1 month	712,610	1,127,120
From 1 month to 3 months	881,241	878,900
From 3 months to 6 months	951,271	544,860
From 6 months to 1 year	346,934	365,879
From 1 year to 2 years	54,888	51,481
	3,378,818	3,138,900

The following table presents additional information regarding the Bank’s deposits

2021	2020
Aggregate amounts of $100,000 or more	3,378,501	3,138,684
Aggregate amounts of deposits in the New York Agency	604,361	657,851

2021	2020
Interest expense on deposits made in the New York Agency	847	1,040

2021	2020
Interest expense on deposits made in the New York Agency	3,097	3,857

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Field: /Page

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Field: Rule-Page

Field: /Rule-Page

Securities sold under repurchase agreements

As of September 30, 2021, and December 31, 2020, the Bank had financing transactions under repurchase agreements for $331 million and $10.7 million, respectively.

During the periods ended September 30, 2021 and 2020, interest expense related to financing transactions under repurchase agreements totaled $525 thousand and $407 thousand, respectively. These expenses are included as interest expense – borrowings and debt line in the condensed consolidated interim statement of profit or loss.

Borrowings and debt

Some borrowing agreements include various events of default and covenants related to minimum capital adequacy ratios, incurrence of additional liens, and asset sales, as well as other customary covenants, representations and warranties. As of September 30, 2021, the Bank was in compliance with all those covenants.

Borrowings and debt are detailed as follows:

	September 30, 2021
	Short-Term			Long-term
Carrying amount	Borrowings	Debt	Lease Liabilities	Borrowings	Debt		Lease Liabilities	Total
Principal	415,469	-	1,326	298,693		1,234,084		16,557	1,966,129
Prepaid commissions	-	-	-	(210	)	(5,220	)	-	(5,430	)
	415,469	-	1,326	298,483		1,228,864		16,557	1,960,699

| | December
31, 2020 | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | Short-Term | | | Long-term | | | | | | |
| Carrying amount | Borrowings | Debt | Lease Liabilities | Borrowings | Debt | | Lease Liabilities | Total | | |
| Principal | 331,585 | 49,350 | 1,244 | 477,010 | | 1,116,033 | | 17,555 | 1,992,777 | |
| Prepaid commissions | - | - | - | (1,158 | ) | (6,549 | ) | - | (7,707 | ) |
| | 331,585 | 49,350 | 1,244 | 475,852 | | 1,109,484 | | 17,555 | 1,985,070 | |

Field: Page; Sequence: 52; Value: 2

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Field: /Page

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Field: Rule-Page

Field: /Rule-Page

Borrowings and debt (continued)

Short-term borrowings and debt

The breakdown of short-term (original maturity of less than one year, excluding lease liabilities) borrowings and debt, along with contractual interest rates, is as follows:

2021	2020
Short-term borrowings:
At fixed interest rates	10,000	55,000
At floating interest rates	405,469	276,585
Total borrowings	415,469	331,585
Short-term debt:
At floating interest rates	-	49,350
Total debt	-	49,350
Total short-term borrowings and debt	415,469	380,935
Range of fixed interest rates on borrowings and debt in U.S. dollars	0.50%	0.45% to 1.40%
Range of floating interest rates on borrowings in U.S. dollars	0.33% to 0.48%	0.47% to 1.65%
Range of floating interest rates on borrowings and debt in Mexican pesos	5.15% to 5.20%	4.97% to 5.05%

The outstanding balances of short-term borrowings and debt by currency, are as follows:

2021	2020
Currency
US dollar	350,000	299,957
Mexican peso	65,469	80,978
Total	415,469	380,935

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Field: Rule-Page

Field: /Rule-Page

Borrowings and debt (continued)

Long-term borrowings and debt

The breakdown of borrowings and long-term debt (original maturity of more than one year, excluding lease liabilities), along with contractual interest rates, plus prepaid commissions as of September 30, 2021 and December 31, 2020, respectively, are as follows (excludes lease liabilities):


Long-term borrowings:
At fixed interest rates with due dates from November 2021 to September 2023	116,027		68,190
At floating interest rates with due dates from October 2021 to August 2023	182,666		408,820
Total long-term borrowings	298,693		477,010
Long-term debt:
At fixed interest rates with due dates from June 2022 to December 2027	912,400		784,006
At floating interest rates with due dates from March 2022 to June 2023	321,684		332,027
Total long-term debt	1,234,084		1,116,033
Total long-term borrowings and debt	1,532,777		1,593,043
Less: Prepaid commissions	(5,430	)	(7,707	)
Total long-term borrowings and debt, net	1,527,347		1,585,336
Range of fixed interest rates on borrowings and debt in U.S. dollars	0.8% to 2.38%		2.04% to 3.05%
Range of floating interest rates on borrowings and debt in U.S. dollars	1.17% to 1.78%		1.16% to 1.85%
Range of fixed interest rates on borrowings in Mexican pesos	6.50% to 9.09%		6.77% to 9.09%
Range of floating interest rates on borrowings and debt in Mexican pesos	5.14% to 5.92%		4.87% to 5.74%
Range of fixed interest rates on debt in Japanese yens	0.40% to 0.95%		0.52%
Range of fixed interest rates on debt in Euros	0.23% to 3.75%		0.9% to 3.75%
Range of fixed interest rates on debt in Australian dollars	1.41%		0.00%
Range of fixed interest rates on debt in Sterling pounds	1.50%		0.00%

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Field: Split-Segment; Name: 12

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Borrowings and debt (continued)

Long-term borrowings and debt (continued)

The balances of long-term borrowings and debt by currency, excluding prepaid commissions, are as follows (excluding lease liabilities):


Currency
US
dollar	780,024	910,296
Mexican
peso	494,088	509,687
Euro	124,062	101,469
Japanese
yen	111,547	71,591
Australian
dollar	18,070	-
Sterling
pounds	4,986	-
Total	1,532,777	1,593,043

Future payments of long-term borrowings and debt outstanding as of September 30, 2021, are as follows (excluding lease liabilities):


Payments
2021	30,879
2022	411,599
2023	273,298
2024	155,381
2025	610,230
2026	34,821
2027	16,569
	1,532,777

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Borrowings and debt (continued)

Long-term borrowings and debt (continued)

Reconciliation – Movements of borrowings

The following table presents the reconciliation of movements of borrowings and debt arising from financing activities, as presented in the condensed consolidated interim statements of cash flows:

| Balance
as of January 1, | 1,985,070 | | 3,138,310 | |
| --- | --- | --- | --- | --- |
| Net
increase (decrease) in short-term borrowings and debt | 37,222 | | (1,162,760 | ) |
| Proceeds
from long-term borrowings and debt | 167,675 | | 386,096 | |
| Repayments
of long-term borrowings and debt | (194,094 | ) | (246,982 | ) |
| Payment
of lease liabilities | (916 | ) | (820 | ) |
| Net
increase in lease liabilities | - | | 27 | |
| Change
in foreign currency | (35,011 | ) | (43,888 | ) |
| Adjustment
of fair value for hedge accounting relationship | (1,465 | ) | 962 | |
| Other
adjustments | 2,218 | | (4,002 | ) |
| Balance
as of September 30, | 1,960,699 | | 2,066,943 | |

The reconciliation of equity account movements is presented in the condensed consolidated interim statement of changes in equity.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Borrowings and debt (continued)

Lease liabilities

Maturity analysis of contractual undiscounted cash flows of the lease liabilities is detailed below:

Due within 1 year	2,098	2,058
After 1 year but within 5 years	10,636	10,641
After 5 years but within 10 years	9,782	11,354
Total undiscounted lease liabilities	22,516	24,053
Short-term	1,326	1,244
Long-term	16,557	17,555
Lease liabilities included in the consolidated
statement of financial position	17,883	18,799

Amounts recognized in the statement of cash flows:

Payments of lease liabilities	916	1,114

Amounts recognized in profit or loss:

2021		2020
Interest on lease liabilities	(201	)	(214	)
Income from sub-leasing right-of-use
assets	52		66

| | Nine
months ended September 30, — 2021 | | 2020 | |
| --- | --- | --- | --- | --- |
| Interest on lease liabilities | (614 | ) | (651 | ) |
| Income from sub-leasing right-of-use
assets | 185 | | 188 | |

Other liabilities

Following is a summary of other liabilities:

2021	2020
Accruals and other accumulated
expenses	8,745	9,213
Accounts payable	2,658	6,307
Others	2,630	3,194
	14,033	18,714

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Earnings per share

The following table presents a reconciliation of profit and share data used in the basic and diluted earnings per share (“EPS”) computations for the dates indicated:

2021	2020
(Thousands of U.S.
dollars)
Profit
for the period	15,731	15,444
(U.S. dollars)
Basic earnings per share	0.41	0.39
Diluted earnings per share	0.41	0.39
(Thousands of shares)
Weighted average of common shares outstanding applicable
to basic EPS	38,789	39,672
Effect of diluted securities:
Stock options and
restricted stock units plan	-	-
Adjusted weighted
average of common shares outstanding applicable to diluted EPS	38,789	39,672

2021	2020
(Thousands of U.S.
dollars)
Profit
for the period	42,631	47,852
(U.S. dollars)
Basic earnings per share	1.08	1.21
Diluted earnings per share	1.08	1.21
(Thousands of shares)
Weighted average of common shares outstanding applicable
to basic EPS	39,377	39,645
Effect of diluted securities:
Stock options and
restricted stock units plan	-	-
Adjusted weighted
average of common shares outstanding applicable to diluted EPS	39,377	39,645

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Field: Split-Segment; Name: 13

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Fee and commission income

Fee and commission income from contracts with customers broken down by main types of services according to the scope of IFRS 15, are detailed as follows:

Syndications	Documentary and standby letters of credit	Other Commissions, net		Total
Openning and confirmation	-	2,674	555		3,229
Negotiation and acceptance	-	8	-		8
Amendment	-	364	-		364
Structuring	1,327	-	-		1,327
Other	-	4	(180	)	(176	)
	1,327	3,050	375		4,752

Syndications	Documentary and standby letters of credit	Other Commissions, net		Total
Openning and confirmation	-	7,931	1,754		9,685
Negotiation and acceptance	-	37	-		37
Amendment	-	990	(16	)	974
Structuring	1,828	-	-		1,828
Other	-	35	(496	)	(461	)
	1,828	8,993	1,242		12,063

Syndications	Documentary and standby letters of credit	Other Commissions, net		Total
Openning and confirmation	-	2,134	413		2,547
Negotiation and acceptance	-	11	-		11
Amendment	-	136	-		136
Structuring	63	-	-		63
Other	-	3	(149	)	(146	)
	63	2,284	264		2,611

Syndications	Documentary and standby letters of credit	Other Commissions, net		Total
Openning and confirmation	-	5,919	933		6,852
Negotiation and acceptance	-	174	-		174
Amendment	-	406	-		406
Structuring	514	-	-		514
Other	-	36	(358	)	(322	)
	514	6,535	575		7,624

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Fee and commission income (continued)

The following table provides information on the ordinary income that is expected to be recognized on the contracts in force:


2021
Up to 1 year	2,279
From 1 to 2 years	267
	2,546

Business segment information

The following table provides certain information regarding the Bank’s operations by segment:

Commercial		Treasury		Total
Interest income	31,916		2,854		34,770
Interest expense	(161	)	(12,530	)	(12,691	)
Inter-segment net interest income	(10,469	)	10,469		-
Net interest income	21,286		793		22,079
Other income (expense), net	4,939		(188	)	4,751
Total income	26,225		605		26,830
Reversal of (provision for) credit losses	115		(886	)	(771	)
Operating expenses	(7,874	)	(2,454	)	(10,328	)
Segment profit (loss)	18,466		(2,735	)	15,731

Commercial		Treasury		Total
Interest income	94,819		7,033		101,852
Interest expense	(492	)	(39,388	)	(39,880	)
Inter-segment net interest income	(33,830	)	33,830		-
Net interest income	60,497		1,475		61,972
Other income (expense), net	12,676		(267	)	12,409
Total income	73,173		1,208		74,381
(Provision for) reversal of credit losses	(890	)	(1,265	)	(2,155	)
Operating expenses	(22,902	)	(6,693	)	(29,595	)
Segment profit (loss)	49,381		(6,750	)	42,631
Segment assets	5,524,936		1,446,516		6,971,452
Segment liabilities	257,504		5,692,819		5,950,323

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Business segment information (continued)

Commercial		Treasury		Total
Interest income	37,886		1,808		39,694
Interest expense	(172	)	(16,914	)	(17,086	)
Inter-segment net interest income	(16,513	)	16,513		-
Net interest income	21,201		1,407		22,608
Other income (expense), net	2,929		(348	)	2,581
Total income	24,130		1,059		25,189
(Provision for) reversal of credit losses	(1,430	)	(113	)	(1,543	)
Gain (loss) on non-financial assets, net	140		-		140
Operating expenses	(6,507	)	(1,835	)	(8,342	)
Segment profit (loss)	16,333		(889	)	15,444

Commercial		Treasury		Total
Interest income	136,690		6,500		143,190
Interest expense	(521	)	(72,538	)	(73,059	)
Inter-segment net interest income	(69,282	)	69,282		-
Net interest income	66,887		3,244		70,131
Other income (expense), net	5,488		(1,770	)	3,718
Total income	72,375		1,474		73,849
Reversal of (provision for) credit losses	1,356		(203	)	1,153
Operating expenses	(20,111	)	(7,039	)	(27,150	)
Segment profit (loss)	53,620		(5,768	)	47,852
Segment assets	4,657,429		1,647,046		6,304,475
Segment liabilities	106,921		5,163,939		5,270,860

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Business segment information (continued)

Reconciliation on information on reportable segments

2021	2020
Profit for the period	15,731	15,444

2021	2020
Profit for the period	42,631	47,852
Assets:
Assets from reportable segments	6,971,452	6,304,475
Other assets - unallocated	5,628	6,719
Total assets	6,977,080	6,311,194
Liabilities:
Liabilities from reportable segments	5,950,323	5,270,860
Other liabilities - unallocated	14,033	14,627
Total liabilities	5,964,356	5,285,487

Related party transactions

The detail of the assets and liabilities with related private corporations and financial institutions is as follows:

2021		2020
Assets
Demand deposits	1,343		3,269
Loans, net	-		22,499
Total asset	1,343		25,768
Liabilities
Time deposits	220,000		240,000
Total liabilities	220,000		240,000
Contingencies
Stand-by letters of credit	9,080		28,300
Loss allowance	(46	)	(60	)
Total contingencies	9,034		28,240

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Field: Split-Segment; Name: 14

Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Related party transactions (continued)

The detail of income and expenses with related parties is as follows:

2021		2020
Interest income
Loans	-		239
Interest expense
Deposits	(398	)	(819	)
Net interest income (expenses)	(398	)	(580	)
Other income (expense)
Fees and commissions, net	67		115
Net income from related parties	(331	)	(465	)

2021		2020
Interest income
Loans	161		1,010
Interest expense
Deposits	(1,658	)	(2,129	)
Net interest income (expenses)	(1,497	)	(1,119	)
Other income (expense)
Fees and commissions, net	185		299
Net income from related parties	(1,312	)	(820	)

The total compensation paid to directors and the executives as representatives of the Bank amounted to:

2021	2020
Expenses:
Compensation costs to directors	466	450
Compensation costs to executives	931	620

2021	2020
Expenses:
Compensation costs to directors	1,173	1,249
Compensation costs to executives	3,220	4,811

Compensation costs to directors and executives, include annual cash retainers and the cost of granted restricted stock and restricted stock units.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Litigation

Bladex is not engaged in any litigation that is significant to the Bank’s business or, to the best of the knowledge of Bank’s management, that is likely to have an adverse effect on its business, consolidated financial position or its consolidated financial performance.

Applicable laws and regulations

Liquidity index

In according with the established in Rule No. 2-2018 issued by the Superintendence of Banks of Panama (SBP), as of September 30, 2021 and December 31, 2020 the minimum LCR to be reported to the SBP was 65% for both periods. The Bank´s LCR as of September 30, 2021 and December 31, 2020 was 202% and 249%, respectively.

The Rule No. 4-2008 issued by the SBP, establishes that every general license or international license bank must maintain, always, a minimum balance of liquid assets equivalent to 30% of the gross total of its deposits in the Republic of Panama or overseas up to 186 days, counted from the reporting date. The liquidity index reported by the Bank to the regulator as of September 30, 2021 and December 31, 2020 was 72.91% and 79.99%, respectively.

Capital adequacy

In compliance with the established in the Banking Law of the Republic of Panama and the Rules No. 01-2015 and No. 03-2016 below, the information corresponding to the total capital adequacy index is presented:

Capital funds	1,034,873	1,048,182
Risk-weighted assets	6,106,811	5,187,054
Capital adequacy index	16.95%	20.21%

Leverage ratio

The table below presents the Bank´s leverage ratio in compliance with Article No.17 of the Rule No. 1-2015:

Ordinary capital	973,554	912,164
Non-risk-weighted assets	7,000,172	6,479,416
Leverage ratio	12.84%	14.08%

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Applicable laws and regulations (continued)

Specific provisions

Based on the classification of risks, collateral and in compliance with SBP Rule No. 4-2013, the Bank classified the loan portfolio as follows:

Normal	Special Mention	Substandard	Doubtful	Unrecoverable	Total
Loans at amortized cost
Corporations	2,789,655	68,806	10,593	-	-	2,869,054
Financial Institutions:
Private	1,962,252	-	-	-	-	1,962,252
State-owned	431,571	-	-	-	-	431,571
	2,393,823	-	-	-	-	2,393,823
Sovereign	29,513	-	-	-	-	29,513
	5,212,991	68,806	10,593	-	-	5,292,390
Allowance for loan losses IFRS (*):	22,978	13,362	5,125	-	-	41,465
Loans at FVTPL
Financial Institutions:
Private	5,223	-	-	-	-	5,223
Total loans	5,218,214	68,806	10,593	-	-	5,297,613

Normal	Special Mention	Substandard	Doubtful	Unrecoverable	Total
Loans at amortized cost
Corporations	2,147,846	9,281	10,593	-	-	2,167,720
Financial Institutions:
Private	2,231,742	-	-	-	-	2,231,742
State-owned	476,520	-	-	-	-	476,520
	2,708,262	-	-	-	-	2,708,262
Sovereign	35,415	-	-	-	-	35,415
	4,891,523	9,281	10,593	-	-	4,911,397
Allowance for loan losses IFRS (*) :	34,720	1,857	4,588	-	-	41,165
Loans at FVTPL
Financial Institutions:
Private	4,949	-	-	-	-	4,949
Total loans	4,896,472	9,281	10,593	-	-	4,916,346

As of September 30, 2021, and December 31, 2020, there are no restructured loans .

(* ) As of September 30, 2021, and December 31, 2020, there is no excess in the specific provision calculated in accordance with Agreement No. 8-2014 of the SBP, over the provision calculated in accordance with IFRS.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Applicable laws and regulations (continued)

For statutory purposes only, non-accruing loans are presented by category as follows:

Loans at amortized cost	September 30, 2021 — Normal	Special Mention	Substandard	Doubtful	Unrecoverable	Total
Impaired loans	-	-	10,593	-	-	10,593
Total	-	-	10,593	-	-	10,593

Loans at amortized cost	December 31, 2020 — Normal	Special Mention	Substandard	Doubtful	Unrecoverable	Total
Impaired loans	-	-	10,593	-	-	10,593
Total	-	-	10,593	-	-	10,593

2021	2020
Non-accruing loans:
Private corporations	10,593	10,593
Total non-accruing loans	10,593	10,593
Interest that would be reversed if the loans had been classified as non-accruing loans	536	351
Income from collected interest on non-accruing loans	-	-

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Applicable laws and regulations (continued)

Modified special mention loans

As of September 30, 2021, the Bank there are no modified special mention category loans.

In accordance with the requirements of Article 4-E of Rule No. 9-2020, a detail of the portfolio of modified special mention category loans and their respective provisions and regulatory reserves as of December 31, 2020, classified according to the three-stage model of IFRS 9 follows:

Stage 1	Stage 2	Stage 3	Total
Modified special mention loans
Modified loans
Corporate	-	8,829	-	8,829
(-) Modified loans secured by pledged deposits in the same bank up to the guaranteed amount	-	-	-	-
(+) Interest receivable		7	-	7
(-) Unearned interest and deferred fees	-	-	-	-
Total loan portfolio subject to provisions
Rule No. 9-2020	-	8,836	-	8,836
Allowance
Allowance IFRS 9	-	1,767	-	1,767
Collective allowance (complement to 1.5%) *				-
Regulatory reserve (complement to 3%) *				-
Total allowance and reserves				1,767

Because IFRS 9 provision for modified special mention loans by $1.7million exceeds the generic provision equivalent to the 3% required by Rule No. 9-2020, the Bank does not require additional complementary equity reserves to the existing provision.

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Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries

Notes to the u naudited condensed consolidated interim financial statements

(Amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

Applicable laws and regulations (continued)

As of September 30, 2021, and December 31, 2020, the total amount of the dynamic provision and the regulatory credit reserve calculated according to the guidelines of Rule No. 4-2013 of the SBP is $136 million for both years , appropriated from retained earnings for purposes of compliance with local regulatory requirements. This appropriation is restricted from dividend distribution in order to comply with local regulations.

The provision and reserve are detailed as follows:

Dynamic provision	136,019	136,019
Regulatory credit reserve	-	-
	136,019	136,019

Capital reserve

In addition to capital reserves required by regulations, the Bank maintains a capital reserve of $95.3 million, which was voluntarily established. Pursuant to Article No. 69 of the Banking Law, reduction of capital reserves requires prior approval of SBP.

Subsequent events

The Bank announced a quarterly cash dividend of $0.25 US dollar cents per share corresponding to the third quarter of 2021. The cash dividend was approved by the Board of Directors on October 27, 2021 and it was payable on November 23, 2021 to the Bank’s stockholders as of November 9, 2021 record date.

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