6-K 1 tm2123541d4_6k.htm FORM 6-K

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 July, 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 xForm 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

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: July 30, 2021

FOREIGN TRADE BANK OF LATIN AMERICA, INC.
(Registrant)

	By:	/s/ Ana Graciela de Méndez

	Name:	Ana Graciela de Méndez
	Title:	CFO

Banco Latinoamericano

de Comercio Exterior, S.A.

and Subsidiaries

Unaudited condensed consolidated interim financial statements as of
June 30, 2021, and for the three and six months ended June 30, 2021
and 2020.

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

	Notes		June 30, 2021 (Unaudited)			December 31, 2020 (Audit)
Assets

Cash and due from banks		4,5		823,493			863,812

Securities and other financial assets, net		3,4,6		527,170			398,068

Loans, net		3,4,7		5,202,871			4,896,647

Customers' liabilities under acceptances		3,4		129,402			74,366
Derivative financial instruments - assets		3,4,10		14,270			27,778
Equipment and leasehold improvements, net				14,841			16,213
Intangibles, net				1,555			1,984
Investment properties				3,075			3,214
Other assets		11		6,555			6,816
Total assets				6,723,232			6,288,898

Liabilities and Equity
Liabilities:
Demand deposits				317,014			170,660
Time deposits				3,029,175			2,968,240
		3,4,12		3,346,189			3,138,900
Interest payable				3,839			1,975
Total deposits				3,350,028			3,140,875

Securities sold under repurchase agreements		3,4,13		112,488			10,663
Borrowings and debt, net		4,14		2,060,009			1,985,070
Interest payable				7,730			9,175

Acceptance outstanding		3,4		129,402			74,366
Derivative financial instruments - liabilities		3,4,10		14,930			9,211
Allowance for loan commitments and financial guarantees contracts losses		3,4		3,790			2,904
Other liabilities		15		14,153			18,714
Total liabilities				5,692,530			5,250,978

Equity:
Common stock				279,980			279,980
Treasury stock				(62,264	)		(57,999	)
Additional paid-in capital in excess of value assigned to common stock				119,366			120,414
Capital reserves		21		95,210			95,210
Regulatory reserves		21		136,019			136,019
Retained earnings				471,121			464,088
Other comprehensive income (loss)				(8,730	)		208
Total equity				1,030,702			1,037,920
Total liabilities and equity				6,723,232			6,288,898

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

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

Unaudited condensed consolidated interim statements of profit or loss
For the three and six months ended June 30, 2021 and 2020
(In thousands of US dollars, except per share data and number of shares)

		For the three months ended June 30,					For the six months ended June 30,
	Notes		2021		2020			2021		2020
Interest income:
Deposits			257		916			617		3,375
Securities			1,925		677			3,562		1,317
Loans			31,982		42,914			62,903		98,804
Total interest income	18		34,164		44,507			67,082		103,496
Interest expense:
Deposits			(3,469	)	(5,691	)		(6,941	)	(17,153	)
Borrowings and debt			(9,697	)	(17,093	)		(20,248	)	(38,820	)
Total interest expense	18		(13,166	)	(22,784	)		(27,189	)	(55,973	)

Net interest income			20,998		21,723			39,893		47,523

Other income (expense):
Fees and commissions, net	17		4,271		1,940			7,311		5,013
Gain (loss) on financial instruments, net	9		234		(3,949	)		163		(4,307	)
Other income, net			87		191			184		431
Total other income, net	18		4,592		(1,818	)		7,658		1,137

Total revenues			25,590		19,905			47,551		48,660

(Provision for) reversal of credit losses	3,18		(1,384	)	2,607			(1,384	)	2,696
Gain (loss) on non-financial assets, net			-		(140	)		-		(140	)

Operating expenses:
Salaries and other employee expenses			(5,363	)	(4,172	)		(10,811	)	(11,178	)
Depreciation of investment properties, equipment and improvements			(691	)	(854	)		(1,510	)	(1,589	)
Amortization of intangible assets			(253	)	(186	)		(524	)	(377	)
Other expenses			(3,815	)	(3,054	)		(6,422	)	(5,664	)
Total operating expenses	18		(10,122	)	(8,266	)		(19,267	)	(18,808	)
Profit for the period			14,084		14,106			26,900		32,408

Per share data:
Basic earnings per share (in US dollars)	16		0.36		0.36			0.68		0.82
Diluted earnings per share (in US dollars)	16		0.36		0.36			0.68		0.82
Weighted average basic shares (in thousands of shares)	16		39,659		39,654			39,676		39,632
Weighted average diluted shares (in thousands of shares)	16		39,659		39,654			39,676		39,632

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

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 six months ended June 30, 2021 and 2020
(In thousands of US dollars)

	For the three months ended June 30						For the six months ended June 30
	2021			2020			2021			2020
Profit for the period		14,084			14,106			26,900			32,408
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		111			226			-			546

Items that are or may be reclassified subsequently to profit or loss:
Change in fair value on financial instruments, net of hedging		(4,933	)		(152	)		(9,350	)		(1,382	)
Reclassification of gains (losses) on financial instruments to the profit or loss		457			(228	)		(36	)		(345	)
Exchange difference in conversion of foreign currency operation		-			(856	)		448			(671	)

Other comprehensive income (loss)		(4,365	)		(1,010	)		(8,938	)		(1,852	)

Total comprehensive income for the period		9,719			13,096			17,962			30,556

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

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

Unaudited condensed consolidated interim statements of changes in equity

For the six months ended June 30, 2021 and 2020

(In thousands of US dollars)

	Common stock		Treasury stock			Additional paid-in capital in excess of value assigned to common stock			Capital reserves		Regulatory reserves		Retained earnings			Other comprehensive income			Total equity
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		-		-			-			-		-		32,408			-			32,408
Other comprehensive income (loss)		-		-			-			-		-		-			(2,454	)		(2,454	)
Transfer of fair value on equity instrument at FVOCI		-		-			-			-		-		(602	)		602			-
Compensation cost - stock options and stock units plans		-		-			888			-		-		-			-			888
Exercised options and stock units vested		-		280			(280	)		-		-		-			-			-
Dividends declared		-		-			-			-		-		(25,150	)		-			(25,150	)
Balances at June 30, 2020		279,980		(57,866	)		119,447			95,210		136,019		452,739			(3,670	)		1,021,859

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		-		-			-			-		-		26,900			-			26,900
Other comprehensive income (loss)		-		-			-			-		-		-			(8,938	)		(8,938	)
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		-		-			890			-		-		-			-			890
Exercised options and stock units vested		-		546			(546	)		-		-		-			-			-
Dividends declared		-		-			-			-		-		(19,867	)		-			(19,867	)
Balances at June 30, 2021		279,980		(62,264	)		119,366			95,210		136,019		471,121			(8,730	)		1,030,702

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

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

Unaudited condensed consolidated interim statements of cash flows
For the six months ended June 30, 2021 and 2020
(In thousands of US dollars)

	2021			2020
Cash flows from operating activities
Profit for the period		26,900			32,408
Adjustments to reconcile profit for the period to net cash provided by (used in) operating activities:
Depreciation of equipment and leasehold improvements		1,510			1,589
Amortization of intangible assets		524			377
Impairment on non-financial assets		-			140
Provision for (reversal of) credit losses		1,384			(2,696	)
(Gain) unrealized loss on financial instruments at fair value through profit or loss		(113	)		2,827
Realized gain on financial instruments at fair value through profit or loss		-			(405	)
Gain net on sale of financial assets at fair value through OCI		(14	)		-
Compensation cost - share-based payment		890			888
Net changes in hedging position and foreign currency		(2,446	)		5,909
Loss for disposal of equipment and leasehold improvements		256			-
Interest income		(67,082	)		(103,496	)
Interest expense		27,189			55,973
Net decrease (increase) in operating assets:
Pledged deposits		(7,098	)		(44,399	)
Loans		(310,398	)		1,313,231
Other assets		284			3,101
Net increase (decrease) in operating liabilities:
Due to depositors		207,289			(2,120	)
Other liabilities		(4,662	)		(4,731	)
Cash flows provided by operating activities		(125,587	)		1,258,596
Interest received		78,347			112,470
Interest paid		(28,550	)		(61,460	)
Net cash (used in) provided by operating activities		(75,790	)		1,309,606

Cash flows from investing activities:
Acquisition of equipment and leasehold improvements		(252	)		(49	)
Acquisition of intangible assets		(96	)		-
Proceeds from the sale of securities at fair value through OCI		23,506			1,882
Proceeds from redemption of securities at amortized cost		65,831			21,176
Purchases of securities at amortized cost		(221,986	)		(36,799	)
Net cash provided by investing activities		(132,997	)		(13,790	)

Cash flows from financing activities:
Increase (decrease) in securities sold under repurchase agreements		101,825			(30,127	)
Net increase (decrease) in short-term borrowings and debt		169,127			(325,742	)
Proceeds from long-term borrowings and debt		86,498			149,799
Repayments of long-term borrowings and debt		(169,511	)		(265,343	)
Payments of leases liabilities		(599	)		(530	)
Dividends paid		(19,767	)		(25,077	)
Repurchase of common stock		(6,203	)		-
Net cash provided by (used in) financing activities		161,370			(497,020	)

(Decrease) increase net in cash and cash equivalents		(47,417	)		798,796
Cash and cash equivalents at beginning of the period		846,008			1,159,718
Cash and cash equivalents at end of the period		798,591			1,958,514

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

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)

1.	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 July 20, 2021.

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)

2.	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.

3.	Financial risk

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

Credit risk

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

June 30, 2021

	PD Ranges	Stage 1			Stage 2			Stage 3			Total
Grades 1 - 4	0.03 - 0.74		2,685,254			-			-			2,685,254
Grades 5 - 6	0.75 - 3.80		2,217,301			111,684			-			2,328,985
Grades 7 - 8	3.81 - 34.51		98,007			103,776			10,593			212,376
			5,000,562			215,460			10,593			5,226,615
Loss allowance			(17,488	)		(18,889	)		(5,063	)		(41,440	)
Total			4,983,074			196,571			5,530			5,185,175

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

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)

3.	Financial risk (continued)

Credit risk (continued)

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

June 30, 2021

	12-month PD Ranges	Stage 1			Stage 2			Stage 3		Total
Commitments and contingencies
Grades 1 - 4	0.03 - 0.74		250,781			-			-		250,781
Grades 5 - 6	0.75 - 3.80		265,399			42,146			-		307,545
Grades 7 - 8	3.81 - 34.51		93,164			-			-		93,164
			609,344			42,146			-		651,490

Customers' liabilities under acceptances
Grades 1 - 4	0.03 - 0.74		9,161			-			-		9,161
Grades 5 - 6	0.75 - 3.80		-			-			-		-
Grades 7 - 8	3.81 - 34.51		120,241			-			-		120,241
			129,402			-			-		129,402
			738,746			42,146			-		780,892
Loss allowance			(3,220	)		(570	)		-		(3,790	)
Total			735,526			41,576			-		777,102

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	4.13 - 30.43		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	4.13 - 30.43		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

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)

Financial risk (continued)

Credit risk (continued)

Securities at amortized cost

June 30, 2021
	12-month PD Ranges	Stage 1			Stage 2		Stage 3		Total
Grades 1 - 4	0.03 - 0.74		217,858			-		-		217,858
Grades 5 - 6	0.75 - 3.80		99,355			-		-		99,355
			317,213			-		-		317,213
Loss allowance			(889	)		-		-		(889	)
Total			316,324			-		-		316,324

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)

June 30, 2021
	12-month PD Ranges	Stage 1			Stage 2		Stage 3		Total
Grades 1 - 4	0.03 - 0.74		205,661			-		-		205,661
			205,661			-		-		205,661
Loss allowance			(28	)		-		-		(28	)
Total			205,633			-		-		205,633

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

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)

Financial risk (continued)

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:

	June 30, 2021
	Stage 1		Stage 2		Stage 3		Total
Current		5,000,562		215,460		10,593		5,226,615

	December 31, 2020
	Stage 1		Stage 2		Stage 3		Total
Current		4,613,468		287,336		10,593		4,911,397

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

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)

Financial risk (continued)

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.

	June 30, 2021
	Notional value USD		Derivative financial instruments - fair value asset		Derivative financial instruments - fair value liabilities
Interest rate swaps		80,000		1,426		(898	)
Cross-currency swaps		644,327		12,734		(13,084	)
Foreign exchange forwards		63,918		110		(948	)
Total		788,245		14,270		(14,930	)

	December 31, 2020
	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	)

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)

3.	Financial risk (continued)

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

	Stage 1			Stage 2			Stage 3		Total
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			-		-
Transfer to credit-impaired financial instruments		-			-			-		-
Net effect of changes in allowance for expected credit losses		(510	)		(818	)		319		(1,009	)
Financial instruments that have been derecognized during the period		(8,130	)		(367	)		-		(8,497	)
New financial assets originated or purchased		9,625			-			-		9,625
Write-offs		-			-			-		-
Recoveries		-			-			156		156
Allowance for expected credit losses as of June 30, 2021		17,488			18,889			5,063		41,440

	Stage 1			Stage 2			Stage 3			Total
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

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)

3.	Financial risk (continued)

Credit risk (continued)

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

	Stage 1			Stage 2		Stage 3		Total
Allowance for expected credit losses as of December 31, 2020		2,426			478		-		2,904
Transfer to lifetime expected credit losses		(80	)		80		-		-
Net effect of changes in reserve for expected credit losses		6			12		-		18
Financial instruments that have been derecognized during the period		(1,196	)		-		-		(1,196	)
New instruments originated or purchased		2,064			-		-		2,064
Allowance for expected credit losses as of June 30, 2021		3,220			570		-		3,790

	Stage 1			Stage 2			Stage 3		Total
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

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)

3.	Financial risk (continued)

Credit risk (continued)

Securities at amortized cost

	Stage 1			Stage 2			Stage 3		Total
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		(147	)		(33	)		-		(180	)
New financial assets originated or purchased		555			-			-		555
Allowance for expected credit losses as of June 30, 2021		889			-			-		889

	Stage 1			Stage 2			Stage 3		Total
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)

	Stage 1			Stage 2		Stage 3		Total
Allowance for expected credit losses as of December 31, 2020		43			-		-		43
Financial instruments that have been derecognized during the period		(15	)		-		-		(15	)
Allowance for expected credit losses as of June 30, 2021		28			-		-		28

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)

3.	Financial risk (continued)

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.

							Securities
June 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		(1,009	)		18			19			-			(972	)
Financial instruments that have been derecognized during the year		(8,497	)		(1,196	)		(180	)		-			(9,873	)
New financial assets originated or purchased		9,625			2,064			555			(15	)		12,230
Total		119			886			394			(15	)		1,384

							Securities
June 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		5,317			358			54			-		5,729
Financial instruments that have been derecognized during the year		(14,790	)		(1,933	)		(49	)		-		(16,772	)
New financial assets originated or purchased		7,592			670			85			-		8,347
Total		(1,881	)		(905	)		90			-		(2,696	)

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)

3.	Financial risk (continued)

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

	June 30, 2021		December 31, 2019
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		195		(744	)
Recoveries of amounts previously written off		156		139
Interest income		124		626
Write-offs		-		(52,106	)
Credit-impaired loans and advances at end of period		5,063		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.

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)

Financial risk (continued)

Credit risk (continued)

vi.

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

									Securities
	Loans at amortized cost				Loan commitments and financial guarantee contracts				At amortized cost				FVOCI
	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Carrying amount - principal		5,226,615		4,911,397		129,402		74,366		317,213		164,074		205,661		231,348
Amount committed/guaranteed		-		-		651,490		564,898		-		-		-		-

Concentration by sector
Corporations:
Private		1,600,984		1,425,929		398,215		276,249		145,646		56,979		59,807		60,403
State-owned		955,724		741,791		71,926		92,299		44,668		29,985		-		23,858
Financial institutions:				-
Private		1,996,183		2,231,742		76,780		65,434		61,018		33,715		-		-
State-owned		644,211		476,520		233,971		205,282		50,772		28,276		140,823		141,974
Sovereign		29,513		35,415		-		-		15,109		15,119		5,031		5,113
Total		5,226,615		4,911,397		780,892		639,264		317,213		164,074		205,661		231,348

Concentration by industry
Financial institutions		2,640,394		2,708,262		310,751		270,716		111,790		61,991		140,823		141,974
Manufacturing		1,001,533		760,985		265,918		173,493		95,853		66,053		45,164		45,654
Oil and petroleum derived products		866,560		586,030		77,816		98,189		40,671		20,911		14,643		38,607
Agricultural		280,193		336,715		-		-		-		-		-		-
Services		197,181		264,597		83,174		63,086		19,532		-		-		-
Mining		94,967		94,955		-		-		4,948		-		-		-
Sovereign		29,513		35,415		-		-		15,109		15,119		5,031		5,113
Other		116,274		124,438		43,233		33,780		29,310		-		-		-
Total		5,226,615		4,911,397		780,892		639,264		317,213		164,074		205,661		231,348

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)

Financial risk (continued)

Credit risk (continued)

Risk rating and concentration by country

									Securities
	Loans at amortized cost				Loan commitments and financial guarantee contracts				At amortized cost				FVOCI
	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Carrying amount - principal		5,226,615		4,911,397		129,402		74,366		317,213		164,074		205,661		231,348
Amount committed/guaranteed		-		-		651,490		564,898		-		-		-		-

Rating
1-4		2,685,254		2,582,794		259,942		247,425		217,858		108,505		205,661		231,348
5-6		2,328,985		2,096,138		307,545		237,807		99,355		55,569		-		-
7-8		212,376		232,465		213,405		154,032		-		-		-		-
Total		5,226,615		4,911,397		780,892		639,264		317,213		164,074		205,661		231,348

Concentration by country
Argentina		105,606		130,944		-		-		-		-		-		-
Belgium		13,851		9,807		-		-		-		-		-		-
Bolivia		12,000		12,000		2,844		2,800		-		-		-		-
Brazil		1,157,457		971,652		50,000		50,000		95,447		41,128		-		-
Canada		-		-		-		-		-		-		-		-
Chile		602,326		533,945		20,674		7,911		94,367		11,992		5,031		28,972
Colombia		642,846		714,258		63,536		50,333		26,606		29,998		-		-
Costa Rica		129,896		146,200		54,032		56,876		-		-		-		-
Dominican Republic		294,196		202,433		16,500		16,500		-		-		-		-
Ecuador		32,144		45,511		225,976		165,275		-		-		-		-
El Salvador		30,003		40,000		3,746		1,087		-		-		-		-
France		135,705		150,810		59,020		84,862		-		-		-		-
Germany		-		-		7,000		-		-		-		-		-
Guatemala		322,831		281,485		94,745		43,845		-		-		-		-
Honduras		33,168		10,199		3,739		345		-		-		-		-
Hong Kong		4,500		1,800		-		-		-		-		-		-
Jamaica		35,776		23,274		-		-		-		-		-		-
Luxembourg		117,500		50,000		-		-		-		-		-		-
Mexico		623,908		607,099		4,286		4,995		35,120		43,910		-		-
Nicaragua		-		-		-		-		-		-		-		-
Panama		196,488		241,097		61,821		61,435		13,693		10,399		-		-
Paraguay		51,215		100,816		10,280		11,800		-		-		-		-
Peru		291,702		272,752		55,405		47,245		51,980		26,647		-		-
Singapore		74,700		75,095		-		-		-		-		-		-
Switzerland		-		-		-		-		-		-		-		-
Trinidad and Tobago		139,613		165,995		-		-		-		-		-		-
United States of America		111,711		113,816		-		-		-		-		89,076		89,794
United Kingdom		5,204		10,409		-		-		-		-		-		-
Uruguay		62,269		-		47,288		33,955		-		-		-		-
Multilateral		-		-		-		-		-		-		111,554		112,582
Total		5,226,615		4,911,397		780,892		639,264		317,213		164,074		205,661		231,348

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)

Financial risk (continued)

Credit risk (continued)

iv.

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:

Derivative financial instruments – assets

June 30, 2021
							Gross amounts not offset in the consolidated statement of financial position
Description	Gross amounts of assets		Gross amounts offset in the consolidated statement of financial position		Net amount of assets presented in the consolidated statement of financial position		Financial instruments		Cash collateral received			Net Amount
Derivative financial instruments used for hedging		14,270		-		14,270		-		(13,010	)		1,260
Total		14,270		-		14,270		-		(13,010	)		1,260

December 31, 2020
							Gross amounts not offset in the consolidated statement of financial position
Description	Gross amounts of assets		Gross amounts offset in the consolidated statement of financial position		Net amount of assets presented in the consolidated 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

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)

Financial risk (continued)

Credit risk (continued)

Securities sold under repurchase agreements and derivative financial instruments – liabilities

June 30, 2021
				Gross amounts offset in the consolidated		Net amount of liabilities presented in the consolidated			Gross amounts not offset in the consolidated statement of financial position
Description	Gross amounts of liabilities			statement of financial position		statement of financial position			Financial instruments		Cash collateral pledged		Net Amount
Securities sold under repurchase agreements		(112,488	)		-		(112,488	)		118,364		450	6,326
Derivative financial instruments used for hedging		(14,930	)		-		(14,930	)		-		14,452	(478	)
Total		(127,418	)		-		(127,418	)		118,364		14,902	5,848

December 31, 2020
				Gross amounts offset in the		Net amount of liabilities presented in the consolidated			Gross amounts not offset in the consolidated statement of financial position
Description	Gross amounts of liabilities			consolidated statement of financial position		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	)

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)

Financial risk (continued)

Liquidity risk

Exposure to liquidity risk

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

	June 30, 2021			December 31, 2020
At the end of the period		306.82	%		249.42	%
Period average		105.03	%		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:

	June 30, 2021						December 31, 2020
	Cash and due from banks		Securities FVOCI		Total		Cash and due from banks		Securities FVOCI		Total
(in millions of USD dollars)
United State of America		744		41		785		740		90		830
Other O.E.C.D countries		-		19		19		100		-		100
Latin America		4		-		4		6		-		6
Other countries		50		-		50		-		-		-
Multilateral		-		141		141		-		112		112
Total		798		201		999		846		202		1,048

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

	June 30, 2021			December 31, 2020
(in millions of USD dollars)
Demand liabilities and "overnight"		317			171
% Demand liabilities and "overnight" to total deposits		9.47	%		5.44	%

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)

Financial risk (continued)

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)	June 30, 2021			December 31, 2020
Total liquid assets		999		1,048
% Total assets to total liabilities		29.86	%	33.40%
% Total liquid assets in the Federal Reserve of the United States of America		69.17	%	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)	June 30, 2021		December 31, 2020
Loan portfolio at amortized cost and securities portfolio less than/equal to 1 year according to its original terms		3,398		3,114
Average term (days)		162		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)	June 30, 2021		December 31, 2020
Loan portfolio at amortized cost and securities portfolio greater than/equal to 1 year according to its original terms		2,352		2,193
Average term (days)		1,373		1,382

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)

Financial risk (continued)

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:

	June 30, 2021
Description	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		823,503			-			-			-			-			823,503			823,493
Securities and other financial assets, net		19,998			12,920			76,840			434,545			-			544,303			527,170
Loans, net		2,014,852			1,268,382			860,658			1,186,819			150,772			5,481,483			5,202,871
Derivative financial instruments - assets		647			-			888			12,715			20			14,270			14,270
Total		2,859,000			1,281,302			938,386			1,634,079			150,792			6,863,559			6,567,804

Liabilities
Deposits		(2,856,591	)		(447,895	)		(41,629	)		(6,638	)		-			(3,352,753	)		(3,350,028	)
Securities sold under repurchase agreements		(63,319	)		(5,073	)		(44,521	)		-			-			(112,913	)		(112,488	)
Borrowings and debt, net		(235,906	)		(176,826	)		(324,595	)		(1,418,161	)		(12,074	)		(2,167,562	)		(2,067,739	)
Derivative financial instruments - liabilities		(626	)		(374	)		-			(13,793	)		(137	)		(14,930	)		(14,930	)
Total		(3,156,442	)		(630,168	)		(410,745	)		(1,438,592	)		(12,211	)		(5,648,158	)		(5,545,185	)

Contingencies
Confirmed lettes of credit		175,804			43,832			2,421			-			-			222,057			222,057
Stand-by letters of credit and guarantees		16,852			19,170			165,546			15,980			-			217,548			217,548
Credit commitments		24,266			4,286			65,000			118,333			-			211,885			211,885
Total		216,922			67,288			232,967			134,313			-			651,490			651,490
Net position		(514,364	)		583,846			294,674			61,174			138,581			563,911			371,129

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)

Financial risk (continued)

Liquidity risk (continued)

ii.

Maturity analysis for financial liabilities and financial assets (continued)

	December 31, 2020
Description	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.

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)

Financial risk (continued)

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:


	June 30,				December 31,
	2021				2020
	Amount		Fair Value		Amount		Fair Value
Balances with Federal Reserve of the United States of America		691,165		691,165		688,612		688,612
Cash and due from banks ⁽¹⁾		107,426		107,426		157,396		157,396
Total Liquidity reserves		798,591		798,591		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:


June 30, 2021
	Guaranteed		Available as collateral

Cash and due from banks		24,902		798,591
Notional of investment securities		117,927		383,020
Loans at amortized cost		-		5,226,615
Total assets		142,829		6,408,226

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

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)

Financial risk (continued)

Market risk

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 :

	June 30, 2021
Description	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		819,765			-			-			-			-			3,728			823,493
Securities and other financial assets, net		10,801			6,112			53,221			457,036			-			-			527,170
Loans		3,678,603			1,095,842			352,744			97,176			7,380			-			5,231,745
Total assets		4,509,169			1,101,954			405,965			554,212			7,380			3,728			6,582,408

Liabilities
Demand deposits and time deposits		(2,849,830	)		(445,254	)		(41,400	)		(6,500	)		-			(3,205	)		(3,346,189	)
Securities sold under repurchase agreements		(63,192	)		(5,055	)		(44,241	)		-			-			-			(112,488	)
Borrowings and debt, net		(224,956	)		(150,985	)		(270,091	)		(1,397,000	)		(16,977	)		-			(2,060,009	)
Total liabilities		(3,137,978	)		(601,294	)		(355,732	)		(1,403,500	)		(16,977	)		(3,205	)		(5,518,686	)
Net effect of derivative financial instruments held for interest risk management		(459	)		(374	)		888			(1,078	)		(117	)		-			(1,140	)
Total interest rate sensitivity		1,370,732			500,286			51,121			(850,366	)		(9,714	)		523			1,062,582

	December 31, 2020
Description	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

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)

Financial risk (continued)

Market risk (continued)

ii. Interest rate 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:

	Change in interest rate	Effect on profit or loss			Effect on equity
June 30, 2021	+50 bps		2,682			7,399
	-50 bps		(2,308	)		(10,022	)

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.

iii. 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.

	June 30, 2021
	Brazilian Real		European Euro		Japanese Yen		Colombian Peso		Mexican Peso			Other Currencies ⁽¹⁾		Total
Exchance rate		4.97		1.19		111.07		3,759.40		19.93
Assets
Cash and due from banks		-		11		41		19		658			24		753
Loans		-		-		-		-		109,728			-		109,728
Total Assets		-		11		41		19		110,386			24		110,481

Liabilities
Borrowings and debt		-		-		-		-		(110,157	)		-		(110,157	)
Total liabilities		-		-		-		-		(110,157	)		-		(110,157	)

Net currency position		-		11		41		19		229			24		324

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

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)

Financial risk (continued)

Market risk (continued)

iii.

Foreign exchange risk (continued)

	December 31, 2020
	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		1		20		147			80		342

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

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)

Fair value of financial instruments

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:

	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets
Securities and other financial assets:
Securities at FVOCI - Corporate debt		-		200,630		-		200,630
Securities at FVOCI - Sovereign debt		-		5,031		-		5,031
Loans at fair value through profit or loss		-		-		5,130		5,130
Total securities and other financial assets		-		205,661		5,130		210,791

Derivative financial instruments - assets:
Interest rate swaps		-		1,426		-		1,426
Cross-currency swaps		-		12,734		-		12,734
Foreign exchange forwards		-		110		-		110
Total derivative financial instrument assets		-		14,270		-		14,270
Total assets at fair value		-		219,931		5,130		225,061

Liabilities
Derivative financial instruments - liabilities:
Interest rate swaps		-		898		-		898
Cross-currency swaps		-		13,084		-		13,084
Foreign exchange forwards		-		948		-		948
Total derivative financial instruments - liabilities		-		14,930		-		14,930
Total liabilities at fair value		-		14,930		-		14,930

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)

Fair value of financial instruments (continued)

Recurring valuation (continued)

	December 31, 2020
	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.

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)

Fair value of financial instruments (continued)

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:


	June 30, 2021
	Carrying		Fair
	value		value		Level 1		Level 2		Level 3
Assets
Cash and deposits on banks		823,493		823,493		-		823,493		-
Securities at amortized cost ⁽¹⁾		320,430		321,152		-		307,422		13,730
Loans at amortized cost, net ⁽²⁾		5,197,741		5,315,976		-		5,315,976		-
Customers' liabilities under acceptances		129,402		129,402		-		129,402		-
Investment properties		3,075		3,075		-		-		3,075

Liabilities
Deposits		3,350,028		3,350,028		-		3,350,028		-
Securities sold under repurchase agreements		112,488		112,488		-		112,488		-
Borrowings and debt, net ⁽³⁾		2,041,809		2,040,304		-		2,040,304		-
Customers' liabilities under acceptances		129,402		129,402		-		129,402		-

	December 31, 2020
	Carrying		Fair
	value		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 $4.1 million and the allowance for expected credit losses of $0.8 million as of June 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 $19.4 million, the allowance for expected credit losses of $41.4 million and unearned interest and deferred fees of $6.8 million for June 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 $18.2 million and $18.7 million as of June 30, 2020 and December 31, 2020, respectively.

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)

Fair value of financial instruments (continued)

Level 3 - Fair value measurement

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

	Debt instruments at fair value through profit or loss (debentures)			Loans at fair value through profit or loss			Total
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⁾		-			181			181
Sales		-			-			-
At June 30, 2021		-			5,130			5,130

⁽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 $5.1 million and $4.9 million as of June 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			6.430% - 7.42%				3.128% to 8.89%

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)

Fair value of financial instruments (continued)

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:

	June 30,		December 31,
	2021		2020
Unrestricted deposits with the Federal Reserve of the United States of America		691,165		688,612
Cash and non-interest-bearing deposits in other banks		3,728		4,331
Cash and interest-bearing deposits in other banks⁽¹⁾		128,600		170,869
Total cash and due from banks		823,493		863,812

Less:
Time deposits with original maturity over 90 days and other restricted deposits ⁽¹⁾		24,902		17,804
Total cash and due from banks in the consolidated statement of cash flows		798,591		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.

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)

Cash and due from banks (continued)

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

	June 30,		December 31,
	2021		2020
Country:
United States of America⁽¹⁾		11,505		11,515
Switzerland		7,047		3,027
France		2,700		50
Japan		1,730		1,330
United Kingdom		710		130
Canada		610		610
Mexico		600		790
Netherlands		-		334
Spain		-		18
Total		24,902		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 fair value
At June 30, 2021				With changes in other comprehensive income (loss)
Carrying amount	Amortized cost			Recyclable to profit and loss			Non-recyclable to profit and loss		With changes in profit or loss		Total securities and other financial assets, net
Principal		317,213			205,661			-		-		522,874
Interest receivable		4,106			1,079			-		-		5,185
Reserves ⁽¹⁾		(889	)		(28	)		-		-		(917	)
		320,430			206,712			-		-		527,142


				At fair value
At December 31, 2020				With changes in other comprehensive income (loss)
Carrying amount	Amortized cost			Recyclable to profit and loss			Non-recyclable to profit and loss		With 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.

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)

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 OCI was $602 thousand, transferred to retained earnings.

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

			At fair value
At June 30, 2021			With changes in other comprehemsive income
	Amortized cost		Recyclable to profit ans loss		Non-recyclable to profit and loss		With changes in profit or loss		Total securities and other financial assets, net
Due within 1 year		13,538		56,596		-		-		70,134
After 1 year but within 5 years		303,675		149,065		-		-		452,740
Balance - principal		317,213		205,661		-		-		522,874

			At fair value
At December 31, 2020			With changes in other comprehemsive income
	Amortized cost		Recyclable to profit ans loss		Non-recyclable to profit and loss		With 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

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)

Securities and other financial assets, net (continued)

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


	June 30, 2021									December 31, 2020
	Amortized cost			Fair value			Total			Amortized cost			Fair value		Total
Securities pledged to secure repurchase transactions		118,364			5,030.60			123,394			11,998			-		11,998
Securities sold under repurchase agreements		(107,817	)		(4,670.50	)		(112,488	)		(10,663	)		-		(10,663	)

The following table presents the realized gains or losses on sale of securities at fair value through other comprehensive income:

	Three months ended June 30
	2021		2020
Realized gain on sale of securities		14		-
Realized loss on sale of securities		-		-
Net gain on sale of securities at FVOCI		14		-

	Six months ended June 30
	2021		2020
Realized gain on sale of securities		14		-
Realized loss on sale of securities		-		-
Net gain on sale of securities at FVOCI		14		-

Loans

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


	June 30,			December 31,
	2021			2020
Loans at amortized cost		5,226,615			4,911,397
Interest receivable		19,403			27,350
Loss allowances		(41,440	)		(41,165	)
Unearned interest and deferred fees		(6,837	)		(5,884	)
Loans at amortized cost, net		5,197,741			4,891,698
Loans at fair value through profit or loss ⁽¹⁾		5,130			4,949
Loans, net		5,202,871			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 $5.1 million and $4.9 million as of June 30, 2021 and December 31, 2020, respectively.

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)

Loans (continued)

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

	June 30, 2020		December 31, 2020
Fixed interest rates		2,858,802		2,544,544
Floating interest rates		2,372,943		2,371,802
Total		5,231,745		4,916,346

As of June 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 0.49% to 9.29% (December 31, 2020 0.43% to 9.70%).

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

	June 30, 2021			December 31, 20120
Class A and B shareholder loans		704,858			522,316
% Loans to class A and B shareholders over total loan portfolio		13	%		11	%
% Class A and B stockholders with loans over number of class A and B stockholders		12	%		12	%

Modified financial assets

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

	June 30, 2021		December 31, 2020
Gross carrying amount before modification		-		8,829
Allowance loss before modification ⁽¹⁾		-		(1,796	)
Net amortized cost before modification		-		7,033

Gross carrying amount after modification		-		8,829
Allowance loss after modification ⁽²⁾		-		(1,802	)
Net amortized cost after modification		-		7,027

⁽¹⁾ Expected credit loss for 12 months.

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

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)

Loans (continued)

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.

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:

	June 30, 2021		December 31, 2020
Documentary letters of credit		222,057		216,782
Stand-by letters of credit and guarantees - commercial risk		217,548		210,497
Credit commitments		211,885		137,619
Total loans commitments and financial guarantee contracts		651,490		564,898

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

Maturities	June 30, 2021		December 31, 2020
Up to 1 year		517,177		419,015
From 1 to 2 years		114,313		75,883
Over 2 to 5 years		20,000		70,000
Total		651,490		564,898

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)

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:

	For the three months ended June 30,
	2021			2020
Gain (loss) on derivative financial instruments and foreign currency exchange, net		681			(694	)
Unrealized loss on financial instruments at fair value through profit or loss		(393	)		(2,827	)
Loss on financial instruments at fair value through profit or loss		(68	)		(428	)
Realized gain on sale of securities at fair value through OCI		14			-
		234			(3,949	)

	For the six months ended June 30,
	2021		2020
Gain (loss) on derivative financial instruments and foreign currency exchange, net	1,319		(1,885	)
Unrealized loss on financial instruments at fair value through profit or loss	(337	)	(2,827	)
Loss (gain) on financial instruments at fair value through profit or loss	(833	)	405
Realized gain on sale of securities at fair value through OCI	14		-
	163		(4,307	)

10.

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:

	June 30, 2021
	Nominal amount		Carrying amount of hedging instruments
	Nominal amount		Asset ⁽¹⁾		Liability ⁽²⁾
Interest rate risk
Fair value hedges		60,000		1,426		(52	)
Cash flow hedges		20,000		-		(846	)
Interest rate and foreign exchange risk
Fair value hedges		343,954		297		(10,489	)
Cash flow hedges		300,373		12,437		(2,595	)
Foreign exchange risk
Cash flow hedges		63,918		110		(948	)
		788,245		14,270		(14,930	)

⁽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.

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)

10.

Derivative financial instruments (continued)

	December 31, 2020
		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.

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:

	June 30, 2021
	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
Securities at FVOCI		5,000		-		(52	)		50			(9	)
Borrowings and debt		55,000		1,426		-			(95	)		16
Interest rate and foreign exchange risk
Loans		3,540		297		-			(60	)		(71	)
Borrowings and debt		340,414		-		(10,489	)		(7,292	)		657
Total		403,954		1,723		(10,541	)		(7,397	)		593

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)

10.

Derivative financial instruments (continued)

Fair value hedges (continued)

	December 31, 2020
	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.

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:

	June 30, 2021
	Carrying amount of hedged items					Line in the consolidated statement of financial position that includes the carrying amount of the	Accumulated amount of fair value hedge adjustments included in the carrying amount			Change in fair value of the hedged items used to calculate hedge
	Asset		Liability			hedged items	of the hedged items			ineffectiveness⁽¹⁾
Interest rate risk
Loans		-		-		Loans, net		-			-
Securities at FVOCI		5,079		-		Securities and other financial assets, net		144			(59	)
Borrowings and debt		-		(56,491	)	Borrowings and debt, net		(60	)		111
Interest rate and foreign exchange risk
Loans		3,287		-				(665	)		(11	)
Borrowings and debt		-		(330,206	)	Borrowings and debt, net		9,031			7,949
Total		8,366		(386,697	)			8,450			7,990

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

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)

10.

Derivative financial instruments (continued)

Fair value hedges

	December 31, 2020
	Carrying amount of hedged items					Line in the consolidated statement of financial position that includes the carrying amount of the	Accumulated amount of fair value hedge adjustments included in the carrying amount of the			Change in fair value of the hedged items used to calculate hedge
	Asset		Liability			hedged items	hedged items			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.

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

	June 30, 2021
Maturity	Interest rate swaps		Foreign exchange and interest rate risks		Total
Fair value hedge
Less than 1 year		60,000		68,933		128,933
Over 1 to 2 years		-		206,253		206,253
Over 2 to 5 years		-		68,768		68,768
Total		60,000		275,186		335,186

	December 31, 2020
Maturity	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

10.

Derivative financial instruments (continued)

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:

	June 30, 2021
	Nominal		Carrying amount of hedging instruments					Change in fair value used for calculating hedge			Changes in the fair value of the hedging instruments recognized			Ineffectiveness recognized in			Amount reclassified from the hedge reserve to profit
	amount		Asset ⁽¹⁾		Liability ⁽²⁾			ineffectiveness			in OCI ⁽³⁾			profit or loss ⁽⁴⁾			or loss⁽⁴⁾
Interest rate risk
Borrowings and debt		20,000		-		(846	)		253			251			(2	)		(423	)
Interest rate and foreign exchange risk
Borrowings and debt		300,373		12,437		(2,595	)		(13,144	)		(12,860	)		284			-
Foreign exchange risk
Loans		63,918		110		(948	)		(699	)		(702	)		(3	)		(3,589	)
Total		384,291		12,547		(4,389	)		(13,590	)		(13,311	)		279			(4,012	)

	December 31, 2020
	Nominal		Carrying amount of hedging instruments					Change in fair value used for calculating hedge			Changes in the fair value of the hedging instruments recognized			Ineffectiveness recognized in		Amount reclassified from the hedge reserve to profit
	amount		Asset ⁽¹⁾		Liability ⁽²⁾			ineffectiveness			in 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	)
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.

10.

Derivative financial instruments (continued)

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:

	June 30, 2021
	Carrying amount of hedged items					Line in the consolidated statement of financial position that includes the carrying amount of	Change in the fair value of the hedged items used to calculate the hedge			Cash flow
	Asset		Liability			the hedged items	ineffectiveness			hedge reserve
Interest rate risk
Borrowings and debt		-		(20,043	)	Borrowings and debt, net		(251	)		761
Interest rate and foreign exchange risk
Borrowings and debt		-		(319,780	)	Borrowings and debt, net		12,860			8,016
Foreign exchange risk
Loans		64,491		-		Loans, net		702			222
Total		64,491		(339,823	)			13,311			8,999

	December 31, 2020
	Carrying amount of hedged items					Line in the consolidated statement of financial position that includes the carrying amount of	Change in the fair value of the hedged items used to calculate the hedge			Cash flow
	Asset		Liability			the hedged items	ineffectiveness			hedge 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

10.

Derivative financial instruments (continued)

Cash flow hedge (continued)

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

	June 30, 2021
Maturity	Foreign exchange risk		Interest rate swaps		Foreign exchange and interest rate risks		Total
Cash flow hedge
Less than 1 year		63,918		-		-		63,918
Over 1 to 2 years		-		20,000		30,333		50,333
Over 2 to 5 years		-		-		252,971		252,971
More than 5 years		-		-		17,069		17,069
Total		63,918		20,000		300,373		384,291

	December 31, 2020
Maturity	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

11.

Other assets

Following is a summary of other assets:

	June 30,		December 31,
	2021		2020
Accounts receivable		1,098		938
Prepaid expenses		2,236		2,541
Prepaid fees and commissions		174		486
Interest receivable - deposits		33		8
IT projects under development		388		218
Severance fund		1,951		1,927
Other		675		698
		6,555		6,816

12.

Deposits

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

	June 30,		December 31,
	2021		2020
Demand		317,014		170,660
Up to 1 month		748,369		1,127,120
From 1 month to 3 months		786,136		878,900
From 3 months to 6 months		1,003,646		544,860
From 6 months to 1 year		439,138		365,879
From 1 year to 2 years		51,886		51,481
		3,346,189		3,138,900

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

	June 30,		December 31,
	2021		2020
Aggregate amounts of $100,000 or more		3,345,889		3,138,684
Aggregate amounts of deposits in the New York Agency		757,673		657,851

	Three months ended June 30
	2021		2020
Interest expense on deposits made in the New York Agency		1,012		1,254

	Six months ended June 30
	2021		2020
Interest expense on deposits made in the New York Agency		2,250		2,818

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)

13.

Securities sold under repurchase agreements

As of June 30, 2021, and December 31, 2020, the Bank had financing transactions under repurchase agreements for $112.5 million and $10.7 million, respectively.

During the periods ended June 30, 2021 and 2020, interest expense related to financing transactions under repurchase agreements totaled $298 thousand and $354 thousand, respectively. These expenses are included as interest expense – borrowings and debt line in the condensed consolidated interim statement of profit or loss.

14.

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 June 30, 2021, the Bank was in compliance with all those covenants.

Borrowings and debt are detailed as follows:

	June 30, 2021
	Short-Term						Long-term
	Borrowings		Debt		Lease Liabilities		Borrowings			Debt			Lease Liabilities		Total
Carrying amount
Principal		549,532		-		1,298		264,609			1,233,644			16,902		2,065,985
Prepaid commissions		-		-		-		(271	)		(5,705	)		-		(5,976	)
		549,532		-		1,298		264,338			1,227,939			16,902		2,060,009

	December 31, 2020
	Short-Term						Long-term
	Borrowings		Debt		Lease Liabilities		Borrowings			Debt			Lease Liabilities		Total
Carrying amount
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

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)

14.

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:

	June 30,		December 31,
	2021		2020
Short-term borrowings:
At fixed interest rates		150,000		55,000
At floating interest rates		399,532		276,585
Total borrowings		549,532		331,585
Short-term debt:
At floating interest rates		-		49,350
Total debt		-		49,350
Total short-term borrowings and debt		549,532		380,935

Range of fixed interest rates on borrowings and debt in U.S. dollars		0.42% to 0.48%		0.45% to 1.40%
Range of floating interest rates on borrowings in U.S. dollars		0.34% to 0.50%		0.47% to 1.65%
Range of floating interest rates on borrowings and debt in Mexican pesos		4.73%		4.97% to 5.05%

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

	June 30,		December 31,
	2021		2020
Currency
US dollar		540,000		299,957
Mexican peso		9,532		80,978
Total		549,532		380,935

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)

14.

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 June 30, 2021 and December 31, 2020, respectively, are as follows (excludes lease liabilities):

	June 30, 2021			December 31, 2020
Long-term borrowings:
At fixed interest rates with due dates from July 2021 to May 2023		81,497			68,190
At floating interest rates with due dates from October 2021 to August 2023		183,112			408,820
Total long-term borrowings		264,609			477,010

Long-term debt:
At fixed interest rates with due dates from July 2021 to December 2027		901,870			784,006
At floating interest rates with due dates from March 2022 to June 2023		331,774			332,027
Total long-term debt		1,233,644			1,116,033
Total long-term borrowings and debt		1,498,253			1,593,043
Less: Prepaid commissions		(5,976	)		(7,707	)
Total long-term borrowings and debt, net		1,492,277			1,585,336

Range of fixed interest rates on borrowings and debt in U.S. dollars		0.8% to 2.85%			2.04% to 3.05%
Range of floating interest rates on borrowings and debt in U.S. dollars		1.17% to 1.80%			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		4.67% to 5.49%			4.87% to 5.74%
Range of fixed interest rates on debt in Japanese yens		0.52% 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%

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)

14.

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):

	June 30, 2021		December 31, 2020
Currency
US dollar		750,063		910,296
Mexican peso		512,276		509,687
Euro		127,297		101,469
Japanese yen		84,750		71,591
Australian dollar		18,749		-
Sterling pounds		5,118		-
Total		1,498,253		1,593,043

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

Payments	Outstanding
2021		46,267
2022		420,777
2023		230,551
2024		130,827
2025		617,543
2026		35,312
2027		16,976
		1,498,253

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)

14.

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:

	2021			2020
Balance as of January 1,		1,985,070			3,138,310
Net increase (decrease) in short-term borrowings and debt		169,127			(325,742	)
Proceeds from long-term borrowings and debt		86,498			149,799
Repayments of long-term borrowings and debt		(169,511	)		(265,343	)
Payment of lease liabilities		(599	)		(530	)
Net increase in lease liabilities		-			27
Change in foreign currency		(11,185	)		(70,286	)
Adjustment of fair value for hedge accounting relationship		(1,083	)		787
Other adjustments		1,692			194
Balance as of June 30,		2,060,009			2,627,216

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

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)

14.

Borrowings and debt (continued)

Lease liabilities

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

	June 30, 2021		December 31, 2020
Due within 1 year		2,084		2,058
After 1 year but within 5 years		10,646		10,641
After 5 years but within 10 years		10,306		11,354
Total undiscounted lease liabilities		23,036		24,053

Short-term		1,298		1,244
Long-term		16,902		17,555
Lease liabilities included in the consolidated statement of financial position		18,200		18,799

Amounts recognized in the statement of cash flows:

		June 30, 2021				December 31, 2020
Payments of lease liabilities			599				1,114

Amounts recognized in profit or loss:

	Three months ended June 30,
	2021			2020
Interest on lease liabilities		(205	)		(217	)
Income from sub-leasing right-of-use assets		66			55

	Six months ended June 30,
	2021			2020
Interest on lease liabilities		(413	)		(437	)
Income from sub-leasing right-of-use assets		133			121

15.

Other liabilities

Following is a summary of other liabilities:

June 30, December 31,

2021 2020

Accruals and other accumulated expenses 7,920 9,213

Accounts payable 3,354 6,307

Others 2,879 3,194

14,153 18,714

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)

16.

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:

	Three months ended June 30
	2021		2020
(Thousands of U.S. dollars)
Profit for the period		14,084		14,106

(U.S. dollars)
Basic earnings per share		0.36		0.36
Diluted earnings per share		0.36		0.36

(Thousands of shares)
Weighted average of common shares outstanding applicable to basic EPS		39,659		39,654

Effect of diluted securities:
Stock options and restricted stock units plan		-		-

Adjusted weighted average of common shares outstanding applicable to diluted EPS		39,659		39,654

	Six months ended June 30
	2021		2020
(Thousands of U.S. dollars)
Profit for the period		26,900		32,408

(U.S. dollars)
Basic earnings per share		0.68		0.82
Diluted earnings per share		0.68		0.82

(Thousands of shares)
Weighted average of common shares outstanding applicable to basic EPS		39,676		39,632

Effect of diluted securities:
Stock options and restricted stock units plan		-		-

Adjusted weighted average of common shares outstanding applicable to diluted EPS		39,676		39,632

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)

17.

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:

	Three months ended June 30, 2021
	Syndications		Documentary and standby letters of credit		Other Commissions, net			Total
Openning and confirmation		-		3,013		646			3,659
Negotiation and acceptance		-		13		-			13
Amendment		-		372		(16	)		356
Structuring		400		3,013		-			400
Other		-		3		(160	)		(157	)
		400		3,401		470			4,271

	Six months ended June 30, 2021
	Syndications		Documentary and standby letters of credit		Other Commissions, net			Total
Openning and confirmation		-		5,257		1,200			6,457
Negotiation and acceptance		-		29		-			29
Amendment		-		626		(16	)		610
Structuring		501		-		-			501
Other		-		30		(316	)		(286	)
		501		5,942		868			7,311

	Three months ended June 30, 2020
	Syndications		Documentary and standby letters of credit		Other Commissions, net			Total
Openning and confirmation		-		1,640		229			1,869
Negotiation and acceptance		-		18		-			18
Amendment		-		128		(0	)		128
Structuring		55		-		-			55
Other		-		2		(131	)		(129	)
		55		1,788		98			1,940

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)

17.

Fee and commission income (continued)

	Six months ended June 30, 2020
	Syndications		Documentary and standby letters of credit		Other Commissions, net			Total
Openning and confirmation		-		3,785		520			4,305
Negotiation and acceptance		-		163		-			163
Amendment		-		270		(0	)		270
Structuring		451		-		-			451
Other		-		33		(209	)		(176	)
		451		4,251		311			5,013

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

	June 30,
	2021
Up to 1 year		1,944
From 1 to 2 years		812
More than 2 years		39
		2,795

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)

18.

Business segment information

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

	Three months ended June 30, 2021
	Commercial			Treasury			Total
Interest income		31,983			2,181			34,164
Interest expense		(164	)		(13,002	)		(13,166	)
Inter-segment net interest income		(11,339	)		11,339			-
Net interest income		20,480			518			20,998
Other income (expense), net		4,479			113			4,592
Total income		24,959			631			25,590

(Provision for) reversal of credit losses		(1,042	)		(342	)		(1,384	)
Operating expenses		(7,880	)		(2,242	)		(10,122	)
Segment profit (loss)		16,037			(1,953	)		14,084

	Six months ended June 30, 2021
	Commercial			Treasury			Total
Interest income		62,903			4,179			67,082
Interest expense		(330	)		(26,859	)		(27,189	)
Inter-segment net interest income		(23,361	)		23,361			-
Net interest income		39,212			681			39,893
Other income (expense), net		7,735			(77	)		7,658
Total income		46,947			604			47,551

(Provision for) reversal of credit losses		(1,005	)		(379	)		(1,384	)
Operating expenses		(15,028	)		(4,239	)		(19,267	)
Segment profit (loss)		30,914			(4,014	)		26,900


Segment assets		5,349,392			1,367,318			6,716,710
Segment liabilities		147,752			5,530,625			5,678,377

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)

18.

Business segment information (continued)

	Three months ended June 30, 2020
	Commercial			Treasury			Total
Interest income		42,914			1,593			44,507
Interest expense		(174	)		(22,610	)		(22,784	)
Inter-segment net interest income		(21,821	)		21,821			-
Net interest income		20,919			804			21,723
Other income (expense), net		(790	)		(1,028	)		(1,818	)
Total income		20,129			(224	)		19,905

Reversal of (provision for) credit losses		2,607			-			2,607
Loss on non-financial assets, net		(140	)		-			(140	)
Operating expenses		(6,263	)		(2,003	)		(8,266	)
Segment profit (loss)		16,333			(2,227	)		14,106

	Six months ended June 30, 2020
	Commercial			Treasury			Total
Interest income		98,804			4,692			103,496
Interest expense		(350	)		(55,623	)		(55,973	)
Inter-segment net interest income		(52,769	)		52,769			-
Net interest income		45,685			1,838			47,523
Other income (expense), net		2,559			(1,422	)		1,137
Total income		48,244			416			48,660

Reversal of (provision for) credit losses		2,696			-			2,696
Loss on non-financial assets, net		(140	)		-			(140	)
Operating expenses		(13,605	)		(5,203	)		(18,808	)
Segment profit (loss)		37,195			(4,787	)		32,408
Segment assets		4,489,329			2,130,220			6,619,549
Segment liabilities		21,073			5,570,610			5,591,683

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)

18.

Business segment information (continued)

Reconciliation on information on reportable segments

	Three months ended June 30
	2021		2020
Profit for the period		14,084		23,373

	Six months ended June 30
	2021		2020
Profit for the period		26,900		32,408

Assets:
Assets from reportable segments		6,716,710		6,619,549
Other assets - unallocated		6,522		7,676
Total assets		6,723,232		6,627,225

Liabilities:
Liabilities from reportable segments		5,678,377		5,591,683
Other liabilities - unallocated		14,153		13,683
Total liabilities		5,692,530		5,605,366

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)

19.

Related party transactions

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

	June 30,			December 31,
	2021			2020
Assets
Demand deposits		1,471			3,269
Loans, net		-			22,499
Total asset		1,471			25,768

Liabilities
Time deposits		260,000			240,000
Total liabilities		260,000			240,000

Contingencies
Stand-by letters of credit		10,280			28,300
Loss allowance		(47	)		(60)
Total contingencies		10,233			28,240

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

	Three months ended June 30
	2021			2020
Interest income
Loans		60			551
Interest expense
Deposits		(637	)		(627	)

Net interest income (expenses)		(577	)		(76	)

Other income (expense)
Fees and commissions, net		59			51

Net income from related parties		(518	)		(25	)

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)

19.

Related party transactions (continued)

	Six months ended June 30
	2021			2020
Interest income
Loans		161			1,091
Interest expense
Deposits		(1,260	)		(1,311	)

Net interest income (expenses)		(1,099	)		(220	)

Other income (expense)
Fees and commissions, net		118			139

Net income from related parties		(981	)		(81	)

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

	Three months ended June 30
	2021		2020
Expenses:
Compensation costs to directors		466		450
Compensation costs to executives		687		781

	Six months ended June 30
	2021		2020
Expenses:
Compensation costs to directors		706		798
Compensation costs to executives		2,289		4,191

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

20.

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.

21.

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 June 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 June 30, 2021 and December 31, 2020 was 307% and 249%, respectively.

In compliance with the Rule No. 4-2008 issued by the SBP, the percentage of the liquidity index reported by the Bank to the regulator as of June 30, 2021 and December 31, 2020 was 79.13% and 79.99%, respectively.

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)

21.

Applicable laws and regulations (continued)

Capital adequacy

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

	June 30, 2021		December 31, 2020
Capital funds		1,050,553		1,048,182

Risk-weighted assets		5,782,777		5,187,054

Capital adequacy index		18.17%		20.21%

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)

21.

Applicable laws and regulations (continued)

Leverage ratio

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

	June 30, 2021		December 31, 2020
Ordinary capital		914,534		912,164
Non-risk-weighted assets		6,876,078		6,479,416
Leverage ratio		13.30%		14.08%

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

	June 30, 2021
	Normal		Special Mention		Substandard		Doubtful		Unrecoverable	Total
Loans at amortized cost
Corporations		2,471,844		74,271		10,593		-	-		2,556,708
Financial Institutions:
Private		1,996,183		-		-		-	-		1,996,183
State-owned		644,211		-		-		-	-		644,211
		2,640,394		-		-		-	-		2,640,394
Sovereign		29,513		-		-		-	-		29,513
		5,141,751		74,271		10,593		-	-		5,226,615

Allowance for loan losses IFRS ^(*):		21,783		14,594		5,063		-	-		41,440

Loans at FVTPL
Financial Institutions:
Private		5,130		-		-		-	-		5,130
Total loans		5,146,881		74,271		10,593		-	-		5,231,745

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)

21.

Applicable laws and regulations (continued)

	December 31, 2020
	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 June 30, 2021, and December 31, 2020, there are no restructured loans.

^(*) As of June 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.

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

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

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

	June 30, 2021		December 31, 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		475		351
Income from collected interest on non-accruing loans		-		-

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)

21.

Applicable laws and regulations (continued)

Modified special mention 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 June 30, 2020 and December 31, 2020, classified according to the three-stage model of IFRS 9 follows:

	June 30, 2021
	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				6		-		6
(-) Unearned interest and deferred fees		-		-		-		-
Total loan portfolio subject to provisions Rule No. 9-2020		-		8,835		-		8,835

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

	December 31, 2020
	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.

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)

21.

Applicable laws and regulations (continued)

As of June 30, 2021, the modified special mention loan has complied with its contractual payments of the loan agreement.

It is important to note that in addition to the modified special mention loan, the Bank maintains corporate loans in Substandard category and that they embraced to the moratorium of Law No. 156 of June 30, 2020. As of June 30, 2021 and December 31, 2020, these loans carrying amount are $11.0 million and $10.9 million, respectively (including interest) and present interest payments with a default of up to 30 days.

As of June 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:

	June 30, 2021		December 31, 2020
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.

22.

Subsequent events

The Bank announced a quarterly cash dividend of $0.25 US dollar cents per share corresponding to the second quarter of 2021. The cash dividend was approved by the Board of Directors at its meeting held on July 20, 2021 and it was payable on August 24, 2021 to the Bank’s stockholders as of August 9, 2021 record date.

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

Unaudited condensed consolidated interim statement of financial position

June 30, 2021 and December 31, 2020

(In thousands of US dollars)