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

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

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

Contents

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

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

Unaudited condensed consolidated interim statement of financial position

September 30, 2021 and December 31, 2020

(In thousands of US dollars)

Notes September 30,
2021
(Unaudited) 		December 31,
2020
(Audit)
Assets
Cash and due from banks 4,5 663,975 863,812
Securities and other financial assets, net 3,4,6 772,957 398,068
Loans, net 3,4,7 5,268,827 4,896,647
Customers' liabilities under acceptances 3,4 239,544 74,366
Derivative financial instruments - assets 3,4,10 7,124 27,778
Equipment and leasehold improvements, net 15,294 16,213
Intangibles, net 1,658 1,984
Investment properties 2,050 3,214
Other assets 11 5,651 6,816
Total assets 6,977,080 6,288,898
Liabilities and Equity
Liabilities:
Demand deposits 431,874 170,660
Time deposits 2,946,944 2,968,240
3,4,12 3,378,818 3,138,900
Interest payable 3,027 1,975
Total deposits 3,381,845 3,140,875
Securities sold under repurchase agreements 3,4,13 330,998 10,663
Borrowings and debt, net 4,14 1,960,699 1,985,070
Interest payable 9,813 9,175
Acceptance outstanding 3,4 239,544 74,366
Derivative financial instruments - liabilities 3,4,10 23,770 9,211
Allowance for loan commitments and financial guarantees contracts losses 3,4 3,654 2,904
Other liabilities 15 14,033 18,714
Total liabilities 5,964,356 5,250,978
Equity:
Common stock 279,980 279,980
Treasury stock (84,366 ) (57,999 )
Additional paid-in capital in excess of value assigned to common stock 119,627 120,414
Capital reserves 21 95,210 95,210
Regulatory reserves 21 136,019 136,019
Retained earnings 477,109 464,088
Other comprehensive income (loss) (10,855 ) 208
Total equity 1,012,724 1,037,920
Total liabilities and equity 6,977,080 6,288,898

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

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

Unaudited condensed consolidated interim statements of profit or loss

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

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

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

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

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

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

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

(In thousands of US dollars)

For the three months
ended September 30 		For the nine months
ended September 30
2021 2020 2021 2020
Profit for the period 15,731 15,444 42,631 47,852
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss:
Change in fair value on equity instrument at FVOCI, net of hedging - - - 546
Items that are or may be reclassified subsequently to profit or loss:
Change in fair value on financial instruments, net of hedging (2,205 ) (1,698 ) (11,555 ) (3,080 )
Reclassification of gains (losses) on financial instruments to the profit or loss 80 (261 ) 44 (606 )
Exchange difference in conversion of foreign currency operation - (122 ) 448 (793 )
Other comprehensive income (loss) (2,125 ) (2,081 ) (11,063 ) (3,933 )
Total comprehensive income for the period 13,606 13,363 31,568 43,919

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

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

Unaudited condensed consolidated interim statements of changes in equity

For the nine months ended September 30, 2021 and 2020

(In thousands of US dollars)

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

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

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

Unaudited condensed consolidated interim statements of cash flows

For the nine months ended September 30, 2021 and 2020

(In thousands of US dollars)

2021 2020
Cash flows from operating activities
Profit for the period 42,631 47,852
Adjustments to reconcile profit for the period to net cash provided by (used in) operating activities:
Depreciation of equipment and leasehold improvements 2,132 2,705
Amortization of intangible assets 623 562
Provision for (reversal of) credit losses 2,155 (1,153 )
(Gain) unrealized loss on financial instruments at fair value through profit or loss (172 ) 2,986
Realized gain on financial instruments at fair value through profit or loss - (484 )
Gain net on sale of financial assets at fair value through OCI (14 ) -
Gain on sale of financial instruments at amortized cost (333 ) -
Compensation cost - share-based payment 1,493 1,291
Net changes in hedging position and foreign currency (906 ) 4,240
Loss for disposal of equipment and leasehold improvements 256 6
Interest income (101,852 ) (143,190 )
Interest expense 39,880 73,059
Net decrease (increase) in operating assets:
Pledged deposits (13,823 ) (23,952 )
Loans (385,063 ) 1,236,130
Other assets 1,179 2,602
Net increase (decrease) in operating liabilities:
Due to depositors 239,918 166,859
Other liabilities (4,937 ) (2,587 )
Cash flows provided by operating activities (176,833 ) 1,366,926
Interest received 111,545 146,677
Interest paid (38,915 ) (77,981 )
Net cash (used in) provided by operating activities (104,203 ) 1,435,622
Cash flows from investing activities:
Acquisition of equipment and leasehold improvements (307 ) (601 )
Acquisition of intangible assets (297 ) -
Proceeds from the redemption of securities at fair value through OCI 10,000 -
Proceeds from redemption of securities at amortized cost 81,116 44,577
Proceeds from the sale of securities at fair value through OCI 33,492 1,882
Proceeds from the sale of securities at amortized cost 16,369 -
Purchases of securities at fair value through OCI (9,999 ) (103,600 )
Purchases of securities at amortized cost (512,051 ) (89,182 )
Net cash provided by investing activities (381,677 ) (146,924 )
Cash flows from financing activities:
Increase (decrease) in securities sold under repurchase agreements 320,336 (29,867 )
Net increase (decrease) in short-term borrowings and debt 37,222 (1,162,760 )
Proceeds from long-term borrowings and debt 167,675 386,096
Repayments of long-term borrowings and debt (194,094 ) (246,982 )
Payments of leases liabilities (916 ) (820 )
Dividends paid (29,356 ) (34,818 )
Repurchase of common stock (28,647 ) -
Net cash provided by (used in) financing activities 272,220 (1,089,151 )
(Decrease) increase net in cash and cash equivalents (213,660 ) 199,547
Cash and cash equivalents at beginning of the period 846,008 1,159,718
Cash and cash equivalents at end of the period 632,348 1,359,265

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

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

Notes to the 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 October 19, 2021.

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

Notes to the unaudited condensed consolidated interim financial statements

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

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.

A. Credit risk
i. Credit quality analysis

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

Loans at amortized cost

September 30, 2021
PD Ranges Stage 1 Stage 2 Stage 3 Total
Grades 1 - 4 0.03 - 0.74 2,652,930 - - 2,652,930
Grades 5 - 6 0.75 - 3.80 2,306,667 94,099 - 2,400,766
Grades 7 - 8 3.81 - 34.51 133,108 94,993 10,593 238,694
5,092,705 189,092 10,593 5,292,390
Loss allowance (19,341 ) (17,000 ) (5,124 ) (41,465 )
Total 5,073,364 172,092 5,469 5,250,925
December 31, 2020
PD Ranges Stage 1 Stage 2 Stage 3 Total
Grades 1 - 4 0.03 - 0.74 2,582,794 - - 2,582,794
Grades 5 - 6 0.75 - 3.95 1,928,142 167,996 - 2,096,138
Grades 7 - 8 3.96 - 30.67 102,532 119,340 10,593 232,465
Grades 9 - 10 30.68 - 100 - - - -
4,613,468 287,336 10,593 4,911,397
Loss allowance (16,661 ) (19,916 ) (4,588 ) (41,165 )
Total 4,596,807 267,420 6,005 4,870,232

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

Notes to the unaudited condensed consolidated interim financial statements

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

3. Financial risk (continued)
A. Credit risk (continued)

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

September 30, 2021
12-month PD
Ranges 		Stage 1 Stage 2 Stage 3 Total
Commitments and contingencies
Grades 1 - 4 0.03 - 0.74 353,107 - - 353,107
Grades 5 - 6 0.75 - 3.80 218,102 19,486 - 237,588
Grades 7 - 8 3.81 - 34.51 64,961 - - 64,961
636,170 19,486 - 655,656
Customers' liabilities under acceptances
Grades 1 - 4 0.03 - 0.74 46,129 - - 46,129
Grades 5 - 6 0.75 - 3.80 - - - -
Grades 7 - 8 3.81 - 34.51 193,415 - - 193,415
239,544 - - 239,544
875,714 19,486 - 895,200
Loss allowance (3,348 ) (306 ) - (3,654 )
Total 872,366 19,180 - 891,546
December 31, 2020
12-month PD Ranges Stage 1 Stage 2 Stage 3 Total
Commitments and contingencies
Grades 1 - 4 0.03 - 0.74 245,927 - - 245,927
Grades 5 - 6 0.75 - 3.95 198,638 38,446 - 237,084
Grades 7 - 8 3.96 - 30.67 81,887 - - 81,887
526,452 38,446 - 564,898
Customers' liabilities under acceptances
Grades 1 - 4 0.03 - 0.74 1,498 - - 1,498
Grades 5 - 6 0.75 - 3.95 723 - - 723
Grades 7 - 8 3.96 - 30.67 72,145 - - 72,145
74,366 - - 74,366
600,818 38,446 - 639,264
Loss allowance (2,426 ) (478 ) - (2,904 )
Total 598,392 37,968 - 636,360

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

Notes to the unaudited condensed consolidated interim financial statements

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

3. Financial risk (continued)
B. Credit risk (continued)

Securities at amortized cost

September 30, 2021
12-month PD Ranges Stage 1 Stage 2 Stage 3 Total
Grades 1 - 4 0.03 - 0.74 384,143 - - 384,143
Grades 5 - 6 0.75 - 3.80 188,626 - - 188,626
572,769 - - 572,769
Loss allowance (1,777 ) - - (1,777 )
Total 570,992 - - 570,992
December 31, 2020
12-month PD Ranges Stage 1 Stage 2 Stage 3 Total
Grades 1 - 4 0.03 - 0.74 108,505 - - 108,505
Grades 5 - 6 0.75 - 3.95 50,562 5,007 - 55,569
159,067 5,007 - 164,074
Loss allowance (462 ) (33 ) - (495 )
Total 158,605 4,974 - 163,579

Securities at fair value through other comprehensive income (FVOCI)

September 30, 2021
12-month PD Ranges Stage 1 Stage 2 Stage 3 Total
Grades 1 - 4 0.03 - 0.74 194,805 - - 194,805
194,805 - - 194,805
Loss allowance (26 ) - - (26 )
Total 194,779 - - 194,779
December 31, 2020
12-month PD Ranges Stage 1 Stage 2 Stage 3 Total
Grades 1 - 4 0.03 - 0.74 231,348 - - 231,348
231,348 - - 231,348
Loss allowance (43 ) - - (43 )
Total 231,305 - - 231,305

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

Notes to the unaudited condensed consolidated interim financial statements

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

3. Financial risk (continued)
A. Credit risk (continued)

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

September 30, 2021
Stage 1 Stage 2 Stage 3 Total
Current 5,092,705 189,092 10,593 5,292,390
December 31, 2020
Stage 1 Stage 2 Stage 3 Total
Current 4,613,468 287,336 10,593 4,911,397

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

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

Notes to the unaudited condensed consolidated interim financial statements

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

3. Financial risk (continued)
A. Credit risk (continued)

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

September 30, 2021
Notional value
USD 		Derivative
financial
instruments -
fair value asset 		Derivative
financial
instruments -
fair value liabilities
Interest rate swaps 60,000 1,095 (738 )
Cross-currency swaps 671,160 5,369 (23,032 )
Foreign exchange forwards 40,244 660 -
Total 771,404 7,124 (23,770 )
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 )

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

Notes to the unaudited condensed consolidated interim financial statements

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

3. Financial risk (continued)
A. Credit risk (continued)
ii. Loss allowances

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

Loans at amortized cost

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

14

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)
A. 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 (53 ) 53 - -
Net effect of changes in reserve for expected credit losses (27 ) (97 ) - (124 )
Financial instruments that have been derecognized during the period (1,470 ) (128 ) - (1,598 )
New instruments originated or purchased 2,472 - - 2,472
Allowance for expected credit losses as of September 30, 2021 3,348 306 - 3,654
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

15

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)
A. 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 (149 ) (33 ) - (182 )
New financial assets originated or purchased 1,483 - - 1,483

Allowance for expected credit losses as of September 30, 2021

 1,777 - - 1,777
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 (17 ) - - (17 )

Allowance for expected credit losses as of September 30, 2021

 26 - - 26

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

Notes to the unaudited condensed consolidated interim financial statements

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

3. Financial risk (continued)
A. Credit risk (continued)

Securities at fair value through other comprehensive income (FVOCI)

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

The following table provides a reconciliation between:

- Amounts shown in the previous tables reconciling opening and closing balances of loss allowance per class of financial instrument; and
- The (reversal) provision for credit losses' line item in the condensed consolidated interim statement of profit or loss and other comprehensive income.
Securities
September 30, 2021 Loans at amortized cost Loan commitments and financial guarantee contracts At amortized cost FVOCI Total
Net effect of changes in allowance for expected credit losses (2,600 ) (124 ) (19 ) - (2,743 )
Financial instruments that have been derecognized during the year (11,577 ) (1,598 ) (182 ) (17 ) (13,374 )
New financial assets originated or purchased 14,317 2,472 1,483 - 18,272
Total 140 750 1,282 (17 ) 2,155
Securities
September 30, 2020 Loans at amortized cost Loan commitments and financial guarantee contracts At amortized cost FVOCI Total
Net effect of changes in allowance for expected credit losses 10,196 (109 ) 22 - 10,109
Financial instruments that have been derecognized during the year (21,747 ) (1,797 ) (76 ) - (23,620 )
New financial assets originated or purchased 11,151 950 242 15 12,358
Total (400 ) (956 ) 188 15 (1,153 )

17

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)
A. Credit risk (continued)
iii. Credit-impaired financial assets

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

September 30,
2021 		December 31, 2020
Credit-impaired loans and advances at beginning of period 4,588 54,573
Classified as credit-impaired during the period - 2,100
Change in allowance for expected credit losses 191 (744 )
Recoveries of amounts previously written off 160 139
Interest income 185 626
Write-offs - (52,106 )
Credit-impaired loans and advances at end of period 5,124 4,588

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

18

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)
A. Credit risk (continued)
iv. Concentrations of credit risk

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

Concentration by sector and industry

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

19

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)
A. Credit risk (continued)

Risk rating and concentration by country

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

20

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)
A. Credit risk (continued)
v. Offsetting financial assets and liabilities

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

a) Derivative financial instruments - assets
September 30, 2021
Gross Gross amounts
offset in the
consolidated
statement of 		Net amount of
assets presented
in the
consolidated 		Gross amounts not offset in the
consolidated statement of
financial position
Description amounts of
assets 		financial
position 		statement of
financial position 		Financial
instruments 		Cash collateral
received 		Net Amount
Derivative financial instruments used for hedging 7,124 - 7,124 - (4,990 ) 2,134
Total 7,124 - 7,124 - (4,990 ) 2,134
December 31, 2020
Gross Gross amounts
offset in the
consolidated
statement of 		Net amount of
assets presented
in the
consolidated 		Gross amounts not offset in the
consolidated statement of
financial position
Description amounts of
assets 		financial
position 		statement of
financial position 		Financial
instruments 		Cash collateral
received 		Net Amount
Derivative financial instruments used for hedging 27,778 - 27,778 - (24,720 ) 3,058
Total 27,778 - 27,778 - (24,720 ) 3,058

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)

3. Financial risk (continued)
A. Credit risk (continued)
b) Securities sold under repurchase agreements and derivative financial instruments - liabilities
September 30, 2021
Gross amounts
offset in the
consolidated 		Net amount of
liabilities
presented
in the 		Gross amounts not offset in the
consolidated statement of
financial position
Description Gross
amounts of
liabilities 		statement of
financial
position 		consolidated
statement of
financial position 		Financial
instruments 		Cash
collateral
pledged 		Net
Amount
Securities sold under repurchase agreements (330,998 ) - (330,998 ) 358,674 765 28,441
Derivative financial instruments used for hedging (23,770 ) - (23,770 ) - 20,862 (2,908 )
Total (354,768 ) - (354,768 ) 358,674 21,627 25,533
December 31, 2020
Gross amounts
offset in the
consolidated 		Net amount of
liabilities
presented
in the 		Gross amounts not offset in the
consolidated statement of
financial position
Description Gross
amounts of
liabilities 		statement of
financial
position 		consolidated
statement of
financial position 		Financial
instruments 		Cash
collateral
pledged 		Net
Amount
Securities sold under repurchase agreements (10,663 ) - (10,663 ) 11,998 18 1,353
Derivative financial instruments used for hedging (9,211 ) - (9,211 ) - 7,786 (1,425 )
Total (19,874 ) - (19,874 ) 11,998 7,804 (72 )

22

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)
B. Liquidity risk
i. Exposure to liquidity risk

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

September 30,
2021 		December 31,
2020
At the end of the period 201.90 % 249.42 %
Period average 125.04 % 115.98 %
Maximum of the period 306.82 % 249.42 %
Minimum of the period 73.82 % 53.26 %

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

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

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

(in millions of USD dollars) September 30,
2021 		December 31,
2020
Demand liabilities and "overnight" 514 171
% Demand liabilities and "overnight" to total deposits 15.21 % 5.44 %

23

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)
B. Liquidity risk (continued)

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

(in millions of USD dollars) September 30,
2021 		December 31,
2020
Total liquid assets 827 1,048
% Total assets to total liabilities 24.48 % 33.40 %
% Total liquid assets in the Federal Reserve of the United States of America 68.53 % 65.68 %

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

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

(in millions of USD dollars) September 30,
2021 		December 31,
2020
Loan portfolio at amortized cost and securities portfolio less than/equal to 1 year according to its original terms 3,312 3,114
Average term (days) 186 195

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

(in millions of USD dollars) September 30,
2021 		December 31,
2020
Loan portfolio at amortized cost and securities portfolio greater than/equal to 1 year according to its original terms 2,748 2,193
Average term (days) 1,380 1,382

24

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

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

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

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)

3. Financial risk (continued)
B. 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.

26

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)
B. Liquidity risk (continued)
iii. Liquidity reserves

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

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

September 30, December 31,
2021 2020
Amount Fair Value Amount Fair Value
Balances with Federal Reserve of the United States of America 566,849 566,849 688,612 688,612
Cash and due from banks (1) 65,499 65,499 157,396 157,396
Total Liquidity reserves 632,348 632,348 846,008 846,008
(1) Excludes pledged deposits.
iv. Financial assets available to support future funding

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

September 30, 2021
Guaranteed Available as collateral
Cash and due from banks 31,627 632,348
Notional of investment securities 338,081 393,460
Loans at amortized cost - 5,292,390
Total assets 369,708 6,318,198
December 31, 2020
Guaranteed Available as collateral
Cash and due from banks 17,804 846,008
Notional of investment securities 11,450 371,900
Loans at amortized cost - 4,911,397
Total assets 29,254 6,129,305

27

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)
C. Market risk
i. Interest rate risk

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

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

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)
C. Market risk (continued)

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

Change in
interest rate 		Effect on
profit or loss 		Effect on
equity
September 30, 2021 +50 bps 2,511 16,064
-50 bps (2,014 ) 6,362
December 31, 2020 +50 bps 1,182 16,618
-50 bps (5,161 ) 107

Interest rate movements affect reported equity in the following ways:

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

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

ii. Foreign exchange risk

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

September 30, 2021
Brazilian
Real 		European
Euro 		Japanese
Yen 		Colombian
Peso 		Mexican
Peso 		Other
Currencies
(1)		 Total
Exchance rate 5.44 1.16 111.30 3,816.79 20.64
Assets
Cash and due from banks - 8 1 26 10,994 143 11,172
Loans - - - - 151,030 - 151,030
Total Assets - 8 1 26 162,024 143 162,202
Liabilities
Borrowings and debt - - - - (161,940 ) - (161,940 )
Total liabilities - - - - (161,940 ) - (161,940 )
Net currency position - 8 1 26 84 143 262

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

29

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)
C. Market risk (continued)
ii. 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 20 147 80 342

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

30

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)

4. Fair value of financial instruments
A.Recurring valuation

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

September 30, 2021
Level 1 Level 2 Level 3 Total
Assets
Securities and other financial assets:
Securities at FVOCI - Corporate debt - 194,805 - 194,805
Securities at FVOCI - Sovereign debt - - - -
Loans at fair value through profit or loss - - 5,223 5,223
Total securities and other financial assets - 194,805 5,223 200,028
Derivative financial instruments - assets:
Interest rate swaps - 1,095 - 1,095
Cross-currency swaps - 5,369 - 5,369
Foreign exchange forwards - 660 - 660
Total derivative financial instrument assets - 7,124 - 7,124
Total assets at fair value - 201,929 5,223 207,152
Liabilities
Derivative financial instruments - liabilities:
Interest rate swaps - 738 - 738
Cross-currency swaps - 23,032 - 23,032
Foreign exchange forwards - - - -
Total derivative financial instruments - liabilities - 23,770 - 23,770
Total liabilities at fair value - 23,770 - 23,770

31

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)

4. Fair value of financial instruments (continued)
A.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.

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

Notes to the unaudited condensed consolidated interim financial statements

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

4. Fair value of financial instruments (continued)
B.Non-recurring valuation

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

September 30, 2021
Carrying
value 		Fair
value 		Level 1 Level 2 Level 3
Assets
Cash and deposits on banks 663,975 663,975 - 663,975 -
Securities at amortized cost (1) 577,426 577,261 - 567,582 9,679
Loans at amortized cost, net (2) 5,263,604 5,348,107 - 5,348,107 -
Customers' liabilities under acceptances 239,544 239,544 - 239,544 -
Investment properties 2,050 2,050 - - 2,050
Liabilities
Deposits 3,381,845 3,381,845 - 3,381,845 -
Securities sold under repurchase agreements 330,998 330,998 - 330,998 -
Borrowings and debt, net (3) 1,942,816 1,940,103 - 1,940,103 -
Customers' liabilities under acceptances 239,544 239,544 - 239,544 -
December 31, 2020
Carrying
value 		Fair
value 		Level 1 Level 2 Level 3
Assets
Cash and deposits on banks 863,812 863,812 - 863,812 -
Securities at amortized cost (1) 165,564 168,110 - 157,698 10,412
Loans at amortized cost, net (2) 4,891,698 4,972,599 - 4,972,599 -
Customers' liabilities under acceptances 74,366 74,366 - 74,366 -
Investment properties 3,214 3,214 - - 3,214
Liabilities
Deposits 3,140,875 3,140,875 - 3,140,875 -
Securities sold under repurchase agreements 10,663 10,663 - 10,663 -
Borrowings and debt, net (3) 1,966,271 1,989,719 - 1,989,719 -
Customers' liabilities under acceptances 74,366 74,366 - 74,366 -
(1) The carrying value of securities at amortized cost is net of accrued interest receivable of $6.4 million and the allowance for expected credit losses of $1.7 million as of September 30, 2021 (accrued interest receivable of $1.9 million and the allowance for expected credit losses of $0.4 million as of December 31, 2020).
(2) The carrying value of loans at amortized cost is net of accrued interest receivable of $20.9 million, the allowance for expected credit losses of $41.4 million and unearned interest and deferred fees of $8.2 million for September 30, 2021 (accrued interest receivable of $27.3 million, the allowance for expected credit losses of $41.1 million and unearned interest and deferred fees of $5.8 million for December 31, 2020).
(3) Borrowings and debt exclude lease liabilities for an amount of $17.8 million and $18.7 million as of September 30, 2020 and December 31, 2020, respectively.

33

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)

4. Fair value of financial instruments (continued)
C.Level 3 - Fair value measurement

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

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) - 274 274
Sales - - -
At September 30, 2021 - 5,223 5,223

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

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

Loans at fair value through profit or loss - Level 3

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

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

Observable inputsUnobservable inputs
- Forward interest rate referenced to 12M USD Libor - Discount rate or discount margin of floating rate bond "USD US composite B+" with credit risk similar to the instrument analyzed adjusted by the country risk premium.
Fair value measurement sensitivity to unobservable inputs - discount rate 2021 2020
A significant increase in volatility would result in a lower fair value 6.86% - 7.48% 3.128% to 8.89%

34

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)

4. Fair value of financial instruments (continued)
C.Level 3 - Fair value measurement (continued)

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

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

Loans at fair value through profit or loss

 Effect on profit
or loss
+ 100 bps to the observable and unobservable inputs (130 )
- 100 bps to the observable and unobservable inputs 134
5. Cash and due from banks

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

September 30, December 31,
2021 2020
Unrestricted deposits with the Federal Reserve of the United States of America 566,849 688,612
Cash and non-interest-bearing deposits in other banks 2,233 4,331
Cash and interest-bearing deposits in other banks(1) 94,893 170,869
Total cash and due from banks 663,975 863,812
Less:
Time deposits with original maturity over 90 days and other restricted deposits (1) 31,627 17,804
Total cash and due from banks in the consolidated statement of cash flows 632,348 846,008
(1) Includes restricted deposit of $10.0 million for both periods with the New York State Banking Department under March 1994 legislation and margin call deposits collateralizing derivative financial instrument transactions demand deposits based on daily rates determined by banks.

35

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)

5. Cash and due from banks (continued)

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

September 30, December 31,
2021 2020
Country:
United States of America(1) 11,485 11,515
Switzerland 7,787 3,027
Netherlands 3,290 334
Japan 3,060 1,330
France 2,980 50
Mexico 1,700 790
United Kingdom 710 130
Spain 315 18
Germany 300 -
Canada - 610
Total 31,627 17,804
(1) Includes pledged deposits of $10.0 million for both periods, with the New York State Banking Department under March 1994 legislation and deposits pledged to guarantee derivative financial instrument transactions.
6. Securities and other financial assets, net

Securities and other financial assets are presented as follows:

At fair value
At September 30, 2021 With changes in other comprehensive
income (loss) 		With
Carrying amount Amortized cost Recyclable to
profit and loss		 Non-recyclable to
profit and loss		 changes in
profit or loss		 Total securities and other
financial assets, net
Principal 572,769 194,805 - - 767,574
Interest receivable 6,434 726 - - 7,160
Reserves (1) (1,777 ) (26 ) - - (1,803 )
577,426 195,505 - - 772,931
At fair value
At December 31, 2020 With changes in other comprehensive
income (loss) 		With
Carrying amount Amortized cost Recyclable to
profit and loss		 Non-recyclable to
profit and loss		 changes in
profit or loss		 Total securities and other
financial assets, net
Principal 164,074 231,348 - - 395,422
Interest receivable 1,985 1,156 - - 3,141
Reserves (1) (495 ) (43 ) - - (538 )
165,564 232,461 - - 398,025
(1) The loss allowance for losses for securities at FVOCI is included in equity in the condensed consolidated interim statement of financial position in the line Other comprehensive income.

36

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)

6. Securities and other financial assets, net (continued)

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

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

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

At fair value
At September 30, 2021 With changes in other comprehemsive
income 		With
Amortized cost Recyclable to
profit ans loss		 Non-recyclable to
profit and loss		 changes in
profit or loss		 Total securities and other
financial assets, net
Due within 1 year 37,533 107,988 - - 145,521
After 1 year but within 5 years 535,236 86,817 - - 622,053
Balance - principal 572,769 194,805 - - 767,574
At fair value
At December 31, 2020 With changes in other comprehemsive income With
Amortized cost Recyclable to
profit ans loss		 Non-recyclable to
profit and loss		 changes in
profit or loss		 Total securities and other
financial assets, net
Due within 1 year 40,625 34,027 - - 74,652
After 1 year but within 5 years 123,449 197,321 - - 320,770
Balance - principal 164,074 231,348 - - 395,422

37

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)

6. Securities and other financial assets, net (continued)

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

September 30, 2021 December 31, 2020
Amortized cost Fair value Total Amortized cost Fair value Total
Securities pledged to secure repurchase transactions 358,674 - 358,674 11,998 - 11,998
Securities sold under repurchase agreements (330,998 ) - (330,998 ) (10,663 ) - (10,663 )
7. Loans

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

September 30, December 31,
2021 2020
Loans at amortized cost 5,292,390 4,911,397
Interest receivable 20,912 27,350
Loss allowances (41,465 ) (41,165 )
Unearned interest and deferred fees (8,233 ) (5,884 )
Loans at amortized cost, net 5,263,604 4,891,698
Loans at fair value through profit or loss (1) 5,223 4,949
Loans, net 5,268,827 4,896,647

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

38

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)

7. Loans (continued)

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

September 30, December 31,
2020 2020
Fixed interest rates 2,930,034 2,544,544
Floating interest rates 2,367,579 2,371,802
Total 5,297,613 4,916,346

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

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

September 30, December 31,
2021 20120
Class A and B shareholder loans 393,199 522,316
% Loans to class A and B shareholders over total loan portfolio 7% 11%
% Class A and B stockholders with loans over number of class A and B stockholders 10% 12%

Modified financial assets

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

September 30,
2021

December 31,
2020

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

(1) Expected credit loss for 12 months.

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

Recognition and derecognition of financial assets

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

39

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)
8. 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:

September 30, December 31,
2021 2020
Documentary letters of credit 256,305 216,782
Stand-by letters of credit and guarantees - commercial risk 199,232 210,497
Credit commitments 200,119 137,619
Total loans commitments and financial guarantee contracts 655,656 564,898

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

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

40

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)
9. 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
September 30,
2021 2020
Loss on derivative financial instruments and foreign currency exchange, net (118 ) (357 )
Unrealized gain (loss) on financial instruments at fair value through profit or loss 509 (159 )
Realized (loss) gain on financial instruments at fair value through profit or loss (836 ) 79
Gain on sale of financial instruments at amortized cost 333 -
(112 ) (437 )
For the nine months ended
September 30,
2021 2020
Gain (loss) on derivative financial instruments and foreign currency exchange, net 1,201 (2,242 )
Unrealized gain (loss) on financial instruments at fair value through profit or loss 172 (2,986 )
Realized (loss) gain on financial instruments at fair value through profit or loss (1,669 ) 484
Gain on sale of financial instruments at amortized cost 333 -
Realized gain on financial instruments at fair value through OCI 14 -
51 (4,744 )

41

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

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:

September 30, 2021
Nominal Carrying amount of hedging instruments
amount Asset (1) Liability (2)
Interest rate risk
Fair value hedges 40,000 1,095 -
Cash flow hedges 20,000 - (738 )
Interest rate and foreign exchange risk
Fair value hedges 343,687 378 (17,993 )
Cash flow hedges 327,473 4,991 (5,039 )
Foreign exchange risk
Cash flow hedges 40,244 660 -
771,404 7,124 (23,770 )
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.

42

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)
A. Fair value hedges (continued)

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

September 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
Borrowings and debt 40,000 1,095 - 1 14
Interest rate and foreign exchange risk
Loans 3,273 378 - 21 (95 )
Borrowings and debt 340,414 - (17,993 ) (15,961 ) 679
Total 383,687 1,473 (17,993 ) (15,939 ) 598
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.

43

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)
A. Fair value hedges (continued)

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

September 30, 2021
Carrying amount of
hedged items		 Line in the consolidated
statement of financial
position that includes the		 Accumulated amount of
fair value hedge
adjustments included in the		 Change in fair value of
the hedged items used
Asset Liability carrying amount of the
hedged items 		carrying amount of the
hedged items 		to calculate hedge
ineffectiveness(1)
Interest rate risk
Borrowings and debt - (41,134 ) Borrowings and debt, net (28 ) 13
Interest rate and foreign exchange risk
Loans 2,935 - Loans, net (770 ) (116 )
Borrowings and debt - (322,395 ) Borrowings and debt, net 17,722 16,640
Total 2,935 (363,529 ) 16,924 16,537
December 31, 2020
Carrying amount of hedged items

Line in the consolidated
statement of financial
position that includes the

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

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)

10. Derivative financial instruments (continued)
A. Fair value hedges (continued)

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

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

45

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)
B. Cash flow hedges

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

September 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 in		 Ineffectiveness
recognized in		 Amount
reclassified
from the hedge
reserve to profit
amount Asset (1) Liability (2) ineffectiveness OCI (3) profit or loss (4) or loss (4)
Interest rate risk
Borrowings and debt 20,000 - (738 ) 364 362 (2 ) (423 )
Interest rate and foreign exchange risk
Borrowings and debt 327,473 4,991 (5,039 ) (25,180 ) (24,931 ) 249 -
Foreign exchange risk
Loans 40,244 660 - 705 702 (3 ) (3,589 )
Total 387,717 5,651 (5,777 ) (24,111 ) (23,867 ) 244 (4,012 )
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 in		 Ineffectiveness
recognized in		 Amount
reclassified
from the hedge
reserve to profit
amount Asset (1) Liability (2) ineffectiveness OCI (3) profit or loss (4) or loss (4)
Interest rate risk
Borrowings and debt 60,000 - (1,541 ) (443 ) (442 ) 1 (75 )
Interest rate and foreign exchange risk
Borrowings and debt 221,508 23,091 - 23,380 23,481 101 (1,697 )
Foreign exchange risk
Loans 71,353 - (3,589 ) (3,466 ) (3,465 ) 1 (1,927 )
Borrowings and debt - - - - - - -
Total 352,861 23,091 (5,130 ) 19,471 19,574 103 (3,699 )
(1) Included in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.
(2) Included in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.
(3) Included in equity in the condensed consolidated interim statement of financial position on the line Other comprehensive income.
(4) Included in the condensed consolidated interim statement of profit or loss under the line Loss on financial instruments, net.

46

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)
B. Cash flow hedges (continued)

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

September 30, 2021
Carrying amount of
hedged items		 Line in the consolidated
statement of financial
position that includes the
carrying amount of the		 Change in the fair value
of the hedged items used
to calculate the hedge		 Cash flow hedge
Asset Liability hedged items ineffectiveness reserve
Interest rate risk
Borrowings and debt - (20,042 ) Borrowings and debt, net (362 ) 650
Interest rate and foreign exchange risk
Borrowings and debt - (340,964 ) Borrowings and debt, net 24,931 10,329
Foreign exchange risk
Loans 39,472 - Loans, net (702 ) 339
Total 39,472 (361,006 ) 23,867 11,318
December 31, 2020
Carrying amount of
hedged items		 Line in the consolidated
statement of financial
position that includes the
carrying amount of the		 Change in the fair value
of the hedged items used
to calculate the hedge		 Cash flow hedge
Asset Liability hedged items ineffectiveness reserve
Interest rate risk
Borrowings and debt - (20,045 ) Borrowings and debt, net 442 1,440
Interest rate and foreign exchange risk
Borrowings and debt - (243,817 ) Borrowings and debt, net (23,481 ) (1,980 )
Foreign exchange risk
Loans 74,509 - Loans, net 3,465 562
Total 74,509 (263,862 ) (19,574 ) 22

47

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)
B. Cash flow hedge (continued)

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

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

48

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)

11. Other assets

Following is a summary of other assets:

September 30, December 31,
2021 2020
Accounts receivable 940 938
Prepaid expenses 1,296 2,541
Prepaid fees and commissions 312 486
Interest receivable - deposits 23 8
IT projects under development 439 218
Severance fund 1,964 1,927
Other 677 698
5,651 6,816
12. Deposits

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

September 30, December 31,
2021 2020
Demand 431,874 170,660
Up to 1 month 712,610 1,127,120
From 1 month to 3 months 881,241 878,900
From 3 months to 6 months 951,271 544,860
From 6 months to 1 year 346,934 365,879
From 1 year to 2 years 54,888 51,481
3,378,818 3,138,900

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

September 30, December 31,
2021 2020
Aggregate amounts of $100,000 or more 3,378,501 3,138,684
Aggregate amounts of deposits in the New York Agency 604,361 657,851
Three months ended September 30
2021 2020
Interest expense on deposits made in the New York Agency 847 1,040
Nine months ended September 30
2021 2020
Interest expense on deposits made in the New York Agency 3,097 3,857

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

Notes to the unaudited condensed consolidated interim financial statements

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

13. Securities sold under repurchase agreements

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

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

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

Borrowings and debt are detailed as follows:

September 30, 2021
Short-Term Long-term
Carrying amount Borrowings Debt Lease Liabilities Borrowings Debt Lease Liabilities Total
Principal 415,469 - 1,326 298,693 1,234,084 16,557 1,966,129
Prepaid commissions - - - (210 ) (5,220 ) - (5,430 )
415,469 - 1,326 298,483 1,228,864 16,557 1,960,699
December 31, 2020
Short-Term Long-term
Carrying amount Borrowings Debt Lease Liabilities Borrowings Debt Lease Liabilities Total
Principal 331,585 49,350 1,244 477,010 1,116,033 17,555 1,992,777
Prepaid commissions - - - (1,158 ) (6,549 ) - (7,707 )
331,585 49,350 1,244 475,852 1,109,484 17,555 1,985,070

50

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:

September 30, December 31,
2021 2020
Short-term borrowings:
At fixed interest rates 10,000 55,000
At floating interest rates 405,469 276,585
Total borrowings 415,469 331,585
Short-term debt:
At floating interest rates - 49,350
Total debt - 49,350
Total short-term borrowings and debt 415,469 380,935
Range of fixed interest rates on borrowings and debt in U.S. dollars 0.50% 0.45% to 1.40%
Range of floating interest rates on borrowings in U.S. dollars 0.33% to 0.48% 0.47% to 1.65%
Range of floating interest rates on borrowings and debt in Mexican pesos 5.15% to 5.20% 4.97% to 5.05%

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

September 30, December 31,
2021 2020
Currency
US dollar 350,000 299,957
Mexican peso 65,469 80,978
Total 415,469 380,935

51

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

September 30,
2021 		December 31,
2020
Long-term borrowings:
At fixed interest rates with due dates from November 2021 to September 2023 116,027 68,190
At floating interest rates with due dates from October 2021 to August 2023 182,666 408,820
Total long-term borrowings 298,693 477,010
Long-term debt:
At fixed interest rates with due dates from June 2022 to December 2027 912,400 784,006
At floating interest rates with due dates from March 2022 to June 2023 321,684 332,027
Total long-term debt 1,234,084 1,116,033
Total long-term borrowings and debt 1,532,777 1,593,043
Less: Prepaid commissions (5,430 ) (7,707 )
Total long-term borrowings and debt, net 1,527,347 1,585,336
Range of fixed interest rates on borrowings and debt in U.S. dollars 0.8% to 2.38% 2.04% to 3.05%
Range of floating interest rates on borrowings and debt in U.S. dollars 1.17% to 1.78% 1.16% to 1.85%
Range of fixed interest rates on borrowings in Mexican pesos 6.50% to 9.09% 6.77% to 9.09%
Range of floating interest rates on borrowings and debt in Mexican pesos 5.14% to 5.92% 4.87% to 5.74%
Range of fixed interest rates on debt in Japanese yens 0.40% to 0.95% 0.52%
Range of fixed interest rates on debt in Euros 0.23% to 3.75% 0.9% to 3.75%
Range of fixed interest rates on debt in Australian dollars 1.41% 0.00%
Range of fixed interest rates on debt in Sterling pounds 1.50% 0.00%

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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):

September 30,
2021		 December 31,
2020
Currency
US dollar 780,024 910,296
Mexican peso 494,088 509,687
Euro 124,062 101,469
Japanese yen 111,547 71,591
Australian dollar 18,070 -
Sterling pounds 4,986 -
Total 1,532,777 1,593,043

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

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

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

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

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

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

Notes to the 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:

September 30,
2021 		December 31,
2020
Due within 1 year 2,098 2,058
After 1 year but within 5 years 10,636 10,641
After 5 years but within 10 years 9,782 11,354
Total undiscounted lease liabilities 22,516 24,053
Short-term 1,326 1,244
Long-term 16,557 17,555
Lease liabilities included in the consolidated statement of financial position 17,883 18,799

Amounts recognized in the statement of cash flows:

September 30,
2021 		December 31,
2020
Payments of lease liabilities 916 1,114

Amounts recognized in profit or loss:

Three months ended September 30,
2021 2020
Interest on lease liabilities (201 ) (214 )
Income from sub-leasing right-of-use assets 52 66
Nine months ended September 30,
2021 2020
Interest on lease liabilities (614 ) (651 )
Income from sub-leasing right-of-use assets 185 188
15. Other liabilities

Following is a summary of other liabilities:

September 30, December 31,
2021 2020
Accruals and other accumulated expenses 8,745 9,213
Accounts payable 2,658 6,307
Others 2,630 3,194
14,033 18,714

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

Notes to the 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 September 30
2021 2020
(Thousands of U.S. dollars)
Profit for the period 15,731 15,444
(U.S. dollars)
Basic earnings per share 0.41 0.39
Diluted earnings per share 0.41 0.39
(Thousands of shares)
Weighted average of common shares outstanding applicable to basic EPS 38,789 39,672
Effect of diluted securities:
Stock options and restricted stock units plan - -
Adjusted weighted average of common shares outstanding applicable to diluted EPS 38,789 39,672
Nine months ended September 30
2021 2020
(Thousands of U.S. dollars)
Profit for the period 42,631 47,852
(U.S. dollars)
Basic earnings per share 1.08 1.21
Diluted earnings per share 1.08 1.21
(Thousands of shares)
Weighted average of common shares outstanding applicable to basic EPS 39,377 39,645
Effect of diluted securities:
Stock options and restricted stock units plan - -
Adjusted weighted average of common shares outstanding applicable to diluted EPS 39,377 39,645

56

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 September 30, 2021
Syndications Documentary and standby
letters of credit 		Other Commissions,
net 		Total
Openning and confirmation - 2,674 555 3,229
Negotiation and acceptance - 8 - 8
Amendment - 364 - 364
Structuring 1,327 - - 1,327
Other - 4 (180 ) (176 )
1,327 3,050 375 4,752
Nine months ended September 30, 2021
Syndications Documentary and standby
letters of credit 		Other Commissions,
net 		Total
Openning and confirmation - 7,931 1,754 9,685
Negotiation and acceptance - 37 - 37
Amendment - 990 (16 ) 974
Structuring 1,828 - - 1,828
Other - 35 (496 ) (461 )
1,828 8,993 1,242 12,063
Three months ended September 30, 2020
Syndications Documentary and standby
letters of credit 		Other Commissions,
net 		Total
Openning and confirmation - 2,134 413 2,547
Negotiation and acceptance - 11 - 11
Amendment - 136 - 136
Structuring 63 - - 63
Other - 3 (149 ) (146 )
63 2,284 264 2,611
Nine months ended September 30, 2020
Syndications Documentary and standby
letters of credit 		Other Commissions,
net 		Total
Openning and confirmation - 5,919 933 6,852
Negotiation and acceptance - 174 - 174
Amendment - 406 - 406
Structuring 514 - - 514
Other - 36 (358 ) (322 )
514 6,535 575 7,624

57

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)

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

September 30,
2021
Up to 1 year 2,279
From 1 to 2 years 267
2,546
18. Business segment information

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

Three months ended September 30, 2021
Commercial Treasury Total
Interest income 31,916 2,854 34,770
Interest expense (161 ) (12,530 ) (12,691 )
Inter-segment net interest income (10,469 ) 10,469 -
Net interest income 21,286 793 22,079
Other income (expense), net 4,939 (188 ) 4,751
Total income 26,225 605 26,830
Reversal of (provision for) credit losses 115 (886 ) (771 )
Operating expenses (7,874 ) (2,454 ) (10,328 )
Segment profit (loss) 18,466 (2,735 ) 15,731
Nine months ended September 30, 2021
Commercial Treasury Total
Interest income 94,819 7,033 101,852
Interest expense (492 ) (39,388 ) (39,880 )
Inter-segment net interest income (33,830 ) 33,830 -
Net interest income 60,497 1,475 61,972
Other income (expense), net 12,676 (267 ) 12,409
Total income 73,173 1,208 74,381
(Provision for) reversal of credit losses (890 ) (1,265 ) (2,155 )
Operating expenses (22,902 ) (6,693 ) (29,595 )
Segment profit (loss) 49,381 (6,750 ) 42,631
Segment assets 5,524,936 1,446,516 6,971,452
Segment liabilities 257,504 5,692,819 5,950,323

58

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 September 30, 2020
Commercial Treasury Total
Interest income 37,886 1,808 39,694
Interest expense (172 ) (16,914 ) (17,086 )
Inter-segment net interest income (16,513 ) 16,513 -
Net interest income 21,201 1,407 22,608
Other income (expense), net 2,929 (348 ) 2,581
Total income 24,130 1,059 25,189
(Provision for) reversal of credit losses (1,430 ) (113 ) (1,543 )
Gain (loss) on non-financial assets, net 140 - 140
Operating expenses (6,507 ) (1,835 ) (8,342 )
Segment profit (loss) 16,333 (889 ) 15,444
Nine months ended September 30, 2020
Commercial Treasury Total
Interest income 136,690 6,500 143,190
Interest expense (521 ) (72,538 ) (73,059 )
Inter-segment net interest income (69,282 ) 69,282 -
Net interest income 66,887 3,244 70,131
Other income (expense), net 5,488 (1,770 ) 3,718
Total income 72,375 1,474 73,849
Reversal of (provision for) credit losses 1,356 (203 ) 1,153
Operating expenses (20,111 ) (7,039 ) (27,150 )
Segment profit (loss) 53,620 (5,768 ) 47,852
Segment assets 4,657,429 1,647,046 6,304,475
Segment liabilities 106,921 5,163,939 5,270,860

59

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
September 30
2021 2020
Profit for the period 15,731 15,444
Nine months ended
September 30
2021 2020
Profit for the period 42,631 47,852
Assets:
Assets from reportable segments 6,971,452 6,304,475
Other assets - unallocated 5,628 6,719
Total assets 6,977,080 6,311,194
Liabilities:
Liabilities from reportable segments 5,950,323 5,270,860
Other liabilities - unallocated 14,033 14,627
Total liabilities 5,964,356 5,285,487
19. Related party transactions

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

September 30, December 31,
2021 2020
Assets
Demand deposits 1,343 3,269
Loans, net - 22,499
Total asset 1,343 25,768
Liabilities
Time deposits 220,000 240,000
Total liabilities 220,000 240,000
Contingencies
Stand-by letters of credit 9,080 28,300
Loss allowance (46 ) (60 )
Total contingencies 9,034 28,240

60

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)

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

Three months ended September 30
2021 2020
Interest income
Loans - 239
Interest expense
Deposits (398 ) (819 )
Net interest income (expenses) (398 ) (580 )
Other income (expense)
Fees and commissions, net 67 115
Net income from related parties (331 ) (465 )
Nine months ended September 30
2021 2020
Interest income
Loans 161 1,010
Interest expense
Deposits (1,658 ) (2,129 )
Net interest income (expenses) (1,497 ) (1,119 )
Other income (expense)
Fees and commissions, net 185 299
Net income from related parties (1,312 ) (820 )

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

Three months ended September 30
2021 2020
Expenses:
Compensation costs to directors 466 450
Compensation costs to executives 931 620
Nine months ended September 30
2021 2020
Expenses:
Compensation costs to directors 1,173 1,249
Compensation costs to executives 3,220 4,811

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

61

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)

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 September 30, 2021 and December 31, 2020 the minimum LCR to be reported to the SBP was 65% for both periods. The Bank´s LCR as of September 30, 2021 and December 31, 2020 was 202% and 249%, respectively.

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

Capital adequacy

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

September 30,

2021

 December 31,
2020
Capital funds 1,034,873 1,048,182
Risk-weighted assets 6,106,811 5,187,054
Capital adequacy index 16.95% 20.21%

Leverage ratio

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

September 30,

2021

December 31,

2020

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

62

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)

Specific provisions

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

September 30, 2021
Normal Special Mention Substandard Doubtful Unrecoverable Total
Loans at amortized cost
Corporations 2,789,655 68,806 10,593 - - 2,869,054
Financial Institutions:
Private 1,962,252 - - - - 1,962,252
State-owned 431,571 - - - - 431,571
2,393,823 - - - - 2,393,823
Sovereign 29,513 - - - - 29,513
5,212,991 68,806 10,593 - - 5,292,390
Allowance for loan losses IFRS (*): 22,978 13,362 5,125 - - 41,465
Loans at FVTPL
Financial Institutions:
Private 5,223 - - - - 5,223
Total loans 5,218,214 68,806 10,593 - - 5,297,613
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 September 30, 2021, and December 31, 2020, there are no restructured loans.

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

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

Notes to the unaudited condensed consolidated interim financial statements

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

21. Applicable laws and regulations (continued)

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

September 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
September 30, December 31,
2021 2020
Non-accruing loans:
Private corporations 10,593 10,593
Total non-accruing loans 10,593 10,593
Interest that would be reversed if the loans had been classified as non-accruing loans 536 351
Income from collected interest on non-accruing loans - -

64

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

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

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

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.

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

Notes to the unaudited condensed consolidated interim financial statements

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

21. Applicable laws and regulations (continued)

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

The provision and reserve are detailed as follows:

September 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 third quarter of 2021. The cash dividend was approved by the Board of Directors on October 27, 2021 and it was payable on November 23, 2021 to the Bank's stockholders as of November 9, 2021 record date.

66

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BLADEX - Banco Latinoamericano de Comercio Exterior SA published this content on 02 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2021 10:08:15 UTC.