Bladex's Q2 performance fails to impress analysts

Latin American foreign trade bank Bladex reported net income of US$22.3mn in 2Q16, which represents a drop of 5% from the previous quarter and a 65% increase from the same quarter of 2015.

The bottom-line result came in below the expectations of Deutsche Bank and JPMorgan, which had forecast higher net income of 29% and 5.3%, respectively.

Both investment banks pointed to a spike in loan loss provisions as the main reason for Bladex's disappointing quarter.

Second quarter provisions jumped to US$11.5mn from US$1.2mn in the first quarter as the non-performing loan (NPL) ratio climbed to 1.3% from 0.4% in the same comparison.

"This reflected adjustments for expected credit losses of exposures undergoing restructuring, and one specific case undergoing recovery efforts, likely related to operations in Brazil," said Deutsche Bank in a research note.

JPMorgan pointed out in its research note that the second quarter NPL ratio had reached the highest level since 2Q10.

Bladex's net interest income fell 3% quarter-on-quarter and increased 10% year-on-year, while fee income jumped 87% q-o-q and 43% y-o-y.

Return on average equity dropped to 9.1% from 9.6% in the previous quarter, but was 3.3 percentage points higher than in 2Q15.