Fitch Affirms Bladex's Ratings; Outlook Stable

Fitch Ratings has affirmed Banco Latinoamericano de Comercio Exterior's (Bladex) ratings as follows:

--Foreign Currency Long-term Issuer Default Rating (IDR) at 'BBB';

--Foreign Currency Short-term IDR at 'F2';

--Individual rating at 'C';

--Support Rating at '5';

--Support Floor at 'NF'.

The Rating Outlook is Stable.

Bladex's ratings reflect the bank's expertise, competitive position, high asset quality, adequate reserves, sound risk management policies, strong capitalization, lean operational structure and ample liquidity. They also factor in the loan and funding concentration, narrow product offering, and relatively low returns.

Bladex may expect some support from its main shareholders (Central banks from Latin America) should it be required. However, given the dilution of ownership, support may be difficult to coordinate and cannot - in Fitch's opinion - be relied upon.

Upside potential for Bladex's ratings is dependent upon lower asset concentration, sustained performance through the cycle and improved profitability. Severe asset quality deterioration and/or profitability erosion could pressure ratings downwards.

Bladex's performance was disrupted by the shock waves of the global financial crisis as it was forced to reduce growth and collect its short-term loan portfolio to sustain and bolster liquidity. Operating revenues were driven by loan growth until third quarter 2008 (3Q'08) but in the aftermath of Lehman, a cautious credit approach, the cost of liquidity and the impact of global volatility on the investment portfolio, weakened the bottom line. The trend improved in 2009 as growth stabilized and costs remained under control. However, credit cost increased in anticipation of asset quality deterioration. Hence profitability declined to a return on average equity (ROAE) of about 9% and a return on average assets (ROAA) of 1.3% at June 2009.

Asset quality remains very good but some customers require remedial management to avoid deterioration. The investment portfolio is gradually recovering from the impact of global volatility. Loan loss reserve levels were improved but asset concentration remains high. Liquidity remains strong and of very good quality in spite of a rapid decline in deposits, which have now stabilized. Bladex has an ample capital cushion, capital ratios to risk weighted assets stood at 21% at June 2009.

Future revenue growth should be slow in the short run, due mainly to credit concerns, but steady. Lower volatility in global markets should lead to better investment performance. Costs should remain stable but credit costs will remain high for the rest of 2009, while asset quality is expected to decline moderately but remain adequately covered by existing reserves. Profitability could decline in the short run but should improve in 2010, while capital could decline as assets grow but should remain comfortably above 15%.

Bladex is a specialized supranational bank originally established by the Central Banks of Latin American and Caribbean countries to support trade finance in the region. Headquartered in Panama, it operates under a general banking license, offering trade services, finance, vendor financing, syndications/structured loans, leasing and factoring to regional public and private financial institutions and corporations. Through June 30, 2009, Bladex had disbursed credits of approximately US$160 billion.

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