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Tuesday, March 26 2019 @ 06:17 PM UTC

Bladex Banks on Panama's Thriving Economy

Money MattersBy Judy Alster for Right Side Advisors.com - Quick, name the hottest economy in Latin America. No. Sorry. Not Brazil. It's Panama — home of the world's second largest free-trade zone (after Hong Kong), with an overall economic growth rate just a touch under China's, and boasting 23 consecutive quarters of economic growth with a GDP that grew by 11% in 2007. U.S. retirees are moving there in statistically significant numbers and the Panamanian construction sector is growing wildly. All good news for Banco Latinoamericano de Exportaciones, or Bladex. We took a fast 8% profit in this stock in June in another 21st Century Investor portfolio. It fell some 50% by late October but now looks like it's basing. (more)

Bladex is a multinational bank that finances trade in Latin America; it's 25% owned by central banks and other financial institutions in Latin America and the Caribbean, who started Bladex to focus on cross-border trade finance; clients include commercial banks, state-owned entities and private corporations. It's probably the purest infrastructure investment in the region. Bladex has no "toxic debt" problems in its $5 billion credit portfolio. Its loans, albeit with narrower spreads than some other commercial lenders, are concentrated in high-growth investment grade countries. In addition to its own loans, Bladex also now manages funds for other institutions. Lately the bank has been investing its maturing loan proceeds in short-term assets to build vital liquidity.

The bank's third quarter was not bad, given the condition of the global economy. Net income was down 5.4% year over year; the commercial division’s net operating income was $16.7 million, up 55% over last year's quarter but not quite up enough to offset losses in asset management. Liquidity was very strong at $469 million, up $96 million or 26% from the previous quarter. Earnings per share came in at 38 cents, down three cents from last year but sufficient to pay the so-far-stable 22-cent quarterly dividend. Even with its careful management and fortunate home-base economy, Bladex is not a sure thing. But add its 6.8% yield at yesterday's $12.86 close and its very fair shot at price appreciation, and it's a solid research candidate for the risk-tolerant.

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