Banco Latinoamericano de Comercio Exterior, S. A.
Q3 2015 Earnings Call Transcript

Published: 15 Oct 2015

[Operator:]

Hello, everyone, and welcome to Bladex’s Third Quarter 2015 Conference Call. On today, the 15th of October 2015. This call is being recorded and is for investors and analysts only. If you are a member of the media, you are invited to listen only. Bladex has prepared a PowerPoint presentation to accompany their discussion. It is available through the webcast and on the bank’s corporate website, at www.bladex.com. Joining us today are Mr. Rubens Amaral, Chief Executive Officer of Bladex; and Mr. Christopher Schech, Chief Financial Officer. Their comments will be based on the earnings release, which was issued yesterday. A copy of the long version is available on the corporate website. Any comments made by the Executive Officers today may be include forward-looking statements. These are defined by the Private Securities Litigation Reform Act of 1995. They are based on information and data that is currently available. However, the actual performance may differ due to various factors, which are cited in the Safe Harbor statement in the press release. And with that, it is my pleasure to turn the call over to Mr. Rubens Amaral for his presentation. Sir, please begin.

[Rubens Amaral:]

Thank you, Kenny. Good morning, everyone, and thanks for joining us today for our third quarter 2015 earnings call. Our performance this quarter demonstrates the quality of our earnings and our commitment to position the Bank to do well in a more challenging economic environment without compromise the credit quality of our portfolio. In my comments today, I will touch on a number of important elements to explain how we achieved these results. I’ll start with the highlights of the third quarter results, and then I will share our views on credit demand, fee income, how we are in terms of credit quality, the objectives we have set for the fourth quarter, outlook for Latin America and how it impacts our business, review on Brazil, and a final comment on liquidity management. So let me start with the highlights of our financial results in Q3. Average balances increased by almost $100 million. Margin on loans increased by 9 basis points, as a result of pricing discipline for more medium-term transactions. Total fee income increased by 121%, first of all, our contingency and syndication businesses performed very well this quarter. The return on equity reached 13.9%. The efficiency ratio improved to 26%. We have added 22 new clients to our client base, which led us to have increased the net income of 66% quarter-on-quarter, 26% year-on-year, a quite successful performance overall. Let me move onto credit demand. It is important to emphasize that we continue to see demand in the markets we service. The total credit disbursements for the quarter amounted to $3.3 billion. Although the majority of disbursements was related to transaction move up to one year, the medium-term portfolio continues to grow. This quarter alone medium-term disbursements to our traditional clients reached $513 million, which as a consequence contributed directly through increasing margins in the quarter. On the other hand, it’s important to stress that we are not aiming at reducing the size of our portfolio in Q3. But the divisions we had lower end of the period balances this quarter were; first because of prepayments of several transactions; and second quite a few clients requesting to defer the disbursement of some transactions to early in the fourth quarter. As far as fee income is concerned, we have mentioned previously that we had a solid pipeline in our syndication business. During the quarter, we secured six important mandates of which four transactions have been already executed in Q3 and the two remaining are being executed as we speak. These four transactions were done with clients from Peru, Honduras, and Ecuador. In terms of distribution of these deals is important to highlight that we have worked with the important international, regional and local banks as well, thus contributing to consolidate our franchise in this important line of business and not less important securing a stable and sustainable level of fee income. As far as credit quality is concerned, it remains healthy. We saw no increase in non-performing loans and the increasing provisions was the result of adjusting the level of a specific reserved to reflect the terms of restructured credits, which were already non-accrual status in previous quarters. Although we remain comfortable with the overall credit quality of our book of business, we are monitoring constantly our credit exposures, mainly in the sectors and countries that have been more negatively impacted in light of headline risks and the headwinds from the global and regional environments. Then looking forward, the objective for Q4 remains the same as for Q3, increased average balances and margins give the momentum of the syndication activities to further increase fee income, while expanding the client base. As far as 2015 is concerned, we now expect portfolio growth at a level 4% for the year, taking into consideration the sluggish economic growth and the headwinds the region distressing. With that, let me talk about the outlook for Latin America, it indeed remains challenging, and GDP growth forecasts for 2015 and 2016 have been revised down across the region. As you know, this sluggish economic performance may impact negatively the decision of companies to invest and grow. On the other hand, we have seen a wave of the valuations of currencies, which impacted decision of companies about whether or not to increase their indebtedness in U.S. dollars. Not less important was the reduction in commodity prices, including oil prices, which reduced the need for financing of several of our clients. On the other hand, the U.S. economy continues to improve and several countries in our region are benefiting from that, primarily Central America and Mexico naturally. The favorable trend impacts in positive related to demand for credit in those countries, where Bladex is well positioned to capture new opportunities. I will do another as vibrant as in the past, trade flows will increase in 2015 and 2016, which in itself is another important source for financing U.S. dollars and again this reality plays to our strengths as we specialize in financing trade. We are also seeing some activity in the M&A arena in Central America and some of our clients are looking to secure medium to long-term funds to provide them with a better liquidity, and working capital management. This is another example of a positive impact in the demand for credit in U.S. dollars, which for Bladex have significant positive impact, as, first, it helps to grow our portfolio, and second, it’s an important opportunity to continue to expand the syndication spot form and then the sustainable fee income levels. Therefore, although, as you can see our business is being impacted by the current situation in the region in several ways, the Bank continues to be well positioned to capture the growth opportunities across the different markets with service as has being historically the case for this organization. Okay. Now, let’s talk about the situation in Brazil. Everybody is concerned about Brazil. We just heard that, Fitch downgraded Brazil to BBB minus, still to being investment grade rating, but again and almost downgraded. My first comment would be that the recent downgrade by Standard & Poor’s now by Fitch was not a surprise for us, as we have already anticipated and adjusted our internal rating last quarter. The unfortunate deterioration of the economic environment in Brazil is something we have been monitoring since last year. Those are decision to focus on trade, short-term and companies with competitive advantages when doing new transactions in that specific country. But we are saying that our concern is with a protracted recession associated with headwinds from the global environment in the foreseeable future. Nevertheless as far as our portfolio is concerned, let me point out that Bladex has no exposure to the construction companies associated with the corruption scam in Brazil, the so-called Car Wash scandal. And the total exposure to Brazil is now down to 25%, and the majority of our credits are short-term, so much, so the duration of our portfolio it is only 13 months in that country and most of our exposure is trade related. The non-exposure to Brazil just to give you more color, quarter-over-quarter dropped by 10%, which amounted to almost $200 million. If we look at the accumulated credit disbursements for the first nine months of 2015, the reduction when compared to similar period last year was even more pronounced 22% amounting to $500 million. These figures demonstrate clearly that, first, we’re managing proactively our exposure to Brazil; and second, we’re being able to collect, which just in the firms inherent quality of our credits in the country. For more information we have added a slide in our earnings presentation with updated information about our exposure to Brazil. So let me move onto liquidity management. We maintained high levels of liquidity and continue to diversify and strengthen our funding base. Deposit levels remained stable at high levels over $3 billion, and we continue to have very good access to liquidity through a variety of channels rather replacements, banking lines, syndicated fund transactions, which provide us with medium-term funds and which we’ll probably have read about in some of our recent press releases. Lastly, I’m pleased to inform that our Board of Directors have declared a dividend of $0.385 of a dollar for the third quarter 2015. Confirming once again the positive view of the results of the Bank and the prospects for its stable earnings generation moving forward. This represents a dividend yield of over 6% as the current price level, which makes it very attractive indeed. With that, I will now turn it over to Christopher to guide you through our presentation. Thank you very much. Christopher, please?

[Christopher Schech:]

Thank you, Rubens. Hello, and good morning, everyone. Thank you for joining us on the call today. In discussing our third quarter results, I will focus as usual on the main aspects that have impacted our results, and I’ll make reference to the earnings call presentation that we have uploaded through our website together with the earnings release and which is being webcast as we speak. So before we go into more detail, let’s start at recap on pages 3 and 4 with a click one down of the key financial highlights and drivers that shape this quarter. So the third quarter 2015 closed with net income to Bladex shareholders of $33.6 million, compared to $20.2 million in the previous quarter, and $26.6 million in the third quarter of 2014. In order to accurately present performance in our recurring business activities, we focus on business net income, which is recurring net income derived from our principal business activities, our financial intermediation, which generate net interest, commission, and fee income and also other income. We also referred to it as core income or income for core activities. Consolidated business net income reached $29.2 million in the third quarter, up 30%, compared to the second quarter, mainly as commission income caught up with expectations, as structuring deals were finalized in the quarter, the other with increased net interest income driven mostly from higher lending margins. Business net income was up 12% from $26.0 million in the third part of 2014, mainly due to increased net interest income from higher average commercial portfolio balances. The quarterly net interest margin was 4 basis points higher than previous quarter levels, as lending margins improved or trailed to level seen in the third quarter of a year ago, mainly on account of higher average liquidity balances. The quarterly net interest spread, sort of similarly quarterly pattern year-to-date both net interest margin and net interest spread are trailing prior year levels by 3 basis points at 182 basis points and a 166 basis points respectively, due to higher average liquidity balances and lower lending margins. While origination momentum continues robust ending period balances declined quarter-on-quarter at the end of the third quarter on account of clients, decisions to deferred disbursement for the fourth quarter, as already Rubens alluded to. We continue to strengthen reserves moderately. Taking into consideration current market conditions which focus on our loan portfolio. The reduction of end-of-period contingency balances and changes in their exposure profile help mitigate the provision impact on overall reserves. With improved operating results in the third quarter -- business return on assets and return on equity, metrics increased quarter-on-quarter and year-on-year. The business efficiency ratio was 28% in the third quarter 2015, improved by 5 points versus the previous quarter, and also improved 2 points versus the third quarter of the year ago. The Tier 1 Basel III ratio stood at 15.2% at the end of the third quarter 2015, down from 16.1% in the previous quarter, which is throughout the Basel I levels, which we continue to report temporarily for the sake of period comparison purposes. The drop in Basel III versus Basel I capital ratio, metrics is attributable to more risk sensitive waiting impacting assets on the Basel III guidelines, which is consistent with what we’re reflecting in our provision and reserve levels. And last but not least, for the announcement that came out the day before yesterday, the Board of Directors declared a dividend payment for the third quarter of $0.358 a share, which continues to add an attractive dividend yield component to our total shareholder value proposition. So let’s look into the numbers in a bit more detail. Moving to the next Slide page 5, shows the evolution of net income for the nine months 2015 compared to the same period of 2014. Year-on-year total net income nine months 2015 was up some 17% compared to the same period of a year ago. Net interest income was the main driver for that on higher average portfolio balances. The increase in commission income this year lagged behind the prior year period and non-core income mainly from the participation and investment funds continues ahead of last year’s level. Moving to the quarter-on-quarter comparison on Page 6, we see net interest income rising compared to the second quarter 2015, on account of higher lending yields, which increased 10 basis points together with slightly lower cost of funds minus 1 basis point, and a 1% increase in average lending balances. Fees and other income increased significantly versus the second quarter 2015, as for mandates were closed in our letters of credit and contingency business also showed more activity. Provisions increased at a slower pace compared to the prior quarter and expenses were nearly flat. Non-core income which comes from the participation and investment funds sunk back to a sizeable gain this quarter. On Page 7, we take another look at net interest income and margin. Year-on-year, interest income was up mainly on weighted average portfolio balances, and while margins fell by 3 basis points. The quarterly variance in net interest margin represents the turnaround as lending rates increased in an environment of higher headline risk in the region. The average original tenure of our disbursements increased slightly and that also contributed to the quarterly rise in our lending margins. On the funding side, we benefited from our counterparties preference for high quality names on the one hand, and the increase of average deposit balances on the other. The combination of which allowed us to increase medium-term funding without adding overall – to overall funding cost. On Page 8 we show average portfolio balances grow in segmentation. Year-on-year, both Corporate Client segments and Financial Institution segments grew moderately. Same story quarter-on-quarter where portfolio average has picked up 1%. Ending balances declined at the end of the quarter from a few prepayment in disbursements that client deferred to the fourth quarter. The fundamental portfolio characteristics, with trade finance focus and short-term nature remained intact, and we believe these characteristics are very relevant and beneficial to Bladex in these times of greater uncertainty. On Page 9, represent breakdowns of our commercial portfolio balances by country on the left, and by industry sector on the right. Among the more significant changes versus the previous quarter was the trending of our Brazil exposures. Just as Rubens already mentioned, from now 25% of the portfolio, while in Mexico we have dropped some business that we thought was not well-priced at this point. Instead, we grow in Central America, especially Panama, also in some other places. Sector wise, we decreased our exposure to oil and gas, and increased exposure to banks, while all other sectors had only minor changes. On Page 10, we provided an update on our Brazil exposures, including sector exposures. Lending to top tier banks and producers of soft commodities represent the largest sector exposures. The pronounced buying is towards trade finance in the short dated composition of our book of business remain in place. Let’s move onto Page 11, where we show the evolution of credit quality and reserve parameters. While non-accruing loans remained stable quarter-on-quarter, we did increase specific reserves with impact in the provision line to reflect the current status of restructuring negotiations, which are still ongoing. Although our generic reserves to both funded and unfunded portfolio balances remained stable, despite lower end-of-period portfolio balances to the shift in portfolio exposures between funded loans and unfunded contingency business, and its lean country sector and client exposures also contributing to a high reserve coverage ratio for longer original tenants of our new disbursements. On Page 12, we show our fee income evolution. This quarter we were able to bring four mandates over the long weighted finish line, and that provided the expected jump in fee income, so we are very pleased with that. And as, Rubens, mentioned in his remarks, we expect further closings in the fourth quarter and early next year subject of course to the requirements of our clients. On the letters of credit side, we continue to make progress generating increased fees and commission income throughout the ebbs and flows of its very short-dated line of business. Moving onto Page 13, a quick recap of operating expenses and efficiency levels. Expense levels were stable to slightly declining versus the comparison periods. The business efficiency ratio, which excludes the non-core income from the participation and investment funds and the overall efficiency ratio, both showed improvement, as a result of higher revenues, which is why we expect further efficiency improvements to come from. On Page 14, we highlight return on average equity and capitalization trends. Return on average equity continues to be on track. Capitalization levels remain strong with a Tier 1 Basel III ratio dropping to 15.2%, reflecting higher risk weighted assets and mirroring the effect on reserves of shift in – coming from shifts in portfolio exposures. And finally, on Page 15, we highlight our focus on total shareholder return. The Board of Directors continued its consistent approach and evaluating the Bank’s core performance strengths, and again that cleared a quarterly dividend payment of $0.385 a share. And with that, I’d like to hand it back to Rubens for the Q&A session. Thank you.

[Rubens Amaral:]

Thank you, Christopher. Ladies and gentlemen, we’re ready for the Q&A session. Kenny, please?

[Operator:]

Yes, sir. At this time we’ll open the floor for questions. [Operator Instructions]. Our first question will come from Jeremy Hellman from Singular Research.

[Jeremy Hellman:]

Hi. Good morning, guys.

[Rubens Amaral:]

Good morning, Jeremy. How are you?

[Jeremy Hellman:]

I’m good. I wanted to dig into the syndication pipeline a little bit, couple of questions there. First off, congrats on the number and I’m curious, is that figure in line with what where you expect it to be as of our call a quarter ago? And then secondly, just looking at that Slide 12, of your joint lead arrange on three of the transactions noted, were those the other joint arrangers local regional banks or they multinational type banks?

[Rubens Amaral:]

Okay, thank you, Jeremy, for the question. The pipeline of syndications, as I alluded in my initial comments remains solid, as we’re seeing several opportunities coming from our clients, mostly in the liquidity and working capital management needs that they have. We have been working in the pipeline, there was – when we mentioned in the second quarter there was about 9 to 10 transactions. We secured six mandates. And as I said four have been executed to in execution, one of them is already executed, another one is in the process. And we have some good disposition from the clients where we need the pipeline to have at least to perform more in this quarter. Of course, that will always be dependent on the clients and students to make. But the information that we have so far and what we’re seeing leads us to be very confident about another good performance for the fourth quarter. As far as distribution goes, I think that’s one of the points I tried to highlight in my comments as well. It is quite remarkable that we are working with both local banks, regional banks, and international banks. If you see the four transactions, we will see that the transaction in Peru, we did with an international bank well known in the marketplace, that was Banco Santander, another transaction grew will be the Chinese bank, that was ICBC. In transaction in Honduras, we did with a SMO, a regional multilateral bank from the Netherlands and the transaction in Ecuador, we did with several local banks. So it provides you a good flavor about how important is the network of distribution we have with different players in the marketplace.

[Jeremy Hellman:]

Okay. Thanks, that’s some great granularity there. And then just one follow-up. Just looking at – you mentioned two to four more deals this quarter, and even kind of looking over the horizon that 2016, our deal sizes likely to be consistent with those that you closed in Q3, kind of that 25, 40, 60, 102. I know in the past the target market, I had in my head was kind of 50 to 250, so I’m wondering, if you see any potentiality start moving up into the nine figure deal space?

[Rubens Amaral:]

That one of the interesting things about this business for Bladex is that, our Swiss thought is different from the big banks. So we are in the range of deals that vary from $50 million to $200 million. So although we have in our pipelines of few deals, there are very close to $100 million, $150 million. You will continue to see deal sizes around this figure. I would say around $ 80 million – $70 million to $80 million, that is where we see majority of this deal is coming, but you are going to see one or two or three deals that go over the three digits figure. And we are well positioned that there is one important deal that is going on right now and the deal altogether, it’s close to $300 million and few other deals that are smaller. There is one of, if I’m not mistaken $15 million to $30 million, and one that we just closed was $100 million. And so I would say that, you can expect few transactions, there are over $100 million, but we’re going to be around this deal size of $80 million to $100 million in the majority of the deals.

[Jeremy Hellman:]

Great. All right. Well, I appreciate that and best wishes for the balance of the year.

[Rubens Amaral:]

Thank you.

[Operator:]

Thank you. Next question we have it from Claudia Velicia from BT Volaris. Claudia, your line is now open.

[Claudia Velicia:]

Well, thanks for taking the call, the question. Could you guys comment on the off balance sheet provision changes over the last quarter, please? [Multiple Speakers]

[Christopher Schech:]

Okay. I’ll take that question. Thanks very much for the question. Well, provision changes are a function of – of course, our reserve methodology, which as you know is, focus is both on funded transaction, meaning the loan portfolio and also the unfunded transactions, which is our contingency letters of credit business. We view both exposures basically in the same fashion, in terms of risk exposure. And so, we apply the reserve methodology equally to both funded and unfunded transaction. Of course, the unfunded transactions are a little bit more volatile, letters of credits are used in sparingly in the majority of the countries that we operate in and, of course, are more widely used in countries that represent somewhat higher risk. And so, we have quite a bit of volatility in that in the contingency business in terms of balances, and also in terms of reserve requirements, given the fact that depending on the countries that we issued, that we confront on those LCs. And so, our own approach generally is to balance out these – the higher degrees of volatility on the unfunded side. And so if you look at our portfolios, you see quite a bit of provision increase on the funded side, which had a lesser degree of decline in balances, and also represented a greater shift in terms of our country and client exposures. We talked about reducing our exposures in Brazil, but that business in Brazil is mainly trade, so it has good risk quality, that is taken into consideration by our risk methodology, the reserve methodology. And so I’ll be compensated for that the declining balances in places like Central America, which inherently have a lower country risk rating than other places, although the decrease balances, such as Mexico and Brazil and Chile. And so as a reflection of that our funded portfolio did require more reserves and our unfunded portfolio required less reserves. The balance of it really enhanced that generic reserves levels but non-specific reserves remained stable over the course of the quarter. And the only increase actually in absolute reserve levels came from allocating more provisions through these non-recurring balances that we have the $20 million that we have in non-recurring and where we are reflecting the current status of restructuring negotiations. I don’t know if this gives you enough color.

[Claudia Velicia:]

Yes. That sounds pretty good. And another question about -- regarding the hedge fund, I know that you guys plan to wrapping it up in the near future, but just to have an idea of how that might impact earnings in the next couple of quarters. Like what is the hedge fund actually invested in, what’s the strategy, because the returns have been quite volatile one quarter up, one quarter down, I mean four, four is quite a lot. I don’t know if you could give some more insight into that, please?

[Rubens Amaral:]

Well let me tell you that first of all that we remain committed to exit the investment in the fund and by April 2016 as we have announced since we decided to sell the asset management company. We continue to redeem over the course of the year. So our exposure is being reduced gradually as the fund provides us with returns. The fund -- it is primarily invested in strategies in Latin America but they have some strategies also to hedge elsewhere, but the primary objective is macro strategy in Latin America. We are passive investors as of now. So, for us -- we were just hoping that the fund continues to perform well. But as I said and that’s the very reason we decided to exit this activity. This is very volatile and we can have a very good quarter as this quarter was and another quarter that might be not as good, but so far, what we have seen is that the fund continues to have a good performance in this initial weeks of the months. But this is very difficult for us to predict. For me what matters and it’s what we are demonstrating to you is the core that’s strong, resilient, and we are well positioned, really to continue to deliver stable 12% ROE, that’s our target for this business.

[Claudia Velicia:]

Could you comment please on the attributions of why the fund was up so much this past quarter, just to have an idea of like what -- where within the macro strategies of Latin America they might find themselves?

[Rubens Amaral:]

Well, the devaluation of the currencies of course play an important role. But I would prefer not to be commenting on the results of the fund other than say that it was a good quarter. They have demonstrated what they did in the past. If you remember, and follow Bladex well, you remember that in the small volatile times this fund always performed well, and had a stellar performance. So I think it is basically what they have being doing all along and that’s what we had in this quarter. But you can see that the volatility that we have experienced in Latin America, thus they have benefited quite a bit and got a very interesting return for us.

[Claudia Velicia:]

Sounds good. Thanks for the responses.

[Rubens Amaral:]

Thank you very much.

[Operator:]

Thank you [Operator Instructions] Our next question comes from Ryan [indiscernible]. it seems like he has taken himself out of queue. [Operator Instructions] Our next question Jordan Hymowitz from Philadelphia Financial.

[Jordan Hymowitz:]

Hey, guys, congrats on a good quarter. Well, I have two questions. One, what do you think is the expected level of fee income on a – next year on a quarterly basis or an annual basis, forgetting by quarter that is somewhat lumpy, is there a range syndication fee income specifically?

[Rubens Amaral:]

Well, Jordan, nice to talk to you again. We are in the process of preparing our budget for 2016. What we have seen so far indicates that we – it’s going to be a very challenging year. As you have seen this year, the reduction in syndicated loan facilities was very important overall in the markets. But we positioned ourselves very well to be at level similar to last year, which for us is quite an achievement. This is an important source of diversification of income to us, and we continue to do. So I’ll be able to give you more color about this, when we meet next time for the fourth quarter conference call.

[Jordan Hymowitz:]

Okay. Next question is loan growth fell and partially, because you cut that exposure to Brazil. As the banks in Brazil itself are now shrinking on a real basis after inflation, do you think your Brazil loan book will grow next year in particular or said another way will growth in the portfolio if it occurs next be a result of diversification?

[Rubens Amaral:]

Well, thank you for the question. I think you saw in our presentation that we have provided you with information about our exposure in Brazil and how it evolved on the course of the last 10 years. We did see an important diversification that we have applied and we continue to do so in terms of our portfolio. We’re very cognizant of the challenges we have in Brazil, but we’re also very cognizant of the futilities we have in Brazil that we will not let pass if they are within the guidelines that our risk area has defined for us to presume that specific country. So what we’re going to see is that, we’ll continue our efforts of diversification. There are markets where we can see more important growth, such as Mexico. Mexico, it’s an important market for us very, very competitive. But we expect to see more growth in that market, as Columbia really picks up, its investment infrastructure, we might see more opportunities in Colombia to grow our portfolio and then we’ll grow there. And as Chile also, although very competitive presents now with all the change we’re seeing because of this headwind market in Latin America is experiencing we’re seeing opportunities also to diversify into Chile, not less important Peru. So in these countries we are going to see Bladex making an effort to continue to grow in an important way. Central America or Honduras also presents very good opportunities, as this continue to improve its economic outlook. These countries will benefit from these and then we might have more opportunities there. So overall, we’re working, as I said to you on the previous question and our budget for 2016, it’s going to be another challenging year. Growth has been revised down, as we discussed already and we make very well. But we expect the growth to come from different countries and we’ll not let pass the good opportunities we might see in Brazil, because there are still very good opportunities there.

[Jordan Hymowitz:]

Okay. So final question, so said in another way, the growth next year in earnings, if there is growth will basically be from the fee income in the diversification side, most likely and not from the core banks?

[Rubens Amaral:]

Well, the growth next year will come from a different type of mix of our portfolio. And mostly that, I think it’s important to highlight, and thanks for asking this question is that margins have been adjusted up. So we expect also our net interest income to improve in the important way, because margins have been adjusted up and you saw that we really have been able to increase 9 basis points in the net interest margin, that means that our margins on loans increased quite a bit for us to achieve this amount in an increasing mean. And that’s going to be a reality. So next year you might expect that in terms of expenses we’ll remain very committed to efficiency. And in terms of fee income, we will continue to invest in this platform of our syndications, but we will benefit from the widening of margins in our traditional book of business. So it’s a combination of the tree and we feel very comfortable with what we saw in this very challenging Q3. There might be a proxy for what is coming next year in 2016.

[Jordan Hymowitz:]

Got it. Thank you.

[Rubens Amaral:]

Thank you, Jordan. Nice talking to you.

[Jordan Hymowitz:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] At this time, I’m showing no further question. If you have any closing remarks before you wrap up?

[Rubens Amaral:]

That’s all. Thank you, Kenny. I’d like to thank you all for stepping into call today. We’re very satisfied with our performance in Q3. And as we have told you all along, the Bank is well-positioned to capture good opportunities and good times and not so good times, and that’s exactly what we’re doing playing to our strengths. And we’re looking forward to meeting with you next year when we talk about the full-year performance of Bladex. So thank you very much for your time today and for your confidence in our company. Bye-bye.

[Operator:]

Thank you ladies and gentlemen. This concludes today’s conference. You may now disconnect.