Tuesday, August 4, 2009

Bladex Wakes Up With The Rest Of Them

There are four banks in the Low P/E Bin with significant exposure to Latin America. Two of them, Banco Bilbao Vizcaya Argentaria and Banco Santander, are headquartered in Spain and also have exposure to the Spanish economy. Those two banks are commercial rivals in Spain, with Santander having the bigger presence, and both stocks have taken off recently.

The third is headquartered in Columbia, and has operations largely in Latin America. Bancolumbia, though, also has some exposure to Spain and even has a presence in the United States. It's been up as well, although in a rise more jagged than either Bilbao's or Santander's.

The final bank has been in a tight trading range until today. Banco Latinoamericano de Comercio Exterior, or Bladex, had been hovering around $13 while its compadres above have been either racing or spurting up. Today, it shot up 6.45% to close at $13.70. Bladex used to be owned by the central banks of several Latin American and Caribbean countries, and its reason for being used to be trade facilitation. Now privatized, its a bank that almost solely lends to businesses, government-owned export organizations, and other banks. In keeping with its former life, most of its commercial loans go to exporters. It makes a likely candidate for an investor hoping to profit from growth in the Latin American region.

It certainly shares the risks of loss in the region. In 2002, when the Uruguayan bank crisis hit and the Argentinian currency crisis came to a head with convertibility suspension, Bladex lost $12.62 per share. Although it did recover in 2003, that year's earnings of $3.88 were the highest of all the subsequent years. 2008's EPS was $1.51, and 12-month trailing EPS is currently $1.58. The bank's 10-year return on equity, as calculated by dividing the sum of net incomes over 10 years by the sum of shareholder's equities over the same period, is only 6.99%. Thanks largely to the crisis-related gutting at the beginning of this decade, its 10-year average EPS is only 44 cents.

Bladex stock may be waking up because its 2nd quarter earnings portend better times for the bank in 2009, as indicated by its 12-month trailing being above its 2008 full-year results. My own hunch, though, tells me that it's leapt up because others with Latin American exposure are. Unlike the last recessionary episode, this one has not accompanied a real Latin American economic crisis or any definite sign of one.

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