2008 - BAC

Transcription

2008 - BAC

Indice
Index
Carta del Chairman y del Presidente
A Word from the Chairman and the President
Introducción
Introduction
..................2
......................................................................8
Descripción de la Compañía
Company Description .....................................................................14
Gobierno Corporativo y Ética
Corporate Governance and Ethics...............................................20
Estructura Legal y Regulación
Legal and Regulatory Structure.
Información Financiera Relevante
Relevant Financial Information
...........................................23
...............................................25
Productos y Segmentos de Negocios
Products and Business Segments ..............................................35
Administración de Riesgo
Risk Management
...........................................................39
Estados Financieros Consolidados
Consolidated Financial Statements
................................46
Informe Anual | Annual Report ‘08
--2i -
[
COMPARTIMOS EL VALOR
DE LA FLEXIBLIDAD
We have backing,
integrity and fairness
going far beyond duty.
WE SHARE THE VALUE
OF FLEXIBILITY
[
Respaldo, integridad y justicia
que trascienden más allá
de nuestros quehaceres.
Ernesto Castegnaro
Presidente y CEO
de BAC International Bank
President & CEO
BAC International Bank
Carlos Pellas
Presidente de la Junta Directiva
de BAC | Credomatic - GECF Inc.
Chairman of the Board of Directors
BAC | Credomatic - GECF Inc.
-1-
CARTA DEL CHAIRMAN Y DEL PRESIDENTE
A WORD FROM THE CHAIRMAN AND THE PRESIDENT
April 2009
Abril de 2009
A nuestros accionistas, clientes y amigos:
To our Shareholders, Customers and Friends,
Sin duda alguna, 2008 será recordado como el año de
los cambios más dramáticos que haya visto la industria
financiera mundial. En un período muy corto, el sistema
financiero mundial, el cual había venido creciendo de
manera muy vigorosa, se vio envuelto en una de las
más grandes crisis de confianza jamás vista.
The year 2008 will, without a doubt, be remembered
as the year of the most dramatic changes the global
financial industry has ever faced. In a very short period,
the global financial system – which had been growing
very vigorously – was immersed in one of the greatest
confidence crisis the world has ever seen.
Las pérdidas relacionadas con cartera e inversiones
financieras en el sector inmobiliario se extendieron
al resto de las actividades bancarias y aumentaron la
incertidumbre y la desconfianza en la estabilidad del
sistema. Esa desconfianza produjo una gran iliquidez
en los bancos, que se vieron obligados a registrar
más pérdidas aún, ya no solo por carteras malas,
sino también por la necesidad de valorar y vender
inversiones en un mercado claramente a la baja.
Como consecuencia lógica, se redujo drásticamente
la disponibilidad de crédito para financiar la actividad
económica y, con ello, vino la recesión.
Portfolio and financial investment losses in the real
estate sector spread to the rest of banking in general,
generating uncertainty and distrust in the system’s
stability. This distrust led to a major lack of liquidity in
the banks, which were forced to record even more losses,
this time not just because of bad portfolios but also
due to a need to assess and sell off investments in an
obviously bear market. Consequently, this was followed
by a drastic reduction in available credit to finance
economic activity, and with that, a recession.
La globalización, la interrelación y la interdependencia
de los mercados financieros mundiales provocaron
que una crisis originada en un país se extendiera como
la pólvora al resto del mundo. La incertidumbre y la
desconfianza en los mercados ocasionaron el desplome
de los índices de las bolsas de valores internacionales
y el aumento de las primas de los riesgos de crédito.
En medio de este proceso que todos quisiéramos que
terminara pronto para que no nos golpee tan fuerte
como en otras latitudes, nos complace informar
que nuevamente alcanzamos cifras récord en las
operaciones de BAC | Credomatic.
El año 2008 fue uno en que cambiamos de manera
significativa nuestras políticas.
En el escenario en que estábamos, era preciso cambiar
el rumbo para ser un Banco aún más conservador
-2-
Globalization and global financial market interrelations
and interdependence caused a crisis originating in one
country to spread like wildfire to the rest of the world.
Market uncertainty and distrust led to plummeting
indices on the international stock exchanges and rising
credit risk premiums.
In the midst of this situation – which all of us hope
will end soon so that we aren’t hit as hard as at other
latitudes – we are pleased to report that once again
BAC | Credomatic’s operations have reached record
highs.
2008 was a year in which we changed our policies
significantly.
In the scenario in which we found ourselves, we needed
a major change of direction to make our bank even
more conservative with respect to the quality of our
assets – greater liquidity with a better investment risk
profile, more capitalization, and more flexibility and
efficiency.
en cuanto a la calidad de sus activos; un banco
más líquido y con un mejor perfil de riesgo de sus
inversiones; un banco más capitalizado; y un banco
más flexible y eficiente.
Por eso, a principios de 2008 y previendo un futuro
más complicado, decidimos modificar nuestras
políticas de originación de créditos y de liquidez. En
consecuencia, nuestra cartera de préstamos, que en
el pasado crecía alrededor del 30%, aumentó apenas
un 11.3 % en ese año, y alcanzó la suma de US $5,204
millones al terminar el año.
A pesar de la crisis mundial y de la contracción de
las disponibilidades de crédito, nuestra liquidez
experimentó un aumento de un 31.5% y alcanzó la suma
de US $1,984 millones, el monto más alto de liquidez
de nuestra historia. Nuestros depositantes, nuestros
bancos corresponsales y nuestras operaciones en los
mercados internacionales apoyaron ese crecimiento
tan importante en nuestras inversiones.
Los activos totales del banco sumaron US $7,525
millones, después de haber crecido un 15.7% con
respecto al año anterior. El patrimonio del banco
aumentó en un 27%, hasta la suma de US $776
millones. Nuestro nivel de capitalización mejoró
considerablemente, al igual que nuestro indicador de
eficiencia.
Pese a la crisis internacional, nuestras políticas
conservadoras durante tantos años, y particularmente
durante el año 2008, nos permitieron alcanzar
utilidades de US $245 millones; cifra récord de
nuestra historia, con un valor de un 33.3% más que
el del año anterior. Nos causa gran satisfacción
informar sobre este incremento tan significativo en
nuestras utilidades en un ambiente tan hostil como
el que estamos viviendo, más aún al considerar los
ingresos extraordinarios que logramos con la venta
de las acciones de VISA en los años 2007 y 2008, que
representaron alrededor de US $32.5 millones y US
$47.9 millones respectivamente.
La economía mundial ha sido golpeada de manera
devastadora, y sigue sufriendo los embates de la
crisis; nuestra región no escapa a esa realidad.
As a result, at the start of 2008, with a challenging
outlook, we decided to shift to a more conservative
stance in our policies on credit sources and liquidity. In
consequence, our loan portfolio, which in the past had
been growing at around 30%, increased by barely 11.3%
in 2008 to US $5,204 million at year end.
In spite of the global crisis and shrinking credit, our
liquidity rose by 31.5% to US $1,984 million, our highest
ever. The support for this strong investment growth
came from our depositors and correspondent banks, as
well as our international market transactions.
The bank’s total assets reached US $7,525 million after
having grown 15.7% over last year. Our equity rose by
27% to US $776 million. Our capitalization improved
significantly, as did our efficiency indicator.
Despite the international crisis, our conservative policies
over so many years, and particularly in 2008, helped
us reach profits of US $245 million – an unprecedented
figure for us, and an improvement of 33.3% over the
previous year. It is with great satisfaction that we
report such a major increase in our profits in such a
hostile environment as that in which we find ourselves
this year, even taking into account the extraordinary
income we earned from selling our Visa stocks in 2007
and 2008, which netted us about US $32.5 million and
US $47.9 million each year, respectively.
The global economy has been and continues to be
devastatingly hit, and our region is not exempt from
this reality. In an awareness of this, we have continued
to work harder than ever on our corporate social
responsibility programs. Thus some 2,400 members
of our organization donated close to 15,000 hours
to our volunteer program dedicated to helping our
communities and customers on different social issues.
We were able to cover 8,700 SMEs, with whom we
processed almost 11,000 operations.
Today we have an SME portfolio of around US $400
million. Our financial education program for students,
which started in 2008, trained 432 professors who in
turn taught the course to 30,000 students in three of
the six Central American countries. We also trained 332
BAC| Credomatic suppliers so that they in turn could set
-3-
Conscientes de esa situación, hemos continuado
trabajando más arduamente que nunca en nuestros
programas de Responsabilidad Social Corporativa.
En ese sentido, alrededor de 2,400 colaboradores de
nuestra organización donaron cerca de 15 mil horas
en nuestro programa de voluntariado dedicado a
apoyar a nuestras comunidades y a nuestros clientes
en diferentes temas de interés social. Pudimos cubrir
8,700 pymes, con quienes procesamos casi 11 mil
operaciones.
Hoy en día tenemos una cartera de pymes del orden
de los US $400 millones. Nuestro programa de
educación financiera para estudiantes, que comenzó
en el año 2008, capacitó a 432 profesores que, a su
vez, enseñaron el curso a 30 mil estudiantes en tres de
los seis países del Istmo Centroamericano. Asimismo,
capacitamos a 332 proveedores de BAC | Credomatic
para que establecieran programas de Responsabilidad
Social Corporativa en sus propias empresas. El 69%
de nuestros colaboradores se sensibilizó en el tema
ambiental y más del 11% se inscribió en nuestro
Programa de Promotores Ambientales. Además,
lanzamos nuestro programa de Carbono Neutral,
mediante el cual contribuimos para lograr un mundo
mejor para todos y, sobre todo, para disfrutar de una
mejor situación económica y social en las comunidades
donde operamos.
up corporate social responsibility programs in their own
companies. We raised the environmental awareness of
69% of our employees, and more than 11% signed up for
our Environmental Promoters Program. We launched
our Carbon Neutral Program, through which we seek
to contribute in this manner to making this a better
world for all, and especially to improving the social
and economic situation in the communities where we
operate.
We hope that 2009 will bring us greater progress. And
we hope to be able to continue supporting economic
growth and social advancement in our region, so that
this time next year our message will have an even more
encouraging tone.
We know we can do it with the help of our customers,
our employees, and all of you, and especially with God’s
help.
Esperamos que el año 2009 nos brinde más
prosperidad y que podamos seguir apoyando el
crecimiento económico y el progreso social de nuestra
región para escribir este mensaje en un tono más
esperanzador el año próximo.
Sabemos que lo lograremos con la ayuda de nuestros
clientes, de nuestros colaboradores, de todos Ustedes
y, especialmente, con la ayuda de Dios.
Carlos Pellas Ch.
Chairman of the Board
-4-
Ernesto Castegnaro O.
President & CEO
J U N TA D I R E C T I VA D E B A C | C R E D O M AT I C - G E C F I N C .
B A C | C R E D O M AT I C - G E C F I N C . B OA R D O F D I R E C TO R S
De pie / Upright:
• Alejandro de Iturbide - Subsecretario / Assistant Secretary
• Alejandro Gómez - Director / Director
• Alberto Chamorro - Director / Director
• Silvio Pellas - Director / Director
• Ana María Chadwick - Director / Director
• Rubén Díaz - Secretario / Secretary
Sentados / Seated:
• Edmundo Vallejo - Director / Director
• F. Alfredo Pellas Jr - Vicepresidente / Vice President
• Ernesto Castegnaro - President & CEO / President & CEO
• Carlos F. Pellas - Presidente Junta Directiva / Chairman of the Board of Directors
• Des O’Shea - Director / Director
• Kishore Ponnavolu - Director / Director
Ausente / Absent:
• Agustín de Jesús Carcoba Falomir - Director / Director
-5-
G E R E N T E S G E N E R A L E S Y G E R E N T E S D E PA Í S D E B A C I N T E R N AT I O N A L B A N K
B A C I N T E R N AT I O N A L B A N K
GENERAL AND COUNTRY MANAGERS
• Ricardo Horvilleur - Credomatic of Florida
• Alejandro Chamorro - Credomatic México
• Roberto Fuentes - Gerente País / Country Manager Guatemala
• Juan José Viaud - BAC Guatemala
• Juan Maldonado - Credomatic Guatemala
• Raúl Cardenal - Gerente País / Country Manager El Salvador
• Gerardo Ruiz - BAC El Salvador
• Fernando González - Credomatic El Salvador
• Jacobo Atala - BAC BAMER
• Juan Carlos Paez - Credomatic Honduras
• Ricardo Barrios - Gerente País / Country Manager Nicaragua
• Juan Carlos Sansón - BAC Nicaragua
• Edgar Ahlers - Credomatic Nicaragua
• Gerardo Corrales - BAC San José
• José Ignacio Cordero - Credomatic Costa Rica
• Rodolfo Tabash - BAC Panamá
• Juan Carlos Mejía - Credomatic Panamá
D I R E C TO R E S D E A R E A D E B A C I N T E R N AT I O N A L B A N K
BAC I NTER NATIONAL BAN K AR EA DI R ECTORS
• Rodolfo Tabash - Banca / COO Bank Business
• Juan Carlos Páez - Tarjetas de Crédito / COO Card Business
• Federico Odio - Finanzas / CFO
• Eugenia Castañeda - Riesgo / Risk
• Luciano Astorga - Cumplimiento / Compliance
• José Calderón - Auditoría Interna / Internal Audit
• Pablo Ayón - Recursos Humanos / HHRR
• Ricardo Bolaños - Calidad y Productividad / CPQ
• Alfonso Salvo - Canales y Tecnología / Technology and Services
• Rubén Díaz - Asesor Jurídico / Legal Counsel
-6-
[
DE LA EXCELENCIA
We lead our field and
are steadily evolving.
WE SHARE THE VALUE
OF EXCELLENCE
[
Lideramos nuestro territorio
y nos mantenemos en
constante evolución.
Introducción
Introduction
2.1 Principales variables durante 2008 con
respecto a años anteriores
2.1 Main variables in 2008 compared to previous
years
Los activos alcanzaron los US $7,525 millones al cierre
de 2008, lo cual representa un crecimiento del 15.7%
con respecto a 2007. Este crecimiento es menor a la
tasa de crecimiento promedio histórica del Grupo,
principalmente debido a las medidas conservadoras
aplicadas como respuesta a la crisis financiera
internacional.
Assets reached US $7,525 million at 2008 year end –
an increase of 15.7% from 2007. This is less than the
Group’s average historical growth rate, mainly due to
the conservative measures taken in response to the
international financial crisis.
Activos | Assets
(US $MM)
7,525
8000
6,507
7000
6000
4,240
5000
3,356
4000
3000
2,665
2000
1000
0
2004
2005
El capital alcanzó los US $776 millones. Ese incremento
del 27% se debe a la generación de nuevas utilidades,
que implican un fortalecimiento de nuestra posición
patrimonial.
2006
2007
2008
Equity capital reached US $776 million; this 27% rise
was due to new profits and implies a strengthening of
our equity position.
Patrimonio | Equity
(US $MM)
776
800
700
611
600
461
500
382
400
297
300
200
100
0
-8-
2004
2005
2006
2007
2008
Los depósitos de nuestros clientes, que representan el
74% de nuestro fondeo total, alcanzaron los US $4,781
millones; es decir, un crecimiento del 14% con respecto
a 2007.
Customer deposits, which account for 74% of our total
funding, were at US $4,781 million, 14% higher than the
2007 figure.
Depósitos | Deposits
(US $MM)
4,781
5000
4,194
4000
2,838
3000
2000
2,261
1,741
1000
0
2004
2005
A pesar del ambiente negativo que afecta a los
mercados financieros internacionales, el Grupo logró
mantener su rentabilidad, con utilidades netas que
alcanzaron US $245 millones, un 33.3% más que las del
año 2007.
2006
2007
2008
Despite the negative environment impacting the
international financial markets, the Group managed to
maintain its profitability, with net earnings of US $245
million, up 33.3% from our 2007 earnings.
Utilidad neta | Net income
(US $MM)
245
250
184
200
150
100
122
88
92
50
0
2004
2005
2006
2007
2008
-9-
2.2 BAC en un escenario de crisis
2.2 BAC in a crisis scenario
A nivel mundial, 2008 fue un año particularmente
difícil, caracterizado por la marcada volatilidad en el
precio internacional del petróleo y de otras materias
primas; la inestabilidad financiera generada a partir
de la crisis hipotecaria en los Estados Unidos; y las
expectativas de desaceleración económica en los
países industrializados, entre otros. Específicamente
a nivel financiero se intensificó la crisis, los índices
de las bolsas de valores registraron reducciones
significativas y las condiciones crediticias de los
mercados internacionales se vieron drásticamente
restringidas.
Globally, 2008 was a particularly difficult year,
characterized by markedly volatile international
prices for oil and other raw materials, financial
instability stemming from the U.S. mortgage crisis,
and an expected economic slowdown in industrialized
countries, among other things. Specifically, the crisis
intensified at the financial level; stock market indices
fell significantly and international credit markets dried
up.
Caídas de las bolsas de valores en el 2008 | Stock Exchange Downturns during 2008
Nikkey Japón / Japan
-42%
Bovespa Brasil / Brazil
-41%
DAX Alemania/Germany
-40%
S&P 500 EEUU / USA
-38%
FTSE100 Reino Unido / UK
-31%
Mexbol México / Mexico
-24%
Una fuerte reducción de la liquidez, el encarecimiento
de las fuentes de fondeo y la desconfianza en el
sector financiero internacional son algunas de las
condiciones que caracterizan el escenario actual. Para
2009 las revisiones del Fondo Monetario Internacional
(FMI) publicadas a principios de enero señalan que
el crecimiento mundial será apenas del 0.5% (cifra
sujeta a revisiones). Para hacer frente a la crisis, el
patrón común en varios países ha sido la aplicación
de políticas monetarias y fiscales dirigidas a respaldar
a los sectores más afectados; sin embargo, la eficacia
de dichas medidas empezará a ser palpable en el
mediano plazo.
Dentro de ese contexto, la prioridad principal del
Grupo BAC | Credomatic seguirá siendo proteger los
recursos que nuestros clientes nos han confiado.
Además, tenemos la gran responsabilidad de apoyar
con prudencia a los clientes que tengan capacidad
financiera, para que puedan salir adelante y contribuir
con el crecimiento económico y la estabilidad social y
política de nuestra región.
- 10 -
The current scenario is characterized by a strong
constriction of liquidity, rising costs of funding and
distrust in the international financial sector. Revised
figures of the International Monetary Fund (IMF),
published at the start of January, show global growth
at barely 0.5% for 2009 (subject to revision). To deal
with the crisis, the common pattern in several countries
has been to apply fiscal and monetary policies aimed
at providing support for the hardest hit sectors, but the
effectiveness of these measures won’t be felt until the
medium term.
Within this context, Grupo BAC | Credomatic primary
priority, then, will be to continue protecting the
resources our customers have entrusted to us. We also
have a huge responsibility to support – with caution –
customers who have financial capacity, so that they can
pull through and contribute to our region’s economic
growth and political and social stability.
Para alcanzar estos objetivos el Grupo ha tomado
decisiones tendientes a fortalecer su posición; las
principales son las siguientes:
To meet these goals, the Group has made decisions for
strengthening our position, the main ones being the
following:
a) Fortalecer la liquidez: a pesar de que el Grupo ha
mantenido una posición sólida de liquidez, como
medida preventiva se han aumentado los activos
líquidos, tanto en monto como en relación a los
depósitos totales.
a) Strengthening of liquidity: Although the Group has
maintained solid liquidity, as a preventive measure,
liquid assets have been increased, in both amount
and percentage of overall deposits.
Como medida complementaria, se han
implementado mejoras en el monitoreo y la
administración de la liquidez, no solo a nivel de
cada entidad sino a nivel consolidado.
Con respecto al manejo de pasivos con entidades
financieras internacionales, se han negociado
fondeos a mayor plazo y se han definido mecanismos
para reducir la concentración de vencimientos en
determinadas fechas.
La reducción del plazo de nuestras inversiones, así
como la colocación de estas en emisores de la más
alta calidad, son medidas tomadas con el objetivo
de aumentar nuestra capacidad de respuesta ante
situaciones de estrés. Para mayor detalle consulte
las secciones 6.2 Liquidez y fuentes de fondeo y 8.2
Riesgos de mercado.
b) Cambios en la originación de créditos: la velocidad
de colocación se ha reducido con dos objetivos;
primero, permitir la acumulación de reservas de
liquidez en un ambiente en el que las nuevas
fuentes son limitadas y, segundo, manejar el riesgo
de crédito en un escenario de crisis.
Se produjo un redireccionamiento del crédito
hacia las actividades y segmentos de menor riesgo
relativo.
Por otra parte, se han modificado parámetros de
originación para otorgar crédito a segmentos de
clientes que tengan mayor capacidad de pago de
sus obligaciones.
To complement this, improvements have been made
to liquidity monitoring and management, not only
in each entity, but at a consolidated level.
With respect to the management of liabilities
with international financial institutions, we have
negotiated longer term funding and defined
mechanisms for reducing the concentration of
maturities on specific dates.
Reducing the terms of our investments and placing
them with higher quality issuers are measures we
have taken to increase our response capacity in
situations of stress. For more details, see section
6.2, Liquidity and Funding Sources, and section 8.2,
Market Risks.
b) Loan origination changes: Placement has been
slowed for two purposes: first, to permit the
accumulation of liquidity reserves in an environment
where new sources are limited; and second, to
manage credit risk in a crisis scenario.
Credit was redirected to relatively lower risk activities
and segments.
Origination parameters have also been changed for
granting credit to customer segments with greater
repayment capacity.
In order to maintain a healthy portfolio, we have
been working with new, innovative technologies
that enable us to identify much better the credit
quality of loan applicants before granting the loan,
and to monitor it during the loan period. For more
details, see section 8.1, Credit Risks.
- 11 -
Se ha trabajado en la innovación en tecnologías que
nos permitan identificar mejor la calidad crediticia
de los solicitantes de crédito antes del otorgamiento
del crédito y a lo largo de su vigencia para mantener
una cartera sana. Para mayor detalle, consulte la
sección 8.1 Riesgos de crédito
c) Fortalecimiento de la posición patrimonial: por
medio de la retención de utilidades el Grupo ha
fortalecido su tasa de adecuación de capital. Esta
medida nos convierte en un Grupo aún más sólido
ante nuestros depositantes y acreedores. Para
mayor detalle, consulte la sección 6.3 Capital.
d) Mejora en productividad: estamos conscientes de
que una entidad más eficiente puede enfrentar
mejor un ambiente externo y, por eso, se ha
continuado con el proceso de incremento de la
productividad. Diferentes iniciativas tendientes
a mejorar los ingresos y a controlar el gasto han
resultado claves en el desempeño del grupo. Para
mayor detalle, consulte la sección 6.4 Eficiencia.
El año 2009 se perfila como uno de grandes retos,
pero también representa grandes oportunidades
para aquellas entidades que, como el Grupo BAC |
Credomatic, han actuado siempre con honestidad
y prudencia y también tienen la flexibilidad para
adaptarse al cambio en el entorno.
- 12 -
c) Reinforcement of our equity position: By retaining
earnings, the Group has strengthened its capital
adecuacy ratio. This has made us an even more
robust Group for our depositors and creditors. For
more details, see section 6.3, Capital.
d) Improved productivity: We are aware that a more
efficient entity can face the external environment
better, and this is why we have continued to increase
productivity. Different initiatives for improving
revenues and controlling expenses have been key
factors in the group’s performance. For more details,
see section 6.4, Efficiency.
2009 will be a major challenge, but it also presents great
opportunities for entities like Grupo BAC | Credomatic,
which have always acted with honesty and prudence
while still being flexible enough to adapt to changing
environments.
[
DEL ESFUERZO
Our priorities guide
our strategies.
WE SHARE THE VALUE
OF ENDEAVOR
[
Nuestras prioridades
son el norte de nuestras
estrategias.
Descripción de la compañía
Company Description
BAC | Credomatic Network es un grupo con presencia
en Guatemala, Honduras, El Salvador, Nicaragua, Costa
Rica y Panamá, países en los que ofrece amplia gama
de servicios bancarios, medios de pago y tarjetas de
crédito y débito. Además, cuenta con operaciones de
tarjeta de crédito en México. La compañía matriz del
Grupo, BAC Internacional Bank Inc, es una entidad
financiera con licencia bancaria en Panamá.
Nuestros sistemas y procesos nos permiten ofrecer a
nuestros clientes –individuos y empresas– servicios
integrados e innovadores en la región en la que
operamos.
3.1 Productos y servicios
El Grupo continúa innovando para ofrecer mejores
productos y servicios a sus clientes.
En el área de banca contamos con cuentas de ahorros,
cuentas corrientes, depósitos a plazo fijo, préstamos
comerciales y personales, corretaje de valores, créditos
documentarios, emisión de garantías, préstamos
hipotecarios, pagos directos a proveedores, servicios de
planilla, envío de transferencias y cajeros automáticos,
entre otros.
En el área de tarjetas de crédito y débito, se emiten
marcas tales como Visa, Mastecard y American Express,
las cuales cuentan con incentivos y servicios de valor
agregado. Por otra parte, seguimos siendo líderes en
el negocio adquiriente y ofrecemos productos con un
alto grado de tecnología.
3.2 Historia
El Grupo BAC | Credomatic se fundó en 1952 con el
establecimiento del Banco de América en Nicaragua y el
inicio de operaciones de Credomatic Nicaragua en 1974.
En la década de los setenta, Credomatic El Salvador,
Credomatic Costa Rica, Credomatic Guatemala y
Credomatic Honduras iniciaron operaciones emitiendo
tarjetas de crédito. En 1985, el Grupo incursionó en
el negocio de banca con la adquisición de un banco
- 14 -
BAC | Credomatic Network has a presence in Guatemala,
Honduras, El Salvador, Nicaragua, Costa Rica and
Panama, where it offers a wide spectrum of banking
services, payment methods and debit and credit cards.
It also has credit card operations in Mexico. The Group’s
parent company, BAC International Bank, Inc., is a
licensed financial institution in Panama.
Our systems and processes enable us to offer our
individual and corporate customers innovative and
integrated services in the region where we operate.
3.1 Products and Services
The Group continues to innovate in order to offer better
products and services to its customers. In the field of
banking, we have savings and demand accounts, time
deposits, commercial and personal loans, securities
brokering, documentary credits, issuing of guarantees,
mortgage loans, direct supplier payments, payroll
services, transfers, automatic tellers, and others.
In the debit and credit card area, we issue brands such
as Visa, MasterCard and American Express, which offer
value-added services and incentives. We are also a
leading acquirer, providing high-tech products.
3.2 History
Grupo BAC | Credomatic was founded in 1952 with the
establishment of Banco de América in Nicaragua and
the startup of Credomatic Nicaragua in 1974. In the
seventies, Credomatic El Salvador, Credomatic Costa
Rica, Credomatic Guatemala and Credomatic Honduras
began operations with the issuing of credit cards. In
1985, the Group entered the banking business with the
acquisition of a Costa Rican bank currently known as
Banco BAC San José.
Since then, the Group has developed a set of financial
and banking services supplementing its credit card
operation; these were strengthened with the obtaining
of banking licenses in the rest of the Central American
countries throughout the nineties.
costarricense actualmente conocido como Banco BAC
San José. Desde entonces, el Grupo ha desarrollado
un conjunto de servicios financieros y bancarios
complementarios a la operación de tarjetas de crédito,
que se han fortalecido con la obtención de licencias
bancarias en el resto de los países de Centroamérica
durante toda la década de los noventa.
En 2001, el Grupo alcanzó el grado de inversión BBBde la calificadora Standard & Poors. Como parte de la
estrategia de crecimiento y expansión del Grupo BAC
| Credomatic, se decidió incursionar en el mercado
de tarjetas de crédito de México en 2004. En 2005,
el Grupo BAC | Credomatic llevó a cabo una alianza
estratégica con GE, en virtud de la cual su subsidiaria
GE Consumer Finance adquirió el 49.99% del capital
de BAC | Credomatic GECF, Inc., una sociedad que
indirectamente controla el 100% de BAC International
Bank.
En 2006, el Grupo BAC | Credomatic mejoró su
calificación a BBB, otorgada por la calificadora
Standard & Poors, como resultado de sus indicadores
financieros y el apoyo de GE Money. En el año 2007
se realizaron tres adquisiciones. La de mayor tamaño
fue la del Banco Mercantil (BAMER) en Honduras
(US $767 millones de activos a junio de 2007), que vino
a fortalecer nuestra posición en ese país; además, se
adquirieron Propemi en El Salvador (US $62 millones
en activos) y Corporación Financiera Miravalles en
Costa Rica (US $33 millones de activos), que nos
han permitido mejorar nuestra oferta de servicios a
segmentos de mercado específicos en esos países.
Durante este tiempo, la región donde operamos ha
sufrido situaciones de crisis, tanto a nivel político,
social y económico. Sin embargo, a pesar de las
guerras, los terremotos y los huracanes, el Grupo
BAC | Credomatic ha logrado mantener un desempeño
estable, en beneficio de nuestros clientes, accionistas
y los países donde operamos.
3.3 Centroamérica, la región en la que operamos
La región de América Central tiene una extensión
aproximada de 512.000 metros cuadrados y está
conformada por siete países independientes: Belice,
In 2001, the Group achieved a BBB- investment
rating from Standard & Poors. As part of Grupo BAC
| Credomatic’s growth and expansion strategy, the
decision was made to enter the Mexican credit card
market in 2004.
In 2005, Grupo BAC Credomatic formed a strategic
partnership with GE, by virtue of which GE’s subsidiary,
GE Consumer Finance, acquired 49.99% of the capital
stock of BAC | Credomatic GECF, Inc., a company that
indirectly controls 100% of BAC International Bank
stock.
In 2006, Grupo BAC | Credomatic improved its Standard
& Poor’s rating to BBB as a result of its financial
indicators and the support of GE Money.
In 2007, three acquisitions were made. Banco Mercantil
(BAMER) in Honduras was the largest (US $767 million
in assets at June 2007), strengthening our position
in that country. Propemi was acquired in El Salvador
(US $62 million in assets) and Corporación Financiera
Miravalles in Costa Rica (US $33 million in assets),
enabling us to improve our service offer for specific
market segments in these countries.
During these years our region has gone through
political, social and economic crises, but in spite of wars,
earthquakes and hurricanes, Grupo BAC | Credomatic
has been able to maintain a stable performance to
the benefit of our customers and shareholders and the
countries in which we operate.
3.3 Central America, the Region in which we
Operate
The Central American region covers an approximate
area of 512,000 square meters and is comprised of seven
independent countries: Belize, Guatemala, Honduras,
El Salvador, Nicaragua, Costa Rica and Panama.
During 2008, the Gross Domestic Product (GDP) at
current prices was US $131 billion versus US $117 billion
in 2007 (11.1% compound annual growth rate for 20042008). The three countries with the greatest share
were Guatemala, Costa Rica and El Salvador, as seen
in the chart below. With a population of 42 million,
- 15 -
Guatemala, Honduras, El Salvador, Nicaragua, Costa
Rica y Panamá.
the average per capita GDP was US $3,667 at the close
of 2008, 8.6% higher than the US $3,377 recorded for
2007.
Durante 2008, el Producto Interno Bruto (PIB) a
precios corrientes fue de US $131 mil millones, en
comparación con US $117 mil millones durante 2007
(11.1% tasa compuesta de crecimiento anual entre
2004 y 2008). Los tres países con mayor participación
fueron Guatemala, Costa Rica y El Salvador, tal como
se presenta en el gráfico a continuación. Con una
población de 42 millones de personas, el PIB per cápita
promedio fue de US $3,667 al cierre de 2008, un 8.6%
mayor a los US $3,377 registrados en 2007.
Centroamérica: Producto Interno Bruto | Central America: 2008 Gross Domestic Product
(US $MM)
Panamá
US $18 bn
14%
Costa Rica
US $30 bn
23%
Nicaragua
US $6 bn
5%
Belice
US $2 bn
1%
Guatemala
US $39 bn
29%
El Salvador
US $22 bn
17%
Honduras
US $14 bn
11%
Fuente: Bancos Centrales / Dirección de Estadísticas y Censos de Panamá
Source: Central Banks / Department of Statistics Panama
En las economías centroamericanas, la industria
manufacturera, el comercio y la agricultura son los
sectores con mayor peso relativo dentro del PIB, pues
durante 2008 representaron en conjunto el 45% del
total.
- 16 -
Manufacturing, commerce and agriculture are the
sectors with the greatest relative weight in the GDP of
Central American economies; during 2008 as a group,
they accounted for 45% of the total.
Centroamérica: Producto Interno Bruto por sector | Central America: GDP by Sector
(US $MM)
Agricultura, Ganadería y Pesca
Agriculture, farm-stock and fishing
10%
Otros | Others
24%
Manufactura
Manufacturing
18%
Bienes Raíces
Real Estate
9%
Construcción | Construction
5%
Electricidad y agua
Electricity and water
2%
Servicios Financieros
Financial Services
5%
Comercio | Commerce
17%
Transporte y Almacenamiento
Transportation and storage
10%
Fuente: Bancos Centrales / Dirección de Estadísticas y Censos de Panamá
Source: Central Banks / Department of Statistics Panama
En los últimos años, las exportaciones de
bienes realizadas por los países de la región han
experimentado crecimiento hasta alcanzar US
$22,910 millones en 2008 (13.2% tasa compuesta
de crecimiento anual entre 2004 y 2008). Entre los
principales mercados de destino de los productos
centroamericanos se encuentran América del Norte y
Europa.
In recent years, exports by the region’s countries have
grown, reaching US $22,910 million in 2008 (13.2%
compound annual growth rate for 2004-2008).
The main destination markets for Central American
products are North America and Europe.
Below is a summary of the main economic variables by
country for 2008:
A continuación se presenta un resumen de las
principales variables económicas por país para el año
2008:
América Central: Principales Indicadores 2008 | Central America: 2008 Main Indicators
Guatemala El Salvador
PIB (US $ bn) | GDP (US $ bn)
PIB per cápita (US $) | GDP per cápita (US $)
Población (millones) | Population (millons)
Inflación (%) | Inflation (%)
IED (US $ mn) | FDI (US $ mn)
Exportaciones (US $ bn) | Exports (US $ bn)
Importaciones (US $ bn) | Imports (US $ bn)
Calificación S&P | S&P Rating
39.0
2,848
13.7
9.4
837
4.8
15.1
BB
22.0
3,108
7.1
5.5
900
2.7
8.6
BB+
Honduras
Nicaragua
Costa Rica
Panamá
13.9
1,820
7.6
10.8
466
2.8
6.7
B+
6.1
1,076
5.7
13.8
250
1.6
4.4
n.a
30.0
6,619
4.5
13.9
2,000
9.9
15.6
BB
18.3
5,378
3.4
8.7
2,376
1.2
9.2
BB+
Fuente: Bancos Centrales / Dirección de Estadísticas y Censos de Panamá / Standard & Poor’s
Source: Central Banks / Department of Statistics Panama / Standard & Poor’s
- 17 -
3.4 Panorama internacional
3.4 International Panorama
A pesar de estar ubicadas en una misma zona
geográfica, las economías centroamericanas se
enfrentan a distintas realidades. No obstante estas
particularidades, en los últimos años ha mejorado
su realidad política, macroeconómica y financiera, lo
que se ha traducido en un mejor desempeño de la
economía centroamericana como un todo.
In spite of being located in the same geographical area,
Central American economies face different realities.
Nonetheless, their financial, macroeconomic and
political realities have improved in recent years, leading
to an improved performance of the Central American
economy as a whole.
Debido a la crisis económica mundial, en la segunda
parte de 2008 se empieza a sentir el impacto directo
en América Central, por medio de una desaceleración
en las tasas de crecimiento del Producto Interno Bruto
(PIB) y el ingreso per cápita, en las exportaciones y en
la Inversión Extranjera Directa (IED), además de un
aumento en la inflación y el desempleo, lo cual afecta
las condiciones sociales.
De acuerdo con las proyecciones de organismos
internacionales, 2009 será un año difícil en términos
económicos. Según proyecciones de la Comisión
Económica para América Latina y El Caribe (CEPAL),
América Latina y El Caribe crecerán únicamente un
1.9%.
Aunque la situación económica internacional ya está
teniendo un impacto en los países centroamericanos,
cabe resaltar que en la actualidad la región se
encuentra en una mejor posición para afrontar estos
efectos, comparada con otras épocas de su historia
reciente.
- 18 -
Central America began to feel the impact of the
global economic crisis in the second half of 2008, with
slowdown in the growth of GDP and per capita income,
exports and foreign direct investment (FDI) and rising
inflation and unemployment – which has affected
social conditions.
According to the projections of international
organizations, 2009 will be a difficult year in economic
terms. The Economic Commission for Latin America and
the Caribbean (ECLAC) predicts a growth rate of only
1.9% for Latin America and the Caribbean.
The international economic situation is already
impacting Central American countries, but it is
important to note that the region is currently in a better
position for confronting these effects compared to other
eras in its recent history.
[
DEL TRABAJO EN EQUIPO
We practice ethical corporate
governance that goes beyond
our borders,
taking our philosophy
throughout the region.
WE SHARE THE VALUE
OF TEAMWORK
[
Gobierno Corporativo y Etica
que trascienden nuestras
fronteras llevando
nuestra filosofía a través
de toda la región.
Gobierno Corporativo y Ética
Corporate Governance and Ethics
4.1 Comités y estructura de gobierno corporativo
El Grupo BAC cuenta con una estructura gerencial de
gran trayectoria en el medio financiero, liderada por
el CEO.
El Grupo alcanza unidad estratégica gracias a la labor
de los Directores de Área, que dirigen las estrategias
corporativas y se apoyan en la estandarización, la
implementación de mejores prácticas y el diseño de
productos en los ámbitos de banca, tarjetas de crédito,
finanzas, sistemas de información, riesgos, recursos
humanos, eficiencia, cumplimiento y auditoría
interna.
La estructura gerencial de cada país, dirigida por un
Gerente de País y Gerentes de Banca y Tarjeta –las
dos principales áreas de negocio del Grupo–, además
de la eficiencia en la ejecución y el alcance de las
metas, permiten adaptarse a las condiciones propias
de cada país en lo concerniente a negocios, leyes y
regulaciones.
Dentro de este contexto, durante el año 2008, el
Grupo ha mantenido y consolidado su estructura
de gobierno corporativo, la cual tiene como objetivo
garantizar que exista un sistema adecuado de control
interno y administración de riesgo independiente de
la gerencia.
El principal rector del sistema de gobierno corporativo
es la Junta Directiva, que a su vez se apoya en los
Comités de Activos y Pasivos, Crédito, Cumplimiento,
Operaciones y Auditoría, los cuales se reúnen
regularmente y están conformados por miembros de
la Junta Directiva.
La Junta cuenta con representantes del grupo
mayoritario de accionistas y de GE, nuestro socio
estratégico. Los miembros de la Junta también son
miembros de los Comités Regionales.
- 20 -
4.1 Corporate Governance Structure and
Committees
Grupo BAC’s management structure, headed by its CEO,
is distinguished by an extensive, successful record in
finance.
The Group has achieved strategic unity thanks to the
efforts of its regional managers, who guide corporate
strategies with the aid of standardization, the use
of best practices and products designed for banking,
credit cards, finance, information systems, risk, human
resources, efficiency, compliance and internal audit.
Each country’s general structure, led by a Country
Manager and managers for the Group’s two main
business areas – banking and cards – as well as efficient
performance and the attainment of goals, have
enabled the Group to adapt to each country’s particular
business, legal and regulatory conditions.
In this context, in 2008, the Group maintained and
consolidated its corporate governance structure, the
purpose of which is to guarantee an adequate system
of internal control and risk management independent
of management.
The main governing body for the corporate governance
system is the Board of Directors, in turn supported by the
assets and liabilities, credit, compliance, operations and
auditing committees, which consist of Board members
and meet on a regular basis.
TheBoardhasrepresentativesfrommajorityshareholders
and GE, our strategic partner. Board members are also
members of the regional committees.
The main objective of our Board of Directors is to
oversee the performance of management in the service
of our shareholders, regulatory bodies and employees.
To comply with this, the Board has implemented
corporate governance principles in order to define their
responsibilities. In 2008, the Board met periodically to
discuss strategy and performance.
El principal objetivo de nuestra Junta Directiva
consiste en supervisar el desempeño de la Gerencia
en servicio de nuestros accionistas, entes reguladores
y empleados. Para cumplir con esto, la Junta ha
implementado principios de gobierno corporativo con
el fin de definir sus responsabilidades. Durante el año
2008, la Junta se reunió periódicamente para discutir
estrategia y desempeño.
El Comité de Auditoría está compuesto por cinco
miembros que supervisan nuestra estructura
de control interno, se reúnen con los auditores
externos y dan seguimiento al plan de trabajo de
Auditoría Interna, que cuenta con un alto grado de
independencia.
The Auditing Committee, which is highly independent,
consists of five members who supervise our internal
control structure, meet with external auditors and
follow up on the internal auditing work plan,.
4.2 Code of Ethics
Grupo BAC | Credomatic adheres to the GE code of ethics,
entitled “The Spirit and the Letter”, which defines the
highest standards that all GE employees must follow,
and given the Group’s adherence, it is obligatory for all
BAC Credomatic employees and executives. This code of
ethics covers areas such as relationships with suppliers,
the prevention of money laundering, fair labor
practices, environment, health and safety, conflicts of
interest, and others.
4.2 Código de Ética
El Grupo BAC | Credomatic ha decidido apegarse al
Código de Ética de GE, denominado “El Espíritu y la
Letra”, donde se definen los más altos estándares que
deben seguir todos los empleados de GE. Debido a
que el Grupo acordó respetarlo, es de acatamiento
obligatorio para todos los empleados y ejecutivos
de BAC | Credomatic. El Código de Ética comprende
áreas como relaciones con proveedores, prevención
de lavado de dinero, prácticas laborales justas, medio
ambiente, salud y seguridad y conflictos de interés,
entre otras.
Durante 2008, se realizaron capacitaciones a los
colaboradores y ejecutivos sobre el Código de Ética y
sus áreas principales. Específicamente en prevención
y detección de lavado de dinero, se fortaleció la
estructura a nivel regional y se implementó el uso de
tecnología y las iniciativas que pretenden minimizar el
riesgo en este campo, para ir más allá de los requisitos
mínimos impuestos por las autoridades en los países
donde operamos.
In 2008, training sessions were held with employees and
executives on the code of ethics and its main areas. In
the specific case of prevention and detection of money
laundering, the regional structure was reinforced with
the implementation of technology and initiatives to
reduce risk, going beyond the minimum requirements
imposed by the authorities of the countries in which
we operate.
On another front, there is an ombudsperson available
to handle any report or complaint by employees of the
Group over possible violations of “The Spirit and the
Letter” code of ethics, or simply to answer any inquiries
about the code.
Por otra parte, se cuenta con la figura del
Ombudsperson, una persona que está disponible para
atender cualquier denuncia o queja que los empleados
del Grupo consideren sobre posibles violaciones del
Código de Ética “El Espíritu y la Letra” o simplemente
para hacer consultas sobre este.
- 21 -
[
DE LA HONESTIDAD
We are successful
to the extent that we fully
satisfy our customers
and earn their trust.
WE SHARE THE VALUE
OF HONESTY
[
Somos exitosos en la medida
en que logremos
la plena satisfacción y
confianza de nuestros clientes.
Estructura Legal y Regulación
Legal and Regulatory Structure
BAC International Bank Inc, es un banco domiciliado
en Panamá y opera amparado a una licencia general en
dicho país que le faculta para ofrecer servicios y captar
recursos a nivel internacional y de personas y empresas
panameñas. En su calidad de banco, es regulado por la
Superintendencia de Bancos de Panamá, la cual emite
normativa prudencial en áreas como capital, liquidez
y crédito a empresas relacionadas, entre otras. Los
bancos panameños de licencia general están sujetos
a una inspección al menos cada dos años por parte
de la Superintendencia de Bancos y a la presentación
y publicación de informes y estados financieros en
forma periódica.
A su vez, BAC International Bank es la compañía
matriz del Grupo BAC | Credomatic, y esto faculta
a la Superintendencia de Bancos de Panamá a
realizar supervisión consolidada materializada
en inspecciones a las subsidiarias del Grupo en el
resto de los países, establecimiento de límites y
requerimientos a nivel consolidado. Bajo el amparo de
acuerdos de entendimiento, mantiene intercambio de
información con reguladores en los diferentes países
donde operan las empresas del Grupo.
Asimismo, los bancos, las casas de corretaje y de
administración de carteras por cuenta de terceros
que forman parte del Grupo están sujetas a la
regulación de las autoridades correspondientes en
cada uno de los países donde opera el Grupo. Existen
normativas de acatamiento obligatorio tales como
capital mínimo, calificación y constitución de reservas
de crédito, límites al crédito que se puede otorgar a
empresas relacionadas, requisitos de liquidez, normas
de control y administración de riesgos, entre otras.
Durante 2008, los reguladores centroamericanos
emitieron nuevas normativas o fortalecieron las
existentes, con el fin de mejorar su supervisión y
como forma de impulsar mejoras en los mecanismos
de control y administración de riesgos a lo interno de
los bancos. Entre los cambios se pueden mencionar
incrementos en los requisitos de capital, normas
más estrictas de constitución de reservas de crédito
y regulación de bancos extraterritoriales (off-shore),
entre otros.
BAC International Bank, Inc., is a Panama-domiciled
bank that operates under a general license from
that country to offer services and capture funds both
internationally and from Panamanian individuals and
companies. As a bank, it is regulated by the Panama
Superintendence of Banks, which issues reasonable
regulations concerning such areas as capital, liquidity,
and credit for related companies, etc. Panamanian
banks with general licenses are subject to inspection
at least once every two years by the Superintendence
of Banks, and to the submission and publication of
periodic financial statements and reports.
BAC International Bank is also the parent company
of Grupo BAC | Credomatic, and this empowers the
Panama Superintendence of Banks to carry out
consolidated supervision in the form of inspections of
the Group’s subsidiaries in the rest of the countries,
setting consolidated limits and requirements; under
memorandums of understanding it also maintains an
exchange of information with the regulators of the
different countries in which the Group’s companies
operate.
In addition, the Group’s banks, brokerage houses and
third-party portfolio managers are subject to regulation
by the corresponding authorities of each country
in which the Group operates. There are obligatory
regulations such as minimum capital, loan reserve
creation and classification, credit limits for related
companies, liquidity requirements, risk management
and control standards, and others.
In 2008, Central American regulators issued new rules
or reinforced existing ones to improve oversight and
encourage improved control and risk management
mechanisms within the banks. Changes include larger
capital requirements, stricter rules for creating loan
reserves, and regulation of offshore banking, among
other things.
- 23 -
[
DE LA TRANSPARENCIA
Our customers are our reason
for being. Our commitment,
beyond that of transactions, is
to create lasting relationships.
WE SHARE THE VALUE
OF TRANSPARENCY
[
Nos debemos al cliente.
Nuestro compromiso,
más allá de transacciones,
es crear relaciones duraderas.
Información Financiera Relevante
Relevant Financial Information
6.1 Análisis de balance y resultados
6.1 Analysis of Balance Sheet and Results
El Grupo contaba, al cierre de 2008, con US $1,984
millones de liquidez e inversiones, lo cual representa
un crecimiento del 31.5% con respecto al año 2007.
Este incremento se debe tanto al crecimiento de los
servicios que el Grupo presta a sus clientes como a
la estrategia de acumulación de reservas de liquidez
de cara a la situación de los mercados financieros y la
economía internacional.
At the close of 2008, the Group had US $1,984 million
in liquidity and investments, an increase of 31.5% over
2007. This was due to a growth of the Group’s services
to its customers as well as its strategy of accumulating
liquid reserves in the face of the international economic
and financial market situation.
Liquidez e Inversiones en valores | Liquidity and Investments
(US $MM)
1,984
2000
1,506
1500
1,176
1,021
1000
886
500
0
2004
2005
La cartera de créditos bruta (sin reservas), incluyendo
los préstamos a valor razonable, alcanzó los
US $5,204 millones, lo que representa un crecimiento
del 11.3% con respecto a 2007.
El crecimiento menor a los niveles promedio
históricos se debió a las medidas preventivas tomadas
por el Grupo, en primer lugar ante las presiones
inflacionarias producto del incremento en los precios
de las materias primas y, posteriormente, ante la
situación de la economía internacional.
2006
2007
2008
The gross loan portfolio (without reserves), including
loans at reasonable value, grew to US $5,204 million,
an increase of 11.3% over 2007.
The growth was lower than the historical average
due to preventive measures taken by the Group, first
in response to inflationary pressures from rising
raw material prices, and later in response to the
international economic crisis.
- 25 -
Cartera de préstamos | Loan Portfolio
(US $MM)
6000
5,204
5000
4,674
Otros | Others
4000
1,313
2,884
3000
Automóviles | Vehicles
2,171
2000
1000
0
594
1,653
260
562
1,187
1,275
Hipotecas | Residential Mortgages
Tarjeta Crédito | Credit Card
361
706
Consumo | Consumption
1,066
706
555
613
747
2004
2005
2006
Comercial e Industrial | Commercial and Industrial
1,399
1,587
2007
2008
Los depósitos alcanzaron US $4,781 millones, un 14%
más con respecto al año 2007.
Deposits reached US $4,781 million, up some 14% from
2007.
Los depósitos en cuentas corrientes y de ahorro
crecieron en conjunto un 13%, y los depósitos a plazo
crecieron un 15%.
Demand and savings account deposits together grew
by 13%, while time deposits rose by 15%.
Composición de los depósitos | Deposits Breakdown
(US $MM)
5000
4,781
4,194
4000
2,065
2,838
3000
1,799
2,261
2000
1,233
1,824
822
722
Depósitos a Plazo | Time Deposits
1,044
303
803
1000
0
- 26 -
236
Cuentas e Ahorro | Savings
260
785
957
2004
2005
1,895
1,301
2006
1,673
2007
Cuentas Corrientes | Demand Deposits
2008
6.2 Liquidez y fuentes de fondeo
6.2 Liquidity and Funds Sources
Consciente del nuevo entorno internacional, el Grupo
se dedicó año a fortalecer aún más su liquidez durante
2008, de modo que el efectivo, los equivalentes
de efectivo y las inversiones líquidas crecieron en
conjunto US $475 millones, un 31.5% con respecto al
año anterior.
In an awareness of the new international environment,
the Group worked throughout the year to strengthen
its liquidity even more; thus cash, cash equivalents and
liquid investments together rose by US $475 million, or
31.5% over 2007.
La liquidez no solo aumentó en monto sino también
como relación a los depósitos totales, con lo que,
al cierre de 2007, contábamos con activos líquidos
equivalentes el 36% de nuestros depósitos totales;
esta relación incrementó a un 41.5% al cierre del año
2008.
Liquidity expanded not only in amount, but also in
relation to total deposits, so while at 2007 year-end
we had liquid assets equivalent to 36% of our total
deposits, by the close of 2008 this percentage had gone
up to 41.5%.
Liquidez e inversiones a depósitos totales | Liquidity and Investments as a percentage of total deposits
(US $MM)
41.5%
39.2%
38.5%
37.7%
36.0%
35.8%
36.4%
35.1%
35.1%
38.1%
36.2%
34.9%
34.1%
Dec 07 Jan 08
Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08
Sin embargo, no sólo es importante mantener niveles
adecuados de liquidez, sino también minimizar el
riesgo de esos activos líquidos. A continuación se
muestra la composición general de la cuenta de
efectivo y equivalentes:
Aug 08 Sep 08 Oct 08 Nov 08 Dec 08
Nevertheless, not only is it important to maintain
adequate levels of liquidity; the risk of these liquid
assets must also be minimized. Below is the general
composition of the cash and equivalents account:
Liquidez | Liquidity
Remesas en tránsito | Transit Remittances
4%
US$ 69 MM
Reportos y
Depósitos | Overnight
1%
US$ 22 MM
Depósitos overnight | Overnights Deposits
12%
US$ 181 MM
Depósitos en Bancos
Centrales por encaje | Deposits at
Central Banks as legal requirements
33%
US$ 512 MM
Efectivo | Cash
13%
US$ 200 MM
Equivalente de
Efectivo | Cash Equivalents
15%
US$ 228 MM
Depósitos
en Bancos | Due from Banks
22%
US$ 335 MM
Total US $1,546 millones | US $1,546 million
- 27 -
A continuación se muestra un detalle de la porción de
la liquidez clasificada como equivalentes de efectivo:
A breakdown of the liquid portion classified as cash
equivalents is given below:
Equivalentes de Efectivo | Cash Equivalents
Costa Rica
Banco Central | Central Bank
6%
Dresdner Bank
US $14 MM
4%
US $10 MM
Otros | Others
BCIE | CABEI
10%
7%
US $24 MM
US $17 MM
Guatemala
15%
US $33 MM
El Salvador
32%
US $71 MM
Honduras
26%
US $59 MM
Total US $228 millones | US $228 million
Nuestras inversiones en títulos valores y depósitos
que generan intereses contribuyen como reserva de
liquidez. A continuación se presenta un resumen de
los principales emisores en nuestra cartera:
Our securities investments and interest-bearing
deposits contributed as a liquidity reserve; below is a
summary of the main issuers in our portfolio:
Inversiones según emisor | Investments by Issuer
El Salvador Gov
3%
US $15 MM
Honduras Gov
3%
US $14 MM
Otros | Others
4%
US $18 MM
Guatemala Gov
5%
US $23 MM
Panama Gov
12%
US $51 MM
US Gov
35%
US $230 MM
CR Gov
20%
US $87 MM
Total US $438 millones | US $438 million
- 28 -
Una porción importante de nuestras inversiones
y equivalentes de efectivo se mantienen en los
Gobiernos y los Bancos Centrales de Centroamérica.
La mayoría de inversiones responde a requisitos
legales y regulatorios, aunque también representan
las alternativas de menor riesgo para mantener la
liquidez denominada en las monedas locales de los
países centroamericanos.
Un 98.16% de la cartera de inversiones corresponde
a títulos de renta fija, un 1.83% a fondos de inversión
que a su vez invierten en renta fija y solo un
0.01% a acciones. Al cierre del año 2008 no hay en
nuestra cartera de inversiones ningún instrumento
estructurado.
Estas inversiones no solo se manejan con criterios
conservadores desde el punto de vista de riesgo de
crédito, sino que se mantienen a corto plazo para
cumplir con el objetivo primordial de mantener una
reserva de liquidez. A continuación, el detalle de
nuestras inversiones por plazo remanente:
A large portion of our investments and cash equivalents
is maintained in Central American government and
central bank issues; a majority of these respond to legal
and regulatory requirements, but they also represent
less risky alternatives for maintaining liquidity in local
Central American currency denominations.
98.16% of the investment portfolio is in fixed income
bonds and 1.83% in investment funds which in turn
invest in fixed income bonds, with only 0.01% in stocks.
At the 2008 close, there were no structured instruments
in our investment portfolio.
These investments are not only managed under
conservative criteria from the credit risk standpoint,
but also maintained in short term securities to meet
our primary goal of keeping a liquidity reserve. Below is
a breakdown of our investments by maturity:
Inversiones por plazo | Investments by maturity
(US $MM)
300
250
251
200
150
100
51
50
0
0-3
meses | months
15
19
3-6
meses | months
6 - 12
meses | months
17
1-2
años | years
62
23
2-3
años | years
3-5
años | years
+5
años | years
Nuestra principal fuente de fondeo son los depósitos,
que representan el 74% del total a diciembre de 2008.
Our primary source of funding is deposits, accounting
for 74% of total funding at December 2008.
La oferta de servicios de valor agregado a nuestros
clientes permitió un incremento de US $587 millones
en los depósitos, los cuales mantuvieron los niveles
estables de años anteriores.
Value-added services for our customers enabled us
to increase deposits by US $587, keeping them at the
stable levels of previous years.
- 29 -
Fuentes de Fondeo | Sources of Funding
(US $MM)
6,483
6000
5,579
1,667
5000
1,386
4000
3000
3,550
2,808
2,229
2000
405
1000
1,824
713
4,781
546
4,194
2,838
0
2004
2,261
2005
2006
2007
2008
Depósitos | Deposits
Fondeo Institucional | Institutional Funding
Como complemento a los depósitos, se dispone de
una serie de fuentes de fondeo institucional, como
préstamos a largo plazo con entidades financieras,
líneas de crédito de corto plazo y colocaciones de
títulos valores. Estas fuentes están constituidas con
entes y mercados locales e internacionales.
El monto total del fondeo institucional alcanzó
US $1,657 millones al cierre de 2008, lo que representa
un crecimiento de US $271 millones, un 20% con
respecto al año 2007. Esto comprueba la confianza
que los bancos corresponsales, las entidades
multilaterales y los tenedores de bonos en los
mercados centroamericanos siguen teniendo en el
Grupo, a pesar del entorno internacional caracterizado
por menor liquidez y mayor costo de fondos.
Como parte de la administración de las fuentes
de fondos, el Grupo BAC | Credomatic realiza un
monitoreo permanente de sus depósitos y del fondeo
institucional, y ha tomado medidas como contratar
créditos a largo plazo que reduzcan la participación
de los pasivos a corto plazo en el fondeo total e
incrementar las reservas de recursos líquidos.
Se cuenta con mecanismos de contingencia que
recogen la experiencia acumulada durante años
de operar en la región centroamericana y que han
demostrado ser sólidos ante los eventos críticos que
la región ha sufrido en su historia reciente.
- 30 -
In addition to deposits, a series of institutional funding
sources is available such as long-term loans from
financial institutions, short-term credit lines and
securities placement. These funding sources consist of
both local and international institutions and markets.
Total institutional funding reached US $1,657 million
at 2008 year-end; this represented a growth of US
$271 million, or 20% over 2007. As evidenced by this,
correspondent banks, multilateral organizations and
bond holders in Central American markets continue
to deposit their trust in the Group, in spite of an
international environment characterized by restricted
liquidity and higher costs of funds.
Part of Grupo BAC | Credomatic’s management of
funding sources includes ongoing monitoring of both
deposits and institutional funding and the application
of measures such as taking on long-term credits to
reduce the share of short-term liabilities in overall
funding, and increasing liquid reserves.
Contingency mechanisms are in place that are based on
the accumulated experience of many years of operating
in the Central American region; these have been shown
to be solid in the face of the critical events the region
has experienced in recent history.
En cuanto al costo de fondos, se logró minimizar el
impacto del incremento de los márgenes de deuda
observado en los mercados financieros mundiales.
Este objetivo se logró gracias al crecimiento, la
estabilidad de los depósitos y la existencia de fondeo
a largo plazo de períodos anteriores, cuyo costo se vio
reducido producto de la disminución de las tasas de
referencia de mercado como la tasa LIBOR.
6%
With respect to the cost of funds, we were able to
minimize the impact of the higher debt spreads found
in global financial markets, thanks to deposit growth
and stability and the existence of long-term funding
from previous periods, the cost of which fell as a result
of lower market reference rates such as the LIBOR rate.
Evolución costo de fondos vrs. LIBOR 3m | Funding Cost vs. 3-month LIBOR
5%
4%
3%
2%
1%
0%
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Costo Fondos | Funding Cost
Jun-08
Dec-08
LIBOR
Estamos conscientes de que el nuevo entorno
internacional implica mayores costos de fondeo, pero
continuaremos administrando nuestros pasivos con el
fin minimizar el impacto de estas nuevas condiciones
en nuestros costos financieros.
We are aware that the new international environment
implies higher funding costs, but we will continue to
manage our liabilities in order to minimize the impact
of these new conditions on our financial costs.
6.3 Capital
6.3 Capital
El Grupo administra su capital de manera consistente
con los riesgos asumidos. De acuerdo con el Comité
de Supervisión Bancaria de Basilea, un banco
adecuadamente capitalizado debe mantener una
tasa de adecuación de capital, mayor o igual al 8%.
The Group manages its capital in line with assumed
risks. According to the Basel Committee on Banking
Supervision, an adequately capitalized bank must
sustain the capital adecuacy ratio at or higher than
8%.
Al 31 de diciembre de 2008, la relación de capital
ajustado a activos ponderados por riesgo de BAC
Internacional Bank y Subsidiarias se ubica en el
11.42%, lo cual representa un incremento con respecto
al 9.83% que registró este índice en el año 2007.
At December 31, 2008, the ratio of adjusted capital
to risk-weighted assets of BAC International Bank
and subsidiaries was at 11.42%, up from the 9.83% it
recorded in 2007.
- 31 -
Esa mejora es parte de las medidas adoptadas por
el Grupo para enfrentar la situación económica
internacional y representa una mayor solidez que
favorece a nuestros depositantes y acreedores.
The improvement is one of the measures adopted by
the Group to deal with the international economic
situation, and represents greater robustness, to the
benefit of our depositors and creditors.
Las utilidades retenidas constituyen la principal fuente
de capitalización para el Grupo. Para el año 2008,
crecieron en US $203 millones netos de dividendos,
lo cual representa el 83% de la utilidad neta para el
mismo año.
Retained earnings are the Group’s primary source of
capitalization; in 2008 these grew by US $203 million,
net of dividends, representing 83% of net earnings for
this year.
6.4 Efficiency
6.4 Eficiencia
El Grupo ha continuado mejorando su índice de
eficiencia (gastos operativos/ingresos netos) mediante
un proceso consistente y sostenido que incluye
iniciativas enfocadas en controlar costos, generar
nuevas fuentes de ingresos y promover la creatividad
del colaborador mediante un proceso sistemático y
práctico en innovación.
Hemos diseñado herramientas puntuales para darle
seguimiento a las variables que influyen en nuestro
índice de eficiencias; por ejemplo: OpEx Analyzer, Fee
Income Analyzer y Cost Center. Analyzers.
The Group has continued to improve its efficiency
index (operating costs / net revenue) through a
steady, sustained process involving initiatives aimed at
controlling costs, developing new sources of income and
encouraging employee creativity through systematic,
practical innovation.
We have designed reliable tools for monitoring the
variables influencing our efficiency index, such as
OpEx Analyzer, Fee Income Analyzer and Cost Center
Analyzers.
The fruit of these efforts is an improved efficiency ratio.
Estos esfuerzos han dado como fruto una mejora en
nuestro indicador de eficiencia.
Indicador eficiencia | Efficiency ratio
2004
2005
2006
2007
2008
63.45
62.98
62.04
60.4
56.6
6.5 Rentabilidad
6.5 Profitability
En 2008 se logró un rendimiento sobre el patrimonio
(ROE) del 35.3% y un rendimiento del activo (ROA) del
3.5%. Estos indicadores demuestran la rentabilidad
que ha mantenido el Grupo.
In 2008 our return on equity (ROE) was 35.3%, while
our return on assets (ROA) was 3.5%, showing the
profitability the Group has maintained.
Aún si se excluyen los ingresos extraordinarios, como
la venta de acciones de VISA Inc, el ROE fue del 28.6%
y el ROA, del 2.8%, muy similares al ROE del 28.2% y
el ROA del 2.8% obtenidos en el año 2007 (también
excluyendo los ingresos extraordinarios de ese año).
- 32 -
Even if extraordinary income such as that from the sale
of Visa Inc. stock is excluded, the ROE was 28.6% and the
ROA was 2.8%, very similar to the 28.2% ROE and 2.8%
ROA of 2007 (also excluding extraordinary income from
that year).
Retorno sobre Activos | Return on Equity
(%)
40
35
32.0%
27.2%
30
29.0%
34.2%
35.3%
6.0%
6.7%
25
20
15
32.0%
27.2%
29.0%
28.2%
28.6%
2004
2005
2006
2007
2008
10
5
0
ROE Operativo / Operating ROE
ROE Ingresos Extraordinarios / Extraordinary Income ROE
Retorno sobre Activos | Return on Assets
(%)
3.5%
3.5
3.1%
3.2%
3.0
3.4%
3.5%
0.6%
0.7%
2.5
2.0
1.5
3.5%
3.1%
3.2%
2.8%
2.80%
2004
2005
2006
2007
2008
1.0
0.5
0.0
ROA Operativo / Operating ROA
ROA Ingresos Extraordinarios / Extraordinary Income ROA
- 33 -
Preparados para el cambio.
Un año de cambios es un año
lleno de oportunidades.
We are prepared for change.
A year full of change is a year
full of opportunity.
Todos los servicios de BAC
se adelantan a los cambios,
crecen, evolucionan, van más lejos
y alcanzan más.
All BAC’s services anticipate
change, grow, evolve, go beyond
and achieve more
WE SHARE THE VALUE
OF INNOVATION
[
[
DE LA INNOVACIÓN
Productos y segmentos de negocios
Business segments and products
El Grupo BAC | Credomatic cuenta con tres grupos
de productos, a saber: tarjetas de crédito, servicios
bancarios a personas y servicios bancarios a
empresas.
Emitimos tarjetas de crédito y débito (negocio emisor)
además de realizar servicios de procesamiento de
transacciones, tanto para nuestros tarjetahabientes
como para los comercios afiliados a nuestra red
(negocio adquiriente).
El negocio de tarjetas de crédito ha mostrado un
crecimiento sostenido y estable a través de los años.
Específicamente, el saldo por cobrar por tarjetas de
crédito ha crecido en promedio un 24% anual en los
últimos cinco años. Específicamente en el año 2008,
el crecimiento fue de un 7% con respecto a 2007,
producto de las medidas conservadoras que aplicó el
Grupo durante el año.
Grupo BAC | Credomatic has three product groups:
credit cards, personal banking services and corporate
banking services.
We issue credit and debit cards (issuing business) in
addition to providing transaction processing services
for both our cardholders and merchants affiliated to
our network (acquiring business).
The credit card business has had steady, stable growth
throughout the years. Specifically, credit card receivables
have risen an average of 24% per year over the last
five years; in 2008, the increase was 7% compared to
2007, due to the Group’s conservative credit measures
throughout the year.
Saldo de tarjetas de crédito | Credit Card Receivables
(US $MM)
1500
1,275
1,187
1200
926
900
600
706
568
300
0
2004
2005
El Grupo ofrece crédito a personas mediante
préstamos para vivienda, adquisición de vehículos y
préstamos de consumo. Este negocio presentó una
desaceleración en el año 2008, como resultado de
los ajustes realizados a las normas de originación
crediticia.
2006
2007
2008
The Group offers credit to individuals through housing,
car and consumer loans. There was a slowdown in this
business in 2008 as a result of the adjustments made to
credit origination standards.
- 35 -
El crédito a personas creció un 18% en el año 2008,
menor que el 45% promedio que ha crecido esta
cartera en los último cinco años.
Personal loans rose by 18% in 2008, much less than the
average 45% growth reported over the last five years.
Crédito a personas | Personal Loans
(US $MM)
2500
2,027
2000
1,717
1500
1,027
1000
500
0
653
443
2004
2005
Como complemento al crédito de consumo, el Grupo
ofrece crédito comercial y corporativo, el cual creció
un 5% en el año 2008; ese porcentaje es menor al 22%
promedio que ha crecido esta cartera en los últimos
cinco años.
2006
2007
2008
To complement its consumer credit, the Group offers
commercial and corporate credit, which expanded by
5% in 2008 – below the 22% average growth reported
over the last five years.
Crédito Corporativo | Corporate Loans
(US $MM)
1,859
2000
1,770
1500
931
1000
776
813
500
0
2004
2005
Además, el Grupo ha creado servicios de valor agregado,
lo cual se ha materializado en un crecimiento del 21%
del ingreso por comisiones en 2008.
- 36 -
2006
2007
2008
The Group has also developed added-value services,
which have led to a 21% increase in commission income
in 2008.
Un elemento importante para el buen desempeño
financiero es el contacto con nuestros clientes,
utilizando canales tradicionales y electrónicos.
An important factor behind good financial performance
is customer contact through both traditional and
electronic channels.
Al 31 de diciembre de 2008, el Grupo tenía 403
sucursales, distribuidas de la siguiente forma:
At December 31, 2008, the Group had 403 branches,
distributed as follows:
País | Country
Número de Sucursales
Number of Branches
Guatemala
51
Honduras
119
El Salvador
62
Nicaragua
69
Costa Rica
80
Panamá
22
- 37 -
[
DE LA PRUDENCIA
We have the tools
we need
to make the best
decisions.
WE SHARE THE VALUE
OF PRUDENCE
[
Contamos con las
herramientas necesarias
para tomar
las mejores decisiones.
Administración de Riesgo
Risk Management
8.1 Riesgo de crédito
8.1 Credit Risk
El Grupo cuenta con estrictas políticas de control y
administración del riesgo de crédito. El Comité de
Crédito Regional, un comité de la Junta Directiva
del Grupo, las establece y verifica su cumplimiento.
El Comité de Crédito está compuesto por personas
de trayectoria en la administración del riesgo de
crédito, quienes cuentan con amplia experiencia,
incluso durante períodos de crisis, cuando los eventos
políticos, económicos y naturales han demostrado la
solidez de nuestras políticas.
The Group has strict credit risk management and
control policies, which are set and their compliance
verified by the Regional Credit Committee, a committee
of the Group’s Board members. The Credit Committee
consists of people who have extensive experience in
credit risk management, including during periods of
crisis when natural, economic and political events have
demonstrated the soundness of our policies.
Como apoyo al Comité de Crédito, está la Dirección
Regional de Riesgo, encargada de monitorear, definir
criterios y estandarizar prácticas en todas las empresas
del Grupo. Esta Dirección tiene una participación activa
en el análisis y la ejecución de proyectos o prospectos
de negocios que implican riesgo de crédito.
Por otra parte, en cada una de las empresas del
Grupo que llevan a cabo actividades crediticias, se
cuenta con una estructura de análisis independiente
de las áreas de negocios que sigue los principios
básicos de la prudente administración del riesgo de
crédito, principios comprobados a lo largo de muchos
años que, con el apoyo de nuevas herramientas
tecnológicas, permiten realizar su labor de una forma
más eficiente.
Entre las sanas prácticas que el Grupo realiza a nivel
de riesgo de crédito se encuentran:
• Definición de estrategias de crecimiento de
acuerdo con el riesgo del país.
• Revisión frecuente de la situación política, social y
económica de los países donde operamos y a nivel
internacional.
• Análisis cualitativos y cuantitativos de los niveles
de industria, sector y segmento, utilizados para
administrar la participación de cada uno de ellos
In support of the Credit Committee is a Regional Risk
Direction that monitors, sets criteria and standardizes
practices for all of the Group’s companies, and which
actively participates in analyzing and executing projects
or business prospectuses implying credit risk.
In addition, each of the Group’s companies dealing
with credit has an analysis division independent of
the business area which follows the basic principles
of prudent credit risk management, proven over the
course of many years, and uses new technological tools
for carrying out its task more efficiently.
The Group’s healthy credit risk practices include:
• Defining growth strategies in accordance with
country risk;
• Frequently reviewing the economic, social and
political situation of the countries where we
operate, as well as the international scene;
• Performing qualitative and quantitative analyses of
the industry, sector and segment, which are used to
manage the share of each in our portfolio and as
a tool for making decisions such as whether to get
into or out of a specific market segment or sector.
The Group monitors the quality of our loan portfolio
and maintains a sufficient loan reserve for absorbing
likely losses inherent to our loan portfolio.
- 39 -
en nuestra cartera y como herramienta para tomar
decisiones como entrar o salir de determinado
sector o segmento de mercado.
El Grupo monitorea la calidad de su cartera de crédito
y mantiene una reserva de préstamos suficiente para
absorber las pérdidas probables inherentes a esa
cartera.
A inicios de 2008, se registraron presiones
inflacionarias en los países en que el Grupo opera a
raíz del incremento en los precios internacionales
de las materias primas. Como respuesta a este
factor, que podría afectar la capacidad de pago de
nuestros clientes, se realizaron diferentes análisis
para determinar los sectores y segmentos vulnerables
en contraposición con aquellos que estaban más
preparados para enfrentar la situación. Producto de
estos análisis se efectuaron ajustes en los parámetros
de originación y se redujo la velocidad de colocación del
crédito. De esa manera, cuando en la segunda mitad
de 2008, se redujeron las presiones inflacionarias pero
empezaron a sentirse los primeros efectos de la crisis
financiera y económica internacional, el Grupo ya se
había adelantado con medidas para reducir el riesgo
de crédito de su cartera. Como resultado, el efecto de
la crisis internacional en la morosidad de las carteras
no ha sido significativo e, incluso, en algunos tipos
de cartera como las tarjetas de crédito y consumo, la
morosidad se ha reducido (cuando se descontinuaron
productos que se ofrecían a segmentos de mayor
riesgo relativo o se incrementaron los requisitos para
obtener, mantener o aumentar los límites de tarjeta
de crédito).
At the start of 2008 we saw inflationary pressures in
the countries where the Group operates as a result of
the rising international prices of raw materials. As
this could affect our customers’ payment capacity, we
conducted various analyses to determine vulnerable
segments and sectors compared to those who were
better prepared to face the situation.
As a result of these analyses, adjustments were made
to the origination parameters and loan placements
were slowed. Thus by the second half of 2008, when
inflationary pressures were reduced but the first
effects of the international economic and financial
crisis began to be felt, the Group had already gotten
a head start on measures to reduce its portfolio credit
risk. As a result, the effect of the international crisis on
portfolio delinquency has not been very great; in some
portfolio types such as credit cards and consumer loans,
delinquency has even dropped as products offered to
relatively higher risk segments were discontinued or
requirements for obtaining and maintaining credit
cards or raising credit limits were increased.
Mora a más de 90 días | Delinquency over 90 days
Dic-07 | Dec 07
Dic-08 | Dec 08
Incremento | Increase
Tarjeta de crédito | Credit Card
2.92%
2.73%
-0.19%
Vivienda | Residencial Mortgage
1.11%
1.33%
0.23%
Vehículos | Car Loans
1.09%
1.39%
0.29%
Consumo | Consummer Loans
1.86%
1.76%
-0.10%
Corporativo | Corporate Loans
0.43%
1.61%
1.18%
Total cartera | Total Portfolio
1.36%
1.80%
0.44%
Los castigos de cartera netos de recuperaciones
como porcentaje de la cartera de crédito promedio
pasaron del 1,54% en el año 2007 a un 2,31% en el
- 40 -
Portfolio penalties net of recoveries as a percentage of
the average loan portfolio rose from 1.54% in 2007 to
2.31% in 2008; most of the increase was due to losses
2008. La mayor parte del incremento se debió a las
pérdidas en algunos productos crediticios en el área
de consumo y tarjetas de crédito a ciertos segmentos
que se liquidaron y descontinuaron durante el año.
Específicamente en el crédito para vivienda, que ha
causado preocupación en otras latitudes, en el Grupo
BAC se sigue operando con estándares conservadores.
Por ejemplo, se concede crédito garantizado con la
vivienda primaria del deudor, pero no se financian
casas o terrenos de descanso; se definen niveles
adecuados de cuota a ingreso y relación del crédito al
valor de la vivienda para minimizar el riesgo de crédito.
La relación de saldo de crédito a valor de vivienda
promedio de nuestra cartera de hipotecas era del
65.6% al cierre de 2008. La relación de saldo de crédito
a garantía en la cartera de crédito para vehículos era,
al cierre de 2008, del 69.8%. Se debe aclarar que, en
el caso de vehículos, este indicador se calcula sobre
el valor depreciado del automóvil, de acuerdo con la
antigüedad, la marca y otros detalles del mismo.
in some consumer credit and credit card products
for certain segments which were liquidated and
discontinued during the year. Particularly with respect
to housing loans, which have been a cause of concern
in other areas of the world, Grupo BAC continues to
operate with conservative standards. For example,
housing loans are secured by the debtor’s primary
dwelling, vacation homes or lots are not financed and
appropriate payment-to-income and loan-to-value
ratios are set for minimizing credit risk.
The average loan-to-value ratio in our portfolio was
65.6% at the close of 2008. The ratio of loan to collateral
in the car loan portfolio was 69.8% at the 2008 close; it
should be clarified that in the case of vehicles, the ratio
is calculated on the depreciated value, depending on
the age, make and other vehicle details.
With respect to distribution by country, the relative share
of each in the overall credit portfolio is as follows:
A continuación se muestra la participación relativa de
cada país en la cartera de crédito total:
Portafolio de crédito por país | Credit portfolio by country
Panamá
14%
México
1%
Guatemala
12%
Honduras
19%
Costa Rica
28%
El Salvador
16%
Nicaragua
10%
8.2 Riesgo de mercado
8.2 Market Risk
El Grupo BAC | Credomatic ha implementado una
estructura de control y administración de riesgos de
mercado.
Grupo BAC | Credomatic has implemented a market risk
management and control structure.
- 41 -
El marco en el que se administran estos riesgos se
encuentra regulado por dos políticas principales, la
Política de Inversiones y la Política de Administración
de Riesgos de Mercado.
La Política de Inversiones define los parámetros para
el control del riesgo de las inversiones que realiza el
banco, cuyo objetivo principal consiste en convertirse
en una reserva de liquidez. Al ser la liquidez el objetivo
primordial de la cartera de inversiones, la composición
de esta responde a criterios conservadores en cuanto
a plazo y riesgo de crédito. En dicha política se
definen los límites de riesgo país y riesgo emisor. El
cumplimiento se verifica en forma permanente por
medio de una herramienta informática denominada
MACCI (Módulo de Administración y Control de Cartera
de Inversiones). Además, se definen las atribuciones
para aprobar nuevos límites de riesgo país, emisor y
emisión. En general, los límites de riesgo país y emisor
son aprobados por el ALICO Regional (Comité de
Activos y Pasivos, por sus siglas en inglés), conformado
por miembros de la Junta Directiva del Grupo BAC |
Credomatic. La Política de Administración de Activos
y Pasivos define el marco general para controlar los
riesgos de mercado y liquidez.
El riesgo de liquidez se mide con dos mecanismos:
primero, el cálculo de la cobertura de liquidez, neta de
obligaciones y requerimientos, a nivel de cada país y
a nivel consolidado; segundo, el cálculo y la definición
de límites en los calces de plazos que mantienen las
diferentes entidades que conforman el Grupo. En
2008 se incorporó el cálculo de indicadores de estrés
ante escenarios anormales, tanto a partir de eventos
históricos excepcionales como eventos hipotéticos
aún más drásticos.
El riesgo de tasas de interés se mide a nivel del balance
(duración de activos y pasivos) y a nivel de la cartera de
inversiones (duración modificada de los instrumentos
en la cartera). En ambos casos, se calcula un factor
de sensibilidad ante un cambio del 1% en las tasas de
interés en dólares y del 2% en las tasas en monedas
locales para cada banco en Centroamérica. Existe un
límite máximo para esta exposición medido como un
porcentaje de las utilidades presupuestadas para el
año.
- 42 -
Management of these risks is regulated within the
framework of two main policies, investment policy and
market risk management policy.
Investment policy sets the parameters for controlling risk
in the bank’s investments, which are mainly designed
for acting as a liquidity reserve. Since liquidity is the
primary goal, the investment portfolio’s composition
responds to conservative criteria with respect to term
and credit risk. The policy sets issuer and country risk
limits, and ongoing compliance checks are conducted
using an information tool called MACCI (Investment
Portfolio Control and Management Module). The policy
also determines the level responsible for approving new
issue, issuer and country risk limits. In general, issuer and
country risk limits are approved by the Regional ALICO
(Assets and Liabilities Committee), which is comprised
of Grupo BAC | Credomatic Board members. The assets
and liabilities management policy defines the general
framework for controlling liquidity and market risks.
Liquidity risk is measured by two mechanisms: the
first is the calculation of liquidity coverage, net of
liabilities and requirements, for each country as well
as consolidated; and the second is the calculation
and setting of maturity matching limits for securities
held by the Group’s different companies. In 2008,
the calculation of abnormal scenario stress indicators
was included, based as much on exceptional historical
events as on even more drastic hypothetical events.
Interest rate risk is measured for both balance sheet
(duration of assets and liabilities) and investment
portfolio (modified duration of portfolio instruments).
In both cases a sensitivity factor is calculated for a
1% change in dollar interest rates and a 2% change in
local currency rates for each bank in Central America. A
maximum limit exists for this exposure, measured as a
percentage of budgeted earnings for the year.
The exchange risk is controlled by maintaining a long
position in US dollars (dollar assets less dollar liabilities
plus fixed assets and other non-monetary assets) as a
percentage of the equity in each country. Thus, equity
is protected from currency fluctuations in the countries
where Grupo BAC | Credomatic operates.
El riesgo cambiario se controla manteniendo una
posición larga en dólares estadounidenses (activos
en dólares menos pasivos en dólares más activos fijos
y otros activos no monetarios) como porcentaje del
patrimonio de cada país. De esta manera, se protege
el patrimonio ante fluctuaciones de las monedas de
los países donde opera el Grupo BAC | Credomatic.
La Dirección Regional Financiera, los Comités de
Activos y Pasivos de cada país, el ALICO Regional y la
Junta Directiva del Grupo BAC | Credomatic vigilan
las exposiciones y el cumplimiento de los límites. El
sistema de gestión de calidad se convierte en una
herramienta para documentar las medidas correctivas
que deben acatar los responsables cuando se da
un incumpliendo de alguno de los límites internos
establecidos en las políticas.
El marco general del sistema de riesgos de mercado
se ha consolidado en los últimos años, sobre todo
en el año 2008 y, dadas las necesidades y el entorno
internacional, se han implementado mejoras como el
monitoreo diario de variables críticas –a nivel local y
consolidado– que se presentan a la alta administración
del Grupo y el uso de herramientas tecnológicas
y metodologías más sofisticadas en la medición y
gestión de los riesgos de mercado.
8.3 Riesgo operativo
La gestión de riesgos operativos en BAC | Credomatic
Network se realiza mediante una metodología
conceptual que sigue los lineamientos de Basilea
II e incorpora, además, elementos del esquema de
administración integral de riesgos de COSO. COSO
es una organización dedicada a mejorar la calidad
de los informes financieros por medio de ética en
los negocios, controles internos eficaces y gobierno
corporativo; ha emitido normas en diversas áreas,
incluyendo la gestión de riesgos operativos.
Nuestro sistema de gestión es un proceso continuo
de administración descentralizada del riesgo en varias
‘etapas’:
•Gestión de ambiente de control (medición y
corrección de brechas)
Exposures and compliance with limits are both overseen
by the Regional Financial Direction, each country’s
assets and liabilities committee, the Regional ALICO
and Grupo BAC | Credomatic’s Board of Directors.
The quality management system becomes a tool for
documenting the corrective measures to be observed by
those in charge when any of the internal limits set in
the policies are not met.
The general framework for the market risk system has
been consolidated over the last few years, especially
in 2008. Given the necessities and the international
context, improvements have been made, such as daily
monitoring of critical local and consolidated variables,
which are reported to the Group’s top management,
and use of more sophisticated technologies and
methodologies for measuring and managing market
risks.
8.3 Operating Risk
Operating risk management in BAC | Credomatic
Network is carried out with a conceptual methodology
that follows Basel II guidelines and also incorporates
elements of the COSO integral risk management scheme.
COSO is an organization dedicated to improving the
quality of financial reporting through business ethics,
effective internal controls and corporate governance;
it has issued standards in different areas, including
operating risk management.
Our management system is an ongoing process of
decentralized risk management in various “stages”:
• Control environment management
(gap measurement and correction)
• Risk identification and assessment
• Risk mitigation (implementation of controls,
in cases where risks exceed an acceptable limit)
•Risk monitoring (monitoring of risk indicators)
•Risk measurement (incident data collection and
capital modeling)
•Control effectiveness testing
- 43 -
•Identificación y evaluación de riesgos
•Mitigación de riesgos (implementación de
controles para los casos en que los riesgos superan
un límite de aceptación)
•Monitoreo de riesgos (seguimiento de indicadores
de riesgo)
A centralized risk management unit provides follow-up
and assesses the decentralized management carried
out by managers.
A Board of Directors committee oversees risk
management and makes sure the operating risk profile
is maintained within satisfactory levels.
This methodology generates several benefits:
•Medición de riesgos (recolección de incidentes y
modelación de capital)
•Pruebas de eficacia de controles
Una unidad centralizada de gestión de riesgos da
seguimiento y evalúa la gestión descentralizada que
realiza la administración. Un comité de Junta Directiva
supervisa la gestión y se asegura de que el perfil de
riesgos de la operación se mantenga dentro de niveles
satisfactorios.
Esta metodología genera varios beneficios:
•Permite un trato conceptual homogéneo de los
riesgos operativos de todos los productos, por
variados que sean, lo que sirve de base para
priorizar.
•Promueve un uso eficiente y eficaz de los recursos:
se invierte más en controlar los riesgos mayores.
•Mejora la comprensión y la propiedad de los riesgos
por parte de cada unidad operativa o de negocios:
permite un reconocimiento más oportuno de
los problemas (pues hay un proceso continuo
de retroalimentación), incentiva a los gerentes a
mejorar el control de los riesgos (son los dueños
y responsables de los riesgos) y, eventualmente,
la información de pérdidas servirá de base para el
análisis de costo y beneficio de nuevos controles.
Durante el año 2008, hubo avances hacia la
homogenización del proceso de gestión de riesgos en
todos los países donde operamos.
- 44 -
•It allows for uniform conceptual treatment of
the operating risks of all products, no matter how
different, serving as a basis for prioritizing.
•It encourages efficient and effective use of funds;
more money is put into controlling larger risks.
•It improves the understanding and ownership of
risks by each operating or business unit, enabling
problems to be recognized in a more timely manner
(since there is a steady stream of feedback) and
motivating managers to improve risk control (they
own and are responsible for the risks); eventually
information about losses will serve as a basis for
analyzing the costs and benefits of new controls.
Since 2008, the standardization of risk management
process has been developed in all countries where we
operate.
[
DE LA CONFIANZA
We are a Bank of values,
service, efficiency, trust and
commitment.
We are responsible for
reinforcing our values.
WE SHARE THE VALUE
OF TRUST
[
Somos el Banco de los valores.
Servicio, eficiencia, confianza
y compromiso.
Somos los responsables en
fortalecer nuestros valores.
Estados Financieros Consolidados
Consolidated Financial Statements
- 46 -
BAC INTERNATIONAL BANK, INC. AND SUBSIDIARIES
(Panama, Republic of Panama)
Table of Contents
Independent Auditors’ Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Stockholder’s Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
- 47 -
- 48 -
Consolidated Balance Sheets
December 31, 2008 and 2007
2008
Assets
Cash and cash equivalents
Interest-bearing deposits
Trading securities
Securities available for sale
Securities held to maturity
Loans at fair value
Loans
Less:
Allowance for loan losses
Unearned income and deferred loan fees and costs
Loans, net
Property and equipment, net
Investments in unconsolidated entities
Customers' liability under acceptances outstanding
Accrued interest receivable
Other accounts receivable
Goodwill
Intangible assets
Other assets
Total assets
Liabilities and Stockholder’s Equity
Deposits:
Demand non-interest-bearing
Demand interest-bearing
Savings
Time deposits
Total deposits
US$
US$
US$
Securities sold under agreements to repurchase
Borrowings
Other borrowed funds
Acceptances outstanding
Accrued interest payable
Other liabilities
Total liabilities
Minority interest
Stockholder’s equity:
Common stock, US$1,000 par value. Authorized 100,000 shares;
78,947 shares issued and outstanding
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total stockholder’s equity
Total liabilities and stockholder’s equity
See accompanying notes to consolidated financial statements.
- 49 -
US$
2007
1,546,054,808
10,388,735
16,596,718
402,421,684
8,737,645
43,020,107
5,160,486,420
1,196,468,020
21,394,356
27,347,792
245,011,560
19,155,737
0
4,673,544,697
123,535,949
24,059,736
5,012,890,735
127,780,918
25,077,546
4,520,686,233
176,684,356
2,044,899
9,481,876
46,853,700
71,802,068
85,389,088
16,048,787
76,834,001
7,525,249,207
161,575,891
4,169,090
3,079,401
30,606,130
82,727,523
78,470,167
11,703,322
104,391,056
6,506,786,278
332,350,746
1,562,225,075
821,536,134
2,064,564,462
4,780,676,417
269,093,936
1,403,764,589
721,954,588
1,798,706,950
4,193,520,063
30,488,158
1,409,153,132
217,255,009
9,481,876
28,570,441
273,161,705
6,748,786,738
49,201,840
1,123,103,587
213,476,324
3,079,401
25,321,475
257,209,722
5,864,912,412
418,092
30,709,232
78,947,000
34,618,254
756,056,517
(93,577,394)
776,044,377
7,525,249,207
78,947,000
34,618,254
553,098,814
(55,499,434)
611,164,634
6,506,786,278
Consolidated Statements of Income
Years ended December 31, 2008 and 2007
2008
Interest income:
Loans
Trading securities
Total interest income
US$
2007
707,894,746
18,826,715
575,308
12,433,201
447,454
740,177,424
546,400,985
22,671,695
592,488
17,899,055
385,017
587,949,240
Interest expense:
Deposits
Securities sold under agreements to repurchase
Borrowings and other borrowed funds
Total interest expense
Net interest income before provision for loan losses
Provision for loan losses
Net interest income after provision for loan losses
154,076,346
2,151,513
88,496,919
244,724,778
495,452,646
118,619,842
376,832,804
129,866,944
3,332,307
66,560,602
199,759,853
388,189,387
88,764,845
299,424,542
Other income (expenses):
Service charges
Commissions and other fees, net
Foreign currency gains, net
Net (loss) gain on trading securities
Net gain on sale of securities available for sale
Gain on other investments
Other income
Total other income
180,855,509
71,927,652
53,464,191
(358,825)
8,601,650
47,948,644
25,848,816
388,287,637
146,916,928
78,490,920
21,682,106
394,619
12,238,704
32,510,635
22,677,772
314,911,684
195,305,218
32,718,713
23,470,559
32,651,720
178,502,760
462,648,970
162,430,805
26,162,043
21,775,112
25,318,384
149,659,766
385,346,110
302,471,471
228,990,116
56,002,879
246,468,592
35,914,587
193,075,529
1,603,084
244,865,508
9,411,850
183,663,679
Operating expenses:
Salaries and employee benefits
Depreciation and amortization
Administrative expenses
Occupancy and related expenses
Other operating expenses
Total operating expenses
Income before income tax expense
and minority interest
Income tax expense
Income before minority interest
Minority interest
Net income
US$
- 50 -
Consolidated Statement of Changes in Stockholder’s Equity
Additional
Paid-in
Capital
Common
Stock
Balance as of December 31, 2006
Dividends
Comprehensive income:
Net income
Other comprehensive income (loss):
Foreign currency translation
Changes in unrealized gain (loss) on
securities available for sale, net of tax
Comprehensive income
Dividends
Net effect of adoption of new accounting
principle (SFAS No.159)
Comprehensive income:
Net income
Other comprehensive income (loss):
Changes in unrealized gain (loss) on
securities available for sale, net of tax
Comprehensive income
Retained
Earnings
Total
Stockholder's
Equity
US$ 78,947,000
0
34,618,254
0
407,435,135
0
0
183,663,679
0
183,663,679
0
0
0
3,918,637
3,918,637
0
0
0
218,724
78,947,000
0
34,618,254
0
553,098,814
218,724
187,801,040
611,164,634
(43,500,000)
0
(43,500,000)
0
0
1,592,195
0
1,592,195
0
0
244,865,508
0
244,865,508
0
0
0
(30,647,519)
0
0
0
(7,430,441)
US$ 78,947,000
- 51 -
Accumulated
Other
Comprehensive
Loss
34,618,254
(38,000,000)
756,056,517
(59,636,795)
0
(55,499,434)
(93,577,394)
461,363,594
(38,000,000)
(30,647,519)
(7,430,441)
206,787,548
776,044,377
Consolidated Statements of Cash Flows
2008
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Net loss on impairment of foreclosed assets
Provision (release) for unfunded committments
Release provision for claims receivable for unreturned securities
Depreciation and amortization
Amortization of deferred loan fees and costs
Loss on derivative financial instruments
Net decrease (increase) in trading securities
Net gain on sale of unconsolidated entities
Net gain on sale of securities
Net loss (gain) on sale of property and equipment
Deferred taxes
Equity participation in unconsolidated entities
Minority interest
Increase in accrued interest receivable
Decrease (increase) in other accounts receivable
Decrease (increase) in other assets
Increase in accrued interest payable
(Decrease) increase in other liabilities
Net cash provided by operating activities
US$
2007
244,865,508
183,663,679
118,619,842
251,197
1,041,570
(227,216)
32,718,713
2,542,556
0
7,963,768
(587,562)
(8,252,256)
(47,948,644)
(3,423)
5,594,579
(154,146)
1,603,084
(16,979,260)
23,302,964
1,593,961
4,372,277
(14,170,278)
356,147,234
88,764,845
240,329
(66,408)
(4,136,939)
26,162,043
(5,308,958)
67,801
(4,839,560)
0
(12,633,323)
(32,510,635)
72,272
(8,264,567)
(312,694)
9,411,850
(6,838,935)
(5,169,021)
(30,544,301)
293,219
62,796,580
260,847,277
Cash flows from investing activities:
Net decrease in deposits placed with original maturity over three months
Proceeds from sale of securities available for sale
Maturities, prepayment and calls of securities available for sale
Purchases of securities available for sale
Proceeds from sale of other investments
Maturities, prepayment and calls of securities held to maturity
Purchases of securities held to maturity
Proceeds from sale of investments in unconsolidated entities
Dividends received from unconsolidated entities, net of advances
Net increase in loans
Purchases of property and equipment
Proceeds from sale of property and equipment
Cash paid in purchase of businesses and minority interest, net of cash received
Net cash used in investing activities
6,110,609
211,774,866
764,974,094
(1,143,165,194)
79,775,294
11,019,741
(1,050,943)
3,000,000
(116,317)
(795,550,466)
(67,982,956)
19,465,858
(40,000,000)
(951,745,414)
20,528,071
129,528,624
450,993,023
(510,942,923)
0
183,835
(9,814,396)
0
190,525
(1,198,297,446)
(36,044,691)
516,284
(4,688,303)
(1,157,847,397)
Cash flows from financing activities:
Net proceeds from deposits received
Net proceeds from other borrowed funds
Net decrease in securities sold under agreements to repurchase
Proceeds from borrowings
Repayment of borrowings
Distributions to minority interest
Net change in overdraft line of credit
Dividends
Net cash provided by financing activities
709,336,413
9,078,474
(18,016,968)
5,292,663,483
(4,953,618,345)
(24,400)
(5,447,898)
(43,500,000)
990,470,759
799,111,498
76,242,693
(7,375,631)
3,222,503,773
(2,806,165,377)
(17,600)
0
(38,000,000)
1,246,299,356
(45,285,791)
Effect of exchange rate fluctuations on cash held
Net increase in cash and equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
US$
349,586,788
1,196,468,020
1,546,054,808
5,836,329
355,135,565
841,332,455
1,196,468,020
- 52 -
Notes to Consolidated Financial Statements
December 31, 2008 and 2007
(1)
Organization
BAC International Bank, Inc. was incorporated on August 25, 1995, in Panama City, Republic of
Panama, as a banking institution. BAC International Bank, Inc. is a 100% owned subsidiary of BAC
International Corporation (the “Parent Company”, which is an indirect subsidiary of BAC Credomatic
Holding Company, Ltd.) and provides, directly and through its wholly owned subsidiaries, Credomatic
International Corporation (CIC), BAC International Bank (Grand Cayman) (“BAC Cayman”), BAC
Bahamas Bank Ltd. (a direct subsidiary since 2008), Rudas Hill Financial, Inc., Premier Asset
Management, Inc., BAC Leasing, Inc. and BAC Valores (Panama), S. A., (collectively the “Bank”), a wide
variety of financial services to individuals and institutions, principally in Mexico, Guatemala,
Honduras, El Salvador, Nicaragua, Costa Rica and Panama. Credit card operations are carried out
through CIC and its subsidiaries.
The banking operations in Panama are subject to regulatory requirements of the Superintendency of
Banks of the Republic of Panama, pursuant to law decree No.9 of February 26, 1998 as modified by
law decree No.2 of February 22, 2008.
These consolidated financial statements are expressed in U.S. dollars.
(2)
- 53 -
Summary of Significant Accounting Policies
The accounting and reporting policies of the BAC International Bank, Inc. and its subsidiaries are in
accordance with U.S. generally accepted accounting principles (“US GAAP”) and they conform to
general practices within the industry. The following is a description of significant policies and
practices:
(a)
Principles of Consolidation
These consolidated financial statements include the accounts of BAC International Bank, Inc.
and all majority owned subsidiaries. In consolidation all significant intercompany accounts and
transactions are eliminated. Investments in companies in which the percentage of ownership is
at least 20%, but not more than 50%, are accounted for under the equity method and the pro
rata share of their income (loss) is included in other income. Investments in companies with
less than 20% ownership are accounted for under the cost method; income is recognized when
dividends are received.
(b)
Use of Estimates
Management has made a number of estimates and assumptions relating to the reporting of
assets and liabilities and the disclosure of contingent assets and liabilities to prepare these
consolidated financial statements in conformity with U.S. generally accepted accounting
principles. Actual results could differ from those estimates. The current economic environment
has increased the degree of uncertainty inherent in those estimates and assumptions.
(c)
Cash and Cash Equivalents
Cash and cash equivalents include cash, due from banks, certain securities, and term interestbearing deposits with original maturities of three months or less.
(d)
Securities Purchased and Sold Agreements
Securities purchased under resale agreements and securities sold under repurchase
agreements are generally accounted for as collateralized financing transactions and are
recorded at the amount at which the securities were acquired or sold plus accrued interest. It is
the Bank’s policy to take possession of securities purchased under resale agreements. The Bank
monitors the market value of securities purchased and sold and obtains collateral from or
returns it to counterparties when appropriate.
(e)
Securities
Securities that are held principally for resale in the near term are classified as trading securities
and recorded at fair value with changes in fair value recorded in earnings. Debt securities that
management has the positive intent and ability to hold to maturity are classified as held to
maturity and recorded at amortized cost. All other securities are classified as available for sale
and recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, if
any, on available-for-sale securities are reported as a component of accumulated other
comprehensive income (loss).
Realized gains and losses from the sale of securities are recorded on a trade-date basis and
determined on a specific identification basis. Realized gains and losses are included in other
income as securities gains (losses) in earnings.
Premiums and discounts are recognized as an adjustment to yield over the contractual term of
the security using a method that approximates the interest method. If a prepayment occurs on
a security, any related premium or discount is recognized as an adjustment to yield in the
period in which the prepayment occurs. Interest on securities is recognized in interest income
on an accrual basis.
The Bank makes an assessment to determine whether there have been any events or economic
circumstances to indicate that a security on which there is an unrealized loss is impaired on an
other-than-temporary basis. The Bank considers many factors including the severity and
duration of the impairment; the intent and ability of the Bank to hold the security for a period
of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for
debt securities, external credit ratings and recent downgrades. Securities on which there is an
unrealized loss that is deemed to be other than-temporary are written down to fair value with
the write-down recorded as a realized loss on securities.
(f)
Loans
Loans are stated at their outstanding unpaid principal balances adjusted for unearned income,
when applicable, except for those loans measured at fair value. Interest income on loans is
recognized on an accrual basis. Loan origination fees and direct costs as well as premiums and
discounts are amortized as an adjustment to yield over the term of the loan. Loans include
- 54 -
direct financing leases that are recorded at the aggregate of future lease payments receivable
plus the estimated residual value of the leased property, if applicable, less unearned income.
In 2008, the Bank modified the method applied for determining interest income on credit
cardholder balances, so as to recognize income that corresponds to the lapse from the monthly
cut-off date of each card to month-end date.
This change allows for measuring with more precision income accrued over credit card
activities. Effect from its retrospective application was not presented because such effect is
deemed as immaterial.
A loan is considered to be impaired when based on current information, it is probable the Bank
will not receive all amounts due in accordance with the contractual terms of a loan agreement.
The fair value is measured based on either the present value of expected future cash flows
discounted at the loan's effective interest rate, the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. A loan is also considered impaired if its
terms are modified in a troubled debt restructuring. When the ultimate collectibility of the
principal balance of an impaired loan is in doubt, all cash receipts are applied to principal. Once
the recorded principal balance has been reduced to zero, future cash receipts are recorded as
recoveries of any amounts previously charged off, and then to interest income to the extent
any interest has been forgone.
Restructured loans are loans for which the original contractual terms have been modified to
provide for terms that are less than those the Bank would be willing to accept for new loans
with comparable risk because of deterioration in the borrower’s financial condition. Interest on
these loans is accrued at the renegotiated rates.
The Bank’s policy is to discontinue accrual of interest either when reasonable doubt exists as to
the full, timely collection of interest or principal, or when a loan becomes 90 days or more past
due as to principal or interest. Credit card receivables that become 120 days past due or
assigned to legal status are placed on non accrual status. The accrued and unpaid interest is
reversed against interest income and, thereafter, the loan is accounted for on the cash method
until it qualifies for return to accrual. When borrowers demonstrate over an extended period
the ability to repay a loan in accordance with the contractual terms of a loan classified as non
accrual, the loan is returned to accrual status. The Bank charges off loans when collectibility of
principal is not probable.
(g)
- 55 -
Allowance for Loan Losses and Reserve for Unfunded Lending Commitments
The allowance for loan losses and the reserve for unfunded lending commitments represent
the amounts, which, in management’s judgment, will be adequate to absorb inherent losses of
the existing loan portfolio and unfunded commercial lending commitments, respectively, at
balance sheet date. The Bank has developed policies and procedures for assessing the adequacy
of the allowance for loan losses and the reserve for unfunded lending commitments that
reflect the assessment of credit risk considering all available information. Where appropriate,
this assessment includes monitoring qualitative and quantitative trends including changes in
the levels of past due, criticized and nonperforming loans. In developing this assessment, the
Bank must rely on estimates and exercise judgment in assessing credit risk. Depending on
changes in circumstances, future assessments of credit risk may yield materially different
results from the estimates, which may require an increase or a decrease in the allowance for
loan losses or the reserve for unfunded lending commitments. Additions to the allowance for
loan losses are based on several factors which include, but are not limited to, analytical review
of loan loss experience in relation to outstanding loans, a continuing review of problem or non
performing loans, overall portfolio quality and adequacy of collateral, results of regulatory
examinations, evaluation of independent appraisals, and management’s judgment with
respect to the impact of current economic conditions on the existing loan portfolio.
The allowance on certain homogeneous loan portfolios is based on aggregated portfolio
segment evaluations generally by product type. Loss forecast models are utilized for these
segments which consider a variety of factors including, but not limited to, historical loss
experience, estimated defaults or foreclosures based on portfolio trends, delinquencies,
economic conditions and credit scores. The consumer loss forecast models are updated at least
once a year in order to incorporate information reflective of the current economic environment.
The remaining commercial portfolios are reviewed on an individual loan basis. Loans subject to
individual reviews are analyzed and segregated by risk according to the Bank’s internal risk
rating scale. These risk classifications, in conjunction with an analysis of current economic
conditions, industry performance trends, and any other pertinent information (including
individual valuations on nonperforming loans in accordance with SFAS No. 114, “Accounting by
Creditors for Impairment of a Loan” (SFAS 114)) result in the estimation of the allowance for
loan losses. The historical loss experience is updated at least quarterly to incorporate the most
recent data reflective of the current economic environment.
In addition to the allowance for loan losses, the Bank also estimates probable losses related to
unfunded lending commitments, such as letters of credit and financial guarantees, and binding
unfunded loan commitments. Unfunded lending commitments are subject to individual
reviews and are analyzed and segregated by risk according to the Bank’s internal risk rating
scale. These risk classifications, in conjunction with an analysis of current economic conditions,
performance trends and any other pertinent information, result in the estimation of the reserve
for unfunded lending commitments.
The allowance for loan losses relating to the loan portfolio, and the reserve for unfunded
lending commitments are reported in the consolidated balance sheets in the allowance for loan
losses, and other liabilities, respectively. Provision for loan losses related to the loan portfolio
and unfunded lending commitments are reported in the consolidated statement of income in
the provision for loan losses and other operating expenses, respectively.
- 56 -
(h)
Foreclosed Assets
Assets acquired through, or in lieu of, loan foreclosures are held for sale and are initially
recorded at the lower of its cost or fair value less costs to sell at the date of foreclosure,
establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed
by management and the assets are carried at the lower of carrying amount or fair value less
cost to sell. Revenue and expenses from operations and changes in the valuation allowance of
those assets are included in other operating expenses.
(i)
Transfer of Financial Assets
Transfers of financial assets are accounted for as sales, when control over the assets has been
surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets
have been isolated from the Bank, (2) the transferee obtains the right (free of conditions that
constrain it from taking advantage of that right) to pledge or exchange the transferred assets,
and (3) the Bank does not maintain effective control over the transferred assets through an
agreement to repurchase them before maturity.
When the Bank sells receivables in securitizations of loans, it might retain servicing rights, and
in some cases residual values and cash reserve accounts, all of which are retained interests in
the securitized loans. Gain or loss on sale of the loans depends in part on the previous carrying
amount of the financial assets involved in the transfer, allocated between the assets sold and
the retained interests based on their fair values at the date of transfer.
(j)
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation is computed using the straight-line method over the estimated useful lives of the
respective assets or based on use, as follows:
Years/Base
Buildings and improvements
Aircraft
Equipment and furniture
Computers
Vehicles
20 – 50
Based on hours flown
5 –10
3–5
5
Leasehold improvements are amortized in three to five years or the lease term, whichever is
lower.
Expenditures for major renewals and improvements are capitalized. Repairs and maintenance
expenditures are charged to expense as incurred. The cost and accumulated depreciation and
amortization relating to premises and equipment retired or otherwise disposed of are
eliminated from the accounts and any resulting gains or losses are credited or charged to
income.
- 57 -
(k)
Goodwill and Intangible Assets
Goodwill and identified intangible assets with indefinite useful lives are not amortized but
rather tested for impairment annually. This test involves assigning tangible assets and
liabilities, identified intangible assets and goodwill to reporting units and comparing the fair
value of each reporting unit to its carrying amount. If the fair value is less than the carrying
amount, a further test is required to measure the amount of impairment.
Identified intangible assets that have a definite useful life are amortized over that life in a
manner that approximates the estimated decline in the economic value of the identified
intangible asset. Identified intangible assets that have a definite useful life are periodically
reviewed to determine whether there have been any events or circumstances to indicate the
recorded amount is not recoverable from projected undiscounted net operating cash flows. If
the projected undiscounted net operating cash flows are less than the carrying amount, a loss
is recognized to reduce the carrying amount to fair value, and when appropriate, the
amortization period is also reduced.
(l)
Revenue Recognition
Revenue is recognized when the earnings process is complete and collectibility is assured.
Specifically, brokerage commission fees are recognized in income on a trade date basis. Asset
management fees, measured by assets at a particular date, are accrued as earned. Advisory fees
are recognized when the transaction is complete. Commission expenses are recorded when the
related revenue is recognized. Transaction-related expenses are recognized as incurred.
Credit card annual fees, net of direct lending costs, are deferred and amortized on a straightline basis over a one-year term. Merchant’s commission income is determined based on the
amount and type of purchase by the cardholder and is recognized at the time the charges are
billed.
The Bank offers rewards programs that allow its cardholders to earn points that can be
redeemed for a broad range of rewards including cash, travel and discounted products. The
Bank establishes a rewards liability based upon the points earned which are expected to be
redeemed and the average cost per point redemption. The points to be redeemed are estimated
based on past redemption behavior, card product type, account transaction activity and other
historical card performance. The liability is reduced as the points are redeemed. The estimated
cost of the rewards programs is recorded as contra-revenue against credit card commissions.
(m) Fair Value
Effective January 1, 2008, the Bank determines the fair values of its financial instruments based
on the fair value hierarchy established in SFAS No. 157 “Fair Value Measurements” which
requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. Fair value is used on a recurring basis for
assets and liabilities that are elected to be accounted for under SFAS No. 159 “The Fair Value
Option for Financial Assets and Financial Liabilities” as well as for certain assets and liabilities in
which fair value is the primary basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Fair
- 58 -
value is defined as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. Depending on
the nature of the asset or liability, the Bank uses various valuation techniques and assumptions
when estimating fair value, which are in accordance with SFAS No. 157.
In accordance with SFAS No. 157, the Bank applied the following fair value hierarchy:
o Level 1 – Assets or liabilities for which the identical item is traded on an active exchange,
such as publicly-traded instruments or futures contracts.
o Level 2 – Assets and liabilities valued based on observable market data for similar
instruments, quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the full
term of the assets or liabilities.
o Level 3 – Assets or liabilities for which significant valuation assumptions are not readily
observable in the market; instruments valued based on the best available data, some of
which is internally-developed, and consider risk premiums that a market participant
would require.
When determining the fair value measurements for assets and liabilities required or permitted
to be recorded at fair value, the Bank considers the principal or most advantageous market in
which it would transact and considers assumptions that market participants would use when
pricing the asset or liability. When possible, the Bank looks to active and observable markets to
price identical assets or liabilities. When identical assets and liabilities are not traded in active
markets, the Bank looks to market observable data for similar assets and liabilities.
Nevertheless, certain assets and liabilities are not actively traded in observable markets and the
Bank must use alternative valuation techniques to derive a fair value measurement.
(n)
Derivative Financial Instruments
The Bank makes use of derivative financial instruments, primarily as part of its management of
interest rate risks.
Derivative financial instruments such as interest rate swaps and interest rate caps are used to
manage interest rate risk through the exchange of interest payments based on a
predetermined notional principal amount. The underlying principal balances are not affected.
Net settlement amounts are reported in other income.
The Bank carries all derivatives in the consolidated balance sheets at fair value. The accounting
for changes in fair value (i.e. gains or losses) of a derivative depends on whether it has been
designated and qualifies as part of a hedging relationship and, if so, the type of hedge. That is,
the derivative is designated by the Bank as (1) a hedge of the fair value of a recognized asset or
liability or of an unrecognized firm commitment (“fair value” hedge); or (2) a hedge of the
variability of cash flows of a forecasted transaction to be received or paid related to a
recognized asset or liability (“cash flow” hedge); or (3) as a freestanding.
Changes in the fair value of a derivative that has been designated and qualifies as a fair value
hedge, along with the changes in the fair value of the hedged asset or liability that are
- 59 -
attributable to the hedged risk, are included in other income (expense) and recorded as
derivative and hedging activities. Changes in the fair value of a derivative that has been
designated and qualifies as a cash flow hedge are recorded in other comprehensive income
(loss) to the extent of its effectiveness, until earnings are impacted by the variability of cash
flows from the hedged item. Changes in the fair value of derivatives held for trading purposes
or those that do not qualify as hedges (freestanding) are included in other income (expense)
and recorded as derivative and hedging activities.
At the inception of each hedge, when applicable, the Bank documents the relationship between
hedging instruments and hedged items, as well as its risk management objective and strategy
for undertaking the hedge transactions. This process includes linking all derivatives that are
designated as fair value or cash flow hedges to specific assets and liabilities on the consolidated
balance sheets, or to specific firm commitments or forecasted transactions.
(o)
Employee Benefits
The Bank is subject to the labor law of each country in which it operates. The Bank provides for
employee benefits when such benefit relates to services already rendered by the employee, the
employee is currently entitled to receive the benefit, the payment of the benefit is probable and
the amount of the benefit can be estimated.
As part of these benefits, the Bank recognizes a provision for vacation time accrued but not
enjoyed by its employees at each balance sheet date, when the respective law states that such
vacation time is an inalienable labor right.
In the majority of countries, employee termination benefits apply principally when the
employee is dismissed without due cause, in accordance with the corresponding labor law.
Consequently, such benefits are contingent and are recognized in earnings as incurred.
However, when the right to termination benefits is vested and does not depend on the
occurrence of unforeseen future events, the Bank accrues a provision to cover the future related
disbursements.
(p)
Income Tax
The Bank uses the asset and liability method of accounting for income taxes. Under the asset
and liability method, deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates
expected to be applied to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the enactment date period. A valuation allowance is
recognized when it is more likely than not that some portion or all of the deferred tax assets
will not be realizable. The Bank periodically evaluates jointly with its tax specialists, any
uncertain tax positions.
- 60 -
(q)
Foreign Currency
Assets, liabilities and operations of foreign subsidiaries are recorded based on the functional
currency of each entity. For foreign operations, the functional currency is the local currency, in
which case the assets, liabilities and operations are translated, for consolidation purposes, at
period-end rates from the local currency to the reporting currency, the U.S. dollar. The resulting
unrealized gains or losses are reported as a component of accumulated other comprehensive
income (loss).
When the foreign entity’s functional currency is determined to be the U.S. dollar, foreign
currency transactions are recorded at the exchange rate prevailing at the date of the
transaction. Assets and liabilities denominated in foreign currency are re-measured into the
functional currency at the exchange rate prevailing at balance sheet date. Resulting gains and
losses on foreign currency transactions are included within other income in the consolidated
statements of income.
(r)
(3)
Reclassifications
Certain amounts in the 2007 consolidated financial statements have been reclassified to
conform to the 2008 consolidated financial statement presentation.
Business Combinations
The Bank believes the acquisitions described in the following paragraphs will enhance stockholder
value by expanding the Bank’s range of available products and services and increasing the
distribution channels available to customers.
The Bank acquired 99.9 percent of the outstanding stock of Banco Mercantil, S.A. (BAMER), a
Honduran banking institution, on June 13, 2007. The aggregate purchase price was approximately
US $132,449,000; including a cash payment of US $130,222,000. The acquisition was accounted for
under the purchase method of accounting in accordance with SFAS No. 141, “Business Combinations”.
Accordingly, the results of operations of BAMER’s operations have been included in the consolidated
financial statements since the acquisition date.
- 61 -
The total purchase price of approximately US $132,449,000 has been allocated to the assets acquired
and the liabilities assumed based on their fair values at the BAMER purchase date as summarized in
the following table:
June 13,
2007
Assets
Securities
Loans, net of unearned income
Loans, net
Property and equipment
Intangible assets
Goodwill
Other assets
Total assets
Liabilities
Deposits
Borrowings
Other liabilities
Total liabilities
Net assets acquired
US$
US$
189,045,217
27,473,273
535,262,228
(20,524,886)
514,737,342
21,200,644
12,610,000
57,961,469
20,408,528
843,436,473
532,312,308
151,292,964
27,382,615
710,987,887
132,448,586
Of the US $12.6 million of acquired intangibles assets, US $11.0 million was assigned to core deposit
intangible with a weighted-average useful life of approximately 17 years. The intangible assets that
make up the remaining amount include purchased credit card relationships for US $1.4 million (10year weighted - average useful life), and other assets of US $0.2 million (1-year useful life). None of
the intangible assets are tax deductible. Goodwill of US $57.9 million is not deductible for tax
purposes.
During 2007, the Bank acquired the following two entities for a total cost of approximately US $64.1
million, which was paid in cash:
o
o
Corporacion Financiera Miravalles S. A., based in Costa Rica, a financial group that offered
primarily consumer loans.
Fundacion Salvadoreña para el Desarrollo Economico y Social, based in El Salvador, a
financial group that offered primarily small business loans.
Goodwill recognized in those transactions amounted to US $17.9 million and approximately US $10.2
million is expected to be deductible for tax purposes.
- 62 -
(4)
Cash and Due from Banks, and Pledged Interest-Bearing Deposits
At December 31, 2008 and 2007, cash and due from banks aggregating US $1,015,205,076 and
US$743,890,147, respectively, are pledged to cover legal liquidity reserve requirements.
At December 31, 2008 and 2007, interest-bearing deposits amounting to US $8,382,000 and
US$14,215,955, respectively, are pledged as legal liquidity or to guarantee borrowings and other credit
facilities.
(5)
Supplemental Information to the Consolidated Statements of Cash Flows
Certain supplemental information related to cash flows statement is shown below.
2007
2008
Cash paid for interest during the year
Cash paid for income taxes during the year
Additional information on non cash investing and
financing activities is as follows:
Changes in unrealized gain (loss) on securities
available for sale, net of tax
Properties acquired in settlement of loans
In conjunction with the business acquisitions,
liabilities assumed were as follows:
Fair value of assets acquired
Cash paid
Liabilities assumed
(6)
US$
US$
241,475,812
49,500,649
196,137,877
38,762,891
US$
US$
US$
(7,430,441)
0
6,929,164
218,724
32,510,635
4,650,623
US$
US$
0
0
0
939,582,514
(194,349,103)
745,233,411
Trading Securities
At December 31, 2008 and 2007, trading securities consist of government bonds amounting to
US $16,596,718 and US $27,347,792, respectively.
Net (loss) gains on security trading activities included in earnings for the years ended December 31,
2008 and 2007 amount to US $(358,825) and US $394,619, respectively, including unrealized (loss)
gains on trading securities for US $(858,786) and US $62,587, respectively.
At December 31, 2008 and 2007, securities with a carrying value of US $4,562,918 and US $16,541,128,
respectively, were pledged to secure repurchase agreements.
- 63 -
(7)
Securities Available for Sale
The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of
securities available for sale as of December 31, 2008 and 2007 is as follows:
2008
Amortized
Cost
Government bonds and
agency securities
Corporate debentures
Mutual funds
Others securities
US$
US$
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(5,619,535)
(22,869)
(1,779,635)
0
(7,422,039)
Fair Value
394,079,348
5,567,465
9,818,316
18,185
409,483,314
191,404
164,724
0
4,281
360,409
388,651,217
5,709,320
8,038,681
22,466
402,421,684
Amortized
Cost
Gross
Unrealized
Gains
205,251,927
15,924,228
5,845,319
1,604,677
186,674
253,566
(347,946)
(182,995)
0
206,508,658
15,927,907
6,098,885
4,572,409
12,390,838
20,197
244,004,918
0
0
14,596
2,059,513
0
(521,930)
0
(1,052,871)
4,572,409
11,868,908
34,793
245,011,560
2007
agency securities
Mortgage-backed securities
Retained interests on securitization
of mortgages
Mutual funds
Other securities
US$
US$
Gross
Unrealized
Losses
Fair Value
- 64 -
A summary of securities available for sale as of December 31, 2008 and 2007 by contractual maturity
is presented below. Expected maturities will differ from contractual maturities because issuers may
have the right to call or prepay obligations with or without call or prepayment penalties.
2008
Amortized
Cost
Government bonds and agency securities:
Due within one year
Due after one year but within five years
Due after five years but within ten years
Due after ten years
2007
Amortized
Cost
Fair Value
Fair Value
US$ 252,689,524
56,570,210
21,889,275
62,930,339
394,079,348
252,509,590
55,243,691
20,364,755
60,533,181
388,651,217
43,920,603
65,740,662
59,566,113
36,024,549
205,251,927
43,931,318
65,886,602
59,970,529
36,720,209
206,508,658
3,081,840
2,485,625
5,567,465
3,066,355
2,642,965
5,709,320
8,253,557
7,670,671
15,924,228
8,246,583
7,681,324
15,927,907
Mortgage-backed securities:
Due after ten years
0
0
5,845,319
6,098,885
Retained interests on securitization of
mortgages:
Due after ten years
0
0
4,572,409
4,572,409
9,818,316
8,038,681
12,390,838
11,868,908
18,185
US$ 409,483,314
22,466
402,421,684
20,197
244,004,918
34,793
245,011,560
Corporate debentures:
Due after one year but within five years
Due after five years but within ten years
Mutual funds:
Without maturity
Other:
Without maturity
At December 31, 2008 and 2007, securities with a carrying value of US $3,616,775 and US $42,935,635;
respectively, were pledged to secure borrowings and repurchase agreements.
For the years ended December 31, 2008 and 2007, proceeds from sale of securities available for sale
amounted to US $211,774,866 and US $129,528,624, respectively. Gross realized gains amounted to
US $8,726,052 and US $12,430,373 for 2008 and 2007, respectively. Gross realized losses amounted to
US $124,402 and US $191,669 for 2008 and 2007, respectively.
- 65 -
Gross unrealized losses on securities available for sale and the fair value of the related securities,
aggregated by category and length of time the individual security has been in the continuous
unrealized loss position at December 31, 2008 and 2007, were as follows:
2008
More than 12 Months
Fair
Unrealized
Value
Losses
12 Months or less
Fair
Unrealized
Value
Losses
agency securities
Mutual funds
Total
US$
US$
323,826,088
2,058,971
0
325,885,059
(4,100,941)
(22,869)
0
(4,123,810)
30,979,546
2,642,965
8,038,680
41,661,191
2007
More than 12 Months
Fair
Unrealized
Value
Losses
12 Months or less
Fair
Unrealized
Value
Losses
agency securities
Mutual funds
Total
US$
US$
24,529,848
5,362,928
8,752,374
38,645,150
(296,247)
(9,595)
(497,626)
(803,468)
(1,518,594)
0
(1,779,635)
(3,298,229)
21,319,985
4,411,650
544,011
26,275,646
(51,699)
(173,400)
(24,304)
(249,403)
Total
Fair
Value
Unrealized
Losses
354,805,634
4,701,936
8,038,680
367,546,250
(5,619,535)
(22,869)
(1,779,635)
(7,422,039)
Total
Fair
Value
Unrealized
Losses
45,849,833
9,774,578
9,296,385
64,920,796
(347,946)
(182,995)
(521,930)
(1,052,871)
The unrealized losses on investments are caused by interest rate increases. The decline in fair value is
mainly attributable to changes in interest rates and not credit quality, and the Bank has the intent
and ability to hold those investments until a market price recovery or maturity; therefore, these
investments are not considered other-than-temporarily impaired.
(8)
Securities Held to Maturity
The amortized cost and fair value of securities held to maturity as of December 31, 2008 and 2007 are
as follows:
2008
Amortized
Cost
Government bonds
US$
US$
8,737,645
0
8,737,645
2007
Fair
Value
8,546,295
0
8,546,295
Amortized
Cost
14,167,646
4,988,091
19,155,737
Fair
Value
14,308,202
4,689,800
18,998,002
As of December 31, 2008 and 2007 the gross unrealized losses amount to US $191,350 and US $157,735,
respectively; most of the securities have been on a continuous unrealized loss position for more than
12 months. Management considers the unrealized losses to be attributable to increase in interest
rates and not due to decline in the credit quality of the issuers. Therefore, these securities are not
considered to be other–than–temporarily impaired.
- 66 -
A summary of securities held to maturity as of December 31, 2008 and 2007, by contractual maturity,
is presented below. Expected maturities would differ from contractual maturities because issuers
may have the right to call or prepay obligations with or without call or prepayment penalties.
2008
Amortized
Cost
Government bonds:
Due after one year but within
five years
Due after five years but within
ten years
Due after ten years
US$
Corporate debentures:
Due after one year but within
five years
Due after five years but within
ten years
US$
(9)
2007
Fair
Value
Amortized
Cost
Fair
Value
8,737,645
8,546,295
4,912,204
5,052,760
0
0
8,737,645
0
0
8,546,295
16,567
9,238,875
14,167,646
16,567
9,238,875
14,308,202
0
0
2,988,091
2,863,200
0
0
8,737,645
0
0
8,546,295
2,000,000
4,988,091
19,155,737
1,826,600
4,689,800
18,998,002
Loans
The composition of loans as December 31, 2008 and 2007 is as follows:
2008
Commercial, financial and industrial
Mortgage and real estate
Credit card
Vehicles
Other personal
Secured by cash
Lease financing
Overdrafts
US$ 1,587,078,208
1,269,553,794
1,274,836,241
410,439,552
346,754,075
123,631,632
112,992,057
35,200,861
US$ 5,160,486,420
2007
1,398,760,868
1,066,118,678
1,187,112,013
342,244,325
324,587,294
137,242,463
178,629,276
38,849,780
4,673,544,697
At December 31, 2008 and 2007, the Bank had loans for US $269,237,608 and US $283,868,587,
respectively, pledged to secure borrowings and other credit facilities.
At December 31, 2008 and 2007, the Bank’s non-accrual loans, including impaired loans, amounted to
US $109,498,046 and US $84,629,438, respectively. The Bank has no commitments to lend additional
funds to borrowers whose loans are classified as non-accruing.
- 67 -
Other real estate owned assets included in other assets amounted to US $14,749,057 and
US $11,774,980 at December 31, 2008 and 2007, respectively.
The following is a summary of information pertaining to impaired loans:
2008
2007
Impaired loans, all with a valuation allowance
US$
33,821,420
23,658,065
Valuation allowance
US$
9,140,207
9,108,564
Average recorded investment
US$
39,658,927
22,116,873
Interest income recognized on a cash basis
US$
2,185,695
2,368,526
The Bank has no commitments to lend additional funds to borrowers whose loans are impaired.
(10) Allowance for Loan Losses
The changes in the allowance for loan losses during the years ended December 31, 2008 and 2007 are
presented below:
2008
Balance, beginning of year
Balance from acquired entities at purchase date
Charge-offs
Recoveries
Balance, end of year
(11)
US$
US$
2007
127,780,918
118,619,842
0
(136,821,240)
23,297,463
(9,341,034)
123,535,949
69,808,464
88,764,845
26,295,681
(75,080,817)
16,866,651
1,126,094
127,780,918
Property and Equipment
Property and equipment as of December 31, 2008 and 2007 are detailed as follows:
2008
Land
Buildings and improvements
Equipment, furniture and vehicles
Constructions in progress
US$
Less: accumulated depreciation and amortization
US$
2007
20,460,046
74,164,363
212,798,792
8,686,431
316,109,632
(139,425,276)
176,684,356
19,737,308
68,169,623
182,465,148
5,135,309
275,507,388
(113,931,497)
161,575,891
- 68 -
(12)
Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the years ended December 31, 2008 and 2007, are
as follows:
2008
Goodwill:
Balance, beginning of the year
Goodwill acquired during the year
Purchase accounting adjustments
Foreign exchange
Balance, end of the year
US$
78,470,167
0
7,818,296
(899,375)
85,389,088
US$
2007
2,632,748
75,719,314
(199,934)
318,039
78,470,167
The gross carrying amount and accumulated amortization for each of the Bank's identified intangible
assets subject to amortization at December 31, 2008 and 2007, are presented below:
2008
Gross
Carrying
Amount
Core deposit intangible
Purchased credit card
relationships
Merchant relationships
Trade name
2007
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
US$
12,034,978
2,318,417
10,980,000
787,220
US$
7,992,127
739,999
41,570
20,808,674
2,100,338
316,190
24,942
4,759,887
1,400,000
230,000
41,570
12,651,570
29,400
115,000
16,628
948,248
During 2008, in the purchase of minority interests, intangible assets were acquired for US $8.2
million. Of that amount, US $1.1 million, US $6.6 million and US $0.5 million were assigned to core
deposit intangible, credit card relationships and merchant relationships, respectively. These
intangible assets, were assigned weighted - average useful lives of 17, 13 and 16 years, respectively.
None of these intangibles is deductible for tax purposes.
Amortization expense related to identified intangible assets for the years ended December 31, 2008
and 2007, is presented below:
2008
Core deposit intangible
Purchased credit card relationships
Merchant relationships
Trade name
US$
US$
- 69 -
1,531,197
2,070,938
201,190
8,314
3,811,639
2007
787,220
29,400
115,000
16,628
948,248
Amortization expense related to identified intangible assets in each of the five years subsequent to
December 31, 2008, is as follows: 2009: US $3,412,171, 2010: US $2,418,133, 2011: US $1,887,428, 2012:
US $1,497,749, 2013: US $1,235,244 and 2014 and thereafter: US $5,598,062.
(13)
Deposits
As of December 31, 2008 and 2007, the Bank held US $1,801,825,796 and US $1,471,108,452
respectively, of time deposits with principal balances of US $100,000 and over.
Scheduled maturities of time deposits at December 31, 2008 are as follows:
Year ending December 31,
2009
2010
2011
2012
2013
Thereafter
US$
US$
1,977,332,177
59,390,274
15,017,062
7,232,820
697,483
4,894,646
2,064,564,462
(14) Securities Sold under Agreements to Repurchase
The following table summarizes certain information on securities sold under agreements to
repurchase at or for the years ended December 31, 2008 and 2007:
2007
2008
Carrying amount at end of year
US$
30,488,158
49,201,840
Maximum amount outstanding at any month end
US$
52,500,255
49,201,840
Average amount outstanding during the year
US$
28,139,914
40,503,923
Weighted average interest rate for the year
2.03%
7.63%
Weighted average interest rate at end of year
5.17%
7.69%
- 70 -
(15)
Borrowings
Borrowings at December 31, 2008 and 2007 consist of the following:
Interest
Rate
2008
Maturity
Various Through
1.96% to 18.00%
1.15% to 12.50%
2025
2019
10.27%
2010
63,163,397
Payable in Quetzals (Guatemala):
Floating rate
8.50% to 11.50%
2010
42,852,347
Payable in Lempiras (Honduras):
Floating rate
0.01% to 15.00%
2037
82,837,175
Payable in Cordobas (Nicaragua):
Fixed rate
5.00% to 6.53%
2014
610,320
Payable in Colones (Costa Rica):
Fixed rate
Floating rate
5.00%
5.10% to 10.00%
2009
2010
2,086,210
30,967,147
1,409,153,132
Carrying
Amount
Payable in U. S. dollars:
Fixed rate
Floating rate
Payable in Mexican Pesos (Mexico):
Floating rate
US$
US$
- 71 -
163,333,284
1,023,303,252
Interest
Rate
2007
Maturity
Various Through
3.23% to 18.00%
3.75% to 13.25%
2025
2017
9.50%
2010
88,955,733
Payable in Quetzals (Guatemala):
Floating rate
7.25% to 8.50%
2008
40,140,028
Payable in Lempiras (Honduras):
Fixed rate
Floating rate
18.00% to 24.00%
5.00% to 15.00%
2008
2037
206,907
51,061,610
Payable in Cordobas (Nicaragua):
Fixed rate
5.00% to 6.53%
2019
852,389
Payable in Colones (Costa Rica):
Fixed rate
Floating rate
9.00%
5.60% to 8.00%
2008
2010
1,735,797
43,661,208
1,123,103,587
Payable in U.S. dollars:
Fixed rate
Floating rate
Payable in Mexican Pesos (Mexico):
Floating rate
Carrying
Amount
US$
US$
85,720,798
810,769,117
As of December 31, 2008 and 2007, the amount outstanding under the CIC Receivables Master Trust,
a consolidated special purpose vehicle, aggregated US $400,000,000 and US $288,504,812,
respectively. The certificates issued under such vehicle are secured by future cash flows from
merchant vouchers originating in Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica, and
by a financial guarantee insurance policy provided by Ambac Assurance Corp. The merchant vouchers
are those to be generated by holders of credit cards issued by third-party international financial
institutions, under Visa and MasterCard Credit Card Programs which are processed by the Bank. The
certificates pay interest quarterly each January, April, July and October at a rate of three-month
U.S. dollar LIBOR plus a margin (5.28% and 6.63%, including surety premiums, at December 31, 2008
and 2007, respectively). Principal amortization amounts will be paid to certificate holders beginning
in April 2010. The certificates had an original duration of 4.68 years. At December 31, 2008, the
certificates currently have a weighted - average duration of 5.1355 years.
At December 31, 2008 and 2007, secured borrowings amounted to US $679,025,751 and
US $601,758,968, respectively, including the amount outstanding under the CIC Receivables Master
Trust.
At December 31, 2008, the Bank had approximately US $284,374,853 available in unused lines of
credit that expire through 2012.
- 72 -
Scheduled maturities of borrowings at December 31, 2008, are as follows:
2009
2010
2011
2012
2013
Thereafter
US$
US$
544,854,105
177,148,704
209,603,807
74,409,419
76,668,303
326,468,794
1,409,153,132
(16) Other Borrowed Funds
Carrying amount of other borrowed funds at December 31, 2008 and 2007 consist of certificates of
indebtedness registered at and negotiable through the corresponding local stock exchanges in
Guatemala, El Salvador and Costa Rica, at fixed and variable interest rates, and is detailed as follows:
Payable in:
2008
Interest Rate
U.S. dollars
Quetzals
Colones
4.88% to 6.72%
7.02% to 9.75%
4.85% to 5.50%
2008
US$
US$
2007
84,646,234
57,323,657
_75,285,118
217,255,009
69,888,577
52,973,486
_90,614,261
213,476,324
Scheduled maturities of other borrowed funds at December 31, 2008 are as follows:
2009
2010
2011
2012
2013
US$
US$
91,572,231
57,360,753
8,500,000
34,822,025
25,000,000
217,255,009
At December 31, 2008 and 2007, the Bank had loans receivable for US $105,999,655 and
US $84,570,469, respectively, pledged to secure these other borrowed funds.
- 73 -
(17)
Other Operating Expenses
The following table sets forth the components of other operating expenses for the years ended
December 31, 2008 and 2007:
Advertising
Communications
Office supplies
Maintenance
Credit card franchise and authorization fees
Taxes other than income tax
Processing fees
Deposit insurance
Security
Armored services
Travel expenses
Other
US$
US$
2008
2007
23,352,603
18,396,155
9,126,001
15,491,704
16,250,049
8,512,181
5,264,559
3,755,191
5,618,421
5,853,460
5,470,708
61,411,728
178,502,760
22,045,269
16,242,070
7,887,697
14,363,588
13,633,411
8,371,903
4,911,921
2,876,044
4,052,779
4,218,177
5,220,973
45,835,934
149,659,766
2008
2007
(18) Income Taxes
Income tax expense consists of:
Current
Deferred
US$
US$
50,408,300
5,594,579
56,002,879
44,179,154
(8,264,567)
35,914,587
Income tax expense was US $56,002,879 and US $35,914,587 for the years ended December 31, 2008
and 2007, respectively, and differed from the amounts computed by applying the statutory income
tax rate to pretax consolidated earnings as a result of the following:
2008
Computed “expected” tax expense
Increase (decrease) in income taxes resulting
from:
Exempt and foreign source income
Tax incentives
Change in allowance
Nondeductible expenses
Foreign income taxes rate differential
Income tax expense
2007
US$
90,431,027
US$
(28,368,214)
(550,161)
79,227
33,588,660
(39,177,660)
56,002,879
68,697,035
(30,839,676)
(525,426)
(4,478,631)
10,934,509
(7,873,224)
35,914,587
- 74 -
Temporary differences between financial statement carrying amounts and tax bases of assets and
liabilities that give rise to the deferred tax assets and liabilities as of December 31, 2008 and 2007 are
as follows:
Deferred tax assets:
Net operating tax loss carryforwards
Deferred loan origination fees and costs
Accrued expenses
Unrealized loss on securities available for sale
Gross deferred tax assets
Less-valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Net premises and equipment depreciation
difference
Organizational costs
Deferred commissions and accrued interest
receivable
Foreclosed assets
Unrealized gains on securities available for
sale
Total deferred tax liabilities
Net deferred tax assets
US$
US$
2008
2007
395,642
12,284,298
1,401,359
1,286,689
888,795
16,256,783
(126,803)
16,129,980
730,001
14,422,163
383,482
2,394,190
0
17,929,836
(47,576)
17,882,260
(6,463,268)
0
(4,481,306)
(375,307)
(4,862,816)
(259,730)
(1,777,142)
0
0
(11,585,814)
4,544,166
(120,756)
(6,754,511)
11,127,749
The valuation allowance for deferred tax assets as of December 31, 2008 and 2007 was US $126,803
and US $47,576, respectively.
The net change in the total valuation allowance for the years ended December 31, 2008 and 2007 was
an increase of US $79,227 and a decrease of US $4,478,631, respectively. In assessing the realizability
of deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible.
At December 31, 2008, subsidiaries of the Bank have incurred in net operating tax loss
carryforwards of US $1,080,754, which are available to offset future taxable income of the applicable
subsidiaries, if any, through 2028.
In July 2006, the FASB issued Interpretation FIN 48, “Accounting for Uncertainty in Income Taxes,”
which attempts to set out a consistent framework to determine the appropriate level of tax reserves
for uncertain tax positions. The Bank elected to defer the application of the Interpretation until year
2009, following the guidance of the FASB Staff Position FIN 48-3, “Effective Date of FASB
- 75 -
Interpretation No. 48 for Certain Nonpublic Enterprises”. The Bank has determined that there are no
uncertain, significant tax positions that must be recognized on the consolidated financial
statements.
(19) Accumulated Other Comprehensive Loss, Net
The following table presents the components of and changes in accumulated other comprehensive
loss for the years ended December 31, 2008 and 2007:
Foreign
Currency
Translation
Balances as of December 31, 2006
Current year changes
Current year changes
US$
(60,303,957)
3,918,637
(56,385,320)
(30,647,519)
(87,032,839)
US$
Unrealized Net
Gain (Loss) on
Securities
667,162
218,724
885,886
(7,430,441)
(6,544,555)
Accumulated
Other
Comprehensive
Loss
(59,636,795)
4,137,361
(55,499,434)
(38,077,960)
(93,577,394)
The following table presents details of other comprehensive income (loss) for the years ended
December 31, 2008 and 2007:
December 31, 2008
Income tax
Pre-tax
(Expense)
Amount
Benefit
Foreign currency translation adjustment
Unrealized gains (loss) on securities:
Unrealized net holding losses
securities
After-tax
Amount
US$ (30,647,519)
0
(30,647,519)
(11,192,360)
2,315,348
(8,877,012)
_1,961,023
(9,231,337)
39,878,856
(514,452)
1,800,896
1,800,896
1,446,571
( 7,430,441)
(38,077,960)
on
Less: reclassification adjustment to
earnings for realized net losses (gains)
Net current year changes
Other comprehensive loss, for the year
US$
- 76 -
December 31, 2007
Income tax
Pre-tax
(Expense)
Amount
Benefit
Foreign currency translation adjustment
US$
Unrealized gains (loss) on securities:
Unrealized net holding losses on
securities
Less:
reclassification adjustment to
earnings for realized net losses (gains)
Net current year changes
Other comprehensive income for the year
US$
After-tax
Amount
3,918,637
0
(2,004,539)
857,790
(1,146,749)
2,019,235
14,696
3,933,333
(653,762)
204,028
204,028
1,365,473
218,724
4,137,361
3,918,637
(20) Off-Balance Sheet Financial Instruments
The Company is a party to financial instruments with off-balance sheet risk in the normal course of
business to meet the financing needs of its customers. These financial instruments include,
principally, commitments to extend credit, financial guarantees and letters of credit, the balances of
which are not reflected in the accompanying consolidated balance sheets.
Letters of credit are conditional commitments issued by the Bank to guarantee performance of a
customer to a third party. Those letters of credit are primarily used to support trade transactions and
borrowing arrangements. Generally, all letters of credit issued have expiration dates within one year.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending
loan facilities to customers.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation
of any condition established in the contract. Commitments generally have fixed expiration dates or
other termination clauses and may require payment of a fee. The commitments may expire without
being drawn upon. Therefore, the total commitment amounts do not necessarily represent future
cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank, is based
on management’s credit evaluation of the customer. At December 31, 2008 and 2007, the Bank had
not entered into non-cancelable commitments to extend credit.
As of December 31, 2008 the Bank had outstanding revolving lines of credit available to its credit card
customers in each of the various countries of operation that ranged from approximately US $127
million to US $1,399 million (US $150 million to US $1,208 million in 2007). The unused portion of the
total amount available in each country, aggregated approximately from US$80 million to US$1,058
million (US $93 million to US $934 million in 2007). While these amounts represented the available
lines of credit to customers per country, the Bank has not experienced, and does not anticipate, that
all of its customers will exercise their entire available lines at any given point in time. The Bank
generally has the right to increase, reduce, cancel, alter or amend the terms of these available lines of
credit at any time.
- 77 -
Financial guarantees are used in various transactions to enhance the credit standing of the Bank’s
customers. They represent irrevocable assurances that the Bank will make payment in the event that
the customer fails to fulfill its obligations to third parties.
The Bank uses the same credit policies in making commitments and conditional obligations as it does
for on-balance sheet instruments. At December 31, 2008 and 2007 outstanding letters of credit and
financial guarantees are as follows:
2008
Standby letters of credit
Commercial letters of credit
Financial guarantees
US$
US$
13,280,023
47,652,697
215,256,715
276,189,435
2007
20,247,079
45,597,110
179,113,306
244,957,495
The nature, terms and maximum potential amount of future payments the Bank could be required to
make under the standby letters of credit and guarantees as of December 31, 2008 and 2007, are
detailed as follows:
2008
Up to 1 year
Over 1 year
US$
US$
190,163,410
38,373,328
228,563,738
2007
169,774,735
29,585,650
199,360,385
Generally, the Bank has resources to recover from clients the amounts paid under these guarantees;
additionally, the Bank can hold cash or other collateral to cover for these guarantees. The assets held
as collateral, that the Bank can obtain and liquidate to recover totally or partially the amounts paid
under guarantees as of December 31, 2008 and 2007, amounted to US $46,112,020 and
US $22,425,486, respectively.
The fair value of the letters of credit and guarantees as of December 31, 2008 and 2007 are of
US $1,669,678 and US $1,606,424, respectively.
Other Commitments
During 2008, the Bank entered into a sale and leaseback of US$23,400,000 of an aircraft, which has
been classified as an operating lease. Rental expense of this operating lease was US$411,272 in 2008.
- 78 -
Minimum lease payments under this operating lease due in each of the five years subsequent to
December 31, 2008, are as follows:
US$
(21)
2009
2010
2011
2012
2013
Thereafter
Total
1,393,638
1,399,626
1,405,714
1,411,907
1,418,210
6,947,590
13,976,685
Derivative Financial Instruments
The accounting of derivatives financial instruments requires that these financial instruments be
recorded on the consolidated balance sheets at their fair value. In the normal course of business, the
Bank uses interest rate derivatives primarily for economic hedging purposes in its balance sheet
management activities.
Types of Derivative Instruments
Derivative instruments negotiated by the Bank are executed mainly over-the-counter (OTC). These
contracts are executed between two counterparties that negotiate specific agreement terms,
including notional amount, exercise price and maturity.
For purposes of asset/liability activities, the Bank uses the following instruments:
Interest rate swaps are contracts in which a series of interest rate flows, which involve fixed for
floating interest payments or vice-versa.
An interest rate cap is a contract that guarantees a maximum level of LIBOR. Caps are also known as
ceilings. In return for making this guarantee, the buyer pays a premium. Caps generally guarantee a
maximum level of either 3 or 6 month LIBOR or whatever the prevailing floating rate index is in the
particular market. The Bank’s maximum loss on a cap transaction is the premium.
The Bank has designated these derivative instruments as freestanding derivatives.
The following table provides quantitative information on derivative financial instruments
outstanding at December 31, 2008 and 2007.
2008
Notional
Amount
Freestanding:
Interest rate swaps
Interest rate caps
US$
US$
- 79 -
50,000,000
0
50,000,000
2007
Fair Value
Assets
Liability
0
0
0
616,073
0
616,073
Notional
Amount
Fair Value
Assets
Liability
25,000,000
82,000,000
107,000,000
0
244,882
244,882
822,491
0
822,491
(22) Concentration of Credit Risk
Concentrations of credit risk arise when changes in economic, industry or geographic factors similarly
affect groups of counterparties whose aggregate credit exposure is material in relation to the Bank’s
total credit exposure. Through the operation of subsidiary banks in Central American countries,
however, the Bank has widened its lending activities, diversifying into other consumer and
commercial products. The loan book is well diversified by economic sector and by individual
exposures. By country the largest loan exposures are held in Costa Rica, Honduras and El Salvador.
(23) Disclosures about Fair Value of Financial Instruments
As discussed in Note 2 (m), “Summary of Significant Accounting Policies,” the Bank adopted the fair
value financial accounting standards SFAS No. 157 and SFAS No. 159 as of January 1, 2008. In certain
circumstances, fair value enables a Bank to more accurately align its financial performance with the
market value of actively traded or hedged assets or liabilities. Fair value enables the Bank to mitigate
the non-economic earnings volatility caused from financial assets and financial liabilities being
carried at different bases of accounting, as well as to more accurately portray the active and dynamic
management of Bank’s balance sheet.
The Bank established a process for determining fair values. Fair value is based upon quoted market
prices, where available. If listed prices or quotes are not available, fair value is based upon internallydeveloped models that primarily use, as inputs, market-based or independently sourced market
parameters, including but not limited to yield curves, interest rates, debt prices, foreign exchange
rates and credit curves. In addition to market information, models also incorporate transaction
details, such as maturity. Valuation adjustments may be made to ensure that financial instruments
are recorded at fair value.
The methods described above may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Furthermore, while the Bank believes its valuation
methods are appropriate and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial instruments could
result in a different estimate of fair value at the reporting date.
Financial Instruments Measured at Fair Value
Following is a description of the valuation methodologies used for instruments measured at fair
value, including the general classification of such instruments pursuant to the valuation hierarchy.
Securities
Where quoted prices are available in an active market, securities are classified in level 1 of the
valuation hierarchy. Level 1 securities include highly liquid government and agency bonds, and
exchange-traded equities. If quoted market prices are not available for the specific security, then fair
values are estimated by using quoted prices of securities with similar characteristics or discounted
cash flows. In certain cases where there is limited activity or less transparency around inputs to the
valuation, securities are classified within level 3 of the valuation hierarchy. For instance, in the
valuation of certain debt obligations the determination of fair value may require benchmarking to
similar instruments or analyzing default and recovery rates.
- 80 -
Loans
Where pricing information is not available for the specific loan, the valuation is generally based upon
using discounted cash flow models with market-based credit spreads of comparable debt
instruments. In addition, general market conditions, including prevailing market spreads for credit
and liquidity risk, assumptions about prepayment speeds, default rates and loss severity rates are
also considered in the valuation process.
Derivatives
The majority of derivatives entered into by the Bank are executed over the counter and so are valued
using internal valuation techniques as no quoted market prices exist for such instruments. The
valuation technique and inputs depend on the type of derivative and the nature of the underlying.
The key inputs to the models depend upon the type of derivative and the nature of the underlying
instrument and include period to maturity and market-based parameters such as interest rate yield
curves, foreign-exchange rates, the spot price of the underlying, volatility, the credit quality of the
counterparty and correlation. Further, many of the models do not contain a high level of subjectivity
as the methodologies used in the models do not require significant judgment, and inputs to the
model are readily observable from actively quoted markets, as is the case for “plain vanilla” interest
rate swaps. Such instruments are generally classified within level 2 of the valuation hierarchy.
Assets and liabilities measured at fair value on a recurring basis, including financial instruments for
which the Bank has elected the fair value option, are summarized below:
Net
Year ended December 31, 2008
Assets
Trading securities
Loans
Total assets
Liabilities
Derivatives
Total liabilities
Level 1
Level 2
Level 3
Balance
US$
16,596,718
383,042,776
0
0
19,378,908
0
0
0
43,020,107
16,596,718
402,421,684
43,020,107
US$
399,639,494
19,378,908
43,020,107
462,038,509
US$
0
616,073
0
616,073
US$
0
616,073
0
616,073
The table below includes a rollforward of the balance sheet amounts for the year ended December 31,
2008 (including the change in fair value), for financial instruments classified by the Bank within level
3 of the valuation hierarchy. When a determination is made to classify a financial instrument within
level 3, the determination is based upon the significance of the unobservable parameters to the
overall fair value measurement. However, level 3 financial instruments typically include, in addition
to the unobservable or level 3 components, observable components (that is, components that are
actively quoted and can be validated to external sources); accordingly, the gains and losses in the
table below include changes in fair value due in part to observable factors that are part of the
valuation methodology.
- 81 -
Fair value
as of
January 1,
2008
Total realized
gains and
(losses)
included in
earnings
Transfers in
and/or out of
Level 3
Origination, and
settlements
Fair value
as of
December
31, 2008
0
11,286,980
43,020,107
Unrealized
gains
(losses)
Assets
Loans
US$
30,235,069
1,498,058
3,090,253
Fair-Value Elections
In February 2007, the FASB issued SFAS 159, which is effective for fiscal years beginning after
November 15, 2007, with early adoption permitted. SFAS 159 provides an option to elect fair value as
an alternative measurement for selected financial assets, financial liabilities, unrecognized firm
commitments, and written loan commitments not previously carried at fair value.
The Bank elected to record certain fixed-rate mortgage loans to mitigate the volatility in earnings
that had been created by recording financial instruments and the related risk management
instruments on a different basis of accounting and to eliminate the operational complexities of
applying hedge accounting. The following table provides detail regarding the Bank’s elections by
consolidated balance sheet line as of January 1, 2008.
Impact on Retained Earnings of certain Fair Value Elections in accordance with SFAS 159
Detailed below are the December 31, 2007 carrying values prior to adoption of SFAS 159, the transition
adjustments booked to opening retained earnings and the fair values (that is, the carrying values at
January 1, 2008 after adoption) for those items that were selected for fair-value option accounting
and that had an impact on retained earnings. These entries include certain fixed-rate mortgage
loans, for which the Bank maintained economic coverage by means of interest rate swaps.
Balance as of
December 31,
2007
Impact of adoption of fair value options under SFAS 159
Mortgage loans (with no tax effect)
US$
Accumulated impact of adoption of SFAS 159 recorded in
retained earnings
28,642,874
US$
Gains and
Losses, Net
upon
Adoption
Balance as
of January
1, 2008
1,592,195
30,235,069
1,592,195
The following table presents, as December 31, 2008, those positions selected for fair-value
accounting in accordance with SFAS 159, as well the changes in fair value for the year then ended:
Aggregated
fair value as of
December 31,
2008
Year ended December 31, 2008
Mortgage Loans
US$
43,020,107
Aggregate
unpaid
principal
balance as of
December 31,
2008
39,929,854
Fair value
carrying
amount
over/(under)
unpaid principal
3,090,253
- 82 -
Interest income on the fixed-rate mortgage payments are presented separately from other changes
in their fair value. The amount presented as interest income is determined by applying the effective
interest rate method. Other changes in fair value of these loans are recognized as other income. For
the year ending on December 31, 2008, the Bank recorded US $2,251,264 in interest income and
US $1,498,058 in other income on the fixed-rate loans for which they chose the fair value option.
The fair value of these mortgage loans is estimated using present cash flow models that consider,
among other factors, certain forward yield rates, a country-risk premium that is derived from the
comparison between the sovereign bond rate and the LIBOR three-month rate, and prepayment
speed and impairment parameters applied to the future cash flow projections.
Fair Value of Financial Instruments
SFAS No. 107, “Disclosures About Fair Value of Financial Instruments” (SFAS 107), requires the
disclosure of the estimated fair value of financial instruments including those financial instruments
for which the Bank did not elect the fair value option. The fair values of such instruments have been
derived, in part, by management’s assumptions, the estimated amount and timing of future cash
flows and estimated discount rates. Different assumptions could significantly affect these estimated
fair values. Accordingly, the net realizable values could be materially different from the estimates
presented below. In addition, the estimates are only indicative of the value of individual financial
instruments and should not be considered an indication of the fair value of the Bank. The provisions
of SFAS 107 do not require the disclosure of the fair value of lease financing arrangements and
nonfinancial instruments. The following disclosures represent financial instruments in which the
ending balance at December 31, 2008 and 2007 is not carried at fair value in its entirety on the Bank’s
consolidated balance sheet.
The following is a description of the methods and assumptions used to estimate fair value of the
most significant financial instruments held by the Bank:
- 83 -
(a)
Financial Instruments with Carrying Value Approximating Fair Value including cash and cash
equivalents, interest bearing deposits, customers’ liabilities under acceptances and acceptances
outstanding, are valued at their carrying amounts reported in the consolidated balance sheet,
which are reasonable estimates of fair value due to the relatively short period to maturity of the
instruments.
(b)
Securities held to maturity: are predominantly valued at quoted market prices. If quoted market
prices are not available, fair values are based on quoted market prices of similar instruments. In
instances when significant valuation assumptions are not readily observable in the market,
instruments are valued based on the best available data in order to approximate fair value. This
data may be internally-developed and considers risk premiums that a market participant would
require.
(c)
Loans: The majority of the Bank’s loans are not carried at fair value on a recurring basis nor are
they actively traded. Fair values were estimated for certain groups of similar loans based upon
type of loan and maturity. The fair value of these loans was determined by discounting
estimated cash flows using interest rates approximating the market participants’ current
origination rates for similar loans and adjusted to reflect the inherent credit risk. Fair values for
consumer installment loans (including automobile and consumer real estate loans), for which
market rates for comparable loans are readily available, are based upon discounted cash flows
adjusted for prepayments. The discount rate used for consumer installment loans are based on
the current market rates adjusted for credit, and other risks that are applicable to a particular
asset class. Fair value for credit card receivables is based upon discounted expected cash flows.
The discount rates used for credit card receivables incorporate only the effects of interest rate
changes, because the expected cash flows already reflect an adjustment for credit risk. For
loans with doubt as to collectibility, expected cash flows are discounted using an appropriate
rate considering the time of collection and the premium for the uncertainty of the flows. The
value of collateral is also considered. Loan prepayments are used to adjust future cash flows
based on historical patterns. The assumptions used are expected to approximate those that
market participants would use in valuing loans.
(d)
Deposit liabilities: with no defined maturity such as demand deposits, NOW/money market
accounts, and savings accounts have a fair value equivalent to the amount payable on demand
at the reporting date, i.e., their carrying amounts. Fair values for time deposits are estimated
using a discounted cash flow calculation that applies current interest rates to a schedule of
aggregated expected maturities. The assumptions used in the discounted cash flow analysis are
expected to approximate those that market participants would use in valuing such deposits.
(e)
Securities sold under agreements to repurchase: No quoted prices exist for such instruments and
so fair value is determined using a discounted cash-flow technique. Cash flows are estimated
based on the terms of the contract, taking into account any embedded derivative or other
features. Expected cash flows are discounted using market rates appropriate to the maturity of
the instrument as well as the nature and amount of collateral taken or received.
(f)
Borrowings: the fair value is estimated based on current market interest rates for debt with
similar maturities and is adjusted for the Bank’s credit quality and collateral.
(g)
Other borrowed funds: the fair value is estimated based on the quoted market prices for the
same or similar issues or on the current rates offered to the Bank for debt with similar terms,
adjusted for credit quality.
(h)
Off balance sheet financial instruments- The fair value of standby letters of credit and written
financial guarantees were estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and current
creditworthiness of the counterparties. Refer to note 20 for fair value information.
- 84 -
Information about the fair value of on-balance sheet financial instruments at December 31, 2008 and
2007, is presented below.
2008
Financial Assets
Loans
Customers' liability under
acceptances outstanding
Financial Liabilities
Deposits
Securities sold under
agreements to repurchase
Borrowings
Other borrowed funds
Acceptances outstanding
US$
US$
2007
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
1,546,054,808
10,388,735
8,737,645
5,012,890,735
1,546,054,808
10,388,735
8,546,295
4,991,610,439
1,196,468,020
21,394,356
19,155,737
4,520,686,233
1,196,468,020
21,394,356
18,998,002
4,521,702,816
9,481,876
9,481,876
3,079,401
3,079,401
4,780,676,417
4,783,984,722
4,193,520,063
4,196,505,031
30,488,158
1,409,153,132
217,255,009
9,481,876
30,488,158
1,405,045,031
215,429,157
9,481,876
49,201,840
1,123,103,587
213,476,324
3,079,401
49,201,840
1,120,048,703
212,905,391
3,079,401
(24) Administration of Trust Contracts and Asset Management
As of December 31, 2008 and 2007, several of the Bank’s subsidiaries administer and are custodian of
assets which amounted to approximately US $793,113,939 and US $786,488,113, respectively.
(25) Related Party Transactions
The Bank in the normal course of business enters into transactions with related parties, including
principal officers and directors. The following table sets forth balances and transactions with related
parties as of December 31, 2008 and 2007 and for the years then ended:
2008
2007
Assets:
Due from banks
US$
40,329,250
42,480,800
7,010,000
6,139,851
8,038,681
9,296,385
Loans receivable
76,926,351
92,088,255
Accrued interest and other receivables
1,120,844
890,611
US$
133,425,126
150,895,902
Liabilities:
Demand deposits
Time deposits
Borrowings
Accrued interest and other liabilities
Interest and other operating income
Interest and other operating expenses
- 85 -
US$
42,401,016
104,859,630
75,208,139
1,996,214
224,464,999
46,447,518
66,203,452
98,748,043
1,522,159
212,921,172
US$
US$
6,837,919
5,017,144
8,164,924
7,594,985
(26) Litigation
To the best knowledge of Bank’s management, there is currently no litigation or assessment that
may result in a material adverse effect on its business, its consolidated financial condition or
consolidated results of operations.
(27) Regulatory Matters
Banking operations of the Bank are subject to various regulatory requirements administered by
governmental agencies in the countries they operate or are licensed. Failure to meet these regulatory
requirements can initiate certain mandatory, and possibly additional discretionary, actions by the
regulators that, if undertaken, could have a material effect on the Bank’s consolidated financial
statements. In the opinion of management, at December 31, 2008 and 2007, the Bank’s banking
operations were in compliance with such regulatory requirements.
- 86 -
PANAMA
Calle 43 y Aquilino de la Guardia. Edificio BAC Credomatic
Panamá, República de Panamá.
Tel: (507) 206-2700/ Fax: (507) 214-7045
Gerente General: RodolfoTabash E.
Aptdo: 6-3654 El Dorado, Panamá, Rep. de Panamá
e-mail: [email protected]
Web: www.bac.net
BACValores
Calle 43 y Aquilino de la Guardia. Edificio BAC Credomatic
Panamá, República de Panamá.
Tel: (507) 206-2 7oo / Fax: (507) 214-9270
Gerente: Antonio Fistonich
Credomatic de Panamá
Planta Baja, EdificioVallarino Calle 52 y Ave. Elvira Mendez
Tel: (507) 205-4000 / Fax: (507) 205-4010
Gerente General: Juan Carlos Mejía
Aptdo. 55-1167 / Paitilla Panamá, República de Panamá
Web: www.credomatic.com/panama
BAHAMAS
BAC Bahamas Bank Ltd.
Norfolk House Frederick Street
P.O. B0x 556352 Nassau, Bahamas
Tel: (242) 325-4600 • (242) 325-4601 / Fax: (242)325-4602
Gerente: Dave Smith
NICARAGUA
BAC Nicaragua Centro BAC
Km. 4.5 Carretera a Masaya. Managua, Nicaragua
Tel: (505) 2274-4444 / Fax:(505)2274-4623
Gerente General: Juan Carlos Sansón
Aptdo: 2304 Managua, Nicaragua
Web: www.bac.net
BACValores Puesto de Bolsa
Centro BAC
Tel: (505) 2274-4444 / Fax:(505)2274-4490
Gerente: Jorge Riguero Recalde
Credomatic de Nicaragua
Centro BAC
Tel: (505) 2274-4444 / Fax:(505)2274-4408
Gerente General: Edgar Ahlers Pasos
Aptdo: 3597 Managua, Nicaragua
Web: www.credomatic.com
CAYMAN ISLANDS
Caledonian Bank andTrust Ltd.
Caledonian House, 69 Dr. Roy Drive P.O. Box 1043, Georgetown
Grand Cayman, Cayman Islands BWI
Tel: (345) 949-0050 / Fax: (345) 949-8062
COSTA RICA
BAC San José
Calle Central, Avenidas 3 y 5, San José, Costa Rica
Tel: (506) 2295-9595 / Fax: (506) 2222-7103
Gerente General: Gerardo Corrales
Aptdo: 5445-1000 San José, Costa Rica
Web: www.bac.net
- 87 -
Credomatic de Costa Rica
Calle Central, Avenidas 3 y 5 Edificio BAC San José
San José, Costa Rica
Tel: (506) 2295-9000 / Fax: (506) 2233-6387
Gerente General: José I. Cordero
Credomatic de El Salvador
55 Ave. Sur entre Alameda Roosevelt y Ave. Olímpica
Centro Roosevelt, Edificio Credomatic San Salvaldor, El Salvador
Tel: (503) 298-1855 /Fax: (503) 224-4138
Gerente General: Fernando González
Aptdo: 01-261 San Salvador, El Salvador
BAC San José Pensiones
Operadora de Planes de Pensiones Complementarias, S.A.
Ave. 5a entre Calle 0 y 1. Edificio Lachner, Costado Norte de
Radiográfica San José, Costa Rica
Tel: (506)2295-9200 / Fax:(506)2222-5797
Gerente General: Javier Sancho Guevara
Web: www.bac.net
Inversiones Bursátiles Credomatic
Centro Roosevelt, Edificio Credomatic, San Salvador, El Salvador
Tel: (503)206-4173 • 206-4179 / Fax: (503) 298-7009
BAC San José Sociedad de Fondos de Inversión S.A.
Edificio Omni, Piso 7. San José, Costa Rica
Tel: (506) 2295-9719 / Fax: (506) 2222-7103
Gerente: Allan Marín
Web: www.bac.net
BAC San José Leasing S.A.
Calle Central, Avenidas 1 y 3. San José, Costa Rica
Tel: (506) 2295-9595 / Fax: (506) 2223-5610
Gerente General: Javier Sancho
Web: www.bac.net
BAC San José Puesto de Bolsa
Avenida 1 era, Calles 3 y 5 Edificio Omni, Piso 7
San José, Costa Rica
Tel: (506) 2295-9719 / Fax: (506) 2222-7103
Gerente: Luis Fernando Monge
Web: www.bac.net
HONDURAS
BAC Bamer
Barrio Pueblo Nuevo, Boulevard Morazán,
Edificio BAC Credomatic, 1er Piso, Tegucigalpa, Honduras
Tel: (504) 238-7220 / Fax: (504)237-5113
Gerente General: Jacobo Atala
Aptdo: 3725 Tegucigalpa, Honduras
Web: www.bac.net
Credomatic de Honduras
Boulevard Morazán, Edificio Interamericana, 1er Piso
Tegucigalpa, Honduras
Tel: (504) 238-6570 / Fax: (504)237-5222
Gerente General: Juan Carlos Páez
Aptdo: 1536 Tegucigalpa, Honduras
EL SALVADOR
Banco de América Central
Centrc Roosevelt, Edificio Credomatic San Salvador, El Salvador
Tel: (503) 298-l855 / Fax: (503) 224-3148
Gerente General: Gerardo A. Ruiz Munguía
Aptdo: 01-261 San Salvador, El Salvador
Web: www.bac.net
GUATEMALA
Banco de América Central
7 Ave. 6 - 26, Zona 9. Edificio El Roble, 1er. Nivel
Guatemala, Guatemala
Tel: (502) 2361-0909 / Fax: (502) 2331-8720
Gerente General: Juan JoséViaud
Web: www.bac.net
BACValores, Puesto de Bolsa
7 Ave. 6 - 26, Zona 9. Edificio El Roble Nivel 7, Oficina 707
Tel: (502) 2361-0909 / Fax:(502)2331-4818
Gerente: Gustavo Morales
Credomatic de Guatemala
7 Ave 6 - 26, Zona 9. Edificio El Roble, 1er. Nivel
Tel: (502)2361-0909 / Fax: (502) 2331-8720
Gerente General: Juan Maldonado
FLORIDA, USA
Credomatic of Florida
848 Brickell Avenue, 5th. Floor. Miami, Florida 33131
Tel: (305) 372-3000 / Fax: (305) 350-5228
Gerente General: Ricardo Horvilleur
MEXICO
Credomatic de Mexico, S.A. de CV
Av. Lázaro Cárdenas 3590, Colonia Jardines de los Arcos 44500
Guadalajara, Jalisco, México 44500
Tel: (33) 3880-3780 / Fax: (33) 3880-3762
Gerente General: Alejandro Chamorro

2008 - BAC

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