Fitch Ratings has affirmed Banco Latinoamericano de Comercio Exterior's (Bladex) Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BBB+' and Viability Rating (VR) at 'bbb+', respectively. The Rating Outlook is Stable. A full list of rating actions is at the end of this release.

Given the soft phase of the economic cycle that some countries in which Bladex operates are going through at present, Fitch expects some cyclical deterioration in asset quality and potentially earnings in the short term. However, Fitch believes that the bank can absorb this deterioration without dramatically altering its financial profile, thus supporting a Stable Rating Outlook.

KEY RATING DRIVERS

IDRS, VR, NATIONAL RATINGS AND SENIOR DEBT

Sound risk management and asset quality highly influence Bladex's ratings. Bladex's robust management of balance sheet risks in its region of operation over time has underpinned its solid asset quality ratios and resulted in minimal losses since its inception.

Bladex's loan quality is strong relative to similarly rated peers (wholesale commercial banks in 'bbb' operating environments). Impaired loans/gross loans have been consistently below 1% for past five years, while reserve coverage of gross loans averaged 1.3% since 2012. Fitch expects non-performing loans (NPLs) to be higher than previous years, given struggling economic conditions in some of Bladex's key markets. In the medium term, Fitch's base case scenario considers an NPL ratio not higher than 1% of gross loans.

Bladex had about 13% of its assets in bank deposits and highly liquid securities at end-March 2016. Its loan portfolio is very liquid, rolling over at least twice a year. This proved a key safeguard for the bank as it successfully navigated severe liquidity crunches. Deposits come mostly from central, state-owned and commercial banks and are quite stable. Bladex's balance sheet is well matched, with limited asset/liability gaps.

Bladex's FCC ratio is sound and likely to remain in the mid-teens, a level Fitch considers adequate, even with some balance sheet concentration. This view considers Bladex's low-risk business, solid and stable asset quality indicators, as well as comparatively conservative risk management policies.

The bank's narrow margins and low-risk investment strategy limit its profitability. However, Bladex's performance has historically been sound and resilient. In 2015, profitability ratios were stable and driven by resilient margins, as well as controlled credit and operating costs. Margins increased moderately, as they were underpinned by a decline in funding costs and an increase in interest revenues.

Given its customer base (major regional banks and corporations), the bank is structurally concentrated in its loan portfolio. By the same token, funding, mainly from central/state-owned and commercial banks, is also concentrated but fairly stable. Such concentration could limit future upgrades of the bank's ratings.

With its expertise and franchise, Bladex is the top foreign trade bank in Latin America. This expertise is a key competitive factor in a region where trade consistently expands.

The bank's senior debt national rating in Mexican scale is based on its creditworthiness, reflected in Bladex's IDR of 'BBB+'.

SUPPORT RATING AND SUPPORT RATING FLOOR

The bank's Support Rating and Support Rating Floor reflect Fitch's view that external support for the bank, though possible, cannot be relied upon.

RATING SENSITIVITIES

IDRS, VR, NATIONAL RATINGS AND SENIOR DEBT

Significantly weaker margins or important asset quality deterioration that erodes profitability and weakens the bank's capital or reserves cushion beyond Fitch's base case scenarios (FCC below 12%) could pressure Bladex's ratings downward.

Though not likely over the rating horizon given the bank's business profile, Bladex's international ratings could benefit from a material reduction in credit and funding concentrations as this could result in lower risk.

SUPPORT RATING AND SUPPORT RATING FLOOR

As Panama is a dollarized country with no lender of last resort, a change in Bladex's SR and SRF is unlikely.

Fitch has affirmed the following ratings:

Bladex

--Long-Term Foreign Currency IDR at 'BBB+'; Outlook Stable;

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

--Viability Rating at 'bbb+';

--Support Rating at '5';

--Support Rating Floor at 'NF';

--Senior unsecured notes at 'BBB+';

--Senior unsecured certificates at 'AAA(mex)'.

Additional information is available on www.fitchratings.com

Applicable Criteria

Global Bank Rating Criteria (pub. 15 Jul 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884135

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1009441

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1009441

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Fitch RatingsPrimary AnalystTheresa Paiz-FredelSenior Director+1-212-908-0534Fitch Ratings, Inc.33 Whitehall StreetNew York, NY 10004orSecondary AnalystLarisa ArteagaDirector+1-809-563-2481orCommittee ChairpersonAlejandro GarciaManaging Director+1-212-908-9137orMedia Relations:Elizabeth Fogerty, New York, +1 212-908-0526Email: elizabeth.fogerty@fitchratings.com