Institutional Presentation
Central American Bank for Economic Integration
October 2016
Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. Funding and Liquidity
5. Credit Risk Management
6. Comparison with other MDBs - Rating
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Central American Bank for Economic Integration
Fact Sheet
Key Economic Facts
Extension: 547,352 km2
Population: 55.4 million, over 70% below 39 years of age
Population density: 86.63 people per km2
Population Growth: 1.28%
Regional GDP: US$263 billion
Guatemala
El Salvador
Costa Rica
Honduras
Nicaragua
Belize
 Central America is home to 7% of the planet’s biodiversity and
exhibits great geological, geographic, climatic and biotic diversity.
Panama
Dominican
Republic
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 Privileged situation in terms of annual regional water availability
with an estimated 23 thousand cubic meters per inhabitant.
 The agricultural sector is one of the main drivers of the region’s
economy, accounting for approximately 11% of GDP; this share
grows to 18% when agro-industry is included. It is the main source
of food and industrial inputs and produces 35% of the region’s
exports.
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Central American Bank for Economic Integration
Key Statistics for Central America: Economic Outlook
 During 2000-2007, average economic growth rate of CA region was
3.9% , whereas LATAM reached 3.6%.
 After the economic crisis, average growth rate of CA declined to
2.7% - LATAM reached 3.0%.
 The forecast for economic growth for 2015-2016 in Latin America is
around 0.26% whereas Central America’s forecast is 3.5%.
5.0
Latin America: Economic Growth
(Percentage)
 During 2000-2007, higher inflation rates were observed across
LATAM averaging 7.2% - CA region reached 7.9%.
 During 2008-2014, inflation gap between both regions decreased.
LATAM inflation was reported at 6.7% - CA inflation at 5.5% .
 The projections for 2015-2016 estimate that LATAM will be around
11.3%; while CA will be 2.9%.
Latin America: Inflation
(Percentage)
12.0
10.0
4.0
8.0
3.0
6.0
2.0
4.0
1.0
2.0
0.0
0.0
2000-2007
2008-2014
Latin America and the Caribbean
2015-2016
Central America
2000-2007
2008-2014
Latin America and the Caribbean
2015-2016
Central America
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Central American Bank for Economic Integration
Key Statistics for Central America : Economic Outlook
 During 2000-2007, most of CA countries reported fiscal deficits around
LATAM´s regional average (3.0%).
 Growth in Central government debt is one of the major concerns for
LATAM and CA authorities.
 The impact of recent economic crisis affected the fiscal position of CA
countries. Local authorities keep making and implementing important
policy measures.
 Public debt has been increasing in order to finance fiscal budget gaps.
Local governments top this issue in their agendas.
Central America: CG Debt
(Percentage of GDP)
140
8.0
Central America: Fiscal Deficit
(Percentage of GDP)
7.0
120
6.0
100
5.0
80
4.0
60
3.0
40
2.0
20
1.0
0
0.0
2000-2007
Costa Rica
Honduras
2008-2014
El Salvador
Nicaragua
2015-2016
Guatemala
LAC
2000-2007
2008-2014
2015-2016
Costa Rica
El Salvador
Guatemala
Honduras
Nicaragua
LAC
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Central American Bank for Economic Integration
Vulnerabilities: Central America vs South America
Given South America’s dependence on hard
commodity exports, the sub-region has a relatively
high exposure to a drop in hard commodity prices.
The situation is different for countries in Central
America, as it could actually benefit from a drop in
commodity prices, especially energy prices.
Central America depends more on economic
conditions in the U.S., as it is its main commercial
partner and source of remittances.
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Central American Bank for Economic Integration
Central America: Trade Integration Agreements and Regional Initiatives
 Following substantial work towards regional trade integration over the last half century, Central America has emphasized multilateral initiatives that underpin integration:
Initiatives
Free trade agreement between Chile
and Central America
Year approved
Formally signed October
of 1999
Benefits
Improved hemispheric integration.
Improved rules for the investments promotion.
Create an expanded and secure market for the goods produced.
Free trade agreement between Panama
and Central America
Formally signed March
of 2002
Improved commercial relationship in the region.
Increased the economic and social development.
Central America* – USA Free Trade
Agreement
(DR-CAFTA)
Formally signed May of
2004
Improved commercial relationship in the region.
Increased the market access.
Encouraged a complementary agenda for Central America Region.
Free trade agreement between Mexico
and Central America
Formally signed
November of 2011
The European Union - Central America
Association Agreement (EU-CAAA)
Formally signed June of
2012
Free trade agreement between Korea
and Central America**
Under Negotiation
*Includes Dominican Republic
**Includes Panama
Improved the competitiveness between Central America en Mexico.
Increased the economic and social development.
Removed commercial barriers and facilitated the trade between Central America and Mexico.
Improved commercial and cooperative relationship between regions.
Increased social development in the Central America Region.
On June 18th 2015, Central American countries and Korea launched negotiations towards a free trade
agreement. The first round of negotiations for the CA-Korea FTA took place on September 2015, in Seoul,
Korea. The second round of free trade negotiations was held on November 2015, in San Salvador, El
Salvador. The third round of free trade negotiations between Central America and Korea was held from 2226 February 2016 in San Francisco, United States. Further talks regarding this free trade agreement took
place on March and April 2016 in Seoul, Korea. CABEI is supporting the process through a non-refundable
cooperation granted to the Central American countries.
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Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. Funding and Liquidity
5. Credit Risk Management
6. Comparison with other MDBs - Rating
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Central American Bank for Economic Integration
CABEI's Objective
CABEI's Objective
Article No. 2 of the Constitutive Agreement:
The Bank’s objective shall be to promote the economic integration and
the balanced economic and social development of the Central American
region, which includes the founding countries and the non-founding
regional countries.
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Central American Bank for Economic Integration
About CABEI: Member Countries
 Supranational development bank focused on
Central America, founded in 1960
 Headquartered in Tegucigalpa, Honduras
 Founding Members:
 El Salvador
 Guatemala
 Honduras
 Nicaragua
 Costa Rica
Belize
Honduras
Guatemala
El Salvador
Nicaragua
Panama
Costa Rica
 Non-Founding Regional Members:
 Dominican Republic (2007)
 Panama (2007)
 Belize (2006) (*)
 Non-Regional Members:
 ROC Taiwan (1992)
 Mexico (1992)
 Argentina (1995)
 Colombia (1997)
 Spain (2005)
Dominican
Republic
Mexico
Spain
Colombia
Founding Members
Non-Founding Regional Members
Non-Regional Members
Argentina
(*) As of November 9, 2016, Belize became a non-founding regional member
ROC (Taiwan)
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Central American Bank for Economic Integration
About CABEI: Organizational Structure
Board of
Governors
On July 15th, 2013, CABEI's Board
of Governors re-elected Dr. Nick
Rischbieth as CABEI's Executive
President for a new five-year
period beginning December 1st,
2013 and ending on November
30th, 2018.
Board of Directors
CABEI has 321 employees situated at its
headquarters in Tegucigalpa and its 5
regional offices (1 regional office for
each Founding Member Country). In the
short term, the Bank expects to open two
additional regional offices, one in
Panama and the other in Dominican
Republic.
Executive President
Executive Vice-President
Operations and
Technology
Division
Sector and
Countries Division
Financial
Management
Division
Risk Management
Division
Credit
Management
Division
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Central American Bank for Economic Integration
About CABEI: CABEI’s Preferred Creditor Status
As a supranational institution and under its Constitutive Agreement, CABEI has
been accorded in the territory of its member states Preferred Creditor Status.
(*) Average ratings based on the individual ratings assigned to Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica by Moody's Investors Service.
September 2015: “The bank benefits from similar privileges and immunities granted to other multilateral development banks (MDBs). As CABEI is the main provider of long-term
funding in the region, Fitch Ratings assumes that member countries, even if experiencing severe difficulties, will continue to honour CABEI‘s preferred creditor status and exempt its
private-sector borrowers from any measures that may affect the transfer and/or convertibility of their debt service payments.”
June 2015: “Moody's assessment of borrower quality takes into consideration not only the sovereign ratings of the borrowers, but also the likelihood that they will continue to extend
to CABEI its 'most preferred' creditor status. Based on historical experience, we deem this to be highly likely, more so given CABEI’s critical role as the main source of official
multilateral financing for the region.”
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Central American Bank for Economic Integration
About CABEI: CABEI’s Preferred Creditor Status
As a supranational institution and under its Constitutive Agreement, CABEI is granted preferred creditor status
on the territory of its member states .
All of CABEI’s assets and properties are considered public international property and are immune from search,
requisition, confiscation, expropriation or any other form of apprehension or forced alienation by executive or
legislative action.
CABEI, its income, property and other assets, as well as the operations and transactions it carries out pursuant to
its Constitutive Agreement, shall be exempt from all taxation and from all custom duties or other charges of a
similar nature. CABEI shall also be exempt from any obligation relating to the payment, withholding or collection
of any tax, contribution or duty.
No tax or lien may be levied on any obligation or securities issued or guaranteed by CABEI, including any dividend
or interest thereon, by whomsoever held.
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Central American Bank for Economic Integration
CABEI is the dominant MDB in the Central American Region
CABEI, IADB and World Bank participation (%) of total
disbursements to the Region¹ in the last ten years (2005-2014)
Total Disbursements 2005-2014:
US$28.0 billion
1 Includes Guatemala, El Salvador, Honduras,
Nicaragua and Costa Rica
* Includes CII & FOMIN,
** Includes IFC & IDA,
Source: www.iadb.org, www.worldbank.org
CABEI.
 Through the years CABEI has consolidated its role as the Multilateral Development Bank with the most relevant presence in the Central American region.
 This consolidation has been mainly derived from the Preferred Creditor Treatment conferred to CABEI by its member countries.
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Central American Bank for Economic Integration
Rising importance of CABEI in the region.
 Since its creation, CABEI has disbursed over US$24.4 billion to the Central American region.
 More than 57% of those disbursements have taken place over the past 10 years.
 During periods when several multilateral development banks have frozen disbursements to some Central American countries (Nicaragua, Honduras and
Guatemala), CABEI continued to fulfill its mandate, thus strengthening the Preferred Creditor Treatment conferred to it by its member countries.
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Central American Bank for Economic Integration
SICA Member Countries
CABEI / New Members
SICA’s purpose is to achieve the integration of Central
America for the Isthmus to become a Region of Peace,
Freedom, Democracy and Development.
CABEI is SICA’s financial arm.
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Central American Bank for Economic Integration
Modifications to CABEI´s Constitutive Agreement
On February 12th, 2015 CABEI’s Board of Governors approved amendments to the Constitutive Agreement with three main objectives:
 On January 25th, the Legislative
Assembly of Costa Rica ratified the
modifications to CABEI's Constitutive
Agreement.
 These reforms became effective on June
9, 2016, given that literal d) Article 35 of
CABEI’s Constitutive Agreement, states
that such reforms shall become effective
for all its members three (3) months after
the date of its official communication,
which occurred on March 8, 2016; after
the publication of the respective law
(No.9350) on Costa Rica’s Official
Gazette.
 Following the change made in Article No.
2 of the Constitutive Agreement, now all
the member countries of CABEI can be
recipients of financing from the Bank to
attend programs and projects.
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Central American Bank for Economic Integration
Regional Projects & Loan Portfolio
Diversification Initiatives
Over 50 years promoting regional integration
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Central American Bank for Economic Integration
Approvals and Disbursements – June 2016
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*6 month period
Central American Bank for Economic Integration
Operations by Country & Focus Area: June 2016 Approvals and Disbursements
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Central American Bank for Economic Integration
Operations: Over 50 years promoting regional integration
CABEI approved ​road infrastructure projects in the
region for US$4,905 millions.
Approvals of more than US$3,800 millions in Energy
Projects.
Total paved kilometers funded amounted to 4,100
km., representing 4.2% of total roads.
Increased installed capacity for approximately 4,100
MW from 1970-2014, or more than 45.0% of the 2014
total.
Widening and reconstruction of more than 6,000 km.,
or 6.4 % of paved roads.
This installed capacity accounted for more than 30.0%
of the total power generated.
Results:
 Physical integration
 More efficient transportation for goods and
people between countries and cities.
 Increased value of the agricultural, industrial,
commercial and tourism sectors.
Funding for the energy sector, focused mainly on
renewable energy.
Renewable energy funded by CABEI produced savings
of US$1,600.0 millions in imported hydrocarbons.
CABEI has funded more than US$8,686 millions to
support various programs to impact: micro, small and
medium size enterprises (SMEs), educational loans,
housing municipalities, foreign trade, productive
sectors and financial sector strengthening.
Disbursements aimed at Programs for SMEs,
education and social housing have benefited more
than 971,000 end users.
Central American Road Map
CABEI has supported the most vulnerable population
sectors through microfinance, allowing the Bank to
reach the poorest households in rural areas, thereby
promoting social and economic development in
Central America.
Central American Electrical Interconnection
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Central American Bank for Economic Integration
Operations: Notable projects under the Mesoamerican Project
Social Housing Initiative
Transportation and Facilitation of Trade:
Integration Goal:
The program supports low cost housing, develops institutional
capacity, and regional and national financial instruments.
Integration Goal:
International Network of Mesoamerican Highways (RICAM),
Sea Transport Project (TMCD) and Mesoamerican Multimodal
Transportation System (STMM), focus on more efficient
transport of people and goods.
This program is executed by CABEI with the advice and partial
financial support (19.4%) of the Mexican Government, within
the Mesoamerican Project initiative.
CABEI's Investment:
CABEI's investment is about US$1,287 millions. Beneficiary
countries: Belize, Guatemala, El Salvador, Honduras, and
Nicaragua.
CABEI's Investment:
CABEI is providing more than US$222.99 millions through its
network of 101 regional public and private sector financial
intermediaries.
Impact:
This program provides housing for 48,912 low-income
families, distributed amongst the five countries of the region.
Social Housing
Energy Interconnectivity
Integration Goals:
The SIEPAC has two main goals: (a) support the creation and
consolidation of the Regional Electricity Market (MER) with
the creation and establishments of legal, institutional and
technical mechanisms, which will enable an easier
participation of the private sector in the energy sector, and (b)
to establish the regional interconnected electricity lines that
will allow electricity exchanges between all MER actors.
Impact:
More than 500km of roads.
Generation of more than 3,000 permanent and temporary
jobs. Daily use of these roads is by more than 170 thousand
people.
Road Network
CABEI's Investment:
CABEI's investment is about US$100.0 millions, which
represents 20.0% of the total project investment.
Impact:
Increase electricity coverage in the energy integration region.
Implemented regional projects increasing installed capacity
by 300 MW. Jobs generation during construction phase will
be more than 2,000 jobs (700 permanent). Construction of
road access related to the electricity lines.
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Central American Bank for Economic Integration
Loan Portfolio Diversification: Approvals during 2015
Program for the Strengthening of Research and Development
Capacities, (PROFOCAID, for its acronym in Spanish)
(Argentine Republic)
Honda-Puerto Salgar-Girardot Highway (Republic of
Colombia)
The Project involves the rehabilitation and improvement of
190 km of highway, the construction of 32 bridges and the
reconstruction of other 26 existing bridges, with the objective
of improve the accessibility to the Center-South Region of
Colombia. The project is part of the Fourth Generation
Program of Road Concessions, promoted by the Government
of Colombia, in the framework of its National Development
Plan 2014-2018.
The program consists of the allocation and transfer of grants to
research institutions and / or professionals in research and
development, to carry out research projects in order to expand
the frontiers of knowledge, aiming for exponential multiplier
effect on the competitiveness of the Central American region.
As part of the components of this program, 100 doctoral level of
studies scholarships will be awarded to Central Americans to
study in Argentina.
CABEI Investment:
The amount to be financed by is CABEI US$136.0 million.
CABEI Investment:
CABEI will partially finance the program with an approved
amount of up to US$50.0 million.
RANC
Line 2 of the Panama Metro (Republic of Panama)
The overall objective of the Project is to provide an agile,
efficient and clean transportation system to improve the
country's competitiveness and the quality of life for residents
and visitors of Panama City, through a fast, economic, safe and
reliable transportation system.
CABEI Investment:
The amount to be financed by CABEI is US$200.0 million.
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Central American Bank for Economic Integration
Loan Portfolio Diversification: Approvals during 2015

During 2015, CABEI’s loan approvals in regional non-founding and extra-regional member countries reached US$406 million, or 22% of total approvals.

Such level of approvals begins the loan portfolio diversification process, established as an objective under the amendments to CABEI’s Constitutive Agreement.

For 2016, 25% (US466 million) of the projected loan approvals are expected to be for non-founding members
24
Central American Bank for Economic Integration
2015-2019 Institutional Strategy
25
Central American Bank for Economic Integration
Operations: 2015-2019 Institutional Strategy
 The Institutional Strategy seeks to maximize the impact of CABEI's operations on:
 Sustainable Economic Development of the Region.
 Sustainable Development Goals (SDGs) of the of the 2030 Agenda for Sustainable Development.
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Central American Bank for Economic Integration
Operations: 2015-2019 Institutional Strategy - Focus Areas
Productive Infrastructure
Energy
Financial Intermediation and
Development Finance
Rural Development and the
Environment
Human Development and
Social Infrastructure
Competitiveness Services
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Central American Bank for Economic Integration
Diverse Range of Products and Clients
Our Clients
Products
Loans
Public
Sector
Co-Financing
A/B Loans
Guarantees
Letters of Credit
Working Capital Lines
Trade Lines
Factoring
Corporate
Private
Sector
Financial
Sector
Pre-investment Loans
Technical Cooperation
Leasing
28
Central American Bank for Economic Integration
Strategic Objectives of the Institutional Strategy (2015-2019)
29
Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. Funding and Liquidity
5. Credit Risk Management
6. Comparison with other MDBs - Rating
30
Central American Bank for Economic Integration
Balance Sheet
31
Central American Bank for Economic Integration
Balance Sheet
Balance Sheet as of June 30th, 2016
(US$ Million)
Assets
Total US$9,266
Liabilities and Equity
Total US$9,266
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Central American Bank for Economic Integration
Balance Sheet Structure
9.6%
5.1%
10.5%
4.9%
5.7%
7.4%
33
Central American Bank for Economic Integration
Financials: Balance Sheet – Loan Portfolio
As of June 30th, 2016
Total Loan Portfolio US$6,115 Million
Loan Portfolio by Country
6.4%
0.6%
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Central American Bank for Economic Integration
Financials: Balance Sheet – Loan Portfolio Distribution by Institutional Sector and Focus Area
Loan Portfolio by Institutional Sector
(US$ million)
Loan Portfolio by Focus Area
 CABEI’s loan portfolio is mainly in the public sector; which grants CABEI preferred creditor status.
 Within the private sector, the portfolio has a greater proportion corresponding to the financial sector (with 55% ), in line with the
trend observed over the past 5 years.
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Central American Bank for Economic Integration
Loan Portfolio – Institutional Sector Distribution
 As a result of CABEI’s “Back to Basics” strategy, which looks to enhance public sector exposure, there has been a significant shift in the Bank´s loan
portfolio distribution by institutional sector. Consequently, private sector exposure has declined from a high of 44% in 2006 to 21% in June 2016.
36
Central American Bank for Economic Integration
Profits and Capitalization
37
Central American Bank for Economic Integration
Consistent Profits
 Moody’s: “Net income before provisions grew 35% year-on-year in 2015, the highest growth rate in record, with net income reaching US$159.5 million at
the end of the year, up from US$102.9 million. Given CABEI's policy of capitalizing retained earnings, this result will positively contribute to capital growth.”
38
Central American Bank for Economic Integration
Sound Financial Position
 The capital adequacy ratio is the main pillar to assure
CABEI’s financial soundness.
 The bank has a strict capital adequacy requirement (35%).
 CABEI also monitors the Capital Adequacy Ratio established
in Basel II and Basel III Accords; as of June 30th, 2016 the
ratio reached 35.4%.
39
Central American Bank for Economic Integration
Panama and Dominican Republic Capital Increase
Request from the Republic of Panama to increase its
share subscription in CABEI
 As a response to the Constitutive Agreement modifications, on
December 14th 2015, the Republic of Panama, requested to
increase in US$197.4 million its share subscription on CABEI’s
capital structure.
Total Projected Capital
Installments
2016-2019
US$117.9 million
 Such request was approved by CABEI’s Board of Governors on
February 12th 2016 by Resolution No. AG-3/2016.
Request from the Dominican Republic to increase its
share subscription in CABEI
 As a response to the Constitutive Agreement modifications, on
January 13th 2016, the Dominican Republic, requested to
increase in US$197.4 million its share subscription on CABEI’s
capital structure.
 Such request was approved by CABEI’s Board of Governors on
February 12th 2016 by Resolution No. AG-4/2016.
The aforementioned capital subscriptions will generate
new capital installments for the Bank for an aggregate
amount of US$98.2 million to be received in 4 years;
exceeding by US$13.7 million the capital payments to
be received as a result of the Capitalization Scheme
implemented in 2012 (US$84.5 million).
 As a result of the capitalization scheme implementation approved in
2009, as well as the capital increase requests conveyed by Panama and
the Dominican Republic, capital payments are now an important source
of capital; complementing the Bank’s consistent net income generation.
 All members are current with the payment of their respective capital
installments.
40
Central American Bank for Economic Integration
Capital Structure
Capital Structure as of September 30, 2016
41
Central American Bank for Economic Integration
CABEI’s Projected Capital Structure
Projected Capital Structure
Assumptions:
 Projections include the increase of the share subscription
of Dominican Republic on CABEI’s capital structure.
 Includes the transformation of the Special Contributions
made by Belize to “B” Series Shares.
 With the increase of share subscriptions of nonfounding regional countries, participation of the
founding member countries goes from 64.4% to
59.2%.
 Panama´s and the Dominican Republic´s capital
increases, together with the approved
amendments to the Constitutive Agreement
further strengthen CABEI´s "business profile" to
fortify it´s relationship with all its partners and
diversify its shareholder structure.
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Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. Funding and Liquidity
5. Credit Risk Management
6. Comparison with other MDBs - Rating
43
Central American Bank for Economic Integration
Financials: Liquidity Risk - Investment Portfolio & Liquidity Levels
Cash and Investment Portfolio - June 2016
Instrument
US$ Million
Cash
22
Money Market
1,637
Investment Funds
137
Bonds
911
Total Investment Portfolio
2,686
Cash + Investment Portfolio
2,707
%
1%
60%
5%
34%
99%
100%

Liquidity risk is mitigated by CABEI’s internal ALM Policy, which requires holding a minimum liquid asset
coverage of 6 months of gross cash requirements which includes loan disbursements, debt service
obligations and operating expenses.

CABEI also maintains a high level of liquid assets in relation to its total assets.

In line with international risk management standards, CABEI monitors both the Liquidity Coverage Ratio
(LCR) and the Net Stable Funding Ratio (NSFR) proposed by Basel III. As of December 31st 2015, the
aforementioned ratios stood at 2.56x and 1.08x, respectively.

At June 2016, the effective duration of the Investment Portfolio was 0.56 years.
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Central American Bank for Economic Integration
Evolution of Funding Sources
 CABEI's financing structure has been evolving due to an active participation in capital markets, which reflects the good perception international markets have regarding its
credit profile and maturity as an institution.
 CABEI's financing structure reflects the institution’s preference for stable funding sources.
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Central American Bank for Economic Integration
Financials: Funding Diversification
Bonds Payable/Distribution by Markets and Currencies
 CABEI has a highly diversified funding base and has maintained an uninterrupted access to the international capital markets.
 As of June 30th, 2016, CABEI has made debt placements in 19 different currencies and 22 different markets (incorporating the Norwegian Crown and
Norwegian market in 2016).
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Central American Bank for Economic Integration
Financials: Funding Diversification
Europe
43%
United States
14%
Asia
14%
Latam
29%
 During the period of global financial turmoil and as an indication of the favorable market perception towards the Institution, CABEI maintained
uninterrupted access to the international capital markets .
 On March 2016, CABEI upsized its MTN Program from US$4.0 billion to US$6.0 billion, given its relevance towards the procurement of stable funding.
47
Central American Bank for Economic Integration
International Partners
 To further its mission, for over 50 years CABEI has partnered with a wide range of institutions including governments, development banks, and
official agencies to channel resources to key sectors such as microfinance, renewable energy, infrastructure, rural development, and education.
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Central American Bank for Economic Integration
CABEI: A Strong Partner for Combating Climate Change in Central America
CABEI has made a strong commitment to supporting climate change mitigation and adaptation initiatives in the region.
The Bank is currently undergoing the process of Accreditation of the Green Climate Fund.
 Recipient of Preparatory Support from the GCF.
 An accreditation decision expected in the upcoming months.
 Strong support for accreditation by Central American NDAs.
Accredited with EU-DEVCO and the Adaptation Fund.
Climate Adaptation and Mitigation programs managed by CABEI:
 Green SME Initiative, with KfW and EU.
 ARECA Partial Guarantee Program, with Finland, GEF, and UNDP.
 CAMbio, Biodiversity agriculture program, with GEF and UNDP.
Member of IDFC, reporting Climate Change activities under the Club’s flagship report “Green Climate Mapping” since 2013.
CABEI has the competitive advantages to support the region’s climate change priorities:
 Regional presence.
 Sectorial Experience.
 Strong partner articulation.
 Solid track record mobilizing resources and blending.
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Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. Funding and Liquidity
5. Credit Risk Management
6. Comparison with other MDBs - Rating
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Central American Bank for Economic Integration
Financials: Credit Risk - Risk Management Policy
Capital Adequacy and Leverage
Policies:
 CABEI´s Capital Adequacy Ratio requires
that total equity represent at least 35% of
total risk weighted assets.
 CABEI´s total loan portfolio shall not
exceed 3.5 times its total equity (Gearing
Ratio).
 CABEI´s maximum leverage cannot exceed
3 times its total equity (Debt / Equity).
 By policy, the ALCO Committee should
monitor the capital adequacy indicator
that incorporates the criteria established
in the framework of Basel II and III.
 By policy, the ALCO Committee should
monitor the leverage ratio established
under Basel III.
Main Credit Policies:
Main Credit Policies for Derivatives Exposures:
 CABEI´s participation in project finance private
sector loans must not exceed 40% of the total
amount of the loan during its life (60% for
projects with amounts lower than US$25
million or with public sector participation).
 Subscription of Credit Support Annexes (CSAs) with all
counterparties in order to mitigate the credit exposure. In that
sense, CABEI has established thresholds and margin calls
(collateral).
 For corporate private sector loans, the collateral
put forth by the client, must maintain a
minimum coverage of 100% of the total loan.
 Credit risk in derivatives has been eliminated by requiring daily
collateral and establish a "threshold" of 0. As part of this initiative,
since December 2013, a third party provides collateral
management service to CABEI.
 Single Client Exposure (Private) must not
exceed 5% of the Bank´s equity, and the
exposure to a regulated private financial
economic group must not exceed 10%.
 Calculation of net positions with counterparties under ISDA
agreements.
 State or mixed institutions with majority state
participation with NSG should not exceed 20%
of CABEI’s equity.
 Counterparties in derivatives contracts must have an investment
grade rating. If an existing counterparty is downgraded below
investment grade, no new derivative contracts can be agreed
between such entity and CABEI.
 All counterparties must be approved by the ALCO Committee.
 Credit exposure limits with derivative counterparties are defined
by the following conditions:
 Financial internacional counterparties: Up to US$50
million.
 For clients (Government, Financial Institutions o
Corporates): ALCO Approval.
51
Central American Bank for Economic Integration
Credit Risk - Improving Credit Quality

Loans in non-accrual status are those whose arrears of
installments of principal or contractual interest exceed
90 days in the case of Private Sector loans and 180
days for Public Sector loans.

All Public Sector borrowers are current with their
payments in line with the Preferred Creditor
Treatment they grant CABEI.

CABEI’s asset quality is under control.
52
Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. Funding and Liquidity
5. Credit Risk Management
6. Comparison with other MDBs - Rating
53
Central American Bank for Economic Integration
Key Financial Indicators
54
Central American Bank for Economic Integration
Peer Comparison
Concept
CABEI
Peer Comparison
Relevance
Very Important for its Regional Shareholders.
More important than IADB and CAF in Central America.
Credit Quality
Loan Portfolio Credit Quality Index has improved
consistently.
Allowance for Loan Losses Coverage is higher than its
peers.
Leverage
Superior. Well diversified funding structure.
Lower leverage ratios than IADB and CAF.
Equity/Total Assets
Solid capital ratios without adjustments.
Average is higher than IADB and CAF.
Paid-In Capital
Currently receiving capital installments from its
member countries as a result of the capitalization
scheme approved in 2009.
CAF presents higher frequency in capital increases.
Profitability
Solid and stable profitability ratios; all net income is
capitalized to the General Reserve.
Better cost-income ratios, ROE, ROA and NII than IADB
and CAF.
Liquidity
Comparable and more stable.
Superior than IADB average ratios and lower than CAF.
55
Central American Bank for Economic Integration
Financials: Credit Ratings
Key Factors Supporting Investment Grade Rating:
Credit Ratings to Date
Rating
Agency
Last
Reviewed
LongTerm
ShortTerm
Outlook
Moody's*
A1
P-1
Stable
Jun-15
Fitch
A
F1
Positive
Sep-16
S&P
A
A-1
Positive
Jul-16
JCR
AA-
N/A
Stable
Mar-16
Multilateral/preferred
creditor status
Diversified fund procurement
Strong capitalization
Continued support from the
international community
High liquidity
Sound asset quality
Sustained growth
Demonstrated shareholder
support
Conservative financial
policies/strict credit policies
*According to Moody’s Supranational Rating Methodology, CABEI’s
indicative Rating Range is: Aa1-Aa3.
Moody’s (Stable)
12 Upgrades in 13 years
Fitch Ratings (Positive)
Standard & Poor’s (Positive)
Japan Credit Rating (Stable)
56
Central American Bank for Economic Integration
Banco Centroamericano
de Integración Económica
/ www.bcie.org
57