Official Credit Institute (ICO) posts 13.6-million euro profit in first quarter of 2015

With this financing volume, the ICO is adapting its role in the credit market to the new situation of economic recovery in Spain. The ICO has played an important counter-cyclical role in providing financial support to SMEs during the most acute stages of the crisis and is now being gradually replaced by private financial entities, which have increased their loan offer due to improved market conditions. Hence, as previously forecast since the start of the year, the volume of these ICO Second-Floor Facilities is expected to return towards the average issuance figures posted in the past. This underlines the important activity undertaken by the ICO as a counter-cyclical tool for financing companies, especially in terms of their internationalisation.

In the first quarter of 2015, the ICO formalised 45,196 loan transactions to the self-employed and SMEs through its facilities. The ICO Second-Floor Facilities continue to account for the majority, in volume terms, of the new activity by the ICO this year.

The lion's share of ICO financing is targeted at the self-employed and micro-enterprises (companies with between 1 and 9 employees), as 65% of transactions carried out this year were issued to this group. Furthermore, 54% of transactions were for an amount of less than 25,000 euros.

In the first quarter of 2015, it can be seen that the Second-Floor Facilities (excluding the short-term export facility) were in highest demand for the financing of investment projects. 44% of the total were used for this purpose, compared with 39% in the same period of 2014. The volume issued under financing periods equal to or greater than 10 years (excluding the short-term export facility) accounted for 7.83% of the total issued, compared with 4.49% in the previous year.

These figures highlight an improvement in the quality of demand for credit from SMEs.

The companies and self-employed in the Region of Catalonia were the main recipients of loans through the ICO Second-Floor Facilities in this period, with 15.85% of the total, followed by those in Valencia (14.45%) and Madrid (13.31%).

Of all the Second-Floor Facilities, the Enterprise and Entrepreneur Facility - used for both investment and liquidity - is in highest demand, as 1.86 billion euros were issued through this facility in a total of 33,579 loan transactions. The next most popular is the facility used to finance export activity by companies in the short term, which issued 881 million euros in loans through 11,483 transactions. This facility now accounts for 31.6% of the total volume of ICO loan facilities, compared with 24.3% in the same period in 2014.

Besides the Second-Floor Facilities, the ICO offers a number of direct financing programmes for viable investment projects by companies with international operations or projects of special interest to the Spanish economy. In the first quarter of 2015, these direct loans multiplied five-fold to amount to a total of 196 million euros, compared with 35 million euros in the same period of 2014. The ICO studies, issues and assumes the credit risk for these transactions, preferably under a cofinancing scheme with private financial entities.

Income Statement 1st Quarter of 2015

The ICO posted a pre-tax profit of 13.6 million euros and an after-tax profit of 9.5 million euros.

The main management indicators for the ICO remained at similar levels to those posted in the first quarter of 2014.

The solvency ratio rose to 23.59%, compared with 20.37% in the same period of the previous year, and the coverage ratio rose to 143.44%, compared with 140% in 2014.

The default rate stood at 7%.

These indicators stem from cautious management of the balance, in line with market best practices, and stand at considerably better levels than those of the Spanish financial system as a whole.

Attracting New Funds

As a frequent issuer in the international capital markets, the ICO is maintaining an active presence in the markets in 2015, albeit quantitatively lower given the foreseeable decline in financing requirements.

In the first quarter of 2015, 2.16 billion euros have been attracted in the international financial markets through medium- and long-term transactions. Of this amount, 89% was placed outside of Spain. It is worth noting the significant success achieved by the first issue of social bonds launched in Spain by the ICO, for an amount of 1 billion euros.