The Official Credit Institute (Spanish acronym: ICO) issued 10 billion euros last year through its Mediation Lines in partnership with the private banking sector. A total of 166,000 transactions were completed through these lines of credit, which were used to finance investments, liquidity and foster the internationalisation of Spanish companies.
Furthermore, the ICO financed 1.25 billion euros to companies in 2015 through direct loans for major investment projects, which is an increase of 70% on the previous year.
The activity managed by the ICO via the State also increased by 35% to a total of 140.91 billion euros as a result of efforts to strengthen its role as the State Finance Agency.
The contribution made by the ICO to the Spanish economy in 2015 was based on two lines of action. Firstly, to promote SME financing, especially micro-enterprises and self-employed professionals. Secondly, to foster the internationalisation of companies through the development of new products suited to their need to increase productivity.
2015 ICO lines of credit
Within the current context of economic growth and a return to normality by private credit, the ICO maintained an important role in line with the anti-cyclical nature of the institution, albeit to a lesser degree than in the previous year.
Loans worth a total of 9.67 billion euros were issued through the 2015 ICO lines of credit, which were used to finance 166,000 operations. Over half of these loans were for less than 25,000 euros and 66% were issued to companies with less than 10 employees. These two figures highlight the considerable capillarity of the ICO lines of credit as, in collaboration with private credit institutions, they enable financing to reach all companies throughout Spain.
With respect to the geographical distribution of the operations, SMEs and the self-employed in the autonomous region of Catalonia were the largest recipients, with 15% of the total, followed by those in Madrid, with 14%, and Valencia, with 13%.
The sectoral distribution of these lines of credit reveals that the loans formalised with companies in the wholesale sector, manufacturing industries and transport and storage have received the largest volume of financing, with 18%, 11% and 10% of the total, respectively.
In addition, there has been an increase in the volume allocated to long-term investment. 37% of the total financed by the ICO was issued for a term equal to or greater than five years.
The second line of action by the ICO in 2015 was to foster the internationalisation of Spanish companies. Last year, the ICO formalised 43,834 operations worth a total of over 3 billion euros aimed at enhancing the globalisation of companies. Hence, 9% of Spanish export companies in 2015 received financing through the ICO Exporters Line.
The main destinations for the exports and overseas investments by Spanish companies financed by the ICO line of credit were France (with 20% of the loan volume made available), Germany (with 11%) and Italy (with 9%). Beyond Europe, the United States was the country targeted by most companies (accounting for 5% of the loans).
International loan activity by the ICO has increased considerably since 2012, rising from a mere 2% of the loan volume distributed by ICO lines of credit to over 32% in 2015.
Direct financing
Direct financing from the ICO rose by over 70% in 2015 on the previous year to a total of 1.25 billion euros. Of this amount, 1.13 billion corresponded to loans and 118 million to guarantees.
These loans are aimed at financing major investment projects undertaken by Spanish companies, both within Spain and overseas: of the total loan volume issued, 671 million euros were used to support investments by companies in Spain and 579 million euros to support operations overseas by Spanish companies.
Impact on the economy
The impact of activity by the ICO on the Spanish economy is particularly significant in the regions with the greatest economic difficulty. In 2015, the loan volume to companies in the autonomous regions with a per capita GDP below the national average accounted for 50% of the total.
Furthermore, 23% of loans issued last year were used to finance companies located in regions with an unemployment rate higher than the average at the end of 2014.
Increase in the volume of funds managed on behalf of the State
The ICO has continued to increase the volume of funds administered on behalf of the State in its role as a Finance Agency. In 2015, it managed public funds totalling 140.91 billion euros, which represents an increase of 35%. Worthy of mention are the Autonomous Region Financing Fund, the Local Authority Financing Fund and the Company Internationalisation Fund (Spanish acronym: FIEM).
Drawn against the Autonomous Region and Local Authority Financing Funds, 1,400,000 invoices were paid to over 108,000 companies for a total amount of 17.26 billion euros. Furthermore, through these instruments and as a payment agent, the ICO formalised loans worth over 20 billion euros for servicing debt and other financial needs of the regional authorities.
The Spanish Company Internationalisation Fund (FIEM) continues to consolidate its position as an important official instrument for supporting the international expansion of Spanish companies. The volume managed rose to 5.29 billion euros, an increase of 2.5% on the previous year.
During the course of 2015, the ICO captured medium- and long-term loans worth 5.76 billion euros. Of the total resources captured, 3.65 billion were obtained through issues in the capital markets (with a 93% participation by non-domestic investors) and 2.11 billion were captured through loans from various multilateral organisations under highly advantageous terms.
The main new feature was the first issue of the Social Bond in January 2015, for a total of 1 billion euros. The funds obtained by launching this transaction were used to finance Spanish SMEs located in regions with the lowest per capita GDP.
In 2015, the ICO maintained its strategy to diversify its sources of finance, both regarding the term and the investor base. 94% of the volume issued was placed among foreign investors, compared with 80% in the previous year. The Euro continued to act as the main currency, although the issues in Dollars rose from 12% in the previous year to 31% in 2015.
The Official Credit Institute obtained an after-tax profit of 42.4 million euros. The main ICO management indicators continue to reflect an upward trend in 2015. The solvency ratio rose to 32.84%, compared with 23.8% in the previous financial year, and the coverage ratio remained at 134%.
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