ICO made a profit EUR 13.6 million in the first quarter of 2015

ICO made a profit EUR 13.6 million in the first quarter of 2015

 

Demand for loans to finance investment projects has risen and there has been a downturn in demand for loans to cover liquidity needs.

Direct loans have increased more than fivefold over this period, reaching a total of 196 million euros compared to 35 million euros for the same period in 2014.

Instituto de Crédito Oficial (ICO) has granted loans totalling 2.781 billion euros during the first quarter of 2015 through its Second-Floor Facilities. 

This volume of lending shows that ICO is adapting its role in the finance market to the new conditions of the recovering Spanish economy. ICO has played a significant counter-cyclical role in supporting small and medium-sized businesses during the harshest stages of the financial crisis, and is now being gradually replaced by private banks that have increased their range of credit thanks to improved market conditions. Therefore, as already forecast earlier in the year, the volume of ICO's second-floor facilities is expected to return to pre-crisis levels. This demonstrates ICO's role as a counter-cyclical tool for providing financing for businesses, especially in relation to their international development. 

During the first quarter of 2015, ICO completed 45,196 lending operations to SMEs and the self-employed through its on lending facilities. ICO's second-floor facilities still remain at the core of its new activity for this year in terms of volume.

The majority of ICO's financing goes to the self-employed and micro-businesses (companies with 1 to 9 employees), with this segment accounting for 65% of operations carried out this year. Likewise, 54% of transactions were for less than 25,000 euros.

During Q1 2015, second-floor facilities (excluding the Export Facility) have been more in demand for financing investment projects, making up 44% of the total, compared to 39% for the same period in 2014. However, loans granted with maturity periods equal to or greater than 10 years (excluding the Export Facility) represented 7.83% of the total, compared to 4.49% the previous year.

This highlights an improvement in the quality of the demand for lending by SMEs.

Businesses and the self-employed from the region of Catalonia were the main beneficiaries of ICO's second-floor facilities over this period, accounting for 15.85% of the total, followed by Valencia (14.45%) and Madrid (13.31%).
Of the total second-floor facilities, the SMEs and Entrepreneurs Facility was the most demanded, both for investment and liquidity purposes, with 1.857 billion euros granted via 33,579 loan operations.  This was followed by the facility offering short-term financing for businesses' export activities, which has granted 881 million euros through 11,483 lending operations. This facility now accounts for 31.6% of the total volume of ICO's lending facilities, compared to 24.3% for the same period in 2014. 

In addition to its second-floor facilities, ICO offers direct financing programmes for viable investment projects put forward by companies with an international presence or projects of special interest to the Spanish economy. During the first quarter of 2015 a total of 196 million euros in these types of loan were granted, five times more than the same period of 2014 (35 million euros). For these operations, ICO studies the project, grants the loan and takes on the risk, preferably co-financing the project with private banks.

Earnings Income Statement 1st Quarter 2015

ICO posted pre-tax profits of 13.6 million euros and after-tax profits of 9.5 million euros.

ICO's main management indicators have remained at levels similar to those of the first quarter of 2014.

Its solvency ratio increased to 23.59% compared to 20.37% the previous year, while the coverage ratio increased to 143.44% from 140% in 2014.

The NPL rate was 7%.

These indicators are testament to prudent balance sheet management, in line with the market's best practices, and are well above the levels for the Spanish financial system overall.

Raising Capital

As a regular issuer in international capital markets, ICO has maintained an active presence in the markets in 2015, although the volume has decreased due to the expected lower demand for financing.

A total of 2.157 billion euros has been raised from international financial markets in medium and long term operations during the first quarter of 2015, of which 89% was obtained from abroad. It is worth noting the considerable success of the first issue of ICO social bonds launched in Spain for a total of 1 billion euros.