INVESTOR PRESENTATION August 2018
Table of contents I. Instituto de Crédito Oficial II. Funding profile 2
Table of contents I. Instituto de Crédito Oficial II. Funding profile 3
Instituto de Crédito Oficial 100% State-owned Institution The Kingdom of Spain Financial Agency Supervised as a credit institution by the Central Bank of Spain Based on the principle of financial equilibrium 4
ICO: background 1971: Founded as the institution responsible for the co-ordination and control of State-owned banks. 1988: Becomes a State-owned enterprise. Starts tapping markets to raise resources. Assumes ownership of State-owned banks capital. 1991:Reform of state banking Commercial banks BEX, BCI, BHE, BCL, BCA and Caja Postal State-owned investment bank and the State s Financial Agency (1995). 5
ICO: purposes and functions ICO s purpose is to support and foster economic activities which contribute to the growth and the improved distribution of national wealth. These aims are pursued by ICO in its twofold function as: The State s Financial State-owned bank Agency Second-floor facilities Direct financing Private equity platforms Economic policy Administration of Funds set up by the State 6
Second-floor facilities scheme 1. Financing application Processing flows Funds flows Final customer 2. Risk Analysis Banks 4.b Funds delivery 3. Loan signature 5.b Funds refund 4.a Funds delivery Bonds and loans 5.a Funds refund Markets & Supras 7
Second-floor facilities Disbursed per year EUR mill Total loans outstanding EUR mill 8
Second-floor facilities On-lending facilities by sectors 2017 9
Direct Financing On-lending facilities by sectors 2017 10
Direct Financing Outstanding facilities by sectors As at 31/12/2017 11
Strategic Plan 2018-2021 Internationalization Public Infrastructures investments Contributing to Investment in infrastructure and climate change Promoting the contribution to the Investment Plan for Europe Fostering long term investments that enhance corporate size Strengthen and consolidation of export facilities New distribution channels: second floor financing with international partners Funding for international projects in local currencies Long term investment Providing long term financing aimed at productive investment, especially SME Partner with Reciprocal Guarantee Companies under risk sharing framework Alternative Finance Boosting our subsidiary Axis as a catalyst for private equity (SMEs and infraestructures) Securitization in order to promote SME funding.
EUR Million ICO lending activity has reinforced its countercyclical role during the last crisis 13
Counter-cyclical approach Total Assets (billion Euros) Ranking: Spanish banks in terms of assets (February 2018, billion Euros) Source: ICO * unaudited figures Source: AEB, CECA & ICO ICO gained ground during the crisis and has gradually decreased since 2012 14
Investment Distribution As at 30/06/2018 Direct loans abroad 7% Domestic direct loans 40% Domestic SME & other secondfloor loans 49% SME & other second- floor loans abroad 4% Total Loans: 22,508 MM 15
Financial highlights (1) Eligible capital for solvency purposes. (2) According to the forty-ninth Additional Provision of Act 42/2006 on the General-Government Budget Act, this ratio may in no case fall below 9.50%. ICO s own funds are of the highest quality (equity and reserves). ICO has issued neither subordinated debt, preferred stocks, contingent convertibles nor any other hybrid instruments. 16
Financial highlights Source: ICO, 2018 unaudited figures 17
Table of contents I. Instituto de Crédito Oficial II. Funding profile 18
Credit: key points Top quality guarantee Direct Explicit Irrevocable Unconditional S&P Fitch DBRS A- /positive A- u/stable A /stable Moody s Baa1 /stable Prudent risk management Minimizing rate, currency and liquidity risks Guaranteed by the Kingdom of Spain 0%* risk weighted * Minimum risk applicable in accordance with European Prudential Regulations. Sound balance sheet 19
Funding policy 2018 Programme volume: around EUR 4 bn EUR benchmark transactions Bolster sustainability bonds Access to non-euro markets (JPY, USD, SEK, BRL, etc.) Preference for short to medium maturities 20
Funding activity 30 27.4 25 20 19.1 16.5 15 14.6 14.0 10 9.2 11.2 10.7 10.2 5.8 6.2 5 4.0 4.0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2.096 bn completed As at 31th August 2018 Billion EUR 21
Million EUR EUR and USD Benchmark Curve EUR USD Social Bond Strategy: Benchmark minimum size: 500 million As at 31th August 2018 Taps minimum size : 50 million (adding up clips of 25 million) Private placement minimum size: 10 million 22
Liability breakdown As at 30/06/2018 Provisions and other liabilities 4% ECP 16% Bonds 39% Repo & Deposits 5% Equity & Reserves 13% Loans 24% 23
Borrowing profile By Region 2017 By Investor Type By Region 2016 By Investor Type 24
By Currency ECP 2018 (Gross issuance) By term 6-9 meses 2% > 9 meses 3% AUD 33.24% 0-3 meses 37% GBP 0.12% USD 66.64% 3-6 meses 58% Annual Average Outstanding c/v EUR million 5.634 4.298 3.093 92 332 462 221 356 351 352 668 1.374 1.403 2.281 1.482 545 568 652 1.243 1.927 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 25
ICO: an SRI approach to financing New SRI policy and integration of SRI in ICO management by objectives Revised Code of Conduct, with reinforced ethical principles New Environmental Policy First Spanish Public Sector Entity certified as Family and Personal Life Friendly firm 1st Gender Equality Plan 1st ICO Suppliers Survey, to know and promote their SRI commitment ICO receives "Best Social Bond of the Year 2016" award from Global Capital magazine. The award recognizes the innovation of ICO's social bonds launched in the international sustainable bond markets ICO wins 2016 European award for Environmental and SRI Sustainability by European Business Awards Adoption of Equator Principles (October 2016) ICO views Corporate Social Responsibility as a set of strategies, policies and actions that all companies should implement to ensure their activity is environmentally, economically and socially sustainable, encompassing the Institute itself as well as those groups of stakeholders that interact with it in undertaking its business activities. 26
ICO Social Bond platform set up in 2015 ELIGIBILITY CRITERIA SME Under European Union s definition REGIONS WITH GDP PER CAPITA BELOW NATIONAL AVERAGE EXCLUDED ACTITIVITES Aim to measure job retention and creation in SME s Neither Social nor Environmentally friendly: Alcohol, Tobacco, Gambling, Mining 2nd OPINION REPORTING EXTERNAL REPORT (audited) http://www.ico.es/documents/19/1213011/ico+loan+portfolio+summary+2017+-+04-11- 2017+-+Final.pdf/811130fc-5acd-40ba-afd0-2f5db159bd0a https://www.ico.es/documents/19/69769/second+opinion+ico+social+bond+framework.pdf/44cfbcad- 7f67-4528-ac65-e9eefce8d070 On the 1 st anniversary INTERNAL REPORT (detail allocation proceeds) http://www.ico.es/documents/19/1213011/reporting+sb+may+2017.pdf/37608cc 3-1f29-4e54-9152-6a073a676a92 27
ICO EUR 1,000 mm 0.25% Due April 2022 Issued in September 2017 By Region By Investor Type Middle East 4% Switzerland 4% Benelux 4% Germany & Austria 29% Insurance & Pension Fund 11% Banks 37% France 6% Rest of Europe 7% Central Banks 18% Italy 11% Asia 12% Spain 23% Fund Managers 34% 28
3 rd ICO SOCIAL BOND EUR 500 mm 0.1% Due July 2021 By Region Rest of Europe 6% Switzerland 5% Italy 5% France 6% Asia 10% Issued in July 2017 Spain 37% Central Banks & Official Institutions 15% Banks 22% By Investor Type Fund Managers 34% Netherlands 12% Germany & Austria 19% By ESG participation Insurance & Pension Funds 29% Rest of Investors 51% SRI Investors 49% Number of SRI investors: 23/60 29
ICO EUR 500 mm 0.05% Due July 2020 Issued in March 2017 By Region By Investor Type 30
Contacts Antonio Cordero Head of Funding and Treasury Rodrigo Robledo Head of Capital Markets antonio.cordero@ico.es rodrigo.robledo@ico.es Sergio Sierra sergio.sierra@ico.es Head of Securitization and Investor Relations www.ico.es B ICO <GO> investors@ico.es Paseo del Prado 4 28014 Madrid Disclaimer: None of the information displayed constitutes an offer of securities for sale, or recommendation to purchase, to hold or sell any securities in the U.S.A. or in any other jurisdiction in which such offer or recommendation is not authorized. ICO has not registered, and does not intend to register, any of its securities (nor the guarantee thereof has been or will be registered) under the U.S. Securities Act of 1993 (the Securities Act) or any applicable US State Securities Laws or to conduct a public offering of securities in the U.S.A. ICO is complying with rules concerning the exemption from the registration of its securities under the Securities Act, by which those securities will be offered only for sale to qualified institutional buyers (QIBs) pursuant to rule 144A. This information is not directed at and may not be distributed to any person in any jurisdiction in which the access to this information is legally limited (v gr. USA -except QIBs- Canada, Japan, Australia). 31