More than three years after the pandemic began, the public credit program known as the ICO was created by the government to shield SMEs and self-employed workers from the worst effects of the crisis. The aim was to sustain lending and keep the economy moving during the health emergency. By the end of April, the share of loans in default for more than 90 days rose from 1.67% in January, representing €2,346.3 million in defaulted loans, to 2.004% in April, amounting to €2,815.5 million — an increase of 19.9% year over year, according to a report from the Official Credit Institution accessed by El Periòdic de Catalunya via Grupo Prensa Ibérica. [Citation: Official Credit Institution report via El Periòdic de Catalunya, Grupo Prensa Ibérica]
This led to a rising defaults burden for banks: €520.9 million in payments, or €129.5 million more than in January, was guaranteed to ensure funding kept reaching the economy in the early months of the coronavirus lockdown. In parallel, ICO paid €1,721.3 million to guarantee these credits. In short, the state balance remained positive, at least for now, even as the volume of loans expected to mature kept growing and more customers in vulnerable positions faced repayment challenges. [Citation: ICO report summary]
Consequently, the state pledged to absorb around 80% of the losses from loans outstanding to self-employed individuals and SMEs, and between 60% and 70% of losses on non-recovering loans to large companies. The amount paid out remained modest because the program was designed to contain and cap guaranteed sums rather than cover every outstanding loan, since borrowers might still resume payments in the future. [Citation: ICO data release]
Self-employed and SMEs
In the latest figures, the number of delayed transactions totaled 48,034, up from 39,839 in January. The program granted 34,135 advances to freelancers, small businesses, and SMEs, compared with 28,831 in the prior report. Against the backdrop of outstanding loans, the total outstanding portfolio reached 1,192,484 loans with 674,922 beneficiaries and a cumulative value of €140.737 billion, of which €107.187 billion was guaranteed. The portion of operations that remain outstanding, around 4% of the total, dwarfs the actual outstanding amount, indicating that many borrowers are asking for smaller sums — a pattern typical among self-employed individuals and SMEs facing quota pressures. [Citation: ICO statistics]
As a result, the overall default rate rose among micro-SMEs (3%), the self-employed (2.86%), and SMEs (2.19%), while the rate for larger companies stayed around 0.69%. The total default rate hovered near 2%, driven by the fact that the vast majority of operations, about 98%, were allocated to self-employed individuals and small to medium-sized firms. Even so, all segments were assessed against both the forecasts from three years ago and the latest historical default data. By June of the previous year, the grace period for most moratoriums on principal payments ended, yet there was no notable spike in defaults. [Citation: ICO and regional reports]
It is noteworthy that sectors such as tourism, entertainment, and culture posted below-average default rates of 1.77%, despite suffering heavily during lockdowns. The gradual recovery after reopening enabled these sectors to strengthen their financial footing more than expected in the spring of 2020, a trend that appears to extend to other industries as well. Within autonomous regions, a few noted low-default areas include Rioja at 0.76%, Navarre at 0.83%, and the Balearic Islands at 0.86%, while average figures tend to cluster around Andalusia (2.06%), Catalonia (2.05%), and Madrid (2.12%). [Citation: Regional and sector analysis]
Difference with Bank of Spain
The ICO figures, which are expected to grow in the coming quarters, differ from Bank of Spain numbers mainly due to methodology. ICO bases its reference on the maximum loan amount, arguing this provides the most realistic snapshot. The portfolio is affected by a declining balance as new inflows end and collateral declines, particularly among the most trusted customers. Loans not yet due or those harder to pay remain in the portfolio, and their weight tends to rise with the latest balance data. ICO focuses on outstanding loans as these are most relevant to the institution and the banks that guarantee them. [Citation: ICO methodology notes]
By contrast, the Bank of Spain uses the balance of the loans available, including approved and disbursed amounts that borrowers may not require, and it also considers both outstanding and doubtful loans in its ratio. This approach reflects the supervisory body’s interest in the stability of public accounts and the banking system. [Citation: Bank of Spain methodology]
According to the most recent data, the volume of living regulated ICO loans stood at €75.418 billion in March, down 13.203 billion over the year, a 14.9% drop. Of this, doubtful collections accounted for 8.2%, up from 4.1% a year earlier. Consequently, borrowers faced increased payment difficulties, driving doubtful loans up by €2.539 billion to €6.167 billion, and non-performing loans up by 3.353 billion, a 136% rise, alongside a 27% increase in subjective bad loans to €2.813 billion. [Citation: Bank of Spain and ICO comparative analysis]
Overall, the study highlights how the ICO program, despite its challenges, played a critical role in cushioning the economy through the worst phases of the pandemic, while also illustrating the divergent methods used by major institutions to measure credit risk and portfolio health. [Endnote: Synthesis of official data]
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