INTEGRATED REPORT 2016

1. INTEGRATED REPORT 2016

2. 2016 INTEGRATED REPORT CONTENTS Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS ParticipacionesEmpresariales

3. 2016 INTEGRATED REPORT Letter from the Chairman

4. 2016 INTEGRATED REPORT LETTER FROM THE CHAIRMAN This year, once again, ICO is providing its stakeholders with economic, financial and non-financial information, as well as details of its good governance practices. On this occasion, it does so via this integrated report that contains the information traditionally released through the Activity Report, the Corporate Governance Report and the Corporate Social Responsibility Report, prepared following the Global ReportingInitiative's G4 guidelines and the Progress Report on the United Nations Global Compact. Through this integrated report, our aim is to facilitate the analysis and decision-making processes of our stakeholders, avoiding the need for cross-referencing and thus improving the quality, accessibility and transparency of the information. In producing the integrated report, ICO comes into line with the communication model of most large Spanish companies, in addition to Directive 2014/95/EU of the European Parliament and of the Council on the disclosure of non-financial information, which must be transposed into Spanish law by the end of 2017. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance One of the main premises defined at the start of this integration process was the preservation of the quality and integrity of information provided to stakeholders. In this regard, we have achieved the goal we set ourselves, as recognised by our auditor, AENOR, which has highlighted the integration achieved as one of the strong points of this report. When analysing the business and economic information set out in this report, the countercyclical nature of ICO's activities must be borne in mind and that the Institute's goal is not to compete with commercial banking, but rather to complement it. In the years in which companies experienced greatest difficulty obtaining bank loans, ICO was able to alleviate this scarcity by injecting funds into the Spanish economy, which represented record levels for ICO. Now that the flow of credit in the private finance sector has returned to normal, our challenge once again is to adapt to the circumstances. Thus, ICO's activities are important not only quantitatively speaking, but also qualitatively, contributing value to the economy through their specialisation in specific areas that require our involvement and respecting the principle of subsidiarity. As liquidity is no longer a problem for companies, ICO has switched its focus from volume to specialisation and value creation. Against a backdrop of consolidated growth in Spain, ICO is still a key figure in business financing. Its work is focused on its strategic objectives, such as promoting the internationalisation of Spanish companies, and reinforcing its role as a financier of medium- and long-term investment, particularly in relation to infrastructure and action on climate change. As a result of the economic consolidation process and our countercyclical nature, ICO ended 2016 with a volume of new business that was slightly down on previous years, although it was in keeping with the weight the Institute has historically had in the Spanish finance sector. In response to the Europe-wide challenge of creating a Capital Markets Union, ICO is contributing to the diversification of sources of financing by promoting alternatives to traditional bank financing, particularly in the area of venture capital. In 2016, AXIS, ICO's venture capital subsidiary, remained active via its main instrument, the FOND-ICO Global “fund of funds”, which, through its investments in more than 200 Spanish companies, has made it possible to create or maintain more than 55,000 jobs. Also worth noting is the financing received by ICO, through loans from the European Fund for Strategic Investment and the EIB to be invested via FOND-ICO Global and FOND-ICO Infraestructuras, under the “Juncker Plan”; in some instances, these funds have been received as part of risk sharing schemes, which is a significant new development. Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

5. 2016 INTEGRATED REPORT LETTER FROM THE CHAIRMAN In 2016, the work undertaken by ICO as a financial agency was once again very important. It is in this context that the Institute manages instruments related to the foreign sector and instruments to extend financing to the Spain's autonomous regions and local authorities. As a whole, the business managed by ICO in 2016 increased by more than 5%. The presence of ICO as a significant player in the Spanish finance sector has had a notable influence on economic growth and employment. Our estimates suggest that the impact of ICO financing on economic activity stands at more than €18 million, equivalent to 1.6% of GDP. They also suggest that employment created or maintained exceeds 338,000 jobs, 2.0% of the total volume of full-time equivalent employment. To carry out its own activities, ICO raises medium- and long-term funds, for the most part by issuing securities on the capital markets. In 2016, ICO issued a new social impact bond, consolidating its commitment to that market. In terms of non-financial aspects, ICO is aware of the increase in value offered by ethical, responsible and transparent management. In the different phases which the Institute's activities have passed through in recent years, a common element has been professional and prudent management, which has made it possible to maintain the highest standards in relation to the key management ratios. Safeguarding profitability is key to ensuring the sustainability of medium- and long-term projects, so that it is possible to continue contributing to the development of the Spanish economy by supporting Spanish companies and entrepreneurs. In line with responsible management, it is ICO's constant objective to review and update its internal management and control policies and procedures. As Chairman of ICO, I am particularly proud of the progress made in terms of incorporating new environmental and social best practice standards, such as the Equator Principles. We officially signed up to the initiative in the last quarter of 2016 and in 2017 we will fully roll out the risk analysis procedures when studying new financing transactions. Likewise, in 2016 we have continued to commit to transparency and corporate governance best practice. 2016 was the first full year in which independent directors served on the General Board. Their presence since November 2015 has made it possible to reinforce the Institute's autonomy and bring it into line with European best practice. The new independent board members play a key role in the functioning of the board, as they have a double vote on transactions forming part of the Institute's financial business, meaning that they enjoy a majority. In 2016, we rolled out the analysis of a new social initiative, as part of which ICO may transfer 12 properties for social purposes to local authorities and non-profit organisations. In 2017, this initiative has started to bear fruit, with the transfer of two properties for inclusion in the network of rented social housing as part of the women's support programme organised by the local authorities of Alicante and Xátiva. All of the actions taken as part of these initiatives represent progress with ICO's application of the 10 Principles of the Global Compact and demonstrate our renewed commitment to this important international standard. Finally, behind all of these figures, ratios and percentages there are always people. The team of professionals that make up Instituto de Crédito Oficial and its group, which, despite the measures to limit government spending, which affect our employees as public servants, and thanks to their professionalism, expertise and dedication, manage to ensure that our projects flourish, helping ICO to fulfil its purpose for the benefit of Spanish society as a whole. I would like to dedicate this closing statement to them, offering them my sincerest thanks for their indispensable work. Thank you. Pablo Zalba Chairman Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

6. 2016 INTEGRATED REPORT About this report • Scope, coverage and preparation of this report • External verification

7. 2016 INTEGRATED REPORT ABOUT THIS REPORT Balance: To ensure that information is presented in a balanced and fair manner, this report has been produced in line with the G4 guidelines (exhaustive option). Furthermore, the requirements of the United Nations Global Compact Progress Report regarding changes in the implementation of the 10 Principles have also been observed. The report does not include the sectoral supplement for the financial sector, as ICO's activities do not fall into any of the four categories defined by the GRI in section 2.2 of the edited supplement. However, in the table of contents in Annex 1, information on social indicators is provided. Transparency, precision and reliability: ICO has submitted the content of this report to external verification by independent experts. With regard to annual accounts and financial information, that verification was carried out by the General Comptroller of the State Administration (Intervención General de la Administración del Estado: IGAE) (page 8) and by Ernst & Young (pages 9 and 10). As regards the GRI standard for producing social responsibility reports, the verification was carried out by AENOR (page 11). The verification processes established that the document's structure allows information to be read quickly and clearly. Furthermore, the veracity of information and the reliability of sources used was checked. Timeliness and frequency: ICO produces its economic-financial, corporate social responsibility and corporate governance reports on an annual basis. The information they contain refers to the calendar year. For the first time, ICO is producing and presenting the aforementioned information in an integrated manner. Management Commitment: ICO's Management is responsible for deciding who should carry out the external verification. The commitment of ICO's governing body to the verification process is reflected in the participation of the directors-general for the areas included in the scope of external verification workshops, in addition to the approval of a specific budget item to cover the costs arising from this process. SCOPE This report focuses on the economic-financial, ethical, environmental, social and corporate governance matters that have defined ICO's activities in 2016. Letter from the Chairman About this report Key milestones COVERAGE General information about ICO The information included in this report relates to ICO activities. It also includes an Annex 3 (pages 150 to 160), containing information on ESG variables of the investee company AXIS Participaciones Empresariales. Information on ICO's environmental management (pages 105 to 108 and Annex 1, pages 131 to 133) also includes the performance of AXIS Participaciones Empresariales, with the exception of the indicator G4-EN17, Other greenhouse gas emissions, which is reported on separately on page 156. Corporate governance Economic management Environmental management Labour relations ICO and society PRINCIPLES OF PREPARATION OF THE REPORT Annex 1. Table of contents Materiality and stakeholders: The content of this report has been defined taking into account the identified stakeholders and material aspects (“Stakeholders”, pages 29 and 30; “Materiality”, pages 31 to 35). Comparability: With a view to offering information on the ICO's progress in relation to matters included within the scope, the report includes data relating not only to 2016, but also to previous years (“Development of the main indicators”, pages 49 to 51). Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

8. 2016 INTEGRATED REPORT ABOUT THIS REPORT EXTERNAL VERIFICATION • Under article 168 of the General Budget Act (Ley General Presupestaria), the General Comptroller of the State Administration (IGAE), through the National Audit Office, is responsible for the annual audit of Instituto de Crédito Oficial's annual accounts and those of its subsidiaries (consolidated balance sheet, consolidated profit and loss account, consolidated statement of changes in net assets, consolidated cash flow statement and the consolidated report) as at 31/12/2016. Under the agreement entered into with the Ministry of Finance and Public Administrations, Ernst&Young, S.L., at the suggestion of the IGAE, has undertaken the aforementioned auditing and issued the corresponding report, from which the following points have been extracted: • IGAE is responsible for issuing an opinion as to whether the consolidated annual accounts offer an accurate reflection, based on the work undertaken in accordance with the Public Sector Audit Standards. Those standards require the audit to be planned and executed in such a way as to obtain reasonable, although not absolute, assurance that the consolidated annual accounts are free from material inaccuracies. • Audit evidence obtained provides a sufficient and adequate basis for issuing our audit opinion. • The audited consolidated annual accounts offer, in every significant respect, an accurate reflection of the consolidated assets and the consolidated financial position of Instituto de Crédito Oficial and its subsidiaries as at 31 December 2016, in addition to its consolidated results and the consolidated cash flows for the year ending on that date, according to the applicable regulatory framework for financial reporting and, in particular, with the accounting principles and criteria defined therein. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report Note: The full report can be accessed at: https://www.ico.es/documents/15125/1241288/Consolidated+financial+statements+-+Audit+report+2016/cd0e9908-1b76-483a-8dba-a62c8501c792

9. 2016 INTEGRATED REPORT ABOUT THIS REPORT EXTERNAL VERIFICATION Letter from the Chairman • The verification of the annual accounts as at 31 December 2016 relates to Instituto de Crédito Oficial and its subsidiaries. The verification process was carried out by audit firm Ernst & Young, culminating in the release of the corresponding report on 28 March 2017. • The following items are extracted from that report: • The audited accounts comprise the consolidated balance sheet as at 31 December 2016, the consolidated profit and loss account, the consolidated statement of changes in net assets, the consolidated cash flow statement and the consolidated report. • The audit was carried out in accordance with current Spanish regulations. • The audit evidence obtained provides a sufficient and adequate picture for the audit opinion reflected in the report to issued. • The consolidated annual accounts offer, in every significant respect, an accurate reflection of the consolidated assets and the consolidated financial position, in addition to the consolidated results and the consolidated cash flows according to the International Financial Reporting Standards adopted by the European Union and other regulatory provisions concerning financial reporting applicable in Spain. • The consolidated management report contains the relevant explanations given by the chairman of ICO and the accounting information it contains matches the information contained in the consolidated annual accounts. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report Note: The full report can be accessed at: https://www.ico.es/documents/15125/1241288/Annual+accounts+report+prepared+by+the+external+audit+firm/abb33972-8c73-4cc5-ba97-8299aaee6bdc

10. 2016 INTEGRATED REPORT ABOUT THIS REPORT. External verification EXTERNAL VERIFICATION Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report Note: The full report can be accessed at: https://www.ico.es/documents/15125/1241288/Annual+accounts+report+prepared+by+the+external+audit+firm/abb33972-8c73-4cc5-ba97-8299aaee6bdc

11. 2016 INTEGRATED REPORT ABOUT THIS REPORT. External verification EXTERNAL VERIFICATION • The external process to verify ICO's CSR report for 2016 was carried out on 20 and 21 June 2017, with AENOR being entrusted with the verification process for the third year in succession. • According to the report issued by the verifier on 23 June 2017, the strong points of ICO's CSR Report are as follows: • Integrative approach of the sustainability report and the annual report, integrating rather than adding content • Participation of the different areas of the organisation in the definition of content • In-depth identification of ICO's interest groups and subgroups, associating them with the relevant objective • The verifier has also identified the following opportunities for improvement: • Introducing the Sustainable Development Goals (SDGs), identifying ICO's contribution. • Dedicating more content to progress, challenges and relevant facts • Improving the visibility of material aspects • Improving AXIS information, focusing on the relevant aspects in which it differs from ICO • Finally, mention is made of defining a method for identifying materiality and ensuring the participation of stakeholders. • In accordance with the verification process, AENOR has issued the relevant certificate to provide external assurance that the information is compliant and that the sources used to create the report are valid. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

12. 2016 INTEGRATED REPORT Key milestones • 2016 • 2017 (first half) 12

13. 2016 INTEGRATED REPORT NOTABLE MILESTONES IN 2016 NOTABLE ECONOMIC MILESTONES ICO played a significant role during the most acute stages of the crisis Over the course of the past five years, ICO has played an important role in business financing, notably increasing its activity in order to offer companies and entrepreneurs access to financing and offsetting the credit restrictions imposed by private institutions. Between 2012 and 2016, ICO granted €61.485 billion in 898,100 financing transactions through its second-floor facilities. However, as the supply of credit from private financial institutions has returned to normal and companies have greater liquidity, ICO has moved from a largely credit-based model to a more intensive model based on specialisation. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales In this regard, in recent years ICO has reinforced its strategy for supporting internationalisation and exports by Spanish companies, rolling out new financing mechanisms that encompass all the needs that promote the ventures of Spanish companies abroad, ranging from debt instruments to guarantees and equity participation. As a result, in 2016, the countercyclical nature of ICO saw demand for its funds continue on the path initiated in the previous year, to stand where it stood prior to the economic crisis, as can be seen in the table: Print Integrated Report 13

14. 2016 INTEGRATED REPORT NOTABLE MILESTONES IN 2016 NOTABLE ECONOMIC MILESTONES Letter from the Chairman In 2016, ICO continued its unwavering support for Spanish businesses ICO continues to play a key role in the Spanish financial system in terms of support for SMEs, the self-employed and entrepreneurs in this new stage of economic recovery and the normalisation of private lending. At the end of 2016, the outstanding balance of loans granted by ICO to non-financial companies at terms of over one year represented 7% of the total balance of the Spanish credit system. In terms of its lending activities, ICO, in 2016, made loans amounting to €5.406 billion. Of this amount, €4.953 billion were channelled through second-floor facilities in 81,082 transactions. This financing accounted for 2.4% of the total flow of new transactions entered into under the system and for an amount of less than one million euros, involving non-financial companies. Furthermore, it is estimated that these funds have contributed to the creation or maintenance of 338,000 jobs. Also, through its direct lending activities, ICO made loans totalling €453 million. These transactions are aimed at medium-sized and large companies that undertake significant investment and infrastructure projects that have a positive carry-over effect on the Spanish economy and employment, prioritising sustainable growth and the internationalisation of Spanish companies. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report 14

15. 2016 INTEGRATED REPORT NOTABLE MILESTONES IN 2016 NOTABLE ECONOMIC MILESTONES Letter from the Chairman The internationalisation of companies is one of ICO's strategic goals In 2016, ICO stepped up its commitment to the internationalisation of Spanish companies. The volume of lending entered into for this purpose via second-floor facilities has increased notably in recent years, accounting for just 2.1% in 2012 and rising to 33.8% of the total volume entered into in 2016. In the space of these five years, ICO has provided financing for the purposes of promoting the internationalisation of Spanish companies amounting to €11.885 billion through 144,450 transactions. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society In terms of activities in 2016, the funds aimed at promoting expansion projects abroad and the export activities of Spanish companies stood at €1.673 billion through a total of 20,383 transactions. In 2016, 4.1% of regular Spanish exporters obtained financing through the ICO Exporters facility. The implementation of a new second-floor facility known as ICO International Channel also stands out in 2016. This mechanism promotes ICO's role as a second- or third-floor bank for international financial institutions which provide financing for the internationalisation of Spanish companies. In the context of this new product, in 2016, ICO granted a loan of $300 million to the Development Bank of Latin America (CAF) to finance investment projects, liquidity needs and the medium- and long-term exports of Spanish companies to countries in Latin America and the Caribbean. Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report 15

16. 2016 INTEGRATED REPORT NOTABLE MILESTONES IN 2016 NOTABLE ECONOMIC MILESTONES Letter from the Chairman ICO was the first national development bank to obtain financing from the Investment Plan for Europe In 2015, the Investment Plan for Europe, known as the “Juncker Plan”, came into operation for the 2015 to 2017 period. The purpose of the plan is to mobilise public and private resources allocated to investment and to contribute to the revival of the European economy. ICO plays an active role in the plan, prioritising it within its lines of activity with a view to promoting investment in strategic infrastructure, education, research, innovation, renewable energy and energy efficiency projects. As a result of these efforts, in 2016, ICO received the first financing under the “Juncker Plan”, in the form of two loans, for a combined amount of €300 million, from the European Investment Bank (EIB) and the European Fund for Strategic Investments (EFSI). This financing will boost the venture capital market, help to improve the capitalisation of Spanish companies and boost support under the plan for infrastructure and energy projects. Funds will be channelled via FOND-ICO Global and FOND-ICO Infraestructuras, venture capital funds managed by “AXIS, Participaciones Empresariales SGEIC, S.A. S.M.E.”, a venture capital company that is wholly owned by ICO. ICO has revitalised venture capital, contributing to the structured deleveraging of the Spanish business sector The diversification of alternative sources of financing to bank financing via venture capital forms part of the range of instruments that ICO provides to Spanish companies. Via AXIS, ICO manages €2 billion in three funds: FOND-ICO Global, FOND-ICO Infraestructuras and FOND-ICO Pyme, playing a key role in the promotion and development of venture capital in Spain. The activity of FOND-ICO Global, the first public venture capital “fund of funds” created in Spain, has been particularly noteworthy since its creation in 2013, having approved investments, with funds from ICO, totalling more than €1.1 billion, which represents an injection of more than €4.4 billion into Spanish companies. This initiative has transformed and revitalised the Spanish private capital landscape and its great importance as a model for public-private cooperation and as a driver of alternative lines of financing for Spanish companies are of particular note as these are features that are of huge significance to the Spanish economy. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report 16

17. 2016 INTEGRATED REPORT NOTABLE MILESTONES IN 2016 NOTABLE ECONOMIC MILESTONES Significant increase in funds managed by ICO In addition to lending activities and the provision of guarantees, ICO, as a state financial agency, manages and administers different funds which have no legal personality and which, generally speaking, are financed under the general state budget. These instruments are aimed at different areas of activity, such as the financial sustainability of Spain's autonomous regions and local authorities, promoting the internationalisation of Spanish companies and contributing to development. ICO undertakes these activities on behalf of the state and the corresponding balances are not included in ICO's financial statements. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales At the end of 2016, the outstanding balance of transactions carried out using state funds stood at €163.437 billion, an increase of 15.9% compared to the end of 2015. Combining its own operations and those carried out on behalf of the state gives a balance of €196.225 billion as at 31 December 2016, a year-on-year increase of 5.2 %. Print Integrated Report 17

18. 2016 INTEGRATED REPORT NOTABLE MILESTONES IN 2016 NOTABLE ECONOMIC MILESTONES Letter from the Chairman ICO consolidates its presence in the social impact bonds market Over 2016, ICO obtained financing amounting to €3.970 billion. Of this amount, 64% was obtained from securities issued on capital markets and the remaining 36% from loans from different multilateral organisations. In terms of market issues, the return of ICO to the dollar market is worth special mention, with a benchmark financing operation for the sum of $500 million. Also, the second issue of social impact bonds, also for the sum of €500 million, consolidated the presence of ICO in operations of that kind, the purpose of which is to provide financing for SMEs located in regions of Spain with a per capita GDP below the national average. In terms of financing from multilateral organisations, in recent years ICO has improved the channelling of these funds, offering Spanish companies better-than-market conditions in terms of price, term and availability, with the transactions entered into with the European Investment Bank (EIB) deserving special mention. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations NOTABLE ENVIRONMENTAL MILESTONES ICO and society ENERGY EFFICIENCY Annex 1. Table of contents In 2016, €85,800 was invested to install LED lighting. Annex 2. Basic regulatory framework ADHESION TO THE EQUATOR PRINCIPLES Annex 3. AXIS Participaciones Empresariales In October 2016, ICO officially signed up to the Equator Principles. The inclusion of environmental and social criteria in the analysis of financing transactions, in addition to new risks inherent in the project, represent a significant qualitative change in the procedures in place to date. Following ICO's adhesion to the Equator Principles, its employees must receive training to adapt their knowledge to the new requirements; furthermore, internal processes and procedures relating to project finance must also be updated. Print Integrated Report 18

19. 2016 INTEGRATED REPORT NOTABLE MILESTONES IN 2016 AWARDS AND RECOGNITION Letter from the Chairman • ICO was recognised at the “European Business Awards 2016”, in the “Environmental and Corporate Sustainability” category. • “Best Social Impact Bond of the Year” award from Global Capital magazine • ICO has been awarded the DZ Bank seal of quality for sustainability and, notably, we were also ranked in the top 15%. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management OTHER ACTIONS OF INTEREST Labour relations • On 29 June 2016, the second edition of the “ICO Sustainable Bond Forum” was held with a view to exploring the social impact and green bonds market with issuers, investors, agencies and all other market participants. • The ICO Museum has been included in the 7th edition of the Madrid Accessible Tourism Guide. • For the first time, ICO has given work experience to a number of young people with intellectual disabilities, as part of the first edition of the “CAMPVS Project”, in collaboration with Fundación Carmen Pardo-Valcarce. ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report 19

20. 2016 INTEGRATED REPORT NOTABLE MILESTONES IN THE FIRST HALF OF 2017 TRANSFER OF PROPERTIES FOR SOCIAL PURPOSES CORPORATE GOVERNANCE AMENDMENTS TO INTERNAL STANDARDS Letter from the Chairman • Organisational Circular 1/2017, of 27 May, on collegiate bodies • New appointments to the General Board: • Miguel Ordozgoiti, Director General for Services. Ministry of Agriculture and Fisheries, Food and Environmental Affairs • Mª Jesús Romero de Ávila, Director General for Economic Planning and Budgets. Ministry of Public Works • Raquel García, adviser to the minister's office. Ministry of Finance and Public Service • Appointment of Mariano Colmenar Palomares as Director General for Business About this report Key milestones General information about ICO Corporate governance Economic management Environmental management • New version of the Internal Rules of Conduct relating to the Securities Market, approved by the ICO General Board in February 2017. • The rules relating to the ICO Risk Map have been revised with a view to analysing its validity and adjusting the aspects necessary for it to correctly reflect the management of non-financial risks Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework ICO has made a total of 12 properties available to local authorities and other non-profit associations (6 for residential use and another 6 for non-residential use), to be used for social purposes. The first property was transferred to the local authorities in Alicante for use as part of a women's support programme. Annex 3. AXIS Participaciones Empresariales Print Integrated Report 20

21. 2016 INTEGRATED REPORT General information about ICO • Corporate identification details • Legal form and applicable regime. Mission and vision • Business model. Products • Stakeholders • Materiality • Risks and opportunities • Suppliers • Transparency • Communication • Client satisfaction • Investments in companies. • Alliances • Development of the main indicators

22. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO CORPORATE IDENTIFICATION DETAILS Letter from the Chairman About this report Key milestones • Company name • INSTITUTO DE CRÉDITO OFICIAL, ENTIDAD PÚBLICA EMPRESARIAL (ICO) • Tax ID (CIF) • Q-2876002-C • Registered address • Paseo del Prado, 4. 28014 – MADRID • Website • www.ico.es • Social networks • LinkedIn • Twitter (@Icogob) • Point of contact for matters relating to this report • rse@ico.es General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

23. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO LEGAL FORM AND APPLICABLE REGIME. MISSION AND VISION The legal form and the legal regime applicable to ICO, as well as its purposes and functions, are defined in articles 1 to 4 of its articles of association, approved by Royal Decree 706/1999, of 30 April (BOE (official gazette of the Spanish state) No. 114, of 13 May 1999). The original version of this provision has undergone changes and the consolidated text includes amendments set out in Law 40/2015, of 1 October, on the legal regime applicable to the public sector (BOE No. 236, of 2 October 2015), Royal Decree 1149/2015, of 18 December (BOE No. 1, of 1 January 2016), and Royal Decree 390/2011, of 18 March (BOE No. 77, of 31 March 2011). Letter from the Chairman About this report Key milestones • Legal form and applicable regime • ICO is a public business entity attached to the Ministry of Economy, Industry and Competitiveness through the State Secretariat for the Economy and Business Support. Its legal form is that of a credit institution and it is regarded as a state financial agency. It has its own legal personality, assets and treasury, as well as management autonomy in carrying out its functions. • The State Secretariat for the Economy and Business Support is responsible for strategic management at Instituto de Crédito Oficial, as well as assessing and controlling the results of its activities. • ICO is not financed through the general state budget, but in the capital markets and through loans. The Spanish government guarantees the debts and obligations it contracts in order to raise such funds. • Mission • The purpose of the Instituto de Crédito Oficial is to sustain and promote economic activities that contribute to growth and to improving the distribution of the nation's wealth and, in particular, those which should be promoted due to their social, cultural, innovative or environmental importance. • Vision • These objectives are accomplished by ICO in its dual role as a specialised credit institution and a state financial agency. • ICO's goal is to be a top-tier international organisation and a benchmark national institution in terms of transparency, solvency and credibility, to be acknowledged by SMEs and financial institutions in particular as an ally for increasing wealth and employment and as having a highly qualified, motivated, efficient and committed team that carries out its functions in an environment of trust and cooperation. • Functions • The functions of Instituto de Crédito Oficial are to: • Contribute to mitigating the economic effects resulting from serious economic crises, natural disasters or other similar circumstances, in line with guidance from the Council of Ministers or the government's Executive Committee for Economic Affairs. • 2.Act as an instrument to implement certain economic policy measures following the fundamental lines established by the Council of Ministers, the government's Executive Committee for Economic Affairs or the Ministry of Economy and Competitiveness, subject to the rules and decisions set out in that regard by the General Board. General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

24. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO BUSINESS MODEL. PRODUCTS As part its activities, ICO acts as a state financial agency and as a credit institution (state-owned investment bank). Letter from the Chairman Note: The information regarding the activity of these products for 2016 can be found in the “Economic management” section (pages 69 to 104) About this report • STATE FINANCIAL AGENCY Key milestones As a state financial agency, ICO manages the official funding instruments that the Spanish state provides for encouraging exports and supporting development, with the state compensating ICO for any costs these processes may entail. This type also includes ICO funding, on express instructions from the government, for those affected by natural disasters, environmental disasters and other events of general interest. For these types of operations, ICO does not take on the risk and therefore acts only after public funds have been provided and/or through offsetting of interest rate differentials. General information about ICO Corporate governance NATIONAL SCOPE OF ACTION ICO is tasked, on behalf of the state, with arranging, managing and administrating economic policy operations in order to respond to special circumstances. These operations do not form part of the Institute's balance sheet. Economic management Environmental management • Regional Financing Fund (FFCCAA) Labour relations • Purpose: To provide Spain's autonomous regions with liquidity. • ICO's function: ICO is the financial manager of the fund, responsible, among other functions, for arranging financial transactions with Spain's autonomous regions and providing technical instrumentation, accounting, cash, paying agent and monitoring services, in addition to all other financial services relating to authorised transactions charged to the fund. • Other information of interest: This fund inherits the rights and obligations of the now defunct Fund for Financing Payments to Suppliers (FFPP) and the Regional Liquidity Fund (FLA). ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework • Local Authority Financing Fund (FFEELL) Annex 3. AXIS Participaciones Empresariales • Purpose: To provide liquidity to and ensure the financial sustainability of town councils by assisting them with their financial needs. • ICO's function: ICO is the financial manager of the fund, responsible, among other functions, for arranging financial transactions with Spain's autonomous regions and providing technical instrumentation, accounting, cash, paying agent and monitoring services, in addition to all other financial services relating to authorised transactions charged to the fund. • Other information of interest: This fund has been endowed with the assets relating to local authorities from the now defunct Fund for Financing Payments to Suppliers (FFPP). Print Integrated Report

25. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO BUSINESS MODEL. PRODUCTS • STATE FINANCIAL AGENCY Letter from the Chairman INTERNATIONAL SCOPE OF ACTION At an international level, the Institute officially supports the internationalisation of Spanish companies (FIEM and CARI) and the foreign cooperation system (FONPRODE and FCAS). About this report Key milestones • Companies Internationalisation Fund (FIEM) General information about ICO • Purpose: To promote the export operations of Spanish companies, in addition to Spanish direct investment abroad. • Management of the fund: State Secretariat for Trade, which reports to the Ministry of Economy, Industry and Competitiveness. • ICO's function: Financial agent, formalising the corresponding credit, loan or donation agreements, in the name of the Spanish government and on behalf of the State. Furthermore, it provides technical instrumentation, accounting, cash, paying agent and control services, in addition to a whole range of financial services linked to authorised transactions charged to the FIEM. • Beneficiaries: States, regional, provincial and local public sector bodies abroad, foreign public institutions, as well as companies, associations and consortia of public and private foreign companies, both in developed and developing nations. On an exceptional basis, international organisations may benefit from the fund, provided that there is a clear commercial interest in the relevant contribution in terms of the internationalisation of the Spanish economy. • Actions eligible for financing: Transactions and projects that are of special interest to the internationalisation strategy for the Spanish economy, in addition to technical assistance that those transactions and projects may require. Corporate governance Economic management Environmental management Labour relations ICO and society • Reciprocal Interest Adjustment Agreement (CARI) Annex 1. Table of contents • Purpose: Promote the export operations of Spanish companies, offering incentives in terms of long-term loans granted by financial institutions at a fixed interest rate. • Management of the fund: The State Secretariat for Trade, which reports to the Ministry of Economy, Industry and Competitiveness.. • ICO's function: Financial agent, formalising the corresponding credit agreements on behalf of the Spanish government and managing the adjustments under the instrument. • Beneficiaries: Spanish exporters and financial institutions, which receive a certain financial margin on the outstanding balance of each loan made under the system, eliminating the risks arising from the difference between the fixed rate of the loan and the cost conventionally attributed to the resources that finance it. This financial instrument offers flexibility to the bank and the exporter, as it adapts to the construction period, the disbursement period, the number of disbursements and the repayment schedules. • Actions eligible for financing: Operations and projects of special interest to the internationalisation strategy for the Spanish economy. As part of CARI, there is always listing, regardless of the currency used or the size of the transaction. It is also covered by CESCE (Spanish export credit insurance company). Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

26. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO BUSINESS MODEL. PRODUCTS • STATE FINANCIAL AGENCY Letter from the Chairman INTERNATIONAL SCOPE OF ACTION About this report • Fund for the Promotion of Development (FONPRODE) Key milestones • Purpose: Eradication of poverty, reduction of social inequalities among individuals and communities, gender equality, protection of human rights and the promotion of humane and sustainable development in Latin American and the Caribbean. • Management of the fund: Spanish Agency for International Development Cooperation (AECID) (Ministry of Foreign Affairs and Cooperation). • ICO's function: Financial agent responsible for formalising in the name of the Spanish government and on behalf of the state, the agreements entered into with beneficiaries. It also provides technical instrumentation, accounting, cash, control and collection and recovery services, in addition to a whole range of financial services related to the fund's activities. • Beneficiaries: States and the state public sector, non-financial multilateral development organisations, international development financial institutions, microfinance institutions and companies offering technical assistance or carrying out feasibility studies. • Actions eligible for financing: All actions that support development proposed by the Ministry of Foreign Affairs and Cooperation that align with the Spanish policy on international development cooperation. General information about ICO Corporate governance Economic management Environmental management Labour relations • Water and Sanitation Cooperation Fund (FCAS) ICO and society • Purpose: Facilitating access to water and sanitation as an indispensable element for human well-being and development. • Management of the fund: Spanish Agency for International Development Cooperation (AECID) (Ministry of Foreign Affairs and Cooperation). • ICO's function: Financial agent responsible for executing, in the name of the Spanish government and on behalf of the state, the corresponding loan agreements. It also provides technical instrumentation, accounting, cash, control and collection and recovery services, in addition to a whole range of financial services related to the fund's activities • Beneficiaries: Public sector bodies (national, regional, or local) in the countries receiving financing and civil society organisations, cooperatives or other non-profit associations dedicated to the provision of water and sanitation services or tasks associated with the provision of these public services in the region. • Actions eligible for financing: Infrastructure to provide access to drinking water, infrastructure to provide access to basic sanitation services, activities that seek to strengthen the institutional system for the management of the water sector and its sustainability, projects that promote the integrated management of water resources. Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

27. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO BUSINESS MODEL. PRODUCTS • CREDIT INSTITUTION (PROMOTIONAL BANK) Letter from the Chairman As a specialised credit institution or promotional bank, ICO provides medium- and long-term financing for productive investments made by companies established in Spain or Spanish companies established abroad. This is done through the following instruments: • Second-floor facilities. Financing aimed at the self-employed, companies and public and private entities. Second-floor facilities have been confirmed as the most efficient formula for the distribution of ICO financing using the branch network of virtually all the credit institutions operating in Spain, in order to get ICO loans to SMEs and the self-employed nationwide. For this purpose, each year ICO signs the corresponding partnership agreements with these institutions. • Financing for large companies, projects and local authorities: Intended to fund major public or private investment projects which, by their nature, involve high capital requirements and long repayment periods. ICO studies, grants and assumes the risk in the transactions using the standard economic and financial criteria used by commercial banks and assessing the social, economic and environmental impact of the investments it funds. These loans may be bilateral, although it is more common for them to be syndicated with other financial institutions, funded jointly with multilateral financial institutions, or in some cases, when funding Spanish investments abroad, through local financial institutions in the countries receiving the investment. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management • OTHER PRODUCTS Labour relations In 2016, ICO continued to promote the various funds in which it invests, some managed through its wholly owned investee, AXIS ParticipacionesEmpresariales S.G.E.C.R., S.A.U. and others by the Institute itself or other institutions or companies. • FOND-ICO Global. Spain's first publicly held "fund of funds", with assets of €1.5 billion. It responds to one of the main concerns in the venture capital sector, which was asking for greater public sector involvement in relation to alternative funding channels to bank financing for businesses; it forms part of one of the measures in the “Economic Stimulus and Entrepreneur Support Plan” approved by the Government in February 2013. The purpose of this fund is to promote the creation of privately managed venture capital funds which primarily invest in Spanish companies at all stages of development. • FOND-ICOpyme, FCR. Its objective focuses mainly on companies which, having reached a certain degree of maturity, wish to finance their expansion, growth and/or internationalisation and, to a lesser extent, companies in their early stages which, having survived the initial stages, need resources to continue their development. In both cases the investment is made jointly with other financial, technological or industrial partners. • FOND-ICOinfraestructuras, FCR. The objective of this fund is to contribute to the development, construction and co-management of infrastructure projects, focusing on public-private partnership schemes. The objectives of this fund include strengthening the capitalisation of projects, supporting infrastructure management companies by taking minority equity stakes. ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

28. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO • OTHER CAPITAL FUNDS Letter from the Chairman ICO also contributes different amounts to the following capital funds: • Fons Mediterrània Capital, venture capital fund created and designed by ICO in collaboration with the Institut Catalá de Finances (ICF) and the European Investment Bank (EIB). It has a broad and diversified investment mission, carrying out investment transactions in Morocco, Tunisia and Algeria. It is currently in the process of divestment. • FC2E, Carbon Fund for Spanish Companies, promoted by the Instituto de Crédito Oficial and Santander Investment. It is the first mixed-capital carbon fund managed in Spain. It was created to help Spanish companies comply with greenhouse gas emissions regulations. To achieve its objective, the fund supports clean projects carried out in emerging countries under the mechanisms established in the Kyoto Protocol, that is, the Clean Development Mechanism (CDM) and Joint Implementation (JI), by buying the carbon credits generated by those projects. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations • Marguerite Fund, , European capital fund designed by ICO in collaboration with the European Investment Bank, KFW Bankengruppe, the European Commission, Cassa Depositi e Prestiti, Caisse des Dépots et Consignations and PKO Bank Polski,S.A. The purpose of the fund is to mitigate the lack of capital in the European infrastructure projects market. Currently, an expansion to the sectors and products covered is being discussed to adapt the fund to current market deficiencies and the “Juncker Plan”. ICO manages the Spanish Treasury's investment in this fund, which is managed by an independent team that identifies and assesses possible investments, preferably in trans-European energy and transport networks, as well as renewable energy. ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

29. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO STAKEHOLDERS The stakeholder identification process is undertaken by means of ICO's relationship with each of the potential stakeholders. Based on this methodology, ICO has identified the following groups: Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

30. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO STAKEHOLDERS Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

31. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO MATERIALITY • The team that defines the stakeholders also identifies the material aspects of each stakeholder. Although dependent to date on the internal vision of the team, information gathered during many years of experience and relationships with stakeholders has been taken into consideration. Based on this methodology, the material aspects identified are as follows: • AM1. Corporate Reputation. ICO believes that its corporate reputation is one of its best assets. It shows society its modus operandi and its way of doing things, with a special emphasis on its stakeholders. ICO's mission and the nature of its business call for an ethical and responsible approach that makes it possible to ensure the achievement of its objectives and, as a result, sustainable growth and development in its spheres of action. • The confidence generated among investors, national and international banks, multilateral development organisations and society in general, is thanks to the Institute's corporate reputation and it represents another of the pillars, or material aspects, that allow ICO to succeed. For ICO, its corporate reputation is essential in order to remain a key operator, committed to a more sustainable business sector, spurning corruption and bad management practices, to maintain the trust of its partners and to finance projects that help to create value for society as a whole. This also requires appropriate accountability and information tailored to its stakeholders. To this end, ICO also submits its actions to verification by independent experts who can confirm the validity and quality of the information published on the Institute's website (www.ico.es). • In this regard, the following aspects, among others, may be singled out: • Ethical and responsible management • Corporate image • Transparency and communication • Information on this material aspect can be found in the following sections: “Ethical and responsible management” (pages 66 and 68) “Communication” (pages 41 to 43), “Risks and opportunities” (pages 36 and 39); in references G4-34 to G4-58 (Annex 1, pages 127 to 129); in indicators G4-SO3, G4-SO4 and G4-SO5 (Annex 1, pages 137); and in “Principles for preparing the report” (page 7), “External Verification” (pages 8 to 11) and in reference G4-33 (Annex 1, page 127). • AM2. Sources of funding and the financial balance. Solvency and liquidity are key concepts employed by ICO in its dealings on the financial markets and based on which it obtains resources to invest in sustainable development projects. The Institute, despite enjoying the explicit, irrevocable, unconditional and direct guarantee of the Spanish state, applicable to all debts and obligations it contracts with third parties, has always operated generating sufficient own funds and solvency to meet all of its obligations. • This is a main concern in managing the activities of the Institute, which, under the principle of caution, always operates bearing in mind its aim of liquidity and solvency. ICO obtains funding from national and international markets, which represents another of the pillars on which its activities are based. To facilitate fund raising, ICO must also show that it has a balance sheet with the right financial balance. • Information on this material aspect can be found in the “Economic management” (pages 69 and 104) section and indicators G4-EC1 and G4-EC4 (Annex 1, page 130). Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

32. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO MATERIALITY • AM3. Support for development in its role as a state financial agency. Financing, at the express request of the government, those affected by natural disasters and other situations relating to the public interest, is another of the essential aspects of ICO's activities. In this regard, ICO works on a daily basis to preserve its level of effectiveness as a state financial agency. Its extensive experience as a state-owned bank, as well ass its national and international partnerships, make it possible for the Institute to appropriately manage various financial instruments as a state financial agency to promote exports, support for development and the sustainability of the Spanish economy. • Information on this material aspect can be found in the “Business model. Products” (pages 24 to 28) section and in “Economic management” (pages 69 to 104). • AM4. Sustainable growth, the environment and society. As part of this material aspect, on which its operations are dependent, ICO places particular emphasis on the products it develops and the mission that guides its activities. • The design of second-floor facilities or direct financing seeks to contribute to the economy by creating business synergies to facilitate the development of the country. ICO is committed to generating long-term growth in strategic sectors, the development of which, combined with its mission and the SDG or COP21 guidelines, must have a positive impact on the Spanish economy, society and environment. • ICO also seeks to have a positive impact on the development of its surroundings and the most disadvantaged through its annual volunteering plan, in which more than 25% of those working at the Institute participate. Furthermore, in partnership with the Global Compact, and in collaboration with organisations in the voluntary sector, an agreement has been signed to facilitate the implementation of corporate volunteering in SMEs (Socially Responsible SMEs), which seeks to take the knowledge of companies to the groups in most need, through their volunteers. • Information on this material aspect can be found in the “Environmental management” section (pages 105 to 108) and in the “ICO and Society” (pages 122 and 123) section. • AM5. Alliances. ICO is aware that its internal structure, comprising 308 individuals working in a single location, managing a balance sheet of €48.851 billion without a national and international commercial network to support it, would make it impossible to fulfil its objectives and develop its various business lines without its strategic partnerships. ICO is supported by the commercial network of Spanish banking to make its financing facilities available and to support the internationalisation of Spanish companies; furthermore, it has various international partners as part of collaboration agreements and memorandums of understanding with development banks, similar European institutions, multilateral organisations and other non-government organisations, associations, etc. Partners that support ICO in its activities to drive economic, social and environmental development within the scope of its activities and to achieve its goals. • Information on this material aspect can be found in the “Alliances” section (pages 45 to 48) and in “Annex 1. Table of contents (Page 139). Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

33. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO MATERIALITY • AM6. Human capital. ICO's most important asset is its intellectual and human capital. People drive the organisation forwards each day and make the fulfilment of each objective possible. Training plans, equality policies and work-life balance measures, through the implementation of the EFR management model, which certifies ICO as a family-responsible company, are one of its most notable characteristics and unique in the field of public sector administration. In this context, particular emphasis is placed on: • Professionalism and training. Responding to the requirements of the main stakeholders requires an organisation to make sure that its employees maintain a high level of knowledge and commitment. In ICO's opinion, continuous training is a strategic element to obtain and maintain an appropriate level of professionalism that is capable of fulfilling the tasks assigned to it. • Information on this material aspect can be found in the “Labour relations” section (pages 109 to 120) and indicators G4-LA9 and G4-LA10 (Annex 1, pages 134 and 135). • Equality and work-life balance. In the view of ICO, equality among all employees is a basic pillar of its relations with the workforce. Respect for employees' human and employment rights and the right to collective bargaining in which, among other matters, measures are agreed to facilitate a work-life balance, is one of the organisation's permanent objectives. • Information on this material aspect can be found in the “Labour relations” section (pages 109 to 120) and indicators G4-LA1, G4-LA2, G4-LA11, G4-LA12 and G4-LA13 (Annex 1, pages 134 and 135). Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

34. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO MATERIALITY The materiality table below features the material aspects that have an influence on each of the stakeholders identified by ICO. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

35. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO MATERIALITY Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

36. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO RISKS AND OPPORTUNITIES • RISKS Letter from the Chairman • GENERAL ASPECTS About this report • As a credit institution, ICO is exposed to financial (credit, liquidity and market) and operational risks. A further two types of risk are considered as “other risks”: reputational risk and strategic and business risk. • Identifying, managing and controlling risks is a priority task for the Instituto de Crédito Oficial. This is mainly based on the Risk Policy Manual approved by the General Board on 21 December 2005, the latest version of which was approved in December 2016. The manual gathers together different methodologies, applicable regulations, procedures and organisational structure. • The Risk Policy Manual is complemented by the Risk Management Map, which identifies all the Institute's risks, improvement plans and the controls required for appropriate management. • Risk management is based on the following principles: • Active participation and supervision of ICO's governing bodies: the Board is involved in the approval of general business strategies and is responsible for defining risk acceptance and management policies, ensuring that appropriate risk monitoring systems, controls and policies are in place and that lines of authority are clearly defined. • General internal control environment: reflected in a risk culture, promoted by the Board itself, which is communicated throughout the organisation, with a clear definition of the objectives that prevent inappropriate risks or positions being assumed due to the appropriate control systems, procedure or organisation not being in place. Furthermore, it safeguards the appropriate segregation between risk generating units and those undertaking control and monitoring tasks. • Selection of appropriate risk measurement methodologies: ICO has appropriate methodologies for the measurement of risks, which make it possible to appropriately identify the different risk factors to which it is exposed. In this context, aware of the benefits derived from the integration of advanced risk identification, measurement and control methodologies, the Institute expects to continue updating and driving its risk management systems. • Assessment, analysis and monitoring of assumed risks: the continuous identification, quantification, control and monitoring of risks makes it possible to establish an appropriate relationship between the profitability obtained from transactions undertaken and the risks assumed. Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

37. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO RISKS AND OPPORTUNITIES • RISKS Letter from the Chairman • DESCRIPTION OF THE RISKS About this report CREDIT RISK AND CREDIT CONCENTRATION RISK Compared to 2015, the key change made by ICO to the management of credit and concentration risk was the modification of its second-floor model, adapted in 2016 to the new framework for the recovery and resolution of credit institutions, established by Directive 2014/59/EU, of 15/4/14, Regulation 806/2014, of 15/7/15, and Law 11/2015, of 18/6/15. Although pursuant to the seventeenth additional provision of Law 11/2015, ICO is excluded from its scope of application, it would have a direct impact in the event of the resolution of a credit institution. Therefore, and given that the bail-in rules came into force on 1 January 2016, a model has been established for 2016 and subsequent years that excludes ICO's second-floor facilities from a potential bail-in by collaborating financial institutions. The Institute identifies the following subcategories as part of credit and concentration risk for the purposes of management: LIQUIDITY RISK Liquidity risk is defined as the Institute's capacity to meet its payment obligations (liquidity of funds) and its financing plan in the agreed manner. MARKET RISK Market risk at ICO is of limited significance given that it is associated with positions held in the trading book, in which ICO holds practically no positions. Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

38. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO RISKS AND OPPORTUNITIES • RISKS Letter from the Chairman • DESCRIPTION OF THE RISKS About this report • INTEREST RATE RISK (INCLUDES FOREIGN EXCHANGE RISK) • Interest rate risk refers to the impact that adverse changes in risk factors (interest rate and exchange rate) have on an entity's profit and loss and its own funds. • OPERATIONAL RISKS • Those arising from the Institute's activities that do not have a financial component. • Money Laundering. ICO has approved a range of documents that regulate such activities. Furthermore, there are collegiate monitoring bodies whose function, among others, is to ensure compliance with internal regulations. • IT Security. ICO has approved a range of internal documents that regulate the control, monitoring and management of security systems in this area. Furthermore, operating units and collegiate bodies are in place with powers to control information security. • Business Continuity. ICO has a business continuity management system to resume activities in the shortest possible time in the event of any kind of disaster occurring at its facilities or in its sphere of activity. There is also a control and monitoring board in charge of updating and improving existing measures and preventing or reducing risks if any of the situations identified should occur. • BUSINESS AND STRATEGIC RISK • Management of this risk category is anchored in appropriate financial and commercial management (in addition to adequate handling of the aforementioned risks). To this end, existing strategic alternatives are assessed in order to position the organisation and this is reflected in ICO's guidelines and objectives, maintaining control of the risk limits within the limits established by management bodies. • REPUTATIONAL RISK • For the last two years, awareness of this risk at ICO has increased. The internal measures introduced, relating to the mitigation of a potential problem in terms of reputation/image, are based on strict compliance with instructions to approve operations, careful attention to “client understanding” procedures and their monitoring and strictness in terms of internal performance policies regarding relationships with financial institutions, companies and/or suppliers. The policy concerning this risk is based on two essential objectives: • Compliance with regulations relating to operations: data protection, transparency, customer asset protection, anti-money laundering, etc. • A quality service that leads to few complaints being filed by customers. Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

39. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO RISKS AND OPPORTUNITIES • RISKS Letter from the Chairman • DESCRIPTION OF THE RISKS In 2016, ICO approved a “Reputational risk communication management” procedure with a view to detecting and analysing possible scenarios of reputational risk to ICO arising from its external communication strategy and establishing action guidelines and action protocols to mitigate that risk. SOVEREIGN RISK Sovereign risk is understood as the risk derived from investments in sovereign debt made by the organisation. PARTICIPATION RISK Participation risk includes the management of uncertainties associated with shareholdings that ICO holds in other entities or companies. Given the Institute's nature, it takes and holds shareholdings in different finance companies. Shareholdings in non-finance companies are the result of a court ruling and the Institute seeks to dispose of them at the opportune moment. COST OF FINANCING RISK Cost of financing risk is managed by ICO in close relation to liquidity management undertaken by the organisation. Stability in the sources of financing is sought at all times, minimising the corresponding costs relating to possible changes in this risk and the negative impact they may have on the Institute. About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society • OPPORTUNITIES ICO carries out its activities in an economic, financial, regulatory and institutional context that is constantly changing, both nationally and internationally. This context, in combination with the countercyclical role of the Institute which must guide its actions, requires the implementation of periodic processes of strategic analysis regarding the contribution of value, the positioning and model of ICO's activities at all times, based on the identification of areas in which there are market deficiencies and in which the ICO's role complementing private initiatives will be key. As a result, ICO must identify and promote new initiatives that support recovery and growth, with a particular focus on the internationalisation of the economy, the financing of long-term investments in infrastructure and other public assets and the promotion of alternative mechanisms of financing for companies. In terms of CSR, among the opportunities and challenges posed by its operations, ICO places a particular emphasis on the Sustainable Development Goals (SDG), the Paris Agreement (following the COP21 Climate Summit) and the new facets of the circular economy, relevant aspects of the Europe 2020 strategy that are clearly aligned to its mission. ICO wishes to make its presence felt and actively participate in their attainment, as this represents an opportunity to create sustainable development synergies and to improve internal policies. Finally, new opportunities in terms of the governance of the institution have been identified as a result of the change to its articles of association to allow independent members to sit on the General Board. Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

40. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO SUPPLIERS Based on the Public Sector Contracts Act (Ley de Contratos del Sector Público (TRLCSP)), ICO has produced an internal procurement instructions document, which sets out the possible ways of awarding contracts for goods and services. Contracts subject to harmonised regulations and central procurement contracts, regulated by the provisions of the TRLCSP and Order EHA/1049/2008, are excluded from the internal procurement instructions. Public sector companies are included within the scope of application of article 206.1 of the TRLCSP, meaning that the procurement of centrally procured goods and services under Order EHA/1049/2008, of 10 April, must be organised via the Directorate General of Rationalisation and Centralisation of Public Procurement. Given the stipulations of the above legislation, ICO does not keep a register of authorised suppliers as established by models of excellence or quality management systems. For all goods and services procurement procedures that do not entail technical specifications, ICO studies the possibility of including environmental and social requirements in line with the subject matter of procurement. In 2016, 14% of the tender procedures organised required bidding companies to satisfy environmental criteria. 57% of procedures included social clauses relating to the composition of bidders' workforces and their commitment to recruiting persons with disabilities. These clauses are used as tie-breaking criteria in cases where bids were otherwise equal. In this regard, it is worth noting that, in accordance with a ruling of the Central Administrative Court for Contractual Remedies, ICO has had to change a number of measurement criteria in its specifications relating to the CSR policies of bidders. The Court ruled that despite its limited weight in the award process, contracting authorities must be authorised to adopt award criteria or contract performance conditions concerning the work, supply or services to be provided within the context of a public contract in any of the aspects or at any time during their life cycles. Under the ruling, the condition requiring a link to the subject matter of the contract excludes criteria and conditions relating to the general corporate responsibility policy, which cannot be considered a factor that defines a specific production process or the provision of work, supplies or services purchased. As a result, contracting authorities cannot be authorised to demand that bidders have established a specific corporate social responsibility or environmental policy. As a result, ICO no longer includes measurement criteria in relation to bidders' CSR policies. In 2016, two service provision contracts were in force with special employment centres, one of which was subcontracted by our supplier. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

41. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO COMMUNICATION • EXTERNAL COMMUNICATION CHANNELS • Advertising. ICO believes it is important to publicise and make the public aware of the different forms of financing available to support Spanish companies, especially self-employed individuals and SMEs. One of its key annual milestones is a commercial advertising campaign on the second-floor facilities approved for that year. Letter from the Chairman About this report The current legislation on institutional advertising and communications requires each of the bodies of the Central State Administration to prepare an annual advertising plan containing the advertising actions planned for the following year and their allocated funding. Every year, ICO, as a public business entity, submits the details of the campaigns it is planning to carry out to be included in the plan, which, once prepared, has to be approved by the Spanish cabinet. In 2016, ICO carried out a national advertising campaign to publicise the launch of its different financing facilities for that year. The campaign had two main objectives: on the one hand, to make the target audience (the self-employed, companies, institutions and the public in general) aware of the financing facilities available and, on the other, to increase awareness of ICO as a financial institution that supports the financing of companies. The campaign was divided into two phases. The first sought to raise awareness of the launch of ICO facilities. The second wave focused on facilities to support the internationalisation of Spanish companies. Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations The campaign made use of print media, radio, Internet and foreign advertising. It was covered in the national, economic and regional press. Radio activities focused on national stations broadcasting general content. On the Internet, the campaign was visible on the main online media outlets by means of different banners and videos. Furthermore, as part of marketing actions to raise awareness of ICO facilities, posters and informational leaflets were printed in the four official languages of the state. In line with the CSR guidelines applicable to all entities, the use of paper reduced significantly, from 2.9 million printed leaflets in 2015 to 1.4 million in 2016, with preference being given to the use of electronic formats. Internationally, with a view to supporting the Institute's role as a reference issuer on capital markets, ICO undertakes advertising and marketing activities aimed at investors. In line with the strategy rolled out the previous year, in 2016, advertising activities in the international media focused on specialist magazines and online media. In total, 19 advertisements were placed in 7 publications. Magazines are selected based on their target audience and geographical distribution, placing particular emphasis on the European and Asian markets. In 2016, there were two waves of the online campaign in international media, across six different media. As part of these two waves, more than 1.9 million printouts were delivered. Institutional newsletter: E-bulletin designed to offer an in-depth analysis of economic matters relating to ICO's activities. In 2016, two editions of this publication were released. The newsletter was distributed by email to ICO's database and published on the website. ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

42. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO COMMUNICATION • EXTERNAL COMMUNICATION CHANNELS • Financial newsletter. This quarterly newsletter offers up-to-date information of interest to investors. This electronic newsletter is published in English and emailed to the Institute's database of investors and also published on the ICO website. • Press releases. In order to publicise ICO's activities (the launch of its different financing facilities and information on credit granted, agreements signed and transactions entered into, issues, seminars and events, etc.), the Institute sends information to the media. A total of 51 press releases were issued in 2016 and 2,260 news items on ICO were published. • ICO facilities bulletin. E-bulletin, which serves to inform companies and self-employed individuals about news and the features of its products. In 2016, four editions were published. This bulletin is emailed to an ICO database containing 380,000 companies and published on the ICO website. • Organisation of and participation in information days. ICO holds information days throughout Spain to raise awareness of its activities and financing instruments available to self-employed individuals and SMEs. In 2016, ICO's collaboration with CESGAR in organising conferences to raise awareness of the ICO-SGR/SAECA funding programme was worth particular mention. Furthermore, the ICO student visits programme was strengthened. The purpose of this programme is to raise awareness of the role of the state-owned bank, to promote finance culture with the public and to collaborate with educational establishments in the economic-financial training received by students. In total, 13 information days were held and ICO representatives participated at 54 conferences as speakers. • Website. The website still represents the Institute's main channel of communication, providing up-to-date information about ICO's activities and information of interest to international investors. The website meets the requirements regarding transparency for government portals. It has a section on transparency and good governance, where the Code of Ethics and Conduct, the Corporate Governance Report and the internal rules in relation to the securities market may be consulted, along with ICO's Policy on Corporate Social Responsibility, its Equality Policy and its Environmental Policy. Lastly, the website includes a contractor profile section where ICO publishes its calls for tenders and contract awards. In 2016, ICO's website received 590,986 visits. The total number of page visits reached 2.2 million. The most popular content was that relating to ICO facilities aimed at financing the projects of self-employed individuals and companies. The interest generated by the “Companies and Entrepreneurs” facility, visited more than 1.28 million times in 2016, is worth particular mention. Furthermore, it is worth noting that the facilities that aim to support the internationalisation process and export activities of Spanish companies continued the upward trend that began the previous year. Thus, in 2016, the International section was consulted more than 78,000 times. • Professional networks. ICO has a presence on LinkedIn, through the Instituto de Crédito Oficial's corporate page, which offers information on how the state-owned bank operates. In 2016, the page had 2,516 followers. Given the success of this professional network as an employment search engine, ICO used the website to announce current hiring processes. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

43. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO COMMUNICATION • INTERNAL COMMUNICATION CHANNELS Letter from the Chairman Transparency of information is one of the Institute's commitments to its staff. In addition to encouraging personal and direct communication throughout all levels of the organisation, it provides workers with access to "Portico", the corporate intranet where employees can find all corporate information (articles of association, organisation, internal regulations, activities, work-life balance measures, etc.) and access historical information relating to the Institute (salaries, hours worked, information on holidays and leave, training received, business trips, etc.). About this report Key milestones The three basic functions of "Portico" are: • The most frequently used internal communications channel, through which the updated information generated in the Institute for internal and external recipients flows regularly. • The framework which houses, in an orderly and intuitive manner, all the applications, tools and documents needed for the effective daily work of employees. • The platform where employees can manage their relationship with the company, request courses, consult payments and loans, etc. Notably, it is also updated daily with content of general interest to the workforce, such as the intranet news section containing notices and daily summaries of the most important news items published about ICO in the leading newspapers. In 2016, the content of the Studies and Research Service area and the International Relations department were renewed and improved; the economic-financial studies and publications released by these areas are of great interest in terms of the activities undertaken by the different areas of ICO. Publications were visited 213,056 times, with 700,251 pages being accessed (3.29 pages on average per visit). The average duration of each visit was 6 minutes and 53 seconds. In total, 10,977 users were registered. General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents CLIENT SATISFACTION Annex 2. Basic regulatory framework In order to obtain the opinion of clients regarding the functionality of ICO loan facilities, a communication channel is available on the ICO website where further information can be requested on products and complaints or suggestions made. This tool also makes it possible to test the relevance and quality of information that the branches of intermediary financial institutions have on ICO facilities. Finally, this tool makes it possible for customers to obtain information on other ICO activities not necessarily related to financing products. 107 complaints and 10 suggestions were received in 2016. The average response time for complaints was 4.9 working days. Meanwhile, 822 enquires related to financing products were received. All requests were dealt with in an average of 2.21 days. 10,667 queries made using the information and public service freephone number were answered. 812 queries were handled by the in-person customer support team. The level of customer satisfaction with the 900 telephone service and the website, measured in 2,514 surveys, was 4.83 out of 5. Annex 3. AXIS Participaciones Empresariales Print Integrated Report

44. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO INVESTEE COMPANIES Letter from the Chairman About this report Key milestones General information about ICO RELATIONSHIPS WITH OTHER NATIONAL AND INTERNATIONAL INSTITUTIONS Corporate governance • Related to CSR Economic management Environmental management Labour relations ICO and society • In other fields Annex 1. Table of contents • Network of European Financial Institutions (NEFI). A network made up of 17 financial institutions of the EU that share a public mission to provide SMEs with access to funding by offering them financial services and expertise, in co-operation with the national banking system. • European Long-TermInvestorsAssociation (ELTI). Its mission is to consolidate cooperation between member institutions and to combine their efforts to promote and strengthen long-term financing, in accordance with EU objectives and initiatives. It is made up of 29 institutions, including multilateral financial institutions in the EU, regional institutions and non-banking institutions, such as pension funds. • Long-term Investors Club (LTIC). It brings together a total of 19 global financial institutions and investors committed to supporting the major financial investments required for more sustainable economic growth at a national and multilateral level. It was launched in 2009 by the four main European public financial institutions: Caisse de Dépôts, Cassadepositi e prestiti, EIB and KfW, with a combined balance sheet of $5.4 trillion, making it one of the largest investor platforms in the world. • Latin American Association of Development Financial Institutions (ALIDE) An association with over 80 active members in Latin America, the Caribbean and in countries outside the region such as Germany, Canada, China, Spain, Portugal, Sweden and Russia. Its primary aim is to contribute to the economic and social development of the region, through the financial best practice it encourages among its members. Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

45. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO STRATEGIC ALLIANCES In order to fulfil its mission to promote economic activities that contribute to growth, the development of Spain and the improved distribution of the country's wealth, in addition to financing investment operations and the liquidity of Spanish companies abroad, ICO enters into agreements with similar foreign institutions, by means of which a cooperation framework is created between both parties. These agreements seek to facilitate collaboration between the parties to promote programmes and projects that drive such cooperation and, in particular, support the specific development of activities that benefit Spanish companies organising projects abroad. The intention of these partnerships is to develop collaboration based on the principles of equality, mutual benefit, respect and trust, set out both in established international banking practices and all applicable regulations and legislation and by implementing the activities established in the mandate, mission and policies of each party. To that end, the parties exchange experience, information and documents to encourage knowledge sharing regarding the activities that each institution carries out, or intends to carry out, on programmes of mutual interest, or where it is useful and advisable to strengthen their corresponding areas of influence; furthermore, staff exchanges are undertaken with a view to promoting mutual knowledge of the operations carried out by each institution and other activities identified as beneficial to both institutions. Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

46. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO STRATEGIC ALLIANCES Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

47. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO STRATEGIC ALLIANCES Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

48. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO STRATEGIC ALLIANCES Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report

49. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO DEVELOPMENT OF THE MAIN INDICATORS Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report 49

50. 2016 INTEGRATED REPORT GENERAL INFORMATION ABOUT ICO DEVELOPMENT OF THE MAIN INDICATORS Letter from the Chairman About this report Key milestones General information about ICO Corporate governance Economic management Environmental management Labour relations ICO and society Annex 1. Table of contents Annex 2. Basic regulatory framework Annex 3. AXIS Participaciones Empresariales Print Integrated Report 50