The Industrial and Commercial
Bank of China, Ltd. (ICBC), the nation's largest bank, has restricted loans to
over-producing industries in a bid to cut the risks of non-performing loans
(NPL).
The bank's NPL ratio with 11 rapidly expanding industries listed by the
National Development and Reform Commission, including steel, cement, aluminum,
coal and electricity, dropped to four percent at the end of last year, 3.5
percentage points lower than six months earlier.
The government has laid down guidelines to speed up restructuring of these
industries in a bid to manage their investment and expansion.
The bank began restricting loans in 2003, although loans in the second half
of last year grew by 10.97 billion yuan (US$1.37 billion), said an ICBC
spokesman on Tuesday.
Most new loans went to growth sectors to ensure a
better return, said the spokesman.
The ICBC, like other state banks, accrued huge debts due to reckless,usually
government-ordered lending to state-owned enterprises over the last two decades,
analysts acknowledge.
But its NPL ratio from 2001 to 2005 was just 1.5 percent, in line with
leading international banks, thanks to better risk control.
The spokesman said a strict loan policy for the steel industry had led to a
drop in loans to steel firms last year.
By the end of last year, the ICBC called in loans from 1,203 steel firms,
cutting its NPL ratio in the steel sector to 3.74 percent.
The stricter loan policy also applied to the copper smelting and calcium
carbide industries where outstanding loans dropped 1.02 billion yuan and 10
million yuan, respectively, at the end of 2005 from the previous six months.
The spokesman said the ICBC had established an industry analysis center to
adjust its loan policies to different sectors. The bank issued a new loan policy
this year on 19 industries, including most of China's over-producing sectors and
some sun-rise industries.
Bank officials are predicting an increase of 250 billion yuan in existing
loans this year to 2 trillion yuan.