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.