China's largest commercial bank chalked up 57.9 billion yuan (US$6.9 billion) in operating profit for the first nine months of the year, up 21.5 per cent on a year-on-year basis.

The bank said it has restricted lending to overheated industries the State is trying to cool down. But it has stepped up support to sectors that need faster growth, leading companies that have robust prospects, small and medium-sized enterprises as well as to consumers.

Its total outstanding loans increased by 226.2 billion yuan (US$27.3 billion) in the first nine months, with project financing, commercial bills discounting and consumer housing loans being the major drivers.

"This not only reflected the macro management requirements from the State, but optimized the bank's loan structure," an ICBC spokesman said.

China has taken a slew of measures since the latter half of last year to cool down rapid fixed investment growth in a few overheated sectors as well as fast monetary growth.

Credit curbs and land controls were imposed, and many fixed investment projects that were seen as repetitive, unprofitable or not in line with government policies were suspended or cancelled, triggering fears that banks may suffer subsequently from new bad loans that will erode their profitability.

The more than 100 city commercial banks, the nation's smaller regional lenders, already reported a rebound in their aggregate ratio of non-performing loans (NPLs) in recent months.

But the ICBC said it managed to reduce its outstanding NPLs by by 16 billion yuan (US$1.9 billion) during the first nine months of the year, bringing its bad loan ratio down by 1.77 percentage points to 19.46 per cent at the end of September.

The State-owned lender, which aims to get prepared for an initial public offering by the end of 2006, is working hard to bring down its bad loan level to international standards and improve its capital adequacy.

Two banking peers - the China Construction Bank and the Bank of China - were chosen last year for a pilot joint-stock reforms for the nation's four State-owned commercial banks, and won combined US$45 billion capital injections.

The bank said its new business lines witnessed rapid growth in the first nine months of the year, with its online transactions nearly doubling to reach 26 trillion yuan (US$3.1 trillion). Enditem