Since the beginning of this year, ICBC has taken efforts to implement the package of major policy measures to expand domestic demand and the moderately loose monetary policy established by the national government. By reasonably controlling the pace of loan growth, attaching emphasis to the direction of loans, and adjusting the credit structure, ICBC has not only guaranteed that adequate loans are available to support economic growth, but also promoted optimization and upgrading of the economic structure, fulfilling a large-scale bank's role in stimulating economic development. 

As the largest commercial bank in China, ICBC has committed to supporting a sound and stable development of Chinese economy by reasonably increasing loans this year, and has achieved impressive results. According to statistics, during the first half year, ICBC's RMB loans have increased by RMB 825.5 billion, a rise of 19.3 percent, which is higher than the same period in past years. Such a loan growth rate, if in normal years, would be deemed as a little too fast; however, against the background that the world's major economies have sunk into recession and the growth rate of Chinese economic has also slowed down, mitigating the negative impact of the economic crisis upon Chinese economy by encouraging loan growth is not only feasible, but also necessary. 

Admittedly, a fast loan growth poses a serious challenge to management control in a commercial bank. Practice has proved that without a clear loan granting strategy and strict risk control measures, rapid loan growth is likely to give rise to a large amount of non-performing loans, and in turn will affect the healthy development of economy. For this reason, the need to promote economic growth by loan expansion must be coordinated with that to control credit risks. The blood of capital must flow into the arteries of the economic body to nourish it; yet at the same time, caution and prudence are necessary to avoid unscientific and irresponsible over-lending of loans.

Based on this understanding, ICBC has always been closely observing the changes in the macroeconomic environment, adjusted its credit strategies promptly according to analysis of different economic indicators, and conducted stringent review of each loan appeal, which ensures a moderate total amount of loans granted and a rational pace of loan growth. At the outset of this year, Chinese economy started to show an accelerated decline; meanwhile, affected by the deleveraging and credit crunch of international major financial institutions, capital supply was rather tight in the financial market, which threatened a break in the capital chain. It was under such circumstances that ICBC started to increase its credit line and pump more capital "blood" into the economic body. As a result, loan lending of ICBC witnessed a high growth rate in the first quarter, an increase of RMB 636.4 billion, RMB 457.7 billion more than the same period last year. While in the second quarter, as the momentum of growth had grown stronger, ICBC set out to adjust the pace of loan growth, maintaining a steady increase of loans and avoiding large ups and downs. In July the loan increase amounted to RMB 64 billion, which well met the need of enterprises, and also guaranteed the efficiency and effectiveness of loan application and utilization in the real economy.

For Chinese economy, in order to restore and strengthen its ability to "generate capital blood", it is important to "adjust the structure", effectively expanding domestic needs and reforming growth models; and also to "elevate the levels", realizing upgrading of traditional industries and development of new industries by creating new economic growth points. To achieve this, ICBC has reasonably increased loans and controlled the pace of loan growth, so that "economic growth is guaranteed" by increasing loan supply; furthermore, ICBC has given full play to the role of commercial banks in allocating economic resources, thus promoting "structure adjustment and level elevation" of Chinese economy through the leverage of credit.

Historical experience tells us that each huge economic crisis will bring about major industry restructuring and profound change in international division of labor. Never has an economy succeeded in overcoming the recurrent crisis without initiating a new technological revolution, which gives birth to new industries, creates new demands for production and consumption, and in turn saves the economy from recession. In this way a new development cycle of industries spurred by new technologies will start. In the latest round of loan growth, ICBC has focused on such sectors whose developments are given priority by the national government as new energy industries, energy-saving and environment protective industries, comprehensive utilization of resources, modern equipment manufacturing industries, modern service industries and new materials industries. Take the new energy industries and energy-saving and environment protective industries which receive key attention from ICBC as example, up to the end of June 2009, the balance of loans to such industry sectors has reached nearly RMB 400 billion, among which the balance of loans to environment protection, energy saving, new energy sources exploitation and utilization, and promotion of other energy-saving and environment protective technologies have exceeded RMB 50 billion respectively. As to the specific projects, the key construction projects of environment protection and energy saving supported by ICBC mainly concern treatment of waste water, treatment of solid wastes, desulfurization of flue gas generated by coal-fired units, comprehensive remediation of water environment, comprehensive ecological protection, regional combined heat and power engineering, utilization of residual heat and pressure, adaption of coal-fired industrial boiler (kiln), and adoption of energy-saving technologies in architectural construction, and etc.. Projects concerning exploitation and utilization of new energy sources and clean development mechanism are mainly in the fields of hydropower, wind power, and nuclear power. Among the Clean Development Mechanism (CDM) projects approved by the National Development and Reform Commission, 89 projects have received credit support from ICBC. In addition, ICBC has provided credit lines to projects of comprehensive resource utilization, projects of advanced environment protective technologies promotion and application and other technical innovation projects for energy-saving and emission reducing; among which ICBC has granted RMB 1.962 billion of loans to a number of transportation companies, which is used to purchase the new model of Europe III buses. In the relative new sector of modern services for domestic commercial banks, ICBC has also taken the initiative to explore the business this year. For instance, Beijing branch of ICBC gave a credit line of RMB 120 million to a powerful large-scale media company to support its development in the cultural industry.

Meanwhile, ICBC is resolute to cut loans to outdated production capacity and heavily polluting enterprises. In operation, ICBC has taken as a significant criterion in review of loan application whether the applying enterprise has met national standards of environment management, pollution treatment and ecological protection, and strictly controlled its loans to industries with "high energy consumption and high emission production" and to overcapacity industries, so as to raise enterprises' awareness to control and reduce consumption of energy sources and damage to the ecological environment. ICBC requires that its branch offices at different levels should inquire environment protection information about loan-applying enterprises through the credit information system when they review loan appeals; moreover, they should take as important reference whether the applying enterprise obeys the environment protection laws and reject all applications from enterprises which fail to the meet the national standards of environment protection. Apart from this, ICBC has also established criteria for categorizing loans, i.e., whether a project is energy-saving, adopts new energies and comprehensively uses the resources; and has also adopted the "remark of green credit projects" in its computer system which has completed categorization of all credit projects complying with the above criteria. For those projects that fail to meet the criteria, ICBC would reject them resolutely, so as to promote structural adjustment in overcapacity industries and enterprises with high energy consumption and pollution emission beyond the national standards. At present, among the 60 thousand enterprises which have received loans from ICBC, more than 99% comply with the national environment protection policy, and the balance of loans to such enterprises also exceeds 99% of the total loan balance. The rest enterprises are under review of the national department of environment protection.

In the first half of this year, among the three major demands that drive GDP growth, the total retail sales of consumer products representing the need of domestic consumption have increased by 16%, boosting a 3.8% growth of GDP. In this regard, consumer loans of commercial banks have made significant contribution. Take ICBC as an example, to implement the national policy of "expanding domestic demand, guaranteeing growth rate and benefiting people's livelihood", ICBC has increased its consumer loans this year, fostered and developed the growth points of consumer loans targetedly, and promoted structural upgrading and steady growth of consumption. In the first half year, consumer loans of ICBC have increased RMB 131.3 billion, RMB 85.7 billion more than the same period last year. Personal housing loans accounted for 79% of personal loan increment, which satisfied the loan needs for owner-occupied housing and adapted housing. To meet the increasingly diversified consumer needs and the correspondent financial needs, ICBC has also adopted the strategy to launch multiple varieties of personal loan products, and by paying close attention to changes in the consumer market, has actively innovated its consumer credit products and services. At present, personal loans of ICBC cover personal housing loans, personal auto loans, personal comprehensive consumption loans, and personal pledge loans, which comply with people's growing demand for diversified financial products and provide great convenience to clients. In addition, ICBC has strengthened the function of borrowing short-term and small amount loans of credit cards, allowed payment by installments in more areas, loosened limitation on the amount of overdrafts to encourage consumption. Now ICBC provides holders of Peony International Credit Card and Peony Credit Card with varied progressive payment schemes and overdraft period options. Whichever scheme is adopted, clients need to pay no loan interest in the interest-free period and need only pay a certain amount of commission, which effectively reduces the pressure on clients to repay loans and taps consumption potential. In the first half year ICBC has issued nearly 34 million Peony Cards in different types, and Peony Card consumption has amounted to RMB 617.044 billion, RMB 236.96 billion more than the same period last year, an increase of 62%.

Rapid growth of loans to small and medium-sized enterprises (hereafter referred to as SME) has been a highlight in loan growth in the first half year, which has far-reaching significance on optimization of economic structure. As SMEs constitute the most dynamic group in national economy, its development exerts tremendous and direct influence on economic growth and people's lives. Under the impact of financial crisis, SMEs' role in expanding employment, promoting technological and institutional innovations, and enhancing social harmony and stability has become more evident. Considering this, ICBC has chosen as its strategic choice to offer high-quality financial services to SMEs not only to fulfill its social responsibility but also to advance its own development, and has endeavored to increase its credit support to SMEs. By the end of June 2009, the balance of loans to SMEs has reached nearly RMB 2.3 trillion. From January to June, ICBC witnessed an increase of RMB 477.3 billion in its loans to SMEs, a rise of 26%, much higher than the growth rate of loans to companies in the same period. At present loans to SMEs take up about 50% of all loans ICBC has granted to companies. 

In recent years, ICBC has never stopped exploring new management models; thus ICBC has formed specialized systems of client rating, credit granting and examination and approval and operation processes, and developed a specialized loan management system. ICBC has so far established 1088 specialized agencies providing financial services for small enterprises; such a specialized model has contributed greatly to development of small enterprises. Especially since the second half year of 2008, to help SMEs overcome difficulties brought about by global financial crisis, ICBC, with support of the national policies assisting growth of SMEs, has introduced a series of new services. For example, considering the difficulty in accounts receivable collection and the pressure of fund circulation for SMEs, ICBC has promoted trade financing based on accounts receivable, which well satisfied the liquidity needs of SMEs. For another example, by using such off-balance-sheet financing tools as banker's acceptance and bank guarantee, ICBC has provided significant credit support for SMEs to participate in international trade and tender bidding. Lately ICBC has launched four series of financing products for SME clients, including "Commercially-used Housing Loan" "Titles to the Goods Loan" "Accounts Receivable Loan" and "Financial Bills Loan", and also researched on and promoted dozens of SME financing products such as "Small Enterprises Revolving Loan" and "Easy Finance".

Due to the direct impact of global financial crisis, external demand has remained sluggish since the beginning of year. The total import and export volume has dropped by 23.5%, and the contribution rate of net exports amounts to -41%, which drags GDP down by 2.9%. To cope with this situation, the national government has enacted a set of policies to stabilize exports. ICBC, considering the fact that some foreign trade enterprises, whose products have market, temporarily lack fund or guarantee to complete transactions, has also accelerated innovation in trade financing services, and contributed a total of nearly RMB 520 billion to financing trade. Up to June 30th, 2009, ICBC's trade financing balance has reached RMB 365.7 billion, an increase of more than 110 billion U.S. dollars over the beginning of the year, up 42.74%. Among this, ICBC has provided over 43 billion U.S. dollars of international trade financing to domestic foreign trade enterprises. By the end of June the balance of international trade financing has reached 11.867 billion U.S. dollars, a rise of 68.42% over the beginning of the year; which also makes ICBC one of the large-scale banks that enjoy the fastest growth of trade financing. Its international settlement volume in the same period has also exceeded 300 billion U.S. dollars. At the same time, ICBC has provided nearly RMB 220 billion of domestic trade financing to enterprises through bold innovation and perfection of its trade financing product system. By the end of June, 2009, the domestic trade financing balance has reached RMB 188.549 billion, RMB 87.806 billion more than the beginning of the year, an increase of 87%. Co-development and mutual enhancement of international and domestic markets have not only played a positive role in encouraging domestic production and consumption, but has also ensured strong financial support for export-oriented enterprises to develop trade and investment. What is especially worth mentioning is that ICBC has also formulated financing policies favoring development of SMEs. In the first half year ICBC has provided a total of RMB 173.835 billion of trade financing to SMEs, which greatly supports them to overcome the difficulties brought about by global financial crisis.

Through trade finance, ICBC has built up a bridge between the supplier and the demander, which not only promotes circulation of commodities and robust growth of the economic entity, but also creates new business growth points for ICBC itself, opening up new ways of credit structure adjustment. Trade finance can partly replace traditional working capital loan, thus facilitate transformation of traditional credit structure and solve the problems of "capital" precipitation caused by long-term possession of working capital loans by enterprises and of difficult control on loans' direction caused by unmatch between the working capital loan and the cash flow and material flow within the enterprise, effectively reducing the risk in banks' credit operations. Indicated by the record of the first half year, the important role that development of trade finance plays in adjusting credit structure and controlling risk has becoming more obvious. By the end of June, non-performing trade finance loans have taken only 0.2%, lower than the rate of non-performing loans. Meanwhile, the balance of trade finance loans has accounted for 28.7% of the balance of working capital loans.

While encouraging loan growth, ICBC has always emphasized risk control and paid great efforts to ensure assets quality, which is the lifeline of a commercial bank, so as to guarantee a stable and healthy development of ICBC and a sustainable growth of Chinese economy. The measures adopted concern mainly three aspects. First, appraise and review on the credit business and post-lending management are enhanced. All ICBC offices are required to grant loans in accordance with the national industrial policies, ICBC's industrial policies and the related laws and regulations. Second, precaution against potential risks is highlighted. Risks in different banking businesses and their evolving trends must be watched closely, and the ability to identify and assess risks must be improved so as to control risks beforehand and to cope with risks more timely and effectively. ICBC has set credit limits on overcapacity industries and potentially overcapacity industries; and conducted further examination on businesses carrying high risks, trying to control risks at an early stage of loan application processing. Third, by perfecting the risk management system with ICBC's characteristics and the institutional framework for risk control, developing and applying advanced technologies, steadily promoting implementation of inner rating methods, ICBC is enhancing its risk control ability in both institutional and technological aspects and ensuring sound business operation.