Industrial and Commercial Bank of China Ltd has effectively contained a rebound of the nonperforming loan (NPL) ratio since the outbreak of the COVID-19 pandemic last year, senior executives said on Friday. Its NPL ratio fell 0.04 percentage point from the beginning of this year to 1.54 percent at the end of June.

The enhancement of its asset quality goes hand in hand with the Chinese economy, which has continuously recovered since the beginning of the year, as the economic fundamentals have stabilized and improved.

"ICBC stepped up support for key industries backed by macroeconomic policies, key regions backed by national strategies of development, and key clients with huge market potential. The bank continuously optimized its credit structure and layout, leading credit resources to flow into key industries, regions and fields, as well as quality clients," said Wang Jingwu, senior executive vice-president of ICBC, China's largest commercial lender by assets.

It also ramped up efforts to prevent and control risks in key areas by paying close attention to local governments' hidden debt, the real estate industry, heavy-polluting and energy-intensive industries, and the sectors which are significantly affected by the COVID-19 pandemic.

While strengthening farsighted identification of risks of those clients with hidden risks, the bank also kept loans whose principal and interest repayments were deferred under good control.

"As the domestic economy continuously recovered in the first half, we saw a steady slowdown in the growth of our bank's corporate loans whose principal and interest repayments were deferred … Such loans are mainly associated with the clients in road transportation and new-type urbanization industries, of which the risk resistance capacity is relatively strong. Our bank also took effective measures to manage such loans … We estimated that the impact of COVID-19 on our bank's assets quality will weaken step by step," Wang said.

By the end of June, ICBC's balance of special mention loans — potentially weak loans that may spark unwarranted credit risks — decreased by 26.5 billion yuan ($4.1 billion) from the beginning of this year, and the ratio of special mention loans to total loans dropped 0.28 percentage point.

In addition, the bank kept expanding channels for risk asset disposal and improving its capacity of risk asset management. In the first half, it disposed of a total of 84.4 billion yuan in nonperforming loans, he said.

The improvement of asset quality also contributed to an increase in net profit by leading to a reduction of expected loan loss provisions by nearly 9.5 billion yuan year-on-year, said Liao Lin, president of ICBC.

In the first half, the bank realized a net profit of 164.5 billion yuan, up 9.8 percent year-on-year. Its new total loans and advances to customers amounted to nearly 1.4 trillion yuan, which was a 7.4 percent increase from the end of last year. The bank achieved growth in both operating income and net profit during the process of promoting accelerated economic recovery, Liao said.