Large State-owned commercial banks in China are optimizing their credit structure in the first half of this year to strengthen support for the real economy, the part of a country's economy that produces actual goods and services.

Growth of their inclusive loans to small and micro enterprises, which are lending to small businesses whose total credit lines are up to 10 million yuan ($1.55 million) per borrower, remained rapid over the period. The same thing can be said about the growth of their green loans, financing for business which have a distinct environmental impact.

Among the six largest State-owned commercial lenders, three banks posted a more than 30 percent growth in inclusive loans to small and micro enterprises in the first half.

Industrial and Commercial Bank of China took the lead with a 40.4 percent growth in such loans to more than 1 trillion yuan at the end of June. Bank of China saw its balance of inclusive loans to small and micro enterprises reach 781.6 billion yuan by June 30, up 35.8 percent compared with the prior year's end.

The balance of Agricultural Bank of China's inclusive loans to small and micro enterprises also increased by 30.4 percent to 1.24 trillion yuan over the period.

ICBC's number of first-time borrowers rose by more than 40 percent compared to the same period last year. The proportion of unsecured loans and medium- to long-term loans in inclusive loans to small and micro enterprises both rose by more than 3 percentage points year-on-year.

In the first half, the bank's average interest rate of new inclusive loans dropped by 18 basis points from last year, said Liao Lin, president of ICBC.

Supporting the development of small businesses and inclusive finance is an important measure for China Construction Bank Corp to intensify a State-owned bank's undertaking of responsibility and to bolster the real economy, said Wang Jiang, president of CCB.

"Currently, small and micro enterprises are facing some difficulties and problems during the process of development, especially due to uncertainties in the evolution of the COVID-19 pandemic and natural disasters early on. These factors will inevitably affect the asset quality of inclusive finance to some extent. But we should also see robust dynamics in small businesses and therefore, ramping up support for small businesses and inclusive finance will bring a lot of great opportunities for the sustainable development of CCB," Wang said.

The overall risk associated with CCB's inclusive finance has remained controllable. Its nonperforming loan ratio of inclusive finance was 1.1 percent in the first half, Wang said. It was lower than the bank's ratio of nonperforming loans to total loans, which was 1.53 percent at the end of June.

Large State-owned commercial lenders also stepped up efforts to promote the development of green finance and push for relevant financial product innovation, as China pledged to achieve a peak in carbon dioxide emissions by 2030 and carbon neutrality by 2060.

By the end of June, the balance of Bank of China's green loans exceeded 1 trillion yuan and has kept growing. Senior executives analyzed its credit structure and readjusted plans for green lending by the bank and its major branches. The bank also assisted clients in issuing 50.9 billion yuan of green bonds in the domestic market in the first half.

"We plan to provide no less than 1 trillion yuan of funds to support green industries during the 14th Five-Year Plan period (2021-25).We will also strive to increase the proportion of the balance of domestic green corporate loans in the balance of domestic corporate loans by no less than 5 percentage points from the end of the 13th Five-Year Plan period (2016-20), or even 10 percentage points at our best," said Liu Jin, vice-chairman and president of BOC.

Agricultural Bank of China will ramp up financial support for clean energy, green transportation, green building and energy-saving transformation of traditional industries, said Zhang Qingsong, president of ABC. Its balance of green credit reached 1.76 trillion yuan by the end of June, up 16.4 percent year-on-year.

ABC will bring its advantage in comprehensive operations into full play, further strengthen efforts for product innovation and continuously improve its multi-layered and integrated business system, which covers green credit, direct green financing, green consumer finance and carbon finance. The bank will also actively innovate carbon financial products including carbon bonds, carbon asset collateralized financing and carbon asset-backed securities, Zhang said.

By the end of June, China's balance of green loans denominated in yuan and foreign currencies hit 13.92 trillion yuan, up 26.5 percent year-on-year. The banking sector actively promoted innovation of green bonds, and carbon neutrality-themed bonds have become a highlight in the market, said a report released by the China Banking Association on Aug 31.