China Development Bank (CDB) will strengthen operations in development financing to fuel the continuous growth of the national economy, its head said yesterday.

Chen Yuan, governor of the bank, told China Daily: "We are now more than just a policy bank." He was referring to the time before 1998, when the bank was mainly an instrument of State financial policies; and when there was little emphasis on the bank's market performance.

Now, the bank is a provider of State credit to facilitate economic development.

Development financing "is the second stage of progress for a financial institution like ours; and is our focus this year," Chen said, adding that CDB would continue infrastructure lending and addressing challenges such as infrastructure and the environment.

As a development financial institution, CDB has to maintain its strategic focus on infrastructure, pillar industries, and the high-tech sector.

Between 1994 and 2005, it directed 88.9 per cent of its lending towards eight major industries such as power, road construction, railways, petro-chemicals, coal mining and telecommunications.

"The good performance of the infrastructure portfolio has underwritten our financial and operational strengths and enabled us to expand business beyond infrastructure lending," Chen said.

For example, the bank has initiated several programmes to extend lending support to the community level.

With the help of local governments, it has facilitated small- and medium-sized enterprises to update equipment and technology, creating job opportunities for the community.

While maintaining growth in infrastructure lending, the bank focused on such sectors as agriculture, education and environmental protection, Chen said.

"We believe our lending to these sectors will facilitate China's economic development into the next decade," he said.

CDB's financing projects are usually larger and more comprehensive than the ones of commercial banks, while the interest rates of Chinese banks have to be within the range allowed by the People's Bank of China, the central bank.

CDB reported a net profit of 22.8 billion yuan (US$2.8 billion) in 2005, a record high, and an increase of 31 per cent from a year earlier.

At the end of 2005, the bank's total assets reached 1.9 trillion yuan (US$234.3 billion) and total lending portfolio grew to 1.7 trillion yuan (US$213.8 billion), up 22.9 per cent.

The same year, its non-performing loans stood at 0.96 per cent, down from 1.31 per cent at the end of 2004.

(China Daily 03/23/2006 page1)