Industrial and Commercial Bank of China (ICBC) recorded a huge increase in new loans in January as it answered government calls to support the weakening economy.

ICBC, the country's largest bank, said Thursday it extended 117.1 billion yuan (US$17 billion) of new loans last month, 22 percent of the amount for the whole of 2008.

It noted that 69.3 billion yuan, or 59 percent of the total, was lent to infrastructure projects including railways, roads, power grid and nuclear power stations.

Late last year China urged local lenders to increase credit to support its 4 trillion yuan (US$586 billion) stimulus package aimed at spurring economic growth.

China's economy grew 6.8 percent year-on-year in the fourth quarter of last year, down from 9 percent in the third quarter and 10.4 percent in the first half. The sharp slowdown dragged down the growth for 2008 to a 7-year-low of 9 percent.

The bank also reported a big profit and declines in both the amount of non-performing loans (NPLs) and the NPL ratio in January, though no specific figures were given.

Factors driving the good performance include government measures to boost domestic demand and stimulate economy and a moderately loose monetary policy, it said.

The big increase in new loans showed the government measures have yielded initial results and the positive effects are spreading to the real economy, it stated.

The Purchasing Managers' Index of manufacturing rose to 45.3 in January from 41.2 in December, following a record low of 38.8 in November, the China Federation of Logistics and Purchasing said Wednesday, providing evidence the economy was on the road to a recovery.

The lender added it has beefed up risk control while expanding business.

Officials and analysts have warned that domestic banks might face rising bad loans this year as they record huge increases in new loans in the worsening economic conditions.

Shares of ICBC in Shanghai rose 0.8 percent to 3.83 yuan at 11:10 a.m. Beijing time.

(Xinhua News Agency February 6, 2009)