A sharp reduction in non-performing loans and increased income from fee-based business and overseas operations helped China's largest commercial lender drive profit sharply higher in the first nine months of the year. The Industrial and Commercial Bank of China (ICBC) announced it had made a book profit of five billion yuan (about HK$4.68 billion), up 35 per cent on a year earlier. Analysts cautioned the impressive gains could be masked by constant changes in accounting standards and profit figures of mainland banks. Poor transparency in unlisted mainland banks also added to the difficulty in making a fair assessment. ICBC's non-performing loans have fallen 34.7 billion yuan, down 3.71 percentage points, to a loan ratio of 26.4 per cent over a year ago, based on international standards, it said. The bank made a combined 28.33 billion yuan in provisions and funds for writing off 'historical burdens', it added. Beijing hopes to see its big four state banks, including ICBC, cut their non-performing loan ratio to 15 per cent by 2005. Operating profit before provisions soared 47.4 per cent year on year in the January to September period to 33.43 billion yuan, the bank said. During the period, ICBC said it had made great strides in diversifying its revenue source from deposit-taking and lending. ICBC racked up 2.8 billion yuan in income from intermediary business, up 44 per cent from a year earlier, while its overseas operations made a profit of US$83.64 million, it said. In a move aimed at facilitating fund flow between China and Taiwan, ICBC in July took the lead in making direct remittances with 45 Taiwan banks, including 12 foreign bank branches on the island. Previously, Taiwan businesses on the mainland remitted money to and from China via banks located elsewhere. Electronic banking was a new revenue source for ICBC, the bank said. Analysts underlined the search for more alternative income on non-lending businesses, rather than making money from interest margins.