Mainland banks last year posted their highest profits in at least four years, despite a slight rise in bad loans for some in the fourth quarter amid a slowing economy.
About 3,800 institutions on the mainland, including policy banks, commercial, city and rural commercial lenders, earned about 1.25 trillion yuan (HK$1.53 trillion) profit last year - up 39 per cent year on year - according to the China Banking Regulatory Commission's annual report.
Mainland banks have come under fire recently for racking up fat profits while continuing to pay depositors meagre interest rates that do not even keep up with inflation.
With the central government becoming more vocal about breaking the banks' 'monopoly' and pushing interest-rate liberalisation, many lenders have been trying to rely less on interest income and strengthen earnings through fee income and treasury business.
Mainland banks' fee income contribution to overall income rose 2 percentage points to 14 per cent last year. Net interest income contribution continued to increase, by 20 basis points, to 66.2 per cent, due to a fall in treasury and other income.
Bad loans, which came under scrutiny following a lending spree in the aftermath of the global financial crisis, continued to drop in both volume and ratio even though they rose slightly for some banks in the final quarter last year.
Overall, non-performing loans (NPL) in China's banking system fell to 1.05 trillion yuan at the end of last year. The non-performing loan ratio fell 0.66 percentage points to 1.77 per cent.