"Bad loans rose last year mainly because the economic transformation hit some companies in the Yangtze River Delta, especially those in Zhejiang province. The worst is over now," he said.

Mainland manufacturers were hit hard by sluggish external demand and rising land and labour costs at home. The central government is looking to engineer an economic restructuring to increase the economy's reliance on domestic consumption and shift focus to industries with higher added value.

"As the economy has entered an era of single-digit growth, banks should seek a more prudent development model," Zhang said, after the lender's financial report was released on Sunday showing its net profit grew 14 per cent last year - the slowest since 2006.

"2013 will be a less difficult year compared with 2012." chairman Wang Hongzhang said at a press conference in Hong Kong.

The continuing interest rate liberalisation may dent its net interest margin "slightly" this year, Zhang said, as the lender re-prices deposits and loans.

The central bank, for the first time, last summer allowed lenders to offer deposit rates up to 10 percentage points higher than benchmark rates, and loan rates up to 30 percentage points lower.

Wang said interest rate liberalisation will lead to a change in banks' operating structure.

"This will be a challenge, but won't lead to a situation where the banks cannot earn any money," he said, adding that the earlier the liberalisation takes place, the better it is for the industry.

CCB's net interest margin, or the spread between funding costs and lending income, edged up 0.05 percentage point to 2.75 per cent last year.

Loan demand so far this year has been robust, according to senior executives.

The bank has worked out a plan to help finance the mainland's urbanisation drive. It will focus on helping to fund first-time homebuyers and various infrastructure projects, said the executives.