The mainland banking system will not face a crisis similar to those suffered by its Asian neighbours, despite having shared the same symptom of reckless credit expansion, a report by Citibank's China Monitor says. According to the report, mainland banks have a smaller exposure to foreign debts and will not be as easily squeezed by foreign creditors as was Thailand and South Korea. 'Chinese banks funded their assets mainly through the large domestic deposit base,' said the report. 'Confidence in state ownership will help keep the deposits in the state banks and provide the needed liquidity.' The report praises the mainland government's response to the problem of non-performing loans, which official estimates put at 1.4 trillion yuan (about HK$1.3 trillion), or 25 per cent of loan portfolio up to the end of last year, shared amongst the mainland's four state commercial banks. Of non-performing loans, about 280 billion to 335 billion yuan, or 5-6 per cent of the loan portfolio, were loans that cannot be recovered. 'China has demonstrated that it has the will and the resources to traverse the rocky path of banking reform,' the report said. The report concluded that, although a crisis was far from imminent, there was no room for complacency.