Industrial & Commercial Bank of China, the world’s largest bank by assets, held up worse than expected in 2014, with profits hitting 275.8 billion yuan, rising just 5 per cent on the year before. That was about half the rate of growth in profits the bank posted just one year earlier. Higher-than-expected provisions for bad loans, up by 48 per cent year-on-year, accounted partially for the decline in profit growth, analysts noted. ICBC chairman Jiang Jianqing echoed the central govenment’s line that China has entered a "new normal", or in other words a period of slower growth. "In this context, it’s already difficult to achieve this [rate of] growth," Jiang said during a teleconference with reporters from Beijing. ICBC said net interest margin hit 2.66 per cent, from 2.62 at the end of June. The bank lost some control over bad debt. ICBC’s non-performing loan ratio rose to 1.13 per cent last year, from 1.06 at the end of September. Up until now, the bank’s risk management systems were considered to be weathering well the deterioration of assets that many smaller banks were struggling with. Agricultural Bank of China on Tuesday reported that its NPL ratio had soared to 1.52 per cent, a sector-wide high. Bank of China, which reported earnings on Wednesday, showed some success in keeping bad loans low, with an NPL ratio of 1.18 per cent. The average rate of bad loans at the end of last year was 1.29 per cent. “I think NPLs will continue to expand in 2015 with profit after tax growth to get even slower, but likely to see a recovery in 2016 if the economy is stabilised at that time,” Erin Lee, a banks analyst at Yuanta Securities in Shanghai said, noting that ICBC’s NPL ratio was not surprising. The troubles experienced by the bank in 2014 were reflected throughout China’s banking sector last, which has shown signs of a considerable slowdown as the mainland’s economic growth comes to a more than two-decade low. A year earlier, ICBC notched more than 10 per cent profit growth. Bank of China’s growth in 2014 slowed to about 8 per cent from 12.4 percent in 2013. AgBank reported 8 per cent growth for last year, down from 14.6 per cent a year earlier. The last of China’s so-called big four national commercial banks, China Construction Bank, is expected to report its earnings on Friday. ICBC has been sluggish to respond to market trends in recent years. Following several smaller banks and private companies, ICBC announced this week that it was opening its own integrated internet finance platform. The platform will allow customers to make payments and access online investment products, innovations that have been on the market for years. As regulators have allowed more competition in financial innovation, the People’s Bank of China has also signaled that it would push forward with interest rate liberalisation. That step in reform, the last in the process of rate liberalisation, will put pressure on margins at banks as they begin competing for depositors. Massive state banks such as ICBC, which have prospered in a system where interest on deposits was held at an artificially low rate, must adapt quickly if liberalisation comes sooner than expected.