CHINESE banks face worsening asset quality and slower profit growth as the nation's tight monetary environment and a worsening global credit crisis cause more borrowers to default, Fitch Ratings said.
The nation's 14 publicly traded banks, whose total net income rose 67 percent in the first half from a year earlier, have already shown signs of rising borrower defaults and tighter liquidity, Fitch said.
"Chinese banks appear to be approaching their first real test of resilience," Beijing-based analysts Charlene Chu and Chunling Wen wrote in a report on Monday. "Increased vigilance is warranted as Chinese banks take on the growing challenges ahead."
Chinese banks have boosted profits over the past three years as the nation's economy expanded at around a 10- percent annual clip.
The Industrial and Commercial Bank of China Ltd, Bank of China Ltd and Bank of Communications Ltd see slowing growth after record profit in the first half, Bloomberg News said.
Listed banks posted an average yield on loans of 7 percent in the first half, up from 6.3 percent last year.