Meanwhile, nearly 90 per cent of bankers forecast the growth of revenue and after-tax profit to be lower than 15 per cent. Over 60 per cent of bankers predict their NPL ratios to rise above 1.0 per cent in the next three years.

The findings came from the eighth Chinese Bankers Survey (2016) Report.

Dr BA Shusong, project leader and chief economist at the CBA, together with the project team, interviewed 15 senior bankers to get their insights into the sector. With a total of 1,794 valid responses collected, the survey sampling process has taken into account participants’ geographical regions, grades, types of financial institution, and if the institution is listed on stock exchange(s) or privately held.

The report said that as China’s economy enters the “new normal” development phase, the “supply-side reform” remains high on policymakers’ agenda. In response to the supply-side reform, more than 80 per cent of bankers in the survey believe they should adjust loan portfolios and support emerging industries.

“Banks should launch a variety of products and services to support the central government’s initiatives, such as the scheme to investment-loan linkage, debt-for-equity swaps, and green finance,” said Richard Zhu, PwC North China financial services leader.

In 2016, the credit asset quality of Chinese banks continued to face strong headwinds, with rising non-performing loans balances as well as ratios. Despite the fact that NPL balances and ratios continue to deteriorate, 69.5 per cent of bankers still believe that NPLs have not been fully exposed, with 61.4 per cent of bankers expecting NPLs to peak in one year or two.

“While increasing efforts on NPL disposal through conventional approaches such as write-offs, collections and transfers, Chinese banks are also actively exploring a diversified range of alternatives, including NPL securitisation, cooperating with the big four asset management companies, and transferring of usufruct transfer of credit assets,” said Vincent Yao, PwC China financial services partner.

This year’s survey focuses more on fintech (or “internet finance” in China’s context). It was clearly stated that bankers continue to attach great importance to internet finance in 2016, with half of interviewees committed to putting internet finance as a high priority and willing to increase investment on this particular sector. In addition to the promising opportunities ahead, over half of bankers in the survey considered information technology as a top risk when developing the new system for internet finance business.