Asset quality remains major issue for China banks: Fitch

BEIJING - Chinese bank earnings reported underscored growing pressures on profitability for the sector due to asset-quality issues in 2015, a Fitch report said on Thursday.

The pressures are likely to remain in 2016, with slowing economic growth contributing to higher non-performing loans (NPL) formation rates, and weaker profitability combined with strong asset growth will increase capital pressures for banks, the report added.

Chinese banks reported a sharp slowdown in net profit and revenue growth, it said.

On a weighted average basis for the 11 Fitch-rated Chinese banks, revenue and net profit rose by 8.2 percent and 1.3 percent respectively, down from 13 percent and 7.2 percent respectively in 2014. Average return on assets (ROA) fell by 11 basis points to 1.09 percent.