China banks' profit growth to slow, risks rising

Annual profit growth of China's banks could slow to 9 percent in 2014 as they face increased liquidity and lending risks due to slower economic growth and Beijing's battle on excessive factory capacity, the banking industry body said a report. Concern about huge growth in Chinese corporate debt since the global financial crisis and the risk of defaults has intensified this year as growth slows and authorities allow markets to play a bigger role in deciding winners and losers. "Banking financial institutions face challenges from increased volatility of short-term liquidity and rising credit risks due to the impact from economic slowdown, structural adjustment and efforts to reduce overcapacity," the China Banking Association said in the report. "Market risks will rise along with interest rate liberalisation, increased exchange rate flexibility and more frequent capital flows, but there will be no large-scale outbreak of liquidity risks."

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