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In 2018, Chinese banks lent a record $2.4 trillion in loans. That the credit spigot opened is no surprise: The banks had the full backing of Beijing, who looked on nervously as the Chinese economy limped - by its standards, anyway - to the finish line with just 6.5% annual growth, its worst performance since 1990. It wasn't so long ago that China could expect 9% annual growth.

The 2014 year seems to be a year for banks to pad their capital base. Previous heated discussion was around Tier 1 capital sufficiency, after which additional capital has been supplemented via issuing preference shares by SPDB, Bank of China and Agricultural Bank of China.

The latest data from big five banks’ 2013 annual report shows that the cumulative profits in 2013 were RMB 870.3 Billion, accounting for approximately 60% of the banking industry. However, comparing with previous years’ performance, the net Chinese banks' profit growth rate of 2013 has slowed with the exception of BOC, which increased slightly. This decreased profitability is mainly due to narrowed net interest margin. Last year, in the context of interest rate reform and the influence from money funds, banks have been facing challenge and forced to transform. This will likely continue to become more pronounced in the future as banks are heavily reliant on interest income rather than fee income.