Four of the five state-owned banks have reduced their expectation for this year's profit growth, as banking reform continues and regulators keep a firm grip on credit supplies.
Only Agricultural Bank of China, the last of the five to list publicly, expects profit to grow at levels comparable with previous years because of a smaller base, executives from the five banks said in a recent industry meeting.
The other three of Big Four banks plus the Bank of Communications all anticipated profit growth to slow to a single-digit rate this year from an estimated level of 10 to 14 percent for 2012.
There is no consensus over how much profit banks should be able to make. Some said the predicted decline is natural under market reforms. But two bank executives said a healthy profit growth rate should be around 15 percent, or roughly the same as the GDP growth rate when inflation and other nominal appreciation of assets are excluded.
Lower profit expectations partly reflect bankers' concern with the central bank's agenda on this year's credit supply. Sources close to the regulator said it would cap bank loans at 9 trillion yuan for the year.
The figure increased by 800 billion yuan from last year, but is still likely to be well short of the scale banks would need to offset the loss from lower profit margins.
Bank executive at the conference said they expect narrowing interest spreads to weigh substantively on their profits.
"Banks would still rely on interest spreads for an extended period of time, but their profitability would inevitably fall," an executive at a large bank's corporate banking department said.
The decline was mainly a result of last year's interest rate changes, which adjusted the floating ranges of deposit and lending interest rates and limited banks' pricing power over capital. The cost of capital rose also because many customers opted for better-paying wealth management products over ordinary savings accounts.
All those changes have brought impacts that are yet to be fully absorbed by the market, another executive at a large bank said. Some analysts echoed his view in predicting that bank interest spreads would continue shrinking this year, but the changes would be small.
They said that banks' net interest spreads in 2013 would be only a few basis points lower than 2012's estimated levels of between 2.5 and 2.7 percent.