A resident walks past an advertisement for Shanghai Pudong Development Bank Co Ltd in Yichang, Hubei province. The bank's assets reached 5.04 trillion yuan ($775.38 billion) by the end of 2015.[Photo/China Daily]

Shanghai Pudong Development Bank Co Ltd became the first A-share listed company to release its preliminary earnings estimates with business performance higher than expectations, but the overall condition of Chinese commercial banks still remains far from favorable.

The annual operating income of the Shanghai-listed stockholding commercial bank in 2015 totaled 146.5 billion yuan ($22.5 billion), increasing 19 percent year-on-year; and its net profit totaled 50.6 billion yuan, increasing 7.6 percent year-on-year.

The total assets of SPD Bank were 5.04 trillion yuan by the end of 2015, increasing 20.2 percent year-on-year.

Its nonperforming loan ratio was 1.56 percent by the end of 2015, while it was 1.06 percent at the beginning of last year.

"The revenue performance of SPD Bank is higher than our expectations and its profit growth is favorable, and the main reasons may be securities investment returns and receivables from financial institutions," said a report of Ping An Securities Co Ltd.

The report said SPD Bank is expected to be the second-largest stockholding commercial bank in China by asset size following China Merchants Bank Co Ltd.

"Although its nonperforming loan ratio increased to 1.56 percent by the end of 2015, its new nonperforming loan growth in the fourth quarter of last year saw no big change, and the reason may be that SPD Bank slowed the pace of writing off bad loans," said the report.

A source at a major State-owned commercial bank said based on this year's economic situation, the financial performance of SPD Bank is good and may be leading in the Chinese banking sector.

"Because of interest rate liberalization, Chinese commercial banks will shrink interest rate differential and their profits will be greatly affected," he said.

"The nonperforming loans of the commercial banks will be also be increasingly influenced by China's economic slowdown."

The People's Bank of China, the central bank, lowered the one-year benchmark lending rate by 25 basis points to 4.35 percent and the benchmark rate for one-year deposits by the same margin to 1.5 percent, effective from Oct 24.

The State Council said in March that an insurance system for bank deposits would start on May 1 last year and deposits and interest up to 500,000 yuan would be fully covered.

"The profit growth of stockholding and city commercial banks will be around 10 percent in 2015 due to their smaller asset and profit scale and more flexible mechanism, while that of the five biggest State-owned banks can be in single digits," he said.

"The nonperforming loans of Chinese commercial banks are expected to increase in 2015 and in the next year," he said.