Chinese banks warned of bad loans, shrinking profits

Chinese banks should be alert to the risks of growing bad loans and narrowing profit margins amid a worsening global financial crisis and domestic interest rate cuts, a senior banking regulator has warned.

China Banking Regulatory Commission Vice-Chairman Jiang Dingzhi told a financial forum in Beijing on Saturday that China's banking system, despite being generally healthy, faces growing risks.

"Our judgment is that losses at overseas financial institutions will widen further, and capital shortfalls will become more serious," Jiang said.