(Yicai Global) Dec. 29 -- Macroeconomic recovery means the asset quality and profitability of China's banking sector will keep improving next year.

Net profit is expected to rise by 6.5 percent, higher than the 4 percent growth logged this year, projected Lian Ping, chief economist with the Bank of Communications Co. [SHA:601328; HKG:3328], one of China's five major state-backed banks.

The Shanghai-based bank issued its 2018 commercial banks operational outlook yesterday. Prudent monetary policy will improve banks' interest spread and thereby enhance their profitability, Lian noted at the release press briefing, as Shanghai Securities News reported today. China's economic restructuring has started to show progress, the report also advised, adding that the asset quality of commercial banks is anticipated to increase, with the non-performing asset ratio forecast to range between 1.70 percent and 1.75 percent next year.

Bank net profit is expected to grow between 6 percent and 7 percent, several securities brokers also predicted. As interest rates rise, the net interest margin in the sector will climb, a securities analyst said. Regulators will also up their oversight of the financial field next year, effectively curbing shadow banking, many financial institutions believe.