Chinese banks will face pressure to keep their growth in 2017 amid tighter rules on their off-balance sheet activities as the regulator bids to prevent an asset bubble, PricewaterhouseCoopers said yesterday.

The banks may exercise caution on the growth in off-balance sheet credit to meet the requirement from the regulator, which might curb profitability, analysts at PwC China said.

“There are a number of areas where banks need to adjust their business strategies in 2017,” said Jimmy Leung, financial services leader for PwC China.

“They will need to focus on their core banking business while better reflecting risk profiles amid recent regulatory tightening.”

The China Banking Regulatory Commission has been targeting shadow banking products and lending between financial institutions in the interbank market.

Small and medium-sized banks, which rely heavily on off-balance sheet wealth-management products and interbank business, will be hardest hit from the crackdown, PwC said.

Banks are likely to increase housing loans in second or third-tier cities even as some big cities have imposed strict credit policies to cool property prices, PwC analysts added.