Chinese banks are likely to see a slight rise in bad loans next year, as they are facing pressure in making profits from traditional business models.

The average non-performing loans (NPL) rate of Chinese listed banks is forecasted to rise to about 1.8 percent by 2017, up from the forecasted 1.7 percent by the end 2016, Bank of China said in a report released Thursday.

The NPL growth rate of the 16 listed Chinese lenders will decelerate next year thanks to measures like debt-for-equity swaps, but the rate might further climb in coming years.

NPL has risen in recent years, against the backdrop of a slowing economic growth pace and waning profitability of some companies.

Chinese listed banks will likely see double-digit growth of their assets in tandem with a set of challenges next year including pressure on traditional interest margin business and rising operational costs, it said.

Interest margin, which refers to the difference between interest paid and interest received, is traditionally a pillar of Chinese lenders and they are exploring new revenue growth drivers in recent years.

These lenders should embrace opportunities of Chinese economic restructuring as well as upgraded consumption and wealth management demand supported by a growing middle class, it suggested.