Despite challenges like lending rates trending down, China's commercial banks have reported stable revenues and profits during the first half of the year, thanks to their cost cuts and improved efficiency, the interim results of listed banks showed.

Experts, however, urged them to optimize the financial resource allocations made for the real economy and key sectors, and seek new growth points, amid market talk the country may further adjust housing credit policies and lower existing mortgage rates.

China is considering allowing homeowners to refinance as much as $5.4 trillion of mortgages to lower borrowing costs for millions of families and boost consumption, Bloomberg reported on Friday.

According to the report, homeowners will be able to renegotiate terms with their current lenders before January, when banks typically reprice mortgages. They will also be allowed to refinance with a different bank for the first time since the global financial crisis of 2008-09.

Lou Feipeng, a researcher at Postal Savings Bank of China, said reducing existing mortgage rates may have a negative short-term impact on banks' operations.

"However, even with rate reductions, mortgages still represent high-quality assets for banks compared to other loans, and by lowering the rates to discourage early payments, banks will not incur extra costs and can continue to profit from such assets," Lou said.

Moreover, by lowering existing mortgage rates, they can encourage consumer spending, thereby facilitating economic recovery that can benefit banks in the long run, he said.

Dong Ximiao, chief researcher at Merchants Union Consumer Finance, said commercial banks should continue to increase their support for the real economy, particularly for small and micro-sized enterprises. That will optimize the allocation of financial resources and create new growth points via larger loan volumes, compensating for lower rates.

He also said banks should enhance the ability to attract high-quality deposits and reduce liability costs by improving comprehensive services. They should also actively develop high-value-added intermediary businesses such as wealth management.

Vivian Xue, director of Asia-Pacific Financial Institution at Fitch Ratings, however, said a mandatory, blanket rate reduction across all outstanding residential mortgages is less likely, as mortgage pricing typically varies significantly across regions and borrower groups.

Moreover, a broad-scale and material lowering of rates may add to the pressure on banks' net interest margins and profitability, Xue said.

Dong also said lowering mortgage rates should be used as a special policy tool, rather than regularly, although it is fair to cut mortgage rates of existing loans for second homes since such reductions have been applied to first homes.

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