Despite headwinds like lending rates trending down and slack economic performance both at home and abroad, the combined first-half profits of China's six largest State-owned banks by assets edged up, raising hopes of a stable second half as expectations are building for a strong rebound of the Chinese economy.

However, banking industry insiders said lenders in China need to increase efforts to innovate their business models and seek new growth points. Focusing on earnings from interest margins may not be the best option now due to factors like the likelihood of cuts to existing mortgage rates amid lower lending rates.

Interim results of the "Big Six "banks showed their first-half net profits totaled more than 690 billion yuan ($94.65 billion).

The first-half profit breakdown showed Industrial and Commercial Bank of China netted 173.74 billion yuan, China Construction Bank earned 167.34 billion yuan, Agricultural Bank of China bagged 133.23 billion yuan, Bank of China took home 120.10 billion yuan, Postal Savings Bank of China had 49.56 billion yuan in its kitty and Bank of Communications was richer by 46.04 billion yuan.

"China's monetary policy will likely continue to introduce cuts in the reserve requirement ratio and loan rates, which will have an impact on banks that rely on interest margins for profit," said Liu Ying, a researcher at the Chongyang Institute for Financial Studies at the Renmin University of China.

"However, many banks have been adjusting their revenue models and expanding their business in sectors like consulting and financial intermediation. Those that take a lead (in that direction) will likely post a better performance."

Fu Wanjun, president of Agricultural Bank of China, said in an interim result conference that the lender has recorded sound growth in non-interest income. In the second half, the bank will further diversify its products and services to augment net income from fees and commissions while seeking to boost non-interest income by optimizing its investment portfolio.

Upbeat sentiment about the overall economic situation and proactive measures available for banks to cope with pressure on their interest margins also provide a firmer footing for stabilizing prospects of banks, executives at lenders and experts said on Thursday.

Liao Lin, president of ICBC, said implementation of the recently announced macroeconomic policy measures will gradually help accelerate the anticipated uptrend in the economy, which means banks will likely have more favorable conditions to improve their financial performance.

Sheng Liurong, chief financial officer of CCB, said the lender will continue to take measures like optimizing the asset and liability structure, seeking growth from retail credit issuance and curbing costs, to slow down the decline in its net interest margin.

Zheng Lei, chief economist at cloud services provider Smydigtech, said as the central bank recently iterated that commercial banks should maintain a "reasonable level of profitability", there will be room for banks to decide on the pace and extent of repricing outstanding mortgage loans based on their asset structures and profitability.