The combined revenue of 37 listed Chinese banks in 2016 was 4.12 trillion yuan ($627 billion), representing 1.35 percent year-on-year growth, according to new research released on Friday in Shanghai.

Though the revenue growth was slower than the 10.02 percent in 2015, net profit grew 3.65 percent year-on-year to 1.45 trillion yuan, higher than the 2.85 percent growth in 2015, according to the report, compiled by the research team of banking industry journal China Banking. The research was based on a survey of annual reports of 37 banks listed in Shanghai, Shenzhen and Hong Kong.

The combined assets of the banks reached 154.34 trillion yuan, a 13.9 percent year-on-year increase.

In a cost-effective perspective, the report said average cost-revenue ratio was 30 percent in 2016, a bit higher than the 29.95 percent in 2015.

"The entire banking sector in China has been experiencing drastic changes in the past two years, and banks need to quickly respond to them," said Lian Ping, chief economist of the Bank of Communications.

He said banks need to put more efforts on financing real economy growth instead of "amusing themselves" without recognizing real demands from clients.

Strengthened requirements for capital adequacy, more compliance requirements, slower economic growth and more diversified demands from clients, such as asset management and corporate financing for cross-border businesses, would present challenges for banks, said the report.

Dong Ximiao, executive head of the research institute of Heng Feng Bank and a major compiler of the report, said the banking risk management and capital adequacy will remain major challenges for banks, particularly smaller ones.

The average nonperforming loan rate was 1.49 percent in 2016, higher than 1.36 percent in 2015, but the level is still at a reasonable and stable level, and would not cause large-scale risks, according to the report.

Macroeconomic conditions may influence the retail banking segment and personal loans, Dong noted.

For example, personal loans for home purchases is expected to drop this year, he said.

Revenue from profit margin of the 37 banks was 2.93 trillion yuan, accounting for 71.11 percent of overall revenue. Intermediary business income growth is expected to further extend in 2017, which will also help support diversified development and innovations in banks' services and product offerings, the report said.