Lenders' net income in China rose 39 percent last year to 1.25 trillion yuan ($178.4 billion), the fastest growth in at least four years, the banking regulator said on Tuesday.

The China Banking Regulatory Commission said the increase was driven by a rise in credit-based interest-generating assets, improved operating efficiency and good controls on credit risks.

"Basically stable interest rates" also contributed to profit growth, it said.

Interest income accounted for 66.2 percent of the total income of these institutions, which include policy banks, commercial banks, foreign lenders and rural credit cooperatives.

Investment earnings provided 18.5 percent, while revenue from fees and commissions contributed 14 percent.

Banks extended 7.47 trillion yuan in new loans last year, down 6 percent year-on-year. But tight monetary policy that aimed to soak up liquidity and curb inflation drove up lending rates, while banks' deposit rates were not allowed to be higher than the benchmark rates.

The CBRC said it will maintain an "appropriate" credit growth pace in 2012, while guiding banks to lend more to small enterprises, agriculture-related sectors and key infrastructure projects.

But it said that banks must step up efforts this year to avert the risks of loans to local government financing vehicles and the real estate sector.

(For full story, please see April 25 China Daily page 14)