SHANGHAI (Reuters), – China’s three largest banks said this week that they are facing multiple headwinds in 2019. These include the global pandemic, political instability and turmoil inside the realty industry.

China’s banking sector is in “a more complex and severe business environment,” China Construction Bank, the second largest lender (OTC:) Corp (CCB), stated Tuesday.

The fourth-largest country bank in assets by assets, Bank of China (BoC), said Tuesday that “the global epidemic will continue recur”, the easing strategies of developed countries will be withdrawn and geopolitical conflict will intensify.”

Meanwhile, China’s Bank of Communications Co Ltd (BoCom), the President of China’s Bank of Communications Co Ltd (BoCom), stated Friday that the bank would have difficulty delivering satisfactory earnings for this year.

China has struggled with a rising number of COVID-related infections in large cities. Analysts believe that this has caused partial and complete lockdowns, which will have a negative impact on its economy.

According to Nicholas Zhu (NYSE:), a Moody’s banking analyst, the main effect on banks will come from “rising loans delinquencies within service sectors”, said Nicholas Zhu.

He added, “These industries include wholesale or retail, leisure travel, and other consumer discretionary service.”

Not only were banks concerned about the dire outlook but so did the net profit for the entire year from all three lenders, which was higher than the estimates.

BoC profit increased 12.3% in the year to 216.6 billion Yuan. This is higher than the Refinitiv estimate at 199.1 million from 17 analysts. The same happened at CCB where net profit increased 11.6% to 30.2 billion yuan. This was compared to a Refinitiv estimate that came in at 293.1 billion yuan by 21 analysts.

At CCB, the non-performing loan ratio fell to 1.42% by year-end compared to 1.51% three-months ago. While at BoC, it was 1.33% at year-end compared to 1.29% at September’s end.

While the net interest margin (a critical indicator of bank profitability) remained steady at 1.75% over three months at BoC, it fell to 1.94% by the end of 2015 from 2.12% three month earlier.

($1 = 6.3673 renminbi)