Three of China’s largest banks reported ​nearly flat annual profits on Friday as the world’s second largest economy reels from a deepening ‌property sector debt crisis amid a prolonged slowdown.

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Analysts warned […] that a prolonged Middle East conflict, one that ​exceeded four weeks, could have a detrimental impact on bank balance sheets.

Higher oil prices and the pricing in ​of political volatility “would lead to a more challenging operating environment for Chinese banks, raising asset risks in banks’ lending and investment ‌portfolios,” ⁠said Nicholas Zhu, a banking analyst at Moody’s.

Margins are also expected to shrink further this year.

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