(Yicai Global) Jan. 20 -- Shares of Chinese banks are predicted to play catch-up with the wider market rallies this year as their fourth-quarter earnings are turning out better than expected.

Amid the broader market's loose liquidity, the banking sector may be the next to take the lead after many listed lenders revealed better-than-expected performance for the fourth quarter, industry insiders said in interviews with Yicai Global.

China Merchants Bank, Industrial Bank, Jiangsu Suzhou Rural Commercial Bank and Bank of Jiangsu are some of those names in the headlines over the past couple of weeks. Net profits of CMB and Industrial Bank both climbed by more than 30 percent in the fourth quarter from a year ago.

Bank of Shanghai was the first to disclose its fourth-quarter earnings on Jan. 8. Its net profit and revenue both grew after declining during the first three quarters.

Shares of Chinese banks had risen by almost 8.7 percent this year as of yesterday, while the sector ranked second among the 28 sub-indexes after electronics, according to SWS Research.

Lenders' performance improvement in the fourth quarter is mainly attributable to three mutual factors: the recovery of income growth, expenditure cuts, as well as non-performing loan rate declines, said Fu Huifang, banking analyst at Industrial Securities.

The rebounds are driven by a continued macroeconomic recovery, banks' efforts, expanded credit, and income from wealth management services to promote profit and revenue growth, another banking analyst told Yicai Global.

An executive revealed that the branch performed well last year. The lender made a relatively big cut in its loan rates, attracting more clients and driving up the value of deposits, said the manager. Moreover, the bank issued bonds, boosting its investment banking business, the person added.

Editor: Emmi Laine