Bank of China (BOC), the country's flagship foreign exchange lender, said yesterday its third-quarter net profit rose 12 percent on higher fee income, but earnings growth slowed as margins fell and the economy began to cool.

"Banks' profit growth is in a downward trend, and their asset quality problem is just emerging," said Fan Kunxiang, an analyst at Haitong Securities.

BOC, China's second-largest bank, reported July-September net profit of 17.8 billion yuan, up from 15.9 billion yuan in the same period last year, under international accounting standards.