The performance of foreign banks in China dropped last year compared with the previous year, as the country witnessed the slowest growth in three years and the authorities further liberalized interest rates.

According to an annual report released by the China Banking Regulatory Commission on Wednesday, foreign banks achieved profits after taxes of 16.3 billion yuan ($2.61 billion) in 2012, down from 16.7 billion yuan in 2011.

Their asset quality also fell as the ratio of soured loans against total loans rose to 0.52 percent at the end of last year, from the 0.41 percent one year earlier, said the report.