Greater China banks, particularly in China and Hong Kong, face mounting pressure amid the impact of expected interest rate cuts on profitability, Fitch Ratings said in a Wednesday release.

Weak economic growth, dampened retail credit demand, and lingering property market stress have eroded the outlook for banks, Fitch's head of Greater China bank ratings Grace Wu said.

Although rate cuts could ease pressure from elevated impaired loans, they will also squeeze net interest margins and profitability, Fitch said.

In mainland China, government support measures narrow bank margins, and reviving credit demand remains a major concern despite reduced reserve requirement ratios and lower deposit rates.

For Hong Kong banks, greater loan growth will not be able to offset lower margins given large interest rate differentials with mainland China.

Fitch also expects the real estate market downturn to continue impacting Hong Kong banks' earnings and asset quality.

The rating agency has a neutral outlook for Taiwan banks, as stable performance balances slightly lower profitability due to reduced rates.