China's central bank Thursday expressed its confidence about the country's financial system stability, after the International Monetary Fund (IMF) and World Bank pointed out potential risks in the system in several assessment reports.

The People's Bank of China (PBOC) said the reports have fully acknowledged China's achievements in recent economic and financial reforms, but there are "a few descriptions and views in the reports that we don't agree with."

"The descriptions of the stress testing did not fully reflect the outcomes of the test," it said on its website.

The reports are part of the update of the China Financial Sector Assessment Program (FSAP). The IMF and World Bank launched the FSAP in 1999 to gauge the stability and soundness of the financial sector, the regulatory framework of member economies and financial sector's potential contribution to growth. China went through its first FSAP exercise in 2009-2011.

The update, issued after two years of research, said tensions have emerged as China is undergoing a necessary but prolonged economic and financial transformation, the IMF said in a statement on its website.

The tensions identified include China's rapid build-up of credit and risky lending moving away from banks toward less-regulated parts of the financial system, while implicit guarantees added to these risks.

"The system's increasing complexity has sown financial stability risks," the IMF said, advising China to take measures such as strengthening of systemic risk oversight, further improving regulation and moving toward functional supervision.

The PBOC said under the severely adverse scenario during the stress testing, the common equity tier 1 ratios of the banks whose combined assets account for over 65 percent of the total commercial bank assets in China have remained 7 percent and above, attesting to the strong resilience of the financial system.

It said China's commercial banks have enhanced efforts to address non-performing loans (NPL) and kept the NPL ratio at a low level. The China Banking Regulatory Commission said earlier that the NPL ratio of Chinese banks stood at 1.74 percent at the end of September, flat with the previous quarter.

According to the IMF data, the Chinese banks' NPL ratio was 1.674 percent by 2015, much lower than the world's average of 3.925 percent.

Meanwhile, corporate profitability has improved this year, and local government borrowing has been backed by long-term cash-generating assets, making very limited room for any underestimation of NPL ratio, the central bank said.

"Overall, the reports have presented professional and valuable assessments of China's financial system and its recommendations are highly relevant in the context of deepening financial reform in China," the PBOC said.

China will draw on the recommendations, continue to deepen financial sector reform, take concrete steps to contain risks and strengthen cooperation with international organizations, it said.

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