Foreign banks in Mainland China continue to be optimistic about their future performance, according to a new survey report by financial services consultancy Ernest & Young, released on Monday.

“Future Direction for Foreign Banks in China 2014” polled senior executives from 41 locally incorporated foreign banks and bank branches. Despite the optimism, many find the market challenging and complicated by issues surrounding financial reform and economic uncertainty, the survey report said.

“The regulatory landscape continues to challenge foreign players; alongside are also the opportunities generated from the evolving yuan internationalisation and interest rate liberalisation,” says Jack Chan, Managing Partner of Financial Services at Ernest & Young Greater China.

In terms of total assets, based on the China Banking Regulatory Commission’s 2013 annual report, foreign banks’ market share in Mainland China was just 1.73 percent as of end-2013.

Foreign banks expect a modest improvement in performance over the next three years. The survey shows 50 percent of the participants predict a slight improvement while 45 percent of them hope to see a significant one.