Chinese flag.

The RBA is wary of rapid growth.

Australian banks' lending to Chinese borrowers has soared by 75 per cent in a year, as the industry rushes to lift its exposure to Asia's powerhouse economy.

The value of loans to Chinese borrowers on the books of Australian banks swelled by $US12.3 billion to $US28.7 billion during the year to September, figures from the Bank for International Settlements show.

China now rivals Singapore as a key foreign market for Australian bank loans, trailing only New Zealand, Britain and the US.

Hong Kong - a critical gateway for institutional lending into China - is also playing an increasingly important role, with exposure of $US20 billion.

The rapid growth is occurring as domestic banks eye Asian customers - primarily institutional borrowers - as a growing source of future profits.

ANZ has been the most aggressive in its regional expansion, setting the goal of obtaining 25 to 30 per cent of its profits from overseas, mainly Asia, by 2017.

But the trend also ties Australia more closely to weaknesses in China's still-opaque financial system, which have been on full display recently, as regulators try to rein in the country's enormous shadow banking system.

There are also concerns Asian financial centres could suffer from capital flight this year as foreign investors move their cash back to western markets in response to the US Federal Reserve withdrawing stimulus measures. Macquarie analyst Mike Wiblin noted that such ''tapering'' could leave Asia exposed to tighter credit conditions, a trend that would affect ANZ the most.

''We continue to believe that ANZ is most exposed, particularly given its rapid growth in greater China,'' Mr Wiblin said in a note.

Australian bank lending to China and Hong Kong combined had quadrupled in four years, Mr Wiblin's report also said.

The growth in lending to China comes after the Reserve Bank last year cautioned banks against overly rapid expansion in Asia, while NAB chief executive Cameron Clyne conceded local banks had ''mostly destroyed shareholder value by going overseas''.

But lending to Asia still accounts for only 10 per cent of the sector's overseas exposure, compared with 40 per cent for New Zealand and 18 per cent for the UK.

KPMG's national banking sector leader, Ian Pollari, said the expansion into Asia, including markets such as Japan, South Korea and India, had also been managed cautiously.

''Australian banks have invested heavily in their risk management practices in overseas jurisdictions to ensure they are robust,'' Mr Pollari said.

Of the big four, Westpac and Commonwealth Bank are the least exposed to foreign borrowers, with 12 per cent of their loans portfolio tied up overseas, according to a report by Credit Suisse analysts.

About 25 per cent of NAB's portfolio is overseas, the report said, while ANZ's foreign exposure is 32 per cent.