China's "big four" state-owned commercial banks have experienced a surge in profits as their interest income continues expanding.

Industrial and Commercial Bank of China, the country's top lender by assets, said first-half profits soared 29 percent from the previous year to reach 109.6 billion yuan ($17.125 billion).

The bank's net interest income, which reflects the difference in revenue from lending and the cost of deposits, grew 21.8 percent to 174.5 billion yuan ($27.3 billion) in the January-to-June period. Net fee and commission income from products and services such as credit cards, wealth management and insurance sales rose 45.8 percent to 53.8 billion yuan ($8.4 billion).

China Construction Bank, the second largest lender, saw its net profits climb 31.33 percent to 92.95 billion yuan ($14.5 billion).

Bank of China's first-half profits rose 28.98 percent to reach 70.13 billion yuan ($11 billion).

Agricultural Bank of China generated 66.68 billion yuan ($10.4 billion) in net profits, up 45.4 percent.

"Despite the bright performance, commercial banks have felt the pinch of tightening monetary policies, which punched their ability to lend," said Sun Lijian, Vice President of School of Economics of Fudan University in Shanghai.

Lian Ping, chief economist with Communications Bank of China, also struck a note of caution. "The government has stepped a stringent control over financing vehicles of local governments, but there are still default risks," he said.

"In 2009, China kick started an infrastructure building spree, many of which were funded by loans borrowed through financing vehicles of local governments," said Lian. "In the first three years, the projects usually only need to repay interests. When they have to repay principle in 2012, risks may break out."