Japan’s bank loan growth slows to 10-year low as pandemic-induced pressure eases

A Japanese yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration

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  • Bank loans in February increase by 0.4% per year, the lowest since May 2012
  • Slowdown reflects easing pandemic-related funding constraints
  • BOJ says it needs to keep an eye on peak oil’s impact on funding

TOKYO, March 8 (Reuters) – Japanese bank lending rose in February to its smallest increase in a decade as the immediate pressure on businesses to borrow cash continued to ease amid the backdrop of a broader economic recovery from the pandemic crisis.

While massive central bank money printing will likely keep funding conditions ultra-loose, the crisis in Ukraine could hurt restaurants and retailers still reeling from COVID-19 restrictions, some analysts said.

Loans rose 0.4% in February year on year, the slowest pace since May 2012 and after a revised gain of 0.5% in January, Bank of Japan (BOJ) data showed on Tuesday, as that borrowers continued to repay loans extended during the pandemic. .

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“We need to keep an eye on how developments in Ukraine could affect corporate financing through rising crude oil prices,” a BOJ official said in a briefing.

Outstanding loans held by the country’s four main categories of banks, including “shinkin” or credit unions, stood at 580.048 billion yen ($5.030 billion), according to BOJ data. .

“Companies have ample liquidity, so additional demand for funds remains subdued,” the BOJ official said.

Big bank loans fell 1.3% in February from a year earlier after falling 1.0% in January, marking the biggest drop since August 2021, the data showed.

Regional bank lending rose 1.7%, marking the smallest increase in more than a decade, the data showed.

At a policy meeting in December last year, the BOJ extended the March 2022 deadline for its pandemic relief program by six months to ensure that commercial banks continue to funnel funds to small enterprises. Read more

But he decided to phase out most other elements of the emergency funding program from April, in a sign of a marked improvement in financial conditions for big companies.

($1 = 115.3300 yen)

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Reporting by Leika Kihara; Editing by Sam Holmes

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