Japan bank lending slows as easing pandemic sees big firms pay back loans

[TOKYO] Japanese bank lending rose at a slower annual pace in September than the previous month as corporate funding strains caused by the pandemic eased mainly among big borrowers, central bank data showed on Monday.

But lending by regional banks remained high as smaller firms continued to borrow heavily to meet immediate funding needs, the data showed, underscoring the lingering economic pain brought by the health crisis.

"Big companies that had borrowed huge amounts of funds as a precaution around spring are now paying back some of the loans due to easing uncertainty over the pandemic," a Bank of Japan (BOJ) official told a briefing.

"But that's not to say conditions have improved. There are gaps among industries on how much their profits have recovered."

Total bank lending rose 6.4 per cent in September from the same month a year earlier, slower than a 6.7 per cent gain in August, to a record 573.7 trillion yen (S$7.34 trillion), BOJ data showed.

The pace of lending by major banks slowed to 7.3 per cent in September from 8 per cent in August.

Lending by regional banks rose 5.3 per cent, roughly unchanged from the previous month's 5.4 per cent increase. Those by "shinkin" credit associations, which lend mostly to small firms in regional areas of Japan, rose 7.8 per cent, the fastest pace on record, the data showed.

Bank deposits rose 9 per cent in September from a year earlier, the biggest increase on record, as households held back on spending and instead saved government pay-outs aimed at cushioning the blow from the pandemic, the official said.

REUTERS