Japanese banks continued to lend at an all-time high in July as pandemic pain persists
Japanese bank lending hit a record high in July as regional lenders continued to increase lending to small businesses affected by the coronavirus pandemic, central bank data showed on Tuesday.
But the annual rate of increase in lending from large banks has slowed as demand for financing from large corporations eased, suggesting that the wall of money printed by the Bank of Japan has helped cope with immediate tensions over corporate finance.
Total loans from banks and shinkin Credit unions grew 6.3% in July from a year earlier, reaching a record 572.7 trillion yen ($ 5.4 trillion) and accelerating from a gain of 6.2 % in June, according to BOJ data.
This is the fastest growth rate since comparable data became available in 2001.
Loans by major banks rose 7.8% in July, after gaining 8.6% in June. Lending from regional banks rose 5.1%, following an increase of 4.7% in June and corresponding to a record level in 1991, according to the data.
“The demand for funds from large companies seems to have run its course. Some borrowers are also turning to commercial paper and corporate bonds to raise funds, ”a BOJ official told reporters.
“Small business loans continue to increase as borrowers take out cheap loans with government guarantees, although the pace of the increase is likely to slow down in the future,” the official said.
The widespread fallout from the health crisis is pushing Japan into a deep recession, forcing the government to draw up a massive stimulus package and the BOJ to ease policy in March and April.
Private financial institutions have played a key role in funneling money into the economy by following government demands to offer unsecured loans to cash-strapped businesses, most of which are said to be backed by government guarantees. .
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