Asia

Tuesday, July 7, 2015 - 20:12

Japan June Bank Lending Slower But BOJ Sees Solid Loan Demand


--Japan June Bank Lending +2.6% Y/Y Vs May Revised +2.7%
--Japan June Lending By Major Banks +1.2% Y/Y; May +1.3%
--Japan June Lending By Regional Banks +3.8% Y/Y; May +3.9%

TOKYO (MNI) - Monthly bank lending data from the Bank of Japan released Wednesday.

FACTORS: Outstanding bank loans rose 2.6% on year to Y424.21 trillion in June for the 45th consecutive rise, with the pace of increase slowing slightly from a revised +2.7% (preliminary +2.6) in May.

A BOJ official told reporters that there is steady demand for loans used for mergers and acquisitions as well as domestic real-estate investment trusts and housing.

Outstanding loans by large banks rose 1.2% on year in June, the 31st straight rise. The pace of growth also decelerated from +1.3% the previous month.

The growth in lending by regional banks decelerated to +3.8% in June from +3.9% in May. The relatively high pace of increase continued to indicate more small businesses are seeking funds in a modest economic recovery. Companies in rural areas usually have less cash on hand compared with large corporations so an increase in lending by regional banks indicates expansion.

TAKEAWAY: BOJ officials expect a moderate uptrend in capital investment backed by rising corporate profits. They are also watching how companies will proceed with capex plans but they don't expect bank lending to increase sharply because major firms have large cash reserves. A gradual recovery in consumption is supportive to capex but a recovery of overseas demand remains uncertain.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hinoue@mni-news.com
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: msato@mni-news.com

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