— Japan April Bank Lending -1.0% Y/Y Vs -1.8% In March
— BOJ: April’s -1.0% Smallest Y/Y Fall Since -1.2% In Dec 2009

TOKYO (MNI) – Outstanding bank loans in Japan marked a 17th
straight month of year-on-year drops in April, down 1.0%, but the pace
of decline decelerated from March’s -1.8% as corporate fund demand
increased after the March 11 earthquake disaster, Bank of Japan data
released on Thursday showed.

The y/y drop of 1.0% in April to Y395.6 trillion was the smallest
since -1.2% in December 2009.

Demand from some firms for operating funds continued increasing
after the March 11 earthquake and tsunami hit Japan’s northeastern
Pacific coast, a BOJ official told reporters.

The official also said that demand for funding business operations
pushed up lending by city and regional banks.

But fund demand for capital investment wasn’t strong as smaller
firms are cautious about implementing capital spending amid heightened
uncertainty over business prospects.

The BOJ said in a recent report: “While financial conditions have
generally continued to ease, the financial position of some firms,
mainly small ones, has deteriorated since the earthquake.”

“As for the outlook, firms’ demand for credit is likely to
increase. A growing number of firms, especially small ones, are likely
to face a deterioration in their financial position, mainly due to the
drop in turnover as a result of the earthquake disaster,” it said.

“Because of the heightened uncertainty, some firms have started to
build up on-hand liquidity.”

In April, outstanding loans by city banks fell 3.1% from a year
earlier, the 17th consecutive month of y/y drops, after falling 4.6% in
March.

Combined lending by banks and shinkin credit unions fell 0.9% y/y
in April to Y458.2 trillion after dropping by 1.7% in March. It was also
the 17th consecutive y/y fall.

The balance of commercial paper issuance was Y9.32 trillion at the
end of April, down 4.5% from a year earlier, compared with the 0.2% rise
in March.

The balance of CP issuance posted the first y/y drop in two months.

Lending by large regional banks was up 1.4% in April from a year
earlier, up for the 11th consecutive month, after rising 1.2% in March.

Lending by second-tier regional banks rose 0.8% year on year in
April, after rising at the same pace in the previous month.

BOJ data showed that loans extended by both regional and
second-tier regional banks rose 1.2% in April, after rising 1.1% in
March.

Loans extended by credit unions were down 0.6% on year in April,
posting the 16th straight y/y drop, after falling 0.8% in March.

After adjusting for special items such as loan securitization,
foreign exchange rates and write-offs of bad debt, lending fell 0.7%
year on year in April, marking the 17th straight y/y drop after falling
by 1.6% in March.

hinoue@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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