Index for corporate loan demand up

JIJI

Corporate loan demand improved for the first time in six months in October, a Bank of Japan survey said Monday.

The diffusion index (DI) on changes in corporate loan demand over the past three months stood at 5, the first positive reading since April, the BOJ’s survey of senior loan officers at major banks says.

In the July survey, the index was at minus 3.

The improvement apparently reflected drops in interest rates and strong fund demand tied to reconstruction from the March 2011 earthquake and tsunami that hit parts of the Tohoku region. But the pace of recovery was slow, with the October DI standing below the April level of 6.

The DI rose to 6 from 2 in July for large corporations and to 1 from minus 6 for small and midsize businesses.

Nonmanufacturers led the gains, including construction and real estate companies, the survey said.

The quarterly survey covers the 50 biggest banks in Japan by loan balance. The latest survey was conducted from Sept. 11 to Oct. 11.