Resona Holdings Inc. is targeting a fivefold increase in corporate loans this year, signaling Japan’s fifth-biggest bank is confident that the economic recovery is strong enough to spur business spending.
Resona plans to increase loans to companies by ¥300 billion in the year ending March 2015, compared with ¥60 billion the previous fiscal year, President Kazuhiro Higashi said in a recent interview in Tokyo.
Machinery orders, an indicator of future corporate investment, jumped the most since 1996 in March, government figures showed this week. Higashi, 57, said his bank needs to boost credit volume to make up for a decline in lending profitability as monetary policies to stimulate the world’s third-largest economy drag down interest rates.
“We believe that funding demand for capital spending will emerge from small and medium-sized corporates, which are lagging behind larger businesses,” Higashi said. “We need to be patient for the next couple of years before interest rates rise and we fully benefit from the economic recovery.”
Resona will use its expertise in real estate and trust banking to examine corporate demand for land and factory equipment, he said.
Machine orders rose 19.1 percent in March from a month earlier and companies forecast they will climb for a fifth straight quarter, the Cabinet Office said Monday. Japan’s economy grew an annualized 5.9 percent in the first quarter, faster than economists expected, as companies stepped up investment and consumers splurged before a sales tax hike.
Resona is also bolstering services, including loans, for small businesses whose owners are seeking to hand over control to younger generations. In January, the bank set up a private-banking department with 200 employees to provide succession services to small companies, Higashi said.
Loans at Japan’s biggest banks have been rising since December 2012, when Shinzo Abe became prime minister on a platform of spurring the economy with fiscal spending and aggressive monetary easing.
Resona said this month that its total loans, including mortgages, will rise by ¥650 billion in the year ending March 2015.
Resona’s net income declined 20 percent to ¥220.6 billion in the year ended March, the bank said on May 13. Profit may fall 32 percent to ¥150 billion in the current fiscal year, it said.