Loan growth slowed to the weakest pace in three years in March, signaling the central bank's introduction of negative interest rates has yet to spur credit in the world's third-largest economy.
Loans, excluding trusts, rose 2 percent from a year earlier, slowing from 2.2 percent in February, the Bank of Japan said Tuesday. Deposits increased 3 percent, easing from 3.1 percent in February. The figures are the first for a full month after the BOJ began charging lenders 0.1 percent interest on some of their reserves on Feb. 16.
The policy has put pressure on lenders' profitability because they are being forced to lower interest rates on loans more than those on deposits. Bank shares are the worst performers on the Topix index this year amid speculation that the central bank will cut rates further to stem an 11 percent gain in the yen against the dollar, which threatens to undermine recovery.