The total amount of nonperforming loans held by the nation's banks as of the end of September came to 28.08 trillion yen, a 178 billion yen increase over the figure reported at the end of March, the Finance Ministry said Monday.

It was the first increase in bad loans since the ministry began releasing the figures on a half-year basis in September 1995, ministry officials said. According to a ministry calculation, city banks, long-term credit and trust banks, regional banks and cooperative lenders need to write off a total of 4.35 trillion yen in unrecoverable loans.

Monday's figures did not include bad assets held by nine financial institutions that have gone under, including Hokkaido Takushoku Bank, which reported 930 billion yen in bad loans as of the end of March. The figures are based on reports of financial institutions' reports of sour loans in line with disclosure standards established by the Federation of Bankers' Associations of Japan.

Ministry officials attributed the increase to failures of several construction companies and nonbanks affiliated with Nippon Credit Bank from April to September, which pushed up the amount of loans falling into the banks' category of loans to failed borrowers. The figure includes loans to failed borrowers, loans in arrears for at least six months and restructured loans whose interest rates have been brought to or are below the Bank of Japan's official discount rate. It amounts to roughly four percent of the banks' total lending.

The ministry's figures also indicate that financial institutions had a total of some 13.76 trillion yen in hidden assets in the form of listed securities, down 265 billion yen at the end of March.