The balance of outstanding loans at Japanese banks dropped 3.4 percent in March from a year earlier for the 40th consecutive month of decline, the Bank of Japan said Thursday.
The daily lending balance for the month came to an average 452.15 trillion yen, the central bank said in a preliminary report.
The continued decline in the balance of outstanding loans reflects weak demand for operating funds by firms amid the weakening of the economy.
Adjusted for such special factors as loan securitization, exchange rate fluctuations and the allocation of loan-loss reserves, the lending balance fell 1.5 percent to 461.06 trillion yen — down for the 31st straight month, the BOJ said.
The figures cover five categories of Japanese banks — banks with nationwide branch networks known as city banks, trust banks, long-term credit banks, regional banks and second-tier regional banks.
On an unadjusted basis, the April balance at city banks, the largest lenders, weakened 3.1 percent to 207.54 trillion yen, while that at regional banks, the second largest, shed 1.2 percent to 132.29 trillion yen.
The loan balance slipped 5.2 percent to 45.57 trillion yen at second-tier regional banks, 6.2 percent to 39.18 trillion yen at trust banks, and 8.8 percent to 27.56 trillion yen at long-term credit banks.
The daily balance of real deposits and certificates of deposit at city banks, regional banks and second-tier regional banks meanwhile rose 0.3 percent to average at 471.16 trillion yen, for the first climb in nine months, the central bank said.
The outstanding balance of commercial paper at the end of the month soared 41.3 percent to 23.05 trillion yen. The central bank also said the balance of outstanding loans at foreign banks operating in Japan rose 28 percent in the reporting month to 8.06 trillion yen.
Money supply up
Japan’s key money supply indicator grew at an average pace of 2.7 percent in April from a year earlier, the Bank of Japan said in a preliminary report released Thursday.
The average daily balance of M2 — cash in circulation, demand deposits and quasi-money — plus certificates of deposit, came to 650.0 trillion yen, up from 640.1 trillion yen in March, the central bank said.
The balance of M2 plus CDs, held principally by corporations, individuals and local governments, is considered the key money supply gauge, reflecting the closest correlation to changes in economic activity.
A breakdown of the tally showed cash in circulation grew 3.8 percent to 56.5 trillion yen, down from a 5.1 percent gain in March.
Money in demand-deposit and checking accounts increased 6.7 percent to 194.9 trillion yen, compared with a 4.8 percent growth the previous month, the BOJ said.
The supply of quasi-money contracted 1.5 percent to 367.5 trillion yen, following a 0.4 percent drop in March.
Quasi-money refers to time deposits and other types of savings that cannot be immediately refunded on demand, including foreign-currency deposits and nonresidents’ yen deposits.
The CD balance grew 36 percent to 31.1 trillion yen, following a 35.9 percent rise in March.
Broadly defined liquidity — the widest measure of money supply — grew 3.1 percent to 1.310 quadrillion yen in April, compared to a 3.4 percent rise in March.
The measurement includes postal savings, deposits at agricultural and fishery credit cooperatives, loan trusts and money trusts, bank debentures, and Japanese and foreign government bonds, as well as M2 plus CDs.
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