Lending by Japanese banks fell 4.5 percent in August from a year earlier, marking the 56th consecutive month of decline, the Bank of Japan said Monday.

The average daily lending balance for the reporting month was 421.7 trillion yen, the central bank said in a preliminary report.

Analysts attributed the decline to continuing slack demand from businesses for funds for new capital investment amid the prolonged economic slump. Banks also remained reluctant to extend new loans because of the need to book large loan-loss charges, they added.

The figures cover city banks — those with nationwide branch networks — and trust banks, regional banks and second-tier regional banks.

When adjusted for special factors, such as loan securitization, exchange-rate fluctuations and the allocation of loan-loss reserves, lending by banks fell 2.4 percent to 431.18 trillion yen in August, down for the 47th straight month, the BOJ said.

On an unadjusted basis, the August average daily lending balance, including the balance of loans by “shinkin” savings and loan banks, fell 4.4 percent to 484.07 trillion yen, down for the 20th consecutive month.

The unadjusted balance at city banks and trust banks fell 7.1 percent to 247.94 trillion yen, while that at regional banks inched down 0.3 percent to 130.62 trillion yen.

The lending balance at second-tier regional banks slid 1.5 percent to 43.14 trillion yen, and that of shinkin banks sagged 3.4 percent to 62.37 trillion yen.

The daily balance of real deposits and certificates of deposit at city banks, regional banks and second-tier regional banks rose 1.9 percent in August to 480.62 trillion yen, the BOJ said.

The outstanding balance of commercial paper at the end of August inched up 0.2 percent to 21.29 trillion yen.

The balance of lending at foreign banks operating in Japan surged 27.9 percent to 8.31 trillion yen.

Credit shrinks 13%

LONDON (Kyodo) Japanese banks’ cross-border credit contracted by 13 percent in the January-March quarter from a year earlier, making a significant contribution to the slowdown in international bank credit, the Bank for International Settlements said in a quarterly report released Monday.

“The slowdown in cross-border bank credit in the first quarter of 2002 was exacerbated by further declines in Japanese banks’ international positions,” the BIS quarterly review on international banking and financial market developments says.

The Japanese banks’ January-March retrenchment fully reversed the gradual expansion in their claims following the recapitalization of the banking system in early 1999, it says.

The report says credit to nonbanks was especially weak as Japanese banks took profits on their foreign bond holdings in the first quarter.

Japanese banks had purchased European and U.S. government and agency securities in the second half of 2001 in anticipation of a decline in interest rates, and in the early part of 2002 they sold some of these securities, it says.

Japanese banks also continued to unwind their claims on other unrelated banks.

“Their cross-border interbank claims contracted by 32 percent year over year in the first quarter, a rate of decline last experienced in early 1999 prior to the recapitalization of the Japanese banking system,” the report says.

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