Mitsubishi UFJ Financial Group Inc. plans to raise its outstanding loans in China by 25 percent to ¥1 trillion in a year or two, capitalizing on growing demand in the fastest-growing major economy.

Japan’s biggest lender raised the capital of its Chinese unit, Bank of Tokyo-Mitsubishi UFJ (China), by 1.5 billion yuan (¥18.38 billion) to 8 billion yuan, the bank said Friday. The capital increase would allow it to expand lending in China’s regulated banking industry, spokesman Takashi Takeuchi said.

Bank lending in Japan has fallen for 10 straight months as the economic recovery loses momentum. The shrinking and aging population has prompted banks and manufacturers to boost business elsewhere in Asia to counter slowing sales at home.

MUFG also plans to increase the number of its Chinese affiliates to 20 from the current 12 in the next two to three years.

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