• Kyodo

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Lending by banks fell 1.0 percent in April from a year earlier to ¥395.65 trillion, while the benchmark money supply gauge grew 2.7 percent, the Bank of Japan said Thursday.

The average daily balance of commercial loans dropped for the 17th straight month. But the rate of fall was the smallest since the balance started dipping in December 2009, the BOJ said, attributing the move largely to a rise in demand for operating money from companies affected by the March 11 earthquake and tsunami.

After adjusting for special factors — loan securitization, exchange rate fluctuations and loan-loss reserve allocations — the balance fell 0.7 percent, the BOJ said.

Lending by city banks, which have nationwide branch networks, dropped 3.1 percent to ¥199.22 trillion while lending by regional banks rose 1.2 percent to ¥196.43 trillion.

In separate data, the BOJ said the benchmark M2 money supply gauge came to ¥796.8 trillion in April. The reading consists of cash in circulation, demand and time deposits and certificates of deposit at domestic banks.

Another measure of M1 — cash in circulation and demand deposits at all depository institutions — grew 4.9 percent, the sharpest rise in more than five years, to ¥521.0 trillion.

The result is believed to reflect companies and individuals rushing to secure liquidity amid concerns about the outlook for the economy following the natural disaster, a BOJ official said.

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