Lending interest rates for Japanese businesses down for ninth year

JIJI

The average interest rate for lending to companies fell for the ninth straight year in fiscal 2016 that ended in March, Teikoku Databank Ltd. said in a recent survey report.

The average rate stood at 1.43 percent, down 0.10 percentage points from the previous year, the private credit research firm said Monday.

Behind the continued downtrend are intensifying competition between financial institutions amid the falling population and the Bank of Japan’s introduction of a negative interest rate in February last year, it observed.

All 47 prefectures saw the average business loan rate decrease in the reporting year.

Among the prefectures, Kagawa had the lowest rate, at 1.20 percent, against a backdrop of stiff competition between mega-bank groups and regional lenders reflecting falls in the number of major loan customers.

Aichi had the second-lowest rate, at 1.22 percent, due to long-standing loan competition between many shinkin (credit) banks, followed by Wakayama, at 1.25 percent.

Meanwhile, Akita had the highest average interest rate, at 1.87 percent, followed by Okinawa, at 1.83 percent.

Teikoku Databank analyzed financial data of some 810,000 companies across the country.