Japanese bank lending sees biggest annual rise in 4 years
Source: Agencies |
July 9, 2013, Tuesday
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Print Edition
Print Edition
JAPANESE bank lending marked its biggest annual increase in four years in June, though service-sector sentiment worsened for the third straight month, underscoring the challenges facing the government even as its sweeping stimulus policies continue to spur economic momentum.
Outstanding loans held by Japanese banks rose 1.9 percent in June from a year earlier, Bank of Japan data showed yesterday, marking the 20th straight month of increase and posting the biggest gain since July 2009.
"The recent increase in demand for funds is related to mortgage lending and the housing market," said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
"I expect bank lending to continue to steadily increase, which is part of the portfolio rebalancing that the BOJ is trying to encourage."
Borrowing for investment in real-estate trust funds, and overseas mergers and acquisitions, also contributed to the increase, which followed a 1.8 percent rise in May, a BOJ official told a briefing.
The data bode well for the BOJ, which hopes its aggressive stimulus plan will encourage banks to funnel money to lending and risky assets, instead of loading up on low-risk, low-return government bonds. It forms part of the central bank's strategy to spur growth and vanquish years of entrenched deflation.
The BOJ stunned markets on April 4 by setting in motion an intense burst of monetary stimulus, pledging to double its holdings of government bonds and boost purchases of risky assets to achieve its 2 percent inflation target in two years.
Data released last month confirmed Japan was already out of the shallow recession that took hold in late 2012, as the economy grew at an annual 4.1 percent in the first quarter of this year.
However, there's also evidence to suggest that the road to a sustainable recovery will take some time.
Financial markets suffered a brief setback in late May through early June with concerns of slowing Chinese growth and growing hopes of a reduction of the US Federal Reserve's bond-buying program hitting global shares, including Tokyo stocks.
That dented some of the feel-good mood generated by hopes over Prime Minister Shinzo Abe's sweeping stimulus policies, hurting Japanese retailers vulnerable to consumer and retail trends.
An index measuring service-sector mood dipped 2.7 points from May to 53.0 in June, a government survey showed yesterday, marking the biggest fall in a year. Rising import costs and bad weather during the month, which kept consumers at home rather than shop, also weighed on sentiment, the survey said.
Outstanding loans held by Japanese banks rose 1.9 percent in June from a year earlier, Bank of Japan data showed yesterday, marking the 20th straight month of increase and posting the biggest gain since July 2009.
"The recent increase in demand for funds is related to mortgage lending and the housing market," said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
"I expect bank lending to continue to steadily increase, which is part of the portfolio rebalancing that the BOJ is trying to encourage."
Borrowing for investment in real-estate trust funds, and overseas mergers and acquisitions, also contributed to the increase, which followed a 1.8 percent rise in May, a BOJ official told a briefing.
The data bode well for the BOJ, which hopes its aggressive stimulus plan will encourage banks to funnel money to lending and risky assets, instead of loading up on low-risk, low-return government bonds. It forms part of the central bank's strategy to spur growth and vanquish years of entrenched deflation.
The BOJ stunned markets on April 4 by setting in motion an intense burst of monetary stimulus, pledging to double its holdings of government bonds and boost purchases of risky assets to achieve its 2 percent inflation target in two years.
Data released last month confirmed Japan was already out of the shallow recession that took hold in late 2012, as the economy grew at an annual 4.1 percent in the first quarter of this year.
However, there's also evidence to suggest that the road to a sustainable recovery will take some time.
Financial markets suffered a brief setback in late May through early June with concerns of slowing Chinese growth and growing hopes of a reduction of the US Federal Reserve's bond-buying program hitting global shares, including Tokyo stocks.
That dented some of the feel-good mood generated by hopes over Prime Minister Shinzo Abe's sweeping stimulus policies, hurting Japanese retailers vulnerable to consumer and retail trends.
An index measuring service-sector mood dipped 2.7 points from May to 53.0 in June, a government survey showed yesterday, marking the biggest fall in a year. Rising import costs and bad weather during the month, which kept consumers at home rather than shop, also weighed on sentiment, the survey said.
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