Japan bank lending rises most in three years as pandemic-hit firms hoard cash

(C) Reuters.

By Hiroko Hamada

TOKYO (Reuters) – Japanese bank lending jumped in April at the fastest annual pace in nearly three years, central bank data showed on Wednesday, reflecting a surge in fund demand from firms hit by the coronavirus pandemic.

Analysts expect lending to continue rising as the government has asked commercial banks to offer low-interest loans to cash-strapped companies to help them weather the health crisis.

Outstanding loans held by the country’s four main categories of banks, including “shinkin” or credit unions, stood at 553.486 trillion yen ($5.17 trillion) in April, up 3.0% from the previous year, according to data released by the Bank of Japan.

That was the biggest rise since August 2017 and an acceleration from a 2.0% increase in March.

The world’s third-largest economy is on the cusp of a deep recession, as the pandemic forces households to stay home and businesses to shut down.

The BOJ ramped up stimulus for the second straight month in April, focusing on steps to ease corporate funding strains as slumping sales from the pandemic prodded many firms to hoard cash.

About 15,968 coronavirus infections and 657 deaths have been confirmed in Japan as of Tuesday, excluding cases from a cruise ship previously quarantined in Yokohama, according to NHK.