Japan bank lending picks up on demand to meet rising material costs

By Leika Kihara

TOKYO (Reuters) – Japanese financial institution lending rose 1.8% in July from a yr earlier, accelerating from the earlier month, as some firms borrowed extra to satisfy rising uncooked materials prices amid a surge in world commodity inflation.

Excellent loans held by the nation’s 4 major classes of banks, together with “shinkin” or credit score unions, hit a document 588.232 trillion yen ($4.36 trillion), Financial institution of Japan (BOJ) knowledge confirmed on Monday.

The rise, which adopted a revised 1.2% achieve in June, mirrored rising fund demand for property funding in addition to mergers and acquisitions, a BOJ official instructed a briefing.

Firms had been additionally boosting lending to satisfy rising uncooked materials prices and a re-opening of the financial system as curbs to fight the COVID-19 pandemic are lifted, the official mentioned.

Complete lending by main and regional banks rose 2.1% in July from a yr earlier, accelerating from a 1.5% achieve in June to mark the quickest year-on-year improve since Might 2021, the info confirmed.

The info is amongst components intently watched by the BOJ in deciding whether or not to finish a pandemic-relief mortgage scheme, geared toward easing a credit score crunch amongst small companies, as scheduled when it expires in September.

(Reporting by Leika Kihara; Modifying by Sam Holmes)