Japan bank lending rises again as pandemic pressures services sector

TOKYO (Reuters) – Japanese bank lending rose 6.3% in March from a year earlier, data showed on Monday, as restaurants and hotels sought more loans to weather the hit from the COVID-19 pandemic.

Deposits held by banks were also up 9.9% in March as households continued to save rather than spend on uncertainty over the pandemic’s fallout, the Bank of Japan data showed.

Outstanding loans held by the country’s four main categories of banks, including “shinkin” or credit unions, hit a fresh record at 579.995 trillion yen ($5.29 trillion), according to the data. In February, total loans increased 6.2%.

The introduction of a new scheme that offers incentives to banks that channel more funds to pandemic-hit firms has yet to have a major impact on bank lending, a BOJ official said.

“We’ll likely seen the impact appear ahead, and hope the scheme will help smooth financial intermediation,” the official told a briefing.

At its policy meeting in March, the BOJ adopted a new interest paying scheme for financial institutions that tap its cash coffers to boost loans.