Bank loans in Japan rise on demand to meet rising material costs

A man wearing a protective mask walks past the Bank of Japan headquarters amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon/File Photo /File Photo

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  • Bank loans in July increased by 1.8% over one year against +1.2% in June
  • Rise reflects demand to meet higher input costs – BOJ
  • The reopening of economic activity is also behind the rise – BOJ
  • Key data on whether BOJ ends pandemic relief program in September

TOKYO, Aug 8 (Reuters) – Japanese bank lending rose 1.8% in July from a year earlier, accelerating from the previous month as some companies borrowed more to meet rising costs commodities in a context of soaring global commodity inflation.

Outstanding loans held by the country’s four main categories of banks, including “shinkin” or credit unions, hit a record 588.232 trillion yen ($4.36 trillion), according to data from the Bank of Japan (BOJ) on Monday.

The increase, which follows a revised 1.2% gain in June, reflects growing demand for funds for real estate investment as well as mergers and acquisitions, a BOJ official said in a briefing.

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Firms have also increased lending to cope with rising commodity costs and the reopening of the economy as curbs in the fight against the COVID-19 pandemic are lifted, the official said.

Total loans from major banks and regional banks rose 2.1% in July from a year earlier, following a 1.5% gain in June to mark the largest year-on-year increase since May 2021 , according to the data.

The data is among factors closely watched by the BOJ in deciding whether to end a pandemic relief loan program, aimed at easing the credit crunch among small businesses, as scheduled when it expires in September.

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Reporting by Leika Kihara; Editing by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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