Japan Bank lending

Bank lending growth in Japan virtually the highest since the bubble days

Published monthly by Bank of Japan.  Updated to the month of June 2017 (published on July 10th, 2017).

Recent data trend:

The bank lending growth remained elevated in June. Bank lending by all bank types rose by 3.3% year on year (YoY), virtually the highest growth since the statistics become available in 2001. By bank category, the growth seems to be particularly robust among major banks, as we see the growth accelerating from 0.5% YoY in August 2016 to 3.1% YoY in June 2017.  

On the other hand, lending by regional banks does not seem to be accelerating much any more. Between August 2016 to June 2017, the growth rate did rise, but only from 3.3% to 3.6%.

We need to look into more details to understand these divergence between major banks and regional banks. One hypothesis could be the divergence between households and companies. Bank lending to companies have been growing rapidly, with its growth rate accelerating from 2.0% YoY in August 2016 to 3.7% YoY in May 2017, the latest month for which statistics on bank lending by borrowers is available. On the other hand, bank lending to households are growing with less intensity. During the same period, the bank lending growth to household barely changed from 3.1% YoY in August 2016 to 3.2% YoY in May 2017.    

As regional banks are more exposed to households, they were perhaps less positioned to benefit from the acceleration in corporate credit demands. As major banks also lends in non-yen, the depreciation in yen may also have boosted the size of bank lending measured in yen. The Japanese yen was trading at 103 yen per US Dollar in June 2016, while the average was 112 yen per USD in June 2017.

Brief overview of "Bank Lending"

In Japan, bank loans are still the dominant form of credit provision. At the end of 2012, loans outstanding made by private financial institutions totaled 698.9 trillion yen while corporate bonds including CPs totaled mere 93.4 trillion yen. “Bank lending” statistics, released by the Bank of Japan, surveys major banks, regional banks and Shinkin banks and together covers about 2/3 of the total private loans made in Japan. Financial institutions not covered by this statistics include agricultural corporatives, credit unions and foreign banks. Bank lending statistics also includes surveys of deposits. At the end of 2012, total deposits surpassed the total lending by 173 trillion yen and the financial market tends to view this gap as a measure for the demands for JGBs by banks.

For more information, visit the official government page

Bank lending growth YoY%

Bank lending by Borrowers

Note: In this chart, "Bank lending" refers to simple addition of "Domestically Licensed Banks" and "Shinkin Banks" as defined by the BoJ. For more details, please see our brief overview below.  

Brief overview of "Bank lending by Borrowers"

The original data for "Bank lending by borrowers" statistics is published by the Bank of Japan as "Deposits, Vault Cash, and Loans and Bills Discounted". The dataset is released with 4-6 weeks lag. The data are compiled at the end of the month basis. For more details please see the BoJ statistics page here.

Source: BoJ, JMA

The Next Release Date: August 8th, 2017.

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