Japan's bank lending surges at record pace in May

Pandemic-struck companies turn to loans to meet funding needs.

Bank lending in Japan surged to a record-pace in May as cash-strapped companies turned to loans to meet immediate funding needs and survive the economic slump brought by the ongoing pandemic crisis, report Reuters.

Total bank lending by Japanese banks and “shinkin” credit unions rose 4.8% in May from a year earlier to $5.13t (JPY562.5t), accelerating from a 2.9% gain in April, the fastest pace of increase since comparable data became available in 2001, data from the Bank of Japan showed.

The data suggests a raft of measures the government and the central bank took to channel money to ailing firms, including requests for financial institutions to boost lending, is working at least for now.

“The data shows a surge in corporate fund demand in response to the coronavirus pandemic,” a BOJ official told reporters, adding that rising credit costs so far haven’t discouraged financial institutions from lending.

Lending by major banks surged a record 6.6% in May, the data showed, as big companies borrowed more as a precaution in case the virus fallout persists, the official said.

Here’s more from Reuters.

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