Japan’s bank lending shows Covid-19 cash crunch easing

Japan’s bank lending rose in July at the slowest annual pace in nearly nine years, data showed on Tuesday, a sign companies were emerging steadily from a cash crunch last year caused by the coronavirus pandemic.

But the slowdown in lending also reflected sluggish consumption as households hoarded cash instead of spending, underscoring the fragile nature of Japan’s economic recovery.

Total bank lending rose 1.0 per cent in July from a year earlier, Bank of Japan data showed, slowing from a 1.4 per cent gain in June and marking the lowest year-on-year increase since November 2012.

“Some companies were paying back loans they tapped as a precaution,” a BOJ official told a briefing. “Bank deposits remain at high levels, which shows households are cautious about boosting spending,” he added.

The average balance of bank deposits rose 5.7 per cent in July from a year earlier at 831 trillion yen ($7.53 trillion), far exceeding the 578 trillion yen for that of bank lending, the data showed.