Bank Loans Decline in Japan

Darlington Musarurwa
12 Apr, 2010
New York City

The bank loans in Japan fall 2.5% in March. Bank of Japan noted that the economic recovery is still fragile but aggregate demand is not sufficient to sustain the economic target.

[R]5:00 AM New York, 7:00 PM Tokyo – The bank loans in Japan fall 2.5% in March. Bank of Japan noted that the economic recovery is still fragile but aggregate demand is not sufficient to sustain the economic target.[/R]

Japanese market averages rose 0.4% buoyed after the euro-zone finance ministers and the IMF agreed to Greece 30 billion euros this year at around 5%, which is well below the market price.

The euro rebounded after Euro zone finance ministers agreed to offer 30 billion euros in an emergency assistance at a rate near 5%, substantially lower than the market rate and the IMF will provide additional 15 billion euros. The details of debt terms are still not clear but the loan is for three years and additional loans may be provided in 2011 and 2012.

Greece has 11.6 billion euros of debt maturing by the end of May.

Exporters also gained as the yen weakened to 127.16 against the euro from 124.90 on Friday.

In Tokyo trading Nikkei 225 Stock Average edged up 0.4% or 47.56 to 11,251.90, and the broader Topix Index advanced 0.5% to 994.78.

In the first section of the Tokyo Stock Exchange 10.6 billion shares worth 673 billion yen were traded and in the second section 319 million shares valued at 3.8 billion yen changed hands.

Of the Nikkei 225 index stocks, 144 rose, 65 fell, and 16 were unchanged. Oki Electric Industries led gainers in the index shares with a rise of 8% followed by Itochu Corp. increasing 4.4%.

Japan Bank Loans Falls 2.5% in March

Japanese Bankers Association announced in a preliminary report released Friday outstanding loans at the country’s 120 banks declined 2.5% to 424.73 trillion yen at the fiscal year ending in March, dropping for the first time in five years, on a marked increase in fiscal 2008.

Lending by city banks dropped 5.4% to 184.93 trillion yen in the period after weak corporate demand for capital investment and operating funds as the financial markets recovered.

In addition, loans by regional banks tumbled 0.3%to 154.99 trillion yen from the comparable year ago period, while loans by secondary regional banks advanced 1% to 43.54 trillion yen.

Monetary Easing to Prop Economy, Minutes

Bank of Japan said in minutes of the monetary meeting of the board held between March 16-17 the forecasted economic contraction might be lower-than-expected as efforts to loosen credit further may contribute to the economic growth.

However, the board noted that although the country’s economy is recovering due to both demand at home and abroad, the recovery is not yet sufficient to support self-sustaining growth.

At the meeting, the BOJ decided by a split vote to offer another 10 trillion yen in three-month cash at a 0.1% fixed rate to financial institutions, in addition to the 10 trillion yen it offered in December.

But board members Miyako Suda and Tadao Noda opposed the move.

The benchmark interest rates were unchanged at 0.1%.

Nikkei Movers

Mitsumi Electric Co Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 3.3% followed by losses in Daiwa Securities Group Inc of 2.2%, in Meidensha Corp of 2.0%, in Softbank Corp 1.8% and in Nitto Boseki Co Ltd 1.7%.

Oki Electric Industry Company, Limited led gainers in the Nikkei 225 Stock Average with a rise of 8.1% followed by gains in ITOCHU Corporation 4.3%, in Dentsu Inc of 4.1% and in Ntt Data Corp 4.0%.

Other Movers

JX Holdings Inc the copper smelter advanced 2.6% to 535.00 yen.

Mizuho Financial Group, Inc advanced 1.6% to 190.00 yen and Mitsubishi UFJ Financial Group, Inc rose 1.5% to 512.00 yen.

Nippon Sheet Glass Company, Limited rose 1.8% to 277.00 yen.

Nintendo Co., Ltd added 3.1% to 31,400.00 yen after the game maker appointed TheAgency, to handle the advertising account for its gaming brands as it seeks to invigorate its titles.