The Bank of Japan’s October survey found business loan demand edged into positive territory among 50 large Japanese banks, while most lenders kept credit standards steady and some widened loan-rate spreads.
The index for business borrowing reached +3 percentage points, up from -1 in the central bank’s July survey. Household demand rose to +5 from +3, while the measure for local governments fell to -4 from +3.
These readings summarize banks’ assessments, not the amount lent. The demand index is a weighted balance of stronger and weaker responses, with moderate changes counted at half weight. Of the banks surveyed, 43 saw no change in business demand during the preceding three months. Five reported a moderate increase, and two reported a moderate decrease.
Credit standards were also broadly steady. For loans to large firms, 46 of 50 banks reported basically unchanged standards. The counts were 48 for medium-sized firms, 48 for small firms and 49 for households.
Some lenders changed their pricing spreads. Six banks widened the difference between loan rates and funding costs for firms in their high-rating category. Five did so for medium-rated firms and five for low-rated firms. No bank reported narrowing a spread in any of those categories. The survey reports changes in spreads, not borrowers’ overall interest rates.
The Bank of Japan surveyed the lenders from Sept. 9 to Oct. 13. Together, they hold about 80% of outstanding loans at the types of banks covered by the survey.
For the next three months, six banks forecast stronger business loan demand, while 44 expect it to hold steady. Six expect wider spreads in each corporate rating category, with 44 expecting no change in each category.
