Japanese banks reported a small net increase in corporate loan demand in the Bank of Japan’s October survey, while the central bank said its September rate change was expected to leave financing conditions accommodative.
The corporate loan-demand diffusion index rose to +3 percentage points from -1 in the previous survey, the BOJ said. Among respondents, 86% reported no change in corporate demand over the preceding three months; 10% reported moderate strengthening and 4% moderate weakening.
The index compares weighted shares of banks reporting stronger and weaker demand, with moderate responses counting for half as much as substantial ones. The survey also put household loan demand at +5, up from +3, and local-government demand at -4, down from +3.
The BOJ surveyed 50 large banks from Sept. 9 to Oct. 13. Their combined loans account for about 80% of loans outstanding at domestically licensed banks and shinkin banks. The survey asks lenders how demand changed over the prior three months, excluding normal seasonal variations; it records banks’ assessments, not the volume of loans issued.
The BOJ’s September policy decision came during the survey period. On Sept. 18, the Policy Board voted 7-2 to guide the uncollateralized overnight call rate to around 1.25%, effective Sept. 24.
In its policy statement, the BOJ said it expected financial conditions to remain accommodative after the change. It noted that real interest rates remained low as demand for funds increased. The central bank also described lenders as proactive and conditions for commercial-paper and corporate-bond issuance as favorable.
The BOJ said further policy adjustments would respond to developments in economic activity, prices and financial conditions. The statement did not set a date for its next policy decision.
