Negative rates failed to boost Japan bank lending in March
(MENAFN - Asia Times) Bank of Japan spire in Tokyo
Loans excluding trusts rose 2 percent from a year earlier slowing from 2.2 percent in February the Bank of Japan said Tuesday. Deposits increased 3 percent easing from 3.1 percent in February. The figures are the first for a full month after the BOJ began charging lenders 0.1 percent interest on some of their reserves on Feb. 16.
The policy has put pressure on lenders' profitability because they are being forced to lower interest rates on loans more than those on deposits. Bank shares are the worst performers on the benchmark Topix index this year amid speculation that the central bank will cut rates further to stem an 11 percent gain in the yen against the dollar which threatens to undermine an economic recovery.
'Putting aside deciding whether the policy is a failure after just one month we were quite skeptical as to whether negative rates would boost loan demand'' said Takashi Miura a Tokyo-based analyst at Credit Suisse Group AG. 'Home lending will come back if rates settle and demand grows but we'll need to see an increase in corporate loans to get back to the 2.5 percent levels we've seen lately'' he said referring to overall loan growth. Read more