Japan’s Banks Will Benefit From Economic Stimulus

February 3, 2014 Share Print 0

Japan’s biggest banks, flush with cash from a year-long stock market rally, are poised to benefit this year from a spurt in loan growth at home fuelled by the economic stimulus measures of Prime Minister Shinzo Abe.

Mitsubishi UFJ Financial Group Inc (8306.T), Mizuho Financial Group Inc (8411.T) and Mitsui Sumitomo Financial Group Inc (8316.T) all booked increased lending in the latest quarter, in a business that contracted before “Abenomics” kicked in at the beginning of 2013.

Domestic loans at major Japanese banks grew 2 percent in December for the quickest annual pace since 2009 and surpassed 200 trillion yen for first time in over three years, central bank data show.

Lending is likely to pick up as around a quarter of Japanese companies, according to a Reuters poll conducted last month, plan to increase capital expenditure in the financial year beginning in April.

In further positive signs, the central bank’s index of business sentiment reached its highest in six years in the latest quarter, and spending on machinery hit a five-year high.

Lending growth so far has been driven by funding for large-scale acquisitions. MUFG is part-financing drinks maker Suntory Holdings Ltd’s SUNTH.UL $13.6 billion purchase of U.S. whiskey maker Beam Inc.

via Reuters

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.