BOJ survey shows stable loan demand, slightly eased credit standards

The Bank of Japan's latest Senior Loan Officer Opinion Survey indicates that overall demand for loans from firms and households remained largely stable in the past three months. Large Japanese banks also reported broadly unchanged credit standards, with a slight tendency towards easing.

Firms' borrowing stable, households mixed

The Bank of Japan's January 2026 survey found that overall demand for loans from firms, local governments, and households remained largely stable.

The Diffusion Index (DI) for firm loan demand was -2 percentage points, local governments -4, and households 0, indicating a broadly neutral to slightly weaker trend.

However, demand from large firms showed a positive DI of 7, with medium-sized firms at 5 and small firms at 6, suggesting some underlying strength.

Construction and real estate sectors, particularly large firms, reported the strongest demand (DI 12).

Banks attributed increased firm loan demand primarily to customers' fixed investment.

For households, demand for housing loans was stable (DI 0), while consumer loan demand saw a slight increase (DI 3), partly driven by a decline in interest rates.

The outlook for the next three months suggests continued stability in loan demand.

Lending policies stable, competitive pressures noted

The survey revealed that credit standards for approving loan applications from firms and households remained largely unchanged.

The Diffusion Index for credit standards showed a slight easing trend across all firm sizes and for households, with DIs ranging from 1 to 3 percentage points.

Banks primarily attributed this subtle easing to "more aggressive competition from other banks" and "strengthened efforts to growth area.

" The terms and conditions of loans to firms, including rate spreads, also largely remained unchanged.

Looking ahead, banks anticipate continued stability in credit standards over the next three months, maintaining a slight easing bias.

Subtle shifts, no major turning point

The BOJ survey reveals a stable but uninspiring lending landscape, mirroring a cautious economic mood.

While some competitive easing of credit standards is noted, it lacks signals of accelerating credit growth or a significant economic shift.

These results offer little immediate policy impetus, likely reinforcing a wait-and-see stance for central bankers.