Japanese loan spreads widen as credit standards stay broadly steady
Most Japanese banks reported unchanged loan demand in the Bank of Japan's October 22, 2026 survey. Corporate demand strengthened modestly, while loan spreads widened across borrower ratings.
Property lending leads demand
The Bank of Japan (BoJ) surveyed 50 banks from September 9 to October 13, 2026.
Demand diffusion indices rose to 3 percentage points from -1 for firms and to 5 from 3 for households; local governments fell to -4 from 3. Demand was unchanged at 86, 88 and 94 percent of banks, respectively.
Corporate indices stood at 5 for large firms and 1 each for medium-sized and small firms.
Construction and real estate registered 14, 8 and 7, respectively.
Housing and consumer loan indices both rose to 4 from 1. Banks reporting stronger corporate demand cited increased fixed investment; reduced internal funds ranked highest for small firms.
Next-quarter demand indices were 6 for firms, 1 for local governments and 0 for households.
Wider margins, steady approval standards
Credit-standard indices were 0 for large firms, 2 for medium-sized firms, 3 for small firms and 1 for households; positive readings denote easing.
Loan-spread terms indices were -7 across firm sizes, indicating widening.
By borrower rating, 12 percent of banks widened spreads for highly rated firms and 10 percent for medium- and low-rated firms; none narrowed them.
For the next quarter, 12 percent planned wider spreads in every rating group.
Credit-standard outlook indices were 1 for large firms, 0 for medium-sized and small firms and 2 for households.
Diffusion is not loan growth
The survey measures the breadth of reported changes, not growth in lending volumes.
Its 50 banks account for about 80 percent of outstanding domestic bank and shinkin bank loans.
Demand and credit-standard indices give moderate responses half the weight of substantial changes.
Source: Senior Loan Officer Opinion Survey (Oct.)
IN: