TOKYO -- Bad loans at Japan's 115 banks came to a combined 11 trillion yen ($106 billion) at the end of last September, a precipitous drop from a peak of 43 trillion yen in March 2002, according to the country's Financial Services Agency.
In the six-month period to Sept. 30, 2013, the tally fell by as much as 1 trillion yen, suggesting that the pace of bad-debt disposals is quickening. The financial watchdog conducted hearings last September.
Loans to financially sound businesses rose by 9 trillion yen in the April-September half of the current fiscal year, while potential bad loans decreased by more than 3 trillion yen. This means that half the new healthy loans were made to firms whose financial status had recently been upgraded to sound, suggesting that some firms are turning around.
The resurgent property market is also a plus for banks eager to get rid of properties used as loan collateral. Some 425.4 billion yen worth of such assets was disposed of in the first half of fiscal 2013, up 71% from the same period a year earlier.