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Economy

Banks too aggressive in risk-taking, Bank of Japan says

Twice-yearly report warns of harm to future growth from less-profitable lending

The Bank of Japan's report warned excessive lending, while a short-term boon, could prove a drag in the event of a downturn.
The Bank of Japan's report warned that excessive lending, while a short-term boon, could prove a drag in the event of a downturn.   © Reuters

TOKYO -- Lending at Japanese banks is showing hints that it is creeping toward overheating, the central bank implied in a Monday report, as ultralow interest rates push lenders to grow more aggressive with even less-profitable loans in real estate or small businesses.

The October edition of the Bank of Japan's semiannual Financial System Report was upbeat on certain fronts. The nation's financial system "has been maintaining stability on the whole," it said, reusing April's phrasing. Though the report is sometimes referenced in crafting monetary policy, its content "does not press for revising" it, according to a BOJ official.

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