TOKYO -- Japanese companies are depositing cash at banks instead of spending on equipment and raising pay, with their bank account balances growing at the fastest pace in history.
Corporate deposits at domestic banks had surged to 201 trillion yen ($1.65 trillion) at the end of October, up more than 8 trillion yen from the start of 2015, Bank of Japan figures show. The rise eclipsed the 7 trillion yen gain over the first 10 months of 2013 to mark the largest since tracking of comparable data began in 1998.
A big factor was higher revenues at exporters thanks to the weak yen. Fiscal 2014 operating profits came in 6 trillion yen above those in fiscal 2007, the year of highest profits before the Lehman shock, according to the Ministry of Finance.
Meanwhile, wages and capital spending decreased. This allowed internal reserves, which can be set aside for bank deposits, to grow by 13 trillion yen. Many listed companies, such as Panasonic and Toyota Motor, are increasing deposits by hundreds of billions of yen in a year.
"For the economy to get back to a positive cycle, companies must use their profits to increase capital spending and wages," said Junichi Makino, chief economist at SMBC Nikko Securities. BOJ Gov. Haruhiko Kuroda has also appealed to business to take the initiative in raising wages and capital spending.