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Japan's bank lending accelerated for the fourth straight month in April as local companies increased exports and quickening inflation forced them to borrow more.

Loans excluding credit associations rose 1.3 percent from a year earlier, after growing 1.2 percent in March, the Bank of Japan said today. Bank lending has climbed for 27 months, peaking in July 2006, when the central bank ended a policy of keeping interest rates near zero.

Regional banks continued to outperform larger rivals such as Mitsubishi UFJ Financial Group Inc., as their credits swelled 3 percent from a year earlier. The regional banks, which lend more of their capital to individuals and small companies compared with their bigger competitors, boosted lending to large companies by offering attractive terms, said Michio Kitahara, associate director-general of the Bank of Japan's surveillance department.

“Regional banks are taking away some of the customers of major banks,'' Kitahara said.

Lending by Japan's 10 so-called city banks, including Tokyo- based Mitsubishi UFJ and Mizuho Financial Group Inc., slipped 0.2 percent, the 13th consecutive month of declines.

Mitsubishi UFJ fell 0.3 percent to 1,063 yen as of 10:24 a.m quick payday loan. in Tokyo trading. The Topix Banks Index dropped 1.5 percent.

Rising Exports

Higher prices for raw materials, coupled with greater difficulty in raising funds through bonds because of the U.S. subprime-mortgage crisis, have made bank borrowing more attractive in Japan.

The country's exports have risen in each of the past seven months, and the central bank said last month it expects prices to rise by 1.1 percent this fiscal year, almost three times faster than it estimated six months earlier.

Mizuho, Sumitomo Mitsui Financial Group Inc. and Shinsei Bank Ltd. have said they missed their earnings targets in the year ended March 31 as Japanese banks booked more than $8 billion in subprime-related losses.

Goldman Sachs Group Inc., which since January had been telling clients Japan was already in a recession, now forecasts the economy will expand at an annual rate of about 2 percent in the first quarter. That would match the average growth over the past five years.

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