The balance of loans by banks fell 4.7 percent in January from a year earlier, marking the 61st consecutive month of decline, the Bank of Japan said Monday in a preliminary report.

The average daily balance of bank loans came to 418.56 trillion yen. The figure covers city, trust, regional and second-tier regional banks.

Adjusted for special factors -- loan securitization, exchange-rate fluctuations and the allocation of loan-loss reserves -- the loan balance slid 2.3 percent to 429.26 trillion yen in January, down for the 52nd straight month, the BOJ said.

Officials ascribed the loan-balance contraction chiefly to sluggish corporate fund demand amid the ongoing deflation and credit crunch.

The contraction began in 1997, following the collapse of Yamaichi Securities Co. and Hokkaido Takushoku Bank.

On an unadjusted basis, the January loan balance, including the balance of loans by "shinkin" credit banks, fell 4.5 percent to 481.6 trillion yen, down for the 25th consecutive month.

The unadjusted balance at city banks and trust banks fell 7.5 percent to 242.87 trillion yen, and that at regional banks slipped 0.3 percent to 132.25 trillion yen.

The balance at second-tier regional banks was 43.44 trillion yen, down 1.8 percent, and that at shinkin banks fell 2.5 percent to 63.04 trillion yen.

The daily balance of real deposits and certificates of deposit at city banks, regional banks and second-tier regional banks rose 1.2 percent in January to 479.61 trillion yen, the BOJ said.

The outstanding balance of commercial paper at the end of January rose 3.1 percent to 22.75 trillion yen.

The balance of lending at foreign banks operating in Japan fell 14.9 percent to 6.89 trillion yen.