 Bloomberg -- Japanese banks face sharply higher bad loan costs due to the pandemic, but the damage is unlikely to show through in first-quarter earnings reports.The three largest lenders have already forecast credit costs will swell to an 11-year high of 10 billion in the year ending March 2021. Yet analysts predict actual expenses booked in the April-June quarter were relatively low because companies have been tapping credit lines and Bank of Japan loan assistance that will give them room to ride out the storm, at least for now.Corporate borrowers have secured cash and they wont go bust as long as they have it, said Toyoki Sameshima, an analyst at SBI Securities Co.Bloomberg Intelligence analyst Shin Tamura echoed that line, saying credit deterioration at Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. may take time, thanks in part to government support. The Abe administration has unveiled 234 trillion yen 2.2 trillion in virus-related stimulus packages, while the Bank of Japan has introduced business lending programs worth as much as 90 trillion yen.Such aid has helped to keep bankruptcies and joblessness low in Japan, even after a state of emergency caused economic activity to plummet last quarter. But it remains to be seen how long the banks can hold off joining their global peers in making large provisions. Wall Streets biggest lenders set aside 35 billion last quarter alone.We expect bankruptcies to mirror the broader economic trajectory in the long term, and there is a risk of a sharp increase as government relief programs fade, Fitch Ratings Inc. analyst Kaori Nishizawa wrote. That will hurt asset quality, pushing up credit costs through higher loan-loss provisioning, as well as eroding capital buffers, she said.The lenders also face the persistent headwind of rock-bottom interest rates, thanks to central bank monetary easing that has no end in sight. The rate on new loans in Japan tumbled to an unprecedented 0.448 in May, BOJ figures show.Net interest income should continue to decline, with narrowing margins both in Japan and overseas, Tamura said of Sumitomo Mitsui, which is first to report on Wednesday.Mizuho is scheduled to post its results on Friday, followed by MUFG on Aug. 4.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.2020 Bloomberg L.P. 