TOKYO (Reuters) -Two of Japan’s megabanks, Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc (SMFG), on Friday forecast a drop in credit-related costs this year on expectations the economy will recover as vaccination proceeds. Mizuho is predicting credit-related costs of 100 billion yen ($914.6 million) this year, while SMFG’s sees costs at 300 billion yen. Both figures were smaller than those of the last financial year. Prime Minister Yoshihide Suga promised last week to fast-track the government’s inoculation efforts and said it aimed to administer 1 million shots a day. While Japanese banks have been struggling with low interest rates and a shrinking population, they have seen an increase in lending since last year as companies rushed to borrow due to the COVID-19 pandemic. Bank lending in Japan rose 4.8% in April from a year earlier, according to data compiled by the Bank of Japan. Japanese bank shares have outperformed the 2.3% rise in the benchmark Nikkei index in the year to date, with Mizuho’s shares up 23.7% and SMFG 25.5% higher. “While Japan’s economy is expected to recover gradually as vaccination proceeds, it’s still unclear how COVID-19 would impact specific industries,” SMFG’s chief executive Jun Ohta told an earnings briefing. Japan has not suffered as badly as other countries from the pandemic but its vaccination campaign has been slow. So far only around 3% of the population of about 126 million has received at least one vaccine dose, Reuters data showed. Even though the banks expect smaller credit-related costs in this fiscal year, they need to closely monitor the costs longer term, said S&P Global Ratings senior director Ryoji Yoshizawa. “The repayment ability of some sectors such as aviation and retail is deteriorating... It’s unclear whether they can bear swelling debt in the post COVID-19 era,” he said ($1 = 109.3400 yen) Reporting by Takashi Umekawa; Editing by Muralikumar Anantharaman and Jan Harvey Our Standards: The Thomson Reuters Trust Principles.