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Acquisition of financial assets and external financing in Germany in the first quarter of 2019

Acquisition of financial assets and external financing in Germany in the first quarter of 2019 Results of the financial accounts by sector

15.07.2019 | Deutsche Bundesbank DE

At the end of the first quarter of 2019, the financial assets of households in Germany stood at €6,170 billion. Compared with the fourth quarter of 2018, this represents an increase of just over €153 billion, or 2.6%. The main reason for this was the extremely strong transaction-based increase in financial assets of just under €87 billion. Households chiefly expanded their holdings of currency and deposits as well as their claims on insurance corporations. This meant that their preference for investments perceived to be liquid and/or low-risk persisted. This transaction-related growth was complemented by valuation gains in the first quarter of 2019. As liabilities grew only by around €17 billion in the same period, net financial assets also saw a significant increase of just over €136 billion overall to €4,360 billion.

Non-financial corporations’ external financing climbed to just over €49 billion in the first quarter of 2019. This was due, in particular, to loan-based financing in the amount of roughly €15 billion aBus well as the accumulation of other liabilities, including trade credits and advances, to the tune of around €18 billion. The net financial assets of non-financial corporations fell to ‑€1,551 billion.

Households: strong acquisition of financial assets

In the first quarter of 2019, the acquisition of financial assets by households remained very high, at €87 billion on balance, with currency and transferable deposits growing by €35 billion and claims on insurance corporations rising by just under €20 billion. In addition, households’ claims in the form of savings deposits and savings bonds increased for the first time in more than four years. Thus, this sector’s pronounced preference for forms of investment perceived to be liquid and/or low-risk is still in place.

Unlike in the preceding quarter, the trend towards greater capital market exposure observed among households since 2014 continued in the reporting quarter. Inflows to listed shares and investment fund shares in the first quarter of 2019, amounting to just under €10 billion, were significantly higher than just a quarter earlier. A large portion of the inflows to listed shares was accounted for by domestic securities, at just over €4 billion. The investment fund shares purchased comprised, amongst others, shares in mixed securities funds and real estate funds. Additionally, holdings of debt securities were topped up again, with inflows of €0.5 billion. Developments in capital market exposure therefore continue to indicate a heightened yield awareness from 2014 onwards.

Alongside the transaction-related increase in households’ financial assets, there were also valuation gains which primarily materialised in connection with the recovery of prices for investment fund shares and listed shares. Overall, households’ financial assets grew by just over €153 billion to €6,170 billion in the reporting quarter.

At a little over €16 billion in the first quarter of 2019, external financing of households in Germany was again fairly robust. This continued an upward trend that has been ongoing since mid-2013. As in the preceding quarters, household borrowing particularly consisted of housing loans from domestic monetary financial institutions. Overall, liabilities rose by around €17 billion, reaching €1,809 billion at the end of the first quarter. As debt grew somewhat more strongly than nominal gross domestic product (GDP) in the reporting quarter, the debt ratio – defined as total liabilities as a percentage of nominal GDP (four-quarter moving sum) – climbed slightly to 53.1%. Overall, the growth in financial assets and liabilities resulted in an increase of just over €136 billion in net financial assets at the end of the reporting period, bringing the total to €4,360 billion.

Non-financial corporations: larger inflows in acquisition of financial assets and external financing

Compared with the preceding quarter, non-financial corporations acquired more financial assets in the first quarter of 2019 (€31 billion). Credit claims – especially on non-resident borrowers – rose by €11 billion on balance. Investment fund shares and other accounts receivable, which include trade credits and advances, also saw an increase. By contrast, non-financial corporations reduced their holdings of currency and deposits by €15 billion.

Non-financial corporations’ external financing increased significantly on the preceding quarter, rising to around €49 billion. A positive contribution was made by loan-based financing, at just over €15 billion. These borrowed funds were chiefly provided by domestic monetary financial institutions. Debt securities (€6 billion) and shares and other equity (€4 billion) made a positive contribution to funding as well. Non-financial corporations also increased their other liabilities, including trade credits and advances, by just under €18 billion.

Taking valuation effects into account, non-financial corporations’ total net financial assets fell by €37 billion at the end of the first quarter of 2019, reaching -€1,551 billion. The debt ratio, defined as the sum of issued debt securities, loans and pension provisions as a percentage of nominal GDP (four-quarter moving sum), rose to 65.4% over the quarter under review, as debt saw stronger growth than nominal GDP.

Owing to interim data revisions of the financial accounts and national accounts, the figures stated in this press release are not directly comparable with those shown in earlier press releases.

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