Acquisition of financial assets and external financing in Germany in the first quarter of 2021 Results of the financial accounts by sector
Households’ financial assets reach new record high
Financial assets grew by €192 billion to €7,143 billion in the first quarter of 2021, exceeding the €7 trillion mark for the first time ever. Additionally to increases related to the purchase of financial assets, this growth was driven in particular by valuation gains on shares and investment fund shares.
At €129 billion on balance, household financial asset acquisition was thus markedly stronger than in the previous quarters. Claims on insurance corporations added a robust €27 billion to financial asset acquisition, while Currency and transferable deposits registered lower inflows than in the previous quarter, at €47 billion. Overall, then, households are still displaying a strong preference for liquid investments or forms of investment that are perceived to be low-risk. At the same time, in an indication of their stronger appetite for yield, households added further to their capital market exposure. They purchased investment fund shares worth €25 billion, more than ever before, as well as shares and other equity worth €3 billion, focusing their investment on domestic non-financial corporations. Debt securities, on the other hand, were scaled back by €3 billion on balance. Price gains on shares and investment fund shares were primarily responsible for the valuation-related growth of financial assets.
The transaction-related increase in household debt in the reporting quarter, at just under €17 billion, was smaller than in the previous quarter, leaving households’ liabilities at €1,978 billion at the end of the first quarter. The household debt ratio came to 59.5%, its highest level since 2010. It is defined as total liabilities as a percentage of nominal gross domestic product (four-quarter moving sum). This increase marks a continuation of an upward trend which has been driven of late by rising household debt and the further decline in nominal gross domestic product in annual terms. In total, household net financial assets closed the first quarter at €5,165 billion.
Households’ net financial assets stood at €5,165 billion at the end of the first quarter.
Substantial take-up of external financing by non-financial corporations drives up debt ratio significantly again
At €90 billion, non-financial corporations’ external financing rose to its highest level since 2018, largely on the back of a €54 billion increase in other accounts payable, which mainly comprise trade credits. Borrowing also featured more prominently in the financial accounts after two weak quarters, reaching €20 billion. Shares and other equity were issued to the tune of €15 billion, slightly up on the past four-quarter average.
Brisk external financing activity and considerable valuation effects drove up non-financial corporations’ liabilities significantly to €7,734 billion at the end of the first quarter of 2021. Non-financial corporations’ debt ratio came to 82.2%. It is calculated as the sum of loans, debt securities and pension provisions as a percentage of nominal gross domestic product (four-quarter moving sum). The 0.9 percentage point gain in the reporting quarter was significantly higher than the uptick of just 0.3 percentage point recorded in the fourth quarter of 2020.
Taking into account all transactions and valuation effects, non-financial corporations’ financial assets grew by €262 billion in the first quarter of 2021, their strongest growth since 2015, to €5,565 billion. Transaction-related financial asset acquisition accounted for a substantial €86 billion of this figure. After four quarters of steady decline, non-financial corporations increased their stock in financial derivatives and employee stock options by a significant €22 billion. Other accounts receivable, an item that includes trade credits and advances, were another significant factor, adding a similar amount to financial asset acquisition. Receivables from currency and deposits likewise rose again, and significantly so by €20 billion. Furthermore, there were valuation gains on shares and other equity.
On balance, however, the increase in liabilities caused net financial assets to decrease at a faster pace than in the previous period, leaving them at -€2,169 billion.
Owing to interim data revisions of the financial accounts and national accounts, the figures contained in this press release are not directly comparable with those shown in earlier press releases.