Acquisition of financial assets and external financing in Germany in the fourth quarter of 2020 Results of the financial accounts by sector
The financial assets of households in Germany came to €6,950 billion at the end of 2020, increasing by €211 billion, or 3.1%, compared with the third quarter. With inflows of €74 billion in the fourth quarter, households again mainly built up cash and deposits, followed by claims on insurance corporations (€21 billion) and investment fund shares (€14 billion). In addition to financial asset acquisition totalling €102 billion in the fourth quarter of 2020, financial assets were also boosted by valuation gains to the tune of roughly €109 billion. Over the same period, German households’ liabilities rose by €24 billion to €1,960 billion. All in all, these developments led to an increase in net financial assets of €187 billion to €4,990 billion.
After seeing exceptionally strong growth in the previous quarter, non-financial corporations’ external financing stood at €45 billion in the final quarter of 2020. As in the third quarter, this largely took the form of shares and other equity as well as other accounts payable. At €65 billion, their financial asset acquisition was lower than in the previous quarter but remained significantly positive. Nevertheless, taking into account valuation effects, non-financial corporations’ net financial assets dropped again and stood at -€2,079 billion.
Households’ financial assets approach €7 trillion mark
In the fourth quarter of 2020, households’ financial assets grew by €211 billion, reaching a new record high of €6,950 billion. Just over half of this growth was attributable to valuation gains totalling €109 billion.
The increase in financial assets was driven, in particular, by a rise in cash and deposits totalling €74 billion and valuation gains on shares and other equity (€61 billion). Investment fund shares likewise contributed to the expansion of financial assets with valuation gains as well as transaction-related growth. Much the same as in the previous quarter, €21 billion worth of claims on insurance corporations were acquired. In the case of debt securities, valuation gains and the instruments’ transaction-related decline cancelled each other out.
Households remained very active on the capital market in the fourth quarter: disinvestment from debt securities was accompanied by purchases of shares and other equity and investment fund shares in the total amount of €21 billion, with investment fund certificates and listed shares from foreign issuers proving particularly popular.
At €25 billion, households’ external financing was only marginally down on the previous quarter. The funds were principally provided by domestic monetary financial institutions in the form of housing loans. All in all, liabilities amounted to €1,960 billion. The debt ratio, defined as total liabilities as a percentage of nominal gross domestic product (four-quarter moving sum), saw another significant increase, rising by 1 percentage point to 58.8%. Net financial assets likewise went up by €187 billion to €4,990 billion.
Debt ratio of non-financial corporations up only slightly in the fourth quarter
At €45 billion, non-financial corporations’ external financing was no longer as high as it had been in the previous quarter. Despite weak quarter-on-quarter growth, issuance of shares and other equity and the expansion of other accounts payable (mainly comprising trade credits) remained significant, at €19 billion and €23 billion respectively. Following weak growth in the third quarter, borrowing recovered in the reporting quarter but remained at a fairly low level.
During the fourth quarter of 2020, the transaction-related acquisition of financial assets by non-financial corporations remained strong at €65 billion. In particular, other accounts receivable, which include trade credits and advances, were topped up by €51 billion. Cash and deposits were also built up by €7 billion, although this growth was considerably weaker than in the previous two quarters. Purchases of shares and other equity were likewise down somewhat on the previous quarter. Non-financial corporations’ financial assets rose to a total of €5,233 billion, climbing by €72 billion.
Nevertheless, taking into account all transactions and valuation effects, non-financial corporations’ net financial assets dropped again, to -€2,079 billion. This decline was slightly higher than the one recorded in the previous quarter. The debt ratio – calculated as the sum of loans, debt securities and pension provisions as a percentage of nominal gross domestic product (four-quarter moving sum) – went up by 0.4 percentage point to 81.4%, representing a slight slowdown in the significant upward trend observed since the start of 2020.
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.