Acquisition of financial assets and external financing in Germany in the second quarter of 2015 Results of the financial accounts by sector
As at end-June 2015, the financial assets of households amounted to €5,224 billion, after rising only very moderately in the second quarter, by just over €5 billion, or 0.1%. This increase in assets was based exclusively on the transaction-related acquisition of financial assets of just over €41 billion. This was partly offset by significant valuation losses, of just under €36 billion, on financial assets. In terms of types of investment, the ongoing trend towards liquid and low-risk assets continued into the quarter under review. At the same time, households' liabilities rose by approximately €11 billion, which meant that their net financial assets fell slightly, for the first time since 2011, by around €6 billion, or 0.2%, to total €3,625 billion in the second quarter of 2015. Net financial assets of non-financial corporations recorded a marked rise of around €111 billion (ie 6.3%) in the quarter under review thanks, amongst other things, to a perceptible reduction of the valuation of liabilities. At the end of the second quarter of 2015, net financial assets totalled -€1,656 billion.
Households: financial assets acquired primarily via liquid and low-risk investments, with capital market exposure remaining weak
In the second quarter of 2015, the transaction-related acquisition of financial assets by households was just over of €41 billion on balance and was thus – as is usual in the second quarter – around 20% down on the quarter. Just over two-thirds of this amount (roughly €28 billion) was invested in bank deposits (including currency), with all of it flowing into the particularly liquid category of transferable deposits (including currency) on balance, as in the previous quarter. By contrast, fixed-term and savings deposits (including savings certificates) again saw net outflows, particularly in the long-term segment. Households' preference for highly liquid forms of investment thus remained very pronounced in the quarter under review – an investment pattern which has characterised the environment of low nominal interest rates for some time now. Claims on insurance corporations and pension funds, which were upped by around €17 billion net, were a similar factor in the acquisition of financial assets by households. The large role that these claims and transferable deposits, which are regarded as low risk, play in the acquisition of financial assets suggests that households remain highly averse to risk.
This is borne out by their continued reticence when it comes to investing in the capital markets. Although yields on public bonds rose noticeably over the period under review, households were once again net sellers of debt securities – as has now been the case for almost four years in a row. There were marked outflows again, of €5 billion. Exposure to debt securities issued by domestic credit institutions and foreign issuers, but also to German government debt, was worst affected. By contrast, there were – unlike in the preceding quarter – net purchases of shares and other equity of around €3 billion. Similarly, households again invested in mutual fund shares, including mixed and open-end real estate funds. However, net inflows were, at around €5 billion, significantly smaller than in the preceding quarter. As compared to other forms of investment, securities' significance in terms of the acquisition of financial assets in this sector thus remained small.
This transaction-related increase in financial assets was partly offset by considerable valuation losses of around €36 billion on financial assets in the reporting period. In a generally weak stock market environment, mutual fund shares and equities were worst affected. Overall, this resulted in the smallest increase in households' financial assets (+€5 billion, or 0.1%) since the early nineties. As at the end of the second quarter of 2015, financial assets thus totalled €5,224 billion (176% of the annualised gross domestic product).
In the second quarter of 2015, households' external financing was markedly higher than in the previous quarter. Overall, loans (including other liabilities) to the tune of €12 billion net were taken out, mainly in the form of loans for house purchase. This is the highest figure recorded since the year 2000. Domestic banks were the primary lenders. Households' total liabilities consequently rose noticeably by 0.7% to €1,599 billion. In conjunction with the muted expansion in financial assets, this shaved €6 billion, or 0.2%, off net financial assets in the period under review, bringing them to €3,625 billion. Net financial assets therefore dropped for the first time since 2011. The debt ratio – defined as total liabilities as a percentage of annualised nominal gross domestic product – shrank by 0.1 percentage point to 53.9% at the end of the second quarter of 2015.
Non-financial corporations: strong acquisition of financial assets accompanied by declining, but still high, external financing
During the second quarter of 2015, the transaction-related acquisition of financial assets by non-financial corporations was comparatively high, at €83 billion. Non-financial corporations primarily upped their investment in bank deposits (including currency) and shares and other equity, which saw net inflows of just under €6 billion and just under €10 billion respectively. Mutual fund shares, too, were bought again, though buying was, at €3 billion, lower than previously. In addition, positive stimuli came from the area of lending, though inflows were weak overall at just under €1 billion. Borrowers were primarily foreign non-financial corporations. By contrast, there was a fairly large reduction in loans to domestic corporations.
At €36 billion, external financing in the period under review was considerably down on the previous quarter. Funds raised through loans (€20 billion), which were primarily granted by foreign non-financial corporations, made a positive contribution, while borrowing from domestic MFIs was, at €6 billion, significantly more muted than in the preceding quarter. Trade credits also played a significant role in this development, with just under €22 billion taken up on balance. In terms of market-based funding, debt securities in particular made a positive contribution in the quarter under review. Net issuance slightly exceeded €5 billion, with much of the necessary funding again coming from abroad as well as from domestic corporations. Financing via shares was slightly up on the quarter, at approximately €2 billion, but remained fairly muted overall. By contrast, there was a net reduction of just over €17 billion in financial derivatives and employee stock options, which thus made a significantly negative financing contribution.
These transaction-related increases in financial assets and liabilities were partly offset by valuation losses, which left a clear mark both in financial assets (-€125 billion) and liabilities (-€189 billion). Taking into account these strong valuation effects, net financial assets rose by a total of just under €111 billion, or 6%. This brings the total for the second quarter of 2015 to -€1,656 billion. The debt ratio – defined as the sum of issued debt securities, loans and pension provisions as a percentage of annualised nominal gross domestic product – stood at 63.5% at the end of the second quarter. As the increase in debt levels during the reporting period was similar to the annualised growth in the gross domestic product, the debt ratio remained unchanged on the quarter.
Owing to interim data revisions of financial accounts, the figures stated in this press release are not directly comparable with those shown in earlier press releases.