Acquisition of financial assets and external financing in Germany in the third quarter of 2014 Results of the financial accounts by sector

In the third quarter of 2014, the financial assets of households rose by €28 billion on the quarter, climbing to €5,011 billion. While the transaction-related acquisition of financial assets amounted to just under €34.5 billion, leaving it roughly unchanged compared to the previous quarter, valuation losses, notably on shares, curtailed growth in assets by around €6.5 billion. With regard to types of investment, the trend towards liquid and lower-risk assets, which has been evident for some time now, continued into the third quarter. As households' liabilities increased comparatively strongly during the quarter under review, their net financial assets rose by a mere €18 billion to €3,430 billion in the reporting period. The financial assets of non-financial corporations recorded a marked increase of €98 billion in the quarter under review and came to €3,577 billion at the end of the third quarter of 2014. At the same time, their liabilities fell by just under €4 billion to €5,167 billion. Consequently, this sector's net financial assets were significantly higher overall on the quarter.

Households continue to invest in liquid and low-risk assets: rise in transferable deposits and claims on insurance corporations

In the third quarter of 2014, the transaction-related acquisition of financial assets by households totalled just under €34.5 billion on balance and was thus roughly on a par with the previous quarter. Approximately half of this amount (€17 billion) was invested in bank deposits (including currency), with almost all of this (€16 billion) flowing into the particularly liquid category of transferable deposits (including currency). While households also invested in time and savings deposits (including savings certificates), particularly deposits with longer terms or notice periods, these inflows were very low at €1 billion. Households' preference for highly liquid forms of investment – a phenomenon which has long been observed in the low-interest-rate environment – thus continued in the quarter under review. Moreover, claims on insurance corporations and pension funds, which were stepped up by just over €13 billion net, were also a significant factor in the acquisition of financial assets by households. The ongoing preference for this form of investment, which is typically regarded as low-risk, indicates – together with the importance of bank deposits in the acquisition of financial assets – that there is a persistently high level of risk aversion among households.

This view is reinforced by households' continued reluctance to invest in the capital markets, with activity here down significantly in the quarter under review. There were yet again net sales of debt securities, marking the third consecutive year of this development, though the volume was higher than average at €7.5 billion. Outflows of funds were seen in particular for debt securities issued by German corporations, but also for general government securities. Amongst other reasons, this is likely to have been driven by the further decline in yields for this form of investment. Against the backdrop of price losses on the stock markets, the direct acquisition of shares and other equity was also significantly down on the quarter at €1 billion on balance. The only purchases made in any significant volume were for investment fund shares, which, at €6.5 billion in net terms, attracted roughly the same volume as in the previous quarter. Inflows were recorded for mixed funds in particular, while equity saw outflows.

The transaction-related rise in financial assets by just under €34.5 billion was diminished by just under €6.5 billion of valuation losses, which were primarily attributable to equities. Overall, households' financial assets thus grew by €28 billion to €5,011 billion at the end of the third quarter of 2014.

Households' external financing in the quarter under review was again markedly higher than in the previous quarter. In total, loans (including other liabilities) of just over €9.5 billion were taken out on balance (compared to €6 billion in the second quarter). Against the backdrop of the continued dynamic growth in the real estate market, these were mainly loans for house purchase. Domestic banks were again the sole lenders. Loans from insurers and other financial intermediaries decreased slightly. Households' total liabilities thus increased to €1,581 billion. In combination with the rise in financial assets during the period under review, this resulted in net financial assets increasing by a comparatively modest €18 billion to €3,430 billion. The debt ratio – defined as total liabilities as a percentage of annualised gross domestic product – shrank by 0.1 percentage point to 54.8% at the end of the quarter.

Non-financial corporations: marked increase in financial assets and moderate rise in liabilities

In the third quarter of 2014, the acquisition of financial assets by non-financial corporations recorded inflows of just over €50 billion, which was well up on the previous quarter. Besides higher inflows to bank deposits (including currency) to the tune of €17.5 billion, this is partially attributable to the comparatively strong rise in shares and other equity (€22 billion). Growth was seen above all in shares in other German corporations, both in the form of shares and other equity. Furthermore, loans, at just over €15.5 billion, expanded at an above-average rate. Borrowers were primarily other non-financial corporations in Germany and abroad. By contrast, growth in the remaining investment forms was rather modest. The closer financial ties within the corporate sector brought about by this behaviour could be one outcome of corporations' efforts to achieve greater independence from providers of capital outside the corporate sector.

The volume and structure of external financing in the quarter under review are consistent with this development. At just under €15.5 billion net, its volume was slightly lower overall than in the previous quarter and also fell short of its long-term average. Positive contributions were made by funds raised via equity (€5 billion), with shares playing the dominant role here. In this context, funds were often provided by other non-financial corporations. Furthermore, €2 billion of debt securities were issued in net terms. By contrast, loans were repaid by just under €14 billion net on aggregate. In this context, non-financial corporations adopted a mixed stance towards the respective lending sectors. While, for example, loans from German banks were scaled back, German non-banks, including non-financial corporations, borrowed on balance. Other liabilities, primarily in the form of trade credits and advances, also saw strong growth, contributing €18 billion on balance to external financing.

Overall, taking valuation changes into account, non-financial corporations' net financial assets thus rose by €102 billion in total and came to -€1,590 billion in the third quarter of 2014. In light of the overall reduction in debt, the debt ratio – defined as the sum of issued debt securities, loans and company pension commitments as a percentage of annualised gross domestic product – fell to 62.3% (second quarter of 2014: 63%).

Owing to data revisions, the figures stated in this press release are not directly comparable with those shown in earlier press releases.