Acquisition of financial assets and external financing in Germany in the third quarter of 2015 Results of the financial accounts by sector
As at the end of September 2015, households' financial assets amounted to €5,210 billion; this figure was €17 billion (or 0.3%) lower than at the end of the second quarter. Considerable valuation losses, of around €57 billion, on financial assets held were responsible for this decline, which saw households’ financial wealth fall for the first time in four years. A transaction-related acquisition of financial assets to the tune of just under €40 billion, on the other hand, also took place. The trend towards liquid and lower-risk assets observed to date was less strongly pronounced than previously, primarily on account of a significant transaction-related increase in financial assets in the form of shares and other equity. At the same time, households' liabilities, in particular, rose by approximately €14 billion, which meant that their net financial assets fell once again in the third quarter of 2015, to €3,597 billion. At just over €31 billion, or -0.9%, the quarter-on-quarter decline was also steeper than previously. Net financial assets of non-financial corporations recorded a considerable rise of around €163 billion (ie 10%) in the quarter under review thanks, amongst other things, to marked reductions in the valuation of liabilities. At the end of the third quarter of 2015, net financial assets totalled €1,492 billion.
Households: net inflows into bank deposits fall as capital market investment rises
In the third quarter of 2015, the transaction-related acquisition of financial assets by households totalled approximately €40 billion on balance and was thus roughly on a par with the previous quarter. Roughly €9 billion or approximately one-quarter of this amount - and thus markedly less than in the preceding quarter - was invested in bank deposits (including currency). As in the previous quarters, only the particularly liquid category of transferable deposits (including currency) recorded net inflows, while time and savings deposits (including savings certificates) once again saw net outflows, particularly in the long-term segment. Households' preference for highly liquid deposits - an investment pattern which has been observed for some time now given the low-interest-rate environment - thus remained evident in the quarter under review. Claims on insurance corporations and pension funds, which were upped by around €16 billion net, accounted for an unchanged share of the financial assets acquired by households. As these claims as well as bank deposits are regarded as low-risk, the major, albeit slightly reduced overall, role that they continue to play in the acquisition of financial assets suggests that households remain averse to risk. This, however, appears to be less pronounced in the third quarter of 2015 than it had been previously.
This is borne out by a marked expansion of households’ investment in the capital markets. For example, households purchased shares and other equity amounting to just under €12 billion on balance - the highest inflows seen in just over six years. Above all, households primarily invested in domestic non-financial corporations, while their direct acquisition of shares in foreign non-financial corporations was only limited. Similarly, households again invested in mutual fund shares, including equity funds and mixed funds. At just over €5 billion, net inflows were somewhat lower than in the preceding quarter but remained significantly above the long-term average. By contrast, households were once again net sellers of debt securities, as has now been the case for four consecutive years. Net outflows, however, were considerably lower than previously, at €2 billion. Investment in debt securities issued by German corporations even saw positive net transactions to the tune of around €0.5 billion. The significance of securities in terms of the acquisition of financial assets in this sector thus grew considerably overall.
This transaction-related increase in financial assets was offset by considerable valuation losses of around €57 billion on financial assets in the reporting period. In a weak stock market environment, equities and mutual fund shares were worst affected. At -€17 billion, or -0.3%, this ultimately led to the first reduction in households' financial assets seen in four years. As at the end of the third quarter of 2015, financial assets thus totalled €5,210 billion (174% of the annualised gross domestic product).
In the third quarter of 2015, households' external financing was higher than in the previous quarter. Overall, loans (including other liabilities) of just under €15 billion net were taken out, mainly in the form of loans for house purchase. Even the sizeable external financing figure seen in the preceding quarter was thus exceeded. Domestic banks were the primary lenders. Households' total liabilities consequently rose materially by 0.9% to €1,614 billion. In conjunction with the slight decline in financial assets, this caused a €31 billion (or 0.9%) drop in net financial assets in the period under review, bringing them to €3,597 billion. Net financial assets were thus down for the second time in a row. The debt ratio - defined as total liabilities as a percentage of annualised nominal gross domestic product - was practically unchanged at 53.9% at the end of the third quarter of 2015.
Non-financial corporations: strong acquisition of financial assets once again as debt levels fall
During the third quarter of 2015, the transaction-related acquisition of financial assets by non-financial corporations remained strong, at €55 billion. Non-financial corporations primarily upped their investment in bank deposits (including currency) and shares and other equity, which saw net inflows of just over €20 billion and just under €13 billion respectively. Moreover, investments in mutual fund shares grew slightly, at €4 billion. In addition, positive stimuli came from the area of lending; at just under €8 billion, net inflows were considerably higher on the quarter overall. Non-financial corporations in Germany as well as other financial intermediaries were the key borrowing parties here.
At €8.6 billion, external financing in the period under review was comparatively subdued. Funds raised through loans (-0.7 billion) made a negative contribution. Borrowing from domestic MFIs, in particular, was moderate, whereas domestic corporations - including non-financial corporations, in particular - granted loans amounting to just under €5 billion net. Financial derivatives and employee stock options also made a negative contribution, recording a drop of around €1 billion on balance. Market-based securities had the greatest positive influence over lending in the third quarter of 2015. In particular, just under €3 billion worth of listed shares were issued on balance, for example, with much of this funding coming mainly from German households. Although debt securities financing was also positive, at roughly €0.5 billion, it was considerably more subdued than in the preceding quarter.
Overall, taking valuation changes into account, which left a clear mark both on financial assets (-€121 billion) and liabilities (-€238 billion), net financial assets grew by a total of just over €163 billion, or 10% - the steepest rise since 2008. This brought the total for the third quarter of 2015 to -1,492 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 62.9% at the end of the third quarter. On account of the slight decline in debt levels, on the one hand, and the positive annualised GDP growth, on the other, the debt ratio was thus down on the quarter.
Owing to interim data revisions of the financial accounts, the figures stated in this press release are not directly comparable with those shown in earlier press releases.