Acquisition of financial assets and external financing in Germany in the third quarter of 2017 Results of the financial accounts by sector
At the end of the third quarter of 2017, households’ financial assets amounted to €5,779 billion, up by €66 billion, or 1.2%, on the second quarter of 2017. The largest inflows of funds were again recorded for currency and deposits totalling €18 billion, followed by claims on insurance corporations, with an acquisition of €15 billion. Although investment in shares and investment fund shares also increased again significantly, German households’ preference for liquid and low-risk investments persisted. Besides the transaction-based acquisition of financial assets, there was also a rise in financial assets stemming from valuation gains of just under €19 billion. In the third quarter of 2017, liabilities went up by €19 billion, causing an overall increase in net financial assets of €47 billion (1.2%) on the previous quarter to €4,064 billion.
External financing of non-financial corporations amounted to just over €20 billion in the third quarter of 2017; this primarily took the form of loans (just over €18 billion). Security-based financing, which mainly included shares and other equity, was also in positive territory. By contrast, other accounts payable, which include trade credits and advances, were reduced. The net financial assets of non-financial corporations fell by a total of just under €65 billion (3.6%) to minus €1,845 billion.
Households: robust acquisition of financial assets amidst strong external financing
In the third quarter of 2017, transaction-related acquisition of financial assets by households remained at a high level at €47 billion on balance. This was dominated by the build-up of currency and transferable deposits of €23 billion, while time deposits, savings deposits and savings certificates were scaled back slightly. The acquisition of claims on insurance corporations also had an impact with €15 billion. In the low-interest-rate setting, the investment behaviour of households again generally indicates that there is a marked preference for particularly liquid investments and/or investments considered to be low-risk.
Measured in terms of the developments since the financial and economic crisis, capital market exposure on balance was also high in the period under review, as it has been for a number of quarters now. Both listed shares (primarily from abroad) and investment fund shares (€4 billion and €9 billion, respectively) were acquired on a comparatively large scale, as in the preceding quarters. Purchases of investment fund shares predominantly focused on shares in equity funds and mixed securities funds. While an overall preference for liquid and lower-risk types of investment continues to chiefly characterise portfolio behaviour, this more recent development suggests an increased yield awareness since the financial and economic crisis, as these kinds of securities are typically seen to be riskier and are therefore acquired in the expectation of higher yields. By contrast, there were once again capital outflows in debt securities, although these were not extraordinarily high, amounting to €2.4 billion.
Unlike in the preceding quarter, households in Germany recorded valuation gains in the third quarter, which increased the financial assets held on top of the transaction-related rise; taken in isolation, these valuation gains pushed up holdings of financial assets by €19 billion. The primary reason for this lay in the price gains in listed shares and investment fund shares. These developments combined were reflected in growth in financial assets by €66 billion (1.2%) to €5,779 billion.
In terms of external financing, households raised funds in the amount of around €19 billion. This represents the highest value since 2000 and continued the upward trend observable since mid-2013 also in the quarter under review. The funds were principally provided by domestic monetary financial institutions in the form of housing loans. Liabilities therefore rose overall by just under €19 billion (1.1 %), to €1,715 billion. In the period under review, debt and the nominal gross domestic product (GDP) grew at practically the same pace. The debt ratio, defined as total liabilities as a percentage of nominal GDP (four-quarter moving sum), therefore remained virtually unchanged at 53.1% at the end of the quarter. Overall, in combination with the growth in financial assets, this sent net financial assets just over €47 billion (1.2%) higher to €4,064 billion.
Non-financial corporations: acquisition of financial assets and external financing up
The transaction-related acquisition of financial assets of non-financial corporations amounted to €50 billion on balance in the third quarter of 2017, following a weaker preceding quarter. Besides the inflows to other accounts receivable, which include trade credits and advances, the enterprises included in this sector invested mainly in shares and other equity, with just under €17 billion. To a lesser extent, funds also flowed into currency and deposits (€3 billion) and credit claims held primarily vis-à-vis non-residents (€2 billion). Conversely, non-financial corporations slightly reduced their stocks of debt securities (minus €1 billion).
In the period under review, external financing by non-financial corporations amounted to roughly €20 billion and recorded significant inflows following the preceding muted quarter. Positive contributions were made by loan-based financing, at just over €18 billion. These funds were provided in large part by domestic monetary financial institutions and by non-resident investors. Inflows of funds from issuing shares and other equity were also higher than in the previous quarter, amounting to roughly €5 billion on balance. The corresponding funding was provided, above all, by domestic corporations. Debt securities also made a slightly positive contribution to funding. By contrast, non-financial corporations scaled back their other accounts payable, including trade credits and advances, by just over €8 billion.
Alongside the transaction-related inflows in financial assets and liabilities, there were also valuation changes, which increased financial assets by €40 billion and liabilities by €135 billion. Net financial assets thus fell by a total of about €65 billion in the third quarter, reaching minus €1,845 billion. The debt ratio, defined as the sum of issued debt securities, loans and pension provisions as a percentage of nominal GDP (four-quarter moving sum), rose to 62.5% by the end of the period under review because debt grew more strongly than nominal GDP.
Owing to interim data revisions of the financial accounts and national accounts, the figures stated in this press release are not directly comparable with those shown in earlier press releases.