Acquisition of financial assets and external financing in Germany in the third quarter of 2018 Results of the financial accounts by sector
16.01.2019 | Deutsche Bundesbank DE
At the end of the third quarter of 2018, the financial assets of households in Germany stood at €6,053 billion. Compared with the second quarter of 2018, this represents an increase of €76 billion or 1.3%. First and foremost, currency and deposits were boosted by €31 billion. Claims on insurance corporations likewise recorded a marked increase, growing by €17 billion. Although investment in shares and investment fund shares remained strong, German households continued to exhibit a preference for liquid investments and investments perceived as low risk. This transaction-related growth was complemented by valuation gains in the third quarter of 2018. Net financial assets rose by a total of €56 billion because liabilities simultaneously grew by around €21 billion.
External financing of non-financial corporations amounted to roughly €21 billion in the third quarter of 2018; this primarily took the form of loans. By contrast, over the same period, financing based on shares and other equity was negative on balance. Net financial assets went up to -€1,737 billion.
Households: financial assets exceed the 6 trillion mark for the first time
In the third quarter of 2018, transaction-related acquisition of financial assets by households remained at a high level at €48 billion on balance, with currency and transferable deposits growing by €33 billion and claims on insurance corporations rising by €17 billion. This is indicative of a continuing preference for liquid investments and forms of investment that are perceived to be low risk. By contrast, claims stemming from savings deposits and savings certificates were reduced once again.
Compared with the years directly following the outbreak of the financial and economic crisis, capital market exposure remained high in net terms – a trend that has been observed since 2014. Above all, inflows to shares and other equity, amounting to €7 billion, were of notable size in the third quarter of 2018; a large proportion of this (€3 billion) was accounted for by foreign listed shares. Investment fund shares were also augmented, although – at a volume of just under €5 billion – somewhat less so than in previous quarters. The purchased investment fund shares comprised, amongst others, shares in mixed securities funds and real estate funds. Moreover, there were net purchases of debt securities for the second quarter in a row, after these holdings had been whittled down for the past seven years. At €1.7 billion, inflows in this area were even more substantial in quarter-on-quarter terms. In comparison with bank deposits or claims on insurance corporations, securities are generally considered to be riskier and, as a result, are acquired with the expectation of higher yields. Despite households’ ongoing preference for liquid investments and those perceived as being low-risk, this development in capital market exposure suggests an increased yield awareness since 2014.
Alongside transaction-related growth, households’ financial assets saw valuation gains linked to effects arising from the prices of investment fund shares and listed shares, primarily with regard to any deriving from abroad, amongst other factors. Altogether, this led to a rise in financial assets of just over €76 billion to €6,053 billion in the reporting quarter.
At just over €20 billion in the third quarter, external financing of households in Germany was again very robust. This continued an upward trend that has been ongoing since mid-2013. Borrowed funds consisted primarily of housing loans from domestic monetary financial institutions. Overall, liabilities rose by just under €21 billion, or 1.2%, reaching €1,776 billion at the end of the third quarter. As debt grew somewhat more strongly than nominal gross domestic product (GDP) in the reporting quarter, the debt ratio – defined as total liabilities as a percentage of nominal GDP (four-quarter moving sum) – climbed slightly at the end of the quarter to 52.8%. The trajectory of financial assets and liabilities pushed net financial assets up by just under €56 billion on balance to stand at €4,227 billion at the end of the reporting quarter.
Non-financial corporations: weaker acquisition of financial assets and external financing
In the third quarter of 2018, the transaction-related acquisition of financial assets by non-financial corporations (€28 billion) was weaker than in the previous quarter. At a figure of €24 billion, the acquisition of shares and other equity was the largest contributor to this. On top of this, currency and deposits were bolstered considerably by just under €15 billion, while claims arising from debt securities were built up to a moderate extent. Conversely, other accounts receivable, which include trade credits and advances, were reduced by a notable margin. In addition to this, credit claims – chiefly against domestic corporations – were scaled back to a limited extent.
In the period under review, external financing of non-financial corporations amounted to roughly €21 billion and thus recorded somewhat more modest inflows following the strong preceding quarter, with a positive contribution being made by loan-based financing, at just over €27 billion. These borrowed funds were provided by domestic monetary financial institutions and by non-residents. Debt securities made a slightly positive contribution to funding as well. For the first time since 2012, financing based on shares and other equity was negative ( €1 billion), with the bulk of equity being offloaded by non-residents. In addition, non-financial corporations scaled back their other accounts payable, including trade credits and advances, by just over €11 billion.
Taking valuation effects into account, non-financial corporations’ total net financial assets rose by €36 billion in the third quarter, reaching
-€1,737 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), remained virtually unchanged at 63.7% over the quarter under review because debt grew at around the same rate as 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.