Acquisition of financial assets and financing in Germany in the first quarter of 2012

Results of the financial accounts by sector

The financial assets of households rose by around €91 billion in the first quarter of 2012 to €4,805 billion at the end of the quarter. This rise is due in considerable measure to price gains in the capital markets; financial asset acquisition itself stood at around €52 billion. At the same time, debt was reduced slightly. Non-financial corporations’ acquisition of financial assets totalled roughly €40 billion, while their external financing rose by just under €23 billion.

Households: strong acquisition of financial assets, declining debt

As in earlier years, households’ acquisition of financial assets, at around €52 billion in the first quarter of 2012, was much stronger than in the previous quarter (€33 billion). Bank deposits and claims on insurance corporations were the main areas of growth. In particular, bank deposits (including cash holdings) once again showed a perceptible increase. They rose by around €21 billion net in the reporting period and thus played a key part in the acquisition of financial assets. In some cases, households even accepted negative real interest rates, preferring liquid deposits. Mainly sight deposits (including currency), which grew by just under €13 billion net, were seen as relatively attractive – as in the preceding quarter. Fixed-term deposits rose by around €4 billion on balance. Savings deposits (including savings certificates) showed similar growth; net inflows likewise amounted to just over €4 billion.

Bonds (including money market paper), by contrast, saw renewed net outflows of just under €3 billion in the reporting quarter. This is probably due, above all, to falling yields on domestic government bonds, the nominal interest rates on which, in some cases, even entered negative territory. Mutual fund shares showed a similar picture; around €2 billion worth of such instruments (mainly pension funds and mixed securities-based funds) were sold on balance. At just under €1 billion, purchases of shares, too, were relatively weak, despite the positive developments in the equity markets. By contrast, claims on insurance corporations, which have been rising steadily over the past few years, increased again by around €17 billion.

This transaction-related increase in financial assets was amplified by valuation effects of around €39 billion. On balance, this led to households holding financial assets amounting to €4,805 billion at the end of the first quarter of 2012.

Household debt fell slightly in the first quarter of 2012; on balance, just under €1 billion worth of loans (including other liabilities) were paid down. Total liabilities thus ran to around €1,549 billion at the end of the quarter, and the debt ratio – defined as total liabilities as a percentage of annualised gross domestic product (GDP) – fell once again, to around 60% at the end of the observation period.

Non-financial corporations: financial assets and external financing clearly on the rise

The acquisition of financial assets by non-financial corporations totalled around €40 billion during the reporting period, perceptibly higher than a quarter earlier (€12 billion). Corporations were shifting part of their financial asset acquisition from bank-based to capital market-based acquisition. For instance, bank deposits (including cash holdings) were reduced by around €9 billion, whereas equity exposures (including mutual fund shares) were expanded by just under €15 billion net. This development is probably due inter alia to the brief period of calm in the financial markets visible in the reporting quarter – not least on the heels of the loosening of monetary policy in the euro area. Trade credits and advances to domestic and foreign enterprises, at over €19 billion, made a major contribution to non-financial corporations’ acquisition of financial assets.

During the reporting period, non-financial corporations’ external financing amounted to around €23 billion, and was thus somewhat stronger on the quarter (€20 billion). The capital market, trade credits and payments on account were the main sources of financing. Bonds (including money market paper) were issued in the amount of just under €4 billion, after having been redeemed for not quite €8 billion net in the preceding quarter. One of the reasons for this rise might be that enterprises’ financing conditions fell perceptibly due to investors’ search for alternatives to government bonds. Bank-based financing, by contrast, tended to be weak despite the favourable interest rate environment, with loans from domestic banks up by only around €2 billion in the reporting quarter, contrasting with €7 billion in bank loans in the previous quarter. Loans from domestic non-banks and from non-residents were once again paid down (by around €1 billion net), whereas trade credits and payments on account, at just under €7 billion, once again made a major contribution to non-financial corporations’ external financing. The debt ratio of non-financial corporations – defined as the sum of issued bonds, loans and company pension commitments over annualised GDP – remained relatively unchanged from the previous quarter, at around 78%.

Owing to data revisions, the results published in this press release are not directly comparable with data in earlier press releases.