Acquisition of financial assets and financing in Germany in the third quarter of 2012 (Results of the financial accounts by sector)

The financial assets of households rose by €64 billion, or 1.3%, on the previous quarter to €4,871 billion by the end of the third quarter. The trend towards more liquid investments continued in an environment of low interest rates. At €33 billion, around one-half of the increase was due to price gains in the capital markets. Non-financial corporations’ acquisition of financial assets, at more than €99 billion, showed a considerably larger increase than in the previous quarters, which meant that, despite a €56 billion rise in external financing, net acquisition of financial assets stood at €43 billion.

Households: reduced acquisition of financial assets offset by price gains, slight rise in debt

Households’ acquisition of financial assets in the third quarter of 2012, at just under €31 billion, was – as in earlier years – significantly lower than in the preceding quarter. Once again, there were inflows, especially into bank deposits and claims on insurers. Asset acquisition through bank deposits (including cash holdings), at just under €20 billion, accounted for a major part of households’ net acquisition of financial assets. Despite negative real interest rates, this was due solely to inflows of funds into sight deposits (including cash holdings), which amounted around €28 billion net. By contrast, households showed restraint in the case of fixed-term and savings deposits (including savings certificates). There were total outflows of just over €8 billion from this investment segment. The preference for liquidity already discernible in the second quarter persisted in the reporting period, which is likely to be a result of the interest rate environment remaining at a historic low as well as general uncertainty in connection with the debt crisis in Europe.

The capital markets presented a similar picture. In the reporting period, there were net sales of bonds (including money market paper) for the fifth quarter running, amounting to almost €5 billion, which was nearly twice as much as in the preceding quarter. There were also net sales of investment fund shares in the amount of €1 billion. Although it was mostly open-end real estate funds that were purchased on balance, these purchases were more than offset by sales of other types of funds, such as money market funds and mixed funds. Shares (including other equities) were purchased to a lesser extent (€0.3 billion net). Claims on insurance corporations, which have risen steadily over the past few years, also increased by around €9 billion in the third quarter of 2012, albeit less strongly than in the previous quarter (€12.5 billion).

These transaction-related changes in financial assets, which were equivalent to a net increase of just under €31 billion, were accompanied by valuation gains in the capital markets of €33 billion. The main beneficiaries of these gains were holders of shares, the prices of which made a strong recovery in the reporting period.

Financial assets thus saw an overall increase of 1.3% on the quarter to €4,871 billion at the end of the third quarter of 2012.

Household debt – as in the previous quarter – went up only slightly; on balance, loans (including other liabilities) worth just over €6 billion were taken up, mainly for house purchase. Total liabilities therefore amounted to €1,562 billion at the end of the quarter and households’ net financial assets climbed to €3,309 billion. The debt ratio – defined as total liabilities as a percentage of annualised GDP – remained constant at 59.3%.

Non-financial corporations: acquisition of financial assets and external financing up considerably

Non-financial corporations’ acquisition of financial assets amounted to €99 billion in the third quarter, increasing considerably on the previous period (€13 billion). Bank deposits (including cash holdings) went up by €13.5 billion net, which was a significantly larger increase than in the second quarter
(€2 billion). The preference for liquidity is highlighted by the €19 billion increase in sight deposits (including cash holdings) among non-financial corporations. Capital-market-based acquisition of financial assets, too, increased markedly compared with one quarter earlier, when sales of securities amounted to €7 billion net, with purchases of securities worth just over €4 billion now being made. This development is likely to be connected to price recoveries on the stock markets. In addition, there were inflows of funds amounting to €11.5 billion in the case of trade credits and advances.

External financing, at around €56 billion, was considerably higher than one quarter earlier (€33 billion). Borrowing was mainly effected through loans (€28 billion net), which were provided by domestic and foreign non-banks (just under €35.5 billion). Loans of domestic banks in the amount of just under €7.5 billion were redeemed, however. Moreover, funds totalling €16 billion were obtained by means of trade credit and payments on account. Once again, capital-market-based financing was of lesser importance: Although the issuance of bonds (including money market paper) did, in fact, show an increase on the quarter to around €7 billion, equity financing was again down by €5 billion net. The debt ratio of non-financial corporations – defined as the sum of issued bonds, loans and company pension commitments over annualised GDP – was 1.3% up on the quarter and stood at 71.7% at the end of the third quarter.