Acquisition of financial assets and financing in Germany in the third quarter of 2013 Results of the financial accounts by sector
German households' financial assets increased at the end of the third quarter of 2013 by Euro48 billion, or 1 %, on the second quarter to around Euro5,070 billion. Their transaction-related acquisition of financial assets totalled just under Euro32 billion, which was somewhat more sluggish than in the second quarter of 2013 and thus displayed a similar dynamic to that of the third quarter in previous years. In addition, households recorded holding gains of more than Euro16 billion, which were attributable mainly to rising market values of shares and mutual fund shares. In an unchanged low interest-rate environment, the trend towards more liquid forms of investment already observed in previous quarters continued. Households' net financial assets rose to Euro3,492 billion despite an increase in debt. By contrast, the net financial assets of non-financial corporations were lower than in the second quarter. Although gross financial assets in this sector recorded a sharp rise of Euro120 billion, or 3.6 %, and amounted to Euro3,412 billion at the end of the third quarter of 2013, liabilities increased still more sharply, adding Euro126 billion to total more than Euro4,927 billon at the end of the quarter.
Households: appreciable increase in financial assets and liabilities
In the third quarter of 2013, the acquisition of financial assets was comparable to that in the same quarter in previous years at just less than Euro32 billion. Bank deposits (including cash holdings) were added at a somewhat more modest rate than in previous quarters, at just short of Euro12 billion, but nonetheless made up a significant share of total acquisition of financial assets. Cash holdings and sight deposits expanded by Euro22 billion, whilst fixed-term and savings deposits (including savings certificates) experienced further shrinkage of almost Euro11 billion. This indicates that households continue to have a preference for liquidity, as observed in previous quarters. Claims on insurance corporations added more than Euro12 billion, making them as important as bank deposits, though the increase was somewhat less than the Euro17 billion recorded in the second quarter of 2013.
The acquisition of financial assets in the capital markets was effected primarily via mutual fund shares, of which net acquisitions totalled just under Euro3 billion (+ Euro4 billion in the second quarter of 2013). By contrast, sales of shares and other equity amounted to over Euro3 billion. In particular, direct investments in shares recorded a significant net reduction of more than Euro4 billion (second quarter - Euro0.6 billion), which suggests that households remain risk-averse. Bonds (including money market paper) were also sold on balance, though the reduction, at Euro1 billion, was much smaller than in the previous quarter (almost - Euro6 billion).
In addition to the transaction-related growth in financial assets of Euro32 billion, households also recorded holding gains totalling Euro16 billion, attributable in particular to rising market values of shares and mutual fund shares. As a result, their financial assets rose 1 % on the quarter to Euro5,070 billion.
In an environment of historically low interest rates, households' external financing reached its highest nominal level for ten years in the third quarter of 2013. Just under Euro9 billion in loans (including other liabilities) were taken out in net terms (+ Euro6 billion in the second quarter of 2013), again including, in particular, loans for house purchase. As a result, total household liabilities were up 0.5 % at Euro1,579 billion; setting this off against the increase in gross financial assets means that net financial assets rose by Euro39 billion to Euro3,492 billion. The debt ratio - defined as total liabilities as a percentage of annualised gross domestic product - shrank by 0.1 percentage point to 58.2 % at the end of the quarter.
Non-financial corporations: sharp growth in financial assets and liabilities
Non-financial corporations acquired financial assets of more than Euro111 billion in the third quarter of 2013, a figure which is higher than it has been since the end of 2007. As investment remained low, these corporations used their retained earnings mainly to build up liquid assets. For instance, the acquisition of financial assets in the form of bank deposits (including cash holdings) was particularly prevalent, totalling just under Euro44 billion in net terms. Both sight deposits (including cash holdings) and short-term deposits expanded significantly at just below Euro22 billion in each case. In contrast, other fixed-term and savings deposits (including savings certificates) recorded growth of only around Euro0.5 billion. The acquisition of financial assets in the form of securities was Euro10 billion and thus higher than in the second quarter of 2013 (just under + Euro6 billion). Shares once again accounted for the bulk of this total, with purchases of just less than Euro6 billion as in the previous quarter. Bonds (including money market certificates) and mutual fund shares recorded net inflows of Euro1 billion and Euro2 billion respectively.
Non-financial corporations' external financing in the third quarter was well below its long-term average at a little under Euro3 billion net. Other liabilities, mainly trade credits and payments on account, played a particularly large part in this, accruing by more than Euro17 billion. On the other hand, Euro17 billion in loans was repaid (+ Euro14 billion in the second quarter), principally loans from government and from foreign lenders, and to a lesser extent those furnished by German banks. External financing via the capital market was also much lower than previously. Although equity financing, at just under Euro2 billion, was only slightly less than in the second quarter of 2013, external financing through bonds (including money market paper) contracted for the first time since 2011 at -Euro0.5 billion (compared to expansion exceeding + Euro3 billion in the previous quarter).
Transaction-related changes for non-financial corporations were accompanied by holding gains; these gains were particularly large in the case of shares issued, at Euro114 billion. This means that, despite the modest level of external financing, liabilities rose more sharply than financial assets, and therefore the net financial assets of non-financial corporations fell deeper into negative territory than in the previous quarter, at -Euro1,515 billion. The debt ratio - defined as the sum of issued bonds, loans and company pension commitments over annualised gross domestic product - fell against the previous quarter and stood at 66.1 % (as against 67.0 % in the second quarter).