Investment and financing by sector in the third quarter of 2010 (Results of the financial accounts)
According to the current financial accounts, the financial assets of households in Germany increased again in the third quarter of 2010. At the same time, household debt also increased, albeit only marginally. Enterprises had greater recourse to external financing, which consisted mainly of loans from other enterprises, than in the previous quarter.
Households: increase in both financial assets and debt
Households’ acquisition of financial assets amounted to just over €28 billion in the third quarter of 2010. Bank deposits, securities and claims on insurance corporations were the main areas of growth. Bank deposits (including currency) rose by just over €7½ billion net, thus showing relatively weak growth compared with the preceding quarters. Specifically, as in previous quarters, sight deposits, in particular, proved relatively attractive owing to the low level of interest rates, with net inflows of just over €5 billion. By contrast, there was again only marginal growth in savings deposits. Their increase, at slightly more than €3½ billion net, was the second lowest since the phase of low interest rates began in the fourth quarter of 2008. The low interest rate level is probably also the reason for the further reduction in fixed-term deposits (including savings certificates) which has now persisted for just under two years. With a decline of just over €5 billion net, outflows were nevertheless at their prior-quarter level and therefore, once again, relatively weak. Short-term time deposits were affected most, while long-term deposits (with a maturity of more than two years) recorded minor inflows.
The inflows to securities totalled roughly €6 billion net in the reporting quarter. The main reason for this was higher investment in mutual funds shares, sales of which amounted to €5½ billion on balance. These inflows of funds were spread without an identifiable preference across various types of fund, including open-end real estate funds that had previously recorded noticeable withdrawals on account of uncertainty regarding their liquidity situation. Least important in this context were funds investing solely in shares. In comparison with the previous quarters, direct share purchases, too, were comparatively low at €½ billion. Finally, claims on insurance corporations also showed a perceptible increase, going up by €13 billion net.
Added to the above-mentioned transaction based rise in financial assets, there were capital gains of €15 billion on securities already held. On balance, this led to households holding financial assets amounting to €4,796 billion at the end of the third quarter of 2010.
Household debt increased only marginally during the reporting period, as in the previous quarter. On balance, loans (including other claims) in the amount of just under €5½ billion were taken up. At the end of the quarter, debt to banks and insurers totalled €1,537 billion. This means that its level has remained virtually unchanged for more than ten years – or, more precisely, since the third quarter of 2000, when household debt exceeded the €1,500 billion mark for the first time. As a result, net financial assets rose to €3,259 billion.
Non-financial corporations: strong acquisition of financial assets and increasing external financing
The results for non-financial corporations include, for the first time, creditor-debtor relationships between the respective enterprises (non-consolidated basis). This represents a change from the previous publication practice, in which such relationships were always excluded (consolidated). This change in the analysis is motivated by the sustained increase in the importance of such intrasectoral ties, especially in corporate external financing. As a result, the data are comparable only to a limited extent with the figures published in earlier quarters.
In line with this analysis, producing enterprises’ acquisition of financial assets, at €55 billion, was noticeably stronger than in the previous quarter (+€39 ½ billion). This was due mainly to considerable growth in fixed-term deposits, which increased by €21 billion on balance, as well as a further expansion of loans, principally to other domestic enterprises, totalling more than €17½ billion net.
There was an increase again in external financing of around €36 billion in the third quarter of 2010. This was driven predominantly by growth in loans from non-banks, including mainly loans from other domestic enterprises, which increased by a total of more than €26 billion in net terms. This increase of this type of financing thus again remained at the comparatively high level achieved throughout since the escalation of the financial crisis at the end of 2008. The last time there were similarly high rates of growth over an extended period was at the start of the new millennium after the New Economy bubble had burst. Trade credits, at more than €11 billion, also made a significantly greater contribution to corporate financing than on a multi-year average. Loans from domestic banks showed a further decline, however, and were reduced on balance by just under €10½ billion. By contrast, there was little movement in securities-based financing; debt securities (including money market paper) were reduced in net terms by more than €3½ billion, and equity-based financing, as in the previous quarter, was virtually negligible.