60311 Frankfurt am Main, de
Acquisition of financial assets and external financing in Germany in the second quarter of 2019Frankfurt am Main, )
Non-financial corporations raised €35 billion in external financing in the reporting quarter. Loans were once again the most important instrument in this context, being taken up in the amount of €39 billion net. By contrast, non-financial corporations scaled back their other liabilities, including trade credits and advances, by €16 billion. Overall, the net financial assets of non-financial corporations in Germany fell to -€1,688 billion at the end of the second quarter of 2019.
Households: accumulation of debt gains momentum
In the second quarter of 2019, the transaction-related acquisition of financial assets by households amounted to around €65 billion in net terms, and was thus considerably stronger than in the same period of the previous year. This was largely attributable to the robust €44 billion build-up of currency and transferable deposits and the €15 billion increase in claims on insurance corporations. Households’ savings deposits and savings bonds increased for the second time in a row, after previously decreasing over a period of more than four years. By contrast, fixed-term deposits fell slightly for the first time in six quarters. Overall, there is still a strong observable preference for liquid investments or forms of investment that are perceived to be low-risk.
That said, the ongoing pronounced level of capital market exposure indicates a heightened yield awareness on the part of households from 2014 onwards. The net investment of households in listed shares and investment fund shares amounted to around €10 billion in the second quarter of 2019; roughly half of the new investments in listed shares were in paper issued abroad. The investment fund shares purchased comprised, amongst others, shares in mixed securities funds and real estate funds. In the reporting quarter, households also increased their holdings of debt securities by just under €1 billion.
Over the same period, households once again saw valuation gains on their financial assets. While the capital markets were somewhat less dynamic than in the very strong first quarter, gains totalling just under €19 billion were recorded on equity by the end of the quarter. Overall, households’ financial assets grew by €95 billion to reach €6,237 billion in the reporting quarter.
The transaction-related increase in household debt in the second quarter of 2019 was, at around €24 billion, higher than at any time since 1999. This continued an upward trend that has been ongoing since mid-2013. As in previous quarters, the dominant force in this development was the marked growth in loans for house purchase. By the end of the reporting quarter, German households’ total liabilities had risen to €1,836 billion. As nominal gross domestic product (GDP) grew somewhat less strongly in comparison, the household debt ratio – defined as total liabilities as a percentage of nominal GDP (four-quarter moving sum) – also climbed relatively sharply by 0.4 percentage points to 54.2%. Overall, the growth in financial assets and liabilities resulted in an increase of just under €70 billion in net financial assets at the end of the reporting period, bringing the total to €4,401 billion.
Non-financial corporations: decline in financial assets
For the second time in the last four quarters, non-financial corporations in Germany scaled back their financial assets on balance, following over three years of continuous growth. The purely transaction-related decline was unusually pronounced at €36 billion. This was attributable, in particular, to transaction-related falls in fixed-term deposits of €17 billion and in credit claims of just under €6 billion. Other accounts receivable, which include trade credits and advances, fell even more sharply, by around €27 billion. This contrasted with net purchases of shares and other equity amounting to just under €12 billion, which meant that exposure was considerably higher than in the very weak previous quarter. Holdings of investment fund shares rose moderately by around €2 billion.
Non-financial corporations’ external financing, at around €35 billion, roughly corresponded to the mean value of the last four years. This was due, in particular, to the further expansion of credit liabilities by €39 billion. Just over half of this was provided by foreign creditors. External financing on the capital market was once again positive, on balance. The new issuance of debt securities as well as equity instruments thus exceeded the redemption or repurchase of own securities by €6 billion and €3 billion respectively. By comparison, non-financial corporations scaled back their other liabilities, including trade credits and advances, by just over €16 billion.
The valuation-related increase in financial assets in the reporting quarter amounted to around €6 billion. Overall, non-financial corporations’ total net financial assets had fallen by €169 billion at the end of the second quarter of 2019, reaching -€1,688 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), rose to by 1.1 percentage point over the quarter under review to 67.2%. The observable trend of corporate debt rising more dynamically than GDP, which started in 2017, therefore continued.
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.
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