At the end of the fourth quarter of 2019, German households’ financial assets amounted to €6,458 billion. Taking into account transactions and valuation effects, this represents an increase of €126 billion, or 2%, from the previous quarter. This rise was due, first, to valuation gains in the amount of €67 billion. Second, households expanded their receivables worth €59 billion, chiefly in the form of currency and deposits. Households also significantly increased their investment fund shares as well as their claims on insurance corporations. Liabilities rose by €15 billion in the fourth quarter of 2019 and thus not as sharply as in the preceding quarter. Overall, net financial assets increased by €111 billion to €4,583 billion. 

Non-financial corporations in Germany made a clear reduction of €12 billion in their external financing in the fourth quarter of 2019. Bank loans were increased by €8 billion, whereas liabilities to non-residents saw a marked reduction by €9 billion. Furthermore, other liabilities, which include advances and trade credits, were reduced by €3 billion. On balance, non-financial corporations issued €3 billion worth of debt securities in the reporting quarter.

Households: lower incurrence of new debt

In the fourth quarter of 2019, the transaction-related acquisition of financial assets by households amounted to around €59 billion in net terms, and was thus almost unchanged compared with the same period of the previous year. Contributing to this figure were, in particular, higher inflows of currency and transferable deposits. At €52 billion, these were clearly up on the figure for the preceding quarter. Once again, households strongly scaled back their investment in savings bonds and savings deposits by €4 billion. Claims on insurance corporations, at €18 billion, also played a part in the increased acquisition of financial assets.

One of the outstanding features of households’ behaviour in the capital market was an increase of €13 billion in net investment in investment funds. While the net inflow to domestic shares remained roughly constant, the inflow to foreign equities amounted to €3 billion in net terms. Households made a marginal reduction of roughly €2 billion in their holdings of debt securities in the fourth quarter of 2019, however. 

Similar to the increase in liabilities, at €16 billion, the transaction-related increase in household debt was lower than in the third quarter of 2019, although it was possible to observe such final-quarter declines in previous years, too. Bank loans, at €19 billion, contributed to positive net new borrowing, while households reduced their liabilities to other financial institutions by €2 billion. 

By the end of the reporting quarter, German households’ total liabilities had risen by 1% to €1,876 billion. The household debt ratio, defined as total liabilities as a percentage of nominal GDP (four-quarter moving sum), thus went up by 0.1 percentage point on the quarter to 54.6%. Overall, the growth in financial assets and liabilities resulted in an increase of €111 billion in households’ net financial assets, bringing the figure to €4,583 billion. 

Non-financial corporations: persistently weak credit financing 

Non-financial corporations’ acquisition of financial assets in the fourth quarter of 2019 was down by €39 billion overall. This sharp decline was due in part to a transaction-related reduction in financial derivatives and employee stock options amounting to €18 billion as well as a €3 billion decline in investment in shares and other equity. By contrast, non-financial corporations increased their currency and deposits by a further €16 billion.

In a setting that was strongly marked by valuation effects, the financial assets of non-financial corporations, at €4,865 billion, were considerably higher than in the previous quarter. Holdings of shares and other equity showed significant growth of €82 billion, thus standing at €2,128 billion. In a favourable capital market environment, claims in the form of investment fund shares rose by €1 billion.

At -€12 billion, the overall external financing of non-financial corporations in the reporting period was significantly lower than in the previous quarter. Credit financing was weak compared with the preceding four quarters, contributing only €3 billion to external financing on balance. While net new borrowing from domestic banks amounted to €8 billion, credit liabilities to central government and non-residents saw a sharp reduction of €9 billion. Developments in external financing are due further to a decline of €3 billion in other liabilities, which include advances and trade credits, as well as negative net inflows to financial derivatives. Non-financial corporations acquired around €8 billion in the capital market. The issuance of debt securities contributed around €3 billion to this figure, while shares and other equity were issued in the amount of just under €5 billion. 

Taking into account transactions and valuation effects, non-financial corporations’ net financial assets shrank markedly by €135 billion and amounted to -€1,886 billion at the end of the reporting quarter. Nevertheless, 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), also fell by 0.5 percentage point to 67.8%, because although external financing decreased, GDP simultaneously rose.