Economic and financial developments in the euro area by institutional sector: second quarter 2022

October 28, 2022

  • Since October 2022, the quarterly financial accounts published by the European Central Bank provide a more detailed breakdown of other financial institutions (OFIs)
  • Euro area net saving fell to €733 billion over four quarters to the second quarter of 2022, from €790 billion a quarter earlier
  • The household debt-to-income ratio fell to 95.3% in the second quarter of 2022 from 95.9% a year earlier
  • The debt-to-GDP ratio of non-financial corporations (consolidated measure) fell to 77.3% in the second quarter of 2022, from 79.8% a year earlier

Financial accounts of other financial institutions by subsector

Since October 2022, the quarterly financial accounts published by the European Central Bank provide a more detailed breakdown of other financial institutions (OIF), which, after monetary financial institutions (MFIs – ​​ie banks and money market funds), constitutes the second largest financial sector in the euro area. The new breakdown distinguishes other financial intermediaries, financial auxiliaries, captive financial institutions and lenders. For more details, see: Other Financial Institutions Explained.

Total euro area economy

Euro area net savings fell to €733 billion (7.2% of euro area net disposable income) in the four quarters to Q2 2022, from €790 billion a quarter earlier. Euro area net non-financial investment fell to €556 billion (5.4% of net disposable income), due to lower investment by non-financial corporations that do not was only partially offset by an increase in household investment, while net investment by financial corporations and general government remained broadly unchanged (see Chart 2).

The euro area’s net lending capacity to the rest of the world fell to €207 billion (vs. €250 billion in the previous quarter), as net savings fell more than non-financial investment . Household financing capacity fell to 370 billion euros (3.6% of net disposable income, after 4.8%). The financing capacity of non-financial corporations fell to 120 billion euros (1.2% of net disposable income, after 1.8%), while that of financial corporations remained broadly unchanged at 91 billion euros ( 0.9% of net disposable income). The fall in the financing capacity of the private sector as a whole was partially offset by a fall in the general government borrowing requirement (-3.6% of net disposable income, after -5.0%).

Figure 2. Euro area savings, investment and financing capacity to the rest of the world

(billions of euros, amounts over four quarters)

Sources: ECB and Eurostat.

* Net saving minus net capital transfers to the rest of the world (equals change in net worth due to transactions).

Households

Household financial investment increased at an annual growth rate of 2.7% in the second quarter of 2022, compared to 3.0% in the previous quarter. This deceleration is mainly due to the decline in the growth rates of investments in cash and deposits (3.8%, after 4.2%) and in shares and other equity (2.3%, after 2.8%), while life insurance and pensions grew at a broadly unchanged pace. (1.8%) (see Table 1 below).

Households are overall net buyers of listed shares. By issuing sector, they were net buyers of listed shares issued by the resident and rest of the world sectors (ie shares issued by non-residents of the euro zone). In net terms, households continued to sell debt securities issued by MFIs, other financial institutions and the rest of the world, while buying debt securities issued by general government, insurance companies and non-financial corporations (see table 2.2. in the appendix) .

The household debt-to-income ratio[1] fell from 95.9% in the second quarter of 2021 to 95.3% in the second quarter of 2022. The ratio of household debt to GDP fell from 60.9% in the second quarter of 2021 to 58.7% in the second quarter of 2022 (see graph 3).

Table 1. Financial investments and household financing, main items

(annual growth rates)

Financial operations

2021 Q2

2021 Q3

2021 Q4

2022 Q1

2022 Q2

Financial investment*

4.2

3.9

3.4

3.0

2.7

Currency and deposits

6.7

6.2

5.0

4.2

3.8

Debt securities

-9.2

-10.0

-8.4

-6.8

-0.5

Shares and other equity

3.3

3.5

3.8

2.8

2.3

Life insurance and pension plans

2.2

2.2

2.1

1.9

1.8

Funding**

3.5

3.7

4.0

4.6

5.4

Loans

4.0

4.0

4.1

4.2

4.4

Source: ECB.

* Items not shown include: loans granted, advances on insurance premiums and provisions for claims payable and other receivables.

** Items not presented include: net financial derivative liabilities, pension plans and other accounts payable.

Data on financial investments and household financing (Table 1)

Chart 3. Debt ratio of households and non-financial corporations

Source: ECB and Eurostat.

* Outstanding loans, debt securities, trade credits and pension plan liabilities.
** Outstanding loans and debt securities, excluding debt positions between non-financial corporations.
*** Outstanding debt-related liabilities.

Non-financial corporations

In the second quarter of 2022, annual growth in financing of non-financial corporations increased to 3.2%, from 3.0% in the previous quarter, reflecting an acceleration in debt and trade credit financing, while the issuance of debt securities debt has slowed down (see table 2 below).

The acceleration in loan funding was due to higher growth rates in loans from MFIs and the rest of the world, which more than offset a deceleration in loans from other financial institutions, insurance companies and pension funds , general government and through inter-company loans (see table 3.2 in the appendix).

The debt ratio of non-financial corporations to GDP (consolidated measure) decreased to 77.3% in the second quarter of 2022, from 79.8% in the second quarter of 2021; the broader measure of unconsolidated debt fell to 139.9% from 142.5% (see Chart 3).

Table 2. Financing and financial investments of non-financial corporations, main items (annual growth rates)

Financial operations

2021 Q2

2021 Q3

2021 Q4

2022 Q1

2022 Q2

Funding*

2.3

2.3

3.0

3.0

3.2

Debt securities

2.3

2.0

5.6

5.8

4.9

Loans

2.8

3.6

4.4

4.6

5.3

Shares and other equity

1.6

1.1

1.1

1.1

1.1

Trade credits and advances

4.7

6.7

10.9

11.0

11.7

Financial investment**

4.2

4.2

4.9

4.8

4.7

Currency and deposits

8.1

7.0

9.6

8.8

8.2

Debt securities

2.6

-0.2

-5.2

-1.4

4.2

Loans

5.8

6.9

7.2

7.3

6.6

Shares and other equity

1.9

1.3

1.7

2.0

2.3

Source: ECB.

* Items not presented include: pension plans, other accounts payable, liabilities net of financial derivatives and deposits.

** Items not presented include: other accounts receivable and advance payments on insurance premiums and provisions for claims payable.

For any questions, please use the Request for statistical information form.

Remarks

  • These data come from a second release of the quarterly euro area sector accounts from the European Central Bank (ECB) and Eurostat, the statistical office of the European Union. This release incorporates revisions and supplemented data for all sectors compared to the first quarterly publication on “euro area households and non-financial corporations” of 5 October 2022.
  • Debt-to-GDP (or debt-to-income) ratios are calculated as the stock of debt in the reference quarter divided by the sum of GDP (or income) for the four quarters up to the reference quarter. The ratio of non-financial transactions (eg, savings) as a percentage of income or GDP is calculated as the sum of the four quarters relative to the reference quarter for the numerator and denominator.
  • The annual growth rate of non-financial transactions and the stock of assets and liabilities (stocks) is calculated as the percentage change between the value of a given quarter and that recorded four quarters earlier. The annual growth rates used for financial transactions refer to the total value of transactions during the year compared to the outstanding amount of the previous year.
  • Hyperlinks in the main body of the statistical release lead to data that may change with subsequent releases as a result of revisions. The figures presented in the tables in the appendix are a snapshot of the data at the time of current publication.

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