Amid volatile capital markets and a slowing economy, Austrian private investors continued to save at a high level while reducing new borrowing. In the first half of 2009, households invested EUR 8.7 billion (which equals a per capita average of slightly more than EUR 1,000) in financial assets, in particular in short-term investment instruments. Holders of securities benefited from rising share prices in the first half of 2009, which translated into an additional EUR 2.8 billion increase in the value of households’ financial assets. As at the end of June 2009, Austrian household’ financial assets totaled some EUR 430 billion or, on average, EUR 52,300 per capita. The distribution of this wealth across households, however, is very unequal. Households did not take out new loans, on balance, in the first six months of 2009. Outstanding household debt stood at some EUR 145 billion as at mid-2009, with 40% of households having outstanding (housing and/or consumer) loans.
“Austrians’ financial behavior has been following two very distinctive patterns,” Andreas Ittner, Member of the Governing Board of the Oesterreichische Nationalbank (OeNB), said at a press conference held on Tuesday, October 27, 2009, in Vienna on the occasion of the upcoming World Savings Day. “Holding savings in cash and overnight deposits was the main characteristic of Austrians’ liquidity-driven investment behavior immediately after the financial crisis had peaked. In addition, however, private investors returned to investing in long-term instruments, such as shares, when share prices were very low,” Ittner said. At the same time, new borrowing declined on the back of households’ subdued loan demand and banks’ generally higher risk awareness. As a result, since the third quarter of 2008, annual growth in new lending has been significantly below the average of the previous five years.
Presenting more detailed data, Aurel Schubert, Director of the OeNB’s Statistics Department, underlined that “the savings book successfully defended its long established leading position among Austrians’ favorite investment vehicles, accounting for 36%.” Schubert continued by pointing out the following key statistics for the first half of 2009:
EUR 7.1 billion or some 80% of households’ total financial investment in the first half of 2009 (EUR 8.7 billion) was made in cash and overnight deposits at domestic banks. Private investors also switched between different maturity classes, transferring EUR 25.1 billion or almost 70% of their total financial investment into cash or deposit holdings since the outbreak of the financial crisis.
The acquisition of quoted shares has been countercyclical since the financial crisis escalated. Both in the fourth quarter of 2008 and in the first quarter of 2009, as share prices were falling, Austrian investors bought shares on balance (EUR 0.8 billion), while their buying interest faded as share prices started to pick up in the second quarter of 2009. Since the onset of the financial crisis in mid-2007, Austrian private investors purchased shares worth EUR 1.3 billion in total, which corresponds to 4% of total financial investment.
Austrian households’ financial assets totaled EUR 429.5 billion as at mid-2009, up 2.6% against end-2008. Some 40% of these assets had a maturity or residual maturity of less than one year and included, next to cash and term deposits, money market instruments, money market fund shares and debt securities with a residual maturity of less than one year.
On balance, households did not take out new loans in the first half of 2009. While housing loans increased at a very moderate pace, there were net redemptions of both consumer and other loans.
Total household loans outstanding amounted to EUR 143.1 billion as at end-June 2009, down by 0.9% against end-2008. At EUR 93.9 billion, housing loans outstanding accounted for a share of some 65%. Loans worth EUR 43.4 billion were bullet loans, some 70% of which were linked to repayment vehicles.
OeNB Governing Board Member Ittner concluded that “the financial crisis had raised Austrian households’ risk awareness in managing their finances. Moreover, Austrians’ sustained high propensity to save continues to contribute to financial stability, supporting, in particular, the refinancing of Austrian banks in such difficult times.”
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