Households prefer deposits and real estate
National accounts and business cycles
finsek, Financial accounts, financial investments, households and non-profit organisations, general government, abroad, balance sheets, FINSEFinancial accounts , National accounts and business cycles

Financial accountsQ4 2007



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Households prefer deposits and real estate

In 2007, households and non-profit institutions serving households transferred assets from quoted securities and individual pension schemes to bank deposits and property companies. Borrowing remained at a high level.

Households’ acquisition of financial assets increased more than their borrowing in 2007. Furthermore, the households have had a net purchase of unquoted shares in property companies since the second half of 2006. The development can, among other factors, be explained by changing conditions for individual pension savings with tax advantages, which has led to assets being transferred from insurance technical reserves to property investments. Households increased their bank deposits and redeemed mutual fund shares in particular in the fourth quarter. Changes in the portfolio can be explained by an increasing interest rate level and the disturbances in the securities markets.

Household net lending and change in net financial assets over the last four quarters. NOK billion. Net assets as ratio of disposable income.

Net lending for 2007 is estimated to NOK -76 billion compared to NOK -87 billion in 2006. The main picture shows that the development in net lending has levelled out. Net holding gains increased the value of the households’ financial assets by NOK 28 billion in 2007. In total, net financial assets decreased by NOK 48 billion. The households’ financial net wealth constituted NOK 413 billion at the end of 2007.

Local government net lending on the decline

The financial accounts for local government show a decrease in net lending from NOK 3 billion in 2006 to NOK -12 billion in 2007 following a rising trend since 2003. Over the last year there has been an increase in local government borrowing and a decrease in acquisitions of financial assets.

Acquisitions of financial assets fell from NOK 29 billion in 2006 to NOK 2 billion in 2007, while borrowing, except other accounts payable, increased by NOK 5 billion to NOK 17 billion. Local government total debt was estimated to NOK 329 billion at the end of 2007.

Currency exchange rate developments causes holding losses on foreign financial assets

Norway's net foreign assets to the rest of the world were estimated to NOK 1 350 billion in 2007 compared to NOK 1 332 billion at the end of 2006. The modest increase in net foreign assets was to a large extent due to losses on foreign financial assets held by domestic sectors caused by currency exchange rate developments. The increase can be explained by net lending of approximately NOK 371 billion and net holding losses of NOK 353 billion. Net lending in the rest of world was almost on level with net lending in 2006.

Financial accounts for households and non-profit institutions serving households. NOK billion
  4. quarter 2005 1. quarter 2006 2. quarter 2006 3. quarter 2006 4. quarter 2006 1. quarter 2007 2. quarter 2007 3. quarter 2007 4. quarter 2007
Financial assets 2 021 2 090 2 112 2 138 2 234 2 278 2 342 2 360 2 382
Liabillities 1 581 1 614 1 671 1 710 1 773 1 799 1 872 1 920 1 969
Net financial assets/net financial wealth  440  476  441  429  461  479  470  439  413
  Sum over the last four quarters
Change in net financial assets/net financial wealth 69 65 15 -16 21 3 29 11 -48
Other changes 23 54 46 42  108 88  129 92 28
Net lending 46 11 -31 -58 -87 -86 -99 -81 -76

Financial accounts in Statbank

The financial accounts for detailed institutional sectors based on the Finse database are now available in StatBank NOrway. The data are presented in three tables which show the asset relationship between sectors by instrument, financial assets and liabilities by instrument together with net financial assets (net financial wealth) and net lending by sector.

Please note that the compilation methods for quantification of the financial accounts are under development. Several variables in the current financial accounts are thus quantified on the basis of preliminary computations. Two examples of preliminary and incomplete quantified variables are unquoted shares and financial derivatives. Users should be aware of the uncertainty linked to preliminary figures when using data from the released financial accounts.

Data from the Finse database are reported to Eurostat and annual financial accounts for Norway are also available on Eurostat’s website.

Statistical discrepancies between financial and non-financial accounts

The link between non-financial and financial accounts is represented by the balancing item “net lending/net borrowing”. In theory, net lending derived from non-financial accounts should be identical to net lending derived from financial accounts. However, experience shows that there are significant discrepancies between the two parts of the accounting system. Net lending is a marginal balancing item which is calculated on the basis of large aggregates. Even relatively small errors in these aggregates may cause significant discrepancies in net lending. The observed discrepancies are caused by flaws and shortcomings in both sets of accounts. Among other factors this is due to lack of information, which has to be replaced by estimates. Examples of the problem addressed in the financial accounts are unquoted shares and financial derivatives together with households and NPISH claims towards the rest of the world and non-financial corporations.

Deviations between financial accounts and source statistics

Financial accounts are based on a list of different statistical sources and among these are accounting statistics for financial corporations and general government. The financial accounts differ from the accounting statistics due to the incorporation of market values in financial accounts and the compilation process in FINSE, which comprises several reconciliation procedures and consistency checks that may change the source statistics.


Net lending defined in non - financial accounts ( capital account ) =

saving + net capital transfers - net acquisition of non - financial assets

Net lending defined in financial accounts =

net acquisition of financial assets - net incurrence of liabilities

Savings is non-consumed income and can be invested in financial or non-financial assets. If savings exceed non-financial investments, a sector has surplus of funds and becomes a net lender to other sectors. In the financial transaction account, this means that the sector acquire more financial assets than liabilities. On the other hand, if savings are less than non-financial investments, investments have to be funded either by selling financial assets or incurring debts. Household investments in non-financial assets mainly reflect the purchase of new housing and fixed investments by unincorporated enterprises. They typically finance substantial parts of these investments by incurring debt in the form of loans.

Net financial assets ( net financial wealth ) = total financial assets - total liabilities

The financial balance sheet shows the financial position of a sector at the end of the reference period and is broken down into categories of financial assets and liabilities. Insurance technical reserves, currency and deposits are the predominant assets held by households, while loans provided by financial corporations (banks etc) constitute the main proportion of liabilities.

Changes in net financial asset = net lending + other change in assets , net

The change in the financial balance sheet during the reference period is a result of accumulated financial transactions and other changes in assets. The latter category mainly reflects revaluations due to changes in market prices of financial instruments.