Financial accounts, Q2 2009

Households’ net lending was NOK -11 billion in the last four quarter period, which is NOK 10 billion higher than in the period up to the first quarter of 2009. Holding losses amounted to NOK 86 billion, and combined with negative net lending this contributed to a reduction in net financial assets of NOK 97 billion in the last four quarter period. Households’ net financial assets amounted to NOK 282 billion at the end of the second quarter of 2009.

Households consolidated their financial position

Borrowing declined significantly in the last quarter compared with the same quarter in 2008, while the fall in financial investments levelled out. Households’ activities in securities markets have recovered over the last two quarters, after several years with downward sales of quoted securities. The acquisition of quoted shares and mutual fund shares in particular has increased. The development in the financial accounts is consistent with the movement in the non-financial accounts in the first quarter of 2009, where households increased their savings, while the fixed capital formation declined. The total picture indicates that many households are consolidating their financial position also in the second quarter of 2009.

Banks in net borrowing position to Norges Bank

Normally the commercial and savings banks are in a net assets position to the Central Bank. Due to the financial turmoil, the Central Bank has supplied the banking system with liquid means beyond standard, inter alia by lending (F-loans) and foreign currency deposits. At the end of the second quarter of 2009, domestic banks were in a net borrowing position to the Central Bank. Assets amounted to NOK 106 billion, while liabilities amounted to NOK 108 billion.

Central government’s net financial asset at a record high level

Central government’s net lending in the four quarter period up to the second quarter of 2009 is calculated to NOK 373 billion, which is down NOK 81 billion from the period up to the first quarter of 2009. The development is explained by falling investments in the Government Pension Fund - Global due to lower revenues from oil and gas activities at the end of the last four quarter period. The quoted development in securities markets has resulted in huge holding gains in central government. Capital gains contributed to NOK 286 billion and central government’s net financial assets increased to a record high level of NOK 3 437 billion at the end of the second quarter of 2009.

Local government reduced its deficit

The local government’s net lending over the last four quarter period was NOK -25 billion, compared with NOK -27 billion in the period to the first quarter of 2009. This development reflects, among other factors, growth in municipalities’ deposits. The development is explained by the fiscal package of measures which were passed by parliament in February this year and which has supplied municipalities with extra financial resources. The local government has in the last four quarter period borrowed NOK 41 billion, which is about NOK 1 billion more than in the previous period.

Net financial assets abroad are increasing

Norway’s net foreign assets were calculated to NOK 1 760 billion at the end of the second quarter of 2009. This is up by NOK 324 billion from the end of the first quarter of 2009, when net foreign assets were calculated at NOK 1 436 billion. In the last quarter, Norway’s net lending abroad was NOK 95 billion, at the same time as Norway achieved net holding gains towards the rest of the world of NOK 230 billion. Huge holding gains are explained by a rise in exchange rates in global securities markets.