Stock market boom, rising Interest charges, high savings rate: private financial assets in Germany has grown over the past year, according to a study. DZ Bank announced on Tuesday that it had increased overall by a good 6 percent to 7.9 trillion euros. In 2022, private financial assets had shrunk by almost five percent.
“Share price gains ensured an increase in value of around 200 billion euros in 2023,” reports analyst Michael Stappel from DZ Bank. The German stock index DAX alone rose by around 20 percent last year. At the end of the year, stocks and investment funds made up a good 23 percent of households’ financial assets with more than 1.8 trillion euros.
“A continued high savings rate also ensured that financial assets grew,” says the study. At 11.2 percent, the value is still above the pre-Corona average, which is “due to a persistently uncertain environment”. The interest rates, which rose sharply and exceptionally quickly, also provided an incentive to save. However, due to strong inflation, these would still have been in negative territory in real terms.
Real income growth likely
“The prospects for investments remain good overall in 2024,” say the DZ Bank analysts, looking ahead. “This is mainly due to the fact that it is expected to continue to decline inflation rate.” With wages rising at the same time, private households could expect real increases in their income. This in turn stimulates consumption and contributes to the gradual economic recovery in Germany.
The upturn in other parts of the world is likely to support price developments on the stock markets. In addition, time deposits, savings certificates and bonds could further benefit from the reduction in savings parked in current accounts. “As a result, households’ interest income is growing and positive real returns can increasingly be achieved with fixed-interest investments,” says the study. As uncertainty subsides and the inflation rate continues to fall, the savings rate should also fall slightly. “All in all, wealth creation is likely to slow down in 2024,” it concluded. The financial assets of private households in Germany will therefore increase by a good four percent in 2024.
54.6 billion euros – more dividends than in the previous year
High profit distributions will also ensure growing financial assets. According to calculations by Dekabank, shareholders of German corporations can expect a record amount of dividends for the 2023 financial year. The 40 companies in the German stock index will therefore pay out a total of 54.6 billion euros. This would exceed the previous year’s value in the Dax by 1.6 billion euros.
The companies have managed to keep their profits at a high level despite the sluggish economy and stressful geopolitical trouble spots, Deka capital market expert Joachim Schallmayer summarized the current figures in a statement on Tuesday.
Car manufacturers ensure high dividends
According to the current status, 26 of the 40 companies in the DAX are likely to increase their payout per share for the past financial year compared to the previous year. An unchanged dividend is expected for eleven DAX companies; according to the Dekabank compilation, there will probably be less money for shareholders than a year before Bavarian, BMW and Fresenius give. In total, the three major car manufacturers alone, BMW, Mercedes and VW account for around a quarter of the total dividends of all DAX companies.
For the current financial year, Dekabank expects a further increase in dividends in the DAX to 58.5 billion euros. “Thanks to their international orientation, companies will be able to decouple themselves from the challenging domestic prospects in 2024 and benefit from the global growth outlook and increase profits again,” predicted Schallmayer.
According to calculations, the 50 companies listed in the MDax will pay a total of around 7.1 billion euros in dividends for 2023, a good seven percent more than for the previous financial year. An increase in distributions is expected for 22 companies, the dividend per share should remain unchanged for 20, and the remaining 8 MDax companies are likely to make cuts.