Quarterly Bulletin Q3 2013

Financing Developments
in the Irish Economy
Quarterly Bulletin 03 / July 13
47
Chart 14: NFC Debt to Financial Assets and
Liabilities
Chart 15: NFC Net Lending/Net Borrowing on a
Four-Quarter Moving Average Basis
70
%
20
€ billion
60
15
(Net Lender)
50
10
5
40
0
30
-5
20
-10
10
-15
(Net Borrower)
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007 2008 2009 2010 2011 2012
-20
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Debt as a % of financial assets
Debt as a % of liabilities
Acquisition of Financial Assets
Incurrence of Financial Liabilities
Source: Quarterly Financial Accounts, Central Bank of Ireland.
Net Lending/Net Borrowing
Source: Quarterly Financial Accounts, Central Bank of Ireland.
two approaches presented in Chart14. These
two approaches to analysing debt are NFC
debt as a percentage of financial assets and
NFC debt as a percentage of total liabilities.
The former declined by 1.9 per cent over the
quarter, to 47.5 per cent in Q4 2012. The ratio
of NFC debt as a percentage of total liabilities
declined during Q4 2012 by 1.2 per cent,
to 38 per cent. The decline in the reporting
population impacted both financial assets and
liabilities.
Multinational NFC Developments
The trend of foreign investment by Irish-owned
multinational NFCs continued in Q1 2013,
where nearly €10 billion was invested abroad
over the quarter. Direct investment income
earned abroad by Irish-owned multinational
NFCs remained steady at just over €4 billion
during Q1 2013. A significant portion of direct
investment income earned is attributable to
multinational NFCs which have established
their headquarters in Ireland, with the
remaining income related to foreign earnings
of Irish-owned multinational NFCs. Investment
income paid abroad to foreign direct investors
fell by nearly €2 billion during Q1 2013.
Despite a fall in NFC debt levels in Q4 2012,
foreign-owned multinational NFCs continued
to reinvest in their Irish operations. Foreign direct
investment inflows amounting to €16.7 billion
were recorded during Q1 2013, primarily
comprised of equity inflows. The volume of
foreign investment in Irish-based foreignowned
multinational NFCs was €385 billion at
end-March.
The NFC sector was a net lender during Q4
2012, as shown in Chart 15 10 . The chart shows
that NFC net lending amounted to €2.7 billion
over the quarter, which was the lowest level
since Q4 2009. NFCs invested €9 billion in
financial assets over the quarter, which was in
excess of incurred liabilities of €6.3 billion. Both
the investment in assets and the incurrence of
liabilities were at their highest since Q4 2008.
10 The NFC net lending/net borrowing position is measured as a four-quarter moving average, to adjust for seasonality.