Canadian national net worth increased 1% to C$6.5T in Q3; on a per capita basis, national net worth rose to C$189,100 from C$187,900 in Q2
December 13, 2011
National net worth increased 1.0% to $6.5 trillion in the third quarter, a slower pace than in the second quarter (+1.3%). On a per capita basis, national net worth rose to $189,100 in the third quarter, up from $187,900 in the previous quarter.
Non-financial assets held by Canadians increased $88 billion to $6.8 trillion in the third quarter, which led the increase in national net worth. However, this rise was partly offset by the increase in Canada's net foreign debt, which was up $22.6 billion to $237.0 billion. This largely reflected a decline in the value of foreign equities with foreign stock markets weakening by more than their Canadian counterpart. These losses were moderated by the upward foreign currency revaluation effect as a result of the depreciation of the Canadian dollar against major foreign currencies during the third quarter.
Drop in share values reduces household net worth
Household net worth fell by 2.1% in the third quarter, its second quarterly decline. Although residential real-estate assets increased, this was more than offset by the decline in the value of household holdings of equities (including mutual funds) and pension assets. The Standard and Poor's / Toronto Stock Exchange composite index fell over 12% during the quarter. Per capita household net worth declined to $180,100 in the third quarter from $184,700 in the second quarter. This marked the sharpest quarterly reduction in stock prices and per capita household net worth since the fourth quarter of 2008.
Household credit market debt expanded in the third quarter as mortgage debt and consumer credit debt increased to $1 trillion and $448 billion, respectively. Household sector leverage increased as the ratio of credit market debt to net worth rose to 25.2% in the third quarter. The ratio of household credit market debt to personal disposable income increased to 150.8%, as debt levels increased while personal disposable income remained unchanged.
Government net debt up
Overall government net debt (expressed at book value) increased to $795 billion in the third quarter, compared with $772 billion in the second quarter. The ratio of total government net debt to gross domestic product rose slightly from 46.3% in the second quarter to 46.9% in the third quarter.
Provincial bonds were the primary contributor to the increase in total government debt in the third quarter, augmented by higher levels of federal bonds and short-term paper.
Private non-financial corporate debt to equity up
Total private non-financial corporation credit market debt to equity (expressed at book value) edged up to 55.2% in the third quarter from 54.5% in the second quarter. While both debt and equity grew during the quarter, the increase in the ratio reflected bonds and short-term paper rising at a faster rate than equity.
Value of assets held by financial institutions decreases
Assets of lending institutions and institutional investors (such as trusteed pension plans and mutual funds) edged lower in the third quarter. The value of shares held by institutions decreased sharply in the third quarter, mirroring losses witnessed on the Canadian stock exchange. However, this impact was largely offset by the increase in the value of holdings of federal and provincial government bonds.