Economic Results of Monetary Institutions

In January to March banking monetary institutions (CZ-NACE 65.12 – banks without CNB, building societies) realized the total revenues amounting to CZK 41,8 billion, including financial revenues amounting to CZK 33,7 billion. The total costs stood at CZK 33,5 billion, including the total financial costs amounting to CZK 12,2 billion.

Unlike the difference between total revenues and total expenses, the financial performance of the monetary banking institutions is higher by the profits made from certain financial transactions (e.g. foreign currency, derivates and securities transactions). Since 2002, the financial performance of these institutions has been measured in terms of their results – i.e. as profits or losses from these financial transactions – and not in terms of revenues and expenses.

In the first quarter of 2004 the difference between the total revenues and total cost was CZK 8,3 billion and the net profit from financial operations was CZK 2,3 billions. The banking monetary institutions made pre-tax net income amounting to CZK 10,6 billion, which translates into a increase of 59,7% compared to the corresponding period of the previous year. This growth was mainly caused by the relative decrease of total costs.

Interests receivable reached CZK 25,0 billion and interests payable reached the amount of CZK 10,6 billion in the first quarter of 2004. Interests receivable decreased by 4% year-on-year. Interests payable fell by 17,8% year-on-year. This decrease is primarily caused by continuing falling of market interest rate. The interest margin grew from CZK 13,1 to 14,4 billion.

In comparison with the first quarter of 2003 there was a growth of number of concluded contracts for savings for building purposes and purchases of a house. The citizens of CR concluded via building societies 6 732 770 contracts in total to the end of March, which translates into an increase of 21,4% compared to the corresponding period of the year 2003. The number of contracts in saving stage accounting for 92,1% of total number of contracts and stood at 6 201 774, which increased by 1 134 900 contracts in comparison with the end of corresponding period of the previous year.

Non-banking monetary institutions (CZ-NACE, rev.1, code 65.2 and 67) made in the 1st quarter of 2004 a profit of CZK 3,9 billion, twice more than year before.

Investment companies and investment funds (CZ-NACE, rev.1, code 65.2) made during the reference period a profit of CZK 0,9 billion. The growth of pre-tax profit by 15 percent was caused by the continuous market consolidation (the number of active companies were reduced by 25 percent).

The consolidation was accompanied by decreasing average registered number of employees (reduced by 40 percent), which also led to reduction in wage cost (interannual reduction by 35 percent). Because of increasing productivity the total revenues didn´t fall so dramatically, even if employment was decreasing.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) realized during the reference period a profit of CZK 1,2 billion, by 10 percent more, than previous year. The Financial leasing companies reached revenues in total amount of CZK 31,3 billion (interannual growth by 4,8 percent). Expenses rose by 4,6 percent to final total amount of CZK 30,1 billion.

It will be very interesting to watch the future evolution of financial leasing companies in connection with the higher value added tax for financial services. We can predict that financial leasing companies won´t raise their leasing payments sharp due to the keen competition.