Economic Results of Monetary Institutions

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 half-year of 2004 the difference between the total revenues and total cost was CZK 17,2 billion and the net profit from financial operations was CZK 4,5 billions. The banking monetary institutions made pre-tax net income amounting to CZK 21,7 billion, which translates into a increase of 14,4% compared to the corresponding period of the previous year. Monetary institutions have been particularly earning on services charges and interests from mortgage and consumer credits. Also the drop of income tax rate of corporate bodies (from 31 to 28%) lead to higher net profits of banks.

In the first half-year 2004 all 35 banks and building societies employed 37 493 actual persons on average, by 3,7% less than in the same period of 2003. In terms of f/t equivalent, the average number of employed persons fell by 3,8%, 37 044 persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 7,2%) and stood at CZK 38 963.

Interests receivable reached CZK 50,0 billion and interests payable reached the amount of CZK 21,0 billion in the first and second quarter of 2004. Interests receivable decreased by 1,8% year-on-year. Interests payable fell by 14,8% year-on-year. This decrease is primarily caused by continuing drop of market interest rate. The interest margin grew from CZK 26,3 to 29,0 billion.

In comparison with the first half-year of 2003 there was a growth of number of concluded contracts for savings for building purposes and purchases of a house. The growth was 883 794 contracts (total 6 619 940) year-on-year and translates into an increase of 15,4% compared to the corresponding period of the year 2003. The number of contracts in saving stage accounting for 91,7% of total number of contracts and stood at 6 073 260, which increased by 838 050 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 half-year of 2004 a profit of CZK 8,6 billion, almost 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 2,6 billion. The growth of pre-tax profit by 41,0 % was caused by the continuous market consolidation when the number of active companies were reduced by 27,5 %.

The consolidation was accompanied by decreasing average registered number of employees in actual persons (reduced by 35,7 %), which also led to reduction in wage cost (interannual reduction by more than 30,2 %). The importance of investment companies and investment funds has been rising because of low interest rates. These low interest rates have reduced the yield of the term deposits which made people to switch from term deposits to alternative forms of evaluating their deposits.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) realized during the reference period a profit of CZK 2,9 billion, by 40,1 % more than previous year. The Financial leasing companies reached revenues in total amount of CZK 64,6 billion (interannual growth by 3,8 %). Expenses rose by 2,5 % to final total amount of CZK 61,7 billion.
Received financial leasing instalments contributed to total revenues by amount of CZK 52,8 billion, by 5,9 % more than previous year.