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 four quarters of 2004 the difference between the total revenues and total cost was CZK 34,1 billion and the net profit from financial operations was CZK 11,0 billions. The banking monetary institutions made pre-tax net income amounting to CZK 45,1 billion, which translates into a increase of 9,1 % compared to the corresponding period of the previous year. Monetary institutions have been particularly earning not even on interests from mortgage and consumer credits, but some banks earned on increasing level of commissions on bank services, i.e. commissions on standard services, on ATM withdrawals, on operations of an account or commissions on transactions via direct banking.

In the period of the 1^st and 4^th quarter of 2004 all 36 banks and building societies employed 37 290 actual persons on average, by 3,1 % less than in the same period of 2003. In terms of f/t equivalent, the average number of employed persons fell by 3,1 %, 36 834 persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 6,9 %) and stood at CZK 38 082.

Interests receivable reached CZK 103,1 billion and interests payable reached the amount of CZK 43,3 billion in the four quarters of 2004. Interests receivable increased by 2,3 % year-on-year. Interests payable fell by 7,9 % year-on-year. This growth of interests receivable is caused by big call for mortgages and consumer credits.The interest margin grew from CZK 53,8 to 59,8 billion.

In comparison with 1^st to 4^th period of 2003 there was a fell of number of concluded contracts for savings for building purposes and purchases of a house. The fell was 359 461 contracts (total 6 456 043) year-on-year and translates into a fell of 5,3 % compared to the corresponding period of the year 2003. The number of contracts in saving stage accounting for 91,4 % of total number of contracts and stood at 5 899 295, which decreased by 372 858 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 referece period of 2004 a profit of CZK 17,8 billion which is 28,9 % above the level of the year before. This positive trend was caused especially by lower cost which interannualy fell by 9,9 % to total amount of CZK 211,2 billion.

Investment companies and investment funds(CZ-NACE, rev.1, code 65.2) continued to grow, by making a profit of CZK 3,7 billion. The growth of pre-tax profit by 62,5 % was caused by the appropriate conditions on the market on one hand, on the other hand it was result of internal factors of companies which reduced their cost by 23,9 % (about CZK 2,3 billion). The total revenues fell by 7,1 % to total amount of CZK 10,9 billion.

Profits of companies on capital market was positively influenced by two factors. First we can predict continuous interest in medium-term and long-term financial products especially in form of moving finance to stock and bond markets. Structure will be much more similar to highly developed “west” economies and its weight on the whole financial intermediation will grow.

Next factor was the domestic and worldwide macroeconomic development whose impact on capital markets was broadly positive.

Financial leasing companies(CZ-NACE, rev.1, code 65.21) realized during the 2004 a profit of CZK 6,2 billion, by 49,2 % more than year before. Even though the growth of revenues was less than those in previous years, the interannual growth of revenues by 1,1 % means that earlier care about significiant decreasing of revenues because of Value-Added Tax law amendment was unfounded. The changes were following: the base rate was cut down from 22 % to 19 % but on the other hand financial services were moved from the lower 5 % rate to the higher 19 % rate. The strong competition on this market didn´t allow to rise the prices for leasing services and so they are still attractive for financing personal and company needs.