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 quarter of 2005 the difference between the total revenues and total cost was CZK 9,1 billion and the net profit from financial operations was CZK 3,0 billions. The banking monetary institutions made pre-tax net income amounting to CZK 12,1 billion, which translates into an increase of 14,2 % compared to the corresponding period of the previous year. The profit of monetary institutions comprised not only the commissions receivable but also due to the drop of interest rates announced by CNB comprised the mortgage rates, which became very favourable for households, who concluded more mortgage contracts.

During the first quarter of 2005 all 35 banks and building societies employed 36 562 actual persons on average, by 2,7 % less than in the same period of 2004. In terms of f/t equivalent, the average number of employed persons fell by 2,8 %, 36 118 persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 18,5 %) and stood at CZK 46 786. Such a high increase was primarily caused by bonuses etc.

Interests receivable reached CZK 27,1 billion and interests payable reached the amount of CZK 11,6 billion in the first quarter of 2005. Interests receivable increased by 8,5 % year-on-year. Interests payable rose by 9,6 % year-on-year. This growth of interests receivable is caused by big call for mortgages and consumer credits. The interest margin grew from CZK 14,4 to 15,5 billion.

In comparison with 1st quarter of 2004 there was a fell of number of concluded contracts for savings for building purposes and purchases of a house. The fell was 341 226 contracts (total 6 391 544) year-on-year and translates into a fell of 5,1 % compared to the corresponding period of the year 2004. The number of contracts in saving stage accounting for 91,1 % of total number of contracts and stood at 5 823 917, which decreased by 377 857 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 a profit of CZK 5,7 billion which is 30,7 % above the level of the year before. This positive trend was caused especially by suitable market conditions, which reflect in higher interest of consumers in products of non-banking monetary institutions.

Investment companies and investment funds (CZ-NACE, rev.1, code 65.2) continued to grow, by making a profit of CZK 1,8 billion. The growth of pre-tax profit by 1,1 % 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 7,9 % to total amount of CZK 2,5 billion. The total revenues fell by 4,3 % to total amount of CZK 4,2 billion.

Economic performance of these institutions is affected not only by worldwide conditions but is significantly affected by domestic fiscal and monetary policy. Liberalization of monetary and credit policy affects positively consumer consuption or investments on the one hand. On the other hand it can also increase public interest in alternative forms of deposits, which are offered by investments companies and investment funds.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) realized during the reference period a profit of CZK 1,9 billion, by 55,4 % more than year before. The Financial leasing companies reached revenues in total amount of CZK 30,9 billion (interannual fall by 4,7 %). Expenses fell by 7,0 % to final total amount of CZK 29,0 billion.
Received financial leasing instalments contributed to total revenues by amount of CZK 24,8 billion, by 3,6 % less than previous year.