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 2005 the difference between the total revenues and total cost was CZK 22,3 billion and the net profit from financial operations was CZK 5,9 billions. The banking monetary institutions made pre-tax net income amounting to CZK 28,2 billion, which translates into an increase of 30,0 % compared to the corresponding period of the previous year. The profit of monetary institutions still comprises of the revenues and profits from consumer and mortgage credits and commissions receivable.

During the first half-year of 2005 all 35 banks and building societies employed 36 632 actual persons on average, by 2,3 % less than in the same period of 2004. In terms of f/t equivalent, the average number of employed persons fell by 2,3 %, 36 173 persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 12,9 %) and stood at CZK 43 960. Such a high increase was primarily caused by bonuses etc.

Interests receivable reached CZK 53,8 billion and interests payable reached the amount of CZK 22,3 billion in the first half-year of 2005. Interests receivable increased by 7,5 % year-on-year. Interests payable rose by 6,2 % year-on-year. This growth of interests receivable is caused by big call for mortgages and consumer credits. The interest margin grew from CZK 29,0 to 31,5 billion.

In comparison with 1st half-year of 2004 there was a fell of number of concluded contracts for savings for building purposes and purchases of a house. The fell was 322 674 contracts (total 6 297 266) year-on-year and translates into a fell of 4,9 % compared to the corresponding period of the year 2004. The number of contracts in saving stage accounting for 90,8 % of total number of contracts and stood at 5 720 196, which decreased by 353 064 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 reference period a profit of CZK 12,4 billion, which is 53,5 % above the level of the year before.

Investment companies and investment funds (CZ-NACE, rev.1, code 65.2) realized during the reference period a profit of CZK 4,3 billion. This profit results from moving the interest of population from bank deposits to alternative form of savings on one hand, on the other hand it was the result of macroeconomic conditions. Low interest rates and noninflationary economic growth are contributing to raise the interest in products of investment companies and investment funds.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) realized during the reference period a profit of CZK 3,0 billion, by 1,8 % less than year before. The reason of the falling of the profit can be ascribed to absorption of the costs by financial leasing companies.

Amendment of the Value-Added Tax law has raised the costs of financial leasing services, but because of strong competition on this market there wasn’t much space to raise the prices. Financial leasing companies had to cut down their profits.