Economic Results of Financial Intermediation

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 of 2006 the difference between the total revenues and total cost was CZK 21,2 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 27 billion.

During the first half of 2006 all 36 banks and building societies employed 36 113 actual persons on average, by 1,4 % less than in the same period of 2005. In terms of f/t equivalent, the average number of employed persons fell by 1,5 %, 35 647 persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 7,7 %) and stood at CZK 47 284.

Interests receivable reached CZK 58,3 billion and interests payable reached the amount of CZK 24,1 billion in the first half of 2006. Interests receivable increased by 8,4 % year-on-year. Interests payable rose by 8 % year-on-year. This growth of interests receivable is caused by big call for mortgages and consumer credits. The interest margin grew by 8,6 % (from CZK 31,5 to 34,2 billion).

In comparison with the end of first half of 2005 there was a drop of number of concluded contracts for savings for building purposes and purchases of a house. The fell was 297 900 contracts (total 5 999 366) year-on-year and translates into a fell of 4,7 % compared to the corresponding period of the year 2005. The number of contracts in saving stage accounting for 90,1 % of total number of contracts stood at 5 407 538, which means the decrease by 312 658 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 first half-year a profit of CZK 7,6 billion, which means reduction by 39,8 % in comparison with the same period of the last year. The growth half-year period of 2005 changed in slump in current year. Increase in total costs in this period is by 6,5 % higher than increase in revenues. Pre-tax profit from financial operations fell biannually even by 61,4 %. In sector of non-banking monetary institutions came about the considerable decrease in number of active companies (by 124 units).

Investment companies and investment funds (CZ-NACE, rev.1, code 65.2) realized during the reference period a loss of CZK -0,4 billion. The revenues decreased by 22,1 % in comparison with the last year, while the costs increased by 35,1 %. On this situation widely participates the second quarter. So in this sector there was an essential fall in number of companies – from 21 units in the half-year of 2005, to 13 units in 2006.

Domestic capital market after years of growth brings the disappointment to investors. It achieved a drain of money from bonds and money market funds partially in favour of more risky share funds. But recently, as it turned out, the growth of shares, which yielded a profit for more than two years, ended for now.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) realized during the reference period a profit of CZK 2,5 billion, by 21,6 % less than year before. The slump there is not so considerable as with the investment companies and it can be said, that the sector is still going relatively strong, as indicates the data from Czech Leasing and Financial Association (CLFA).

In January to June insurance companies (CZ-NACE 66.01 and 66.03) made pre-tax profits amounting to CZK 6,4 billion, which translates into a decrease of 4,8 % compared to the corresponding period of the previous year.

In the first half of 2006 gross premiums written stood at CZK 62,1 billion, accounting for 45,4 % of total revenues and rising by 2 % year-on-year. Insurance claims paid amounted to CZK 29,7 billion, making up 22,8 % of total expenses of the insurance companies. Costs of these insurance claims increased by 10,6% year-on-year. Over the period of January to the end of June, total technical provisions for life insurance increased by CZK 6,3 billion to CZK 169,1 billion.

In the period from the beginning of 2006 till the end of June all of the 45 insurance companies employed a total of 14 338 employees (actual persons) on average, i.e., by 1,1 % less than in the corresponding period of 2005. In terms of full-time equivalent (fte) persons, the average registered number of employees was 14 161; the employment thus decreased by 1,4 %. The average monthly wage (related to the fte persons) was 37 493 CZK, increasing by 15,7 % in comparison to the same period of 2005.

During a first half of 2006 there were concluded 2 839 479 non-life insurance contracts, by 20,7% more than in the same period of the previous year. The number of life insurance contracts concluded during the observed period of 2006 is 387 576, which translates into a decrease of 15,3%.

In the first half of 2006 pension funds (CZ-NACE 66.02) made their profits amounting to CZK 1,7 billion (an drop of 24,4 % year-on-year). Total expenses of 11 active pension funds during the period from January to the end of June reached CZK 2,6 billion, rising by 53,7 % year-on-year. Total revenues increased by 9,2 % year-on-year to CZK 4,3 billion. Financial expenses were 61 % of total expenses and financial revenues accounted for 98,7 % of total revenues.

First half of 2006 saw total technical provisions of pension funds growing by CZK 12,4 billion to CZK 125,1 billion. Contributions received from members and employers (excluding government contributions) stood at CZK 13,7 billion, increasing by 26,6 % year-on-year. Government contributions increased by 13,3 % in the observed period of 2006 and amounted to CZK 2 billion. Supplementary pension insurance benefits paid stood at CZK 6,1 billion, which is a year-on-year growth of 30,3 %.

There were 3 464 892 active supplementary pension insurance policy holders (members of pension schemes) in total on 30th June 2006. The number increased by 10,3 % in comparison with the end of the same period of 2005. Of the total, 3 396 458 persons received government contributions. The number of pension recipients increased by 287 to 5 001 persons since the beginning of 2006.

All of the pension funds employed a total of 469 actual persons on average in a first half of 2006, which is almost identical to the same period of 2005. This employment in terms of full-time equivalent stood at 447 persons and fell by 1,2 % year-on-year. The average monthly wage related to fte persons was up by 10,9 % year-on-year and amounted to 43 065 CZK.