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 three quarters of 2006 the difference between the total revenues and total cost was CZK 30,5 billion and the net profit from financial operations was CZK 8,3 billions. The banking monetary institutions made pre-tax net income amounting to CZK 38,8 billion.

During the first three quarters of 2006 all 36 banks and building societies employed 36 135 actual persons on average, by 1,3 % less than in the same period of 2005. In terms of f/t equivalent, the average number of employed persons fell by 1,4 %, which means 35 666 employed persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 7,4 %) and stood at CZK 44 153.

Interests receivable reached CZK 89,9 billion and interests payable reached the amount of CZK 37,5 billion in the three quarters of 2006. Interests receivable increased by 12,2 % year-on-year. Interests payable rose by 15,5 % year-on-year. This growth of interests receivable is caused by big call for mortgages and consumer credits. The interest margin grew by 9,9 % (from CZK 47,7 to 52,4 billion).

In comparison with the end of 3rd quarter of 2005 there was a drop of number of concluded contracts for savings for building purposes and purchases of a house. The fell was 319 850 contracts (total 5 882 603) year-on-year and translates into a fell of 5,2 % compared to the corresponding period of the year 2005. The number of contracts in saving stage accounting for 89,8 % of total number of contracts stood at 5 284 962, which means the decrease by 330 016 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 period of the 1st to 3rd quarter a profit of CZK 14,5 billion, which means reduction by 27,6 % in comparison with the same period of the last year. The three-fourths of the year 2005 was from the point of view of financial institutions the period economically strong and companies can hardly draw level with its results, in the first place they are not able to reduce the costs like in the past.

Investment companies and investment funds (CZ-NACE, rev.1, code 65.2) realized during the reference period a profit of CZK 2,0 billion. This period of time was not very favourable for positive economic results; from this perspective mainly the loss of CZK 1,8 billion in the second quarter is significant. The decrease in comparison with the last year is a sequel to the interannual increase of costs by 45,2 %, while the revenues dropped by 8,8 %.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) realized during the reference period a profit of CZK 3,2 billion, by 27,9 % less than year before. This situation is influenced by the fact that the credit market in Czech Republic goes through the period of dynamical changes. Market segments, which were until recently the domain of leasing companies, are taken under competitor’s wing in a form of bank credits and credit products of hire-purchase companies. Leasing companies struggle against it extending their offer, e.g. by consumer credits or the opportunity to hire purchase.

In January to September insurance companies (CZ-NACE 66.01 and 66.03) made pre-tax profits amounting to CZK 12,8 billion, which translates into an increase of 22,5 % compared to the corresponding period of the previous year.

In the first three quarters of 2006 gross premiums written stood at CZK 91,1 billion, accounting for 44,3 % of total revenues and rising by 3,3 % year-on-year. Insurance claims paid amounted to CZK 42,9 billion, making up 22,2 % of total expenses of the insurance companies. Costs of these insurance claims increased by 6,7% year-on-year. Over the period of January to the end of September, total technical provisions for life insurance increased by CZK 13,7 billion to CZK 176,5 billion.

In the period from the beginning till the end of September all of the 45 insurance companies employed a total of 14 316 employees (actual persons) on average, i.e., by 0,7 % less than in the corresponding period of 2005. In terms of full-time equivalent (fte) persons, the average registered number of employees was 14 135; the employment thus decreased by 1 %. The average monthly wage (related to the fte persons) was 33 607 CZK, increasing by 4,3 % in comparison to the same period of 2005.

During the first three quarters of 2006 there were concluded 4 454 537 non-life insurance contracts, by 17,8% more than in the same period of the previous year. The number of life insurance contracts concluded during the observed period of 2006 is 593 002, which translates into a decrease of 6,3 %.

In the three quarters of 2006 pension funds (CZ-NACE 66.02) made their profits amounting to CZK 2,6 billion (an drop of 24,9 % year-on-year). Total expenses of 11 active pension funds during the period from January to the end of September reached CZK 3,6 billion, rising by 36,7 % year-on-year. Total revenues increased by 1,7 % year-on-year to CZK 6,2 billion. Financial expenses were 55,3 % of total expenses and financial revenues accounted for 97,7 % of total revenues.

The first three quarters of 2006 saw total technical provisions of pension funds growing by CZK 17,2 billion to CZK 129,9 billion. Contributions received from members and employers (excluding government contributions) stood at CZK 20,6 billion, increasing by 24,9 % year-on-year. Government contributions increased by 12,6 % in the observed period of 2006 and amounted to CZK 3 billion. Supplementary pension insurance benefits paid stood at CZK 8,9 billion, which is a year-on-year growth of 27,7 %.

There were 3 509 815 active supplementary pension insurance policy holders (members of pension schemes) in total on 30th September 2006. The number increased by 9,1 % in comparison with the end of the same period of 2005. Of the total, 3 447 196 persons received government contributions. The number of pension recipients increased by 542 to 5 256 persons since the beginning of 2006.

All of the pension funds employed a total of 470 actual persons on average in the first three quarters 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 0,7 % year-on-year. The average monthly wage related to fte persons was up by 9,9 % year-on-year and amounted to 41 725 CZK.