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 four quarters of 2006 the difference between the total revenues and total cost was CZK 39,3 billion and the net profit from financial operations was CZK 9,8 billions. The banking monetary institutions made pre-tax net income amounting to CZK 49,2 billion.

During the 2006 all 37 banks and building societies employed 36 314 actual persons on average, by 0,5 % less than in the same period of 2005. In terms of f/t equivalent, the average number of employed persons fell by 0,7 %, which means 35 827 employed persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 7,3 %) and stood at CZK 43 576.

Interests receivable reached CZK 124,9 billion and interests payable reached the amount of CZK 52,6 billion in 2006. Interests receivable increased by 16,6 % year-on-year. Interests payable rose by 21,9 % year-on-year. This growth of interests receivable is caused by big call for mortgages and consumer credits. The interest margin grew from CZK 64,0 to 72,4 billion during the 2006.

In comparison with the end of 2005 there was a drop of number of concluded contracts for savings for building purposes and purchases of a house. The fell was 272 850 contracts (total 5 881 996 on 31st December 2006 to 6 154 846 on 31st December 2005) year-on-year and translates into a fell of 4,4 % compared to the corresponding period of the year 2005. The number of contracts in saving stage accounting for 89,9 % of total number of contracts stood at 5 288 024, which means the decrease by 277 108 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 of 2006 a profit of CZK 25,2 billion, which is 16,7 % above the level of the year before. Only the second quarter affected the interannual decrease, otherwise was this year the period of growth, which is typical for this sector, except oscillations.

Investment companies and investment funds (CZ-NACE, rev.1, code 65.2) realized during the reference period a profit of CZK 5,8 billion, by 12,4 % less than year before. This is a result of ambiguous situation, which was on financial markets during the year. After very poor second quarter investment companies managed to partially improve yearly balance. It became in consequence of favourable development on stock market, when the growth of stocks at the end of the year yielded interesting profits. Investors diverged from money funds and bonds and chose share funds for their better profitability, even if the cost of increased risk, which is however absorbed by the fund managers through diversification.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) realized during the 2006 a profit of CZK 5,3 billion and that means almost the same result as the year before (increase only by two tenths of percent). Profits of leasing companies are still under the influence of competition in form of permanently more affordable bank credits and credit products of hire-purchase companies. Dynamically expanding credit market (mortgage credits, credits from savings for building purposes or purchases of a house, consumer credits) narrows the area for leasing companies but on the other hand motivates them to extend the offer by opportunity to hire purchase or consumer credits.

In January to December insurance companies (CZ-NACE 66.01 and 66.03) made pre-tax profits amounting to CZK 17,1 billion, which translates into an increase of 45,7 % compared to the corresponding period of the previous year.

In the four quarters of 2006 gross premiums written stood at CZK 122 billion, accounting for 43,9 % of total revenues and rising by 4,1 % year-on-year. Insurance claims paid amounted to CZK 56,9 billion, making up 21,8 % of total expenses of the insurance companies. Costs of these insurance claims increased by 5,3% year-on-year. Over the period of 2006, total technical provisions for life insurance increased by CZK 20 billion to CZK 183 billion.

In the period from the beginning till the end of 2006 all of the 45 insurance companies employed a total of 14 352 employees (actual persons) on average, i.e., by 0,6 % less than in the corresponding period of 2005. In terms of full-time equivalent (fte) persons, the average registered number of employees was 14 168; the employment thus decreased by 0,9 %. The average monthly wage (related to the fte persons) was 34 236 CZK, increasing by 5,4 % in comparison to the same period of 2005.

During the 2006 there were concluded 5 506 657 non-life insurance contracts, by 17,4% more than in the same period of the previous year. The number of life insurance contracts concluded during the observed period of 2006 is 808 955, which translates into a decrease of 2 %.

In the four quarters of 2006 pension funds (CZ-NACE 66.02) made their profits amounting to CZK 4,1 billion (an drop of 11,2 % year-on-year). Total expenses of 11 active pension funds during the period from January to the end of year reached CZK 4,9 billion, falling by 5,8 % year-on-year. Total revenues decreased by 7,8 % year-on-year to CZK 9,1 billion. Financial expenses were 51,4 % of total expenses and financial revenues accounted for 96 % of total revenues.

The four quarters of 2006 saw total technical provisions of pension funds growing by CZK 20,5 % to CZK 136,3 billion. Contributions received from members and employers (excluding government contributions) stood at CZK 28,4 billion, increasing by 22,4 % year-on-year. Government contributions increased by 12,7 % in the observed period of 2006 and amounted to CZK 4,2 billion. Supplementary pension insurance benefits paid stood at CZK 11,5 billion, which is a year-on-year growth of 21,6 %.

There were 3 619 428 active supplementary pension insurance policy holders (members of pension schemes) in total on 31st December 2006. The number increased by 9,9 % in comparison with the end of 2005. Of the total, 3 551 894 persons received government contributions. The number of pension recipients increased by 568 to 5 282 persons since the beginning of 2006.

All of the pension funds employed a total of 471 actual persons on average in the four quarters of 2006, which is identical to the same period of 2005. This employment in terms of full-time equivalent stood at 448 persons and fell by 1,4 % year-on-year. The average monthly wage related to fte persons was up by 9 % year-on-year and amounted to 42 553 CZK.