Financial Intermediation: Economic Results

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 and some other 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 special transactions – and not in terms of revenues and expenses.

In the first quarter of 2007 the difference between the total revenues and total cost was CZK 12,5 billion and the net profit from financial and some other operations was CZK 0,9 billions. The banking monetary institutions made pre-tax net income amounting to CZK 13,3 billion, which means decrease by 3,7 % year-on-year. Incomes and revenues of banks and building societies are mainly based on consumer credits, mortgage credits and commissions receivable.

During the first quarter of 2007 all 37 banks and building societies employed 37 314 actual persons on average, by 3,4 % more than in the same period of 2006. In terms of f/t equivalent, the average number of employed persons rose by 1,9 %, 36 294 persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 9,8 %) and stood at CZK 57 039.

Interests receivable reached CZK 34,8 billion and interests payable reached the amount of CZK 15,3 billion in the first quarter of 2007. Interests receivable increased by 22,8 % year-on-year. Interests payable rose by 31,4 % year-on-year. This growth of interests receivable is caused by big call for mortgages and consumer credits. The interest margin grew from CZK 16,7 to 19,5 billion.

In comparison with the end of 1st quarter of 2006 there was a drop of number of concluded contracts for savings for building purposes and purchases of a house. The fell was 183 912 contracts (total 5 899 624) year-on-year and translates into a fell of 3,0 % compared to the corresponding period of the year 2006. The number of contracts in saving stage accounting for 88,9 % of total number of contracts stood at 5 242 232, which means the decrease by 249 367 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) realized in the first quarter of 2007 a profit of CZK 6,3 billion, which means increase by 9,6 % in comparison with the same period of the last year. It was mainly the merit of investment companies and funds, which profited from the growing interest of foreign investors in investing money in securities and investment instruments.

Investment companies and investment funds (CZ-NACE, rev.1, code 65.2) made in the reference period a profit of CZK 2,3 billion. It was by 67,2 % more than in the same quarter a year before. Companies achieved the growth of the volume of controlled property and the increase in income from charges and commissions displayed in financial revenues. On the basis of the interest of investors, investment companies are coming with extended offer of new shares funds; the most attractive are nowadays secured funds. At the end of the quarter the slump on stock markets occurred, but it doesn’t influenced current results so far.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) made in the reference period a gross profit of CZK 0,6 billion, by 57,9 % less than year before. The number of concluded leasing contracts decreased, although the total volume of leasing increased; it indicates that the average value of property from one leasing contract has risen. The profit achieved in the 1st quarter of 2007 was the lowest in past two years.

In January to March insurance companies (CZ-NACE 66.01 and 66.03) made pre-tax profits amounting to CZK 4,3 billion, which translates into a increase of 50,1 % compared to the corresponding period of the previous year.

In the first quarter of 2007 gross premiums written stood at CZK 34,2 billion, accounting for 42,9 % of total revenues and rising by 4,8 % year-on-year. Insurance claims paid amounted to CZK 15,3 billion, making up 20,2 % of total expenses of the insurance companies. Costs of these insurance claims increased by 7,5 % year-on-year. Over the period of January to the end of March, total technical provisions for life insurance increased by CZK 3,7 million to CZK 186,7 billion.

In the period from the beginning of 2007 till the end of March all of the 45 insurance companies employed a total of 14 379 employees (actual persons) on average, i.e., by 0,6 % more than in the corresponding period of 2006. In terms of full-time equivalent (fte) persons, the average registered number of employees was 14 180; the employment thus increased by 0,3 %. The average monthly wage (related to the fte persons) was 37 616 CZK, increasing by 9,9 % in comparison to the same period of 2006.

During the first quarter of 2007 there were concluded 1 426574 non-life insurance contracts, by 0,4 % more than in the same period of the previous year. The number of life insurance contracts concluded during the observed period of 2007 is 223 562, which translates into a increase of 22,1 %.

In the first quarter of 2007 pension funds (CZ-NACE 66.02) made their profits amounting to CZK 1,4 billion (an increase of 31,7 % year-on-year). Total expenses of 10 active pension funds during the period from January to the end of March reached CZK 1,3 billion, rising by 11,4 % year-on-year. Total revenues increased by 21,1 % year-on-year to CZK 2,7 billion. Financial expenses were 58,0 % of total expenses and financial revenues accounted for 99,0 % of total revenues.

First quarter of 2007 saw total technical provisions of pension funds growing by 21,2% to CZK 141,7 billion. Contributions received from members and employers (excluding government contributions) stood at CZK 8,5 billion, increasing by 25,9 % year-on-year. Government contributions increased by 12,2 % in the observed period of 2007 and amounted to CZK 1,1 billion. Supplementary pension insurance benefits paid stood at CZK 3,0 billion, which is a year-on-year growth of 1,9 %.

There were 3 725902 active supplementary pension insurance policy holders (members of pension schemes) in total on 31st March 2007. The number increased by 10,2 % in comparison with the end of the same period of 2006. Of the total, 3 597 596 persons received government contributions. The number of pension recipients increased by 210 to 5 492 persons since the beginning of 2007.

All of the pension funds employed a total of 466 actual persons on average in a quarter of 2007, which is equal to the same period of 2006. This employment in terms of full-time equivalent stood at 443 persons and fell by 0,9 % year-on-year. The average monthly wage related to fte persons grew up by 19,8 % year-on-year and amounted to 53 701 CZK.