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 transactions and some other transactions (e.g. foreign currency, derivates and securities transactions). Since 2007, 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 half of 2007 the difference between the total revenues and total cost was CZK 26,3 billion and the net profit from financial and some other operations was CZK 2,4 billions. The banking monetary institutions made pre-tax net income amounting to CZK 28,7 billion.

During the first half of 2007 all 37 banks and building societies employed 37 866 actual persons on average, by 4,6 % more than in the same period of 2006. In terms of f/t equivalent, the average number of employed persons increased by 2,0 %, 36 425 persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 9,5 %) and stood at CZK 51 895.

Interests receivable reached CZK 71,7 billion and interests payable reached the amount of CZK 31,7 billion in the first half of 2007. Interests receivable increased by 23,2 % year-on-year. Interests payable rose by 31,8 % year-on-year. This growth of interests receivable is caused by persistent call for mortgages - despite the CNB hike on interest rates, which was included in bank’s interests in advance and accepted by customers - and consumer credits. The interest margin grew by 17,3 % (from CZK 34,2 to 40,1 billion).

In comparison with the end of first half of 2006 there was a drop in number of concluded contracts for savings for building purposes and purchases of a house. The fell was 160 027 contracts (total 5 839 339) year-on-year and translates into a fell of 2,7 % compared to the corresponding period of the year 2006. The number of contracts in saving stage accounting for 88,7 % of total number of contracts stood at 5 179 711, which means the decrease by 227 827 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 14,1 billion. The second quarter of the previous year was in the time series of 2006 noticeably the weakest period, the profit of 2007 is developing in growing pace so far, but the American mortgage crisis, which influenced also the Czech capital market, is going to reflect in results of following half-year.

To positive profit reached in the first half of 2007 contributed mainly Investment companies and investment funds (CZ-NACE, rev.1, code 65.2), when during the reference period realized a profit of CZK 5,3 billion. The economy of investment companies was positively influenced by the increase in volume of financial asset property, which is connected with the growth of charges and commissions.

Financial leasing companies (CZ-NACE, rev.1, code 65.21) realized during the reference period a profit of CZK 1,7 billion, by 33,3 % less than year before.

In January to June insurance companies (CZ-NACE 66.01 and 66.03) made pre-tax profits amounting to CZK 11,8 billion, which translates into a increase of 83,7 % compared to the corresponding period of the previous year.

In the first half of 2007 gross premiums written stood at CZK 65,8 billion, accounting for 40,3 % of total revenues and rising by 6,0 % year-on-year. Insurance claims paid amounted to CZK 30,7 billion, making up 20,3 % of total expenses of the insurance companies. Costs of these insurance claims increased by 3,3 % year-on-year. Over the period of January to the end of June, total technical provisions for life insurance increased by CZK 5,4 billion to CZK 188,5 billion.

In the period from the beginning of 2007 till the end of June all of the 48 insurance companies employed a total of 14 363 employees (actual persons) on average, i.e., by 0,2 % more than in the corresponding period of 2006. In terms of full-time equivalent (fte) persons, the average registered number of employees was 14 156 and in comparison with the same period of the previous year is without change. The average monthly wage (related to the fte persons) was 38 110 CZK, increasing by 14,8 % in comparison to the same period of 2006.

During a first half of 2007 there were concluded 3 405 191 non-life insurance contracts, by 19,9 % more than in the same period of the previous year. The number of life insurance contracts concluded during the observed period of 2007 is 456 170, which translates into an increase of 17,7 %.

In the first half of 2007 pension funds (CZ-NACE 66.02) made their profits amounting to CZK 3,1 billion (an accumulation of 83,8 % year-on-year). Total expenses of 10 active pension funds during the period from January to the end of June reached CZK 2,8 billion, rising by 9,0 % year-on-year. Total revenues increased by 38,5 % year-on-year to CZK 5,9 billion. Financial expenses were 53,2 % of total expenses and financial revenues accounted for 98,6 % of total revenues.

First half of 2007 saw total technical provisions of pension funds growing by CZK 14,2 billion to CZK 150,5 billion. Contributions received from members and employers (excluding government contributions) stood at CZK 16,8 billion, increasing by 22,4 % year-on-year. Government contributions increased by 11,6 % in the observed period of 2007 and amounted to CZK 2,3 billion. Supplementary pension insurance benefits paid stood at CZK 6,3 billion, which is a year-on-year growth of 3,3 %.

There were 3 806 076 active supplementary pension insurance policy holders (members of pension schemes) in total on 30th June 2007. The number increased by 9,8 % in comparison with the end of the same period of 2006. Of the total, 3 724 427 persons received government contributions. The number of pension recipients increased by 527 to 5 809 persons since the beginning of 2007.

All of the pension funds employed a total of 464 actual persons on average in a first half of 2007, which represents the decrease of 1,1 % comparing to the same period of 2006. This employment in terms of full-time equivalent stood at 443 persons and fell by 1,0 % year-on-year. The average monthly wage related to fte persons was up by 12,5 % year-on-year and amounted to 48 439 CZK.