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 financial and other transactions – and not in terms of revenues and expenses.

In the four quarters of 2007 the difference between the total revenues and total cost was CZK 56,1 billion and the net profit from financial and some other operations was CZK 3,2 billions. The banking monetary institutions made pre-tax net income amounting to CZK 59,3 billion.

During the 2007 all 37 banks and building societies employed 38 549 actual persons on average, by 6,2 % more than in the same period of 2006. In terms of f/t equivalent, the average number of employed persons rose by 2,3 %, which means 36 637 employed persons. The average monthly wage related to f/t persons has continued in growing trend (increase by 6,2 %), except a little fluctuation in the fourth quarter, and stood at CZK 46 502.

Interests receivable reached CZK 156,5 billion and interests payable reached the amount of CZK 71,6 billion in 2007. Interests receivable increased by 25,3 % year-on-year. Interests payable rose by 36,3 % year-on-year. This growth of interests receivable is caused by constant call for mortgages and consumer credits. The interest margin grew from CZK 72,4 to 84,9 billion during the 2007.

In comparison with the end of 2006 there was a drop of number of concluded contracts for savings for building purposes and purchases of a house. The fell was 77 232 contracts (total 5 804 764 on 31st December 2007 to 5 881 996 on 31st December 2006) year-on-year and translates into a fell of 1,3 % compared to the corresponding period of the year 2006. The number of contracts in saving stage accounting for 88,5 % of total number of contracts stood at 5 139 977, which means the decrease by 148 047 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 2007 a profit of CZK 25,1 billion, which means almost the same result as in the year before (increase only by four tenths of percent). The first and the second quarters were the periods of the expansion; the third and the fourth ones noted interannual fall.

Investment companies and investment funds (CZ-NACE, rev.1,code 65.2) realized during the reference period a profit of CZK 3,3 billion, by 36,7 % less than in the previous year. Unlike very strong first and second quarter, in remaining parts of the year there was no profit made.

The highest increase in the property was registered in Balanced funds, then Equity funds, then Fund of funds, Money market funds and Real estate funds. On the contrary there was an outflow of assets in Bond funds.

Financial investments increased during the 2007 by CZK 19,7 billion (increase by 12,5 %). Value of deposits increased by CZK 6,4 billion (increase by 29,4 %), value of stocks and shares increased by CZK 14,2 billion (increase by 35,2 %) and value of bonds fell by CZK 1,4 billion (decrease by 1,4 %).

Financial leasing companies (CZ-NACE, rev. 1, code 65,21) realized during the 2007 a profit of CZK 4,7 billion. In comparison with the last year, it was 21,2% decrease.

Leasing and non-banking loans had been offered during the period of economical prosperity, which supported demand for these products.

Outputs (including received financial leasing instalments) rose during the whole year, up to 31. 12. 2007 it reached the amount of CZK 109,7 billion (increase by 6,5 %). Received financial leasing instalments interannually increased by 2,9 %. There was further substantial increase in volume of funds provided by leasing companies through consumer credit (they are provided by a contract attachment) and in instalment sales in 2007.

During the year 2007 consumer credit and instalment sale reached total amount of CZK 14,1 billion (interannual increase by 44,3 %).
In January to December insurance companies (CZ-NACE 66.01 and 66.03) made pre-tax profits amounting to CZK 16,2 billion, which translates into a decrease of 8,6 % compared to the corresponding period of the previous year.

In the four quarters of 2007 gross premiums written stood at CZK 133,7 billion, accounting for 40,5 % of total revenues and rising by 9,9 % year-on-year. Insurance claims paid amounted to CZK 60,4 billion, making up 19,3 % of total expenses of the insurance companies. Costs of these insurance claims increased by 5,6% year-on-year. Over the period of 2007, total technical provisions for life insurance increased by CZK 14,5 billion to CZK 197,3 billion.

In the period from the beginning till the end of 2007 all of the 49 insurance companies employed a total of 14 423 employees (actual persons) on average, i.e., by 0,5 % more than in the corresponding period of 2006. In terms of full-time equivalent (fte) persons, the average registered number of employees was 14 210; the employment thus increased by 0,4 %. The average monthly wage (related to the fte persons) was 37 956 CZK, increasing by 8,7 % in comparison to the same period of 2006.

During the 2007 there were concluded 6 709 634 non-life insurance contracts, by 21,8% more than in the same period of the previous year. The number of life insurance contracts concluded during the observed period of 2007 is 912 225, which translates into a decrease of 12,8 %.

In the four quarters of 2007 pension funds (CZ-NACE 66.02) made their profits amounting to CZK 4,8 billion (an increase by 17,1 % year-on-year). Total expenses of 11 active pension funds during the period from January to the end of year reached CZK 7,0 billion, rising by 41,9 % year-on-year. Total revenues increased by 30,6 % year-on-year to CZK 11,8 billion. Financial expenses were 63,7 % of total expenses and financial revenues accounted for 98,3 % of total revenues.

The four quarters of 2007 saw total technical provisions of pension funds growing by 19,1 % to CZK 162,3 billion. Contributions received from members and employers (excluding government contributions) stood at CZK 32,1 billion, increasing by 13,0 % year-on-year. Government contributions increased by 12,3 % in the observed period of 2007 and amounted to CZK 4,7 billion. Supplementary pension insurance benefits paid stood at CZK 12,4 billion, which is a year-on-year growth of 5,0 %.

There were 3 971 374 active supplementary pension insurance policy holders (members of pension schemes) in total on 31st December 2007. The number increased by 9,7 % in comparison with the end of 2006. Of the total, 3 910 004 persons received government contributions. The number of pension recipients increased by 863 to 6 145 persons since the beginning of 2007.

All of the pension funds employed a total of 471 actual persons on average in the four quarters of 2007, which represents an increase by 0,2 % in comparison with the same period of 2006. This employment in terms of full-time equivalent stood at 449 persons and rose by 0,4 % year-on-year. The average monthly wage related to fte persons was up by 5,8 % year-on-year and amounted to 46 104 CZK.