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Durrant Pate/Contributor

The Bahamas financial services sector has been assessed as strong and resilient, whilst remaining the cornerstone of the economy, accounting for an estimated 15-20% of Gross Domestic Product (GDP).

Last year, despite global regulatory pressures and subdued new licensing activities, the sector demonstrated resilience through modest expenditure growth and expanding domestic financial intermediation. In fact, the assessment carried out by the Central Bank of The Bahamas reports that the sector continues to significantly support government revenue through licensing fees and transactional taxes. 

In 2024, total government receipts from the sector increased by 8.5% to $249.9 million. The bulk of this came from bank and trust company licensing fees, which rose by 11.4% to $77.9 million. Transactional taxes, particularly stamp duties, also saw notable growth, contributing $145.6 million, a 7.5% rise from the prior year.

Banking sector dynamics

The banking sector remained the largest financial segment, both in asset size and employment. Domestic banking assets grew by 3.6% to $12.1 billion, while international banking assets slightly increased by 0.1% to $108 billion, reversing years of decline. 

Employment in banks and trust companies decreased marginally by 1% to 3,646, with a continued dominance of Bahamian staff, who made up over 94% of the workforce. In terms of expenditures, the banking sector grew by 8.5% to $930.1 million. 

Operational costs rose across the board, especially in administrative expenses and government fees. However, capital expenditures declined by over 20%, reflecting a shift from infrastructure to operational efficiency. 

Domestic banks drove most of the spending increase, with a total rise of 11.8%, while international banks experienced a 1.4% decline in spending, driven by reduced salary costs.

Credit unions and insurance

The credit union sector expanded modestly, with assets increasing by 4.6% to $517.8 million, largely funded through deposits. Lending rose by 7.7%, with strong gains in consumer and mortgage loans. 

Employment rose to 216, and expenditures jumped by 14.6% to $30.2 million, driven by increased operational and technology spending. The insurance sector saw limited activity growth.

The number of licensed insurers and intermediaries declined to 147. Nevertheless, total assets rose by 8.4% to nearly $2 billion, supported by an increase in both long-term and general insurance segments. 

Employment went down slightly, but average salaries rose by 2.5% to $39,476.

Securities and Digital Assets

The securities industry, overseen by the Securities Commission, showed increased regulatory engagement. Fees paid to the Commission rose, and digital asset regulation continued to evolve, notably with the passage of the DARE Act, 2024. 

This legislation strengthens investor protections and aligns the Bahamas’ framework with international standards, expanding oversight on digital asset exchanges, stablecoins, and client staking.

Regulatory and Policy Developments

Regulatory bodies, particularly the Central Bank, intensified efforts to strengthen the country’s AML/CFT framework and financial stability infrastructure. The Central Bank advanced digital financial inclusion through projects like Wallet 2.0 and the Bahamas Fast Payment System, slated for a 2026 launch. 

It also enhanced supervisory frameworks with updated guidelines and tools, including climate risk assessments and Basel II/III implementation. Additionally, coordination between regulators was bolstered by the formation of the Bahamas Financial Stability Council. 

The Central Bank also began integrating international payment standards (ISO20022) and prepared for a real-time gross settlement (RTGS) system launch in 2025.

Outlook

Looking ahead, the sector faces a mixed outlook. Domestic intermediation is set to strengthen, but employment gains may be limited due to continued automation and digital innovations. The international sector may see modest growth driven by niche services in wealth and securities, though offset by consolidations and regulatory headwinds, particularly in Europe. 

Regulatory authorities remain committed to maintaining the jurisdiction’s credibility through enhanced supervision and modernisation initiatives.