NASSAU, BAHAMAS — The financial services sector’s contribution to government revenue increased by 7.2 percent in 2023, amounting to $177.6 million collected from taxes and fees, according to the Central Bank.
The financial services sector in The Bahamas plays a crucial role in the economy, contributing approximately 10 to 15 percent of the country’s Gross Domestic Product (GDP), making it the second-largest contributor to the economy.
In its report on the gross economic contribution of the financial sector in 2023, the regulator noted that data from The Bahamas’ financial services sector survey suggests an incremental gain in expenditure and employment contribution within the Bahamian economy, concentrated in domestic intermediation activities.
The Central Bank stated: “Preliminary figures on financial sector performance revealed that total taxes and fees received by the Government grew by $11.9 million (7.2 percent) to $177.6 million during 2023. Underlying this development, transactional taxes on local intermediation activities rose by 9.9 percent to $106.9 million, due to a 28.9 percent increase in the collection of insurance premium tax and a 12.2 percent rise in the collection of stamp tax on other banking transactions. Conversely, taxes on mortgages contracted by $5.7 million to $5.4 million in 2023. Additionally, license and registration fees rose by $2.3 million (3.4 percent) to $70.7 million, owing to a 4.1 percent gain in collections from banks and trust companies and a 1 percent uptick in receipts from international business companies. Meanwhile, other fees received from insurance companies, brokers, and agents stabilized at $0.4 million, relative to the previous year.”
During the year, the total number of banks and trust companies licensed in The Bahamas decreased by 5 to 197, following a decline of 12 in 2022. Public banks and trust companies fell by 1 to 74, and restricted, non-active, and nominees, by 4 to 123. Among other public licensees, the euro-currency branches of foreign banks decreased by 1 to 9, while Bahamian incorporated entities remained unchanged at 45. The licensed authorized dealers and agents remained at 20, consisting of 10 agents (resident trust companies) and 10 authorized dealers (commercial banks)—including 7 clearing banks.
Total domestic assets within the local banking sector increased by 2.2 percent to $11.7 billion in 2023, although this was lower than the 4.2 percent expansion a year earlier and the 2.4 percent average annual growth rate of the last five years. Conversely, total assets of the international banking sector declined by 8.2 percent to $107.9 billion, compared to the 8.9 percent reduction in the previous year and the 6.7 percent average annual decrease over the last five years.
In 2023, total employment within banks and trust companies grew by 17 (0.5 percent) to approximately 3,681 persons, a turnaround from the 1.2 percent reduction in 2022. An analysis by nationality showed that Bahamian positions rose by 38 (1.1 percent) to 3,487, while non-Bahamian positions declined by 21 to 194. Consequently, the ratio of employed Bahamians to non-Bahamians in the banking sector increased by 6 basis points to 94.7 percent, up from 94.1 percent in the previous year.
During 2023, total employment in the domestic banking sector rose by 13 (0.4 percent) to 3,021, reversing the marginal contraction of 0.9 percent in 2022 and the larger average yearly reduction of 1.4 percent over the past five years. Similarly, total international sector employees increased by 4 (0.6 percent) to 660, contrasting with both the 2.8 percent decline in the prior year and the average yearly decline of 6.7 percent over the previous five years. In terms of staffing composition for the domestic banking sector, the total number of Bahamian employees rose by 23 (0.8 percent) to 2,954, reversing the 1 percent decline in the previous year. In contrast, the total number of non-Bahamian employees decreased by 10 (13 percent), compared to a 5.5 percent increase in the previous year.
