Total financial sector operations reduced by 7.5 percent in 2022, The Central Bank of The Bahamas (CBOB) revealed in its just released survey on the gross economic contribution of the financial services sector in The Bahamas.

The $11.2 billion decrease was driven largely by a decline in assets held by international banks, which outpaced dips in the balance sheets for domestic banks.

At the end of 2022, financial sector operations were estimated to stand at $138.6 billion.

"Trust companies' fiduciary assets also contracted by approximately $26.4 billion (17.2 percent) to an estimated $127.4 billion, while assets under management also trended downwards within the securities industry. Credit unions provided expanded contributions, exhibited by gains in balance sheet assets; while onshore insurance operations revealed a similar uptick in balance sheet assets," the Central Bank revealed.

As a result of the overall decrease, taxes and fees collected by the government from the sector decreased 11.9 percent to settle at $165.6 million in 2022.

"Contributing to this outturn, transactional taxes on domestic intermediation activities declined by 12.3 percent to $97.2 million, owing primarily to a $25.5 million (31.1 percent) reduction in levies on non-mortgage related banking transactions. Providing some offset, taxes on mortgages surged to $11.1 million from $2.2 million in the previous year. In addition, insurance premium taxes increased by 12.2 percent to $29.5 million," the bank said.

"Further, license and registration fees fell by 11.4 percent to $68.4 million, on account of a 4.6 percent falloff in collections from international business companies. In contrast, receivables from banks and trust companies (80.6 percent of the total) rose by 4.3 percent to $55.1 million. Similarly, returns from insurance companies, brokers and agents moved higher by 30.7 percent to $0.4 million."

For more than a decade the financial services sector has been shrinking, which many have attributed to global pressures and a more stringent regulatory environment.

The financial services sector could take another hit soon, as global tax watchdogs and global superpowers move to impose a minimum corporate tax on corporations across the world by next year.

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