By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

BAHAMIAN employment in the banking sector increased modestly at the expense of expatriates in 2023 although the industry’s overall economic impact largely remained flat year-over-year.

The Central Bank, unveiling its annual survey of the financial services industry’s wider contribution to the Bahamian economy, said total local jobs across the domestic and international banking sectors increased by 38 compared to 2022 to take the total to 3,487. By contrast, expatriate jobs declined by 21 to 787 year-over-year, for an overall net gain of 17 posts.

The banking industry regulator said the sector, and wider financial services industry, had seen only “incremental growth” in 2023 as the international side continued to face global regulatory and compliance pressures. It indicated that The Bahamas’ new business and client prospects in Latin America continue to be offset by the “continued re-domiciling of clients to Europe”.

And, despite the modest employment gains, the Central Bank said banking sector assets declined by 8.2 percent to around $127.2bn during 2023.

“In particular, the reduction in international banks’ balance sheets overshadowed the gains in domestic banks’ assets. In contrast, fiduciary assets increased by 6.5 percent to $295.3bn,” the regulator said.

“Further, in the securities industry, indications are that net asset value registered healthy gains in 2023. With regard to credit unions, assets expanded, led by a rise in liquid investments and an increase in deposits held with the Credit Union League. Meanwhile, onshore insurance operations featured constrained balance sheet trends relative to prior year.”

The total number of licensed banks and trust companies in The Bahamas continued to slowly decline, dropping by five to 197 at year-end 2023 following a drop of 12 in 2022. “Total domestic assets within the local banking sector firmed by 2.2 percent to $11.7bn in 2023, albeit lower than the 4.2 percent expansion a year earlier and the 2.4 percent average annual growth rate of the last five years,” the Central Bank said.

“Conversely, total assets of the international banking sector declined further by 8.2 percent to $107.9bn vis-à-vis 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, contrasting with non-Bahamian positions which declined by 21 to 194,” the regulator continued.

“As a result, the ratio of employed Bahamians to non-Bahamians in the banking sector firmed by six basis points to 94.7 percent from 94.1 percent in the previous year.... During the year, total expenditure in the banking sector increased by $78.9m (10.1 percent) to $856.9m, surpassing the 0.9 percent growth in the previous year and the annual average spending gain of 0.6 percent over the last five years.

“Contributing to this outturn, total operational costs expanded by$70.3m (9.1 percent) to $839.3m, extending last year’s 1.7 percent growth. Notably, non-staff administrative costs rose by $38.1m (10.3 percent) to $408.1m exceeding the 3.8 percent gain in the prior year. In addition, salaries grew by $17.2m (5.6 percent) to $321.4m, a reversal from the 3.1 percent decline in 2022.

“Further, government fees advanced by $14.7m (15.7 percent) to $107.9m, led by gains in company registration fees of 32.7 percent and license fees of 26.9 percent. Further, expenditure on staff training firmed by $0.4m (22.8 percent) to $2m, albeit a sharp moderation from the 51.6 percent increase a year earlier.”

Breaking down banking industry salaries, the Central Bank found: “With regard to compensation, movements in average base salaries varied across the banking sectors. Specifically, the average salary for the domestic banks appreciated by $3,295 (5.6 percent) to $62,271 per annum.

“However, average compensation in the international sector decreased by $3,345 (2.8 percent) to $115,264 per annum, owing in part the closure of a public bank. Expenditure growth in the domestic banking sector persisted, contrasting with the retrenchment in the international sector. In the domestic banking sector, aggregate expenditure grew by 14.2 percent to $644.1m in 2023, after stabilizing at $563.9m in 2022.

“In the international banking sector, total expenditure fell by 0.6 percent to $212.9m following a 5.5 percent fall-off in 2022 and a 3.7 percent annual average decline over the preceding five-year period. Operational outlays decreased by 0.8 percent to $210.1m, although lower than the 5.4 percent decline in the preceding year and the annual average of 3 percent.”

As for the wider financial services industry’s total contribution to the Government, the Central Bank said: “Preliminary figures on financial sector performance revealed that total taxes and fees received by the Government grew by $11.9m (7.2 percent) to $177.6m during 2023.

“Underlying this development, transactional taxes on local intermediation activities rose by 9.9 percent to $106.9m on account of 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. In an offset, taxes on mortgages contracted by $5.7m to $5.4m in 2023.

“In addition, licence and registration fees rose by $2.3m (3.4 percent) to $70.7m 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 $0.4m relative to the previous year.”