The Central Bank has released its report on the “Gross Economic Contribution of the Financial Sector” for 2006. This latest report focuses primarily on an analysis of the licensing, employment and expenditure trends of banks and trust companies operating in The Bahamas.

A combination of factors continue to support the success of The Bahamas in financial services, the Central Bank says, principal among which are the diverse pool of skilled professionals, a commitment to remain up-to-date in the provision of financial products, and strong emphasis on ensuing compliance with international standards and regulations. Traditionally, banking and trust activities account for the largest share of the sector, with domestic banks offering retail banking services, and international institutions specializing primarily in wealth and portfolio management.

The report confirms that the financial sector continues to contribute positively to the growth of the Bahamian economy, as evidenced by sustained improvements in employment, salaries and capital investments by banks and trust companies. Of the increases in employment, the Central Bank says developments reflected expansions in banking operations, as the range of services provided to clients increased, coupled with continued efforts by the sector to comply with its physical presence requirements. Moreover, employment growth supported the industry’s pressing need for high-skilled, bilingual employees, for both front and back end office functions.

The 2006 survey data reveals that:

• the asset base of international banks and trust companies indicated an improvement to $339.4 billion while total assets of the domestic banks expanded to $7.8 billion.

• profits were up by 27.9%; consequently, the sector experienced an improvement in its average return on assets ratio, to an estimated 4.02%.

• the total number of persons employed in the banking sector rose for the third consecutive year, to 4,662. Specifically, the number of Bahamians employed increased by 158 (3.8%) to 4,368 and accounted for 93.7% of the total workforce. The number of expatriate employees rose by 22% (53) to 294, to represent 6.3% of the workforce.

• banks’ total spendings were elevated by 10.5% to $470.5 million, significantly above the average outlay of $421.7 million over the past five years.

• salary expenses were boosted by 8.1% to $228.2 million – outpacing both the previous year’s increase of 1.6% and the 2.0% average growth for the five years through 2005. The average salary paid to employees rose by 3.2% to $48,958 and expenditures related to staff training were increased to $2.8 million. The spread between offshore and domestic average salaries narrowed by an estimated $908 to $24,312, as the 3.8% rise in domestic banking average salaries to $43,195 outpaced the 1.0% expansion in offshore sector salaries to $67,507.

• capital spending escalated by 45.0%; in particular, investments in land and office equipment purchases rose strongly by 61.3%, along with a 28.4% expansion in investments related to new premises.

**Other Sectors**

Statistics indicate that the insurance industry continued to perform well during 2006, with the total number of insurance companies standing at 205, and the sector employing approximately 1,391 persons.

Preliminary estimates from the Department of Cooperative Development revealed that total assets in the sector strengthened by 14.2% to $201.0 million.

The number of active mutual funds under management rebounded to 725 in 2006 and, correspondingly, asset valuations firmed by US$29.8 billion to US$205.0 billion. A net increase of four (4) investment fund administrators brought the total to 63 by end-2006.

With regard to capital market developments, the Central Bank reports that buoyed by the general improvement in economic conditions the BISX All Share Price Index appreciated by 24.1% to 1,676.2 points, with total market capitalization of shares traded on BISX rising by 20.9% to $3.2 billion.

The Central Bank concludes that its review of the financial sector’s activities revealed a trend of continued strengthening, with the outlook for the sector remaining optimistic, as institutions continue to employ high caliber individuals and strive to maintain a competitive advantage over other jurisdictions.