According to The Central Bank of The Bahamas (CBOB), in its latest Financial Stability Report for December 2025, financial stability risks within The Bahamas’ financial sector remained well contained during 2025 as well as in the outlook for 2026. Nevertheless, the geopolitical risks in Eastern Europe and the Middle East, coupled with ongoing global trade policy uncertainty, have dampened the global economic outlook and underscored slightly elevated risks over the near term.
The report further notes that stability within the domestic financial system remains buttressed by strong capital and liquidity buffers among systemically important institutions, improving balance sheet strength, and strengthening coordination mechanisms among key Bahamian financial sector regulators and through the Bahamas Financial Stability Council (BFSC).
“In its first full year of proceedings, the BFSC agreed to pursue near-term priorities, which included strengthening the analytical framework for financial stability, particularly around interconnectedness across key sectors, assessment of climate and cybersecurity-related risks, and improving data coverage. Against this backdrop, the Central Bank, in collaboration with council members, continue to monitor trends in the financial system, with the aim of identifying any emerging risks – both domestic and external – to stability.”
The report states that in 2025, commercial banks maintained robust capital buffers and satisfactory provisioning levels, which resulted in no new concerns arising regarding stability in the banking sector.
“As to the level of interconnectedness in the banking system, network analysis revealed that despite some interconnectedness between domestic banks, the high capital and liquidity ratios mitigate any related systemic risk,” the report points out.
According to the report, the credit union sector continued to perform strongly, with improved credit quality and overall balance sheet indicators. Nevertheless, profitability was marginally reduced, and average liquidity slightly moderated. In addition, capital adequacy levels continued to exceed the international PEARLS (protection, effective financial structure, asset quality, rates of return and cost, liquidity and signs of growth) benchmark.
“Performance indicators in the insurance sector maintained an upward trajectory, with both life and non-life profitability strengthening over the review period,” notes the report. “The domestic payments and settlement system is also systemically important to financial stability. In this space, growth in the use of digital financial services continued in 2025, supported by the Central Bank’s continued efforts to modernize the domestic payments landscape.
“In the securities industry, no material risk to financial stability appeared over 2025. With most activities concentrated outside of the domestic space, interconnectedness with the domestic banking and insurance sectors remained low. Asset quality indicators continued to maintain adequacy, despite a marginal decline in assets under administration for investment fund administrators, and the regulatory capital surplus for firms under the Securities Industry Act.”