Financial Stability Report 2025
Published: Wednesday July 29th, 2026
The Central Bank of The Bahamas (the Bank), as part of its mandate to promote the stability of the financial sector, along with its associated regulators, the Insurance Commission and the Securities Commission, developed this report which seeks to provide an overview of key developments within the financial sector and an assessment of the underlying risks to financial stability.
Financial stability risks within The Bahamas financial sector remained well contained, during 2025 as well as in the outlook for 2026. Nevertheless, the protracted geopolitical conflicts in Eastern Europe and the Middle East, coupled with ongoing global trade policy uncertainty have dampened the global economic outlook, underscoring slightly elevated risks over the near-term.
The 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)[1]. 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.
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. The consolidated stress tests results—inclusive of credit, liquidity and interest rate risks—underscored resilience with capital ratios, under simulated shocks staying above the regulatory minimum of 17.0%, given a baseline average capital to risk-weighted assets ratio which fluctuated between 35.0% and 38.5%. However, the Bank Stability Index (BSI) ebbed slightly in 2025, as compared to 2024. Similarly, the Aggregate Financial Stability Index (AFSI) softened, relative to the previous year, reflecting the rise in global economic uncertainties.
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. In addition, contagion risks remained low, as a result of banks’ small exposures relative to capital levels.
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. Nevertheless, capital adequacy levels continued to exceed the international PEARLS benchmark.
Performance indicators in the insurance sector maintained an upward trajectory, with both life and non-life profitability strengthening over the review period. In addition, although the sector’s financial stability indicators showed some moderation, key ratios remained well above international standards.
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. Work also continued toward the development of a Fast Payment System (FPS), which would enhance payments efficiency by reducing transactions’ settlement time and cost.
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. However, profitability indicators improved for fund administrators in 2024—the latest period for which data is available.
Against this backdrop, the Central Bank will continue its surveillance of financial institutions to ensure financial stability over the medium-term. Given the moderated economic outlook, which has implications for domestic economic activity, the Bank will continue to pursue policies that promote sustained improvements in credit quality, while addressing an orderly medium-term moderation in excess liquidity within the sector. Further, through the BFSC, the Bank will continue to bolster coordinating mechanisms to improve financial stability oversight.
