Mexican Banks Report MX$222 Billion in Profits By September 2024

Mexican banks reported cumulative profits of MX$222.7 billion through the end of September 2024, an increase of MX$17.2 billion over the same period last year, according to data from the National Banking and Securities Commission (CNBV). Total profits for the sector in 2023 reached nearly MX$273 billion.

The increase in banking profits has been driven by sustained high interest rates, increased lending activity, and overall economic stability, which bolstered domestic demand. However, analysts expect a deceleration in economic growth, credit expansion, and, subsequently, bank profits in the coming months.

BBVA, Banorte, and Santander emerged as the top banks in terms of profits as well as metrics such as lending volume, deposits, and client numbers. CNBV data shows that BBVA reported profits of MX$70.5 billion by the end of September 2024, compared to MX$67.4 billion in the same period last year. Banorte’s profits reached MX$34.3 billion, up from MX$31.7 billion, while Santander recorded profits of MX$22.3 billion, slightly down from MX$22.4 billion in 2023.

Other major players include Inbursa, which saw profits rise to MX$18.7 billion, aided by its acquisition of automotive finance company Cetelem. Citibanamex followed with MX$18.1 billion in profits, up from MX$15.9 billion. Scotiabank and HSBC reported profits of MX$7.9 billion and MX$6.8 billion, respectively.

These seven banks collectively generated profits of MX$178.6 billion in the first nine months of 2024. The remaining profits were distributed among Mexico’s 47 other banking institutions. Notably, BanBajío, while not classified as systemically important, posted substantial profits of MX$8.2 billion during the same period.

Looking ahead, Mexican banking profits may slow as the sector enters a phase of interest rate reductions, alongside a broader economic slowdown and reduced lending activity. Jorge Arce, Vice President of the Mexican Banking Association (ABM), stated that declining interest rates could put pressure on bank profits. “Lower interest rates certainly represent headwinds for banks, but profitability also hinges on factors like expected losses, capital usage, and inflation in our operating costs,” Arce said. “We are working to improve efficiency, expand our customer base, and increase service depth.”

CNBV data reveals that by the end of September 2024, Mexico’s total bank loan portfolio reached MX$7.3 trillion, while total deposits stood at MX$8.5 trillion. The sector’s non-performing loan ratio was 2.06% as of the third quarter.

Private sector lending by commercial banks grew by 7.1% year-over-year in real terms in September, slightly below the 7.9% growth rate observed in August, according to Mexico’s Central Bank (Banxico). Consumer loans led with a 12.7% increase, while corporate lending and mortgage lending grew by 6.6% and 2.8%, respectively.