Lower rates and a weak economy cool Mexican banks’ profits at the start of 2026

Banxico’s rate cuts and a sluggish economic start squeezed net interest margins and slowed the banking system’s earnings.

Mexico’s banking system began 2026 showing signs that profitability is cooling, in an environment shaped by the Bank of Mexico (Banxico) rate-cut cycle and weaker economic performance. In the first two months of the year, cumulative profits for banks operating in the country totaled 48.985 billion pesos, down 2% year over year, according to regulatory figures from the National Banking and Securities Commission (CNBV).

The figure matters because it breaks a streak of several years in which the first two months typically showed growth, supported by a prolonged period of high rates and more dynamic credit demand. Now, monetary normalization has begun to show up in results: as benchmark rates fall, interest income generation tends to moderate—especially when repricing happens faster on the asset side (loans) than on the funding side.

Against that backdrop, the system’s interest income fell 8.4% year over year to 279.525 billion pesos as of the end of February, from 305.115 billion pesos in the same period a year earlier. Banxico took its policy rate to 6.75% at its March decision, below the 9% seen a year earlier, which reduced the “tailwind” that had boosted net interest margins during the tightening phase.

In terms of scale, the institutions with the largest amount of interest income remain concentrated among the system’s biggest players, including Banorte, BBVA, Santander, Banamex, and Banco Azteca, reflecting their customer base, market share, and portfolio diversification. At the same time, within the group of systemically important banks, some institutions posted more pressured results during the period, consistent with a seasonally slower start and a tough comparison against historically high profits.

Sector analysts often expect a first quarter with less momentum due to seasonal factors and greater caution from households and businesses at the beginning of the year. However, the 2026 read suggests the effect of the economic slowdown was added to the direct impact of lower rates, increasing the challenge of maintaining loan-book growth without worsening credit quality.

The pulse of consumption and tax collection: signals weighing on credit

Bank performance is not isolated from the real economy. The weakness seen in the first months of the year showed up in consumption-linked indicators: Banamex estimates a 1.3% GDP contraction in the first quarter, with a recovery through the rest of the year. In parallel, VAT collection fell 8% between January and February, a data point that is often read as a sign of weaker spending momentum—though factors such as base effects and exchange-rate moves that change the taxable base at customs also play a role.

For banks, softer consumption typically translates into slower origination in segments such as personal loans, credit cards, and trade finance, while for businesses it can lead to more cautious investment decisions. In this environment, the usual strategy is to protect margins through pricing adjustments and portfolio mix, strengthen deposit gathering, and maintain prudent risk policies to keep slower growth from turning into a rise in delinquencies.

Looking ahead, the outlook for banks will depend on how quickly the expected rebound in the second quarter takes hold and on the path of rates. If growth regains traction, credit volumes could offset part of the pressure on net interest margins; if not, institutions may lean more on fee income, operating efficiency, and cost control to stabilize results.

In perspective, the first two months of 2026 point to a regime shift: after years in which high rates drove record profits, the sector is entering a stage in which performance will depend more on economic activity, competition for customers, and origination quality. The main takeaway is that banks are facing a natural adjustment to less restrictive monetary conditions, with consumption as a key variable for the rest of the year.