Banorte Reports Modest Profit Growth and Sees a 2026 Driven by Consumption and Investment, Despite Rate Cuts

The bank posted a marginal increase in earnings as Banxico’s rate declines squeeze the margin, while consumer lending keeps momentum intact.

Grupo Financiero Banorte started the year with moderate growth in its results: the institution reported net income of 15.458 billion pesos in the first quarter, up 1% from the same period a year earlier. Performance reflected two forces currently shaping banking in Mexico: on the one hand, a downward adjustment in interest income amid a cycle of benchmark rate cuts; on the other, higher expenses tied to technology investment and the expansion and modernization of its branch network.

On the earnings call, management said part of the spending reflects investments already included in the budget, particularly in technology platforms and branches. These outlays tend to pressure results in the short term, but they can also improve efficiency and the customer experience over the medium term, in an environment where banks are competing more aggressively on digitization, security, and analytics capabilities for credit origination.

The component most sensitive to the monetary backdrop was the net interest margin: interest income totaled 88.573 billion pesos, a 19% year-over-year decline. The drop comes as the Bank of Mexico (Banxico) has lowered its policy rate from cycle highs—moves that tend to gradually reduce funding costs and reprice loans, though with different lags depending on portfolio type and the deposit mix.

From a macro standpoint, Banorte maintained its 2026 economic growth forecast at 1.8%. The bank’s view is that, unlike 2025—when the main boost came from the external sector—next year could see a more balanced contribution if consumption and investment hold up, as long as the labor market remains solid and regulatory and trade uncertainty does not discourage spending decisions by businesses and households.

The group also highlighted the review process for the USMCA, whose formal discussions begin in July and could extend over time. Expectations for a “good renegotiation” translate, for the financial sector, into a scenario of continued trade and investment flows tied to manufacturing, logistics, and supply chains—areas that are especially important for Mexico given its integration with the United States and the momentum behind nearshoring.

Consumer lending: the growth engine, but with close monitoring of asset quality

In its portfolio, Banorte reported a loan book of 1.2 trillion pesos, up 6% year over year. The strongest momentum came from consumer credit, which grew 11%, with notable increases in auto financing (30%), credit cards (14%), and payroll loans (12%). This pattern aligns with an economy where consumption has proven resilient, supported by formal employment, remittance inflows, and wage gains in recent years; however, it also requires monitoring credit risk, especially if growth slows or if disinflation causes real income to rise more slowly.

In contrast, lending to governments fell 5%, while commercial lending rose 6%. The mix suggests greater emphasis on segments with better risk-adjusted returns and on customers tied to productive activity, although the future trajectory will depend on private investment, companies’ appetite to expand capacity, and confidence shaped by public policy signals.

An analysis by Ve por Más (Bx+) underscored that, despite a slowdown, Banorte continues to post loan growth above the system average, and that its management of funding costs has helped contain financing expenses and support the margin. In a declining-rate environment, the ability to adjust deposit gathering, manage maturities, and segment pricing becomes critical to protecting profitability without tightening credit conditions too much.

Looking ahead, the bank’s performance—and the sector’s—will hinge on a delicate balance: capturing the benefits of lower rates to stimulate credit and investment without loosening risk standards; while also absorbing the cost of technology modernization and cybersecurity demanded by an increasingly digital financial intermediation model.

Overall, the results show a banking sector entering a new phase of the monetary cycle with stable profits, pressure on interest income, and consumer lending as the main pillar, while the 2026 outlook will be shaped by Banxico’s path, investment, and the direction of the USMCA.