Coverage: Q3 2025 · Information to 29 December 2025
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TGB Quarterly Regional Banking Monitor · 29 December 2025
Easing spread across the Americas in the second half of 2025, with 75bp of cuts in the United States and 100bp in Mexico, while Brazil held the Selic at 15.00% and US banks lifted third-quarter return on assets to 1.27%.
The desk view
The third quarter of 2025 turned the Americas towards easier money, but not everywhere. The Federal Reserve cut three times between September and December, to 3.50–3.75%, and Banco de México cut at each of its four decisions from August to December, to 7.00%. The Bank of Canada took its overnight rate to 2.25% and then held. Copom kept the Selic at 15.00% at all four meetings, and Banco de la República held at 9.25% four times on the same 4–2–1 vote. Bank earnings were strong: US return on assets reached 1.27% and Royal Bank of Canada earned C$20.4 billion in its fiscal year. The pressure points are Brazilian household credit, where 90-day arrears rose over the year, and sizable if shrinking US unrealised securities losses.
The regional picture
Where monetary policy in the Americas moved in the second half of 2025, it moved down, but at very different speeds. The Federal Reserve held the federal funds target range at 4.25–4.50% on 30 July 2025, then lowered it by 25bp on 17 September, 29 October and 10 December, to 3.50–3.75%. The Bank of Canada cut by 25bp to 2.5% on 17 September and to 2.25% on 29 October, and held on 10 December. Banco de México lowered its overnight interbank target by 25bp at each decision on 7 August, 25 September, 6 November and 18 December, taking it from 8.00% to 7.00%. Copom maintained the Selic at 15.00% throughout, and Banco de la República kept Colombia's benchmark rate at 9.25% at each of its four decisions.
Inflation explains much of the split. Canadian CPI inflation was 2.2% in October 2025, and the Bank of Canada saw its policy rate at about the right level if the economy evolved as projected. Colombian headline inflation was 5.3% in November, above its level at the end of 2024. In Brazil, the Focus survey's expectation for 2026 inflation was 4.2% in December, which left the Selic 10.8 percentage points above it.
Policy rates after the last decision of 2025, %
Source: Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (10 December 2025), 10 December 2025; Bank of Canada, Bank of Canada maintains policy rate at 2¼%, 10 December 2025; Banco Central do Brasil, Minutes of the 275th Copom meeting (December 9-10, 2025), 16 December 2025; Banco de México, Anuncio de Política Monetaria (18 de diciembre de 2025), 18 December 2025; Banco de la República (Colombia), Board of Directors decision, December 2025, 19 December 2025.
Policy decisions, July to December 2025
| Central bank | July/August | September | October/November | December | Net change |
|---|---|---|---|---|---|
| Federal Reserve | Held at 4.25–4.50% | Cut to 4.00–4.25% | Cut to 3.75–4.00% | Cut to 3.50–3.75% | −75bp |
| Bank of Canada | Held at 2.75% | Cut to 2.5% | Cut to 2.25% | Held at 2.25% | −50bp |
| Banco Central do Brasil | Held at 15.00% | Held at 15.00% | Held at 15.00% | Held at 15.00% | 0bp |
| Banco de México | Cut to 7.75% | Cut to 7.50% | Cut to 7.25% | Cut to 7.00% | −100bp |
| Banco de la República | Held at 9.25% | Held at 9.25% | Held at 9.25% | Held at 9.25% | 0bp |
Source: Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (30 July 2025), 30 July 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (17 September 2025), 17 September 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (29 October 2025), 29 October 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (10 December 2025), 10 December 2025; Bank of Canada, Bank of Canada holds policy rate at 2¾%, 30 July 2025; Bank of Canada, Bank of Canada lowers policy rate to 2½%, 17 September 2025; Bank of Canada, Bank of Canada lowers policy rate to 2¼%, 29 October 2025; Bank of Canada, Bank of Canada maintains policy rate at 2¼%, 10 December 2025; Banco Central do Brasil, Minutes of the 272nd Copom meeting (July 29-30, 2025), 5 August 2025; Banco Central do Brasil, Minutes of the 273rd Copom meeting (September 16-17, 2025), 23 September 2025; Banco Central do Brasil, Minutes of the 274th Copom meeting (November 4-5, 2025), 11 November 2025; Banco Central do Brasil, Minutes of the 275th Copom meeting (December 9-10, 2025), 16 December 2025; Banco de México, Anuncio de Política Monetaria (7 de agosto de 2025), 7 August 2025; Banco de México, Anuncio de Política Monetaria (25 de septiembre de 2025), 25 September 2025; Banco de México, Anuncio de Política Monetaria (6 de noviembre de 2025), 6 November 2025; Banco de México, Anuncio de Política Monetaria (18 de diciembre de 2025), 18 December 2025; Banco de la República (Colombia), Board of Directors decision, July 2025, 31 July 2025; Banco de la República (Colombia), Board of Directors decision, September 2025, 30 September 2025; Banco de la República (Colombia), Board of Directors decision, October 2025, 31 October 2025; Banco de la República (Colombia), Board of Directors decision, December 2025, 19 December 2025.
Banking-system data follow different calendars: US and Chilean figures refer to September 2025, Brazilian credit data to November 2025 and Colombian loan quality to September 2025.
United States: higher earnings, smaller securities losses
The 4,379 FDIC-insured institutions reported third-quarter 2025 net income of $79.3 billion, up $9.4 billion (13.5%) on the second quarter, and return on assets rose to 1.27%. Provision expense fell $9.2 billion (30.7%), largely because the prior quarter had carried expenses tied to the acquisition of one large bank, while net interest income rose $7.6 billion (4.2%). The net interest margin increased 9bp to 3.34%, above its pre-pandemic average of 3.25%. Because net interest income grew alongside the provision effect, the earnings gain was not purely a one-off.
Credit quality was stable in aggregate. The past-due and nonaccrual loan ratio was unchanged at 1.49%, and the net charge-off ratio was 0.61%, up 1bp on the quarter. Past-due and nonaccrual rates for non-owner-occupied commercial real estate, multifamily, auto and credit card loans stayed well above pre-pandemic averages. At banks with more than $250 billion of assets, the non-owner-occupied commercial real estate rate was 4.18%, down from a peak of 4.99% in the third quarter of 2024.
Loans rose $159.0 billion (1.2%) in the quarter, with loans to non-depository financial institutions and loans to purchase or carry securities posting the largest dollar increases, partly because of reclassifications. Domestic deposits rose $92.2 billion (0.5%), a fifth consecutive quarterly increase. The Federal Reserve's November 2025 Financial Stability Report also noted that bank credit to other financial entities continued to increase, which makes lending to non-bank financial firms a segment to watch.
Lower longer-term rates eased the securities overhang: unrealised losses fell $58.2 billion (14.7%) to $337.1 billion, the lowest since the first quarter of 2022. The Financial Stability Report judged the banking sector sound and resilient overall, but described fair value losses on fixed-rate assets as still sizable and sensitive to long-term rates. The Problem Bank List fell by a net two to 57 banks, and no banks failed during the quarter.
US banking industry, third quarter of 2025
| Indicator | Q3 2025 | Comparison |
|---|---|---|
| Net income | $79.3 billion | Up $9.4 billion (13.5%) on the prior quarter |
| Return on assets | 1.27% | 1.13% in Q2 2025; 1.09% in Q3 2024 |
| Net interest margin | 3.34% | Up 9bp; pre-pandemic average 3.25% |
| Past-due and nonaccrual loans | 1.49% | Unchanged; pre-pandemic average 1.94% |
| Unrealised securities losses | $337.1 billion | Down $58.2 billion (14.7%) |
| Deposit Insurance Fund reserve ratio | 1.40% | Up 4bp |
Source: Federal Deposit Insurance Corporation, FDIC-Insured Institutions Reported Return on Assets of 1.27 Percent and Net Income of $79.3 Billion in Third Quarter 2025, 24 November 2025; Federal Deposit Insurance Corporation, FDIC Quarterly Banking Profile: Third Quarter 2025 (statement), 24 November 2025.
The FOMC's December statement said the unemployment rate had edged up through September and inflation remained somewhat elevated; the decision drew three dissents, one for a 50bp cut and two for no change. Having ended the reduction of its securities holdings on 1 December, the Committee said it would start buying shorter-term Treasury securities as needed to keep reserves ample. The median participant projected a federal funds rate of 3.4% at the end of 2026, unchanged from September and below the target range set in December.
Canada: two cuts, then a hold
GDP declined by about 1.5% in the second quarter of 2025 and exports fell by 27%, while unemployment reached 7.1% in August. The Bank of Canada cut to 2.5% on 17 September and to 2.25% on 29 October, with the deposit rate at 2.20%, and projected growth of 1.1% in 2026. By December the economy had rebounded: GDP grew 2.6% in the third quarter while final domestic demand was flat, and unemployment fell to 6.5% in November. The Bank held at 2.25% on 10 December.
On 18 December 2025 OSFI maintained the Domestic Stability Buffer at 3.5% of risk-weighted assets, the level in effect since 1 November 2023, and said it expects the domestic systemically important banks to target a CET1 ratio of at least 11.5%. It assessed systemic vulnerabilities as stabilised but elevated, and near-term risks as low but rising amid global trade uncertainty. OSFI left the buffer unchanged even though the Bank of Canada had cut by 50bp from its July level.
Royal Bank of Canada reported net income of C$20.4 billion for the year ended 31 October 2025, up 25%, and a CET1 ratio of 13.5%, 2 percentage points above OSFI's target. Its ratio of provisions for credit losses on impaired loans was 37bps for the year, up 9bps on the prior year.
Brazil: a long hold at 15%
Copom kept the Selic at 15.00% at all four meetings from July to December 2025. In December it said maintaining the rate at its current level for a very prolonged period was appropriate, and that it would not hesitate to resume hiking if appropriate. The Focus survey's inflation expectations for 2025 and 2026 eased from 5.1% and 4.4% at the July meeting to 4.4% and 4.2% in December, and Copom's reference scenario put inflation at 3.2% at its relevant horizon of the second quarter of 2027. The guidance points to an extended hold rather than early cuts.
Credit growth slowed, and arrears were higher than a year earlier. The credit balance of the national financial system was BRL6.8 trillion in September 2025 and BRL7.0 trillion in November, when 12-month growth slowed to 9.5% from 10.2% in October. The 90-day past-due ratio for non-earmarked household credit was 6.3% in November, up 1.0 percentage point in 12 months. The average rate on that credit reached 59.4% a year, and the household debt service ratio was 29.4% in October.
Brazil: credit and arrears, national financial system
| Indicator | September 2025 | November 2025 |
|---|---|---|
| Credit balance | BRL6.8 trillion | BRL7.0 trillion |
| 12-month credit growth | 10.1% | 9.5% |
| 90-day past-due ratio, total portfolio | 3.9% | 3.8% |
| 12-month change in past-due ratio | +0.7 percentage point | +0.7 percentage point |
Source: Banco Central do Brasil, Monetary and credit statistics, press release (September 2025 data), 29 October 2025; Banco Central do Brasil, Monetary and credit statistics, press release (November 2025 data), 26 December 2025.
The Banco Central do Brasil's November 2025 Financial Stability Report found no relevant risk to financial stability and comfortable capitalisation and liquidity. It warned that problem assets had increased in almost all household portfolios, especially rural credit, and among smaller firms, and would remain under pressure. Capital levels increased slightly, though most of the impact of new provisioning and operational-risk methodologies falls between 2026 and 2028. The Financial Stability Committee held the countercyclical capital buffer at 0% in May and August 2025. Household asset quality is the main domestic risk for Brazilian banks.
Mexico: steady cuts despite firmer inflation
Banco de México cut its target by 25bp to 7.75% on 7 August, 7.50% on 25 September, 7.25% on 6 November and 7.00% on 18 December, each time by majority with one member voting to hold. Inflation did not ease: between the first half of October and November, headline inflation rose from 3.63% to 3.80% and core from 4.24% to 4.43%. The Board still expected headline inflation to reach its 3% target in the third quarter of 2026, and said it would assess the timing of additional adjustments, wording that leaves room for a pause.
Banco de México's December 2025 Financial Stability Report said the capital adequacy ratio of commercial banks increased between March and September 2025, and that capitalisation and liquidity widely exceed regulatory minimums. Stress tests indicated sufficient capital and liquidity to withstand adverse scenarios. Non-performing loans to firms rose but remained below historical averages, and consumer non-performing loan ratios increased marginally for banks.
Colombia: a divided board on hold
Banco de la República held at 9.25% from 31 July to 19 December, each time with four directors voting to hold, two for a 50bp cut and one for a 25bp cut. Headline inflation rose to 5.5% in October before easing to 5.3% in November, while GDP grew at an annual rate of 3.4% in the third quarter. The Board noted that the failure to pass the Financing Law means the government must find measures to balance the 2026 budget.
The December Financial Stability Report found that credit institutions maintain solid capital and liquidity, that profitability has improved and that delinquency continues to decline. The central bank's loan quality indicator fell from 5.2% for 2024 to 4.7% in September 2025. The report flagged that local financial institutions have bought most of the government's increased debt issuance, raising their market risk, and that credit quality has deteriorated slightly for larger firms and in trade and real estate.
Chile: lending picks up
The Comisión para el Mercado Financiero reported that banks' effective loans grew 2.19% in real terms over the 12 months to September 2025, the fastest in 24 months. The 90-day-plus delinquency ratio rose to 2.38% from 2.27% in August, while the impaired-portfolio ratio eased to 5.99%. Compared with a year earlier, return on average assets rose to 1.35% and return on average equity fell to 15.48%, with lower taxes and higher fee and financial income offsetting a weaker interest margin.
Regulation and supervision
On 25 November 2025 the US agencies issued a final rule modifying the enhanced supplementary leverage ratio standards, which reduces tier 1 capital requirements for affected holding companies by less than 2% in aggregate and caps the overall requirement for their bank subsidiaries at 4%. The same day they proposed lowering the community bank leverage ratio from 9% to 8%. Elsewhere, capital buffers were unchanged: OSFI kept its buffer at 3.5% and Brazil's countercyclical buffer stayed at 0%.
Cross-country comparison
Americas banking monitor: policy rates and system indicators (reference dates in brackets)
| Country | Policy rate after last 2025 decision | Capital | Asset quality | Profitability |
|---|---|---|---|---|
| United States | 3.50–3.75% | CET1 at historically high levels across bank types | Past-due and nonaccrual 1.49% (Q3 2025) | ROA 1.27% (Q3 2025) |
| Canada | 2.25% | DSB 3.5%; RBC CET1 13.5% (31 October 2025) | RBC impaired-loan PCL ratio 37bps | RBC net income C$20.4bn (year to 31 October 2025) |
| Brazil | 15.00% | Capital levels increased slightly | 90-day past due 3.8% (November 2025) | Not available |
| Mexico | 7.00% | Commercial-bank CAR up (March to September 2025) | Firm NPLs below historical averages | Not available |
| Colombia | 9.25% | Solid capital and liquidity | Loan quality indicator 4.7% (September 2025) | Profitability improved |
| Chile | Not available | Not available | 90-day-plus delinquency 2.38% (September 2025) | ROAA 1.35%; ROAE 15.48% (September 2025) |
Source: Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (10 December 2025), 10 December 2025; Board of Governors of the Federal Reserve System, Financial Stability Report, November 2025, 30 November 2025; Federal Deposit Insurance Corporation, FDIC-Insured Institutions Reported Return on Assets of 1.27 Percent and Net Income of $79.3 Billion in Third Quarter 2025, 24 November 2025; Bank of Canada, Bank of Canada maintains policy rate at 2¼%, 10 December 2025; Office of the Superintendent of Financial Institutions, OSFI maintains the level of the Domestic Stability Buffer at 3.5% - Letter (December 2025), 18 December 2025; Royal Bank of Canada, Royal Bank of Canada reports fourth quarter and 2025 results, 3 December 2025; Banco Central do Brasil, Minutes of the 275th Copom meeting (December 9-10, 2025), 16 December 2025; Banco Central do Brasil, Financial Stability Report, Volume 24, N. 2, November 2025, 30 November 2025; Banco Central do Brasil, Monetary and credit statistics, press release (November 2025 data), 26 December 2025; Banco de México, Anuncio de Política Monetaria (18 de diciembre de 2025), 18 December 2025; Banco de México, Financial Stability Report – December 2025, 10 December 2025; Banco de la República (Colombia), Board of Directors decision, December 2025, 19 December 2025; Banco de la República (Colombia), Financial Stability Report - second half of 2025, 23 December 2025; Banco de la República (Colombia), Reporte de Estabilidad Financiera 2025-II (presentation), 5 December 2025; Comisión para el Mercado Financiero (Chile), CMF informa el desempeño de bancos y cooperativas supervisadas a septiembre de 2025, 29 October 2025.
Brazil and Colombia ended 2025 with the highest policy rates of the five central banks covered, and were the only two of them that did not cut after July. US and Chilean banks reported returns on assets of 1.27% and 1.35%, with US past-due and nonaccrual loans at 1.49% and Chilean 90-day-plus arrears at 2.38%, on different definitions, while Brazil's 90-day arrears were up 0.7 percentage point over 12 months.
Outlook risks
For US banks, unrealised losses of $337.1 billion remain sensitive to long-term rates. In Brazil, the central bank expects problem assets to remain under pressure while Copom keeps rates at 15.00% for a very prolonged period. In Canada, OSFI sees near-term risks as low but rising. In Mexico, inflation rose in the autumn even as rates fell. In Colombia, fiscal pressure reaches bank balance sheets through holdings of government debt.
What to watch
- 1 January 2026: US banking organisations may begin applying the modified enhanced supplementary leverage ratio standards, which take full effect on 1 April 2026.
- 28 January 2026: the Bank of Canada's next rate announcement, with a new Monetary Policy Report.
- Third quarter of 2026: the quarter in which Banco de México expects headline inflation to converge to its 3% target.
Primary sources: Federal Deposit Insurance Corporation, FDIC-Insured Institutions Reported Return on Assets of 1.27 Percent and Net Income of $79.3 Billion in Third Quarter 2025, 24 November 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (30 July 2025), 30 July 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (10 December 2025), 10 December 2025; Banco de México, Anuncio de Política Monetaria (7 de agosto de 2025), 7 August 2025; Banco de México, Anuncio de Política Monetaria (18 de diciembre de 2025), 18 December 2025; Banco Central do Brasil, Minutes of the 275th Copom meeting (December 9-10, 2025), 16 December 2025; Federal Deposit Insurance Corporation, FDIC Quarterly Banking Profile: Third Quarter 2025 (statement), 24 November 2025; Banco Central do Brasil, Monetary and credit statistics, press release (November 2025 data), 26 December 2025; Bank of Canada, Bank of Canada lowers policy rate to 2¼%, 29 October 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (17 September 2025), 17 September 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (29 October 2025), 29 October 2025; Banco de México, Anuncio de Política Monetaria (25 de septiembre de 2025), 25 September 2025; Banco de México, Anuncio de Política Monetaria (6 de noviembre de 2025), 6 November 2025; Bank of Canada, Bank of Canada maintains policy rate at 2¼%, 10 December 2025; Banco Central do Brasil, Minutes of the 272nd Copom meeting (July 29-30, 2025), 5 August 2025; Banco Central do Brasil, Minutes of the 273rd Copom meeting (September 16-17, 2025), 23 September 2025; Banco Central do Brasil, Minutes of the 274th Copom meeting (November 4-5, 2025), 11 November 2025; Banco de la República (Colombia), Board of Directors decision, July 2025, 31 July 2025; Banco de la República (Colombia), Board of Directors decision, September 2025, 30 September 2025; Banco de la República (Colombia), Board of Directors decision, October 2025, 31 October 2025; Banco de la República (Colombia), Board of Directors decision, December 2025, 19 December 2025; Royal Bank of Canada, Royal Bank of Canada reports fourth quarter and 2025 results, 3 December 2025; Board of Governors of the Federal Reserve System, Financial Stability Report, November 2025, 30 November 2025; Bank of Canada, Bank of Canada lowers policy rate to 2½%, 17 September 2025; Bank of Canada, Bank of Canada holds policy rate at 2¾%, 30 July 2025; Comisión para el Mercado Financiero (Chile), CMF informa el desempeño de bancos y cooperativas supervisadas a septiembre de 2025, 29 October 2025; Banco de la República (Colombia), Reporte de Estabilidad Financiera 2025-II (presentation), 5 December 2025; Board of Governors of the Federal Reserve System, Summary of Economic Projections, December 10, 2025 (accessible version), 10 December 2025; Office of the Superintendent of Financial Institutions, OSFI maintains the level of the Domestic Stability Buffer at 3.5% - Letter (December 2025), 18 December 2025; Banco Central do Brasil, Monetary and credit statistics, press release (September 2025 data), 29 October 2025; Banco Central do Brasil, Financial Stability Report, Volume 24, N. 2, November 2025, 30 November 2025; Banco de México, Financial Stability Report – December 2025, 10 December 2025; Banco de la República (Colombia), Financial Stability Report - second half of 2025, 23 December 2025; Board of Governors of the Federal Reserve System, FDIC and OCC, Agencies issue final rule to modify certain regulatory capital standards, 25 November 2025; Board of Governors of the Federal Reserve System, FDIC and OCC, Agencies issue proposal to enhance community banks' ability to serve their communities while maintaining strong capital requirements, 25 November 2025.