Coverage: Q4 2024 · Information to 31 March 2025
TGB Premium Intelligence — Open Access
This report was originally available exclusively to TGB Premium subscribers. It is now part of our open research archive.
TGB Quarterly Regional Banking Monitor · 31 March 2025
Rate cuts in the United States, Canada, Mexico and Colombia contrasted with 350bp of Selic increases in Brazil between November 2024 and March 2025, while US banks lifted fourth-quarter 2024 return on assets to 1.11%.
The desk view
The fourth quarter of 2024 split the Americas into two monetary regimes. The Federal Reserve cut twice to 4.25–4.50% and then held through March 2025, while the Bank of Canada and Banco de México each lowered their policy rates by 150bp in four steps, to 2.75% and 9.00% respectively. Brazil moved the other way: Copom took the Selic from 10.75% before its November meeting to 14.25% on 19 March 2025. US bank margins widened as funding costs fell faster than asset yields. The pressure points are US unrealised securities losses, which rose to $482.4 billion at end-2024, Colombian asset quality and earnings, and the cost of Brazil's tightening for borrowers.
The regional picture
Monetary policy across the Americas diverged in the fourth quarter of 2024. The Federal Reserve lowered the federal funds target range by 25bp on 7 November 2024 and by a further 25bp on 18 December, to 4.25–4.50%. The Bank of Canada moved in 50bp steps, cutting its overnight rate target to 3.75% on 23 October and to 3.25% on 11 December. Banco de México cut by 25bp on 14 November and again on 19 December, taking its overnight interbank target to 10.00%. Banco de la República cut Colombia's benchmark rate by 50bp to 9.75% on 31 October and by 25bp to 9.50% on 20 December. Brazil was the exception: Copom raised the Selic by 50bp to 11.25% on 6 November and by 100bp to 12.25% on 11 December.
The first quarter of 2025 widened the gap. The Federal Reserve held its range at 4.25–4.50% on 29 January and 19 March 2025. The Bank of Canada slowed to 25bp moves, cutting to 3% on 29 January and to 2.75% on 12 March. Banco de México accelerated to 50bp moves, cutting to 9.50% on 6 February and to 9.00% on 27 March. Banco de la República held its policy rate at 9.5% on 31 January and again on 31 March. Copom delivered two further 100bp increases, to 13.25% on 29 January and to 14.25% on 19 March.
Across the four decisions from 23 October 2024 to 12 March 2025, Canada's overnight target fell by 150bp. Across the four decisions from 14 November 2024 to 27 March 2025, Mexico's target also fell by 150bp. Across the four Copom decisions from 6 November 2024 to 19 March 2025, the Selic rose by 350bp. Inflation readings help explain the split: Canadian CPI was 1.9% in January 2025 and Mexican headline inflation 3.67% in the first half of March 2025, whereas Copom's own reference-scenario projection put Brazilian IPCA inflation at 5.1% for 2025.
Policy rates after the last decision on or before 31 March 2025, %
Source: Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (19 March 2025), 19 March 2025; Bank of Canada, Bank of Canada reduces policy interest rate by 25 basis points to 2¾% (12 March 2025), 12 March 2025; Banco Central do Brasil, Minutes of the 269th Copom meeting (18-19 March 2025), 25 March 2025; Banco de México, Monetary Policy Statement, press release (27 March 2025), 27 March 2025; Banco de la República (Colombia), Board of Directors decision, 31 March 2025: policy rate unchanged at 9.5% (press release), 31 March 2025.
Banking-system indicators are published on different calendars, so the comparisons that follow mix reference dates: US and Chilean figures refer to the end of 2024 (US capital data to the first half of 2024), Brazilian data to December 2024, January 2025 or June 2024, Canadian supervisory data to October 2024, Mexican data to September 2024 and Colombian data to June 2024.
United States: wider margins, larger unrealised losses
The December 2024 FOMC statement said that, in considering the extent and timing of additional adjustments to the target range, the Committee would carefully assess incoming data, the evolving outlook and the balance of risks. The December 2024 projections put the median participant's federal funds rate at 4.4% for end-2024, 3.9% for end-2025, 3.4% for end-2026 and 3.1% for end-2027, with a longer-run level of 3.0%. That median path implied 0.5 percentage point of easing during 2025. When the Committee held rates on 29 January 2025, it described the unemployment rate as having stabilised at a low level, labour market conditions as solid and inflation as somewhat elevated. On 19 March 2025 it kept the range at 4.25–4.50% and announced that from April it would cut the monthly redemption cap on Treasury securities from $25 billion to $5 billion, while keeping the cap on agency debt and agency mortgage-backed securities at $35 billion.
The 4,487 FDIC-insured institutions reported fourth-quarter 2024 net income of $66.8 billion and a return on assets of 1.11%, up $1.5 billion (2.3%) on the third quarter. Full-year 2024 net income was $268.2 billion, up $14.1 billion (5.6%) on 2023, and full-year return on assets was 1.12%. The industry net interest margin rose 5bp to 3.28% in the fourth quarter, and it increased in every asset-size group. In the quarter the yield on earning assets fell 19bp and the cost of funds fell 24bp, which the FDIC linked to the three Federal Reserve rate cuts in the second half of 2024. The 5bp gap between the two declines matches the margin increase. This suggests that banks' funding costs were repricing faster than their asset yields as the easing cycle progressed. The industry's annual rate of loan growth held at 2.2%, and domestic deposits rose $214.0 billion (1.2%) on the quarter.
Asset quality weakened only at the margin. The past-due and nonaccrual loan ratio rose 6bp to 1.60% of total loans in the fourth quarter, still below its pre-pandemic average of 1.94%. The net charge-off ratio rose 3bp to 0.70%. Credit cards remained weaker: the card net charge-off ratio was 4.57%, up 9bp on the quarter and 109bp above its pre-pandemic average. The past-due and nonaccrual ratio for non-owner occupied commercial real estate loans fell 5bp to 2.02%, but remained 175bp above its pre-pandemic average. The pattern points to credit cards and non-owner occupied commercial real estate as segments where, respectively, charge-offs and past-due and nonaccrual loans remain above pre-pandemic averages.
Total unrealised losses on held-to-maturity and available-for-sale securities were $482.4 billion at the end of the fourth quarter, up $118.4 billion (32.5%) on the quarter as longer-term rates rose. That implies a third-quarter level of $364.0 billion. The increase came in a quarter in which the Federal Reserve cut its policy rate twice, which indicates that longer-term yields rather than the policy rate drove securities valuations. The Deposit Insurance Fund balance rose $4.0 billion to $137.1 billion in the fourth quarter, and the reserve ratio rose 3bp to 1.28%.
Capital buffers entered the period strong. The Federal Reserve's November 2024 Financial Stability Report said the common equity Tier 1 ratio of US banks increased further across all bank-size categories in the first half of 2024. At bank level, JPMorgan Chase reported fourth-quarter 2024 net income of $14.0 billion and record full-year 2024 net income of $58.5 billion.
Canada: deep cuts, steady capital buffers
The Bank of Canada cut its overnight rate target by 50bp to 3.75% on 23 October 2024, with the Bank Rate at 4% and the deposit rate at 3.75%. At that decision it noted that CPI inflation had declined from 2.7% in June to 1.6% in September 2024. On 11 December it cut by a further 50bp to 3.25%, with the Bank Rate at 3.5% and the deposit rate at 3.25%. At the same decision it said the possibility of new US tariffs on Canadian exports had increased uncertainty and clouded the economic outlook.
The pace slowed in 2025. On 29 January the Bank cut by 25bp to 3%, with the Bank Rate at 3.25% and the deposit rate at 2.95%. It also announced the end of quantitative tightening, with asset purchases to restart gradually in early March 2025 so that its balance sheet would stabilise and then grow modestly. On 12 March it cut by 25bp to 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. The Bank said January 2025 CPI inflation was 1.9%, slightly firmer than expected, and that it expected inflation to rise to about 2½% in March with the end of the GST/HST tax break.
On the prudential side, the Office of the Superintendent of Financial Institutions (OSFI) announced on 17 December 2024 that it would maintain the Domestic Stability Buffer at 3.5%, the level in effect since 1 November 2023. OSFI assessed that systemic vulnerabilities remained elevated but stable, and that near-term risks were low but rising. Holding the buffer while the central bank was cutting rates indicates that the supervisor saw no case either to release capital or to demand more.
Bank capital was broadly stable. The average CET1 ratio of Canada's domestic systemically important banks was 13.3% of risk-weighted assets in October 2024, against 13.2% in July 2024. The Bank of Canada's May 2024 Financial Stability Report had put the average CET1 ratio of large banks at 13.4% in the first quarter of 2024, about 2 percentage points above the pre-pandemic level. Royal Bank of Canada reported net income of C$16.2 billion for the fiscal year ended 31 October 2024, up C$1.6 billion or 11%, and ended the year with a CET1 ratio of 13.2%.
Brazil: tightening into rising inflation expectations
Copom unanimously raised the Selic by 50bp to 11.25% on 6 November 2024. On 11 December it raised the rate by 100bp to 12.25%, again unanimously, and said that if the expected scenario was confirmed it anticipated adjustments of the same magnitude at each of its next two meetings. At that point the Focus survey's inflation expectations for 2024 and 2025 had increased significantly, to around 4.8% and 4.6% respectively. Copom followed through with a 100bp increase to 13.25% on 29 January 2025, and said it anticipated another adjustment of the same magnitude at its next meeting if the scenario evolved as expected. On 19 March it raised the Selic by 100bp to 14.25%. At that meeting it signalled an adjustment of lower magnitude at its next meeting, citing heightened uncertainty and the lags inherent in the tightening cycle. Its reference-scenario projection for IPCA inflation was 5.1% for 2025 and 3.9% for the third quarter of 2026. The shift in guidance signals a slower pace of tightening rather than an end to the cycle.
The Banco Central do Brasil's November 2024 Financial Stability Report concluded that there was no relevant risk to financial stability and that the national financial system had comfortable capitalisation and liquidity. The banking system had a capital margin of BRL486 billion in June 2024, equal to 32% of its aggregate regulatory capital. Entities with a return on equity above 10% accounted for more than 75% of the banking system's total assets in the first half of 2024. The Financial Stability Committee held the countercyclical capital buffer at 0% at its May and August 2024 meetings.
Credit kept growing quickly despite the tightening. Twelve-month growth of credit operations in the national financial system was 11.5% in December 2024 and 11.7% in January 2025. The share of loans 90 days or more past due was 3.2% in January 2025, up 0.3 percentage point in the month and 0.1 percentage point lower than in January 2024.
New accounting rules took effect on 1 January 2025. A central bank survey of institutions holding about 80% of the system's credit exposures estimated that they would raise provisions by BRL35.6 billion, about 10% of current provisions, recorded against capital rather than income. That charge is equivalent to about 7% of the June 2024 capital margin.
Mexico: cuts accelerate as inflation eases
Banco de México cut its overnight interbank target by 25bp to 10.25% on 14 November 2024, effective 15 November. At the time it reported that headline inflation had rebounded to 4.76% in October 2024 while core inflation had fallen to 3.80%. On 19 December it cut by a further 25bp to 10.00%, effective 20 December, noting that headline inflation had fallen to 4.55% in November and core inflation to 3.58%.
The pace doubled in 2025. On 6 February the Board cut by 50bp to 9.50% by majority vote, after headline inflation fell to 3.69% in the first fortnight of January 2025, a level unseen since the beginning of 2021, with core inflation at 3.72%. On 27 March it cut unanimously by 50bp to 9.00%, with headline inflation at 3.67% and core inflation at 3.56% in the first fortnight of March. The Board said it could continue calibrating its stance and consider adjusting it in similar magnitudes, and anticipated that the rate-cutting cycle would continue while the stance remained restrictive.
Banco de México's December 2024 Financial Stability Report showed the capitalisation index of commercial banks edging down from 19.49% in March 2024 to 19.39% in September 2024, as risk-weighted assets, mainly those related to credit, grew faster than regulatory capital. The 10bp decline therefore reflected balance-sheet growth rather than a fall in capital. In the central bank's stress analysis, banks representing around 94% of system assets kept a liquidity coverage ratio at risk above the 100% regulatory minimum even under extreme deposit outflows. The non-performing loan ratio of commercial banks' business-loan portfolio was 1.46% in September 2024.
Colombia: easing on hold, earnings under pressure
Banco de la República cut its benchmark rate by 50bp to 9.75% on 31 October 2024, with four directors in favour and three voting for a 75bp reduction. On 20 December it cut by 25bp to 9.50%: five directors backed the decision, one voted for 50bp and one for 75bp. Annual inflation had fallen to 5.2% in November from 5.4% in October. The Board then held the rate at 9.5% by majority vote on 31 January 2025. On 31 March 2025 it held again, with four directors voting to keep the rate unchanged and three voting for a 50bp cut. Annual inflation had increased marginally to 5.3% in February 2025, after three months at 5.2%. The split votes show a Board divided on the pace of further easing.
System data from the central bank's September 2024 quarterly update of the Financial Stability Report refer to June 2024. The non-performing loan ratio of credit institutions' total portfolio was 5.75% in June 2024, against 5.79% in March and a five-year average of 4.95%. That left it 0.80 percentage point above the five-year average. Return on assets was 0.69% in June 2024, against 0.70% in March and a five-year average of 1.40%. That was less than half the five-year average. The total solvency ratio was 17.64% and the basic solvency ratio 14.64% in June 2024.
Chile
The Banco Central de Chile's December 2024 Monetary Policy Report said its Board had lowered the monetary policy rate by 625bp since July 2023, when the easing cycle began. The report put annual CPI inflation at 4.2% in November 2024, expected inflation to close the year at 4.8%, and expected it to fluctuate around 5% in the first half of 2025. According to the Comisión para el Mercado Financiero, banking-system loans grew 0.78% over the 12 months to December 2024. In December 2024 the 90-day-plus delinquency ratio rose to 2.35% from 2.32%, while the impaired-loan ratio eased to 6.19% from 6.22% and the provisions ratio to 2.49% from 2.53%. Return on average equity was 15.25% and return on average assets 1.26% in December 2024, both lower than in the previous month. Loan growth of 0.78% after 625bp of cumulative easing shows that lower policy rates had yet to revive Chilean bank lending by the end of 2024.
Cross-country comparison
| Country | Policy rate after last 2024 decision | Policy rate at 31 March 2025 | Capital | Asset quality | Profitability |
|---|---|---|---|---|---|
| United States | 4.25–4.50% | 4.25–4.50% | CET1 ratios up across all bank-size categories (H1 2024) | Past-due and nonaccrual 1.60%; net charge-offs 0.70% (Q4 2024) | ROA 1.11% (Q4 2024); 1.12% (FY 2024) |
| Canada | 3.25% | 2.75% | D-SIB average CET1 13.3% (Oct 2024); Domestic Stability Buffer 3.5% | Not available | RBC net income C$16.2bn (FY to 31 Oct 2024) |
| Brazil | 12.25% | 14.25% | Capital margin BRL486bn, 32% of regulatory capital (Jun 2024) | 90+ days past due 3.2% (Jan 2025) | Entities with ROE above 10% hold over 75% of assets (H1 2024) |
| Mexico | 10.00% | 9.00% | Commercial-bank capitalisation index 19.39% (Sep 2024) | Commercial-bank business-loan NPL 1.46% (Sep 2024) | Not available |
| Colombia | 9.50% | 9.50% | Total solvency 17.64% (Jun 2024) | Total-portfolio NPL 5.75% (Jun 2024) | ROA 0.69% (Jun 2024) |
| Chile | Not available (625bp cut since Jul 2023) | Not available | Not available | 90+ days delinquency 2.35% (Dec 2024) | ROE 15.25%; ROA 1.26% (Dec 2024) |
Source: Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (18 December 2024), 18 December 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (19 March 2025), 19 March 2025; Board of Governors of the Federal Reserve System, Financial Stability Report, November 2024, 22 November 2024; Federal Deposit Insurance Corporation, FDIC-Insured Institutions Reported Return on Assets of 1.11 Percent and Net Income of $66.8 Billion in the Fourth Quarter (press release, Quarterly Banking Profile Q4 2024), 25 February 2025; Bank of Canada, Bank of Canada reduces policy interest rate by 50 basis points to 3¼% (11 December 2024), 11 December 2024; Bank of Canada, Bank of Canada reduces policy interest rate by 25 basis points to 2¾% (12 March 2025), 12 March 2025; Office of the Superintendent of Financial Institutions (OSFI), OSFI maintains Domestic Stability Buffer at 3.5% - December 2024 (news release), 17 December 2024; Office of the Superintendent of Financial Institutions (OSFI), Domestic Stability Buffer - Decision Summary Note - December 2024, 17 December 2024; Royal Bank of Canada, Royal Bank of Canada reports fourth quarter and 2024 results (earnings release, fiscal year ended 31 October 2024), 4 December 2024; Banco Central do Brasil, Minutes of the 267th Copom meeting (10-11 December 2024), 17 December 2024; Banco Central do Brasil, Minutes of the 269th Copom meeting (18-19 March 2025), 25 March 2025; Banco Central do Brasil, Financial Stability Report, Volume 23, No. 2 (November 2024), November 2024; Banco Central do Brasil, Monetary and Credit Statistics press release (13 March 2025; January 2025 data), 13 March 2025; Banco de México, Monetary Policy Statement, press release (19 December 2024), 19 December 2024; Banco de México, Monetary Policy Statement, press release (27 March 2025), 27 March 2025; Banco de México, Financial Stability Report, December 2024, December 2024; Banco de la República (Colombia), Board of Directors decision, 20 December 2024: benchmark rate reduced by 25 bp to 9.50% (press release), 20 December 2024; Banco de la República (Colombia), Board of Directors decision, 31 March 2025: policy rate unchanged at 9.5% (press release), 31 March 2025; Banco de la República (Colombia), Quarterly Update of the Financial Stability Report - September 2024, 17 September 2024; Banco Central de Chile, Monetary Policy Report, December 2024, December 2024; Comisión para el Mercado Financiero (CMF), Chile, CMF informa el desempeño de bancos y cooperativas supervisadas a diciembre de 2024 (press release), 31 January 2025.
Of the five economies with policy-rate data, Brazil is the only one where the rate was higher at the end of March 2025 than at the end of 2024; over the same period Canada cut by a further 50bp and Mexico by a further 100bp, while the United States and Colombia held. On the system indicators available, Colombia stands out for a non-performing loan ratio above its five-year average and a return on assets well below it in June 2024, while the fourth-quarter data for the United States and the December 2024 data for Chile show a return on assets above 1% or a double-digit return on equity.
Outlook risks
For Canada, the Bank of Canada warned that possible US tariffs had clouded the outlook, and OSFI assessed near-term risks as low but rising. For US banks, unrealised securities losses of $482.4 billion leave balance sheets sensitive to further rises in longer-term rates, even with policy rates on hold. In Brazil, the 90-day past-due ratio of 3.2% in January 2025 is the indicator to follow for how a 14.25% Selic feeds through to borrowers. In Colombia, the 4–3 vote to hold on 31 March 2025 and the uptick in inflation to 5.3% leave the timing of further easing uncertain, with the system's non-performing loan ratio above its five-year average in June 2024. In Mexico, the Board's guidance points to further cuts while the stance stays restrictive.
What to watch
- April 2025: the Federal Reserve's monthly redemption cap on Treasury securities falls from $25 billion to $5 billion, with the agency debt and mortgage-backed securities cap kept at $35 billion.
- Copom's next meeting after 19 March 2025: the Committee has signalled an increase of lower magnitude than the 100bp moves of December, January and March, if the scenario evolves as expected.
- Banco de México's next decision after 27 March 2025: the Board has said it could consider adjustments of similar magnitude to its recent 50bp cuts.
- Canadian CPI for March 2025: the Bank of Canada expects inflation to rise to about 2½% with the end of the GST/HST tax break.
Primary sources: Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (7 November 2024), 7 November 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (18 December 2024), 18 December 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (29 January 2025), 29 January 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (19 March 2025), 19 March 2025; Board of Governors of the Federal Reserve System, FOMC Summary of Economic Projections, December 2024 (accessible version), 18 December 2024; Board of Governors of the Federal Reserve System, Financial Stability Report, November 2024, 22 November 2024; Federal Deposit Insurance Corporation, FDIC-Insured Institutions Reported Return on Assets of 1.11 Percent and Net Income of $66.8 Billion in the Fourth Quarter (press release, Quarterly Banking Profile Q4 2024), 25 February 2025; Federal Deposit Insurance Corporation, FDIC Quarterly Banking Profile Fourth Quarter 2024 (statement on fourth-quarter and full-year results with charts), 25 February 2025; JPMorgan Chase & Co., JPMorgan Chase Reports Fourth-Quarter 2024 Net Income of $14.0 Billion (earnings release), 15 January 2025; Bank of Canada, Bank of Canada reduces policy interest rate by 50 basis points to 3¾% (23 October 2024), 23 October 2024; Bank of Canada, Bank of Canada reduces policy interest rate by 50 basis points to 3¼% (11 December 2024), 11 December 2024; Bank of Canada, Bank of Canada reduces policy interest rate by 25 basis points to 3% and announces end of quantitative tightening (29 January 2025), 29 January 2025; Bank of Canada, Bank of Canada reduces policy interest rate by 25 basis points to 2¾% (12 March 2025), 12 March 2025; Bank of Canada, Financial Stability Report—2024 (May 2024; the most recent edition on the cutoff date), 9 May 2024; Office of the Superintendent of Financial Institutions (OSFI), OSFI maintains Domestic Stability Buffer at 3.5% - December 2024 (news release), 17 December 2024; Office of the Superintendent of Financial Institutions (OSFI), Domestic Stability Buffer - Decision Summary Note - December 2024, 17 December 2024; Royal Bank of Canada, Royal Bank of Canada reports fourth quarter and 2024 results (earnings release, fiscal year ended 31 October 2024), 4 December 2024; Banco Central do Brasil, Minutes of the 266th Copom meeting (5-6 November 2024), 14 November 2024; Banco Central do Brasil, Minutes of the 267th Copom meeting (10-11 December 2024), 17 December 2024; Banco Central do Brasil, Minutes of the 268th Copom meeting (28-29 January 2025), 4 February 2025; Banco Central do Brasil, Minutes of the 269th Copom meeting (18-19 March 2025), 25 March 2025; Banco Central do Brasil, Financial Stability Report, Volume 23, No. 2 (November 2024), November 2024; Banco Central do Brasil, Monetary and Credit Statistics press release (13 March 2025; January 2025 data), 13 March 2025; Banco de México, Monetary Policy Statement, press release (14 November 2024), 14 November 2024; Banco de México, Monetary Policy Statement, press release (19 December 2024), 19 December 2024; Banco de México, Monetary Policy Statement, press release (6 February 2025), 6 February 2025; Banco de México, Monetary Policy Statement, press release (27 March 2025), 27 March 2025; Banco de México, Financial Stability Report, December 2024, December 2024; Banco de la República (Colombia), Board of Directors decision, 31 October 2024: benchmark rate reduced by 50 bp to 9.75% (press release), 31 October 2024; Banco de la República (Colombia), Board of Directors decision, 20 December 2024: benchmark rate reduced by 25 bp to 9.50% (press release), 20 December 2024; Banco de la República (Colombia), Board of Directors decision, 31 January 2025: policy rate unchanged at 9.5% (press release), 31 January 2025; Banco de la República (Colombia), Board of Directors decision, 31 March 2025: policy rate unchanged at 9.5% (press release), 31 March 2025; Banco de la República (Colombia), Quarterly Update of the Financial Stability Report - September 2024, 17 September 2024; Banco Central de Chile, Monetary Policy Report, December 2024, December 2024; Comisión para el Mercado Financiero (CMF), Chile, CMF informa el desempeño de bancos y cooperativas supervisadas a diciembre de 2024 (press release), 31 January 2025.