Coverage: Q4 2025 · Information to 16 March 2026
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TGB Quarterly Regional Banking Monitor · 16 March 2026
The Federal Reserve, the Bank of Canada and Banco de México eased in the fourth quarter of 2025 while Brazil held the Selic at 15.00%, and US banks closed the year with a 3.39% net interest margin and $77.7 billion of quarterly profit.
The desk view
The fourth quarter of 2025 left the region's banks profitable and well capitalised, but on diverging monetary paths. The Federal Reserve cut twice to 3.50–3.75% and then held in January 2026, the Bank of Canada cut to 2.25% and paused, and Banco de México cut to 7.00% before pausing on 5 February 2026. Brazil kept the Selic at 15.00% at all three meetings from November to January, but signalled that easing could begin at its next meeting. US banks earned $295.6 billion in 2025, helped by higher net interest income, and falling funding costs lifted the net interest margin to 3.39% in the fourth quarter. The pressure points are credit quality rather than capital: Brazilian delinquency rose to 4.2% in January 2026, Chilean arrears edged up to 2.42% in December, and Canadian D-SIB impaired loans stood at 0.80% of loans in October 2025, against 0.67% a year earlier.
The regional picture
Monetary policy across the Americas moved in different directions in the fourth quarter of 2025. The Federal Open Market Committee lowered the federal funds target range by 25bp to 3.75–4.00% on 29 October 2025 and by a further 25bp to 3.50–3.75% on 10 December 2025. The Bank of Canada cut its overnight rate target by 25bp to 2.25% on 29 October 2025 and held it there on 10 December 2025. Banco de México cut by 25bp to 7.25% on 6 November 2025 and by another 25bp to 7.00% on 18 December 2025. The Banco Central do Brasil's monetary policy committee (Copom) kept the Selic rate at 15.00% on 5 November 2025 and 10 December 2025.
The pattern changed early in 2026. The FOMC kept its range at 3.50–3.75% on 28 January 2026, and the Bank of Canada held at 2.25% on the same day. Banco de México paused its cutting cycle and kept its target at 7.00% on 5 February 2026. Copom also held the Selic at 15.00% on 28 January 2026, but said that, if its expected scenario was confirmed, it foresaw beginning to ease at its next meeting. Across the two cuts in the fourth quarter, the Federal Reserve and Banco de México each lowered their policy rates by 50bp.
Policy-rate decisions, October 2025 to February 2026
| Central bank | Q4 2025 decisions | Rate after last 2025 decision | Latest decision in 2026 |
|---|---|---|---|
| Federal Reserve | Cut 25bp (29 October), cut 25bp (10 December) | 3.50–3.75% | Held at 3.50–3.75% (28 January 2026) |
| Bank of Canada | Cut 25bp (29 October), held (10 December) | 2.25% | Held at 2.25% (28 January 2026) |
| Banco Central do Brasil | Held (5 November), held (10 December) | 15.00% | Held at 15.00% (28 January 2026) |
| Banco de México | Cut 25bp (6 November), cut 25bp (18 December) | 7.00% | Held at 7.00% (5 February 2026) |
Source: Board of Governors of the Federal Reserve System, FOMC statement, 29 October 2025; Board of Governors of the Federal Reserve System, FOMC statement, 10 December 2025; Board of Governors of the Federal Reserve System, FOMC statement, 28 January 2026; Bank of Canada, Interest rate announcement, 29 October 2025; Bank of Canada, Interest rate announcement, 10 December 2025; Bank of Canada, Interest rate announcement, 28 January 2026; Banco Central do Brasil, Copom statement, 274th meeting, 5 November 2025; Banco Central do Brasil, Copom statement, 275th meeting, 10 December 2025; Banco Central do Brasil, Copom statement, 276th meeting, 28 January 2026; Banco de México, Monetary policy statement, 6 November 2025; Banco de México, Monetary policy statement, 18 December 2025; Banco de México, Monetary policy statement, 5 February 2026.
United States: margins up, unrealised losses down
In October the FOMC decided to end the reduction of its securities holdings on 1 December 2025, and in December it judged reserves to be ample and said it would buy shorter-term Treasury securities as needed. The cuts were contested: two members dissented in October and three in December, with views split between a larger cut and no change. The December 2025 projections put the median federal funds rate at 3.6% for end-2025, 3.4% for end-2026 and 3.1% for end-2027, with median PCE inflation at 2.4% for 2026. When the Committee held in January 2026, it described economic activity as expanding at a solid pace and inflation as somewhat elevated; two members dissented in favour of a 25bp cut.
The 4,336 FDIC-insured institutions reported full-year 2025 net income of $295.6 billion, up $27.5 billion (10.2%) on 2024, and the industry's return on assets rose from 1.12% to 1.20%. Fourth-quarter net income was $77.7 billion, down $1.6 billion (2.0%) on the third quarter, and quarterly return on assets slipped to 1.24% from 1.27%, while remaining above the 1.10% of a year earlier. The FDIC attributed the quarterly decline mainly to higher noninterest expense, up $5.1 billion (3.4%), and to non-recurring items at several larger firms.
Margins carried the year. The industry net interest margin rose 5bp in the quarter to 3.39%, its highest level since the first quarter of 2019, as the cost of funds fell 15bp against an 11bp fall in the yield on earning assets. Total loans and leases rose $267.8 billion (2.0%) in the quarter to $13.5 trillion, and annual loan growth reached 5.9%, the fastest in 11 quarters. The largest dollar increases were in loans to non-depository financial institutions and credit card loans. Domestic deposits rose $318.3 billion (1.8%), a sixth consecutive quarterly increase, driven by estimated uninsured deposits, which rose $214.7 billion (2.7%).
Asset quality was mixed. The past-due and nonaccrual ratio rose 7bp to 1.56% of loans, still well below its pre-pandemic average of 1.94%, but the FDIC said rates for non-owner-occupied commercial real estate, multifamily, auto and credit card portfolios were well above their pre-pandemic averages. The net charge-off rate rose 1bp to 0.63%, 15bp above the pre-pandemic average of 0.48%. The number of banks on the Problem Bank List rose by a net three to 60, or 1.4% of all banks, and no bank failed in the quarter.
Balance-sheet repair continued. Unrealised losses on securities fell $31.0 billion (9.2%) in the quarter to $306.1 billion, the lowest level since the first quarter of 2022, and were $174.6 billion (36.3%) lower than a year earlier. Equity capital rose $18.9 billion (0.7%) to $2.6 trillion, although the leverage capital ratio fell 7bp to 9.26%. The Deposit Insurance Fund reserve ratio rose 2bp to 1.42%. The Federal Reserve's November 2025 Financial Stability Report described the banking system as sound and resilient, with CET1 ratios at historically high levels across bank types, but noted that many banks still carried fair value losses not reflected in their regulatory capital ratios.
Regulation
On 25 November 2025 the federal bank regulatory agencies finalised changes to the enhanced supplementary leverage ratio standards for the largest banking organisations, estimating that tier 1 capital requirements for affected bank holding companies would fall by less than 2% in aggregate. For their depository institution subsidiaries the overall requirement is capped at no more than 4%, and the rule takes effect on 1 April 2026, with optional adoption from 1 January 2026. The same day the agencies proposed lowering the community bank leverage ratio requirement to 8% from 9%. On 4 February 2026 the Federal Reserve Board finalised its 2026 stress test scenarios for 32 banks, in which unemployment peaks at 10% and commercial real estate prices fall 39%, and voted to keep current stress capital buffer requirements until 2027.
US banking indicators, FDIC-insured institutions
| Indicator | Q4 2025 | Change or comparison |
|---|---|---|
| Net income | $77.7 billion | Down $1.6 billion (2.0%) on Q3 2025 |
| Return on assets | 1.24% | 1.27% in Q3 2025; 1.10% a year earlier |
| Net interest margin | 3.39% | Up 5bp on the prior quarter |
| Annual loan growth | 5.9% | Fastest in 11 quarters |
| Past-due and nonaccrual ratio | 1.56% | Pre-pandemic average 1.94% |
| Net charge-off rate | 0.63% | Pre-pandemic average 0.48% |
| Unrealised securities losses | $306.1 billion | Down $31.0 billion on the prior quarter |
| Leverage capital ratio | 9.26% | Down 7bp on Q3 2025 |
| Problem banks | 60 | Up a net three |
Source: Federal Deposit Insurance Corporation, Quarterly Banking Profile press release, 24 February 2026; Federal Deposit Insurance Corporation, Quarterly Banking Profile, Fourth Quarter 2025, 24 February 2026.
Canada: a pause at 2.25%, buffers held
The Bank of Canada cut its overnight rate target by 25bp to 2.25% on 29 October 2025, with the Bank Rate at 2.5% and the deposit rate at 2.20%. It said it saw the policy rate at about the right level if the outlook evolved in line with its projection. It held at 2.25% on 10 December 2025, after third-quarter GDP growth of 2.6%, and said the unemployment rate had declined to 6.5% in November and CPI inflation had slowed to 2.2% in October. On 28 January 2026 it held again, reporting that inflation was 2.1% in 2025 and projecting growth of 1.1% in 2026 and 1.5% in 2027. The Bank named the upcoming review of the Canada-US-Mexico Agreement as a key source of uncertainty.
On 18 December 2025 the Office of the Superintendent of Financial Institutions (OSFI) kept the Domestic Stability Buffer at 3.5% of risk-weighted assets, the level in effect since 1 November 2023, and continued to expect the domestic systemically important banks (D-SIBs) to target a CET1 ratio of at least 11.5%. OSFI assessed that systemic vulnerabilities had stabilised but remained elevated, and that near-term risks were still low but rising amid global trade uncertainty. It said D-SIB earnings and capital generation had remained solid, supported by lower performing provisions and improved margins, and that it stood ready to release the buffer in the event of an unexpected shock or downturn.
OSFI's data show the D-SIB average CET1 ratio at 13.64% in October 2025, against 13.70% in July 2025 and 13.34% in October 2024. Average gross impaired loans were 0.80% of total loans in October 2025, unchanged from July 2025 but up from 0.67% a year earlier. Capital therefore remained well above the 11.5% expectation, while impaired loans were higher than a year earlier. At bank 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%. For the quarter ended 31 January 2026 it reported record net income of C$5.8 billion, up 13%, a CET1 ratio of 13.7% and a return on equity of 17.6%.
Canada: policy and D-SIB indicators
| Indicator | Value | Reference date |
|---|---|---|
| Overnight rate target | 2.25% | Held 28 January 2026 |
| Domestic Stability Buffer | 3.5% of risk-weighted assets | Maintained 18 December 2025 |
| D-SIB average CET1 ratio | 13.64% | October 2025 |
| D-SIB average gross impaired loans | 0.80% of loans | October 2025 |
| RBC net income | C$20.4 billion | Year to 31 October 2025 |
| RBC CET1 ratio | 13.7% | 31 January 2026 |
Source: Bank of Canada, Interest rate announcement, 28 January 2026; Office of the Superintendent of Financial Institutions, Domestic Stability Buffer letter, 18 December 2025; Office of the Superintendent of Financial Institutions, Domestic Stability Buffer decision summary note, 18 December 2025; Royal Bank of Canada, Fourth quarter 2025 earnings release, 3 December 2025; Royal Bank of Canada, First quarter 2026 earnings release, 26 February 2026.
Brazil: a long hold and rising delinquency
Copom kept the Selic at 15.00% on 5 November 2025, 10 December 2025 and 28 January 2026. Focus survey inflation expectations eased from 4.5% to 4.4% for 2025 between the November and December meetings, and Copom's projection for the second quarter of 2027 moved from 3.3% to 3.2%. By January 2026 expectations stood at 4.0% for 2026 and 3.8% for 2027, and the Committee said it foresaw beginning to ease at its next meeting while maintaining adequate restriction.
The central bank's November 2025 Financial Stability Report found no relevant risk to financial stability, with comfortable capitalisation and liquidity and provisions adequate to expected losses. It also judged that risk materialisation had deteriorated and should remain under pressure in the short term. The median return on equity, measured over the 12 months to June 2025, was stable at 11%. New expected-loss provisioning and operational-risk capital rules will continue to weigh on capital ratios until 2028; had their effect been brought forward to June 2025, the system Basel ratio would have fallen 0.93 percentage point to 16.4%. At its 19 November 2025 meeting the Financial Stability Committee (Comef) kept the countercyclical capital buffer at 0%, and said system profitability had decreased slightly as provisioning expenses and funding costs rose.
The quarter also brought a bank resolution. The central bank decreed the extrajudicial liquidation of Banco Master and other conglomerate institutions and placed Banco Master Múltiplo under a temporary special administration regime; Comef said the liquidation did not pose systemic risk. The conglomerate, classified as small and placed in prudential segment S3, represented 0.57% of financial-system assets and 0.55% of total funding.
Credit quality weakened through the turn of the year. The 90-day delinquency ratio on total credit reached 4.1% in December 2025, 1.1 percentage points higher than at the end of 2024, with the household ratio at 5.0% and the corporate ratio at 2.5%. In January 2026 total delinquency rose to 4.2%, with households at 5.2% and companies at 2.6%. Credit growth slowed to 10.1% year on year in January 2026 from 10.3% in December 2025, while the average cost of credit rose to 23.6% a year. Household debt service was at a historical high of 29.3% of income in November 2025. Delinquency, the cost of credit and household debt service all rose while the Selic stayed at 15.00%.
Brazil: credit and asset quality
| Indicator | Value | Reference date |
|---|---|---|
| Total credit delinquency (90+ days) | 4.1% | December 2025 |
| Total credit delinquency (90+ days) | 4.2% | January 2026 |
| Household delinquency | 5.2% | January 2026 |
| Corporate delinquency | 2.6% | January 2026 |
| Annual credit growth | 10.1% | January 2026 |
| Average cost of credit | 23.6% a year | January 2026 |
| Median return on equity | 11% | 12 months to June 2025 |
| Countercyclical capital buffer | 0% | 19 November 2025 |
Source: Banco Central do Brasil, Estatísticas monetárias e de crédito (dados de dezembro de 2025), 29 January 2026; Banco Central do Brasil, Estatísticas monetárias e de crédito (dados de janeiro de 2026), 25 February 2026; Banco Central do Brasil, Relatório de Estabilidade Financeira, 30 November 2025; Banco Central do Brasil, Ata da 63ª reunião do Comef, 30 November 2025.
Mexico: easing paused at 7.00%
Banco de México's Governing Board cut its overnight interbank rate target by 25bp to 7.25% on 6 November 2025 and by 25bp to 7.00% on 18 December 2025, both times by majority; in December one member voted to hold at 7.25%. Headline inflation rose from 3.63% in the first fortnight of October to 3.80% in November, and core inflation from 4.24% to 4.43%. In December the central bank still expected headline inflation to reach the 3% target in the third quarter of 2026. On 5 February 2026 the Board decided unanimously to keep the target at 7.00%, pausing the cutting cycle. Core inflation had risen to 4.47% in the first fortnight of January 2026, and the expected date for headline inflation to reach target moved to the second quarter of 2027. The Board cited the revised forecasts and the need to assess the fiscal adjustments made at the start of the year.
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 commercial banks' capitalisation and liquidity widely exceed regulatory minimums. In all of its simulated credit stress scenarios, system capital stayed above the regulatory minimum plus surcharges. Consumer non-performing loan ratios rose only marginally at banks, with larger increases at other financial institutions. At bank level, Grupo Financiero Banorte reported a capitalisation index of 20.06%, fundamental capital of 12.61% and a liquidity coverage ratio of 162.35% at the end of 2025. Its non-performing loan ratio was 1.38%, and its fourth-quarter return on equity was 24.2%.
Colombia: profits recover, arrears fall
The Superintendencia Financiera de Colombia reported that financial-system assets, including those managed for third parties, reached COP3,545 trillion at the end of 2025, equal to 191% of GDP, with real annual growth of 4.8%. Credit establishments earned COP17.7 trillion in 2025, against COP8.7 trillion in 2024, and their return on assets was 1.56% in December 2025. Gross loans reached COP762.8 trillion in December 2025, the eighth consecutive month of positive real annual growth, at 2.4%.
Asset quality improved. Loans more than 30 days overdue were 3.8% of gross loans in December 2025, with microcredit at 6.8%, consumer at 5.0%, commercial at 3.3% and housing at 3.2%. The overdue balance fell 16.4% in real terms from December 2024, driven by a 26.5% real fall in consumer arrears. Provision coverage of overdue loans stood at 142.4%. The total solvency ratio of banks was 15.9%, with a combined buffer of 8.4%. The sector therefore ended 2025 with lower arrears and stronger earnings than a year earlier.
Chile: loans contract, arrears edge up
According to the Comisión para el Mercado Financiero, Chilean banking-system loans fell 1.03% in real terms in the 12 months to December 2025, mainly because of the commercial portfolio, while consumer loans grew for an eighth consecutive month. The 90-day arrears ratio rose to 2.42% in December 2025 from 2.37% in November, and the impaired portfolio ratio to 6.10% from 6.02%, while the provisions ratio eased to 2.58%. Compared with a year earlier, return on average assets rose to 1.32% but return on average equity fell to 15.02%. The CMF attributed profit growth mainly to lower tax expenses from deferred-tax adjustments. With loans shrinking and arrears edging up, profit growth came from tax effects and non-lending income rather than from balance-sheet expansion.
Cross-country comparison
Americas banking monitor: system indicators (reference dates in brackets)
| Country | Capital | Asset quality | Profitability |
|---|---|---|---|
| United States | Leverage ratio 9.26% (Q4 2025) | Past-due and nonaccrual 1.56% (Q4 2025) | ROA 1.24% (Q4 2025) |
| Canada | D-SIB average CET1 13.64% (Oct 2025) | D-SIB gross impaired loans 0.80% (Oct 2025) | RBC ROE 17.6% (quarter to 31 Jan 2026) |
| Brazil | Basel ratio 16.4% if new rules applied in full (Jun 2025) | 90+ days delinquency 4.2% (Jan 2026) | Median ROE 11% (12 months to Jun 2025) |
| Mexico | Banorte capitalisation index 20.06% (4Q25) | Banorte NPL ratio 1.38% (4Q25) | Banorte ROE 24.2% (4Q25) |
| Colombia | Bank total solvency 15.9% (Dec 2025) | 30+ days overdue 3.8% (Dec 2025) | ROA 1.56% (Dec 2025) |
| Chile | Not available | 90+ days arrears 2.42% (Dec 2025) | ROAA 1.32%; ROAE 15.02% (Dec 2025) |
Source: Federal Deposit Insurance Corporation, Quarterly Banking Profile, Fourth Quarter 2025, 24 February 2026; Office of the Superintendent of Financial Institutions, Domestic Stability Buffer decision summary note, 18 December 2025; Royal Bank of Canada, First quarter 2026 earnings release, 26 February 2026; Banco Central do Brasil, Relatório de Estabilidade Financeira, 30 November 2025; Banco Central do Brasil, Estatísticas monetárias e de crédito (dados de janeiro de 2026), 25 February 2026; Banco Central do Brasil, Estatísticas monetárias e de crédito (dados de dezembro de 2025), 29 January 2026; Grupo Financiero Banorte, 4Q25 results press release, 27 January 2026; Superintendencia Financiera de Colombia, Actualidad del Sistema Financiero Colombiano, diciembre 2025, 20 February 2026; Comisión para el Mercado Financiero (Chile), Desempeño de bancos y cooperativas a diciembre de 2025, 29 January 2026.
Capital is the region's common strength: the supervisors in the United States, Canada, Brazil and Mexico all described bank capital as strong or well above requirements. Credit quality is the common watch point, with US past-due ratios and Brazilian and Chilean arrears all above their previous readings, and Canadian impaired loans above their year-earlier level. Colombia is the exception, with arrears falling 16.4% in real terms.
Outlook risks
In the United States, unrealised securities losses were still $306.1 billion, many banks carry fair value losses not reflected in their regulatory capital ratios, and commercial real estate and card portfolios remain above pre-pandemic delinquency averages. In Canada, OSFI's assessment of near-term risks as low but rising amid global trade uncertainty, and the Bank of Canada's focus on the trade-agreement review, keep trade at the centre of the credit outlook. In Brazil, the speed of any easing will matter for household borrowers carrying a record debt-service burden. In Mexico, the later expected date for inflation to reach target, now the second quarter of 2027, was one reason the Board gave for its pause.
What to watch
- 18 March 2026: the Bank of Canada's next scheduled overnight rate announcement, followed by its Monetary Policy Report on 29 April 2026.
- 1 April 2026: the final enhanced supplementary leverage ratio rule takes effect for the largest US banking organisations.
- Copom's first meeting after 28 January 2026: the Committee foresees beginning to ease if its expected scenario is confirmed.
- 2026 US stress test: 32 banks face a scenario with unemployment peaking at 10%, with current stress capital buffers kept until 2027.
Primary sources: Federal Deposit Insurance Corporation, Quarterly Banking Profile press release, 24 February 2026; Board of Governors of the Federal Reserve System, FOMC statement, 29 October 2025; Board of Governors of the Federal Reserve System, FOMC statement, 10 December 2025; Bank of Canada, Interest rate announcement, 29 October 2025; Banco de México, Monetary policy statement, 6 November 2025; Banco de México, Monetary policy statement, 18 December 2025; Banco Central do Brasil, Copom statement, 274th meeting, 5 November 2025; Banco Central do Brasil, Copom statement, 275th meeting, 10 December 2025; Federal Deposit Insurance Corporation, Quarterly Banking Profile, Fourth Quarter 2025, 24 February 2026; Banco Central do Brasil, Copom statement, 276th meeting, 28 January 2026; Banco Central do Brasil, Estatísticas monetárias e de crédito (dados de janeiro de 2026), 25 February 2026; Banco de México, Monetary policy statement, 5 February 2026; Board of Governors of the Federal Reserve System, FOMC statement, 28 January 2026; Bank of Canada, Interest rate announcement, 10 December 2025; Comisión para el Mercado Financiero (Chile), Desempeño de bancos y cooperativas a diciembre de 2025, 29 January 2026; Office of the Superintendent of Financial Institutions, Domestic Stability Buffer decision summary note, 18 December 2025; Bank of Canada, Interest rate announcement, 28 January 2026; Board of Governors of the Federal Reserve System, Summary of Economic Projections, 10 December 2025; Board of Governors of the Federal Reserve System, Financial Stability Report, 30 November 2025; Board of Governors of the Federal Reserve System, Final rule on enhanced supplementary leverage ratio standards, 25 November 2025; Board of Governors of the Federal Reserve System, Community bank leverage ratio proposal, 25 November 2025; Board of Governors of the Federal Reserve System, Final 2026 stress test scenarios, 4 February 2026; Office of the Superintendent of Financial Institutions, Domestic Stability Buffer letter, 18 December 2025; Royal Bank of Canada, Fourth quarter 2025 earnings release, 3 December 2025; Royal Bank of Canada, First quarter 2026 earnings release, 26 February 2026; Banco Central do Brasil, Relatório de Estabilidade Financeira, 30 November 2025; Banco Central do Brasil, Ata da 63ª reunião do Comef, 30 November 2025; Banco Central do Brasil, Estatísticas monetárias e de crédito (dados de dezembro de 2025), 29 January 2026; Banco de México, Financial Stability Report, 10 December 2025; Grupo Financiero Banorte, 4Q25 results press release, 27 January 2026; Superintendencia Financiera de Colombia, Sistema financiero colombiano en cifras, diciembre 2025, 20 February 2026; Superintendencia Financiera de Colombia, Actualidad del Sistema Financiero Colombiano, diciembre 2025, 20 February 2026.