Mexican Banking: Record Profits and Global Projects

Mexican banking is experiencing a moment of splendor, driven by digitalization and growth.

Two recent news items reflect the dynamic current state of the sector. The first is the participation of leading banks in the ambitious joint effort of international banking, known as Project Agorá, which we discussed here a few months ago. The second is the record increase in their accumulated profits during 2023.

These developments highlight both the innovative potential of Mexican banking and its operational strength.

Project Agorá: towards financial tokenization
Project Agorá is an international initiative driven by the Bank for International Settlements (BIS) and the Institute of International Finance (IIF), aiming to create a common infrastructure to tokenize the international financial system. The goal is to reduce the costs and time associated with international transactions, a challenge that financial institutions have enthusiastically embraced.

Among the 41 financial institutions participating in Agorá, seven key banks in the country stand out: Banco de México, BBVA, Banco Santander, Banorte, HSBC, Intercam Banco, and Monex. Their inclusion reflects not only their systemic importance in the country but also their interest in leading technological change in banking.

This project, which involves central banks such as Banco de México, the Bank of England, and the Federal Reserve Bank of New York, represents a coordinated effort between the public and private sectors to modernize the global financial system.

The participation of Mexican banks in Project Agorá positions the country as a key player in the digital transformation of global finance, which could revolutionize the way international transactions are conducted in the long run.

Profitability: historic record for Mexican banking
Financial results reveal a period of record profits for the 50 banks operating in Mexico, accumulating over 171 billion pesos between January and July—the highest amount ever recorded in that time frame.

This remarkable increase is primarily attributed to high transaction volumes, which have generated greater income from interest and fees, especially among the country’s main financial institutions.

The largest banks (BBVA, Citibanamex, Banorte, Santander, and HSBC) accounted for 80% of the sector’s profits, with earnings reaching 138 billion pesos, a 3.01% increase compared to the previous year.

Meanwhile, the loan portfolio also experienced significant growth, reaching a historic high of 7.22 trillion pesos. This growth reflects an increase in consumer financing, such as credit cards and personal loans, which have been key areas for sector expansion.

Synergy between technology and stability
The current landscape of Mexican banking is characterized by a synergy between the adoption of new technologies and the consolidation of financial stability. The participation of major institutions in initiatives like Project Agorá underscores their commitment to innovation and staying ahead of global trends. Concurrently, record financial results highlight the operational strength of these banks, which have successfully leveraged the macroeconomic environment and the opportunities presented by the sector’s growing digitalization.

This dual focus on digital transformation and financial growth outlines a promising future for Mexican banking, where technology will play a crucial role not only in operational efficiency but also in creating new business opportunities.

Banks are demonstrating not only their ability to adapt to global digitalization trends but also to capitalize on their position in the local market.