Earnings weaken despite a return to interest-income growth
Brokerage B×+, in an October 30 analyst note, said the quarterly result missed consensus. Profit fell from 2,267 million pesos (about $120 million) a year earlier and was 15.9% below the second quarter's 2,118 million pesos (about $113 million). The note did not provide the consensus estimate or earnings per share, leaving the size of the miss unspecified.
The bank's third-quarter report shows that the decline extended beyond the latest quarter: net income for the nine months ended September 30 totaled 5,942 million pesos, compared with 6,924 million pesos a year earlier, a decrease of 14.2%.
Net interest income nevertheless ended a six-quarter stretch of contraction. It increased 1.1% to 5,341 million pesos (about $284 million), according to B×+. Interest income declined 1.3% as the average asset yield dropped 120 basis points; interest expense fell 4.2% as the average cost of liabilities decreased 80 basis points. A basis point is one-hundredth of a percentage point.
Higher costs offset that improvement. Loan-loss provisions increased 25.9% to 913 million pesos (about $49 million), while operating expenses rose 5.9%. Operating profit consequently declined 19.2% to 2,488 million pesos (about $132 million). Noninterest income grew 31.4%, and a 13.3% reduction in taxes cushioned the earnings decline, B×+ reported.
Total revenue was 6,035 million pesos, according to the bank's report—down 4.1% from the third quarter of 2025 but up 0.9% from the preceding quarter. Although the amount paid in taxes fell, the effective tax rate increased to 28.4% from 26.4%. The bank attributed that 200-basis-point rise mainly to tax-rule changes making 75% of IPAB deposit-insurance fees nondeductible.
Lower rates squeeze margins
BanBajío reported a net interest margin of 5.3%, down 60 basis points from a year earlier, attributing the contraction to reductions in Banco de México's reference rate. After credit-risk provisions, the margin was 4.4%.
The central bank's April–June 2026 quarterly report places those reductions in context. Banco de México cut its overnight interbank target rate by 25 basis points to 6.50% in May, saying that the move completed the easing cycle begun in 2024. It then held the rate steady at its June and August meetings.
The bank's funding cost fell to 4.5% from 5.3% a year earlier, according to B×+. The note does not establish how funding costs and asset yields will evolve from here.
Business lending dominates the expanding portfolio
BanBajío focuses on medium-sized companies and small businesses. Its name comes from the Bajío region of central Mexico, where factories and farms supply US buyers, making its lending a gauge of credit availability for businesses serving that market.
Loan growth accelerated from 11.8% in the second quarter to 16.5% in the third. Government lending recorded the largest percentage increase, at 38.0%. Business loans grew 16.0%, consumer loans 12.2% and lending to financial institutions 11.1%. Mortgages moved in the opposite direction, declining 11.9%.
Business credit accounted for 86.1% of the portfolio at the end of September, the bank reported. Government borrowers represented 6.0%, financial institutions 4.2%, consumers 2.7% and mortgages 1.0%.
The past-due loan ratio fell from 2.0% a year earlier to 1.8%, an improvement of 20 basis points. A broader measure in the bank's report, the adjusted deterioration rate, stood at 2.74%; that measure includes delinquency and 12-month write-offs. The reported cost of risk was 120 basis points for the quarter and 77 basis points for the first nine months of 2026.
Deposits also expanded. At September 30, they totaled 310,315 million pesos, up 13.1% from a year earlier and 7.5% from June, according to the bank. Return on equity was 14.7%, while the latest capitalization ratio was 14.84%. B×+ characterized that capital position as solid enough to support further growth.
Ratings and share valuation
Fitch Ratings affirmed BanBajío's BB+ long-term international rating, one notch below investment grade, on October 2 and changed the outlook from stable to positive. The agency cited its expectation that the bank's business profile would continue to strengthen.
HR Ratings had reaffirmed its HR AAA rating with a stable outlook on September 25. It warned that a sustained net capital ratio below 11.8% could prompt a downgrade.
BanBajío shares, listed on the Mexican Stock Exchange as BBAJIOO, traded at 55.82 pesos (about $2.97) on October 30. B×+ put the bank's market value at 67,849.9 million pesos (about $3.6 billion) and its valuation at 8.4 times trailing earnings, compared with a five-year average of 6.8 times. The brokerage attributed the higher multiple to declining earnings.
The dollar equivalents in this article use the October 30 Banxico FIX exchange rate of 18.7962 pesos per US dollar. Exchange-rate movements also affect the dollar value of the bank's peso earnings for US investors.
Full-year guidance remains unconfirmed
In July, BanBajío raised its 2026 loan-growth forecast to 11%–12%, from 8%–10%, according to B×+'s coverage at the time. It also increased the lower end of its net income forecast from 8,250 million pesos (about $439 million) to 8,400 million pesos (about $447 million), while leaving the upper end at 9,000 million pesos (about $479 million). B×+ had also described the second-quarter earnings as below consensus.
The Rio Times reported that it could not access the bank's results through its investor pages on October 31. Its coverage therefore relied on the B×+ note, which cited company reports, and on rating-agency filings. The additional figures attributed here to BanBajío come from its third-quarter earnings report filed with the Mexican Stock Exchange.
The available information does not confirm whether BanBajío retained its 8,400 million–9,000 million peso full-year net income guidance after the third quarter.
