In terms of total returns, the SNL Brazil Bank index outperformed other regional bank indexes in 2018 as the country's ongoing economic recovery and far-right President Jair Bolsonaro's ascension to power helped buoy the local market.
The SNL bank indexes for the Caribbean, Mexico and the Southern Cone all posted negative total returns in 2018.
The Brazil bank index peaked in February 2018 with a return of just above 30%. It dipped into negative territory in the second quarter and remained there through the third quarter before rising back up in October when Bolsonaro took a commanding lead in presidential polls.
The country's economic growth, meanwhile, accelerated to its fastest pace in 18 months during the third quarter.
The SNL Mexico Bank index recorded a negative total return of -20.7% in the fourth quarter of 2018 and -5.6% for the full year. Although returns were positive in the third quarter, the situation changed when Andrés Manuel López Obrador, who was elected Mexico's president in July 2018, shook investor confidence with a number of surprise decisions.
In October, AMLO announced that his government would scrap a more than $13 billion airport construction project. His party delivered a second blow to markets when it floated a proposal to cut fees and commissions charged by banks by up to 50%.
Meanwhile, inflation and currency turbulence in Argentina continued to weigh on the SNL Southern Cone Bank index, which ended 2018 with a negative -24.0% total return for the full year and -5.8% for the fourth quarter.
In response to the crisis, Argentine banks started diverting an increasing amount of their liquidity toward transaction banking and away from lending operations. In a sector report published in October, Moody's said it expects to see asset quality deterioration in Argentina's banking system as outstanding loans will mature in a much less favorable environment than what banks had anticipated.
The SNL Caribbean Bank index did not fare much better, closing 2018 with a negative one-year total return of -11.3%.