This is a brand new Chrome installation with the latest version of Chrome and the Apple Password extension, my version of Chrome is 131.0.6778.140 not 131.1 as yours though.
I have removed Chome and the extension, re-installed both, same problem, rebooted the MacBook Pro, same thing, there is no way for the extension to work.
Maybe in your case it was installed prior, with other versions, and the update doesn't break it as a new installation. I have also tested it on a different laptop (MacBook Air), same situation. No luck.