Likely BMO swan song shows trucking credit strengthening

Recent quarterly data from BMO indicates a notable recovery in the credit health of the trucking sector. According to FreightWaves, the bank’s latest financial report showed that gross impaired loans dropped to $440 million, down from $576 million in the previous quarter. This shift suggests that the broader freight market is strengthening, resulting in fewer anticipated losses for one of the industry's most significant lenders.

Forward-looking metrics also reflected this positive trend, with provisions for credit losses falling to $15 million, their lowest point since early 2023. While actual write-offs remained relatively flat at approximately $17.32 million, the substantial decrease in both allowances and provisions indicates that the bank expects fewer troubled loans in the coming months as market conditions for motor carriers continue to stabilize.

These figures arrive as BMO prepares to finalize the sale of its transportation division to private equity firm Stonepeak later this year. The transition is already evident in the bank’s lending activity, as new loan originations plummeted from $114 million in the second quarter to just $11 million in the third. Total loans for the sector sat at $12.78 billion, significantly below the peak of $15.6 billion recorded last year.