BMO’s latest quarterly results indicate that lending conditions for trucks could be getting better

Signs of Recovery in BMO’s Transportation Credit Data

Recent credit figures from the transportation division of Canada’s BMO bank indicate the first positive shift in the trucking sector in several years, as observed in the quarter ending January 31.

BMO, formerly known as the Bank of Montreal, has a transportation segment that primarily serves the trucking industry. The bank’s quarterly transportation data is widely regarded as a reliable measure of the sector’s credit conditions.

Since BMO’s fiscal first quarter concluded on January 31, much of the quarter coincided with the period when trucking rates began to rebound.

While BMO’s latest earnings report did not reveal any dramatic changes in specific business areas, the numbers suggest that the period of worsening credit in trucking may be coming to an end.

The total value of loans considered at risk of default, known as gross impaired loans, dropped to CA$563 million (US$411 million) from CA$585 million in the previous quarter. However, this figure remains higher than the CA$424 million reported in the third quarter and CA$503 million in the second quarter.

Provisions, which reflect anticipated future losses and are seen as forward-looking indicators, fell sharply to $39 million in the first quarter, compared to $57 million in the fourth quarter.

For the entirety of fiscal 2025, BMO set aside $196 million in provisions.

Net writeoffs, representing loans removed from the bank’s assets due to non-repayment, decreased to $24 million from $43 million in the previous quarter.

The only metric that increased was allowances for credit losses, which rose to $77 million from $71 million. Both provisions and allowances address problematic loans, but provisions affect earnings, while allowances impact the balance sheet.

Declining Transportation Loan Portfolio

According to an August Bloomberg report, BMO has been exploring the sale of its transportation unit. Supporting this, the bank’s gross loans and acceptances in transportation have continued to shrink.

In the first quarter, the portfolio stood at $12.42 billion, down from $12.98 billion in the previous quarter and $15.6 billion in the fourth quarter of 2023.

Loan Formation Trends

Year-over-Year Growth, Sequential Decline

New loan originations in transportation reached $65 million for the quarter, up from $54 million a year earlier but down from $131 million in the fourth quarter of 2025.

Additional Insights

Despite rumors of a potential sale, BMO continues to engage with its transportation clients and maintains a strong presence at industry events, including being a prominent sponsor at the Truckload Carriers Association’s annual meeting.

Gross loans and acceptances are offset by allowances on the balance sheet, resulting in net loans and acceptances. With the recent increase in allowances and reduction in gross loans, BMO’s net transportation portfolio has dropped to $12.34 billion, compared to $15.6 billion at the end of 2023.