Credit conditions in trucking as measured by the quarterly earnings report of major lender BMO took a significant downturn in the three months ending July 31, though with one slightly positive sign.
Allowances taken by Canada-based BMO in its transportation group soared to CA$54 million ($40 million) in the third quarter. That puts the allowances figures at more than double what it was in the second and first quarters and is multiples above the allowances ever taken by the transportation group. First- and second-quarter allowances were both $24 million. They were $8 million as recently as the second quarter of 2022.
An allowance is described by Fincylopedia as being “created and maintained against potential losses and certain risks.” It is taken as a result of “management’s estimate of a certain probability that may adversely impact the value of its assets.” An allowance is taken based on historical data.