Further credit deterioration in trucking is evident in the quarterly earnings report of Canada’s BMO bank.
BMO (NYSE: BMO), the former Bank of Montreal, is one of the largest lenders to the trucking industry. Its transportation unit, purchased from GE Capital in 2015, has a customer base believed to be in the tens of thousands. Roughly 90% of its transportation sector is reportedly truck financing.
Provisions for credit losses at BMO in the quarter ended April 30 climbed to CA$56 million (U.S. $41 million). That marks the seventh consecutive quarter in which that important benchmark figure has risen, and it is easily the highest figure in the history of the BMO data going back to 2015 when the bank bought the business from GE Capital.
That seven-quarter stretch started with provisions of $2 million in the fourth quarter of 2022, an amount that followed a net positive provision of $3 million a quarter earlier. Provisions can be positive when losses are extremely low and are offset by earlier provisions being removed from the danger list as financial conditions allow earlier troubled borrowers to get financially healthy.