BMO’s latest earnings report reveals minimal improvement in trucking sector credit health despite stronger freight rates. Gross impaired loans reached US$417.2 million, allowances for credit losses rose to $86 million, provisions climbed to $41 million, and net writeoffs edged up to $25 million. The loan portfolio grew to $12.65 billion—contrary to expectations ahead of the planned sale to Stonepeak. This report is likely the penultimate transparent view of trucking credit conditions from BMO before the divestiture closes in Q4 2026.
Data from Canada’s BMO on the trucking sector’s credit conditions for the bank’s second quarter suggests the upturn in freight rates has yet to significantly strengthen the finances of many of its clients.
BMO’s Transportation Group: A Key Industry Barometer
BMO, the former Bank of Montreal, is one of the largest lenders to the trucking sector. As a publicly-traded company, its quarterly data on various metrics in its transportation group–of which about 90% consists of financing to truckers–is viewed as a strong indicator of the credit health of the industry.
However, the group is being sold to Stonepeak, a private equity company. That deal is expected to close in the fourth quarter, so the latest BMO (NYSE: BMO) earnings report released Wednesday will likely be the next to last one of its kind that gives a transparent picture of credit conditions in the trucking sector.
Four Key Credit Indicators Show Minimal Improvement
Four key indicators in BMO’s transportation sector of the credit health of trucking barely budged in the second quarter of 2026. BMO’s fiscal year calendar begins in November.
- Gross impaired loans rose to Ca$576 million (US$417.2 million) from $563 million in the first quarter. While that is down from the recent peak of $585 million in the fourth quarter, it remains well above the $503 million in the corresponding quarter of the 2025 fiscal year.
- Allowances for credit losses on impaired loans rose to $86 million from $77 million. A year earlier, that figure was $57 million.
- Provisions for credit losses were $41 million. That is up from $39 million in the prior quarter. They peaked at $85 million in 2024’s final three months.
- Net writeoffs rose slightly, to $25 million, up from $24 million. The recent peak was $63 million in 2024’s fourth quarter.
An allowance is considered a “contra asset,” with its impact on a company’s balance sheet. A provision is a liability, so it impacts income. But both are acknowledgements of a company that it believes there will be difficulty being repaid by a debtor.
Loan Portfolio and Originations Defy Expectations Amid Sale Preparation
While earlier data suggested BMO might be trimming the size of its book of business in preparation for a sale, the size of the loan portfolio rose in the second quarter from the prior three months, rising to $12.65 billion, up from $12.42 billion. A year earlier, it was just over $14 billion. The highest quarterly book of business in BMO’s transportation sector was recorded in the fourth quarter of 2023, when it stood at $15.61 billion.
It also might be expected that BMO might be slowing new lending as it awaits a transition to its new owners. But that wasn’t the case, with loan originations in the second quarter more than a year ago, more than three quarters ago and more than the preceding quarter.
Source: FreightWaves
Compiled from international media by the SCI.AI editorial team.
