Dive Brief:
- BMO’s gross impaired loans in transportation reached CA$585 million (about $419 million) for its most recent quarter, a new peak for the key trucking lender.
- The bank previously experienced relief in Q3, with that monetary risk falling nearly 16%, but the new results reported Thursday for Q4 show that conditions worsened in that part of the portfolio.
- “While it takes time to work through impaired files, we have seen a steady decline in new watch list formations and expect that this will lead to lower impaired balances over time,” Chief Risk Officer Piyush Agrawal said on an earnings call to investors.
Dive Insight:
From Q3 to Q4, gross impaired loans overall increased 2% to $7.1 billion, but in transportation, that involved a 38% increase, according to a Trucking Dive analysis.
The metric shows customers likely unable to repay their loans, and it speaks to the transportation industry’s health and capacity overall.
A freight recession has continued for over three years, according to the American Transportation Research Institute, creating harsh conditions and challenges to repay loans for trucking equipment acquired when spot rates were sky high.
TFI International, headquartered in Montréal, reported in October how economic challenges in the U.S. were adversely affecting its operations, contributing to a 24% drop in its operating income.
“As we look to 2026, we anticipate a softer economic environment in Canada during the first half with trade uncertainty and subdued consumer sentiment continuing to weigh on the economy,” BMO’s Agrawal said. “At the same time, expansionary fiscal policies and growth initiatives as well as support from monetary policy should lead to stronger growth as we go through the year.”
BMO also expects an improved economic backdrop in the U.S. going forward, CFO Tayfun Tuzun said on the call.
