Dive Brief:
- Transportation loan impairments at BMO climbed to C$464 million ($331 million) for its Q4 earnings period ending Oct. 31, the bank reported Thursday.
- The impairments, considered losses under generally accepted accounting principles, were up 9% sequentially and show the difficulty trucking firms face maintaining operations amid a continued freight downturn.
- While the bank said in August that the impaired loans would remain elevated for multiple quarters, “credit performance deteriorated more than we anticipated,” CEO Darryl White said last week an earnings call.
BMO transportation loan impairments continue to escalate
Dive Insight:
Despite the rising impairments, BMO executives suggested the worst was behind them.
“While we expect provisions to remain elevated, we believe that Q4 represents a high point and will begin to moderate through 2025,” Chief Risk Officer Piyush Agrawal said on the earnings call, speaking about impairments overall.
The U.S. had been the dominant source of transportation loan impairments for the Canada-headquartered financial institution. But woes for transportation customers in Canada overtook those losses in Q3 and Q4.
In August, Agrawal noted weak freight volume and lower spot rates were putting stress on trucking customers, although he added that there were early signs of stabilization.
Other factors such as insurance inflation and legal costs connected with crashes have also pressured trucking firms’ operations.
