No weakness in trucking evident in BMO quarterly data 

Although there are non-trucking activities in BMO’s transportation sector, trucking is believed to account for roughly 90% of its book of business.

But what’s remarkable is the road it has taken to get down to that CA$1 million figure. In the second quarter of 2020, which was the height of the pandemic, write-offs in BMO’s transportation sector were CA$35 million. They dropped to CA$30 million in the third quarter and have been down or flat every quarter since then, ranging from CA$12 million to the latest CA$1 million.

But write-offs are the end of the process that usually begins with a company’s debts being considered troubled enough that a bank takes an allowance for potential losses.  

In that category, once again, the second-quarter numbers do not reflect a troubled industry. Allowances declined CA$2 million to CA$12 million in the second quarter. Similar to write-offs, allowance numbers have either been down or flat in every quarter since 2020’s third quarter, when they were CA$36 million. They are now a third of that. 

The data reported by BMO also suggests that the bank is not pulling back from the industry. Gross loans and acceptances for transportation came in at CA$13.6 million. That is the highest in recent history, even exceeding the CA$13.4 million recorded in the second quarter of 2020, when many clients pulled down all or part of their revolving credit lines as they faced the uncertainty of the pandemic. Paying back those loans brought the size of the book down to CA$12.2 million in the second quarter of 2021, but it has since rebounded about CA$1.4 million. 

More articles by John Kingston

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