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, 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 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.
An allowance is considered a “contra asset,”with its impact is 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.
Net writeoffs rose slightly, to $25 million, up from $24 million. The recent peak was $63 million in 2024’s fourth quarter.
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.
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