Dive Brief:
- BMO reported that impaired loans eased by 12% within its transportation portfolio during Q1, the first decline in years, but the company still reported some of its highest levels in the metric.
- Total gross impaired transportation loans totaled CA$196 million ($137 million around the time of the release) for Canadian businesses and CA$214 million for U.S. counterparts, according to earnings materials.
- Across its lending businesses, BMO’s gross impaired loans rose 1% to CA$7 billion ($4.863 billion) due to U.S. commercial risks, Chief Risk Officer Piyush Agrawal said on a Feb. 25 earnings call.
BMO transportation loan impairments retreat slightly
Amount of impaired loans, in millions of Canadian dollars, from Q1 2023 through Q1 2025.
Dive Insight:
BMO may be moving away from a possible peak in transportation loan problems after Q4 2024 books closed, but the major lender to trucking firms is also noting tariff concerns among its customers.
Some clients on both sides of the border have adopted a “more cautious posture around capital deployment,” CEO Darryl White said on the call, referencing a 25% tariff on Canadian imports U.S. President Donald Trump said would start March 4.
But the bank’s chief risk officer suggested not everyone may be impacted the same way.
“There’s so many unknowns in this tariff scenario,” Agrawal said. “We don’t know the duration. We don’t know what percentages will be. We don’t know which industries might get excluded. We don’t know what monetary, fiscal policy actions the government might take here to mitigate some of the impact.”
At the same time, no one sector appeared to be more vulnerable to tariffs than others, Agrawal said. He noted the the bank has reviewed individual customer files for export risks and developed a playbook following extensive review of several trade policy scenarios.
“I think going into the tariff cycle, we are better positioned because we are tracking our watch list very closely,” he said.
