BMO trucking credit data reveals weak financial recovery despite freight rate upturn
Canada’s BMO reported that rising freight rates have not significantly improved the balance sheets of many trucking clients, with impaired loans and credit loss allowances ticking higher in the second quarter of 2026.
Data from Canada’s BMO for the second quarter of 2026 indicates that the recent upturn in freight rates has not significantly strengthened the finances of many of its trucking clients. As one of the largest lenders to the sector, BMO’s quarterly credit metrics serve as a critical barometer for industry health, particularly as the bank prepares to offload its transportation group to private equity firm Stonepeak. The transaction is expected to close in the fourth quarter, making this report one of the final transparent glimpses into the bank’s direct exposure to the trucking market.
Key credit health indicators for the sector remained largely static or worsened slightly during the period. Gross impaired loans rose to Ca$576 million from $563 million in the first quarter. While this figure is below the recent peak of $585 million recorded in the fourth quarter of 2025, it remains well above the $503 million reported in the corresponding quarter of the previous fiscal year. This persistence in impaired assets suggests that higher freight rates have yet to translate into meaningful financial relief for a significant portion of the borrower base.
Provisions for credit losses also increased, rising to $41 million from $39 million in the prior quarter. Consequently, allowances for credit losses on impaired loans grew to $86 million, up from $77 million in the first quarter and significantly higher than the $57 million seen a year earlier. Net write-offs ticked up slightly to $25 million from $24 million, though these levels remain below the $63 million peak observed in the fourth quarter of 2024. These metrics reflect a cautious outlook from the lender regarding the repayment capacity of its debtors.
Contrary to expectations that BMO might be trimming its book of business or slowing new lending in anticipation of the sale, the loan portfolio actually expanded. The total loan book grew to $12.65 billion in the second quarter, up from $12.42 billion in the first quarter. Although this is down from the over $14 billion recorded a year ago, it demonstrates continued activity in the sector. The highest quarterly book of business was recorded in the fourth quarter of 2023 at $15.61 billion.
Loan originations remained robust, with volumes in the second quarter exceeding those of the preceding quarter, as well as levels seen more than three quarters and more than a year ago. Approximately 90% of BMO’s transportation group consists of financing to truckers, underscoring the depth of its involvement in the industry. The combination of strong originations and a growing portfolio, set against a backdrop of stagnant credit health, highlights the complex financial landscape facing Canadian trucking operators.
