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BMO fourth quarter earnings report reflects robust trucking industry

Despite supply chain issues and other upheaval caused by the COVID-19 pandemic, key financial indicators for the trucking industry are trending in the right direction. Canadian bank BMO, a major lender to trucking companies, recently released positive fourth quarter earnings for its transportation related portfolio.

Following a strong third quarter, BMO’s fourth quarter (ending on Oct. 31) report shows that write-offs continue to hover around the CA$6 million number ($4.69 in U.S. dollars), unchanged from the third quarter.

In comparison, at the height of the pandemic, the number of write-offs got as high as CA$35 million per quarter, and even in 2018 under a strong economy, they were about CA$15 million per quarter.

Allowances related to credit losses also fell. This indicator reflects allowances taken by BMO on loans considered impaired. Those losses were down only CA$4 million, representing a very low number when compared to historical trends.

Numbers show that BMO’s transportation related business has steadily grown, worth about CA$9.9 billion in 2018 and rising to nearly CA$13 billion in the fourth quarter of this year. Gross impaired loans were down CA$15 million just from the third quarter to the fourth.

While not the largest number in its history, the CA$12.96 billion fourth quarter book of business from transportation is robust, showing the overall strength of the trucking market and how it could be affected by rising truck and equipment costs as well as the price of fuel.