BMO's third-quarter transportation loan data showed modest improvement, though questions remain about the future of its trucking unit, reports New York's FreightWaves.

The Canadian bank's transportation group, which reportedly has 90 per cent of its business with trucking companies, saw gross loans and acceptances fall to US$13.67 billion - the lowest level since Q1 2023. The group peaked at $15.6 billion in Q4 2023.

Bloomberg reported earlier this month that BMO may sell its transportation unit, though the bank has not confirmed this. During the earnings call, CEO Darrell White did not address the group directly but said the bank was "optimizing through some low-return assets" and managing provisions for credit losses.

Provisions for credit losses in transportation rose to $50 million from $45 million in Q2, but remained well below the $77 million and $85 million recorded in Q3 and Q4 of 2024. Writeoffs fell to $32 million, the lowest in a year.

Allowances for credit losses rose to $66 million from $57 million. Gross impaired loans dropped to $424 million from $503 million in Q2 - an all-time high - returning to the same level as Q3 2024. For comparison, the figure in Q3 2022 was $72 million.

Analysts noted that while some indicators improved, others stagnated. The bank's muted response to divestiture speculation and shrinking loan book suggest a possible strategic shift away from transportation lending.