BMO Completes U.S. Reconfiguration, Targets 12% ROE, Transportation Impaired Loans at CA$576 M
BMO•BMO completed its reconfiguration of the U.S. banking segment, selling lower-return branches to target a 12% return on equity by 2027 after achieving 8.6% in Q2. Its transportation unit’s impaired loans rose to CA$576 million in Q2 while allowances climbed to CA$86 million and provisions increased to CA$41 million, signaling weak credit health.
1. U.S. Segment Reconfiguration Complete
After six quarters, BMO has finalized changes to its U.S. banking segment, which included divesting transactional portfolios and selling retail branches in the Midwest and Great Plains. The refocused portfolio emphasizes full consumer relationships and regional scale in markets where the bank can compete effectively.
2. Profitability Targets and Expansion
BMO’s U.S. return on equity stood at 8.6% in the second quarter, and management maintains a goal of reaching 12% by 2027. To support this, the bank plans to open over 130 new branches in California over five years, increasing its presence from 220 to roughly 350 locations.
3. Transportation Credit Health Update
BMO’s transportation group reported gross impaired loans of CA$576 million in Q2, up from CA$563 million, with allowances for credit losses rising to CA$86 million and provisions increasing to CA$41 million. Net write-offs edged up to CA$25 million, reflecting persistent credit challenges in the trucking sector.
