BMO withdraws from personal auto financing
BMO (Bank of Montreal) withdraws from automobile financing for individuals following a worrying financial report at the end of 2e quarter of 2023. Due to growing debt caused by bad debts, the financial institution must turn to other financial projects.
Alarming figures
To put things into perspective, BMO saw its retail bad debt provisions increase by 800% in the space of one year, from $9 million to $81 million. Across all its business segments, BMO records bad debt debt of $492 million.
“By terminating indirect retail auto financing activities, we are able to focus our resources on areas where we believe our competitive position is strongest,” BMO said in a statement sent to the media. Reuters.
This news comes in the wake of a growing number of consumers unable to repay their auto loans due to the rising cost of living, interest rates and job losses in several sectors of activity.
BMO reassures, however, that all loans granted before this announcement will be supported. BMO intends to continue operating in the automobile sector, but at the dealership level.
Conclusion
This announcement is striking, but in no way surprising and we may soon witness other financial institutions unable to support the auto sector. Consumers are struggling. Life is becoming more and more expensive and the rise in interest rate results in some consumers simply being unable to repay their car loans.
