Bank of Montreal scaling down retail auto finance business
<img width="250" height="177" src="https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-Bank-of-Montreal-scaling-down-retail-auto-finance-business-5175821439iStock-1131317506-250×177.jpg" class="webfeedsFeaturedVisual wp-post-image" alt="" decoding="async" style="float: left; margin-right: 5px;" link_thumbnail="" srcset="https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-Bank-of-Montreal-scaling-down-retail-auto-finance-business-5175821439iStock-1131317506-250×177.jpg 250w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-Bank-of-Montreal-scaling-down-retail-auto-finance-business-5175821439iStock-1131317506-700×496.jpg 700w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-Bank-of-Montreal-scaling-down-retail-auto-finance-business-5175821439iStock-1131317506-768×544.jpg 768w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-Bank-of-Montreal-scaling-down-retail-auto-finance-business-5175821439iStock-1131317506-120×85.jpg 120w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-Bank-of-Montreal-scaling-down-retail-auto-finance-business-5175821439iStock-1131317506-245×174.jpg 245w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-Bank-of-Montreal-scaling-down-retail-auto-finance-business-5175821439iStock-1131317506-500×354.jpg 500w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-Bank-of-Montreal-scaling-down-retail-auto-finance-business-5175821439iStock-1131317506.jpg 1216w" sizes="(max-width: 250px) 100vw, 250px" /><p><span data-contrast="auto">Poor debt provisions in retail trade spiked to C$81m, compared to a C$9m recovery a year earlier, according to the latest quarter-end results. This performance signifies the increasing pressure flowing from rising borrowing costs.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
<p><span data-contrast="auto">In a communication shared with Reuters, the Bank informed automotive dealers that new agreements are off the table as of 15 September. However, the institution wi</span></p>
<p><span data-contrast="auto">l fund agreements submitted and approved before the cut-off date. In a statement to Reuters, the Bank of Montreal said:</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
<blockquote><p><span data-contrast="auto">By winding down the indirect retail auto finance business, we have the ability to focus our resources on areas where we believe our competitive positioning is strongest.</span><span data-ccp-props="{"201341983":0,"335559685":720,"335559739":160,"335559740":259}"> </span></p></blockquote>
<p><span data-contrast="auto">In terms of the existing agreements, the bank financed car dealers instead of car buyers. During the third quarter, gross loans attached to the retail auto business increased by roughly 34% to C$17.36m, making up about 2.7% of the organisation’s total loans.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
<p><span data-contrast="auto">Fast-rising <a href="https://www.leaprate.com/news/boe-interest-rates-outlook-to-increase-for-2023-and-2024/" target="_blank" rel="noopener">interest rates</a> go hand-in-hand with bad loans and forced BMO to dig up roughly C$492m to cover debt losses. This is a significant increase from the previous year’s C$136m.</span></p>
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<p><span data-contrast="auto">BMO looked toward the United States for new growth possibilities and spent $16.3bn on its Bank of the West acquisition. This gave it the foothold to expand into 32 states. At present, the United States makes up two-thirds of the bank’s profits.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
<p>The post <a rel="nofollow" href="https://www.leaprate.com/news/bank-of-montreal-scaling-down-retail-auto-finance-business/">Bank of Montreal scaling down retail auto finance business</a> appeared first on <a rel="nofollow" href="https://www.leaprate.com">LeapRate</a>.</p>
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