MONTREAL — BMO Financial Group says it will close its retail auto finance business in order to reroute resources following a rise in bad debt.
It comes after the company's bad debt provisions more than tripled to $492 million in the quarter ended July 31 compared to a year earlier. Those dents on the income statement hint at the financial strain facing consumers, who have struggled to cope with a spike in interest rates over the past year and a half.
The Bank of Montreal's indirect retail auto loans segment works with car dealerships to arrange financing for car buyers, who in turn make monthly payments to those dealers. BMO's commercial banking business, which backs auto dealers through inventory financing, is unrelated to the upcoming shutdown.
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