Bank of Montreal (BMO) is closing its indirect retail auto finance business, resulting in job losses, as the bank focuses on other areas. The move comes as BMO's bad debt provisions increased, indicating growing stress on consumers due to rising borrowing costs. The bank will continue to fund contracts submitted and approved prior to the termination date. BMO's consumer loan portfolio includes home equity loans and primarily auto loans, but also loans for boats, recreational vehicles, and motorcycles. The Bank of Canada's data shows higher delinquency rates for vehicle loans, reflecting the strain on consumers' finances. BMO has been expanding in the United States to find new avenues of growth, with the US now accounting for over one-third of its overall profits.
The Bank of Montreal (BMO) is exiting the retail auto finance business to focus on areas where it believes its competitive positioning is strongest. While it will no longer provide consumer vehicle loans, BMO will continue to offer financing for dealers. The move will result in layoffs, but the exact number was not disclosed. BMO is working closely with affected employees to provide support and ensure fair treatment. BMO and its American unit, BMO Harris Bank, currently offer auto loans to consumers through various dealers in Canada and the United States.
BMO suggests that now is a good time to consider buying undervalued stocks with growth potential, as they believe these "growth at a reasonable price" standouts are currently underappreciated. They recommend looking into stocks like Amazon, which are set to report earnings soon, and highlight the importance of identifying companies with a history of outperforming earnings expectations. Additionally, Bank of America has identified a software stock as a top pick, citing the palpable interest in artificial intelligence.
BMO's quarterly earnings report showed a significant increase in provisions for credit losses and allowances for credit provisions in the transportation sector, which is considered a strong indicator of the health of fleets. The data suggests that trucking companies were hitting their lines of credit to a greater degree in the second quarter. Gross impaired loans also rose, but were still below peak levels seen in 2020. The weak trucking market has finally caught up to BMO's earnings report, with provisions for credit losses rising to CA$18 million from $6 million in the prior quarter.
BMO has warned that a semi stock could be in trouble as margin pressures grow. The bank's analysts have downgraded the stock from "market perform" to "underperform" and lowered their price target from $150 to $125. The move comes as the semiconductor industry faces rising costs and supply chain disruptions, which are expected to put pressure on profit margins.
BMO recommends investors use a two-pronged strategy of GARP (growth at a reasonable price) and dividend growth to navigate volatile markets. This approach involves identifying companies with strong earnings growth potential that are trading at reasonable valuations, as well as those with a history of consistently increasing dividends.
The Chicago Blackhawks will host their annual Pride Night celebration on March 26th, showcasing their year-round efforts to support the LGBTQIA+ community. The event will feature community partners, programs, and entertainers, including a fireside chat with former professional goaltender Brock McGillis. The Chicago Gay Hockey Association will host a family and friends skate event and a special intermission performance. The event will also feature live entertainment, small business spotlights, and a Pride retail collection. The Blackhawks organization is committed to creating inclusive experiences for all staff, fans, and community members.
