Bank of Montreal (CSE:BMO) (BMO) announced on Saturday that it will close its indirect retail auto finance business and shift its focus to other areas, as the company’s overall bad debt provisions increased to C$492 million from C$136 million a year ago.
Canada's third-largest bank said the decision will result in an unspecified number of job losses.
"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," A BMO spokesperson told Reuters.
With its indirect retail auto finance business, BMO worked with car dealerships to arrange financing for buyers, who make monthly payments to the lender.
The bank operated the business in Canada and the US.
At the end of July, BMO's consumer installment and other personal loan portfolio totaled C$104 billion and included C$54.7 billion in home equity loans, Reuters reported.
Data from the Bank of Canada indicates that delinquency rates for vehicle loans are now higher than before the pandemic, a sign that higher interest rates are weighing heavily on consumer spending.
BMO has been expanding into the US to boost growth, buying Bank of the West for $16.3 billion this year and expanding in 32 western states.
The US now makes up more than one-third of BMO's overall profits.
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