BMO's Strategic Sale of Transportation & Vendor Finance Businesses - Our Take

Research evidence excerpt

BMO's Strategic Sale of Transportation & Vendor Finance Businesses - Our Take

Financial Services - Banks

Bank of Montreal

TD SECURITIES INC. - CANADA QUICK TAKE: COMPANY UPDATE

May 12, 2026

Price: C$209.38 (05/11/2026) BMO's Strategic Sale of Transportation &

Price Target: C$234.00 Vendor Finance Businesses - Our Take

BUY (1)

ESG SCORE: 59/100

Mario Mendonca, CFA, CA^ THE TD COWEN INSIGHT

416 308 2361

Monday evening BMO announced the sale of its Transportation Finance & Vendor Finance

mario.mendonca@tdsecurities.com

businesses to Stonepeak, an alternative investment firm, for an undisclosed amount. We view

Masa Song^ the transaction as a continuation of BMO's balance sheet and ROE optimization, not as an

416 982 5452 indicator of credit deterioration. We will review our estimates when BMO reports Q2/26 on May

masa.song@tdsecurities.com

27.

Fernando Torrealba Tesi, CFA^

416 983 2664 Impact: NEUTRAL to run-rate earnings (transaction is expected to close in Q4/26, subject to

fernando.torrealbatesi@tdsecurities.com regulatory approvals)

Key Data The transaction includes ~$14.5bn of loans and leases across Canada and US, with BMO

Symbol TSX: BMO-T

retaining a 19.9% equity interest in the new entity with Stonepeak. The partnership with

Market Cap C$147.9B Stonepeak may also create potential opportunities to scale the platform outside BMO's

balance sheet. BMO first acquired the transportation finance business from GE in 2015 with

US$8.9bn loans. Media reports from August 2025 reported BMO was exploring a sale of the

transportation finance unit, with estimates at the time valuing the business around US$1bn

with US$11bn assets.

Financial implications: Management expects to record a ~$0.9bn after-tax charge in Q3/26,

primarily related to goodwill.