National Australia Bank Ltd.

The outlook on NAB is stable. Economic risks facing Australian banks are likely to remain low. This is despite rising interest rates and consumer prices. In our base case, we project house prices in Australia will continue to fall in an orderly manner, by about 10% in the next 12-18 months. We forecast NAB's credit losses will remain low and close to pre-pandemic levels, at about 15 basis points (bps) of customer loans. Consequently, the bank should maintain sound earnings, supported by rising interest rates. It is likely to have a strong risk-adjusted capital (RAC) ratio of 10%-10.5% over the next two years. We see little upside to our issuer credit ratings on NAB in the next two years. However,

...National Australia Bank Ltd.'s (NAB) strong market position and focus on low-risk lending in Australia and New Zealand will continue to support its earnings profile. The bank focuses on retail, SME, and commercial banking. Despite rapid increases in consumer prices and interest rates and falling house prices, the outlook for the economies of both countries is solid. Unemployment should also remain low. NAB's capitalization will remain a strength to its credit profile. Credit losses should remain low and close to pre-pandemic levels over the next two years. NAB and the other major Australian banks' dependence on domestic and offshore wholesale funding remains a weakness. This is notwithstanding improvements in the past 10 years across the banking system....

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