The ratings on National Australia Bank Ltd. (The National) reflect the bank's strong cash earnings generation, its diversified business profile within Australia and, to a lesser extent, the U.K., as well as its very good asset quality and capitalization. Risk management, especially for a geographically diverse business, remains a key rating issue for the bank even though Homeside Lending Inc. (Homeside) was sold in 2002. The bank has taken tangible steps to improve its risk management framework, which, if consistently managed, should improve the organization's risk profile. The bank, however, has a lengthy history of growing market share and revenue by acquisition. Potentially impacting the bank's future credit profile, therefore, is its ambition to grow its U.K. retail banking operations
