National Bank of Canada

Strong asset quality profile Stable core profitability and capital adequacy Strong presence in retail and midmarket commercial lending in Quebec Dependence on Quebec for revenue growth and margins Competitive challenges expanding outside of Quebec Higher proportion of capital markets-related revenues relative to that of peers Standard&Poor's Ratings Services' outlook on The National Bank of Canada (NBC) is negative, the same as the other five large Canadian banks, reflecting the possibility that Standard&Poor's might reduce the additional uplift of one notch included in its rating on the bank for extraordinary government support. We could lower the stand-alone credit profile (SACP) if growth in unsecured consumer loans were to materially accelerate, asset quality metrics were to deteriorate to

...Higher proportion of capital markets-related revenues relative to that of peers Outlook: Negative Standard & Poor's Ratings Services' outlook on The National Bank of Canada (NBC) is negative, the same as the other five large Canadian banks, reflecting the possibility that Standard & Poor's might reduce the additional uplift of one notch included in its rating on the bank for extraordinary government support. We could lower the stand-alone credit profile (SACP) if growth in unsecured consumer loans were to materially accelerate, asset quality metrics were to deteriorate to levels that would be unfavorable relative to peer averages, if risks from non-core activities become material, if the forecast risk-adjusted capital (RAC) ratio were to fall below 7% and remain there for a period of time, or if capital markets operations' contribution to revenues were to consistently exceed 30% for several consecutive quarters. Alternatively, we could consider raising the SACP if the RAC ratio were to...

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