Research Update: National Australia Bank Outlook Revised To Negative Following Sovereign Action; Ratings Affirmed At 'AA-/A-1+'

On April 8, 2020, we revised the outlook on our long-term issuer credit rating on Australia to negative from stable to reflect a substantial deterioration in the sovereign's fiscal headroom at the 'AAA' rating level. A lower rating on the sovereign would reflect slightly reduced financial capacity to provide timely financial support to NAB and other systemically important institutions, if needed. We are revising our outlook on NAB to negative from stable, and affirming our 'AA-' long-term and 'A-1+' short-term ratings on the bank. The negative outlook reflects a one-in-three likelihood that we will lower our long-term rating on NAB in the next two years. In our base case, we expect that despite a significant fall in interest and fee

...- On April 8, 2020, we revised the outlook on our long-term issuer credit rating on Australia to negative from stable to reflect a substantial deterioration in the sovereign's fiscal headroom at the '###' rating level. - A lower rating on the sovereign would reflect slightly reduced financial capacity to provide timely financial support to NAB and other systemically important institutions, if needed. - We are revising our outlook on NAB to negative from stable, and affirming our '##-' long-term and 'A-1+' short-term ratings on the bank. - The negative outlook reflects a one-in-three likelihood that we will lower our long-term rating on NAB in the next two years. In our base case, we expect that despite a significant fall in interest and fee income, NAB's earnings in the next two years will remain sufficient to absorb the increase in credit losses due to the COVID-19 outbreak and containment measures....

Research Update