The ratings on National Australia Bank Ltd. (NAB) reflect its well-diversified and soundly based banking franchise, solid cash generation, and very good asset quality. Its business profile is broad based, and includes life insurance and wealth management activities through its MLC brand. Earnings are sound and supported by strong asset quality, partly reflecting benign domestic conditions and core underwriting and recovery skills. The bank's core capitalization is sound. Capital flexibility has moderated, and strategic ambitions are under review with the appointment of a new chairman and CEO following the recent revelation of unauthorized foreign exchange trading losses. Standard&Poor's rating on NAB, and related entities, was lowered to 'AA-' on March 12, 2004, reflecting concerns surrounding the bank's risk
