Summary: National Bank of Canada

Stable core profitability and capital adequacy Strong presence in retail and midmarket commercial lending in Quebec Dependence on Quebec for revenue growth and margins Higher proportion of capital markets-related revenues relative to that of peers Greater dependence on wholesale funding than some peers Standard&Poor's Ratings Services' outlook on National Bank of Canada (NBC) is stable. We could lower the stand-alone credit profile (SACP) if risks from noncore activities or a precipitous decline in home prices accompanied by higher unemployment become material, such as rapid deterioration of credit quality metrics (if nonperforming assets [NPAs] and net charge-offs [NCOs] exceed the peer average by 20% plus) and/or operating performance; or if capital markets operations' contribution to revenues were to consistently

...Outlook: Stable Standard & Poor's Ratings Services' outlook on National Bank of Canada (NBC) is stable. We could lower the stand-alone credit profile (SACP) if risks from noncore activities or a precipitous decline in home prices accompanied by higher unemployment become material, such as rapid deterioration of credit quality metrics (if nonperforming assets [NPAs] and net charge-offs [NCOs] exceed the peer average by 20% plus) and/or operating performance; 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 risk-adjusted capital (RAC) ratio were to rise such that it would sustainably exceed 10% (we consider 10% and higher strong) accompanied by materially higher proportion of revenues from more stable businesses such as retail banking and wealth management. We see this as unlikely in the near future. As NBC is a moderately systemically important financial institution...

Summary