The ratings on Montreal, Que.-based National Bank of Canada (National Bank) reflect consistent growth in core operating performance and lower credit risk profile, which are partly offset by limited geographical diversification and increased exposure to market risk. The ratings also reflect the bank's market share in the Province of Quebec and overall performance compared with the Canadian peer group. The vastly improved credit picture is in part owing to the favorable economic trends in Quebec but mostly to National Bank's strong credit risk management culture. The bank's credit experience was helped by the timely and prudent divestiture of the high-risk U.S. asset-based lending business in 2002 and the strategic decision to limit participation in the U.S. syndicated lending market. Asset
