The ratings on Montreal-based National Bank of Canada (National Bank) reflect its conservative credit risk profile, strong presence in midmarket commercial and retail lending through its market share position in Quebec; measured expansion via the successful partnership program; and overall performance compared with its Canadian peer group. The ratings also reflect National Bank's geographical concentration of loans and deposits in Quebec and the higher-than-several peers' proportion of revenues tied to capital markets activities. Challenging capital markets, weakening U.S. real estate markets, and slowing growth prospects in Canada are hurting National Bank's (and its peers') earnings growth in 2008. The bank does not expect to meet its 2008 financial objectives as a consequence. Despite weaker credit conditions and difficult capital markets,
