The ratings on Montreal-based National Bank of Canada reflect our assessment of its conservative credit risk profile, lack of exposure to high-risk U.S. retail lending, strong presence in midmarket commercial and retail lending in Quebec, good core profitability, strong liquidity, and conservative capital adequacy. The ratings also reflects what Standard&Poor's Ratings Services views as the bank's geographical concentration of loans and deposits in Quebec, the higher proportion of revenues tied to capital markets activities (especially trading related) compared with that of its peers, and the challenges it faced with its exposure to nonbank asset-backed commercial paper (ABCP). National Bank's credit profile remains relatively stable and supported by what we consider its good risk management culture and fairly conservative
