The rating outlook on NAB is stable. We see limited downside to economic risks facing Australian banks over the next two years. We expect modest growth in house prices over the period. Resumption of immigration-driven population growth along with limited new housing supply should continue to support house prices. We forecast NAB's credit losses will remain low, at about 15 basis points (bps) of customer loans. Consequently, the bank should maintain sound earnings. NAB is likely to maintain a strong RAC ratio of 11.0%-11.5% over the next two years. The ratings on NAB have substantial headroom on the downside. Downgrade scenarios are highly unlikely, but include a: two-notch deterioration in our assessment of the bank's stand-alone credit profile (SACP), or;
