“The review for upgrade reflects [the bank’s] robust and stable profitability, supported by its disciplined growth strategy, its strong asset quality and capital position, healthy levels of funding and liquidity that protect against market shocks, as well as its growing presence across Canada, including through its recently announced acquisition of Canadian Western Bank (CWB),” Moody’s said.
The bank’s common equity tier 1 capital ratio is the highest among the big Canadian banks, it noted — and Moody’s said that its exposure to problem loans is among the lowest of the big banks.
“The steady profitability generated by [National Bank’s] retail businesses reflects the bank’s disciplined growth strategy, with asset quality remaining sound, despite a weakening macroeconomic environment,” it said.
Additionally, Moody’s said the bank’s planned acquisition of CWB, which has received shareholder approval but remains subject to regulatory approvals, aligns with National Bank’s strategy of growing domestically and boosting its market presence outside Quebec.
“The review for upgrade will assess the impact of the CWB acquisition on NBC’s capital and its liability structure, as well as the impact on its asset quality, including consideration of the credit marks that may be taken on CWB exposures, and the plan to realize cost synergies from the acquisition,” Moody’s said. It added it will also assess the bank’s loan loss provisions for commercial real estate exposures, “in a downside economic scenario.”
Read More: Moody’s considers upgrade for National Bank
