{"id":43340,"date":"2022-04-29T20:03:28","date_gmt":"2022-04-30T01:03:28","guid":{"rendered":"https:\/\/prefblog.com\/?p=43340"},"modified":"2022-04-29T20:03:28","modified_gmt":"2022-04-30T01:03:28","slug":"na-upgraded-to-pfd-2-by-dbrs","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=43340","title":{"rendered":"NA Upgraded to Pfd-2 by DBRS"},"content":{"rendered":"

DBRS has announced<\/a> that it:<\/p>\n

upgraded the ratings of National Bank of Canada (National or the Bank) and its related entities, including the Bank\u2019s Long-Term Issuer Rating to AA from AA (low) and Short-Term Issuer Rating to R-1 (high) from R-1 (middle). Additionally, DBRS Morningstar changed the trends on all ratings to Stable from Positive. National\u2019s Long-Term Issuer Rating is composed of an Intrinsic Assessment of AA (low) and a Support Assessment of SA2, which reflects the expectation of timely systemic support from the Government of Canada (rated AAA with a Stable trend by DBRS Morningstar). As a result of the SA2 designation, the Bank\u2019s Long-Term Issuer Rating benefits from a one-notch uplift.<\/p>\n

KEY RATING CONSIDERATIONS
\nThe upgrades and Stable trends recognize National\u2019s successful expansion of its footprint in targeted markets and niches across Canada, especially in Wealth Management (WM) and Financial Markets (FM). In addition, the Bank\u2019s strong performance over the last few years, with Personal and Commercial (P&C) and WM now contributing a larger portion of earnings, has placed National at the top of its peer range in terms of profitability metrics.<\/p>\n

The ratings also reflect National\u2019s dominance in its home province, the Province of Qu\u00e9bec (Qu\u00e9bec; rated AA (low) with a Stable trend by DBRS Morningstar), which had experienced strong economic growth prior to the Coronavirus Disease (COVID-19) pandemic and is now showing a healthy rebound. Furthermore, the Bank benefits from strong preprovision earnings, while the transformation efforts in its P&C business and growth of its WM business have driven growth in client deposits. The ratings also consider the small yet growing contribution of the U.S. Specialty Finance and International (USSF&I) segment, which DBRS Morningstar views as having a higher risk profile, as well as potentially more volatile earnings. Lastly, DBRS Morningstar notes that National\u2019s FM business segment is an important contributor to the Bank\u2019s franchise and has benefitted from the market volatility experienced in the last couple of years. Although the majority of transactions are client driven, the segment\u2019s activities could expose the Bank to increased capital markets risk from significant market downturns.<\/p>\n

The ratings also consider that government support measures have largely mitigated the negative economic impacts of the pandemic. Positively, economic performance has rebounded, and the labour market is essentially at full capacity; however, headwinds persist from a potentially aggressive interest rate tightening cycle to combat inflation, geopolitical tensions related to the Russia-Ukraine conflict, supply-chain disruptions, and the pandemic. Furthermore, DBRS Morningstar remains concerned about the combination of high Canadian household debt levels that have reached an all-time high and elevated home prices that have been driven by housing market imbalances and robust demand during the pandemic (particularly in the greater Toronto and Vancouver areas). Housing prices remain vulnerable and, as a result, National and its Canadian peers remain susceptible to adverse changes in the Canadian real estate market. Positively, DBRS Morningstar views National\u2019s residential mortgage loan portfolio as conservatively underwritten, reflecting the Bank’s strong risk culture.<\/p><\/blockquote>\n

Affected issues are NA.PR.C, NA.PR.E, NA.PR.G, NA.PR.S and NA.PR.W.<\/p>\n","protected":false},"excerpt":{"rendered":"

DBRS has announced that it: upgraded the ratings of National Bank of Canada (National or the Bank) and its related entities, including the Bank\u2019s Long-Term Issuer Rating to AA from AA (low) and Short-Term Issuer …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-43340","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/43340","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=43340"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/43340\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=43340"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=43340"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=43340"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}