Dominion Bond Rating Service Ltd. has placed the ratings of National Bank of Canada under review with positive implications, reflecting the sustainable improvement in the bank’s earnings, asset quality and financial risk profiles due to the continuing successful execution of its strategy. All trends are stable.

The rating actions are supported by National Bank’s more balanced business mix, which should provide a base of stability to earnings, DBRS said in a report Monday. The bank continues to solidify its leading retail banking position in Quebec, grow retail earnings in the rest of Canada through its strategic partnership program, expand its distribution capabilities and increase the diversification of its financial markets businesses, the rating agency adds.

In addition, DBRS expects the bank’s more conservative lending philosophy will contribute to respectable asset quality in the longer term, and an improving financial risk profile should position the bank for growth either organically or through acquisitions.

DBRS believes the ratings are limited by the bank’s inherent leverage to capital markets volatility, given that National Bank is a sizable player in the Canadian capital markets business, and the bank’s ability to build wealth management market share from outside of Quebec, particularly in Ontario through Altamira, which continues to experience net redemptions.