DBRS has confirmed the ratings of National Bank of Canada. All trends remain stable.

The firm says its ratings are supported by National Bank’s, “ongoing progress in strengthening its super-regional bank and national investment bank, while maintaining a favourable financial risk profile.”

“Throughout the last three years, National Bank has focused on improving geographic diversification and leveraging its wealth management operations to take advantage of structural changes, while strengthening its Québec-based businesses,” DBRS says. The rating agency believes these actions have contributed to revenue and earnings strength in all segments in the recent past, with record earnings in 2006 and solid results in the first half of 2007.

Quebec-based revenues are unchanged at 64% of total revenues over the last three years, it notes. “In absolute terms, the bank has made good progress towards geographic diversification but strong growth in Quebec has offset this effect. Efforts to expand lending outside of Quebec, including through financial markets and its partnership program, have high potential to increase geographic diversification, but DBRS believes regional concentration in Quebec remains a key long term challenge,” it says.

Within Quebec, National Bank is solidly ranked second in retail banking and has the leading market share in commercial mid-market banking, it adds. DBRS believes this positioning will strengthen as the bank improves service quality and continues to adopt a sales-oriented culture.

National Bank’s financial risk profile is favourable, DBRS says, as evidenced by capital ratios, internal capital generation, adequate financial flexibility and acceptable market-risk exposure levels. DBRS does not anticipate any significant changes in the Bank’s financial risk profile.