Dominion Bond Rating Service has placed its ratings of National Bank “under review with positive implications”.

The rating agency says that the move reflects, “the sustainable improvement in the bank’s earnings, asset quality, and financial risk profiles due to the ongoing successful execution of its strategy.”

“The rating actions are supported by National Bank’s more balanced business mix, which DBRS believes should provide a base of stability to earnings,” its says.

“The bank continues to solidify its leading retail banking position in Québec, 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,” DBRS says. Additionally, DBRS anticipates 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 says it believes the ratings are limited by the bank’s inherent leverage to capital markets volatility, given that National Bank is a sizeable player in the Canadian capital markets business, and its ability to build wealth management market share from outside of Québec, particularly in Ontario through Altamira, which continues to experience net redemptions.