Fitch Ratings has affirmed its rating on National Bank of Canada, while noting the economic environment may become more challenging for the bank.

The rating agency said that it has affirmed its long-term issuer default rating on National Bank, noting that the bank’s ratings “are underpinned by its leading banking franchise in Quebec and sound financial fundamentals.”

Fitch said the bank’s operating performance “remained sound” in its latest quarter, and that while gross impaired loans grew slightly, coverage of those exposures by loan loss reserves remains good.

“Other than its restructured non-bank asset-backed commercial paper exposure, NBC’s exposures to other headline risk areas remain modest,” Fitch added. “Direct U.S. subprime mortgage exposure is zero and indirect U.S. subprime exposure is minimal.”

The rating agency maintains a stable outlook on the bank, which, it says, “reflects an expectation for sound financial results but does recognize the likely effects of a more difficult environment. Asset quality issues could increase but are expected to remain well contained. The Canadian economy remains generally healthy; however, continued economic weakness in the U.S. could have spillover effects in Canada.”

IE