Recent moves, such as selling its stake in CI Financial, and ramping up its exposure to consumer credit businesses, is dimming the outlook for Bank of Nova Scotia’s credit rating, says Moody’s Investors Service.

Following a downgrade in its outlook for certain ratings of all the big Canadian banks amid reduced expectations of government support, Moody’s also separately changed its outlook to negative from stable for the standalone bank financial strength rating and the unsupported long-term ratings of Scotiabank (TSX:BNS), citing signs of increased risk appetite at the bank.

Earlier Wednesday, as part of a broader action affecting all of the big Canadian banks, Moody’s changed the outlook on Scotia’s supported long-term ratings to negative. It’s also changing its outlook on Scotia’s bank financial strength rating and unsupported ratings due to “a number of recent developments which, when taken in combination, could signal a shift in the bank’s risk appetite and, given their higher risk nature, weigh upon [Scotia’s] current very high ratings.”

The rating agency says that the sale of most of Scotia’s stake in CI Financial; its acquisition of a 20% stake in Canadian Tire Financial; and management’s desire to accelerate growth in its credit card and auto finance portfolios; all add up to signal a higher risk appetite at the bank.

First, Moody’s says that the redeployment of the capital raised by the bank’s monetization of its 37% holding in CI Financial could increase its international exposure. And, Moody’s says that the credit profiles of Scotia’s international operations dilute the strong credit profile of its domestic Canadian operation, “therefore a shift in this direction would be credit negative.”

Additionally, the move to take a stake in Canadian Tire Financial increases the bank’s exposure to unsecured consumer credit “at a time of peak Canadian consumer leverage,” Moody’s says.

And, it says that the bank’s management has “recently articulated strategic initiatives to accelerate growth in the credit card and auto finance portfolios, which we view as a departure from its historically conservative risk culture that emphasized secured lending.”

“In combination, these recent strategic developments could represent a fundamental shift in the historically strong and effective risk management culture that supports Bank of Nova Scotia’s very high ratings.” said David Beattie, vice president at Moody’s. “Further indications of increased risk appetite would be credit negative”.