Moody's on May 29 upgraded JSC Russian Regional Development Bank's baseline credit assessment to "ba3" from b1" and affirmed its "ba2" adjusted baseline credit assessment.

The agency also affirmed the bank's Ba2/Not Prime long- and short-term bank deposits, Ba1/Not Prime long- and short-term counterparty risk ratings, and Ba1(cr)/Not Prime(cr) long- and short-term counterparty risk assessments.

The upgrade reflects improvements in the bank's asset quality, relatively low provisioning charges and below market-average problem loans ratio, with its share of problem lending declining to 2.6% of gross loans at 2018-end, compared to 4.6% at the end of 2016.

Moreover, Russian Regional Development Bank's strong asset quality reflects conservative risk appetite and exposure to subsidiaries and counterparties of its ultimate parent Rosneft, the agency noted.

The stable outlook reflects the agency's expectations that the bank will maintain its strong credit metrics in the next 12 to 18 months amid moderate business expansion.