Moody's on June 3 upgraded Santander Bank Polska SA's long- and short-term bank deposits to A2/P-1 from A3/P-2 and senior unsecured regular debt to A3 from Baa1.

The rating agency changed the outlook on the Banco Santander SA unit's long-term bank deposits and senior unsecured debt rating to stable from positive.

The agency upgraded the bank's long-term counterparty risk rating to A1 from A2 and the long-term counterparty risk assessment to A1(cr) from A2(cr). The short-term counterparty risk rating and risk assessment were affirmed at P-1 and P-1(cr), respectively.

Moody's also upgraded the bank's baseline credit assessment to "baa2" from "baa3" and the adjusted baseline credit assessment to "baa1" from "baa2." Furthermore, the senior unsecured medium-term note program was upgraded to (P)A3 from (P)Baa1.

The upgrade reflects Moody's view of the bank's continued strong performance, with a decline in the bank's nonperforming loan ratio to 4.6% in December 2018 from 5.8% a year before.

Moody's expects that the Polish bank's asset quality will remain stable amid favorable economic environment and recent growth of the loan book. In Moody's view, there is a moderate likelihood of government support now for Santander Bank Polska, up from a previous assessment of low probability, after it absorbed part of Deutsche Bank Polska SA's business and as it has increased market share in Poland.