S&P Global Ratings upgraded its outlook on Hokkoku Bank Ltd. to stable from negative following improvements on the bank's asset quality.

The rating agency also affirmed the bank's long-term and short-term counterparty credit ratings at A- and A-2, respectively, and revised the lender's standalone credit profile to "a-" from "bbb+."

S&P said the change in outlook reflects a steady improvement in the bank's asset quality, resulting in a change in the lender's risk position to adequate from moderate.

The stable outlook also reflects S&P's view that the ratings will remain stable given the likelihood of government support for the bank. The rating affirmation reflects Hokkoku Bank's ample business position, capital and earnings, and average funding and robust liquidity, among other factors.

S&P could upgrade the bank if the lender is able to consistently maintain its risk-adjusted capital ratio above 10% by reducing risk assets. It could also downgrade the bank if it seems that its risk-adjusted capital ratio will remain below 7% or if its resilience and adaptability to market changes weaken relative to other Japanese banks.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.