Moody's on March 22 upgraded Kutxabank SA's long- and short-term bank deposit rating to Baa2/Prime-2 from Baa3/Prime-3 and revised the outlook on the long-term rating to stable from positive.

The rating agency also upgraded the Spanish lender's baseline and adjusted baseline credit assessments to "baa2" from "baa3". The Baa1(cr)/Prime-2(cr) long- and short-term counterparty risk assessments were affirmed.

Additionally, Moody's upgraded the senior unsecured debt rating of the bank's Dutch unit Caja Vital Finance BV to Baa2 from Baa3 and revised the outlook to stable from positive.

The upgrade of Kutxabank's bank deposit ratings is based on the upgrade of its baseline and adjusted baseline credit assessments, which in turn reflects improved credit fundamentals, particularly in terms of asset risk and capital, as well as continued strong operating revenues despite profitability headwinds.

The stable outlook is based on Moody's expectation that Kutxabank will be able to maintain the gradual improvement in its credit profile.