Moody's affirmed the Baa1/Prime-2 long- and short-term deposit ratings and Baa2 long-term issuer rating of KBC Group NV's Slovakia-based unit Ceskoslovenská obchodná banka a.s. and revised the outlook on the long-term ratings to positive from stable.

The rating agency also affirmed the bank's "ba1" baseline credit assessment, "baa3" adjusted baseline credit assessment and A3(cr)/Prime-2(cr) long- and short-term counterparty risk assessments.

The action follows the release of the bank's full-year 2017 results, which confirmed the improvements on its overall financial profile, particularly in its solvency, Moody's said.

The agency noted that the outlook revision reflects upward potential to the bank's ratings given its strengthened capitalization, which could provide a greater loss-absorption cushion against its highly unseasoned mortgage loan book and exposures to construction and real estate.