Moody's on Oct. 16 upgraded Israel Discount Bank Ltd.'s long-term local- and foreign-currency bank deposit ratings to A3 from Baa1 and revised the outlook on these ratings to stable from positive.

Moody's also upgraded the Israeli lender's baseline and adjusted baseline credit assessments to "baa3" from "ba1" and its long- and short-term counterparty risk assessments to A2(cr)/Prime-1(cr) from A3(cr)/Prime-2(cr). The bank's long- and short-term local- and foreign-currency counterparty risk ratings were upgraded to A2/P-1 from A3/P-2 as well.

At the same time, the rating agency affirmed Israel Discount Bank's P-2 short-term local- and foreign-currency bank deposit ratings.

Moody's said the ratings action reflects the improvement in the lender's credit fundamentals, demonstrated by improvements in its profitability, efficiency, asset quality and capital.

The stable outlook, meanwhile, reflects Moody's expectation that the bank's financial fundamentals — primarily profitability and efficiency — will keep improving in the coming quarters against high loan growth, which could potentially increase problem loans and credit costs as these loans season.