The outlook on the long-term deposit ratings remains positive.
According to Moody's, "this rating action captures Citadele Bank's improved macro profile, owing to an increase in the proportion of business it conducts in the Baltics, away from weaker markets, and our view that the banking industry structure in all three Baltic countries has improved following a wave of consolidation in recent years.
"The action also reflects parallel improvements in Citadele Banka's intrinsic credit fundamentals, most notably significantly strengthened capitalization and a continued improving trend in asset quality," Moody's said.
Guntis Belavskis, the board chairman of Citadele Bank, said that the steep upgrade of the ratings was the proof that the bank was moving in the right direction.
"Our task is to keep improving the bank's financial results to rise to an even higher level," he said.
The rating upgrade by Moody's is a good news to the investors, who have invested or are considering investment in Citadele Bank's subordinated bonds in the stock exchange, he added.
Citadele Bank closed 2016 with €36.278 million in audited profit, which was an 85.6 percent increase from a year before. The Citadele banking group increased its annual profit by €56.1 percent to €40.688 million last year.
Citadele Bank's assets grew by 9.2 percent year-on-year to €2.63 billion at the end of 2016 and the bank's loan portfolio increased to €1.24 billion, with deposits growing 13 percent. The group's total deposits amounted to €2.92 billion in 2016.
Citadele Bank, created from the remains of the bailed-out Parex Bank, became operational on August 1, 2010. In April 2015, the Latvian government sold its 75 percent stake in Citadele Bank to a group of international investors led by US private equity firm Ripplewood. The European Bank for Reconstruction and Development (EBRD) has a 25 percent stake in Citadele Bank.
Citadele Bank was the sixth largest bank in Latvia by assets at the end of 2016.