FRANKFURT: Moody’s on Wednesday upgraded Deutsche Bank’s credit rating, a vote of confidence as the German lender concludes a major overhaul.

The upgrade to A1 from A2 follows earlier upgrades by Moody’s and other competing ratings agencies as the bank has returned to profit after years of losses.

Moody’s, which tweaked the outlook to “stable” from “positive”, said Germany’s largest lender had made progress in meeting medium-term targets, “in particular by being able to sustain improved, yet still relatively modest, profitability.”

Deutsche Bank’s Chief Executive Christian Sewing said in a statement that he was “delighted that a key stakeholder has, once again, recognised Deutsche Bank’s progress on the path of transformation”.

Credit ratings are critical for any company but especially for a bank such as Deutsche, which, like all financial institutions, is a big issuer of debt securities.

Higher ratings can result in lower funding costs, helping Deutsche return to more sustainable profitability.