Standard & Poor's said Friday it has revised the outlook on its long-term rating for Bank of Yokohama to positive from stable.
The U.S. credit-rating agency said the bank's rating was affirmed at BBB-plus.
The agency said the regional bank's decision to redeem convertible bonds at an early time will boost its capital by about 53 billion yen.
"The outlook revision reflects the prospects for an improvement in the quality and quantity of the bank's capital," S&P credit analyst Ryoji Yoshizawa said.
"This will be achieved through conversion to common stock from convertible bonds, and through stock buybacks and the sale of preferred stock held by the Japanese government."
The bank's profitability and asset quality continue to improve, as evidenced by an increase in profit and a decline in the ratio of net nonperforming loans against total loans due to cost reductions and favorable interest and fee income, S&P said.