Moody's Investors Service said it has upgraded Shenzhen Development Bank's bank financial strength rating (BFSR) to 'D-' from 'E+', in recognition of the bank's stronger capital position on completion of the redemption of a second batch of equity warrants in June 2008.

Moody's (nyse: MCO - news - people ) also upgraded the bank's long-term foreign currency deposit rating to 'Ba2' from 'Ba3'. Its short-term foreign currency deposit rating remains unaffected at 'Not-Prime' and the outlook for all ratings is stable, the rating agency said.

The banks' progress in improving its earnings profile is evident in its growing net interest margins and profitability, and the rising contribution from fee income. It has also steadily reduced the stock of non-performing loans that pre-date its current management team, Moody's said.