Aozora Bank said Wednesday it posted a group net profit of 23.4 billion yen in fiscal 2002, up 25 percent from the previous year, by shedding many bad loans from its portfolio and increasing its loans to good borrowers.

In the six months since Sept. 30, the formerly nationalized Nippon Credit Bank has slashed its problem loans by 40.7 percent to 202.5 billion yen. Bad loans now account for less than 6 percent of the bank's outstanding loans.

To date, Aozora has sold the government 337.9 billion yen worth of nonperforming loans under a buyback provision effective until September.

The bank's parent-only operating profit surged 29 percent from the previous year to 33.5 billion yen.

Aozora Bank expects to generate a net profit of 30 billion yen in fiscal 2003. It has reported the results to the Cerberus Group, a U.S. investment fund widely expected to become the bank's top shareholder after it purchases Softbank Corp.'s stake.

But any subsequent management switch is likely to be delayed until Sept. 30 at the earliest, Aozora Bank President Hiroshi Maruyama said.

The Financial Services Agency, which must approve Cerberus' share purchases and business plans, is "running helter-skelter" to deal with the bailout of Resona Holdings Inc., Maruyama said.

A buyer must receive the banking regulator's approval before it can acquire a stake of 20 percent or larger in a Japanese bank.