Aozora Bank said Tuesday it posted a net profit of 31.9 billion yen in fiscal 2003, up 39.3 percent from the previous year.
Aozora Bank, affiliated with the U.S. investment fund Cerberus Group, sold nonperforming loans worth 77.6 billion yen to the government under a buyback provision. It also reduced loan-loss reserves for nonperforming loans, improving its financial health.
The bank's predecessor was the nationalized Nippon Credit Bank.
Its outstanding nonperforming loans at the end of March stood at 88.7 billion yen, down from 129.2 billion yen at the end of last September. Bad loans accounted for 2.95 percent of the bank's total outstanding loans.
The government ordered banks to lower the ratio of nonperforming loans to total loans to around 4 percent by next March.
"We have already completed necessary measures for the so-called bad-loan problem," Aozora Bank President Hirokazu Mizukami said.