We would like to extend our sincere thanks for your continued support of Bank of the Ryukyus. We have prepared Bank of the Ryukyus’ FY2003 Annual Report to further the public’s understanding about our bank.

Regarding last year’s operating environment, the prolonged deflationary economic trend made for an increasingly harsh climate, the demand for funds stagnated, private-sector earnings performances worsened, and land and share prices plunged. Meanwhile, all banks were faced with intensifying competition with other financial institutions.

Amid these circumstances, we place the top priority on living up to our reputation as a trustworthy bank by providing stable supply of funds within the region. We believe that the maintenance of a stable earnings base is crucial to the region’s development. Against this backdrop, the Bank launched its new two-year management plan, Quality 2003. In addition to our original emphasis on speed, we have added the pursuit of high quality as our targets. Our aim is to provide services that precisely meet the exacting needs of our customers.

Quality 2003 uses as its key goals the simplification of the administrative process; improved service quality; and the offering of fundamental solutions to the non-performing assets problem. We are working to improve our portfolio of loan assets by enhancing support for the revitalization of borrowers with poor business performance. At the same time, we are making efforts to expand loans to small and medium-sized companies and individuals, and increase revenue from fees and commissions through promoting sales of investment trust and pension-type insurance. We will also implement ongoing cost reductions to achieve the transformation to a low-cost management structure.

Simultaneously, with the aim of handling all our customers’ financial needs, speedily providing the required products and services, we are undertaking development of new products and services to enhance customer convenience and actively undertaking staff training and financial data disclosure to win our customers’ trust and meet their expectations.

In May, Bank of the Ryukyus celebrated its 55^th anniversary. We recognize the importance of our responsibilities as the leading bank of Okinawa Prefecture. Officers and staff are working together to make the Bank even stronger, to enable it to lead the competition in the 21^st century, become more useful to the local economy and society, and ultimately indispensable to Okinawa.

July 2003

Isao Oshiro

President