We would like to extend our sincere thanks for your continued support of the Bank of the Ryukyus. We have prepared the present annual report to further understanding of our bank among the public at large.

Japan’s economic recovery has recently weakened somewhat, as some segments have remained sluggish. The near-term business outlook, however, suggests a continued favorable performance by major companies, with the activity expected to remain brisk against the backdrop of a steady recovery in the global economy.

Regarding the overall financial situation, major banks have generally completed their disposal of non-performing loans. The priority task for the financial industry is changing from stabilization to activation of the financial system overall. In line with this trend, all members of the local financial sector will be requested to make further efforts to stimulate the prefectural economy.

Amid sluggish demand for funds from corporate borrowers and intensified competition as a result of financial reforms, the Bank launched its new medium-term management plan under the name Leap 2005, covering the period April 2005 – March 2010. This plan is aimed at ensuring the Bank’s financial soundness and strengthening its earnings capability through steady implementation of a management revitalization plan.

　With this new plan, we are working to provide solutions to the various financial problems facing our customers in the region. To do this, we will continue to expand our range of services beyond those of conventional banking operations with the aim of achieving sustainable growth by both the Bank and the region.

　We will make utmost efforts to successfully implement the measures outlined in our new medium-term management plan. By making progress on our current priority tasks, we hope to become a bank that is both highly competitive and highly profitable — and a bank that enjoys the trust of the local community and the market.

In viewutinher methods.

July 2005

Isao Oshiro,

President