Message from the President

Annual Report

Financial and economic environment

In the interim financial reporting period of the fiscal year 2024, economic recovery in Japan became evident as seen in personal consumption. Behind this recovery was improvement in employment and income situations supported by wage increases the annual spring offensive negotiations achieved for the second straight year. In terms of financial policies, while the Bank of Japan raised policy rates in July, that in the U.S. were lowered in September. Such differences in financial policies between the U.S. and Japan, along with the speculation over the policies, are causing wide fluctuations in foreign exchange rates, and their impacts on commodity price outlook require vigilance.

In Okinawa Prefecture, economic recovery gained momentum particularly in personal consumption, backed by wage increases and demand from foreign visitors, and the tourism sector also grew moderately thanks to foreign tourists. The construction sector moved steadily toward recovery following a surge in demand for rental housing, as well as for hotels and condominiums. As a result, the overall prefectural economy remained on a moderate recovery trend.

Business Developments and Results

In terms of business results, as of September 30, 2024, the balance of deposits (including negotiable certificates of deposit) amounted to ￥2,845,835 million, down ￥4,701 million from the previous fiscal year-end. This was due to a decline in public money deposits that outweighed increases in deposits from individuals and corporations. The balance of loans came to ￥1,926,795 million, up ￥23,661 million from the previous fiscal year-end owing to increased lending to corporations. Securities stood at ￥739,594 million, up ￥42,372 million from the previous fiscal year-end due to the purchase of government bonds.
In terms of profit, ordinary income increased by ￥139 million year on year to ￥22,619 million. This was the result of increases in loan interest income and interest and dividends on securities, as well as higher income from cashless business-related fees, among other factors.
Ordinary expenses amounted to ￥18,232 million, or ￥313 million higher than that in the same period of the previous fiscal year, as there were increases in expenses, interest on deposits and credit costs.
As a result of the foregoing, ordinary profit was ￥4,387 million, down ￥173 million year on year, and profit came to ￥3,116 million, down ￥216 million year on year.

Issues Facing the Bank

In Okinawa prefecture where its economy is trending toward recovery, we view this time of change as an opportunity for strengthening initiatives to foster growth of companies in the prefecture.

Now that a world with positive interest rates has returned to Japan, the Bank deems it essential to review its asset-liability management (ALM) system to maximize profitability in line with rising interest rates.

It has been quite a while since ESG management became a global trend, and addressing climate change issues and other challenges facing local communities is one of the dimensions of ESG management. As ESG efforts by business operators also impact their social reputation, companies nowadays incorporate ESG factors into their business strategies as an indispensable component thereof.

In these circumstances, the Bank will practice ESG management toward achieving its long-term vision, and step up its efforts to grow the earning potential of the communities we serve through expanding its business foundation and taking up challenges for change.

⑴Deal with rising interest rates

We will continue efforts to raise the level of our traditional banking services (deposits, loans, securities). Through engaging in in-depth communication with clients, we get hold of their business conditions and issues they face, and upon obtaining their understanding, we provide financing and other consulting services, to build long-term relationships of trust with clients. We also invest in securities actively as profit expansion is projected in line with rising market interest rates. Based on an optimal risk-return balance and a medium- to long-term perspective, we aim to secure stable periodic income with a focus on yen-denominated bonds.

⑵Deepen and evolve our solution business

In our consulting service for individual and corporate customers, we will spend more time on communication with them to confirm their goals through several interviews. Pitching proposals that would be best and optimal for them from the viewpoints of customers on an ongoing basis, we strive to deepen our solution business to earn greater trust of customers.

In a bid to foster a growth driver of our cashless business, various initiatives are scheduled in cooperation with other companies. One such example is the collaboration with point-of-sale (POS) cash register providers, through which we aim to increase convenience of member companies and expand the number of those within the prefecture. In this and other ways, we work to evolve further our solution business.

⑶Human capital-oriented management

To help resolve increasingly complex and sophisticated challenges that Okinawan communities face, we commit to creating a work environment where diverse talents can fully exercise their abilities. With a view to increasing officers’ and employees’ motivation for active career development, we are upgrading internal programs to encourage their independent, self-directed learning regardless of age. While having a clear understanding of skills and experiences possessed by each person, we build a human resource portfolio through recruiting and developing talents in a way aligned with the Bank’s business strategies, as well as appropriate staff assignments. At the same time, we increase engagement of officers and employees and create a rewarding workplace for them.

⑷Practice ESG management

The Bank will intensify its efforts to help decarbonize local communities in the prefecture. This includes our continuous engagement in ZEP-Ryukyu, an alliance with business operators involved in construction of net zero energy housing (ZEH) and energy-efficient homes. Using this framework, we contribute to increasing technical capabilities of constructors in the prefecture and to promoting the spread of ZEH in Okinawa with our ZEH mortgage loans.
For business operators in the prefecture, we help them identify their issues by using our SDGs diagnostic tools, and provide assistance for resolving issues through execution of sustainable investments and loans.

Through these initiatives, we will continue providing attractive products and services that meet diverse needs of local customers. Working as a partner for communities in resolving issues faced by them and for customers in pursuing their goals, we aim to serve as a financial group that grows together with our local communities.

June 2025
Ken Shimabukuro,
President