Performance
We implemented various measures to strengthen the operations of investment securities and cut costs amid the ongoing weak demand for funds. As a result, net income rose ¥0.9 billion, to ¥1.8 billion (US$17.4 million). Core gross business profit rose ¥0.7 billion to ¥44.0 billion (US$416.6 million), attributable to increases in interest income and fee-based income. Operating expenses declined ¥1.0 billion to ¥27.1 billion (US$257.0 million). The overhead ratio, a basic indicator of the Bank’s efficiency, declined to 61.69%. Income from core businesses rose ¥1.8 billion to ¥16.8 billion (US$159.6 million), owing to the increase in gross profit from core businesses and cost reductions. The balance of deposits (for both those of individuals and of corporate customers) rose, with deposits (including CDs) increasing ¥31.5 billion year-on-year to ¥1,936.8 billion (US$18,326.1 million). Deposits by individuals grew ¥15.2 billion to ¥1,263.1 billion (US$11,951.5 million). Despite efforts to boost funding to local small and medium-sized companies and expand loans to individuals, demand for funds was weak. The Bank also made extensive efforts to remove a substantial portion of non-performing loans from its balance sheets. As a result, the balance of loans declined ¥37.0 billion, to ¥1,471.1 billion (US$13,919.7 million). The balance of securities was ¥569.9 billion (US$5,392.3 million), up ¥46.3 billion from the previous term-end.

Stage 2 of the Medium-Term Management Plan
In April 2004, we entered Stage 2 of our medium-term management plan (April 2004 to March 2006). The key objectives of this plan are to strengthen support for local companies and boost our means of accelerating the disposal of non-performing loans, while raising efficiency and maintaining profitability. During Stage 1, we increased both efficiency and profitability.
  During Stage 2, in addition to further improving the Bank’s efficiency and the soundness of its financial position, we will take a focused approach to the rehabilitation of the companies within the region, to accelerate the rehabilitation process. Through our efforts, we aim to become Nagasaki Prefecture’s leading bank, in terms of both soundness and profitability, and become more strongly resistant to any social and economic fluctuations that may occur in the near future.

Kazuhito Fujiwara, President