Banco do Estado do Rio Grande do Sul S A : Financial Statements 1Q23 BRGAAP

FINANCIAL STATEMENTS

M a rc h 2023

Press Release

March 2023

PRESS RELEASE

We summarize below Banrisul's performance in the first quarter of 2023.

Business Scenario

The first quarter of 2023 was marked by positive revisions in expectations for global economic growth, a trend that can be mainly attributed to the resilience of the economies of the United States and the Eurozone, but also to the more favorable performance observed in China after the withdrawal of strict Covid-19 pandemic- related restriction measures. In Brazil, GDP ended 2022 with a growth of 2.90%, boosted by the services and industry sectors, in contrast to the decline in the agricultural sector. The IPCA, the benchmark index of the inflation target system, accumulated a variation of 4.65% in 12 months until March, slowing down compared to the rise observed at the end of 2022. Because of the resilience noted in price indices, market expectations still far from the target center, and uncertainties in the risk balance, in March the monetary authority kept the basic interest rate of the Brazilian economy (Selic) at 13.75% p.a. The average loan balance in Brazil, in 12 months until March 2023, grew by 15.2%, featuring the individuals segment, which increased by 19.4%. In Rio Grande do Sul, the pace was more intense, with a growth of 18.6% in the average loan balance, in 12 months until February (last data available).

To expand its area of operation and improve customer experience, in March 2023 Banrisul announced that the Banricompras card will be accepted throughout Brazil. The approval of the acquiring companies that join Banricompras Arrangements as Network Service Providers will start as of October 2023, and the acceptance of the brand through the new companies is expected to gain ground in the market from early 2024.

In an unprecedented move, Banrisul launched its first Share Buyback Program to maximize shareholder value creation through efficient capital structure management. The Bank authorized the acquisition of up to 5% of these shares, without reducing the value of the capital stock, which will be held in treasury, canceled, or replaced in the market. The acquisitions are already being made on the stock exchange with a deadline until June 15, 2024, at market value. From the beginning of the Program until March 31, 2023, 217,500 shares were repurchased, totaling R$2.1 million.

To add to Banrisul's current team as well as bring new talents, 218 new employees were hired to work in the Information Technology areas, coming from the public selection process held in the second half of 2022. In the first quarter of 2023, we held a public selection process for the Bank's general staff, and up to 1,335 employees are expected to be hired.

In 2023, Banrisul intends to publish an agenda of sustainability commitments in line with the institutional strategy, since it believes that progress towards a more sustainable economy, with improvements in socio- environmental and corporate governance projects undergo the integration between capital, public policies, private support, and adhesion of the civil society.

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Press Release

March 2023

Economic and Financial Indicators

Main Income Statement Accounts - R$ million	1Q2023	4Q2022	1Q2022	1Q2023/	1Q2023/
1Q2022	4Q2022
Financial Margin	1,250.2	1,280.4	1,121.8	11.4%	-2.4%
Expenses with Provision for Loan Losses	284.9	282.0	246.5	15.6%	1.0%
Income from Services	521.6	550.6	492.3	5.9%	-5.3%
Administrative Expenses (1)	1,000.6	1,004.0	907.1	10.3%	-0.3%
Other Operating Revenues / Expenses	(10.6)	29.5	(1.9)	459.7%	-135.9%
Civil, Tax, and Labor Provisions	(119.1)	(81.0)	(171.6)	-30.6%	47.0%
Net Income	213.0	251.1	164.1	29.8%	-15.2%
Main Balance Sheet Accounts - R$ Million	Mar 2023	Dec 2022	Mar 2022	Mar 2023/	Mar 2023/
Mar 2022	Dec 2022
Total Assets	113,569.8	113,166.2	104,938.4	8.2%	0.4%
Marketable Securities (2)	30,474.3	31,559.5	31,033.2	-1.8%	-3.4%
Total Loan Portfolio	50,087.7	49,121.9	42,378.5	18.2%	2.0%
Provision for Loan Losses	2,481.9	2,439.8	2,612.0	-5.0%	1.7%
Past Due Loans > 90 Days	868.7	777.9	828.5	4.9%	11.7%
Funds Raised and Managed	87,812.4	87,922.6	80,856.9	8.6%	-0.1%
Equity	9,478.1	9,420.1	8,996.9	5.3%	0.6%
Prudential Conglomerate Reference Equity	9,195.3	9,291.8	8,603.8	6.9%	-1.0%
Stock Market Information - R$ Million	1Q2023	4Q2022	1Q2022	1Q2023/	1Q2023/
1Q2022	4Q2022
Interest on Equity / Dividends (3)	150.0	24.8	136.6	9.8%	504.2%
Market Capitalization	4,089.7	3,967.1	4,449.6	-8.1%	3.1%
Book Value per Share	23.18	23.03	22.00	5.3%	0.6%
Average Price per Share (R$)	9.45	10.76	10.08	-6.2%	-12.2%
Earnings per Share (R$)	0.52	0.61	0.40	29.8%	-15.2%
Financial Indexes	1Q2023	4Q2022	1Q2022
Adjusted ROAA (p.a.) (4)	0.8%	0.9%	0.6%
Adjusted ROAE (p.a.) (5)	9.0%	10.9%	7.3%
Adjusted Efficiency Ratio (6)	62.9%	63.5%	59.6%
Interest Margin on Interest-Earning Assets	5.09%	5.14%	4.90%
Default Rate > 90 Days (7)	1.73%	1.58%	1.95%
Coverage Ratio 90 days (8)	285.7%	313.6%	315.3%
Provisioning Index (9)	5.0%	5.0%	6.2%
Basel Ratio (Prudential Conglomerate)	17.1%	17.6%	17.6%
Structural Indicators	Mar 2023	Dec 2022	Mar 2022
Branches	495	495	497
Service Stations	129	131	138
Electronic Service Stations	430	437	429
Employees	8,804	8,658	8,886
Economic Indicators	1Q2023	4Q2022	1Q2022
Selic Rate (YTD)	3.25%	3.20%	2.43%
Exchange Rate Variation (%)	-2.63%	-3.49%	-15.10%
IGP-M (General Market Price Index)	0.20%	-1.08%	5.49%
IPCA (Extended Consumer Price Index)	2.09%	1.63%	3.20%

1. Includes adjusted personnel expenses and other administrative expenses. (2) Includes derivatives, interbank, deposits, and cash equivalents and deduces repurchase obligations. (3) Interest on equity and dividends paid credited and/or provisioned (before retention of income tax). (4) Net income over average total assets. (5) Net income over average equity. (6) Personnel expenses + other administrative expenses / financial margin + income from services and fees + (other operating income - other operating expenses - civil, tax, and labor expenses). Considers LTM income and expenses. (7) Past due loans > 90 days / loan portfolio. (8) Provisions for loan losses / past due loans > 90 days. (9) Provisions for loan losses / loan portfolio.

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Press Release

Financial Highlights

March 2023

Net income reached R$213.0 million in 1Q2023, up by 29.8% or R$48.9 million from 1Q2022, reflecting (i) the increase in the financial margin, (ii) higher flow of expenses from the provision for loan losses, (iii) higher administrative expenses, (iv) lower expenses with labor, tax, and civil provisions, (v) increase in other operating expenses, net of other operating income, and (vi) subsequent tax effect and Profit Sharing Program (PPR).

Compared to 4Q2022, net income fell by 15.2% in 1Q2023, or R$38.1 million, mainly reflecting (i) the decrease in the financial margin, (ii) lower flow of income from services, (iii) lower administrative expenses, (iv) a reduction in other operating income and expenses, (v) higher flow of expenses with labor, tax, and civil provisions, and (vi) subsequent tax effect and Profit Sharing Program (PPR).

The financial margin reported in 1Q2023, of R$1,250.2 million, increased by 11.4% or R$128.3 million from 1Q2022, mainly reflecting the substantial increase in interest income given the increase in interest expenses, in a scenario with a rising Selic Rate and higher loan volumes. Compared to 4Q2022, the financial margin fell by 2.4% or R$30.2 million, a trend that reflects a more significant increase in interest expenses compared to

interest income.

The financial margin on interest-earning assets reported in 1Q2023 increased by 0.19 p.p. over 1Q2022, and fell by 0.05 p.p. from 4Q2022.

Financial Margin Interest Assets

Expenses with provision for loan losses came to R$284.9 million in 1Q2023, up by 15.6% or R$38.5 million over 1Q2022, mainly due to the rolling over of the loan portfolio according to the credit rating levels and the increase in loan operations, in a context in which overdue loans rose. Compared to 4Q2022, these expenses increased by 1.0% or R$2.9 million, mainly reflecting the rolling of the loan portfolio according to rating levels and the increase in the loan portfolio.

Income from services increased by 5.9% or R$29.3 million in 1Q2023 over 1Q2022, mainly reflecting the rise in revenues from Banrisul Pagamentos and insurance brokerage commissions. Compared to 4Q2022, income from services fell by 5.3% or R$29.0 million, mainly reflecting lower revenues from Banrisul Pagamentos, insurance brokerage commissions, and checking account fees.

Breakdown of Income from Services - R$ Million

	1Q2023	4Q2022	1Q2022	1Q2023/	1Q2023/
	1Q2022	4Q2022
Banrisul Pagamentos	190.6	204.4	170.1	12.0%	-6.8%
Insurance Commissions	69.3	74.8	59.8	15.9%	-7.2%
Current Account Fees	140.1	145.2	138.4	1.2%	-3.5%
Consortium Management Fees	30.2	28.6	28.2	7.2%	5.5%
Other Revenues (1)	91.4	97.6	95.8	-4.6%	-6.4%
Total	521.6	550.6	492.3	5.9%	-5.3%

(1) Includes mainly debit account income, collection services, credit card, fund management, collection, and custody services.

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Press Release

March 2023

Administrative expenses, comprised of personnel expenses and other administrative expenses, increased by 10.3% in 1Q2023 over 1Q2022, and remained flat from 4Q2022. Personnel expenses increased by 12.6% over 1Q2022, influenced by the collective bargaining agreement, seasonality of vacations, and hiring of new employees; while other administrative expenses increased by 8.0% in the period, mainly influenced by higher expenses with specialized technical services, advertising, promotions, and marketing. Compared to 4Q2022, personnel expenses fell by 2.7%, led by the effect of vacations and hiring of new employees; other administrative expenses increased by 2.4% in the period, mainly influenced by the increase in expenses with advertising, promotions and marketing, and water, energy, and gas.

Breakdown of Administrative Expenses - R$ Million

	1Q2023	4Q2022	1Q2022	1Q2023/	1Q2023/
	1Q2022	4Q2022
Personnel Expenses	518.9	533.4	460.8	12.6%	-2.7%
Other Administrative Expenses	481.8	470.6	446.2	8.0%	2.4%
Amortization and Depreciation	65.8	68.2	61.9	6.4%	-3.4%
Water, Energy, and Gas	9.9	6.2	8.2	-24%	59.1%
Rentals and Condominiums	39.8	37.1	37.1	7.3%	7.4%
Data Processing	40.6	39.1	39.7	2.3%	3.8%
Promotions and Advertising	32.4	27.7	26.7	21.4%	16.9%
Third-Party Services	141.4	138.3	137.5	2.9%	2.3%
Specialized Technical Services	54.4	51.2	35.9	51.8%	6.2%
Surveillance, Security, and Transportation of Values	34.1	33.7	33.4	2.1%	1.4%
Other (1)	63.4	69.2	66.0	-3.9%	-8.4%
Total	1,000.6	1,004.0	907.1	10.3%	-0.3%

(1) Includes mainly communications, materials, maintenance, and conservation of goods and services of the financial system.

The efficiency ratio for the last twelve months reached 62.9% in March 2023, compared to the 59.6% reported in March 2022, reflecting the 8.2% increase in the adjusted administrative expenses, the higher flow of expenses with civil, tax, and labor provisions, the 6.4% increase in income from services, and the increase in other adjusted operating income, net of other operating expenses, in addition to the stability in the financial margin.

Operational Highlights

Total assets reached R$113,569.8 million in March 2023, up by 8.2% over March 2022, and flat from December 2022. The main components of assets and liabilities will be discussed below.

Treasury investments (marketable securities, derivative financial instruments, interbank liquidity investments, and cash and cash equivalents) totaled R$42,945.5 million in March 2023. Treasury investments net of repo operations fell by 1.8% or R$558.9 million from March 2022, mainly reflecting the directing of funds to the loan portfolio, which grew by 18.2% in the period, and compliance with the compulsory deposits required by the Central Bank in a context where fundraising grew by 8.7%. Compared to December 2022, these investments fell by 3.4% or R$1,085.2 million, mainly reflecting the directing of funds to the 2.0% growth in loan operations, in a context of fundraising reduction.

Loan operations reached R$50,087.7 million in March 2023, up by 18.2% or R$7,709.2 million over March 2022 and by 2.0% or R$956.8 million over December 2022, mainly influenced by the expansion in rural, commercial, and real estate loans.

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