BBD Banco Bradesco SA

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SUMMARY

1. Issuer’s activities	6
1.1 – Briefly describe the issuer's history	6
1.2 – Briefly describe the main activities developed by the issuer and its subsidiaries	7
1.3 – Information on operating segments	7
1.4 – Information on products and services relating to the operational segments disclosed in item 1.3	11
1.5 – Clients responsible for more than 10% of the total net revenue	38
1.6 – Relevant effects of the state regulation of activities	38
1.7 – Countries from which the issuer generates significant revenue	68
1.8 – Foreign countries disclosed in item 1.7, describing relevant impacts arising from the regulation of these countries on the issuer's business	68
1.9 – Environmental, social and corporate governance (ESG) information, indicate:	68
1.10 – Specific information of mixed economy companies	70
1.11 – Indicate the acquisition or disposal of any relevant asset that is not classified as a normal operation in the issuer's business	70
1.12 – Indicate merger, division, incorporation, equity incorporation, capital increase or reduction involving the issuer and documents in which more detailed information can be found	71
1.13 – Indicate the firming, extinction or modification of shareholders’ agreements and the documents in which more detailed information can be found	71
1.14 – Indicate significant changes in the way of conducting the issuer's business	71
1.15 – Indicate significant contracts not directly related to operating activities entered into by the issuer or by its subsidiaries	71
1.16 – Other relevant information	71
2. Officers’ notes	72
2.1 – General Financial and Equity Conditions	72
2.2 – Financial and operating income	93
2.3 – Officers must comment on changes in accounting practices	95
2.4 – Events with significant effects (occurred and expected) on financial statements	103
2.5 – If the issuer has disclosed, during the last fiscal year, or wishes to disclose in this form non-accounting measurements, such as EBITDA (earnings before interest, tax, depreciation and amortization) or EBT (earnings before tax), the issuer must inform:	105
2.6 – Subsequent events to the latest financial statements	105
2.7 – Officers must comment on the destination of the corporate income	106
2.8 – Relevant Items not evidenced in the financial statements	108
2.9 – Comments on other items not evidenced in the financial statements	109
2.10 – Business plan	110
2.11 – Other factors with relevant influence	111
3. Projections	112
3.1 – Disclosed projections and assumptions	112

 

3.2 – Monitoring and changes to the disclosed projections	114
4. Risk factors	116
4.1 – Description of risk factors in descending order of relevance	116
4.2 – Indicate the five (5) main risk factors, among those listed in field 4.1, regardless of the category in which they are inserted	132
4.3 – Describe, quantitatively and qualitatively, the main market risks to which the issuer is exposed, including in relation to exchange rate risks and interest rates	132
4.4 – Judicial, administrative or arbitral proceedings in which the issuer or its subsidiaries are a part of, discriminating between labor, tax, civil, environmental and others	138
4.5 – Indicate the total provisioned value, if any, of the processes described in item 4.4	147
4.6 – Relevant sensitive processes in which the issuer or its subsidiaries are a part of, and which have not been disclosed in item 4.4, analyze the impact in case of loss and inform the values involved	147
4.7 – Describe other relevant contingencies not covered by the previous items	147
5. Risk management policy and internal controls	148
5.1 – Risks indicated in items 4.1 and 4.3	148
5.2 – Controls adopted by the issuer to ensure the elaboration of reliable financial statements	155
5.3 – In relation to the internal mechanisms and procedures of integrity adopted by the issuer to prevent, detect and remedy deviations, fraud, irregularities and illegal acts perpetrated against the public administration, national or foreign	157
5.4 – In relation to the last fiscal year, there were significant changes in the key risks faced by the issuer or in the risk management policy adopted, including any expectations of reducing or increasing the issuer's exposure to such risks.	161
5.5 – Other relevant information	161
6. Control and economic group	162
6.1 / 6.2 – Equity Position	162
6.3 – Capital Distribution	166
6.4 – companies in which the issuer has participation and that are relevant to the development of its activities	167
6.5 – Organization chart of shareholders and economic group	167
6.6 – Other relevant information	170
7. Shareholders’ meeting and management	171
7.1 – Describe the main characteristics of the issuing authority's management bodies and fiscal council, identifying:	171
7.2 – In relation specifically to the board of directors	175
7.3 – For each of the directors and members of the issuer's fiscal council, indicate in a table form:	177
7.4 – Provide the information mentioned in item 7.3 regarding the members of the statutory committees, as well as the risk committee, even if such committee or structure is not statutory	242
7.5 – Inform about the existence of a marital relationship, stable union or kinship up to the second degree related to:	245
7.6 – Inform about subordination, service provision or control relationships maintained in the last three fiscal years between the issuer’s directors and:	245
7.7 – Describe the provisions of any agreements, including insurance policies, which provide for the payment or reimbursement of expenses incurred by directors, arising from the repair of damages caused to third parties or to the issuer, of penalties imposed by state agents, or agreements with the aim of terminating administrative or judicial proceedings, by virtue of the exercise of their duties	252

 

7.8 – Other relevant information	253
8. Management remuneration	254
8.1 – Description of the policy or compensation practice, including the non-statutory board	254
8.2 – total compensation of the board of directors, statutory board of executive officers and fiscal council	261
8.3 – variable compensation of the board of directors, statutory board of executive officers and fiscal council	263
8.4 – Compensation plan based on shares of the board of directors and the statutory board of executive officers	265
8.5 – Compensation based on shares of the board of directors and of the statutory board of executive officers	266
8.6 – Information on the options for buying shares performed in the last 3 fiscal years and planned for the current fiscal year, of the board of directors and the statutory board of executive officers	266
8.7 – Options exercised and shares delivered related to compensation based on shares of the board of directors and the statutory board of executive officers	266
8.8 – Options exercised and open shares of the board of directors and the statutory board of executive officers at the end of the last three fiscal year	266
8.9 – In relation to the remuneration based on shares, in the form of shares to be delivered directly to the beneficiaries, recognized in the result of the last 3 financial years and that foreseen for the current financial year, of the board of directors and of the statutory board	266
8.10 - In relation to each share program performed in the last 3 financial years and planned for the current financial year, the board of directors and the statutory board	267
8.11 - In relation to shares delivered regarding the remuneration based on actions of the board of directors and the statutory board, in the last 3 financial years	267
8.12 - Information necessary to understand the data disclosed in items 8.5 to 8.11 - Method of pricing the value of shares and options	267
8.13 – Number of shares, quotas and other securities convertible into shares held by managers and members of the fiscal council – by body	268
8.14 – Information on private pension plans granted to the members of the Board of Directors and of the statutory board of executive officers	268
8.15 – Highest, lowest and the average individual compensation for the board of directors, statutory board of executive officers and fiscal council	269
8.16 – Compensation or indemnity mechanisms for managers in case of removal from office or retirement	269
8.17 – Percentage in total compensation held by management and members of the fiscal council that are related parties to the controlling companies	270
8.18 – Compensation of managers and fiscal council’s members, grouped by body, received for any reason other than the position they occupy	270
8.19 – Compensation of managers and fiscal council’s members recognized in the income of the controlling shareholders, direct or indirect, of companies under common control and of the issuer’s subsidiaries	270
8.20 – Other relevant information	271
9. Independent auditors	272
9.1/9.2 – Identification and remuneration of auditors	272
9.3 - Independence and conflict of interests of auditors	272

9.4 – Other relevant information	272
10. Human resources	273
10.1 – Description of human resources	273
10.2 – Comment on any relevant change that occurred in relation to the figures disclosed in item 10.1 above	276
10.3 – Description of the employee compensation policy	276
10.4 – Description of the relations between the issuer and unions	279
10.5 – Other relevant information	279
11. Transactions with related parties	281
11.1 – Description of the rules, policies and practices of the issuer with regard to the realization of transactions with related parties	281
11.2 – Transactions with related parties	281
11.3 – Other relevant information	296
12. Share capital and transferable securities	297
12.1 – Information on share capital	297
12.2 – Foreign issuers must describe the rights of each class and type of share issued and the rules of their country of origin and the country in which the shares are held with respect to:	297
12.3 – Other securities issued in Brazil	297
12.4 – Number of holders of each type of security described in item 12.3, as determined at the end of the previous year	297
12.5 – Brazilian markets in which securities are admitted to trading	297
12.6 – Information about class and the kinds of securities admitted for trading in foreign markets	298
12.7 – Securities issued abroad	299
12.8 – Use of proceeds from public offerings for distribution and any deviations in the last three fiscal years	299
12.9 – Other relevant information	299
13. Individuals responsible for the Form	312
13.1 – Declaration and identification of the individuals in charge	312
13.1 – CEO’s Statement	313
13.1 – Investor Relations Officer’s Statement	314
13.2 – Individual declaration of the new occupant of the position of President or Investor Relations Officer, duly signed, attesting that:	315

1. Issuer’s activities

1.1 – Briefly describe the issuer's history

Bradesco was founded in 1943 as a commercial Bank under the name of Banco Brasileiro de Descontos S.A. In 1948, we entered a period of intense expansion, which, by the end of the 1960s, led us to become the largest commercial bank in the private sector in Brazil. We expanded our activities across the country in the 1970s, winning Brazilian urban and rural markets.

In 1988, as provided for by the Central Bank of Brazil, the reorganization of the Company took place in the form of a Multiple Bank, with the incorporation of the real estate loans company, to operate with the Commercial and Real Estate Loan Portfolios, changing its corporate name to Bradesco S.A. – Banco Comercial e de Crédito Imobiliário, which was again changed to Banco Bradesco S.A. on January 13, 1989.

In 1989, Financiadora Bradesco S.A. Crédito, Financiamento e Investimentos changed its object and corporate name, resulting in the cancellation of the authorization to operate as a financial institution, followed by the creation of Carteira de Crédito, Financiamento e Investimentos and, in 1992, Banco Bradesco de Investimento S.A. (BBI) was incorporated by Bradesco, an occasion in which the investment portfolio was established.

We are one of the largest banks in Brazil in terms of total assets. We provide a wide range of banking, financial products and services in Brazil and abroad, for individuals and legal entities (small, medium and large enterprises). We have the widest network of branches and services in the private sector in Brazil, which allows us to cover a diverse client base. Our services and products include banking operations, such as: loan operations and collection of deposits, issuance of credit cards, insurances, capitalization, consortium, leasing, billing and payment processing, pension plans, asset management and brokerage services as well as securities brokerage.

Macroeconomic and Sectorial Policies

Considering the two most recent episodes of contraction of the global economy, the behavior of credit was quite distinct. In the period 2015-2016, the GDP growth slowdown contributed to the downturn of credit, while the increase in the basic interest rate raised the funding costs in the activity of banking intermediation. In 2020, due to the pandemic, the loan portfolio registered expansion, favored by regulatory stimulus measures – such as the reduction of the reserve requirement rate and the increase of the payroll-deductible loan limits, among other measures –, renegotiations of spread payments, increase of guarantees in loan operations, creation of subsidized lines and fall in the basic interest rate. At the same time, the bank inflows have increased, in a scenario of accumulation of savings, especially for families, due to the pandemic. In 2021, the extension of these measures, the rather gradual normalization of the funding and the reopening of the economy resulted in a significant expansion of credit. And in 2022, the monetary tightening by the Central Bank of Brazil (and the consequent increase in the cost of credit) and the effects of accelerating inflation on real income led to an increase in delinquency and consequently to tightening credit concession policies.

For 2023, the adjustment started in 2022 should sustain a more moderate pace of growth in the Financial System portfolio. In the medium term, the expected decline in inflation should allow the Central Bank of Brazil to start a gradual cycle of cuts in the basic interest rate. This, combined with the stabilization and subsequent fall in delinquency, must create the conditions for the credit cycle to evolve favorably again.

It is important to highlight that the structural vision in relation to Brazil remains constructive for the banking sector, which should continue advancing in terms of efficiency gains, in an environment of expansion of competition.

 

1.2 – Briefly describe the main activities developed by the issuer and its subsidiaries

Currently, we are one of the largest banks in country in terms of total assets, loan operations and volume of deposits and funding. We offer a wide range of banking and financial products and services in Brazil and abroad, to individuals, large, medium, small, micro-sized enterprises and major local and international corporations and institutions. Our products and services comprise of banking and non-banking operations such as loans and advances, deposit-taking, credit card issuance, purchasing consortiums, insurance, capitalization, leasing, payment collection and processing, pension plans, asset management and brokerage services. For a better view of the main companies that are part of the Issuer’s Economic Group, and its respective activities, please see item 6 of this Reference Form.

 

1.3 – Information on operating segments

a)

products and services marketed

We operate and manage our business through two segments: (i) the banking sector; and (ii) insurance, pension plans and capitalization bonds.

Banking products and services

In order to meet the needs of each client, we offer a range of products and services, such as:

•

deposit-taking, including checking accounts, savings accounts and time deposits;

•

loans and advances (individuals and companies, real estate financing, microcredit, onlending BNDES/Finame funds, rural credit, leasing, among others);

•

import and export financings;

•

credit cards, debit cards and pre-paid cards;

•

cash management solutions;

•

solutions for the public authorities;

•

third-party asset management and administration;

•

services related to capital markets and investment banking activities;

•

complete investment platform;

•

intermediation and trading services;

•

solutions for the capital markets;

•

international banking services; and

•

purchasing consortiums.

 

Insurance, pension plans and capitalization bonds products and services

We offer insurance, pension plans and capitalization bonds products through different segments, which we refer to collectively as “Grupo Bradesco Seguros,” leader in the Brazilian insurance market. With the objective of meeting the needs of each client, we offer a range of products and services, such as:

·

life and personal accident insurance;

·

health insurance;

·

automobile insurance, property and casualty and liability insurance lines;

·

reinsurance;

·

pension plans; and

·

capitalization bonds.

b)  segment revenue and its participation in the issuer’s net revenue

The following information about segments was prepared on the basis of reports that were provided to the Management to assess performance and to make decisions regarding the allocation of resources for investment and for other purposes. Our Management uses a variety of information, including financial information, which is prepared in accordance with BR GAAP, and non-financial information, measured on a different basis. Therefore, the information contained in the segments has been prepared in accordance with accounting practices adopted in Brazil and the consolidated information has been prepared in accordance with IFRS.

The main assumptions of the segment for income and expenses include: (i) the excess of cash held by insurance, private pensions and capitalization, which are included in this segment, resulting in an increase in net revenue interest; (ii) wages and benefits and administrative costs included within the insurance segment, pension plans and capitalization, which consist only of costs associated directly with these operations; and (iii) the costs incurred in the banking segment, related to the infrastructure of the branch network and other overhead, that are not allocated.

				R$ million
Composition of Net Revenues 2022	Banking sector (1) (2)	Insurance, Pension Plans and Capitalization Bonds (2)	Other transactions, adjustments and eliminations (3)	Total
Revenue from financial intermediation	151,198	36,250	18,465	205,913
Fee and Commission income	33,802	1,701	(8,369)	27,134
Premiums Retained from Insurance and Pension Plans	-	7,425	698	8,123
Equity in the earnings (losses) of unconsolidated companies and Joint Venture	107	125	1,124	1,356
Other operating income	15,145	3,201	7,602	25,948
Contribution for Social Security Financing - COFINS	(4,457)	(877)	(16)	(5,350)
Service Tax - ISS	(930)	(61)	-	(991)
Social Integration Program (PIS) contribution	(719)	(123)	(3)	(845)
Total	194,146	47,641	19,501	261,288
Participation in net revenue	74.3%	18.2%	7.5%	100.0%

 

 

				R$ million
Composition of Net Revenues 2021	Banking sector (1) (2)	Insurance, Pension Plans and Capitalization Bonds (2)	Other transactions, adjustments and eliminations (3)	Total
Revenue from financial intermediation	98,850	20,205	6,389	125,443
Fee and Commission income	31,867	1,780	(7,614)	26,033
Premiums Retained from Insurance and Pension Plans	-	5,178	1,516	6,694
Equity in the earnings (losses) of unconsolidated companies and Joint Venture	8	99	315	422
Other operating income	7,733	1,868	8,404	18,004
Contribution for Social Security Financing - COFINS	(4,036)	(693)	292	(4,438)
Service Tax - ISS	(1,364)	(20)	127	(1,258)
Social Integration Program (PIS) contribution	(670)	(96)	71	(695)
Total	132,386	28,319	9,501	170,206
Participation in net revenue	77.8%	16.6%	5.6%	100.0%
				R$ million
Composition of Net Revenues 2020	Banking sector (1) (2)	Insurance, Pension Plans and Capitalization Bonds (2)	Other transactions, adjustments and eliminations (3)	Total
Revenue from financial intermediation	74,336	22,244	1,849	98,429
Fee and Commission income	30,207	1,876	(7,147)	24,936
Premiums Retained from Insurance and Pension Plans	-	8,075	24	8,099
Equity in the earnings (losses) of unconsolidated companies and Joint Venture	-	99	346	445
Other operating income	9,265	6,443	431	16,139
Contribution for Social Security Financing - COFINS	(2,876)	(701)	(22)	(3,599)
Service Tax - ISS	(1,110)	(18)	(10)	(1,138)
Social Integration Program (PIS) contribution	(479)	(110)	(5)	(594)
Total	109,343	37,908	(4,534)	142,717
Participation in net revenue	76.6%	26.6%	-3.2%	100.0%

 

(1)

The banking sector is comprised of financial institutions, holding companies (which are mainly responsible for managing financial resources); and credit card and asset management companies;

(2)

The asset, liability, income and expense balances among companies from the same segment are eliminated; and

(3)

They refer to the amounts that were eliminated among companies from different segments, as well as among other operations and consolidation adjustments.

 

c)  profit or loss resulting from the segment and participation in the issuer’s net income

R$ million
Income Statement 2022	Banking	Insurance, pension and capitalization bonds	Other Activities	Eliminations	Managerial Income Statement	Proportionately consolidated (1)	Adjustments of Consolidation (2)	Adjustments (3)	Consolidated in accordance with IFRS
Revenue from financial intermediation	151,198	36,250	401	(1,121)	186,728	(2,625)	(2,167)	23,977	205,913
Expenses from financial intermediation (4)	(81,331)	(29,163)	(0)	1,121	(109,373)	484	4,765	(27,188)	(131,311)
Financial margin	69,868	7,087	401	-	77,355	(2,140)	2,598	(3,211)	74,602
Allowance for loan losses	(31,526)	-	-	-	(31,526)	43	-	7,696	(23,786)
Gross income from financial intermediation	38,342	7,087	401	-	45,829	(2,097)	2,598	4,485	50,816
Income from insurance, pension plans and capitalization bonds	-	7,425	-	36	7,461	-	-	662	8,123
Fee and commission income	33,802	1,701	7	(36)	35,474	(4,977)	(1,976)	(1,387)	27,134
Personnel expenses	(20,322)	(2,377)	(4)	-	(22,703)	764	-	256	(21,683)
Other administrative expenses (5)	(20,950)	(1,636)	(8)	530	(22,063)	1,036	(594)	(1,552)	(23,174)
Tax expenses	(6,881)	(1,188)	(19)	-	(8,088)	522	-	-	(7,566)
Share of profit (loss) of unconsolidated and jointly controlled companies	107	125	-	-	232	1,170	-	(47)	1,356
Other operating income / expenses	(8,458)	(500)	(5)	(1,343)	(10,306)	1,737	(28)	(2,746)	(11,344)
Operating profit	15,641	10,636	372	(813)	25,837	(1,846)	-	(329)	23,662
Non-operating income	426	127	-	-	554	(6)	-	-	548
IT/SC (Income Tax/Soc. Contrib.) and non-controlling interests	(2,113)	(4,249)	(110)	813	(5,658)	1,852	-	814	(2,993)
Net Income	13,955	6,515	262	-	20,732	-	-	485	21,217
Participation in net income (Managerial Income Statement)	67.3%	31.4%	1.3%	-	-	-	-	-	-
R$ million
Income Statement 2021	Banking	Insurance, pension and capitalization bonds	Other Activities	Eliminations	Managerial Income Statement	Proportionately consolidated (1)	Adjustments of Consolidation (2)	Adjustments (3)	Consolidated in accordance with IFRS
Revenue from financial intermediation	98,850	20,205	159	(186)	119,027	(612)	1,135	5,893	125,443
Expenses from financial intermediation (4)	(34,561)	(13,192)	(1)	211	(47,543)	161	1,335	(9,075)	(55,121)
Financial margin	64,289	7,012	158	25	71,485	(451)	2,470	(3,182)	70,322
Allowance for loan losses	(15,500)	-	-	-	(15,500)	72	-	5,814	(9,614)
Gross income from financial intermediation	48,789	7,012	158	25	55,985	(379)	2,470	2,632	60,708
Income from insurance, pension plans and capitalization bonds	-	5,178	-	13	5,191	-	-	1,503	6,694
Fee and commission income	31,867	1,780	768	(606)	33,808	(4,230)	(2,049)	(1,496)	26,033
Personnel expenses	(18,426)	(2,040)	(386)	0	(20,853)	672	-	167	(20,014)
Other administrative expenses (5)	(19,677)	(1,495)	(780)	1,129	(20,823)	1,489	(362)	(2,070)	(21,766)
Tax expenses	(6,340)	(984)	(113)	-	(7,437)	609	-	-	(6,828)
Share of profit (loss) of unconsolidated and jointly controlled companies	8	99	38	-	144	720	-	(443)	422
Other operating income / expenses	(13,690)	(722)	166	(561)	(14,807)	643	(59)	2,063	(12,159)
Operating profit	22,531	8,827	(149)	-	31,210	(477)	-	2,357	33,089
Non-operating income	(309)	37	0	-	(272)	35	-	-	(237)
IT/SC (Income Tax/Soc. Contrib.) and non-controlling interests	(5,523)	(3,520)	51	-	(8,992)	442	-	(922)	(9,472)
Net Income	16,699	5,344	(97)	-	21,946	-	-	1,435	23,381
Participation in net income (Managerial Income Statement)	76.1%	24.4%	-0.4%	-	-	-	-	-	-
R$ million
Income Statement 2020	Banking	Insurance, pension and capitalization bonds	Other Activities	Eliminations	Managerial Income Statement	Proportionately consolidated (1)	Adjustments of Consolidation (2)	Adjustments (3)	Consolidated in accordance with IFRS
Revenue from financial intermediation	74,336	22,444	110	(111)	96,778	485	(3,521)	4,687	98,429
Expenses from financial intermediation (4)	(23,937)	(18,341)	-	119	(42,160)	(41)	1,052	(7,427)	(48,576)
Financial margin	50,399	4,103	110	8	54,619	444	(2,469)	(2,740)	49,853
Allowance for loan losses	(25,268)	-	-	-	(25,268)	(104)	-	5,827	(19,545)
Gross income from financial intermediation	25,130	4,103	110	8	29,351	340	(2,469)	3,087	30,308
Income from insurance, pension plans and capitalization bonds	-	8,075	-	24	8,099	-	-	-	8,099
Fee and commission income	30,307	1,876	448	(204)	32,427	4,031	2,164	(13,686)	24,936
Personnel expenses	(17,714)	(1,904)	(174)	0	(19,792)	(632)	-	1,459	(18,965)
Other administrative expenses (5)	(19,350)	(1,524)	(340)	675	(20,540)	(1,442)	218	359	(21,405)
Tax expenses	(5,477)	(1,039)	(75)	-	(6,590)	(541)	-	1,083	(6,049)
Share of profit (loss) of unconsolidated and jointly controlled companies	(0)	99	16	-	115	(634)	-	964	445
Other operating income / expenses	(15,634)	(1,034)	102	(503)	(17,068)	(678)	87	4,861	(12,799)
Operating profit	(2,738)	8,652	87	-	6,001	443	-	(1,874)	4,570
Non-operating income	(284)	(197)	1	-	(481)	(14)	-	-	(495)
IT/SC (Income Tax/Soc. Contrib.) and non-controlling interests	14,509	(3,425)	(57)	-	11,026	(429)	-	1,361	11,959
Net Income	11,486	5,029	31	-	16,547	-	-	(513)	16,034
Participation in net income (Managerial Income Statement)	69.4%	30.4%	0.2%	-	-	-	-	-	-

 

(1) They refer to: adjustments of consolidation, originating from proportionally consolidated companies (Grupo Cielo, Grupo Alelo, etc.) for management purposes; (2) Adjustments of consolidation originating from the “non-consolidation” of exclusive funds; (3) Adjustments due to the differences of the accounting standards used in the management reports and in the financial statements of the Organization that were prepared in the IFRS. The main adjustments refer to the impairment of loans and advances, effective interest rate and business combinations; (4) It includes, in the Consolidated IFRS, the balances related to “Net gains/(losses) on financial assets and liabilities at fair value through income”, “Net gains/(losses) on financial assets at fair value through other comprehensive income” and “Net gains/(losses) on foreign currency transactions”; and (5) It includes, in the Consolidated IFRS, the balances referring to depreciation and amortization.

1.4 – Information on products and services relating to the operational segments disclosed in item 1.3

a)

Characteristics of the product process

We present below some characteristics of the main products and services of Bradesco.

Banking segment

Deposits Accounts

We offer a variety of deposit accounts, including:

·  Checking accounts, such as:

- Easy Account (Conta Fácil) – A checking account and a savings account under the same bank account number, using the same card for both accounts, destinated to individuals and companies;

- Click Account (Click Conta) – Checking accounts for children and young people from 0 to 17 years of age, with exclusive website and debit card, automatic pocket money service and free online courses, exclusive partnerships, among other benefits;

- Academic Account (Conta Universitária) – Checking account for undergraduate students with low fees, student finance, exclusive website, free online courses, exclusive partnerships, among other benefits; and

- Conta Corrente (Checking Account) – accounts intended for companies and public entities with specific legal nature, which do not have a linked savings account.

·  traditional savings accounts, which currently earn interest at the Brazilian reference rate, or taxa referencial, known as the TR, plus 0.5% monthly interest in case the SELIC rate target is higher than 8.5% p.a. or TR plus 70.0% of the SELIC rate target if the SELIC rate target is equal to or lower than 8.5% p.a; and

·  time deposits, which are represented by Bank Deposit Certificates (certificados de depósito bancário – or “CDBs”), and earn interest at a fixed or floating rate.

As of December 31, 2022, we had 38.0 million account holders (clients who have a deposit account which is available for use), of which 36.2 million of them being individuals and 1.8 million being companies. As of the same date, we had 68.7 million savings accounts.

 

Loans and advances to clients

The following table shows loans and advances to clients broken down by type of product on the indicated dates:

									R$ million
	2022	2021	2020	Vertical Analysis %			Horizontal Analysis
				2022	2021	2020	2022 x 2021		2021 x 2020
							R$	%	R$	%
Companies	305,692	293,491	256,810	46.1	47.8	50.0	12,201	4.2	36,681	14.3
Financing and On-lending	111,608	111,906	108,462	16.8	18.2	21.1	(298)	(0.3)	3,444	3.2
Financing and export	37,588	46,636	51,462	5.7	7.6	10.0	(9,048)	(19.4)	(4,826)	(9.4)
Real Estate Financing	20,625	14,136	18,539	3.1	2.3	3.6	6,489	45.9	(4,403)	(23.7)
Onlending BNDES/Finame	16,380	16,080	16,692	2.5	2.6	3.3	300	1.9	(612)	(3.7)
Vehicle loans	23,243	18,927	13,590	3.5	3.1	2.6	4,316	22.8	5,337	39.3
Import	10,392	13,055	5,697	1.6	2.1	1.1	(2,663)	(20.4)	7,358	129.2
Leases	3,380	3,072	2,482	0.5	0.5	0.5	308	10.0	590	23.8
Borrowings	179,350	169,606	140,385	27.0	27.6	27.4	9,744	5.7	29,221	20.8
Working capital	98,964	101,990	91,405	14.9	16.6	17.8	(3,026)	(3.0)	10,585	11.6
Rural loans	7,620	5,502	4,957	1.1	0.9	1.0	2,118	38.5	545	11.0
Other	72,767	62,114	44,023	11.0	10.1	8.6	10,653	17.2	18,091	41.1
Operations with limits (1)	14,734	11,980	7,963	2.2	2.0	1.6	2,755	23.0	4,017	50.4
Credit card	7,577	5,723	3,966	1.1	0.9	0.8	1,854	32.4	1,757	44.3
Overdraft for corporates/ Overdraft for individuals	7,158	6,256	3,997	1.1	1.0	0.8	901	14.4	2,259	56.5
Individuals	357,612	320,342	256,407	53.9	52.2	50.0	37,270	11.6	63,935	24.9
Financing and On-lending	125,995	119,730	93,135	19.0	19.5	18.1	6,264	5.2	26,595	28.6
Real Estate Financing	84,617	81,712	59,064	12.8	13.3	11.5	2,905	3.6	22,648	38.3
Vehicle loans	34,013	30,885	27,818	5.1	5.0	5.4	3,128	10.1	3,067	11.0
Onlending BNDES/Finame	7,214	6,962	6,106	1.1	1.1	1.2	252	3.6	856	14.0
Other	151	172	147	0.0	0.0	0.0	(21)	(12.0)	25	16.8
Borrowings	156,052	142,244	118,656	23.5	23.2	23.1	13,809	9.7	23,588	19.9
Payroll-deductible loans	89,761	84,535	69,897	13.5	13.8	13.6	5,226	6.2	14,638	20.9
Personal loans	35,098	31,052	24,034	5.3	5.1	4.7	4,046	13.0	7,018	29.2
Rural loans	12,368	10,348	8,419	1.9	1.7	1.6	2,019	19.5	1,929	22.9
Other	18,826	16,308	16,306	2.8	2.7	3.2	2,518	15.4	2	0.0
Operations with limits (1)	75,565	58,368	44,616	11.4	9.5	8.7	17,196	29.5	13,752	30.8
Credit card	69,955	53,771	41,230	10.5	8.8	8.0	16,184	30.1	12,541	30.4
Overdraft for corporates/ Overdraft for individuals	5,610	4,597	3,386	0.8	0.7	0.7	1,013	22.0	1,211	35.8
Total portfolio	663,303	613,834	513,217	100.0	100.0	100.0	49,470	8.1	100,617	19.6

(1) It refers to outstanding operations with pre-established limits linked to current account and credit card, whose limits are automatically recomposed as the amounts used are paid.

 

Financing and Onlending

Import and export financing

Our Brazilian foreign-trade related business consists of giving finance services to our clients in their export and import activities.

In import financing/refinancing, we directly transfer funds in foreign currency to foreign exporters, fixing the payment in local currency for Brazilian importers. In export financing, exporters obtain advances in reais on closing an export forex contract for future receipt of foreign currency on the contract due date. Export finance arrangements prior to shipment of goods/performance of services are known locally as Advances on Exchange Contracts or ACCs, and the sums advanced are used to manufacture goods or provide services for export. If advances are paid after goods/performance of services have been delivered, they are referred to as Advances on Export Contracts, or ACEs.

There are other forms of export financing, such as Export Prepayments, onlendings from BNDES-EXIM funds, Export Credit Notes and Export Credit Bills (referred to locally as NCEs and CCEs, respectively), and Export Financing Program with rate equalization – PROEX.

Our foreign trade portfolio is funded primarily by credit lines from correspondent banks. We maintain relations with various American, European, Asian and Latin American financial institutions for this purpose, using our network of 845 correspondent banks abroad, 68 of which credit/guarantee lines as of December 31, 2022.

Housing loans

As of December 31, 2022, we had 336 thousand financing contracts.

Housing loans are provided for: (i) the acquisition of residential and commercial real estate, and urban plots; and (ii) the construction of residential and commercial developments.

The financing for the acquisition of residential properties has a maximum term of up to 35 years and the contracts may have annual interest rates between 9.5% and 9.9% p.a. plus TR, or an annual interest rate of 2.99% p.a. plus savings remuneration. The financing for the acquisition of commercial properties has a maximum term of up to 10 years and annual interest rates starting at 11.0% p.a. plus TR.

The construction financing, also called the Plano Empresário, has a work period of up to 36 months plus the grace period to implement the transfers to borrowers that varies between 6 and 12 months. Interest rates are priced on a case-by-case basis, both in TR+ and Savings+ modality.

Central Bank of Brazil regulations require us to provide at least 65.0% of the balance of savings accounts in the form of housing loans. The remaining funds are to be used for financings and other operations permitted under the terms of the legislation in force.

BNDES/Finame Onlending

The BNDES is the main instrument of the Federal Government to support entrepreneurs of all sizes, including individuals, rural producers, in carrying out their plans for modernization, expansion and implementation of new business, with the potential of generating jobs, income and social inclusion in Brazil. Its portfolio has certain products and programs to provide government-funded long-term loans with different interest rates, focusing on economic development. We are one of the structuring agents of BNDES funds, to borrowers in several sectors of the economy. We determine the margin of return on the loans based on the borrowers’ credit. Although we bear the risk for these BNDES and Finame onlending transactions, these transactions are always secured.

In 2022, we disbursed R$6.3 billion, 71.3% of which were loaned to micro, small and medium-sized enterprises.

Vehicle financings

Vehicle Loans is a financing line for the purchase of light and heavy vehicles, both new and used, for individuals and legal entities. We offer these products through our branch network and Bradesco Financiamentos, with direct contact with clients and business partners for the acquisition of light vehicles, motorcycles, trucks, buses, machinery and equipment.

The vehicle loans portfolio grew in 2022, due to the optimization of concession policies, economic recovery and improvements in procurement processes, maintaining the position among the largest portfolios in the Brazilian markets.

Leasing

As of December 31, 2022, we had 3,763 active leasing agreements. According to ABEL, our leasing companies were among the sector leaders, with a 23.5% market share in Brazil, considering the market portfolio of leases of R$15.2 billion.

Financial leasing involves trucks, cranes, aircraft, ships and heavy machinery. In this same period, 23.6% of our transactions were for vehicles (cars, buses, micro-buses and trucks).

We conduct our leasing transactions through our primary leasing subsidiary, Bradesco Leasing and also through Bradesco Financiamentos.

Borrowings

Working Capital

Line of credit destined to companies with the aim of covering expenses or investments inherent in the company’s working capital, such as: payment of 13th salary, stock renewal, training and other.

Personal loans/Payroll-deductible loans

They are loans with a pre-approved limit to meet needs without a specific purpose. It also includes payroll-deductible loans to Social Security National Service (INSS) pension plan beneficiaries and retirees, to public servants and to the private sector.

The average term of these operations is 59 months and interest rates ranging from 1.6% to 3.5% p.a., as of December 31, 2022.

Rural loans

The provision of loans and financing to the Agribusiness sector is carried out with resources:

·

From the demand deposit, where there is a requirement by the Central Bank of Brazil for the investment of 25% of the Value Subject to Collection (VSR), which is called Obligatory Resources (RO), with maximum rates from 5.00% p.a. to 12.0% p.a., as per the rule of investment of the Manual of Rural Credit (MCR).

·

The Bank’s own, from the Bank’s Treasury for the operations.

·

BNDES onlending, through lines directed to the sector of Agribusiness, destined for investments in equipment, machinery, infrastructure, recovery of pasture, etc., with a term of up to 10 years.

The majority of loans have semiannual or annual payments with payment terms matched to periods of the harvest cycle. The guarantees are usually with the disposal/mortgage of property and machines, the last one valid for the financing of goods in addition to agricultural or livestock lien.

Operations with Limits

Credit card

We offer a range of credit cards to our clients including Elo, American Express, Visa, MasterCard brands, and also the Private Label cards, which stand out due to the extent of benefits and convenience offered to associates.

We earn revenues from our credit card operations through:

•

exchange fees on purchases carried out in commercial establishments;

•

annual fees;

•

interest on credit card balances;

•

interest and fees on cash withdrawals through ATMs; and

•

interest on cash advances to cover future payments owed to establishments that accept credit cards.

We offer our clients a complete line of credit cards and related services, including:

•

credit cards for different audiences for purchases and withdrawals in Brazil and abroad;

•

credit cards directed toward high-net-worth clients, such as “The Platinum Card”, “Infinite”, “Black”, “Nanquim”, “Diners” and “Aeternum” from Elo, Visa, American Express and MasterCard brands;

•

credit cards destined for corporate clients, geared for business expenses and control of expenditure;

•

multiple cards that combine credit and debit features in a single card, which may be used for traditional banking transactions and shopping;

•

co-branded credit cards, which we offer through partnerships with companies; and

•

private label credit cards, which we only offer to clients of retailers, designed to increase business and build client loyalty for the corresponding retailer, which may or may not have a restriction on making purchases elsewhere, among others.

We hold 50.01% of the shares of Elopar, an investment holding company whose investments include Alelo (benefit and prepaid cards), Livelo (coalition loyalty program) and participation in Elo Serviços (payment network). At Cielo S.A., a payment solutions company, we have shared control and relevant participation.

We also have a card business unit abroad, Bradescard Mexico, operating with exclusivity in store chains that are leaders in that country.

We have several partners with whom we offer co-branded/hybrid and private label/ cards. This allows us to integrate our relationships with our clients and offer by means of banking products, such as financing and insurance.

The following table shows our volume of transactions and the total number of transactions of credit cards for the years indicated:

In millions	2022	2021	2020
Volume traded - R$	298,107.5	234,032.8	192,814.1
Number of transactions	2,497.3	2,164.1	1,969.6

 

Overdraft

The overdraft is an emergency revolving credit limit contracted and made available in the checking account that allows greater availability of financial resources for withdrawals, transfers and honoring payments and other debits, whenever own resources are not sufficient.

Guaranteed Account (Conta Garantida)

Conta garantida is a revolving credit limit for companies and individuals to meet short-term needs. The limit of the conta garantida allows the negotiation of more attractive rates. However, in most cases, it requires a guarantee which can be; a surety, disposal of assets, guarantees of contracts or anticipation of receivables, and investments, among others.

Cash Management Solutions

Management of accounts payable and receivable – In order to meet the cash management needs of our clients in both public and private sectors, we offer a broad portfolio of high-quality products and services of accounts payable and receivable, supported by our network of branches, banking correspondents, digital channels and Bradesco App, all of which provided more speed, stability and security for client data and transactions. Our solutions include receipt and payment services; and resource management, enabling our clients to pay suppliers, salaries, and taxes and other levies to governmental or public entities.

These solutions, which can also be customized, facilitate our clients’ day-to-day tasks and help to generate more business. We also earn revenues from fees and investments related to collection, check custody, credit order, collection and payment processing services, and by funds in transit received up to its availability to the related recipients.

Solutions for receipts and payments – In 2022, we settled 1.1 billion invoices through the services of Cobrança Bradesco and 507.9 million receipts by the tax collection systems and utility bills (such as water, electricity, telephone and gas), check custody service, identified deposits and credit orders. The corporate systems processed 1.1 billion documents related to payments to suppliers, salaries and taxes.

Global Cash Management – Global Cash Management aims at structuring solutions for foreign companies that want to operate in the Brazilian markets and for Brazilian companies making business in the international market. By way of customized solutions, partnerships with international banks and access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, our exclusive client service team offers customized products and services to identify solutions for companies.

Niche Markets – We operate in various niche markets, such as franchise business, Individual Microentrepreneur (MEI), education, health, condominiums, notary offices, and among others, where our clients have the support of a specialized team with the mission of structuring custom solutions that add value to their business.

As an example, the franchising niche has a team of franchising specialists that, through their relationship with franchising brands, identify opportunities for financing and providing services to all franchisees and their employees. The partnership with the franchise networks occurs through structured commercial activities in synergy with the managing departments, commercial segments, and affiliated companies. The focus on the peculiarities of this sector creates a competitive and sustainable position by structuring appropriate solutions and, in particular, through the strategy of providing differentiated and specialized services. We have approximately 600 agreements in place with franchising companies, generating numerous opportunities to open new checking accounts and leveraging business with the respective franchisees.

Another important feature in this area is the support we provide towards the development of Local Production Groups (APLs), by providing service to businesses and assistance to these clients. Participating in an APL strengthens the companies, because together they can form an articulated and important group for local development, allowing for greater competitive and sustainable advantages for micro and small businesses. Currently, Brazil has 839 Local Productive Arrangements (APLs) spread across 2,580 municipalities.

Microentrepreneurs use the MEI Portal, including free services provided by partners to meet their day-to-day needs.

Public authority solutions

We have a specific area dedicated to serving public administration, which offers specialized services to identify business opportunities and structuring customized solutions to entities and bodies of the Executive, Legislative and Judiciary branches at federal, state and municipal levels, in addition to independent governmental agencies, public foundations, state-owned and mixed companies, the armed forces (army, navy and air force) and the auxiliary forces (federal and state police forces).

Our exclusive website, developed for our clients, offers corporate solutions for federal, state and municipal governments for payments, receipts, human resources and treasury services.

Our commercial relationships with such public authorities are developed by specialized business managers located in distribution platforms throughout the country, which can be identified on our website. We have nine Specialized Platforms to assist governments, capitals, courts, class councils, chambers, prosecutors, public defenders and the largest municipalities according to the Brazilian GDP, in addition to 34 Platforms that operate providing services to the City Halls and other Authorities.

In 2022, we took part and were successful in payroll bidding processes sponsored by the Brazilian government. Furthermore, according to INSS, we continue to be leaders in payments of INSS benefits, with more than 11.6 million retirees and pensioners.

Management and administration of third-party funds

We provide fiduciary administration services to investments funds and managed portfolios, with regulatory responsibility for operation of investments funds.

Bradesco Asset Management also conducts the management of third-party resources, where it is responsible for investment decisions:

·

mutual funds;

·

managed portfolios;

·

exclusive funds; and

·

FIDCs (Receivable Funds), FIIs (Real Estate Investment Funds) and ETFs (Exchange Traded Funds).

Management of funds and portfolios – On December 31, 2022, Bradesco Asset Management managed 1,786 funds and 454 portfolios, providing services to 3.7 million investors. Among its biggest clients are those from the businesses we operate and Grupo Bradesco Seguros, in addition to institutional investors in Brazil and abroad. These funds comprise a wide group of fixed-income, non-fixed income, investments abroad and multimarket funds, among others.

The following tables show the equity of funds, portfolios under our management, the number of investors and the number of investment funds and managed portfolios for each period:

			R$ million (1)
Distribution of the Shareholders' Equity	2022	2021	2020
Financial investment funds - Total	569,226	540,605	529,081
Fixed Income	495,149	456,173	453,017
Variable income	14,526	19,812	21,133
Multimarket	59,551	64,620	54,931
Managed Portfolios - Total	81,147	84,372	81,888
Fixed Income	72,932	73,701	68,862
Variable income	8,216	10,670	13,026
Overall Total	650,373	624,977	610,969

(1) Source: ANBIMA. We present these amounts in order to give an indication of the scale of our fund activities. We generally earn administration and/or management fees at a percentage of the equity amount of the fund.

	2022		2021		2020
	Quantity	Quotaholders	Quantity	Quotaholders	Quantity	Quotaholders
Investment funds	1,786	3,718,997	1,977	3,114,756	1,573	2,953,465
Managed Portfolios	454	845	577	958	618	1,069
Overall Total	2,240	3,719,842	2,554	3,115,714	2,191	2,954,534

 

Management of third-party funds – On December 31, 2022, we provided administration service to 4,415 funds, 486 portfolios and 48 investment clubs, providing services to 3.1 million investors.

 

The following tables show the equity of funds and portfolios, which are under administration, the number of investors, investment funds, portfolios and investment clubs for each period:

			R$ million (1)
Distribution of the Shareholders' Equity	2022	2021	2020
Financial investment funds - Total	1,008,574	956,488	915,366
Fixed Income	814,214	744,586	720,886
Variable income	65,753	82,285	91,311
Third party share funds	128,607	129,617	103,169
Managed Portfolios - Total	93,581	103,941	107,921
Fixed Income	72,932	73,701	68,862
Variable income	8,216	10,670	13,026
Third party share funds	12,434	19,569	26,033
Overall Total	1,102,156	1,060,429	1,023,287

(1) Amounts shown are funds of third parties and calculate by us (they are not derived from our fiscal statements). We present these amounts in order to give an indication of the scale of our fund activities. We generally earn administration and/or management fees at a percentage of the equity amount of the fund.

	2021		2021		2020
	Quantity	Quotaholders	Quantity	Quotaholders	Quantity	Quotaholders
Investment funds	4,415	3,180,201	4,276	3,177,296	3,828	3,007,567
Managed Portfolios	486	-	497	-	518	-
Investment Clubs	48	359	58	461	64	551
Overall Total	4,949	3,180,560	4,831	3,177,757	4,410	3,008,118

 

Services related to capital markets and investment banking activities

As our investment bank, Bradesco BBI is responsible for (i) originating and executing project financing operations; (ii) originating and executing mergers and acquisitions; (iii) originating, structuring, syndicating and distributing fixed income securities in Brazil and abroad; and (iv) originating, structuring, syndicating and distributing issuances of securities of equity in Brazil and abroad.

Bradesco BBI won several awards in 2022, including "Best Investment Banking Brazil" and "Outstanding Leadership in Sustainable Project Finance" from Global Finance, "Investment Bank of the Year for Equity Raising" from The Banker, "Infrastructure Bank of the Year – Brazil" from Latin Finance, and "Best M&A Firm in Brazil" from the Global M&A Network.

In 2022, Bradesco BBI advised clients in a total of 282 operations across a range of investment banking products, totaling approximately R$362 billion.

Mergers and acquisitions – Bradesco BBI provides advisory services in merger and acquisition and corporate sale transactions, including the sale and purchase of companies and assets, private placements, creation of joint ventures, financial and corporate restructuring, and privatizations. In 2022, Bradesco BBI advised 29 transactions disclosed totaling around R$37 billion.

Equity – Bradesco BBI coordinates public offerings of shares in national and international markets. In 2022, Bradesco BBI coordinated 10 operations totaling around R$53 billion.

Fixed income – Bradesco BBI coordinates public offerings of securities of fixed income in the local and international debt capital markets. In 2022, Bradesco BBI coordinated a total of R$272 billion in the capital market and a total of 243 transactions. In Fixed Income, we can highlight:

·  Operations in the Local Market – Bradesco BBI ended the year in the local fixed income market with the coordination of 129 transactions and involving a total amount of approximately R$118 billion;

·  Project finance – Bradesco BBI acts as advisor and structuring agent in the areas of “Project” and “Corporate Finance”, seeking to optimize financing solutions for projects across various industries through both credit and capital markets operations. In 2022, Bradesco BBI advised 60 structured operations for different clients, totaling around R$34 billion;

·  Structured operations – Bradesco BBI structures customized financial solutions for its clients in terms of their needs such as: investments, acquisitions, corporate reorganization, share repurchase, improved financial ratios, capital structure streamlining, and assets and risk segregation, by offering a number of funding tools to companies. Additionally, Bradesco BBI has a strong presence in the acquisition finance segment. In 2022, Bradesco BBI advised 37 structured operations for different clients, with a total amount of more than R$31 billion; and

·  Operations in the International Market – Bradesco BBI also featured in the international capital market, coordinated 17 transactions with an amount of around R$89 billion.

Investment Platform

We have a complete asset management platform that aims to provide the client with differentiated and personalized investment advice, in a face-to-face and remote way, covering all our product grid, in an accessible and sophisticated way, including investment solutions in Bradesco Asset Management, Ágora Investimentos, Treasury and Bradesco Previdência (Pension), always considering the moment of life, the needs, the objectives and profiles of the clients.

The investment advisory service is supported by a team of investment specialists, in addition to the assistance provided by the branch managers in the branches network, which complement each other. Clients also benefit from recommended portfolios that combine a variety of financial assets. These portfolios are developed on a monthly basis, taking into account risk profiles and economic scenario perspectives in both local and international environments.

Intermediation and trading services

Ágora Investimentos

Ágora, the investment house of Banco Bradesco, is a one stop, open and independent investment platform. Prioritizing the journey and experience of the investor, it aggregates technology and innovation, as well as financial education, quality content and advice for all its clients. It is dedicated to the care of non-institutional individuals and legal entities, whether Bradesco account holders or not. Through the website or App, the client finds a modern Home Broker, its asset trading platform on B3 and a select portfolio of investments that is offered from a careful selection among the most relevant institutions in the market, providing the best opportunities in fixed income, investment funds, COEs, LIGs, public offers and private pension, including with access to investments abroad; all in one place, 24 hours a day, via the website or Ágora App.

To assist in making decisions when investing, on Ágora Insights, the house clients have at their disposal recommendations, reports, analyses, live streams during the trading session and podcasts, as well as greater coverage of companies listed on the stock exchange, with content prepared by the team of renowned economists and market analysts. And if necessary, in Ágora whatever the profile, the client has a team of specialists who understand the subject when it comes to investing, finding the best opportunities according to the objectives.

In addition to the complete grid of investment products, the Ágora client has exclusive programs and services for their day-to-day life, such as the Ágora Visa Infinite credit card, with 1% investment and several advantages, exclusive benefits such as toll tag and car parking with no fees, in partnership with Veloe and the Ágora Plus Program, which brings discount coupons and cashback in several partner stores.

In the pillar of financial education, through the Ágora Academy, we offer more than 90 courses, 50 of which are totally free. All developed by the best business schools in the country: for those who want to learn,

specialize and even professionalize in the market.

Young people and university students can start their investment journey through special programs with Ágora Kids and Universitário. Market professionals have modern and advanced asset trading platforms, by Ágora Trader.

In December 2022, it reached 886.2 thousand clients, with a total of R$68.9 billion assets in custody, occupying the fourth position in the Ranking of Custody of Individuals of B3, the result of the focus on the journey and experience of the investor, through technology and innovation, as well as dissemination of financial education, quality content and specialized advice to all its clients.

Bradesco Corretora

Bradesco S.A. CTVM, or Bradesco Corretora, provides services exclusively to the institutional segment, offering a full service of investment analysis that covers the main industries and companies in the Latin American market, with a team composed of 29 sector specialists who provide consultations to the clients by follow-up reports and stock guides, with a wide range of projections and comparison multiples. Bradesco Corretora also has teams of its own capital economists and fixed income analysts dedicated to institutional clients. Over 360 reports, in English and Portuguese, are forwarded on a monthly basis to the most important investors around the world, such as those domiciled in Brazil, the United States, Europe and Asia.

Bradesco Corretora has as its objective the mediation of the purchase and sale of shares, commodities futures contracts, financial assets, indexes, options, share rental, swaps and forward contracts, in the primary and secondary market, negotiations in B3 and in the organized over-the-counter market, which are tailored to the needs of large corporate and institutional investors.

Regarding B3 variable income markets in 2022, Bradesco Corretora traded R$514.0 billion and ranked second in Brazil in terms of the total trading revenue and third considering revenue from global investors.

In addition, in the same period, Bradesco Corretora traded 1.5 billion futures, forwards, swaps and options totaling R$50.0 trillion in B3. In 2022, Bradesco Corretora ranked fourth in the Brazilian markets, in relation to the number of futures contracts, terms, swaps and options executed.

Bradesco Corretora remains adherent to the Operational Qualifying Program (PQO), maintaining the five excellence seals (Agro Broker, Carrying Broker, Execution Broker, Retail Broker and Nonresident Investor Broker), confirming the high quality of its futures contracts and variable income markets. Bradesco Corretora is also certified by CETIP (Clearing House for the Custody and Financial Settlement of Securities, currently B3).

Capital markets solutions

In 2022, we were one of the main providers of capital market services and we maintained our leadership position in the domestic and global market according to the ANBIMA’s ranking of custody of assets.

Among the main services we offer in this segment, we highlight: qualified custody of securities for investors and issuers, administrators of investment funds, clubs and managed portfolios; bookkeeping of securities (shares, BDRs, quotas of investment funds, CRIs and debentures); custody of shares backed by Depositary Receipts (DR), loan of shares, liquidating bank, depositary (Escrow Account – Trustee), clearing agent, tax and legal representation for non-resident investors, and fiduciary management for investment funds.

Bradesco Custódia has Quality Management System ISO 9001:2015 certifications and GoodPriv@cy certifications. We also hold an ISAE 3402 (International Standard on Assurance Engagements) certification, which includes the issuance of the Control Assurance report in a Service Provider Organization. These certifications expand our structures of controls, increasing the level of effectiveness and quality of processes.

As of December 31, 2022, the set of the services provided by us, which we call Bradesco Custódia was composed of:

·

Custody and controllership services for investment funds and managed portfolios involving:

- R$2.1 trillion in assets under custody;

- R$3.2 trillion in assets under controllership; and

- R$237.8 billion in market value, related to 49 ADR (American Depositary Receipts) programs and 4 GDR (Global Depositary Receipts) programs.

·

Fiduciary administration for funds, investment clubs and portfolios under management with:

- R$1.1 trillion total shareholders’ equity of investment funds under fiduciary management in investment funds, portfolios and investment clubs.

·

Securities bookkeeping:

- 262 member companies of the Bradesco Book-entry Stock System, with 11.1 million shareholders;

- 476 companies with 813 issues in the Bradesco Book-Entry Debenture System, with a market value of R$761.1 billion;

- 1,166 investment funds in the Bradesco Book-Entry Quotas System (value of R$98.8 billion); and

- 43 BDRs programs managed, with a market value of R$5.9 billion.

·

Depositary (Escrow Account – Trustee):

- 28.575 contracts, with a financial volume of R$17.9 billion.

International presence

As a private commercial bank, we offer a wide range of international services, such as foreign trade finance and foreign currency loans, foreign exchange operations and international sureties, lines of credit and banking.

In October 2020, we concluded the acquisition of Bradesco Bank and its subsidiaries to offer a complete platform of banking and investments products and services also in the United States.

December 31, 2022, we had 2 Branches, 11 Subsidiaries and 2 Representative Offices.

Our International and Exchange Area in Brazil coordinates our international transactions, by a team of experts in foreign exchange, providing technical and business support to clients and Retail and Corporate businesses.

Foreign branches and subsidiaries

Our foreign branches and subsidiaries principally provide financing in foreign currency (particularly foreign trade finance operations) to Brazilian and non-Brazilian clients. Total assets of the foreign branches, considering the elimination of intra-group transactions, were R$36.1 billion, as of December 31, 2022, denominated in currencies other than the real.

Funding required for the financing of Brazilian foreign trade is primarily obtained from the international financial community, through credit lines granted by correspondent banks abroad. We issued debt securities in international capital markets, which amounted to US$1.6 billion during 2022 and funding transactions amounted to US$3.3 billion, as an additional source of funding.

The following is a brief description of our subsidiaries abroad:

Cidade Capital Markets – In February 2002, we acquired Cidade Capital Markets in Grand Cayman, through to the acquisition of its parent company in Brazil, Banco Cidade.

Bradesco Securities (U.S., U.K. and H.K.) – Bradesco Securities, our wholly-owned subsidiary, is a broker dealer in the United States, England and Hong Kong:

·  Bradesco Securities U.S. focuses on facilitating the intermediation of operations of fixed income and variable income of Brazilian companies for global institutional investors; raising of short-term funds, placement of Equity Capital Market (ECM) and Debt Capital Market (DCM) operations, distribution of research reports and corporate access services;

·  Bradesco Securities U.K. focuses on the intermediation of equities and fixed income operations for Brazilian companies with global institutional investors; short-term fund-raising activities for us in Euro Certificate of Deposit (Euro CD) program and Global Medium-Term Note program (MTN); and sale of research reports and services of corporate access by subscriptions to institutional investors in Europe; and the sale of variable-income and fixed-income regional transactions to European institutional investors (IPOs, secondary public offerings, etc.); and

·  Bradesco Securities H.K. focuses on the trading of ADRs and public and private securities issued by Brazilian companies to global institutional investors.

Bradesco North America LLC – It serves as a holding company for our investments in non-bank businesses in the United States.

Bradesco Trade Services – A non-financial institution and a subsidiary of our branch in the Cayman Islands, which we incorporated in Hong Kong in January 2007, in partnership with the local Standard Chartered Bank.

Bradescard Mexico – The business unit of credit card issuance.

Bradesco Bank – Commercial bank in the United States with deposits guaranteed by the FDIC, providing banking products and services to resident and non-resident individuals, and corporate and institutional clients.

Bradesco Investments – Broker dealer that offers a complete and open platform of investments for Private, high-income, corporate and institutional clients.

Bradesco Global Advisors – Investment advisory firm that manages discretionary and non-discretionary portfolios for Private and high-income clients.

Banking operations in the United States

In January 2004, the United States Federal Reserve Bank authorized us to operate as a financial holding company in the United States. As a result, we may do business in the United States directly or through a subsidiary and, among other activities, may sell insurance products and certificates of deposit, provide underwriting services, act as advisors on private placements, provide portfolio management and merchant banking services and manage mutual fund portfolios.

Bradesco Bank is positioned to meet the demands of Brazilian and Latin American clients located in the United States and who wish to diversify their assets in the global market by offering investment, banking and financing solutions.

Foreign exchange products

In addition to import and export financing, our clients have access to a range of services and foreign exchange products such as:

·

foreign loans to clients;

·

working capital abroad;

·

WEB exchange contracts;

·

collecting import and export receivables;

·

cross border money transfers;

·

advance payment for exports;

·

accounts abroad in foreign currency;

·

domestic currency account for foreign domiciled clients;

·

cash holding in other countries;

·

structured foreign currency transactions; through our overseas units;

·

service agreements – receiving funds from individuals abroad via money orders;

·

prepaid cards with foreign currency (individuals and legal entities);

·

purchasing and selling of currency paper;

·

cashing checks denominated in foreign currency; and

·

clearance certificate (international financial capacity certificate).

Consortia

In Brazil, persons or entities that wish to purchase certain goods may set up a group known as a “consortium”. Consortia in Brazil are made up of pooled funds for the purpose of financing an acquisition. Consortia groups, which are formed for the purchase of real estate, vehicles, motorcycles, trucks and other assets, have a fixed term and quota, both previously determined by its members and are run by an administrator.

Bradesco Consórcios manages groups of consortia and, as of December 31, 2022, registered total sales of 1,569,684 outstanding quotas; net income of R$3.1 billion; and fee and commission income from consortiums of R$2.3 billion and accrued revenue of R$99.4 billion.

Insurance products and services, pension plans and capitalization bonds

We offer insurance products, pension plans and capitalization bonds through different segments, which we refer to collectively as Grupo Bradesco Seguros.

With the objective of meeting the needs of each client, we offer a range of products and services, such as:

Life and personal accident insurance

We offer life and personal accident insurance, as well as insurance against miscellaneous events, such as job loss, through our subsidiary Bradesco Vida e Previdência. As of December 31, 2022, there were 33.0 million life insurance policyholders.

Health insurance

The health insurance policies cover medical/hospital expenses. We offer health insurance policies through Bradesco Saúde for small, medium or large enterprises wishing to provide benefits for their employees.

On December 31, 2022, Bradesco Saúde and its subsidiary Mediservice Administradora de Planos de Saúde S.A., along with Bradesco Saúde Operadora de Planos S.A., had 4.0 million beneficiaries covered by company plans and individual/family plans. Around 181 thousand companies in Brazil pay into plans provided by Bradesco Saúde and its subsidiaries, including 48 of the 100 largest companies in the country.

As of December 31, 2022, it included 11,438 laboratories, 18,545 specialized clinics, 15,444 physicians and 2,139 hospitals located throughout the country.

Automobiles, property/casualty and liability insurance

We offer car insurance with flexible options according to the client’s profile, through our subsidiary Bradesco Auto/RE. The “Auto Light Rede Referenciada Insurance” is more affordable (vehicle insurance), while “Auto Lar” covers both the vehicle and the residence. There are also options for fleets and account

holders of Banco Bradesco. We cover damages caused to the vehicle, passengers and third parties, with several additional options for purchase, as well as discounts on establishments and a complete Bradesco Insurance App to facilitate the management.

The insurance of retail property and casualty include protection for residential, business and equipment risks, with customized coverage according to the needs of each business or residence. We highlight the “Lar Mais Seguro” (Safer Home) and the “Residencial Sob Medida” (Customized Home Insurance) for individuals, and the “Bradesco Seguro Condomínio” for legal entities, with full coverage and emergency services for various types of condominium.

As of December 31, 2022, Bradesco Auto/RE had 1.5 million insured automobiles and 1.5 million property/casualty policies, making it one of Brazil’s main insurance companies.

Capitalization bonds

Bradesco Capitalização is the market revenue leader among the capitalization bond companies of the industry, with a 22.4% market share, according to SUSEP and offers its clients capitalization bonds with the option of a lump-sum or monthly payment. Plans vary in value (from R$10 to R$50,000), according to the profile of each client, with cash prizes of up to R$11.4 million (net premiums). In December 2022, we had 3.2 million active clients, with growth of 19.3% compared to December 2021, and 21.4 million capitalization bonds, of which 8.6 million were capitalization bonds and 12.8 million were incentive bonds. Our biggest operation is the traditional modality, where the client saves money and can win prizes as a tool of financial regulation, and at the end of the plan the amount paid is 100% of the amount paid restated by the TR. In the incentive category, the purpose is to add value to the products of a partner company or even to provide an incentive for its clients to avoid delinquency, the plans are for short-terms and grace periods with low unit sales value.

In line with the principles of sustainability and the search for the dematerialization of services, we have developed the sale of capitalization securities through the corporate cell phone of the commercial managers of the branch network, with digital acceptance on the Bradesco App, Net Empresa App, Internet Banking and on Net Empresa by our Individual and Corporate clients, considering their convenience and security. These improvements are aligned with mobility, and contribute to the quality of services and client satisfaction, as well as the savings in physical and financial resources. In 2022, we provided our corporate clients with the option to purchase and access bonds services through Net Empresa. Following these principles, since 2021, we offered our individual clients the redemption of the securities through the Bradesco App. With this last delivery, we are in line with the digitalization of the acquisition and redemption processes, which can be performed 100% digitally.

In line with the diversification of our portfolio, in 2022 we launched 4 more products.

·

In digital channels (Bradesco App, Internet Banking and BDN), we launched Max Prêmios, with monthly payment product of R$10.00 and R$20.00, serving all client profiles, helping them with the habit of saving money, competing for awards and contributing to financial education. We achieved above-expected performance from our clients who purchased bonds through 100% digital means, reaching the milestone of 1 million bonds sold;

·

Max & Milhões, exclusively for high-income clients, with millionaire draws of up to R$11.4 million, the highest draw of Bradesco Capitalização;

·

Agro Max Prêmios, made especially for Bradesco clients who want to expand their agribusiness, where the client invests R$5 thousand or R$10 thousand at a time and can win 20 monthly prizes up to R$400 thousand and can still be used as a loan operation guarantee; and

·

Novo Max Prêmios Cem, where the client invests R$100.00 at a time and participates in 324 draws during the month.

Supplementary Pension plans

We have managed individual and corporate pension plans since 1981 through our wholly-owned subsidiary Bradesco Vida e Previdência, which is now one of the leading pension plans managers in Brazil, as measured by investment portfolio and technical provision criteria, based on information published by FENAPREVI and SUSEP.

Bradesco Vida e Previdência offers and manages a range of individual and group pension plans. Our largest individual plans in terms of contributions known as VGBL and PGBL are exempted from paying taxes on income generated by the fund portfolio. The participants of these funds are taxed upon the redemption of quotas, and/or receipt of benefits.

As of December 31, 2022, Bradesco Vida e Previdência accounted for 21.9% of the supplementary pension plans in terms of contributions, according to SUSEP. On December 31, 2022, Bradesco Vida e Previdência accounted for 22.6% of assets under management: 20.9% of VGBL, 21.5% of PGBL and 45.3% of traditional pension plans, according to FENAPREVI.

Brazilian law currently permits the existence of both “open” and “closed” private pension entities. Open private pension entities are those available to all individuals and legal entities wishing to join a benefit plan by making regular contributions. Closed supplementary pension plan entities are those available to discrete groups of people such as employees of a specific company or a group of companies in the same sector, professionals in the same field, or members of a union. Private pension entities grant benefits on the basis of periodic contributions from their members, or their employers, or both.

As of December 31, 2022, we managed open supplementary pension plans covering 2.9 million participants, with a total balance of R$275.9 billion in collateral assets.

Under VGBL and PGBL plans rules, participants are allowed to make contributions either in installments or in lump-sum payments. Participants in pension plans may deduct the amounts contributed to PGBL up to 12.0% of the participant’s taxable income when making their annual tax declaration. At the time of redemption and/or when benefits are paid out, taxes will be levied on the income accrued, pursuant to current legislation, in relation to the total redeemed/received as benefit. VGBL plan participants may not deduct their contributions when declaring income tax. At the time of redemption and/or when benefits are paid out, taxes will be levied on the income accrued, pursuant to current legislation.

These plans can be contracted either individually as well as in business plans. Individual plans represent 55.5% and business plans 44.5% of the total number of participants. The business plans account for 15.7% and Individual for 84.3% of the technical provisions.

The plans being commercialized allow contribution, portability, redemption and conversion into income.

Bradesco Vida e Previdência also offers pension plans for corporate clients that are in most cases negotiated and adapted to the specific needs of this type of client.

Bradesco Vida e Previdência earns revenues primarily from:

·

supplementary pension plan contributions, PGBL and VGBL, life insurance and personal accidents premiums;

·

revenues from management fees charged to pension plan participants in accordance with mathematical provisions; and

·

interest income.

b)

Characteristics of the distribution process

Distribution channels

The following table presents our main distribution channels in the period stated:

Structural Information - Units		2022	2021	2020
Service Points		85,609	81,900	79,892
	- Branches	2,864	2,947	3,395
	- Service Centers	3,524	3,769	3,915
	- Electronic Service Centers	645	764	822
	- Business Units	897	988	715
	- Banco24Horas Network	17,449	16,174	15,250
	- Bradesco Expresso (Banking Correspondents)	40,456	39,100	39,100
	- Bradesco Promotora	19,759	18,085	16,620
	- Losango	-	57	58
	- Branches/Overseas Subsidiaries	15	16	17
ATMs		46,562	50,807	54,522
	- Bradesco Network	22,163	26,526	30,694
	- Banco24Horas Network	24,399	24,281	23,828

 

Distribution channels of insurance products, pension plans and capitalization bonds

We sell our insurance, pension plan and capitalization products through our website, our branches, brokers based in our network of bank branches and non-exclusive brokers throughout Brazil, all of whom are compensated on a commission basis. Our capitalization bonds are offered through our branches, the Internet, our call center, ATMs and external distribution channels.

The following table shows the distribution of sales of these products through our branches and outside our branches:

% of total sales, per product	2022	2021	2020
Insurance products:
Sales through branches	37.1%	39.7%	39.8%
Sales outside branches	62.9%	60.3%	60.2%
Supplementary pension plans products:
Sales through branches	87.1%	87.1%	75.0%
Sales outside branches	12.9%	12.9%	25.0%
Capitalization bonds:
Sales through branches	71.0%	77.6%	84.8%
Sales outside branches	29.0%	22.4%	15.2%

 

Partnerships with retail companies – Bradesco Expresso

“Bradesco Expresso” enables us to expand our share of the correspondent bank segment through partnerships with supermarkets, drugstores, grocery stores, department stores and other retail chains. These companies provide basic banking services offered by employees of the establishments themselves, while decisions regarding granting of credit or opening of accounts are made by us.

The main services we offer through Bradesco Expresso are:

·  receipt and submission of account application form;

·  receipt and submission of loans, financing and credit card application form;

·  withdrawals from checking account and savings account;

·  Social Security National Service (INSS) benefit payments;

·  checking account, savings account and INSS balance statement;

·  receipt of utility bills, bank charges and taxes; and

·  prepaid mobile recharge.

As of December 31, 2022, the Bradesco Expresso network totaled 40,456 service points, with an average of 36.5 million monthly transactions or 1.7 million transactions per business day.

Digital Channels

We offer various products and services through our digital channels Mobile App, Internet Banking, ATM, and Contact Center. They can be accessed from anywhere and at any time, with the aim of taking convenience, practicality and security for clients. In 2022, digital channels represented 98% of the transactions performed at Bradesco, highlighting the Mobile and Internet Banking channels, which represented 93% of this total.

Below is a brief description of our digital channels:

Mobile App – at the end of December 2022, we have 24.1 million active natural person clients (accounts who carried out transactions in the last three months) Comparing against December 2021, this number total an increase of 2.4 million clients in the channel. We believe in the consolidation and continuous growth of Mobile channel in the coming years.

Currently, we have a broad and diversified set of solutions. Available for iOS and Android systems, this channel is used by clients to make from payments and transfers to purchase loans, consortia, carry out foreign exchange operations, access non-financial benefits, among other services. They also take advantage of integration with the Ágora App, a complete investment platform. With it, clients receive tips, market news and expert reviews through the “single sign on”.

Corporate clients use the Bradesco Net Empresa App for their banking operations, such as payments, transfers, Pix, DOC/TED, check deposits, factoring of receivables, purchase of loans, among other transactions. The convenience of the App on the cell phone encompasses the full online contracting of the instant QR Code for cash terminals (TEF), POS and e-commerce.

Importantly, the entry of new accounts by mobile individual and companies. In 2022, the number of digitally opened accounts grew by 48% compared to 2021. In addition, there has been a 52% increase in the opening of MEI accounts compared to 2021 and the expectation is to grow even more in 2023.

BIA – the proximity to the client is increasingly relevant, as well as the customization of the service. Thinking about continuing the customer experience, we invest in research and technologies that also include pioneering solutions. This is the case of BIA, Bradesco’s artificial intelligence launched in 2016. Initially established for branch employees throughout Brazil, BIA matured until it began to interact with clients through the Bradesco App and through other channels.

In December 2022, it surpasses the mark of 1.6 billion interactions and presents itself as one of the main channels of relationship with our clients and non-clients. Present on WhatsApp, Google Assistant, Amazon Alexa and the Apple Messaging app, BIA ensures mobility and helps clients digitally wherever they are. On the Bradesco App, clients can also make transfers between Bradesco accounts by voice or text and

clarify doubts about the bank’s products and services.

Inspired by the movement “Hey, update my voice”, of UNESCO, we changed the answers of BIA so that she can react fairly and firmly against harassment. We will continue to make investments focused on its evolution, expanding her skills with resources that help clients organize their financial flow and improve her communication capacity to provide an increasingly intuitive and intelligent experience.

Internet – We were the first financial institution in Brazil to have an e-mail address on the Internet, beginning in 1996. We provide individuals clients access to financial services on Bradesco Internet Banking, a solution that has transformed the relationship between clients and the financial market, and that continues to be an important source of information and transactions.

With the 26th anniversary on March 31, 2022, Bradesco Internet Banking continues to evolve. With its own domain (banco.bradesco), the Organization is one of the few Brazilian companies to have a top-level domain or generic top-level domains (gTLDs) – an initiative of the ICANN (Internet Corporation for Assigned Names and Numbers), the body responsible for internet protocols, which regulates the addresses on the worldwide web.

This communication platform is divided into 2 main pillars:

·  Bradesco Institutional Website (banco.bradesco): with simplified content and plain language, offers to Individual clients access to information and clarifications on various financial products and services, with the support of tutorials in videos that facilitate the understanding, in addition to the features that help in the client’s day-to-day activities, like issuing the copy of the bank payment slip. Also available on the homepage of the portal, the online purchase of products of the Organization and of partners, such as cards, consortium, Losango, Cielo, among others, also serving clients who do not have a checking account.

·  Bradesco Internet Banking for Financial Services: access by using a password and Token for account holders and by CPF No. and password for non-account holders. With more than 500 services and products available, individual clients can use the channel to check statements, and make payments, transfers, Pix, investments and much more.

The new visual concept of the channel is more modern and technological, presenting facilities, such as customizing the distribution of services on the homepage according to each client’s preference. In addition, it has relevant information of the investment portfolio, with the possibility of customized tips and viewing of credit card limits and real-time purchases, and gives the client even more autonomy using the transaction limit manager.

On Bradesco Net Empresa, the Corporate Bradesco Client can make queries, transfers, Pix, investments, file submission, among other transactions, all in a simple and secure manner.

We also emphasise that the MEI Digital Platform delivers to the individual micro-entrepreneurs, financial and non-financial services by means of partners that meet their main needs.

·  ATM – With more than 8 million clients who make queries and transactions exclusively through the network of self-service machines, we are present in the five regions of Brazil, enabling autonomy with security in a portfolio of products focused on intuitive navigation with synergy and with digital convergence.

Maintaining high availability and capillarity, currently there are over 46 thousand active machines, distributed among Bradesco’s Own Network 22,163 and Shared Network – Banco24Horas 24,399; with more than 80% of the screens with touchscreen enabling features that facilitate the day-to-day operations of the client, like the withdrawal with the possibility of choosing the banknotes, the quick withdrawal and sending the proof of receipt by e-mail.

We also have disruptive services, such as the 146 dollar and euro purchase machines – foreign exchange of 2 currencies in a single machine – which had representative participation in the Organization’s foreign exchange operations. In 2021, we also deployed the Virtual Safe, in which

the client has autonomy in purchasing foreign currency by the Bradesco App and withdrawing from the ATMs.

Strengthening our pioneer DNA, 8,386 machines operate with the recycling of banknotes, which enables the cash deposit with immediate credit in the account of the beneficiary, not requiring the use of the envelope. Continuing with the reduction of cost with consumables, since December 2020, approximately 4,800 recycling companies also received the operation of deposit in check without the envelope; with clearance according to the deadline established by the Central Bank of Brazil.

The self-service machines have advanced security technology and are 100% equipped with Biometrics. The security in the palm of your hand adds, in addition to convenience in the “proof of life” for INSS clients, expedition to make the most diverse transactions without a card, such as the activation of the token on the cell phone and the access of proxies of individual account holders, who can operate without the presence of an employee.

·  Telephone services – Fone Fácil (Contact Center) – We allow clients to bank by telephone, which can be accessed by choosing an electronic service or personalized service.

In the electronic service, we provide a sophisticated service system powered by voice command, which provides clients the experience of doing what they want to do through simple voice commands, without the need for listening to various service options and having to choose them by typing the option on the telephone. The client can request the desired service and proceed directly to its execution, choosing the preferred option.

Through this channel, we offer our main financial services, such as payments, transfers between Bradesco accounts, DOC/TED, investments, loan contracting, among others.

By calling Fone Fácil, clients can access other relationship centers, such as for credit cards, private pension plans, capitalization and internet banking, among others.

·  Social networks – we are innovators and pioneers in social networks, operating in them since 2009 and becoming a market reference. The focus is on communication, relationship, content creation and business activation. The Social Networks team monitors, analyzes and interacts with people who seek us or mention our brand, relying on the participation of segments, managers and branches to resolve demands. This work strengthens the relationship with people and protects the Organization. The team is also responsible for answering doubts, complaints, suggestions and conducting relationship interactions with the user.

The tables below show the number of transactions carried out through digital channels, the loans authorized through these channels and the number of digital clients:

In millions of transactions	2022	2021	2020
Mobile Individuals and Companies+ WhatsApp (1)	19,684	17,450	14,472
Internet Individuals + Companies – with WebTA (2)	4,701	5,096	5,347
ATMs	1,246	1,483	1,749
Direct Debit (1)	159	167	174
Telephone Banking (Fone Fácil)	43	78	106
Total	25,833	24,274	21,848

(1) Including in 2022 and 2021 transactions made through WhatsApp and Automatic Debit.

(2) WebTA is an internet file transmission service, to Bradesco, carried out by Corporate clients using Net Empresa.

In 2022, of the total loans authorized, 33.1% were made available via digital channels, carried out autonomously by clients. The increase of 16 p.p in the participation of the mobile channel for individuals stands out, with the total loans authorized for individuals originated via digital channels in 2021 of 44% increasing to 60% in 2022. Regarding the volume of loans authorized through digital channels, the growth was 15% for Individuals and 27% for companies.

	2022	2021	2020
Loans authorized in the Digital Channels - In R$ billion
Individuals	60.0	52.2	32.9
Companies	45.6	36.0	32.2
Total	105.6	88.2	65.1
Clients with Digital Profile - In million
Individuals	24.7	22.3	19.8
Companies	1.7	1.5	1.4
Total	26.4	23.8	21.2

next

Created in 2017 as a digital bank focused on the hyperconnected generation, next is positioned, today, as a digital platform that has as its objective to simplify everyone’s life, provide solutions to help the client in the financial management process and to be a partner that allows clients to achieve their dreams and goals.

The next solutions ecosystem offers a variety of financial and non-financial services, all devised and designed on studies with clients and non-clients.

In addition to the checking account and credit and debit card, clients have at their disposal several options of investments and loans, insurance, financial management tools, salary account, account for children and teens (nextJoy), cell phone top up, gift card, toll and parking tag (Veloe), and benefits in partnership with more than 270 brands on the Mimos (gratuities) hub and integration with the Apple Pay, Google Pay, Samsung Pay and WhatsApp Pay digital wallets. In addition, next has its own end-to-end marketplace called nextshop, which currently offers over 900,000 deals available to all next clients. It offers various payment methods and benefits, ranging from cashback to exclusive prices and free shipping.

The performance of next is based on the customer-centricity. This premise is followed with constant investments in the analysis and intelligence of data, to understand trends and behaviors, helping to anticipate the creation of a new service or suggestion for the client. In addition to the extensive use of data, we also employ anthropological studies to identify trends and anticipate the needs of our clients. The use of the most modern Design and User Experience solutions and also the feedback gathered at all contact points are key elements to provide a better journey and to actively listen to the demands.

next traces all its goals aiming at a sustainable growth, the quality of the services and actual indices of satisfaction and engagement in the use of the platform.

It closed the year with 14.5 million clients, a 47% growth in the annual comparison, processing 636 million transactions.

Digio

Digio is a multiple digital bank focused on Individuals. The Bank's product portfolio includes credit card, personal loan developed to be distributed in own and third-party channels, INSS payroll-deductible loans, anticipated FGTS – Anniversary Withdrawal and 100% digital payment account. In addition to financial products, it is possible to purchase on the Digio App: cell phone top-up, insurance, dental plan, cashback, e-gift, discounts etc.

Digio closed 2022 with 5.1 million total accounts, recording a growth of 45% over the same period in 2021.

inovabra

In a world of exponential transformations, we have created an innovation ecosystem to conceive and develop solutions that impact the lives and experiences of our clients. We work on three fronts:

· Support to Bradesco’s business areas to accelerate new features or improvements of existing products;

· Foster new products and services; and

· Explore, suggest and experiment with new technologies.

To meet the challenges of these three areas of work, Inovabra relies on:

·  Internal innovation program: we incentivize our employees to engage in intrapreneurship. Innovation projects are prioritized, structured, and guided from the conceptual stage to the case-building process and business model validation. Professionals from various fields collaborate with each other, startups, and other actors in the innovation ecosystem, including major technology players, with a focus on generating innovative solutions to enhance customer experiences, optimize existing products and services, expand into adjacent businesses, and increase market share in new markets. Additionally, employees work in a collaborative space in New York to identify solutions that add value to the Organization's businesses and stay abreast of trends in new business models, technology, and behaviors.

·  Multidisciplinary team (analysts and researchers): constant interaction with partners, universities and research institutes in Brazil and abroad to support and stimulate the acquisition of new knowledge about emerging technologies, market evolution, proposals of new business models, develop pilots, and conduct experiments with emerging technologies such as Artificial Intelligence, Blockchain, DeFi (Decentralized Finance), CBDCs (Central Bank Digital Currencies), and Cryptoeconomics, IoT (Internet of Things), Quantum Computing, among others.

·  Culture program: initiative to inspire and create innovators across the Organization, since innovation is everyone’s role. Through the program, we foster habits, behaviors, and competencies of innovation and intrapreneurship, with the support of Unibrad – Human Resources (HR) and marketing, through 4 pillars.

·  Learn: generation of knowledge and adoption of new skills and attitudes;

·  Connect: sharing knowledge, cases and experiences;

·  Communicate: generation of repertoire through events, reports and newsletters; and

·  Management system: measurement of culture and actions ranging from engagement, content consumption reaching the generation of new opportunities and innovation cases.

The program has two audiences: all our employees and influencers (select group with representatives from different areas of the bank who are the catalysts for innovation in their departments).

In 2022, 254 influencers participated in the program, representing 80% of our areas. The group had access to 100 hours of training (synchronous and asynchronous). With the aim of materialization, 22 innovation challenges were initiated, and 5 ongoing experiments are being coordinated by the influencers. For the entire Organization, there were more than 12 events with participation of market experts and executives and with an average of 1,500 views.

·  Co-innovation environment: large companies, startups, investors, and mentors work collaboratively to co-innovate and generate business opportunities. The environment includes over 230 startups and 82 large companies. In addition to fostering the entrepreneurial ecosystem in Brazil and promoting a culture of innovation within organizations, the co-innovation environment aims to contribute to the country's quest for a more prominent position in global innovation. To complement the physical performance, the co-innovation environment has its digital platform to

house startups and companies outside São Paulo who want to seek connection with other startups, access business opportunities of Bradesco and partner companies. In addition to the residents located in the physical space and the companies connected through the platform, the co-innovation environment establishes partnerships with 9 innovation centers in Brazil (Porto Digital, Gyntec, Artemisia, Nexus, ACATE, Hotmilk, Hospital do Amor, 100 Open Startups, and Manaus Tech Hub – Sidia) to enhance opportunities for startups and companies within its community.

·  Unified and collaborative laboratory: centralizes areas of Bradesco technology and large technology partners, with a safe environment for testing frontier technologies. The model provides operational efficiency in innovation, prototyping and product design, experimentation of new solutions with startups and big techs, proof of concept, launches and solutions of new challenges. Our laboratory also has a Sandbox that allows the test of solutions simulating our productive environment, which guarantees more accurate experimentations reducing integration uncertainties and the time-to-market of innovation.

·  inovabra ventures: proprietary capital fund for strategic investments in startups and high-growth companies that have innovative technologies and/or business models. The fund is controlled by the area of Private Equity & Venture Capital and it actively contributes to the generation of value in the companies and the expansion of entrepreneurship, especially when they involve solutions that meet the needs of our clients.

inovabra results for 2022:

· 82 studies carried out by the multidisciplinary team of research;

· 9 projects with new technologies;

· 77 experimentations;

· 147 certifications between software and hardware;

· 163 technical recommendations;

· 14 contracted startups; and

· 7 investments in startups.

c)

Characteristics of the market segments, specially:

i) Participation in each market:

In the following section, we demonstrate the percentages of Bradesco’s participations in relation to banking and insurance segment and its distribution channels:

			As (%)
Market Share	2022	2021	2020
Source: Bacen
Bank
Demand Deposits	11.0	10.1	10.8
Savings Deposits	13.2	13.2	13.0
Time Deposits	13.7	15.3	16.0
Loans Operations	11.5	12.3	12.1
Loans Operations - Private Institutions	20.0	21.5	22.0
Loans Operations - Vehicles Individuals (CDC + Leasing)	13.8	13.6	13.3
Payroll-Deductible Loans	15.2	16.4	15.9
- National Institute of Social Security (INSS)	18.0	20.9	19.8
- Private Sector	11.2	14.4	14.8
- Public Sector	13.7	13.6	13.3
Real Estate Financing	9.4	9.8	8.8
Consortia
Real Estate	17.6	19.0	21.2
Auto	27.2	29.7	31.2
Trucks, Tractors and Agricultural Implements	24.3	18.3	18.6
International Area
Export Market	13.9	14.8	15.5
Import Market	7.9	10.0	14.6
Source: Insurance Superintendence (Susep), National Agency for Supplementary Healthcare (ANS) and National Federation of Life and Pension Plans (Fenaprevi)
Insurance Premiums, Pension Plan and Capitalization Bond	22.4	22.3	22.4
Technical provisions for insurance, pension plans and capitalization bonds	22.2	22.7	23.3
Pension Plan Investment Portfolios (including VGBL)	22.6	22.9	24.2
Source: Anbima
Investment Funds and Managed Portfolios	16.7	16.7	17.8
Source: Social Security National Institute (INSS)/Dataprev
Benef it Payment to Retirees and Pensioners	30.8	31.4	32.1
Source: Brazilian Association of Leasing Companies (ABEL)
Lending Operations	21.2	22.0	21.9

 

ii) competitive conditions in markets

As of December 31, 2022, state-owned financial institutions held 34.1% of the National Financial System’s (SFN) assets, followed by domestic private financial institutions (taking into consideration financial conglomerates) with a 49.7% share and foreign-controlled financial institutions, with a 16.2% share.

Public-sector financial institutions play an important role in the banking sector in Brazil. Essentially, they operate within the same legal and regulatory framework as private-sector financial institutions, except that certain banking transactions involving public entities must be made exclusively through public-sector financial institutions (including, but not limited to, depositing federal government funds or judicial deposits).

We highlight below some rules that may impact competitiveness, due to some regulatory requirements:

Through Circular No. 3,590/12, as amended, transfers of corporate control, takeovers, mergers, transfers of business, contracts with a view to cooperation in the financial sector, acquisitions of holdings greater than or equal to 5% and acquisitions that result in the purchaser having a stake increase interest equal to or higher than 5% in cases in which the investor holds 5% or more of the voting capital, directly or indirectly involving financial institutions must be submitted to the Central Bank of Brazil.

Through CMN Resolution No. 4,970/21, as amended, the CMN set out and procedures for authorization related to the operations of financial institutions and other entities authorized by the Central Bank of Brazil.

In short, it includes institutions, in the scope of application of CMN Resolution No. 4,970/21, such as (i) development banks; (ii) foreign exchange banks; (iii) development banks; (iv) investment banks; (v) multiple banks; (vi) foreign exchange brokers; (vii) securities and exchange brokers and real estate agencies; (viii) securities and exchange distribution companies; and (ix) loan companies between private individuals. In addition, on August 30, 2022, the Central Bank of Brazil issued Normative Instruction No. 299/22, as amended, which discloses procedures, documents, terms and information necessary for the instruction of authorization requests related to the operation of the institutions covered by CMN Resolution No. 4,970/21.

Through Resolution No. 4,656/18, as amended, CMN regulated credit fintechs, providing for the establishment and operation of the Direct Loan Companies (SCD) and Interpersonal Loan Companies (SEP), regulating loans and financing between people using electronic platforms. In summary, SCD and SEP have to be constituted in the form of joint stock companies and may meet less stringent criteria than those of other financial institutions to obtain authorization. However, the SCD can only perform loans and financing using their own resources, while the SEP cannot make use of operations with its own resources, acting as an intermediary between creditors and debtors, and providing other services established in the Resolution.

In 2019, the CMN created rules for the Credit Society for Microentrepreneurs and Small Business (SCMEPP), through Resolution No. 4,721/19, as amended, which provides for the constitution, authorization for operation, corporate restructuring and cancellation of authorization for operation. The SCMEPP has the role of granting funding to individuals, microenterprises and small businesses based on the viability of their projects. The SCMEPP cannot raise money from the public, nor can it issue bonds and securities to place bids and public offerings.

In these circumstances, the fintechs that are already expanding in the Brazilian markets may act in a regulated manner and independently from a financial institution already constituted, as an SCD or SEP. The process of obtaining authorization for the operation of the SCD, SEP and SCMEPP has fewer requirements than those of a multiple bank; in contrast, these entities have a more limited scope of action.

In June 2020, the CMN enacted Resolution No. 4,822/20, regulating the joint-guarantee society and the counter-guarantee society, provisioning on the constitution, organization and functioning of these societies, introduced by Complementary Law No. 169/19. The joint-guarantee society has as its main objective the granting of guarantees in favor of its participating members in the context of loans contracted by them, and counter-guarantee societies, in turn, is aimed at granting the counter-guarantee to joint-guarantee societies.

Subsequently, in November 2022, the CMN issued Resolutions No. 5,046/22, No. 5,047/22, No. 5,050/22 and No. 5,051/22, which provision, respectively, on the Organization and operation (i) of investment banks, (ii) of development banks, (iii) of direct credit companies (SCD and peer-to-peer lending (SEP in Portuguese), (iv) as well as credit unions.

Through Resolution No. 5,050/22, which revoked Resolution No. 4,792/20 and Resolution No. 4,656/18, the CMN began to provision on the Organization and operation of a direct credit company and a peer-to-peer lending company and regulate the execution of loan and financing operations between peers through an electronic platform.

Open Finance

Open Finance is seen as one of the ways of fostering innovation and competition. The implementation of its regulatory was instituted by Joint Resolution No. 01/20, enacted by the Central Bank of Brazil and the National Monetary Council, with the aim to stimulate innovation, promote competition, increase the efficiency of the National Financial System and Brazilian Payment System and promote financial citizenship. For this purpose, it establishes that standards of systemic integration between participant institutions must be adopted.

Institutions authorized to operate by the Central Bank of Brazil assume the following roles as participants in Open Finance:

a)

transmitting the data;

b)

receiving the data;

c)

holding a demand, savings deposit account or prepaid payment account;

d)

initiating the payment transaction; and

e)

having a digital correspondent contract in Brazil.

Due to our importance in the National Financial System and the characteristics of its activities, it is mandatory to implement Open Finance as a participant in securities “a”, “c” and “e”. Despite being optional, we will participate in the other securities considering business opportunities with data receiver and payment initiator.

The implementation of Open Finance in Brazil consists of four stages, according to the schedule established by the Central Bank of Brazil and highlighted below:

•

Stage 1: The date of February 1, 2021 has been set for implement the necessary requirements for publishing institution data on service channels and products and services related to demand and savings deposit accounts, prepaid and postpaid accounts and loan operations;

•

Stage 2: as of August 13, 2021, for the publishing of registration details and information of bank accounts (deposit, savings and payment) as well as credit card, and loans by the clients;

•

Stage 3: as of August 13, 2021, for the Sharing of client's registration data and transactional information from bank accounts (deposit, savings, and payment), as well as credit card and credit operations;

•

Stage 4: scheduled for April 2023, for the implementation of the requirements needed for the data sharing on products and services and transaction data, as foreign exchange transactions, investments, insurance and private pension plan, in addition to transactional information related to these products and services by clients.

Our Open Finance Squad has more than 400 highly qualified professionals at Bradesco, focused on developing the best solutions regarding new financial system, inserted in multi-functional groups, our Bradesco Squads work with an agile mindset and exercise an end-to-end vision in creating intuitive and personalized journeys to achieve increasingly positive results.

Deposits

The deposit market is highly concentrated, with our main competitors being Itaú Unibanco, Caixa Econômica Federal, Banco do Brasil and Santander. The five largest institutions hold 69.4% of deposits in the Brazilian markets.

Loans and advances

Competition in loans and advances has been increasing in recent years. Our main competitors are Itaú Unibanco, Banco do Brasil and Santander Brasil.

Credit cards

The credit card market in Brazil is highly competitive. Our primary competitors in the market are the major banks. However, digital banks have increased their importance in the Brazilian markets. Management believes that the primary competitive factors in this area are card distribution channels, both physical and digital ones, the services and benefits offered, in addition to better user experience for the cardholder client.

Consortia

In December 2022, according to the Central Bank of Brazil, the consortia market included 141 administrators, divided between the bank, manufacturer and independent administrators.

Our main competitors are Banco de Brasil and Porto Seguro in the real estate segment; Banco do Brasil and Itaú in the automobile segment; and Banco do Brasil and Randon in the trucks segment.

One of our competitive advantages is the credibility of the Bradesco brand, our amount of monthly contemplations, which reinforces the ability to manage the groups and resources of the consortium clients, and our extensive distribution network, with the largest service network throughout Brazil.

Investment Bank

The investment bank market in Brazil is very competitive, involving the participation of national and international financial institutions. Among the main players are Itaú BBA, BTG Pactual, Santander and other national and international institutions. Bradesco BBI has nonetheless achieved significant success in this market, obtaining recognition from renowned international agencies that follow the sector globally.

Leasing

In general, our main competitors in the Brazilian leasing market are Santander Leasing, Banco IBM, HP Financial Service and Daycoval Leasing. We currently enjoy certain competitive advantages, as we have a larger service network than any of our private sector competitors.

Asset management

On December 31, 2022, the asset management industry in Brazil managed funds worth R$7.4 trillion in shareholders’ equity according to ANBIMA’s investment funds management ranking. Bradesco Asset Management held a portion of R$569.2 billion or 7.7% of market share. We are one of the leading institutions as measured by the number of investment fund quotaholders with 3.7 million. Our main competitors are BB DTVM and Itaú Unibanco.

Insurance, pension plans and capitalization bonds

Insurance sector

According to SUSEP, in 2022, we were market share leader of the Brazilian insurance market. Grupo Bradesco Seguros faces growing competition from several domestic and multinational companies in all branches of this sector, which has changed in Brazil in recent years. In this respect, the main competitive factors are price, financial stability, and recognition of the name and services provided by companies. With respect to services, competition primarily involves the ability to serve the branches that market such services, including the claims handling, automation level, and development of long-term customer relationship.

Our principal competitors are SulAmérica Seguros, Porto Seguro, BB Seguridade, Tokio Marine and Mapfre, which account for a combined total of approximately 57.6% of all premiums generated in the market, as reported by SUSEP in 2022.

We believe that the penetration of our service network, present in all municipalities in Brazil, gives Grupo Bradesco Seguros a significant competitive edge over most insurance companies, thereby promoting cost savings and marketing synergies.

Regarding the healthcare sector, although most insurance activities are carried out by companies with nationwide operations, there is also competition from companies that operate locally or regionally.

Supplementary pension plan sector

The Brazilian government’s monetary stabilization policies stimulated the supplementary pension plan sector and attracted new international players.

Bradesco Vida e Previdência’s main competitive advantages are the “Bradesco” brand, our extensive branch network, our strategy and our record of being in the forefront of product innovation.

Our main competitors are BrasilPrev, Caixa Seguridade, Zurich/Santander, Itaú Seguridade, Icatu and XP Previdência.

Capitalization bonds sector

Our competitive strengths in this sector include our offering of low-cost products with a higher number of prize drawings, security, financial stability, and brand recognition.

Our main competitors are BrasilCap, Santander, Cia. Itaú de Capitalização, Icatu, Caixa Seguridade and Kovr Capitalização, which together represent approximately 65.4% of the total capitalization revenue generated in the market, according to information provided by SUSEP.

d)

Seasonality

We generally have some seasonality in certain parts of our business. There is certain seasonality in our consumer financing business (including our credit card business, financing of goods and others), with increased levels of credit card transactions and financing of goods at the end of the year and a subsequent decrease of these levels at the beginning of the year. We also have certain seasonality in our fee collections at the beginning of the year, which is when taxes and other fiscal contributions are generally paid in Brazil. For our PGBL and VGBL business, seasonality happens at the end of the year, when the 13th salary and profit-sharing distributions are usually paid.

e)

Main raw materials, stating:

i) Description of relationships with suppliers, including whether they are subject to governmental control or regulation, with agencies and applicable legislation:

Bradesco hires suppliers and establishes business relationships with partners that operate with ethical standards that are compatible with the Organization, through a rigorous homologation process for subsequent selection and does not negotiate with those who, verifiably, disrespect the provision of its Code of Ethical Conduct, and also guides its business relationship by the Sectorial Code of Ethical Conduct for the Purchasing Professional.

Additionally, in the Organization's Contracts, the supplier declares to be aware of the provisions of the Bradesco Organization's Code of Ethical Conduct, the Bradesco Organization's Sectorial Code of Ethical Conduct for Purchasing Professionals, the Corporate Information Security Policy and the Bradesco Integrity Program, as well as any and all Policies, Codes and Standards, available at www.bradescofornecedores.com.br, which the supplier undertakes to make known to its employees, agents and employees and agents of its subcontractors, as applicable.

ii) Any dependence on a small number of suppliers:

Banco Bradesco has a broad base of suppliers and encourages the constant search and use of new companies for approval and competition processes. However, for some specific situations, the Bank is dependent on suppliers to carry out its activities. For these situations, there is monitoring carried out by the Specialist Areas, through the Organization's Business Continuity Plan (PCN).

For any situations in which there is a shortage of suppliers, either due to their limited supply in the market as a whole and/or in the region in question, in addition to ensuring the robustness of our processes, with regard to Risk Governance, we place great value on to an important point in this business relationship, which is to have good communication with that supplier. However, Bradesco generally opts for a diversification

of suppliers, thus avoiding creating dependence on a few suppliers to carry out its activities, in addition to work aimed at developing new suppliers.

iii) Possible volatility affecting its prices:

The prices volatility, as resources for loans, interest rates charged on products, among other things, rely on macroeconomic conditions and market rates.

If there is an expected inflation growth rate, the Central Bank of Brazil may increase the base interest rate, increasing, consequently, interest rates for loans. Another factor that can enhance loans is the increase in the delinquency rate for clients. Moreover, variations in tax rates on loans also make these operations more expensive.

 

1.5 – Clients responsible for more than 10% of the total net revenue

Bradesco has no clients that are responsible for more than 10% of the total net revenue of the institution.

 

1.6 – Relevant effects of the state regulation of activities

a)

need for governmental authorization for the exercise of activities and history of relation with the public administration in order to obtain such authorizations

The basic institutional framework of the Brazilian Financial System was established in 1964 by Law No. 4,595/64, known as the “Banking Reform Law”. The Banking Reform Law dealt with monetary, banking and credit policies and institutions, and created the CMN.

Principal regulatory agencies

CMN

CMN is responsible for overall supervision of monetary, credit, budgetary, fiscal and public debt policies. CMN has the following functions:

·  regulating loans and advances granted by Brazilian financial institutions;

·  regulating Brazilian currency issue;

·  supervising Brazil’s reserves of gold and foreign exchange;

·  determining saving, foreign exchange and investment policies in Brazil; and

·  regulating capital markets in Brazil.

Within its functions, the CMN provides, through Resolution No. 3,427/06, as amended, the adoption by the CVM of the risk-based supervision model as general guidance for its activities, on which the Risk Based Supervision System (SBR) was created. The SBR is also regulated by CVM Resolution No. 53/21, which sets its objectives.

Central Bank of Brazil

The Central Bank of Brazil was created by Law No. 4,595/64 and is the primary executor of the guidelines of the CMN, responsible for ensuring the purchasing power of the national currency, including responsibility for:

·

implementing currency and credit policies established by the CMN;

·

regulating and supervising public and private sector Brazilian financial institutions;

·

controlling and monitoring the flow of foreign currency to and from Brazil; and

·

overseeing the Brazilian financial markets.

The Central Bank of Brazil supervises financial institutions by:

·

setting minimum capital requirements, compulsory deposit requirements and operational limits;

·

authorizing corporate documents, capital increases, acquisition of interest in new companies and the establishment or transfer of principal places of business or branches (in Brazil or abroad);

·

authorizing changes in shareholder control of financial institutions;

·

requiring the submission of annual and semiannual audited financial statements, quarterly revised financial statements and monthly unaudited financial information; and

·

requiring full disclosure of loans and advances and foreign exchange transactions, import and export transactions and other directly related economic activities.

Through Complementary Law No. 179/21, the Central Bank of Brazil ensured its autonomy. Thus, it conferred greater freedom to the Central Bank of Brazil in the use of monetary instruments for the fulfillment of goals established by the CMN. Through this law, price stability was defined as the primary objective of the Central Bank of Brazil, in addition to ensuring the stability and efficiency of the financial system, smoothing out economic activity level fluctuations and promoting full employment. The Central Bank of Brazil is considered an autarchy of a special nature, characterized by the absence of any ties to a ministry.

CVM

The CVM is a local entity, linked to the Ministry of Finance, with its own legal personality and its own equity, independent administrative authority, absence of hierarchical subordination, fixed mandate, stability of its managers, and financial and budgetary autonomy. It was created on December 7, 1976 by Law No. 6,385/76 with the objective of overseeing, standardizing, regulating and developing the Brazilian securities markets in accordance with securities and capital-market policies established by CMN.

The main objectives of the CVM are:

·

to ensure the integrity of the capital markets;

·

to boost the efficiency of the capital markets;

·

to regulate on issues provided for by law;

·

to monitor compliance with the legislation applicable to agents working in the capital market; and

·

to promote the development of the capital markets.

The main focus of the CVM in overseeing and regulating the Brazilian capital markets is:

·

to promote a culture of investment in the Brazilian capital markets;

·

to increase the participation in the capital market as a competitive source of financing;

·

to reduce the costs of observance of market participants;

·

to increase the liquidity of markets;

·

to improve the efficiency of supervision of the market; and

·

to increase the efficiency of the sanctioning action.

Banking regulations

Principal limitations and restrictions on activities of financial institutions

Under applicable laws and regulations, a financial institution operating in Brazil:

·

may not operate without the prior approval of the Central Bank of Brazil. In the case of foreign banks, approval of the Central Bank of Brazil, pursuant to Decree No. 10,029/19, may be granted where it is considered to be in the national interest to do so, being carried out as stipulated in Decree No. 10,029/19. Through Circular No. 3,977/20, it is recognized as of interest to the Brazilian government

to allow the participation, in the capital of financial institutions based in Brazil, of individuals or legal entities residing or domiciled abroad;

·

may not invest in the equity of any other company beyond regulatory limits;

·

may not conduct credit and leasing transactions or provide guarantees of more than 25.0% of its reference equity (RE) to a single person or group;

·

may not own real estate, except for its own use; and

·

according to Law No. 4,595/64 and CMN Resolution No. 4,693/18, financial institutions are prohibited from conducting loans with related parties. Exempted from the prohibition are loans with related parties that comply with the conditions stipulated by Law No. 4,595/64. CMN Resolution No. 4,693/18 explains who are considered related parties, from the point of view of the Central Bank of Brazil;

·

CMN Resolution No. 4,693/18 also brought a definition of qualified shareholding, which is considered a direct or indirect stake, owned by individuals or companies in the capital of financial institutions and of leasing companies or of these institutions in the capital of companies, equivalent to 15% or more of the respective shares or quotas representing the share capital. The restrictions with respect to the concentration limit to a single person or group do not apply to interbank deposits entered into by financial institutions subject to the consolidation of their financial statements.

·

On September 26, 2022, the Central Bank of Brazil issued BCB Resolution No. 246/22, establishing maximum limits for the exchange rate fee and prohibiting the establishment of different maximum deadlines for the provision of resources for the receiving end user in the domestic payment arrangements, purchase arrangements, and prepaid payment and deposit accounts. According to the Resolution, it is established, as of April 1, 2023, that the maximum limits for the exchange rate shall respect the following percentage: (a) 0.5%, to be applied in any transaction, in the arrangements classified as deposit accounts; and (b) 0.7%, to be applied in any transaction, in the arrangements classified as prepaid payment accounts.

·

On March 28, 2023, the Plenary of the National Council of Social Security issued Resolution CNPS/MPS No. 1,351/23, which established that the INSS should set the maximum interest ceiling per month for payroll loan operations granted for social security benefit at 1.97% and, for transactions carried out by credit card and payroll-deductible loan benefit card, at 2.89%.

Punitive instruments applicable to Financial Institutions

Law No. 13,506/17, as amended by BCB Resolution No. 131/21, as amended, regulates the administrative sanctioning process in the sphere of activity of the Central Bank of Brazil and CVM and, significantly amended the punitive instruments in the context of banking supervision, of the capital market, of the Brazilian Payment System, Payment Institutions and Consortium.

Capital adequacy and leverage

Financial institutions based in Brazil are subject to capital measurement and standards based on a weighted risk-asset ratio, according to CMN Resolutions No. 4,958/21 and No. 4,955/21, as amended. The parameters of this methodology resemble the international framework for minimum capital measurements adopted for the Basel Accord.

In accordance with Basel III recommendations, Circular No. 3,748/15, and Resolution No. 4,615/17, provide for the minimum requirement for the Leverage Ratio (LR) as a supplementary capital measure. It is a ratio that acts to limit the level of exposure to risk assumed by financial institutions and evaluates the leverage through its relation between Tier I Capital and the Total Exposure, calculated through the sum of assets registered in accounting values, added to off-balance exposures (limits, endorsements, guarantees and derivatives), as detailed in the circular. The relevant institutions classified in Segment 1 (S1) and Segment 2 (S2), must comply with the minimum requirement for LR of 3%.

In order to establish minimum quantitative requirements for the liquidity of financial institutions and limit excessive liquidity risk taking, Basel III introduced two liquidity indices: the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR).

BCB Resolution No. 207/22 regulates the preparation and remittance, by financial institutions of information related to (i) the indicator of Short Term Liquidity (LCR); and (ii) exposure to liquidity risk, which must be kept at the disposal of the Central Bank of Brazil, for a minimum period of five years, together with the documentation of the methodology for its calculation and the respective original data.

According to CMN Resolution No. 4,950/21, financial institutions must keep consolidated accounting records (for calculating their capital requirements) of their investments in companies whenever they hold, directly or indirectly, individually or together with partners, a controlling interest in the investee companies. If their interest does not result in control of a company, financial institutions may choose to recognize the interest as equity in the earnings of unconsolidated companies instead of consolidating such interests.

Under certain conditions and within certain limits, financial institutions may include eligible instruments when determining their capital requirements in order to calculate their operational limits, provided that this instrument complies with the requirements of the regulation in force.

It is worth noting that CMN Resolution No. 4,958/21, as amended, regulated the minimum requirements of Reference Equity (RE), Tier I and Common Equity and on the Additional of Common Equity (ACP) and maintained the percentages of application of the RWA for calculating the value of the Additional Conservation of Common Equity (ACP Conservation) in the following way: (i) 2.00% during the period from October 1, 2021 to March 31, 2022; and (ii) 2.5% from April 1, 2022.

Risk Weighting

Pursuant to Circular No. 3,644/13, which will be fully repealed on July 1, 2023, by BCB Resolution No. 229/22, the Central Bank of Brazil consolidated the risk-weighted assets (RWA) applied to different exposures in order to calculate capital requirements through a standardized approach (RWAcpad). Risk-weight factors applicable to different exposures are often changed by the Central Bank of Brazil. Subsequently, mitigation instruments were provided for the portion RWA related to the exposure to credit risk subject to the calculation of capital requirements through a RWAcpad, through Circular No. 3,809/16. A new criterion for application of the 85% Risk-weight factor (FPR), established by Circular No. 3,921/18, and a new criterion for application of the 100% FPR, established by BCB Resolution No. 12/20.

In addition, there are specific standards of the Central Bank of Brazil to determine procedures to calculate the portion of risk-weighted assets related to other exposures. In March 2022, BCB Resolution No. 202/22 was edited, as amended, and now establishes the calculation of the portion of RWA related to the calculation of capital required for risks associated with payment services (RWAsp) established in BCB Resolutions No. 200/22 and 201/22, as amended.

The total consolidated exposure of a financial institution in foreign currencies, gold, and transactions subject to exchange variation limited up to 30.0% of its Reference Equity (RE), pursuant to CMN Resolution No. 4,956/21, this limit may be altered by the Central Bank of Brazil, observing the minimum value of 15% and the maximum value of 75% of the Reference Equity (RE). It should be noted that compliance with the above limit must take place in a consolidated manner for institutions that are members of the same prudential conglomerate.

Financial institutions authorized to operate by the Central Bank of Brazil shall inform (i) exposure in gold, foreign currency and operations subject to the exchange rate variation; (ii) RWAMint portion of the RWA amount; and (iii) the RWAMpad portion of the RWA amount and its components, daily, being available to BACEN for a period of 5 years, as established in BCB Resolution No. 100/21 which entered into force on July 1, 2021.

In November 2022, BCB Resolution No. 266/22 was edited, promoting changes in the circulars and in BCB Resolutions that establish the procedures and parameters for calculating the portions for calculating the amount of risk-weighted assets (RWA) related to credit risk, market risk and operational risk, so that they are applicable to the prudential conglomerate led by the payment institution and integrated by a financial institution

or another institution authorized to operate by the Central Bank of Brazil (Type 3 conglomerate). In addition, this resolution also amends the normative acts dealing with the calculation of the additional countercyclical principal capital (ACPContraciclico) and the risk of variation in interest rates in instruments classified in the bank portfolio (IRRBB), so that they are applicable to the Type 3 conglomerate.

In addition, the Central Bank of Brazil issued Resolution No. 229/21, as amended, which establishes the procedures for calculating the RWA portion of credit risk exposures subject to the calculation of the capital requirement by means of a standardized approach (RWAcpad), that deal with CMN Resolution No. 4,958/21, of October 2021, and BCB Resolution No. 200/22, of March 2022, as amended.

BCB Resolution No. 229/21 aims to improve two main points, which are: (i) methods of measuring the value of exposures, also admitting the use of a method of calculating the mark-to-market value for a specific asset class. This methodology can be used even if the Accounting Standard of the institutions regulated by the Central Bank of Brazil (Cosif) does not provide on this; and (ii) Risk Weighting Factors (FPR), especially on exposures to sovereign entities and multilateral bodies (EMD), financial institutions, non-financial, retail, and real estate legal entities.

In August 2022, the Central Bank of Brazil launched Public Inquiry Notice No. 92/22, which discloses the motion for a resolution that improves the procedures for calculating the capital requirement for credit risk exposures through internal credit risk classification systems.

In February 2023, the Central Bank of Brazil issued BCB Resolution No. 291/23, which establishes the procedures for calculating the portion of the RWA regarding exposures to the risk of variation in the value of derivative instruments due to the variation in the credit quality of the counterpart (RWACVA), and amended Circular No. 3,646/13.

Compulsory Deposits

The Central Bank of Brazil periodically sets compulsory deposit and related requirements for financial institutions based in Brazil. The Central Bank of Brazil uses reserve requirements as a mechanism to control liquidity in the SFN.

According to the Central Bank of Brazil’s rules, we must place a percentage of the demand deposits, savings deposits and time deposits we receive from our clients with the Central Bank of Brazil:

·

Time deposits: we are obliged to deposit 20.0% of the arithmetic mean of the Value Subject to Collection (VSR) established on the working days of the calculation period, deducted from R$30 million, in accordance with BCB Resolution No. 145/21.

Time deposits are represented by bank deposit certificates (CDBs) and notes (exempted); and pay either a fixed or a floating rate, which is typically a percentage of the interbank interest rate (CDI), as disclosed by COPOM.

·

Demand deposits: we are required to deposit 21.0% of the arithmetic mean of the Value Subject to Collection (VSR), on each working day, determined in the calculation period, deducting R$500.0 million, pursuant to the provisions of BCB Resolution No. 189/22, as amended. The verification of compliance with these requirements is made on the basis of established positions on each day of the period of transactions and the calculation period begins on Monday of one week and ends on Friday of the following week.

·

Savings deposits: each week we are required to deposit in an account with the Central Bank of Brazil an amount equivalent to 20.0% of the arithmetic average of the sum of the balances entered under the headings of Savings Deposits and Resources of Associated Savers, according to BCB Resolution No. 188/22, as amended, which that defines and consolidates the rules of compulsory collection on savings deposit resources. The balance of the account is remunerated by the “TR” plus interest, as detailed in the same resolution.

In February 2013, the Central Bank of Brazil defined rules for financial cost collection on non-compliance with compulsory deposit, reserve or compulsory assignment requirements. The financial

cost charged to institutions that failed to comply with these requirements was adjusted to the SELIC rate plus 4.0% p.a.

In February 2022, BCB Resolution No. 188/22 was edited, which defines and consolidates the rules of compulsory collection on savings deposit resources. In the same month in 2022, BCB Resolution No. 190/22 was issued, which extinguishes the enforceability regarding the compulsory collection of deposit resources and guarantees made.

Additionally, present Central Bank of Brazil regulations require that we:

·

allocate a minimum of 25.0% of demand deposits to providing rural loans;

·

we maintain investments in targeted productive microcredit program operations, of at least 2.0% of demand deposits; and

·

allocate a minimum of 65.0% of the total amount of deposits in savings accounts to finance residential real estate.

Standards on compulsory deposits and additional reserve requirements are periodically altered by the Central Bank of Brazil.

Asset composition requirements

According to CMN Resolution No. 4,677/18, as amended, financial institutions headquartered in Brazil must limit their exposure to a single client to a maximum amount of 25.0% of Tier 1 of its RE, or 15% of Tier 1 of its RE if the institution is listed as systemically important in the global scope by the Financial Stability Board.

BCB Resolution No. 76/21 regulates on instruments of operation of the Central Bank of Brazil in the Brazilian foreign exchange market for the purposes of implementing the exchange rate policy, establishing that the terms of the repo operations for the purchase of foreign currency with a commitment to resell and sell foreign currency with a commitment to repurchase, correspond to the period comprised between the date of liquidation of the purchase or sale operation, inclusive, and the respective date of liquidation of the resale or repurchase commitment, exclusive.

Repurchase transactions

Repurchase transactions are subject to operational capital limits based on the financial institution’s equity, as adjusted in accordance with Central Bank of Brazil regulations. A financial institution may only hold repurchase transactions in an amount up to 30 times its Reference Equity (RE). Within that limit, repurchase transactions involving private securities may not exceed five times the amount of the financial institution’s RE. Limits on repurchase transactions involving securities issued by Brazilian governmental authorities vary in accordance with the type of security involved in the transaction and the perceived risk of the issuer as established by the Central Bank of Brazil.

In September 2016, the Central Bank of Brazil prohibited the execution, extension or renewal of repurchase transactions with securities issued or accepted from associated institutions, or institutions that are members of the same prudential conglomerate.

Circular No. 3,990/20 of the Central Bank of Brazil, which was about the criteria and conditions for the practice of repo operations in foreign currencies by the Central Bank of Brazil, through the sale of sovereign bonds (Global Bonds) by a financial institution, with the seller simultaneously committing to repurchase securities with the same characteristics at a future date, was revoked by BCB Resolution No. 76/21.

Onlending of funds borrowed abroad

Financial institutions and leasing companies are permitted to borrow foreign currency-denominated funds in the international markets (through direct loans or the issuance of debt securities) in order to on-lend such funds in Brazil. These onlendings take the form of loans denominated in reais but indexed to the U.S. dollar. The terms of the onlending transaction must reflect the terms of the original transaction. The interest rate charged on the underlying foreign loan must also conform to international market practices. In addition to the original cost of the transaction, the financial institution may charge onlending commission only.

Furthermore, the amount of any loan in foreign currency should be limited to the sum of foreign transactions undertaken by the financial institution to which loan funds are to be directed.

Foreign currency position

Operations in Brazil involving the sale and purchase of foreign currency may be conducted only by institutions authorized by the Central Bank of Brazil to operate in the foreign exchange market.

Beginning in 1999, the Central Bank of Brazil adopted a foreign exchange free float system, which gave rise to increased volatility. Since mid-2011, the Brazilian real has depreciated against the U.S. dollar and the Central Bank of Brazil has intervened in the foreign exchange market to control the foreign rate volatility.

The Central Bank of Brazil does not impose limits on long positions in foreign exchange operations and short positions in foreign exchange operations for banks authorized to operate in the foreign exchange market.

Standards that address foreign exchange markets are frequently changed by CMN and the Central Bank of Brazil.

In December 2022, Law No. 14,286/21 entered into force, which deals with the Brazilian exchange market, the Brazilian capital abroad, the foreign capital in the country and the provision of information to the Central Bank of Brazil with the aim of modernizing, simplifying and bringing greater legal certainty regarding such matters, considering the best international standards and practices, as well as the insertion of Brazil in the globalized economy. In view of this, CMN published CMN Resolutions No. 5,042/22 and No. 5,056/22, as well as the Central Bank of Brazil published BCB Resolutions No. 277/22, No. 278/22, No. 279/22, No. 280/22 and No. 281/22, aiming to regulate foreign exchange operations.

Contextualizing, the main changes that the new exchange rate framework presents:

·

It will be the competence of the Central Bank of Brazil to regulate foreign currency accounts in the country, including regarding the requirements and procedures for opening and operating them, the Central Bank of Brazil may expand, depending on the regulation, the possibility of individuals and legal entities being holders. The ownership of foreign currency accounts in the country is still limited to companies, such as brokers, credit card administrators and other sectors specified by the Central Bank of Brazil.

·

Opening of deposit abroad was already possible, but the project expands and reinforces this, by stating that institutions authorized by the Central Bank of Brazil will be able to allocate, invest and destine for credit and financing operations, in the country and abroad, funds raised here or abroad.

·

Extension from R$10 thousand to US$10 thousand of the limit of cash in kind that each passenger can carry when leaving or entering Brazil.

·

The negotiation of up to US$500 between Individuals is now authorized, allowing the purchase and sale of foreign currency to be made by Individuals and not only banks and brokers, provided that the operation is made occasionally and not professionally.

·

Depending on the regulation by the Central Bank of Brazil, the possibility of private compensation of credits between residents and non-residents, as well as payment in foreign currency of enforceable obligations in the national territory in situations such as foreign trade operations.

Registration of cross-border derivatives and hedging transactions and information on derivatives

In December 2009, the Central Bank of Brazil issued specific rules that became effective in February 2010, requiring Brazilian financial institutions to register their cross-border derivative transactions with a clearing house regulated by the Central Bank of Brazil and by the CVM. Specifically, cross-border derivative transactions must (i) be registered within two business days; and (ii) cover details of underlying assets, values, currencies involved, terms, counterparties, means of settlement and parameters used.

In January 2010, registration rules were extended to cover hedging transactions in foreign OTC markets or exchanges.

In November 2010, to facilitate the management of derivatives-related risk incurred by financial institutions, the CVM stipulated that market participants should create mechanisms in order to share

information on derivatives contracts traded or registered in their systems, subject to banking confidentiality rules.

Treatment of loans and advances

For statutory reporting purposes, financial institutions are required to classify their loans and advances into nine categories, ranging from AA to H, based on their risk. These credit risk classifications are determined in accordance with Central Bank of Brazil criteria relating to:

·

the conditions of the debtor and the guarantor, such as their economic and financial situation, level of indebtedness, capacity for generating profits, cash flow, delay in payments, contingencies and credit limits; and

·

the conditions of the transaction, such as its nature and purpose, the type, the level of liquidity, the sufficiency of the collateral and the total amount of the credit.

In the case of corporate borrowers, the nine categories that we use are as follows:

Rating	Our Classification	Bradesco Concept
AA	Excellent	First-tier large company or group, with a long track record, market leadership and excellent economic and financial concept and positioning.
A	Very Good	Large company or group with sound economic and financial position that is active in markets with good prospects and/or potential for expansion.
B	Good	Company or group, regardless of size, with good economic and financial positioning.
C	Acceptable	Company or group with a satisfactory economic and financial situation but with performance subject to economic variations.
D	Fair	Company or group with economic and financial positioning in decline or unsatisfactory accounting Information, under risk management.

A loan and advance transaction may be upgraded if it has credit support or downgraded if in default.

Doubtful loans are classified according to the loss perspective, as per E-H ratings as follows:

Rating	Bradesco Classification
E	Deficient
F	Bad
G	Critical
H	Uncollectible

A similar nine-category ranking system exists for transactions with individuals. We grade credit based on data including the individual’s income, equity and credit history, as well as other personal data.

For regulatory purposes, financial institutions are required to classify the level of risk of their loans according to the Central Bank of Brazil’s criteria, taking into consideration both the borrower and guarantors’ characteristics and the nature and value of the transaction, among others, in order to identify potential loan losses.

This risk evaluation must be reviewed at least every six months for loans extended to a single client or economic group whose aggregate loan amount exceeds 5.0% of the financial institution’s Capital (PRN1), and once every twelve months for all loans, with certain exceptions.

Past due loans and advances must be reviewed monthly. For this type of loan, regulatory provisions set the following minimum risk classifications:

Number of Days Past Due (1)	Minimum Classification
15 to 30 days	B
31 to 60 days	C
61 to 90 days	D
91 to 120 days	E
121 to 150 days	F
151 to 180 days	G
More than 180 days	H

(1)

These time periods are doubled in the case of loans with maturities in excess of 36 months.

Financial institutions are required to determine whether any loans must be reclassified as a result of these minimum classifications. If so, they must adjust their regulated accounting provisions accordingly.

The regulations specify a minimum provision for each category of loan (BR GAAP), which is measured as a percentage of the total amount of the loan and advance operation, as follows:

Classification of Loan	Minimum Provision %
AA	-
A	0.5
B	1.0
C	3.0
D	10.0
E	30.0
F	50.0
G	70.0
H (1)	100.0

(1)   Financial institutions must write of any loan six months after its initial classification as an H loan.

Loans and advances of up to R$10,000 may be classified by the method used by the financial institution itself or the arrears criteria, described above. Classifications should be at least level A, according to the Central Bank of Brazil.

Financial institutions must make their lending and loan classification policies available to the Central Bank of Brazil and their independent accountants. They are also required to submit information relating to their loan portfolio to the Central Bank of Brazil, together with their financial statements. This information must include:

·

a breakdown of the business activities and nature of borrowers;

·

maturities of their loans; and

·

amounts of rescheduled, written-off and recovered loans.

The Central Bank of Brazil requires authorized financial institutions to compile and submit information on the portfolio of loans and advances.

Exclusivity in loans and advances to clients

As stipulated in Circular No. 3,522/11 of the Central Bank of Brazil, it is prohibited for financial institutions provide services and loans from entering into agreements, contracts or other arrangements that prevent or restrict the ability of their clients to access loans and advances offered by other institutions, including

payroll-deductible loans, aiming to increase competition among credit providers and prevent exclusivity agreements between state-owned banks and government bodies with respect to payroll-deductible loans.

Debit balance of the credit card bill

Through CMN Resolution No. 4,549/17, the Central Bank of Brazil started regulating the financing of the debit balance of the credit card bill and other postpaid instruments, not settled in full at maturity, as a result, credit card administrators were no longer allowed to finance clients’ outstanding balances through revolving credit for more than a month.

CMN Resolution nº 4,882/20 stipulates that in case of a delay in the payment or settlement of obligations related to these shares, certain charges may be charged exclusively such as remunerative interest, fine; and late payment interest. It is prohibited to charge any other remuneration or arrears charges for late payment or settlement of overdue obligations related to loan operations.

Overdraft Use

In April 2018, the Self-Regulation Council of the FEBRABAN – Federação Brasileira de Bancos (Brazilian Federation of Banks), published Regulatory Standard No. 19/18 (Regulatory Standard on the Conscious Use of Overdraft), with new guidelines to promote and stimulate the proper use of overdraft facilities.

Among the Regulatory Standard No. 19/18 main guidelines, we highlight that: (i) financial institutions which have signed the regulatory standard shall, at any time, provide more advantageous conditions to the consumer to settle his overdraft balance, including the possibility of installment payments; (ii) if the consumer uses more than 15% of the overdraft limit available during 30 consecutive days, and as long as the value is above R$200.00, the financial institution shall proactively offer to the consumer alternatives for the settlement of the balance; and (iii) financial institutions shall promote financial guidance related to the overdraft, especially with respect to its use in emergency situations and on a temporary basis.

In November 2019, the CMN published Resolution No. 4,765/19, as amended, which provides for overdrafts granted by financial institutions for cash deposit accounts. This Resolution sets forth that the interest rates charged on the amount used are limited to 8% per month.

Brazilian Clearing System (Sistema de Pagamentos Brasileiro, or “SPB”)

The SPB was regulated and restructured under Law No. 12,865/13. These regulations are intended to streamline the system by adopting multilateral clearing and boost security and solidity by reducing systemic default risk and financial institutions’ credit and liquidity risks.

SPB comprises the entities, systems and procedures related to the processing and settlement of transactions of transfers of funds, operations with foreign currency or with financial assets and securities. The subsystems in the SPB are responsible for maintaining security mechanisms and rules for controlling risks and contingencies, loss sharing among market participants and direct execution of custody positions of contracts and collateral by participants. In addition, clearing houses and settlement service providers, as important components of the system, set aside a portion of their assets as an additional guarantee for settlement of operations.

Currently, responsibility for settlement of a transaction has been assigned to the clearinghouses or service providers responsible for it. Once a financial operation has been submitted for clearing and settlement, it generally becomes the obligation of the relevant clearinghouse and/or settlement service provider to clear and settle, and it is no longer subject to the risk of bankruptcy or insolvency on the part of the market participant that submitted it for clearing and settlement.

CMN Resolution No. 4,952/21 defines the activities of the clearing and payment (settlement) chambers and service providers under the Brazilian Payments System, in order for the SPB to be structured in accordance with principles that ensure the safety, efficiency, integrity and reliability of the clearing and payment (settlement) chambers and service providers that operate in it.

The Central Bank of Brazil and CVM have the power to regulate and supervise the SPB. The only members of the SPB are institutions of payments and payment arrangements that have high financial volumes. These volumes accumulated in the last 12 months are equivalent to R$500.0 million in total value of transactions and 25 million transactions, in the case of payment arrangements.

BCB Resolution No. 80/21, as amended, regulates the establishment and operation of payment institutions, establishing the parameters for authorization requests made by these institutions to operate and provide payment services by other institutions authorized to operate by the Central Bank of Brazil and BCB Resolution No. 81/21 regulates the processes of authorization related to the operation of payment institutions and to the provision of services of payment by other institutions authorized to operate by the Central Bank of Brazil.

It is worth mentioning that, in March 2022, the Central Bank of Brazil edited BCB Resolution No. 205/22, amending BCB Resolution No. 81/22 in order to include the possibility: (i) of investment funds holding qualified participation in payment institutions; and (ii) that the provisions applicable to the individual or legal entity holding a qualified holding provided for by BCB Resolution No. 81/21 also cover the shareholders of the investment fund who are effectively authorized to conduct their operations, in addition to preventing the possibility of an investment fund being a controller, or a member of a control group, of a payment institution.

BCB Resolution nº 150/21 provides rules about the BR Code, a rapid response code standard (QR Code) to be used by the payment arrangements, which must be offered in a standardized manner, in order to facilitate the interoperability, the internationalization and increased efficiency of retail payments.

The Pix was instituted and regulated by BCB Resolution No. 01/20, and BCB Resolution No. 79/21 enabled the implementation of features for Pix, such as the permission to associate the corporate name to the Pix token, change of details on Pix avoiding exclusion in the case of rectification and threshold amount limiting the number of transactions that can be resent or received by end users.

BCB Resolution No. 195/22, as amended, establishes the Instant Payments Systems (SPI) and the Instant Payment Account (PI Account), approving their respective regulations. SPI came into operation on November 3, 2020, with the possibility of gradual availability of system features, including in relation to the hours of operation.

In March 2022, BCB Normative Instruction No. 243/22 was edited, which discloses procedures to be observed for direct participation in the SPI, for the opening of the Instant Payments Account (PI Account). and sets the maximum time limits for validation and settlement of instant payment orders.

Pix Cobrança, the function that consists in the possibility of the recipient user managing and receiving, in a facilitated manner, collections related to immediate payments and payments with maturity, was included in the regulation by BCB Resolution No. 30/20, in accordance with the deadlines for implementation provided for by BCB Normative Instruction No. 43/20, as amended by Normative Instructions No. 58/20, No. 71/21 and No. 87/21.

The procedures necessary for accession to the PIX by institutions permitted are laid down in BCB Normative Instruction No. 2,291/22.

BCB Normative Instruction No. 243/22 governs the procedures to be observed for direct participation in the SPI, for the opening of the Instant Payments Account (PI Account), under the same terms as the Normative Instruction revoked. In addition, this Resolution has set the maximum time limits for validation and settlement of instant payment orders, which is provisioned in the Regulation annexed to BCB Resolution No. 195/22. Furthermore, on December 9, 2022, BCB Normative Instruction No. 200/22, as amended by BCB Resolution No. 200/22 was issued, which establishes the operational procedures for the collection and for the execution of the reimbursement of operational costs for each Pix for the purpose of withdrawal or exchange settled outside the SPI and establishes the format, periodicity and information to be provided by Pix participants on these transactions.

Pix participants can also establish maximum value limits for initiating a Pix, for the purpose of purchase or transfer, by transactional account, which must be per transaction and per period, with the possibility of

differentiating the limit established for the day period and for the night period, according to BCB Normative Instruction No. 331/22, as amended by Normative Instruction No. 341/22.

In October 2021, BCB Normative Instruction No. 171/21 was edited, disclosing operational limits and terms for the scheduled and efficient entry of interfaces dedicated to sharing the initiation service of the Pix payment transaction in Open Banking.

Later, in December 2021, BCB Resolution No. 177/21 was issued, as amended by BCB Resolution No. 270/22, which approved the Penalty Manual for Pix, reformulating the distribution of punishable conduct and establishing penalties for participants who fail to adopt essential security mechanisms in the implementation of applications, Application Programming Interfaces (APIs), and any other systems related to Pix that could significantly compromise the arrangement's security or the security and privacy of user data.

In parallel with BCB Resolution No. 177/21, BCB Resolution No. 176/21 was also issued, amending the Regulation attached to BCB Resolution No. 1/20, which governs the operation of the Pix payment arrangement. The aim is to adjust provisions on penalties to make the Central Bank of Brazil's actions even more effective in the face of irregular activities by participants.

Special Temporary Administrative, Intervention and Extrajudicial Liquidation Regimes – Under Law No. 6,024/74

Intervention

The Central Bank of Brazil will intervene in the operations and management of any financial institution not controlled by the Federal Government if the institution:

·

suffers losses due to mismanagement, putting creditors at risk;

·

repeatedly violates banking regulations; or

·

is insolvent.

Intervention may also be ordered upon the request of a financial institution’s management and may not exceed 12 months. During the intervention period, the institution’s liabilities are suspended in relation to overdue obligations, maturity dates for pending obligations contracted prior to intervention, and liabilities for deposits in the institution existing on the date intervention was ordered.

Administrative liquidation

The Central Bank of Brazil will liquidate a financial institution if:

·

the institution’s economic or financial situation is at risk, particularly when the institution ceases to meet its obligations as they fall due, or upon the occurrence of an event that could indicate a state of bankruptcy;

·

management commits a material violation of banking laws, regulations or rulings;

·

the institution suffers a loss that subjects its unsecured creditors to severe risk; or

·

upon revocation of the authorization to operate, the institution does not initiate ordinary liquidation proceedings within 90 days, or, if initiated, the Central Bank of Brazil determines that the pace of the liquidation may impair the institution’s creditors.

As a consequence of administrative liquidation:

·

lawsuits pleading claims on the assets of the institution are suspended;

·

the institution’s obligations are accelerated;

·

the institution may not comply with any liquidated damage clause contained in unilateral contracts;

·

interest does not accrue against the institution until its liabilities are paid in full; and

·

the limitation period of the institution’s obligations is suspended.

The Central Bank of Brazil may end the extrajudicial settlement of a financial institution, in the following cases:

·

full payment of unsecured creditors;

·

change of the institution’s scope to an economic activity that is not part of the SFN;

·

transfer of the institution’s control;

·

conversion into an ordinary settlement; and

·

sale/loss of the institution’s assets, upon its completion and the distribution of the proceeds among the creditors, even if the debts are not fully paid; or

·

absence of liquidity or difficult completion of the institution’s remaining assets, as recognized by the Central Bank of Brazil.

Temporary Special Administration Regime

The Temporary Special Administration Regime, known as (RAET), is a less severe form of Central Bank of Brazil intervention in financial institutions, which allows institutions to continue to operate normally. RAET may be ordered in the case of an institution that:

·

repeatedly makes transactions contravening economic or financial policies under federal law;

·

faces a shortage of assets;

·

fails to comply with compulsory deposit rules;

·

has reckless or fraudulent management; or

·

has operations or circumstances requiring an intervention.

Credit Guarantee Fund (Fundo Garantidor de Crédito)

In the case of liquidation of a financial institution, employees’ wages, indemnities and tax claims have the highest priority among claims against the bankrupt institution. In November 1995, the Central Bank of Brazil created the Credit Guarantee Fund (FGC) to guarantee the payment of funds deposited with financial institutions in case of intervention, administrative liquidation, bankruptcy, or another state of insolvency. Members of the FGC are financial institutions that accept demand, time and savings deposits as well as savings and loans associations. The FGC is funded principally by mandatory contributions from all financial institutions based in Brazil accepting deposits from clients.

The FGC is a deposit insurance system that guarantees a certain maximum amount of deposits and certain credit instruments held by the same client against a financial institution (or against member financial institutions of the same financial group). The liability of the participating institutions is limited to the amount of their contributions to the FGC, with the exception that in limited circumstances, if FGC payments are insufficient to cover insured losses, the participating institutions may be asked for extraordinary contributions and advances. The payment of unsecured credit and client deposits not payable under the FGC is subject to the prior payment of all secured credits and other credits to which specific laws may grant special privileges.

The maximum amount of the guarantee provided by the FGC as stipulated by the CMN at the moment.is R$250,000.00, maintained until the present date.

CMN Resolution No. 4,653/18 regulated an additional monthly contribution to be collected when the Reference Value is 4 times higher than the Adjusted Shareholders’ Equity. In November 2019, the CMN amended Resolution No. 4,764/19, increasing the amount of the additional contribution and stating that such contribution shall be collected as of July 2020.

Central Bank of Brazil enacted BCB Resolution No. 102/21, which revoked Circular No. 3,915/18 establishing the new obligation of providing information to the FGC by financial institutions, whereby these institutions should have systems and controls that can produce and supply such information in up to two working days in an electronic file with various data listed in the Circular.

Internal compliance procedures

All financial institutions must have in place internal policies and procedures to control:

·

their activities;

·

their financial, operational and management information systems; and

·

their compliance with all applicable regulations.

The board of executive officers of a financial institution is responsible for implementing an effective structure for internal controls by defining responsibilities and control procedures and establishing corresponding goals and procedures at all levels of the institution. The board of executive officers is also responsible for verifying compliance with all internal procedures.

Restrictions on foreign investment

The Brazilian Constitution allows foreign individuals or companies to invest in the voting shares of financial institutions based in Brazil only if they have specific authorization from the Brazilian government, declaring that the participation of foreign capital is in the interest of the Brazilian government by means of a presidential decree, pursuant to article 52, of the Act of Transitional Constitutional Provisions (ADCT). On September 26, 2019, the federal government published Decree No. 10,029, delegating to the Central Bank of Brazil the power to recognize the government’s interest in the viability of investment operations. On January 22, 2020, the Central Bank of Brazil issued Circular No. 3,977/20, which recognizes the shareholding in the capital of financial institutions headquartered in Brazil, of natural persons or legal entities resident or domiciled abroad, as of interest to the Brazilian Government, provided that the requirements provided for in the regulations of the Central Bank of Brazil are met, including: constitutional procedures, an operating permit, cancellation of the permit, control changes and corporate restructuring of financial institutions. Thus, the analysis regarding the shareholding of foreign capital in financial institutions will be performed in the same way as the analysis of composition of capital and shareholding, which financial institutions of national capital are submitted to. However, foreign investors that do not comply with the requirements and procedures laid down in the regulations of the Central Bank of Brazil may acquire publicly traded non-voting shares of financial institutions based in Brazil or depositary receipts representing non-voting shares offered abroad. Any investment in common shares would depend on government authorization. In January 2012, the Central Bank of Brazil authorized us to create an ADR program for our common shares in the U.S. market. Foreign interest in our share capital is currently limited to 30.0%.

Anti-money laundering regulations, banking secrecy and financial transactions linked to terrorism

Under Brazilian anti-money laundering rules and financial operations linked to terrorism, especially Law No. 9,613/98, Law No. 13,260/16, BCB Resolution No. 119/21, and Circulars No. 4,005/20 and No. 3,978/20, as amended by BCB Resolution No. 282/22, bringing the requirement of informing the address in the client identification stage required in the qualification procedures, in order to make the products offered operational; identification of the final beneficiary; and identification of the bearer in the case of operation in specie contribution. The financial institutions must, among other things:

·

keep up-to-date records regarding their clients;

·

maintain internal controls and records;

·

record transactions involving Brazilian and foreign currency, securities, metals or any other asset which may be converted into money;

·

keep records of all transactions made, products and services contracted, including withdrawals, deposits, contributions, payments, receipts and transfers of resources; and

·

keep records and include additional information about withdrawal operations, including those carried out by means of a check or money order, of individual value equal to or greater than R$50 thousand, as well as inform the Council for Financial Activities Control (COAF).

The financial institution must review transactions or proposals whose characteristics may indicate the existence of a crime and inform COAF about suspicious operations of the proposed or executed transaction and implement control policies and internal procedures. Records of multiple transactions must be kept for at

least ten years, unless the bank is notified that a CVM investigation is underway, in which case the ten-year obligation may be extended.

In addition, as provided by CVM Resolution No. 50/21 and consolidated in Central Bank of Brazil’s Circular No. 3,978/20, the qualification of the politically exposed person was extended. Politically exposed are those who hold or held prominent public positions in Brazil or abroad during the past five years and their relatives and close associates. Such individuals include heads of state and government, senior politicians and civil servants, judges or high-ranking military officers, and leaders of state-owned companies or political parties, members of the Judiciary, Legislative and Executive powers, the Federal Public Prosecutor, Minister of State, members of the Court of Auditors (at federal, state and municipal), as well as individuals who held or still hold relevant positions in foreign governments.

In 2008, the Central Bank of Brazil expanded the applicable rules for controlling financial transactions related to terrorism. Law No. 12,683/12, a more rigorous standard has been established for money laundering offenses. According to the new law, any offense or misdemeanor – and not only serious offenses, such as drug traffic and terrorism – may be deemed as a precedent to the money laundering offense. Additionally, the law expands, to a great extent, the list of individuals and legal entities subject to the control mechanisms of suspicious transactions, which need to notify the COAF, including, among them, companies providing advisory or consulting services to operations in the financial and capital markets, under the penalty of fines of up to R$20.0 million. We have an obligation to send to the regulatory or inspection agency information regarding the existence or non-existence of suspicious financial transactions and other situations that generate the need for communications.

In 2021, CVM issued Resolution No. 50/21 which, among other matters: (i) establishes and details the Policy on Prevention of Money Laundering, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction which should be adopted by the people indicated in the Resolution, and (ii) stipulates the methods and procedures of organization and internal controls, and (iii) indicates the responsibilities of the officer responsible for compliance with the standards laid down in the Resolution, as well as the responsibilities of the entity’s senior management.

In the same year, the Central Bank of Brazil changed the procedures related to AMLTF to be adhered to by the payment institutions, in order to meet international requirements set forth under the scope of the Financial Action Task Force (FATF), which is the body responsible for establishing AMLTF standards to be adhered to by the countries of the G20. Accordingly, in addition to the AMLTF procedures already required, payment institutions must also adopt procedures and controls to confirm the client’s identification and implement AMLTF risk management systems. CVM Resolution No. 50/21 which also replaced Normative Instruction No. 617/19, states the standards of AMLTF, with definition of the functions of the responsible officer, definition of the stages linked to conducting the policy of getting to know your client and greater details on the warning signs to be monitored, and the points that must integrate the analysis of the operation or atypical situation detected.

Also in 2014, SUSEP established the Permanent Committee on Anti-money Laundering and Combating Terrorism Financing in the Insurance, Reinsurance, Capitalization and Private Pension Plan Markets (CPLD). The CPLD is a permanent governing body acting to prevent money laundering and curtail terrorism financing, both in connection with SUSEP and the insurance, reinsurance, capitalization and private pension plan markets.

In March 2019, Law No. 13,810/19 was enacted, which deals with the enforcement of sanctions imposed by the resolutions of the United Nations Security Council (CSNU), regulated by BCB Resolution No. 44/20 replacing Circular No. 3,942/19 since January 4, 2021, having operational clarifications of its procedures made by Normative Instruction No. 262/22.

In January 2020, the Central Bank of Brazil issued Circular No. 3,978/20, amended by BCB Resolution No. 119/21, as specified below. This Circular revoked Circular No. 3,461/09, enhancing the policy, procedures and internal controls to be adopted to give greater efficiency to the procedures practiced in the prevention of money laundering and terrorist financing. Among the main guidelines introduced by Circular No. 3,978/20, we highlight:

·

Internal risk assessment: guidelines that the regulated institutions use as subsidy, when available, the evaluations carried out by public entities of the country concerning the risk of money laundering and terrorist financing;

·

Registration of operations: maintenance of records of all operations, products and services contracted, including withdrawals, deposits, contributions, payments, receipts and transfers of resources, including the operations carried out in the context of the institution itself, indicating information enabling the identification of the parties of each operation and origin and destination of resources in cases of payment transactions, receipts and transfer of resources;

·

Operations in kind: a guideline was included requiring the inclusion of the identity of the sender where operations involving resources in kind of individual value exceed R$2 thousand;

·

Procedures to get to know clients: enhancement and inclusion of new procedures destined to get to know clients, in order to understand the identification, qualification and classification of the client compatible with the risk profile and nature of the business relationship, in addition to the possibility, if necessary, of cross-checking information collected with those available on databases of public or private character. These procedures of identification and qualification shall also be adopted for managers of corporate clients and representatives of clients, compatible with the function exercised;

·

Politically Exposed People: expansion of the group of people characterized as politically exposed to the Executive, Legislative and Judicial Powers, the Public Attorney’s Office and, in terms of state companies, at federal, state and municipal levels;

·

Guidelines for hiring: inclusion in the AMLTF policies of guidelines for the selection and hiring of employees, partners and service providers considering the risk of money laundering and terrorist financing;

·

Relationship with third parties: inclusion of forecast that if the institution establishes a business relationship with third parties not subject to the operating permit from the Central Bank of Brazil, the institution’s access to the identification of the final recipients of resources for purposes of the AMLTF must be stipulated in the contract; and

·

Monitoring procedures: inclusion of specific situations to the non-exhaustive list of operations that, considering the parties involved, the values, the forms of implementation, the instruments used or the lack of economic or legal basis, may establish the existence of solid evidence of suspected money laundering or terrorist financing.

BCB Resolution No. 119/21 regulated new themes, with the objective of improving some regulatory points, in order to enable adequate and effective compliance with the rules established by Circular No. 3,978/20 of the Central Bank of Brazil, which are:

·

Requirement of the address information in the client identification stage: obtaining information from the client’s place of residence, in the case of a natural person, or from the place of the head office or branch, in the case of a legal entity, is now only required in the client’s qualification procedures, in order to make it possible to operate some of the products offered;

·

Identification of the final beneficiary: in order to conform to Circular No. 3,978/20 to the CVM regulations on AMLTF, some exceptions have been made to the need to identify the final beneficiary. Thus, except for the need to identify the final beneficiary, for example (i) legal entities characterized as an open company, non-profit entities and cooperatives; (ii) the investment funds registered in the CVM, constituted in the form of a closed condominium, the quotas of which are traded on an organized market, in addition to (iii) certain non-resident investors; and

·

Identification of the holder: in the case of operation with the use of in-kind resources performed by a security and protection company, the identification of the natural person carrying the resources is not effective for AMLTF purposes, especially in view of the number of changes in the

person who actually holds the resources. In this way, BCB Resolution No. 119/21 changed the sense of considering the security and protection company as the carrier of the resources.

In August 2020, SUSEP issued Circular No. 612/20, amended by Circular No. 622/21, which provides on the policy, procedures and internal controls intended specifically for preventing and combating the crimes of money laundering or concealment of assets, rights and values, or the crimes that they can relate to, as well as preventing and combating the terrorism financing.

Anticorruption Law

In August 2013, Law No. 12,846/13 was enacted to regulate civil and administrative liability of legal entities for performing acts against public management, either domestic or foreign. Based on this legal provision, legal entities shall be strictly liable, in both the administrative and civil spheres, for the practice of harmful acts in their exclusive or non-exclusive interest or benefit.

The Decree No. 8,420/15 regulates the application of Law No. 12,846/13. Among others, it establishes the guidelines with respect to the calculation of the fines to be imposed in cases involving corruption scandals. The calculation base of the fine will be the company’s revenues, which may have “minimum” of 0.1% and “maximum” of 20%. Articles 17, 18, 19 and 20 of the Decree concern the “mid-term” of the fine, predicting “mitigating factors” and “aggravating factors”. In the first case, there are provisions on the non-consummation of the infraction, compensation for damages, level of cooperation, spontaneous communication, preparation of the program of governance and internal structure of compliance; in the second, as “aggravating factors”, it provides for the continuity of the conduct during the relevant period, any tolerance by the Board of the company, suspension of construction or public service and positive economic situation. If it is not possible to use the revenue as a parameter for the calculation of the fine, the values to be applied may be between R$6 thousand, minimum, and R$60.0 million, maximum. An additional 5% fine will be levied if within five years of the “corrupt” conduct such “corrupt” conduct is repeated.

Audit partner rotation requirements

Under Brazilian regulations, all financial institutions must:

·

be audited by an independent accounting firm; and

·

have the specialist in charge, officer, manager or audit team supervisor periodically replaced without the need to change the independent auditor firm itself. Rotation must take place after five fiscal years at most and replaced professionals may be reintegrated three years later. Terms of responsible specialists, officers, managers or audit team supervisors begin on the day the team begins work on the audit.

Each independent accounting firm must immediately inform the Central Bank of Brazil of any event that may materially adversely affect the relevant financial institution’s status.

According to BCB Resolution No. 130/21, payment institutions that are registered as publicly-held companies and are conglomerate leaders classified within Segment S1, S2 or S3 should constitute a statutory body called the Audit Committee, which will be responsible for the fulfillment of the attributions and responsibilities of the Resolution.

For the entities regulated by SUSEP, the applicable standards determine the replacement of the actuary and members responsible for the independent accounting audit, every five fiscal years (Article 107 of CNSP Resolution No.432/21). According to Article 119, VIII, of aforementioned CNSP Resolution No. 432/21, amended by Resolution No. 448/22, both revoked Resolution No. 321/15, the member responsible for the independent accounting audit is the technical responsible, officer, manager, supervisor or any other member in a management function that is a member of the team responsible for independent accounting audit work. A member responsible for the independent accounting audit can only return three years after being replaced.

For the entities regulated by ANS, the applicable standards in effect since 2016 determine that the professional responsible for signing the auditors’ report should change at least every five fiscal years, requiring a minimum interval of three years from its replacement.

The members of the Board of Directors, elected in the form of Article 141, paragraph 4 of the Brazilian Corporate Law, will have veto rights, provided that it is in a substantiated manner, the appointment or removal of the independent accounting firm.

Auditing requirements

Because we are a financial institution and registered with the local stock exchange, we are required to have our financial statements, prepared in accordance with BR GAAP, audited every six months, applicable to institutions authorized to operate by the Central Bank of Brazil. Quarterly financial information filed with the CVM is also subject to review by independent auditors. Additionally, as required by CMN Resolution No. 4,818/20, we are required to publish annual consolidated financial statements prepared in accordance with IFRS, accompanied by the independent auditors’ report and the management report on social business and the main administrative facts for the period.

Resolution No. 4,818/20 consolidates the general criteria for the preparation and disclosure of financial statements and other institutions authorized to operate by the Central Bank of Brazil, with the exception of the managers of consortium and payment institutions. These institutions must draw up and publish annual financial statements relating to the fiscal year, and semiannual, relating to the six months ended June 30 and December 31, which are: (i) balance sheet; (ii) income statement; (iii) comprehensive statement of income; (iv) statement of cash flows; and (v) statement of changes in stockholders’ equity.

In addition, in December 2020, the CMN enacted Resolution No. 4,877/20 which contains provisions on the general criteria for the measurement and recognition of social and labor obligations by institutions authorized to operate by the Central Bank of Brazil (except consortium managers and payment institutions). With this resolution, the authorized institutions are obliged to recognize as a monthly liability, when drawing up trial balance or balance sheets, the values due on the portions of the results of the period allotted or to be allotted to employees, managers or to funds and assistance and other obligations with employees.

The independent auditors must also declare to the audited company’s management that their provision of these services does not affect the independence and objectivity required for external auditing services.

CMN issued CMN Resolution No. 4,910/21, which revoked Resolution No. 3,198/04, establishing that financial institutions and other institutions authorized to operate by the Central Bank of Brazil that (i) are registered as an open company; (ii) are leaders of a prudential conglomerate classified in Segment 1 (S1), in Segment 2 (S2) or in Segment 3 (S3), according to specific regulations; or (iii) meet the criteria laid down in the specific regulations for the framework in S1, S2 and S3, in which they must constitute a statutory body called “audit committee”.

This resolution defined the minimum requirements to be observed by financial institutions when electing members for the Audit Committee, establishing the composition, mandate, and duties.

The Audit Committee is responsible for recommending to the Board of Directors which independent accounting firm to engage, reviewing the company’s financial statements, including the notes thereto, and the auditors’ opinion prior to public release, evaluating the effectiveness of the auditing services provided and internal compliance procedures, assessing Management’s compliance with the recommendations made by the independent accounting firm, among other matters. Our Bylaws were amended in December 2003 to stipulate the existence of an Audit Committee. In May 2004, our Board of Directors approved the internal regulations for the Audit Committee and appointed its first members. Our Audit Committee has been fully operational since July 2004.

The audit committee shall keep at the disposal of the Central Bank of Brazil and of the board of directors the audit committee’s report for a minimum period of five years, counted from its preparation. In addition, institutions should disclose, together with their individual and consolidated, semi-annual and annual financial statements, a summary of the audit committee’s report, showing the main information contained in this document.

Operations in other jurisdictions

We have branches and subsidiaries in several other jurisdictions, such as New York, Flórida, London, Grand Cayman Islands, Hong Kong, Mexico, Guatemala and Luxembourg. The Central Bank of Brazil supervises Brazilian financial institutions’ foreign branches, subsidiaries and corporate properties, and prior approval from the Central Bank of Brazil is necessary to establish any new branch, subsidiary or representative office or to acquire or increase any interest in any company abroad. In any case, the subsidiaries’ activities should be complementary or related to our own principal activities. In most cases, we have had to obtain governmental approvals from local central banks and monetary authorities in foreign jurisdictions before commencing business. In each jurisdiction in which we operate, we are subject to supervision by local authorities.

Asset management

In August 2004, the CVM issued Instruction No. 409/04, consolidating all previous regulations applicable to fixed-income asset funds and equity mutual funds. Prior to this ruling, fixed-income asset funds were regulated by the Central Bank of Brazil, and equity mutual funds were regulated by the CVM.

In December 2014, the CVM enacted Instruction No. 555/14, which replaced Instruction No. 409/04, in order to improve electronic communications, rationalize the volume, content and manner of disclosing information, and to make investment limits less rigid for certain financial assets, particularly foreign financial assets. Additionally, CVM Instruction No. 555/14, as amended, addresses the following issues: (i) the framework for setting up funds without the need for executing an adhesion contract and the checking of the adequacy for investment in the fund to the client’s profile in connection with funds investing over 95.0% of its shareholders’ equity in federal public debt bonds or equivalent risky securities; (ii) barring interest-bearing compensation that would jeopardize the independence of the asset management; (iii) providing more transparency to the distribution policy; (iv) improving performance fee regulation; and (v) providing safer rules for investments in foreign assets. In 2020, CVM Instruction No. 555/14 was amended by CVM Resolution No. 03/20 and No. 162/22, with flexibility and an update of the rules on issuance of BDRs.

Pursuant to CVM limits and our Bylaws, our investment funds must keep their assets invested in securities and types of trades available in the financial and capital markets.

Securities, as well as other financial assets which are an integral part of the investment fund portfolio, should be duly registered in the registration system with a custodian or central depository, in all cases, with institutions duly authorized by the Central Bank of Brazil or the CVM to carry out such activities, in their respective areas of competence.

In addition to the limitations specified in each financial investment fund’s bylaws, they may not:

·

invest more than 10.0% of their shareholders’ equity in securities of a single issuer, if that issuer is: (i) a publicly-held institution; or (ii) another investment fund;

·

invest more than 20.0% of their shareholders’ equity in securities issued by the same financial institution authorized to operate by the Central Bank of Brazil (including the fund administrator);

·

invest more than 5.0% of their shareholders’ equity if the issuer is an individual or legal entity that is not a publicly-held company or financial institution authorized to operate by the Central Bank of Brazil; and

·

be directly exposed to crypto assets. The CVM recommends avoiding indirect exposure until the regulator issues a final rule on the matter.

There are no limits when the issuer is the government. For the purposes of these limits, the same issuer means the controlling company, companies directly or indirectly controlled by the parent and its affiliates, or companies under common control with the issuer.

CVM Instruction No. 555/14, as amended, also states the limits to funds hold financial assets traded abroad in their portfolios, as follows: (i) no limits, for funds classified as “Fixed Income – Foreign Debt”, funds exclusively intended for professional investors that include in their denomination the suffix “Foreign Investment”, and certain funds exclusively intended for qualified investors; (ii) up to 40.0% of its shareholders’

equity for funds exclusively intended for qualified investors that do not follow certain provisions set forth in this Instruction; and (iii) up to 20.0% of its shareholders’ equity for general public funds.

Broker and dealer firms

Broker and dealer firms are part of the SFN and are subject to CMN, Central Bank of Brazil and CVM regulation and supervision. Brokerage and distribution firms must be authorized by the Central Bank of Brazil and are the only institutions in Brazil authorized to trade on Brazil’s stock exchanges. Both brokers and dealers may act as underwriters for public placement of securities and engage in the brokerage of foreign currency in any exchange market.

Brokers must observe B3 rules of conduct previously approved by the CVM, and must designate an executive officer responsible for observance of these rules.

Broker and dealer firms may not:

·  with few exceptions, execute transactions that may be characterized as the granting loans to their clients, including the assignment of rights;

·  collect commissions from their clients related to transactions of securities during the primary distribution; or

·  acquire assets, including real estate properties, which are not for their own utilization, with certain exceptions.

Broker and dealer firms’ employees, managers, partners, controlling and controlled entities may trade securities on their own account only through the broker they are related to.

In August 2019, the CMN amended Resolution No. 4,750/19, changing the rules applicable to brokers and distributors. The new rule provides that these societies can make loans of assets of its equity to its clients to exclusively use the goods in the provision of guarantees for operations, provided that the requirements of said Resolution are met.

In March 2022, CMN Resolution No. 5,008/22 totally revoked Resolution No. 4,871/20, which amended the regulation applicable to brokers and distributors, allowing their role as issuers of electronic money. The new Resolution provisions on the constitution, organization and operation of securities dealers and brokers (CTVM) and of securities’ distributors and brokers (DTVM).

Internet brokerage services

The CVM approved regulations on Internet brokerage activities, which may be carried out only by registered companies. Brokers’ website must contain details of their systems, fees, security and procedures for executing orders. They must also contain information about how the market functions generally and the risks involved with each type of investment offered.

Brokers that carry out transactions over the Internet must guarantee the security and operability of their systems, which must be audited at least twice a year.

Leasing

The basic legal framework governing leasing transactions is established by Law No. 6,099/74, as amended (the Leasing Law) and related regulations issued periodically by the CMN. The Leasing Law provides general guidelines for the incorporation of leasing companies and the business activities they may undertake. The CMN, as the regulator of the Financial System, is responsible for issuing Leasing Law related regulations and overseeing transactions made by leasing companies. Laws and regulations issued by the Central Bank of Brazil for financial institutions in general, such as reporting requirements, capital adequacy and leverage regulations, asset composition limits and treatment of doubtful loans, are also applicable to leasing companies.

The accounting criteria applicable to leasing operations contracted by consortium managers and by payment institutions authorized to operate by the Central Bank of Brazil are set out in BCB Resolution No. 178/22.

Insurance, health and pension plans regulation

Principal regulatory agencies

National Private Insurance Council (CNSP)

The National Private Insurance Council (CNSP) is the agency responsible for establishing the guidelines and standards of private insurance policy. The agency is composed of representatives of the Ministry of Finance, the Ministry of Justice, the Ministry of Social Security and Social Assistance of the Superintendence of Private Insurance, the Central Bank of Brazil and the CVM.

In addition to laying down the guidelines and standards of private insurance policy, it is the responsibility of the CNSP:

·

to regulate those exercising activities, subordinate to the National Private Insurance System, as well as the application of penalties;

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to establish the general characteristics of insurance, open private pension, capitalization and reinsurance contracts;

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to establish the general guidelines of reinsurance operations; and

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to prescribe the criteria for the establishment of Insurance Companies, of Capitalization, Open Private Pension Entities and Reinsurers.

Private Insurance Superintendence (SUSEP)

SUSEP is responsible for implementing and overseeing CNSP’s policies and ensuring compliance with such policies by insurance companies, insurance brokers and insured individuals. SUSEP is linked to the Ministry of Finance and was created by Decree-Law No. 73 of November 1966.

Thus, for insurers to operate, they need government approval, as well as specific approval from the SUSEP to commercialize each of their products, where they may underwrite policies either directly to consumers or through qualified brokers (Article 13 and paragraph 2 of Law No. 4,594/64).

SUSEP is responsible for:

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Supervising the constitution, organization, functioning and operation of insurance companies, of capitalization, open private pension entities and reinsurers;

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Complying with and enforcing the deliberations of the CNSP and performing the activities delegated by it;

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Acting in order to protect the acquisition of popular savings that are made through the operations of insurance, open private pension, and of capitalization and reinsurance;

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Promoting the improvement of institutions and operational instruments;

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Promoting the stability of the markets under its jurisdiction, ensuring their expansion and the operation of the entities that operate in them;

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Ensuring the liquidity and solvency of companies that make up the insurance market; and

·

Ensuring the protection of consumer interests of the markets supervised.

National Supplemental Health Agency (ANS)

The ANS is a municipality linked to the Ministry of Health, with operations throughout Brazil, as an agency of regulation, standardization, control and supervision of activities that ensure the qualification of health care in the supplemental health sector.

The main initiatives of ANS are to stimulate the quality of the supplemental health sector and encourage programs to promote and prevent diseases in the sector in which it operates.

To fulfill its objectives, the following are incumbent upon the ANS:

·

regulation of the supplemental health care, creating general policies and guidelines, actions to standardize and foment actions that aim to protect the public interest and the sustainability of the supplemental health care market;

·

qualification of the supplemental health care, creating policies, guidelines and actions that seek, among others the qualification of the sector, in relation to the regulated market; and

·

institutional articulation, creating policies, general guidelines and actions to optimize the internal and external institutional relations enabling the effectiveness of the regulatory process.

Insurance Regulation

The Brazilian insurance business is regulated by Decree-Law No. 73/66, as amended, which created two regulatory agencies, the CNSP and SUSEP. SUSEP is responsible for implementing and overseeing CNSP’s policies and ensuring compliance with such policies by insurance companies, insurance brokers and insured individuals. Insurance companies require government approval, as well as specific approval from SUSEP to offer each of their products. Insurance companies may underwrite policies both directly to consumers and through qualified brokers (Article 13 of Law No. 4,594/64).

Insurance companies must set aside reserves in accordance with CNSP criteria. Investments covering these reserves must be diversified and meet certain liquidity, solvency and security criteria, rules for which were consolidated by CNSP Resolution No. 321/15, revoked by CNSP Resolution No. 432/21, later amended by CNSP Resolution No. 448/22. Insurance companies may invest a substantial portion of their assets in securities. As a result, insurance companies are major investors in the Brazilian financial markets and are subject to CMN rules and conditions for their investments and coverage of technical reserves.

Insurance companies may not, among other activities:

·

act as financial institutions by lending or providing guarantees;

·

trade in securities (subject to exceptions); or

·

invest outside of Brazil without specific permission from the authorities.

Insurance companies must operate within certain retention limits approved by SUSEP pursuant to CNSP rules. These rules reflect the economic and financial situation of insurance companies and the conditions of their portfolios. Insurers must also meet certain capital requirements as provided by SUSEP regulations.

Under Complementary Law No. 126/07, the ceding party (local insurer or reinsurer) must offer local reinsurers preference when contracting reinsurance or retrocession in the percentage of 40% of risks ceded.

The Complementary Law also places more severe restrictions on ceding risk to foreign reinsurance companies and contracting of insurance abroad. Insurance companies must reinsure amounts exceeding their retention limits.

Since CNSP Resolution No. 168/07 was amended by CNSP Resolution No. 353/17, it does not require the insurance company to utilize a minimum number of local reinsurers. However, in accordance with Article 15 of the CNSP Resolution No. 168/07, the insurance company needed to give preference to local reinsurers in at least 40% of the assignment of reinsurance agreements to each automatic or optional contract. In addition, as per CNSP Resolution No. 168/07, there were no more limits on the transference of risks by insurers to companies that belong to its financial conglomerate. Since its amendment by CNSP Resolution No. 353/17, it was established that reinsurance and retrocession operations within the same economic conglomerate should "ensure the effective transfer of risk between the parties" and "take place under conditions of fair competition."

Subsequently, Resolution CNSP No. 168/07 was revoked by Resolution CNSP No. 451/22, regulated by Circular No. 683/22, which provides for the transfer and acceptance of reinsurance and retrocession operations and their intermediation, coinsurance operations, foreign currency operations and insurance contracts abroad. These rules provide for new rules on preferential offer to local reinsurers, indicating that, for the purposes of fulfilling the preferential offer, the insurance company should conduct formal consultation with one or more local reinsurers of their free choice, according to the limits provided for in the legislation.

Resolution No. 432/21, amended by the Resolution No. 448/22, as well as Circular No. 648/21, provides for regulating technical provisions, assets which reduce the need for coverage of technical provisions, risk capital, adjusted shareholders’ equity, solvency regularization plans, retention limit, criteria for investments, accounting standards, accounting and independent actuarial audits, and Audit Committee applicable to insurance companies, open pension fund entities (EAPCs), capitalization companies and reinsurers.

Insurance companies are exempt from ordinary financial liquidation procedures in case of bankruptcy, and instead follow the special procedure administered by SUSEP. Resolution CNSP No. 444/22 provides for preventive prudential measures aimed at preserving the stability and soundness of the National Private Insurance System, of the National Capitalization System and the Supplementary Pension System and ensuring the solvency, liquidity and regular functioning of those supervised. Financial liquidation may be either voluntary or compulsory.

As was already the case in relation to entities subject to CMN, SUSEP issued rules in December 2008 with specific internal controls for preventing and fighting money laundering crimes. These rules include a series of provisions for notifying proposed transactions with politically exposed individuals and suppression of terrorist financing activities. These rules were subsequently amended and consolidated. CNSP Resolution No. 416/21 and SUSEP Circular No. 622/21, which amended by Circular No. 612/20, are current in force.

Resolution No. 383/20 issued by CNSP in March 2020, later amended by Resolution No. 454/22, established that insurance companies, EAPCs, capitalizations companies and local reinsurers must record their operations of insurance, open supplementary pension plan, capitalization and reinsurance, as the case may be, in the registration system (i) previously approved by SUSEP; and (ii) managed by a registration entity accredited by SUSEP in order to increase the control of the operations carried out by these companies.

There is currently no restriction on foreign investment in insurance companies.

Health insurance

Private health insurance and health plans are regulated by Law No. 9,656/98, as amended, which we refer to as the “Health Insurance Law”, containing general provisions applicable to health insurance companies, in accordance with Law No. 10,185/01, and the general terms and conditions of agreements entered into between health insurance companies and their clients.

The ANS is responsible for regulating and supervising supplemental health services provided by health insurance companies pursuant to directives set forth by the Supplemental Health Council (Conselho de Saúde Suplementar).

Until 2001, SUSEP had authority over insurance companies, which were authorized to offer private health plans. Since 2001, pursuant to ANS regulations and supervision, only operators of private health plans may offer such plans. We created Bradesco Saúde in 1999 to fulfill this requirement. However, in accordance with the terms of article 1, paragraph 5 of Law No. 10,185/01, the insurance companies specializing in health insurance will remain subject to the rules on the application of assets guaranteeing the technical provisions issued by CMN.

Private pension plans

Open pension plans are subject, for purposes of inspection and control, to the authority of the CNSP and the SUSEP, which are under the regulatory authority of the Ministry of Finance. The CMN, CVM and Central Bank of Brazil may also issue regulations pertaining to private pension plans, particularly related to assets guaranteeing technical reserves.

Private pension entities must set aside reserves and technical provisions as collateral for their liabilities.

EAPCs and insurance companies have been allowed to create, trade and operate investment funds with segregated assets since January 2006. Notwithstanding the above, certain provisions of Law No. 11,196/05 will only become effective when SUSEP and CVM issue regulatory texts. In September 2007, CVM issued Instruction No. 459/07, subsequently amended by Instruction No. 587/17, which addresses the setup,

management, operation and disclosure of information on investment funds exclusively related to supplementary pension fund plans. In January 2013, the CMN determined new rules to govern the application of reserves, provisions and funds of insurance companies, capitalization companies and EAPCs. In December 2019, the CMN published Resolution No. 4,769/19, changing the limits for the investment of resources addressed in Resolution No. 4,444/15. Both standards were subsequently revoked by CMN Resolution No. 4,993/22, which provides for the rules governing the investment of technical reserve resources, from provisions and funds of insurance companies, capitalization companies, open supplementary pension entities and local reinsurers, on the investments of resources required in the country to guarantee the obligations of reinsurers admitted and on the portfolio of Individual Scheduled Retirement Funds (FAPI), later amended by CMN Resolution No. 5,016/22. In turn, CNSP enacted CNSP Resolution No. 432/21, later amended by CNSP Resolution No. 448/22, revoking Resolution No. 321/15, which among various subjects, also regulates the investments by insurers, open entities of supplementary pensions plans, capitalization companies and local reinsurers.

Currently, Resolution CNSP No. 349/17 and SUSEP Circular No. 563/17, as amended by Circular No. 585/19, in addition to Supplementary Law No. 109/01, regulate the Supplementary Pension Plan activity.

Reinsurance

Insurance companies must operate with reinsurers registered with SUSEP, and may, exceptionally, contract reinsurance or retrocession operations to reinsurers not authorized when the lack of capacity of the local reinsurers is proven.

Currently, due to Decree No. 10,167/19, the Brazilian law provides that the insurer or the cooperative society may concede occasional reinsurers up to 95% of premiums ceded in reinsurance, based on the totality of its operations in each calendar year. In the same way, the local reinsurer may also concede up to 95% of the premiums issued relating to risks they have underwritten, also calculated on the basis of the totality of its operations in each calendar year. It is worth noting that some lines or insurance modalities may have greater or lesser restrictions on the percentages of premiums that may be ceded in reinsurance.

The regulation of SUSEP establishes a minimum compulsory contracting of 15% of the reinsurance ceded, with Brazilian reinsurers. In addition, it provides a limit to certain lines of up to 75%, so that a Brazilian-based insurer or reinsurer can transfer risks to related or foreign-based companies belonging to the same financial conglomerate.

Recently, CNSP Resolution No. 380/20 extended the list of people who can purchase reinsurance, including: (i) Open Supplementary Pension Fund Entity (EAPC) (Article 2, paragraph 1); and (ii) Closed Supplementary Pension Fund Entity (EFPC) and operators of private health care plans (Article 2, paragraph 2). Although it was revoked by CNSP Resolution No. 451/22, the provisions in this regard were maintained.

Taxes on our main transactions

Taxes on financial transactions (“IOF”)

On loan transactions

IOF on loans levied on loan operations have as their taxable event the delivery of the obligation amount or value or its placement available to borrowers.

Rate applicable to loans and advances of any type, including credit opening is 0.0041% per day to legal entity borrowers and 0.0082% to individual borrowers.

The IOF on loans daily rate will be charged on principal available to borrowers regarding the loans and advances, whereby:

•

for cases in which the amount of principal is determined, the IOF on loans daily rate shall not exceed the amount resulting from the daily rate applied to each principal amount, which is expected to be used for the transaction, multiplied by three hundred and sixty-five days (365);

•

for cases in which the amount of principal is not determined before the transaction (revolving credit), the values of interest and charges that will use the limits of revolving credits, will be part of

the principal amount, subject to IOF on loans rates, so that the calculation base will comprise the sum of daily outstanding debt balances calculated on the last day of each month.

Since January 2008, besides IOF on loans daily rate on the transactions mentioned above, loans and advances have been subject to IOF on loans additional rate of 0.38% irrespective of the repayment period or whether the borrower is an individual or a legal entity. This way, in loan operations with defined principal, for legal entities, IOF on loans rate shall not exceed 1.8765% and for individuals, it will not exceed a 3.373% rate, which corresponds to the result of applying the daily rate to each amount of principal stipulated for the transaction, multiplied by 365 days, plus an additional rate of 0.38% even if the loan is to be repaid by installment.

IOF on loans is levied on loan operations between individuals and legal entities domiciled in Brazil, as well as on operations whose creditor resides in Brazil, even if the debtor is located abroad. However, IOF on loans is not levied on loans where the lender is located abroad, and the borrower is in Brazil.

Insurance transactions

IOF on insurance levied on insurance operations has as its taxable event the receipt of premium. Applicable rates are as follows:

·

0.0% on: (i) reinsurance operations; (ii) operations related to mandatory insurance, linked to residential housing loans granted by an agent of the national housing system (SFH); (iii) insurance operations for export credits and international merchandise transportation; (iv) insurance operations entered into Brazil, related to the cover for risks relating to the launch and operation of the satellites Brasilsat I and II; (v) aeronautical insurance and civil liability of airlines; (vi) premiums intended to finance life insurance plans with survival coverage; and (vii) guarantee insurance;

·

0.38% of premiums paid, in the case of life insurance and similar policies, for personal or workplace accidents, including mandatory insurance for personal injuries caused by vehicles or ships or cargo to persons transported or others;

·

2.38% private health insurance business; and

·

7.38% for all other insurance transactions.

Income and social contribution taxes on income

Federal taxes on company profits include two components, income tax known as IRPJ and tax on net income, known as Social Contribution or CSLL, both calculated on the adjusted net income. Income tax charges are calculated based on a rate of 15.0% plus a surcharge of 10.0% on taxable income exceeding R$240 thousand per annum, corresponding to a combined rate of around 25.0%. Social contribution tax payable by the majority of financial institutions is calculated based on a rate of 15.0% as of January 1, 2019.

However, with the enactment of Constitutional Amendment No. 103/19, as of March 1, 2020, the banks of any kind and the development agencies began to be subject to the increased rate of 20%. On March 1, 2021, Provisional Measure No. 1,034/21 was enacted, which increases the rates for Social Contribution by 5% for the majority of financial institutions (including banks of any kind) during the period from July 1, 2021 to December 31, 2021. Provisional Measure No. 1,034/21 was converted into Law No. 14,183/21, which (i) increased to 25% the CSLL rate on banks of any kind, reduced to 20% as of January 1, 2022 and (ii) maintained the increase in the Social Contribution rate to 20% for most of the other financial institutions until December 31, 2021, which was subsequently reduced to 15%.

In 2022, however, Provisional Measure No. 1,115/22 was edited, later converted into Law No. 14,446/22, increasing until December 31, 2022: (i) from 20% to 21% the CSLL rates on banks of any kind; and (ii) from 15% to 16% for other financial institutions.

Legal entities in Brazil are taxed based on their global income, and not just the income produced exclusively in Brazil. As a result, profits, capital gains and other income obtained abroad by Brazilian entities are computed in the determination of their taxable profits on an annual basis.

As a rule, affiliates abroad will have their dividends (and not the corporate profit) taxed in Brazil at the time of effective distribution, except: (i) if they are domiciled in a tax haven or if they adopt a sub-taxation scheme, or (ii) they are treated as subsidiaries. With regard to the subsidiaries, the controller legal entities in Brazil must: (i) record in sub accounts the investment account, in proportion to the stake held, the share of the adjustment of the investment value equivalent to corporate profits (calculated before local income tax), earned by the subsidiaries, directly and indirectly, in Brazil or abroad, concerning the calendar year in which they were calculated in the balance sheet; and (ii) compute these values in their calculation base of the IRPJ and Social Contribution.

Interest paid or credited by a company based in Brazil to: (i) an addressee domiciled abroad, whether or not holding equity interest in the company paying; or (ii) an addressee resident, domiciled or incorporated in a tax haven or locality with a low or privileged tax regime are subject to the deductibility limits imposed by thin-capitalization and transfer pricing rules.

Tax deductions for any payment to a beneficiary resident or domiciled in a country with tax haven are also subject to the following: (i) identification of the actual beneficiary of the person domiciled abroad; (ii) proof of the ability of the person located abroad to complete the transaction; and (iii) documented proof of payment of the respective price and of receipt of the assets, rights, or utilization of service.

The variation in the monetary value of companies’ credit rights and obligations in Brazil due to varying exchange rates can be calculated on a cash or accrual basis. The election of the tax regime must be exercised in January of each calendar year and may only be altered during the fiscal year if there is “material variation in the exchange rate”, as published by a Finance Ministry Directive.

PIS and Cofins

Two federal taxes are imposed on the gross revenues of legal entities: PIS and Cofins. Nonetheless, many revenues, such as: dividends, equity earnings from unconsolidated companies, revenues from the sale of non-current assets (investments, fixed assets and intangible assets) and, as a general rule, export revenues paid in foreign currency are not included in the calculation base for PIS and Cofins. Revenues earned by corporations domiciled in Brazil are subject to PIS and Cofins taxes corresponding to interest on equity.

Brazilian legislation authorizes certain adjustments to the calculation base of those taxes depending on the business segment and on other aspects.

Between 2002 (PIS) and 2003 (Cofins), the government implemented a non-cumulative collection system of PIS and Cofins taxes, allowing taxpayers to deduct from their calculation basis credits originating from certain transactions. In order to offset these credits, the rates of both PIS and Cofins were substantially increased. Subsequent to the changes made to PIS and Cofins, as of May 2004, both taxes are applicable on imports of goods and services when the taxpayer is the importing company domiciled in Brazil.

Since August 2004, the PIS and Cofins rates due on financial revenues were 0.0%, including those arising from operations carried out for purposes of hedge, earned by legal entities subject to the system of non-accrual of these contributions. However, Decree No. 8,426/15 establishes that from July 2015, the rates will be restored to 0.65% regarding the PIS and 4.0% regarding the Cofins. Note that on December 30, 2022, Decree No. 11,322/22 had been published reducing the related rates to 0.33% and 2.0%, respectively, however, this Decree was revoked on January 1, 2023 by Decree No. 11,374/23, if the original wording provided for in Decree No. 8,426/15 is reestablished.

On the other hand, according to the amendments made by Decree No. 8,451/15 to Decree No. 8,426/15, the contributions to PIS and Cofins are subject to a zero tax rate, specifically in relation to financial revenues arising from: (i) monetary variation, depending on the exchange rate, of export operations of goods and services, as well as obligations incurred by the legal entity, including loans and financing; and (ii) hedge operations carried out on the stock exchange, of commodities and of futures, or in the organized OTC market. Certain economic activities are expressly excluded from the procedures of the non-accrual collection of the PIS and Cofins. This is the case of financial institutions, which shall remain subject to PIS and Cofins by the “accrued” procedures, which does not permit the discount of any credits, as provided by Article 10, paragraph I, of Law No. 10,833/03. Despite this impossibility of accrual of credits, the legislation in force enables the

exclusion of certain expenditure in the calculation by such entities of the bases of calculation of the PIS and Cofins (as is the case, for example, of the expenses incurred by the banks in financial mediation operations and expenditure on severance payments corresponding to accidents occurring in the case of private insurance companies). In such cases, the income received by the financial institutions is subject to Contribution to the PIS and Cofins at the rates of 0.65% and 4.0%, respectively.

In July 2010, the Brazilian tax authorities introduced digital tax records (Escrituração Fiscal Digital – EFD) for PIS and Cofins taxes, which must be adopted, including by financial institutions.

Compliance with the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) (Tax Compliance Laws for Foreign Accounts)

Based on the commitment to observe the laws and regulations applicable to their business, whether at national or international level, we comply with the provisions of the international treaties, FATCA and CRS, which aim to coerce tax evasion and money laundering and terrorist financing practices.

The FATCA law, ratified by Decree Law No. 8,506/15, was created by the Government of the United States of America to promote the identification of financial accounts of US taxpayers that are resident in other countries.

The CRS, established by Normative Instruction No. 1,680/16 of the Brazilian Federal Revenue, was conceived under the coordination of the Organisation for Economic Co-operation and Development (OECD), with the participation of the main countries of the world, it presents objectives aligned with the FATCA guidelines and the identification of financial accounts of taxpayers from foreign countries.

We have established Compliance standards to achieve transparency of information and adopt effective measures to control, monitor and improve existing processes, in order to meet local and international requirements.

Centralized Registration and Deposit of Financial Assets and Securities

In August 2017, the Brazilian Congress converted Provisional Measure (PM) No. 775/17, issued by the President of Brazil in April 2017, into Law No. 13,476/17. The new law consolidates the provisions on the creation of liens over financial assets and securities. On the same day, the CMN issued Resolution No. 4,593/17, as amended, to regulate the provisions set by Law No. 13,476/17 and consolidate the regulation on centralized deposits and registry of financial assets and securities issued or owned by financial institutions and other institutions authorized to operate by the Central Bank of Brazil. Resolution No. 4,593/17, as amended, presents a clearer definition of financial assets which includes, in addition to traditional financial instruments such as certificates and bank deposit receipts, credit securities subject to discount and credit card receivables. In addition, the rule establishes that the record of financial assets and securities is (i) applicable to bilateral operations (meaning operations directly with clients), with some exemptions in certain situations; and (ii) the centralized deposit is applicable to credit securities with payment obligations and securities issued by financial institutions or other institutions authorized to operate by the Central Bank of Brazil as a condition for engaging in certain negotiations and in the assumption of custody. The Central Bank of Brazil will issue regulations governing the implementation of such rules, including the creation of an electronic system for the constitution of liens and encumbrances.

In December 2020, by means of BCB Normative Instruction No. 61/20, the financial institutions and other institutions authorized to operate by the Central Bank of Brazil should inform the standardized identifier of the loan (IPOC), dealt by in Circular No. 3,953/19, as amended by BCB Resolution No. 36/20, in the registry of financial instruments representative of loan and leasing operations, including those subject to assignment of credit, chattel and portability and in the form of credit rights, in systems of registration and financial settlement of assets authorized by the Central Bank of Brazil.

b)

main aspects related to compliance with legal and regulatory obligations related to environmental and social issues by the issuer

Sustainability is one of the strategic drivers of Bradesco, because we understand that the management of environmental, social and governance (ESG or ASG in Portuguese) issues has become key to our survival and growth in an environment that is increasingly dynamic and challenging. As we seek to generate shared and long-term value for investors, employees, suppliers, clients and society, we also contribute to the sustainable development of the country.

Guidelines and governance

Our actions are guided by a set of policies and standards which incorporate best practices in sustainability management and which also govern our voluntary commitments.

Our Corporate Sustainability Policy aims to promote our sustainability goals and guide the actions related to the socio-environmental factors of our business. Other policies and rules incorporate these guidelines, consolidating the practices of social and environmental responsibility, including from a risk management perspective.

The Socio-Environmental and Climate Responsibility Standard (PRSAC) defines the main compliance procedures for the socio-environmental and climate criteria governing our business, relationships with stakeholders and the overall governance of the theme. The Social, Environmental and Climate Risk Standard establishes the scope and approach to managing these risks, covered in more detail in the section on “Social, environmental and governance criteria in business decisions”.

The main governance body presiding over the topic is the Sustainability and Diversity Committee, which includes members of the Board of Directors and of the Board of Executive Officers, including the CEO. The Committee is advised by the Sustainability Committee, an executive body composed of officers and managers of various areas, ensuring the implementation of the strategy, monitoring the execution of projects and their impact on our performance. From the perspective of socio-environmental risk, the main decision-making forums are the Executive Risk Management Committee and the Integrated Risk Management and Capital Allocation Committee.

Sustainability Strategy

Sustainability is one of the pillars of our corporate strategy and is integrated with our way of doing business and managing operations. We have defined three main pillars to promote a change agenda:

Sustainable business	Climate change	Customer Relationship
To drive businesses with a positive impact that foster socio-environmental development.	To ensure that our businesses are prepared for climate challenges, raising awareness and engaging our clients about risks and opportunities.	To promote education and financial inclusion to leverage socioeconomic development.

These strategic objectives are aligned to the 2030 Agenda of the United Nations and incorporate the commitment to contribute to the Sustainable Development Goals (SDGs), with an emphasis on six goals that we prioritize:

4 – Quality education

5 – Gender equality

8 – Decent work and economic growth

9 – Industry, innovation and infrastructure

10 – Reduced inequalities

13 – Climate action

Voluntary commitments

Our Sustainability strategy is strengthened through adherence to sector and multi-sector-based voluntary commitments. We take on and integrate voluntary commitments into our internal processes, aiming at the inclusion of ESG aspects in our practices and business. These commitments are: Global Compact, United Nations environment program (UNEP-FI), Sustainable Development Goals (SDGs), Equator Principles, Principles for Responsible Investment (PRI), Principles for Sustainable Insurance (PSI), Principles for Banking Responsibility (PRB), Women’s Empowerment Principles (WEPs), Initiative for Racial Equality (IERE), Task Force Climate-Related Financial Disclosures (TCFD), Race to Zero, Partnership for Carbon Accounting Financials (PCAF), Investors for the Climate (IPC), Glasgow financial Alliance for Net Zero (GFANZ), among many others. In 2022, Bradesco became the first Brazilian bank to sign the PRB Commitment to Health and Financial Inclusion of the UN.

Social, environmental and governance criteria to business decisions

We seek to incorporate and to constantly improve the analysis of the socio-environmental and governance criteria to the business decisions, as well as to the offer of credit, investments and insurance.

Credit

We have a governance structure, comprised of committees, policies, standards and procedures, which is intended to identify, measure, mitigate, monitor and report socio-environmental risks.

Following our guidelines of Corporate Policies for Sustainability, the area of Analysis and Control of Social and Environmental Risk conducts assessments of operations and clients, rating formulations of social and environmental risk, and monitoring of activities, in accordance with the scope and criteria set out in the Social and Environmental Risk Standard, in addition to the requirements and obligations established by the Brazilian legislation and regulations.

Part of the scope of the Standard is (the assessment of funding large projects and loans of clients who are linked to work that characterizes slave labor and/or who work in sectors with greater potential of social and environmental impact, and the assessment of the financial exposure of the activity.

We have been signatories of the Equator Principles since 2004 and we ensure that the projects funded and advised by us and that are included in these principles are developed in compliance with the legislation in force and which also adhere to supra-legal practices foreseen in the Performance Standards, of the International Finance Corporation (IFC), and Guidelines for Health, Safety and the Environment, of the World Bank: climate change, biodiversity, human rights and indigenous peoples.

Projects framed in the Equator Principles and also those in which relevant socio-environmental risks are identified are monitored periodically in order to ensure compliance with applicable standards and guidelines. In the monitoring of these projects follow up is made of the aspects of human rights, impacts on indigenous peoples, biodiversity and climate change.

Additionally, if necessary, action plans are drawn up and audit procedures are established that assist in the management and evaluation of the socio-environmental compliance of the projects.

The decision made by the Credit Executive Committee takes into account the socio-environmental risks, in addition to the other economic and financial aspects and, once the granting of loan is approved, the contracting of the operations is carried out through negotiation and insertion of socio-environmental obligations in the financing contracts. Projects that present potential socio-environmental risks are monitored periodically, with a view to comply with the aforementioned contractual obligations.

Investment

Bradesco Asset Management has a methodology of analysis of ESG factors for all modalities of assets under management, including private and public securities. In the case of private securities, the methodology considers the material themes of each sector to identify the risks and opportunities that companies face. For the public securities, the methodology considers indicators that measure the regulatory quality and the public policies for good basic services provided to the population, i.e., basic services, environmental conservation

and reduction of social inequality. Therefore, the social and environmental aspects are incorporated into Bradesco Asset Management’s business, whose mission has been to provide superior and sustainable returns in managing the investments of clients.

In 2022, Bradesco Asset Management had assets under management of R$569.2 billion, of which R$568.5 billion were evaluated to take account of ESG issues, representing 99.9% of total assets.

Bradesco Asset Management also conducts engagement activities for companies and business partners to adopt the best practices in their fields of business and annually discloses the results in the Transparency Report of the Principles for Responsible Investment (PRI), of which it is a signatory. Application of the PRI, which takes place alongside the activities of investment and relationship with Bradesco Asset Management’s stakeholders, has the following scopes and results in the following practices:

·

integration of ESG issues with the analysis and management of assets;

·

involvement of investees;

·

creation of a database of ESG information from investees;

·

training of Bradesco Asset Management professionals in ESG issues and its importance to investment activities;

·

institutional participation of Bradesco Asset Management in forums and work groups related to the issue of responsible investment; and

·

the flow of information from reporting on the increased application of the principles in the Organization to the PRI and Bradesco Asset Management.

Bradesco Asset Management has funds with strategies dedicated on ESG with different investments, such as: variable income, fixed income and fund of funds. We highlight the local funds, FIA Corporate Sustainability variable income fund and the fixed income fund Private Credit Performance SRI 20. In addition, Bradesco Asset Management has other funds with different active management strategies, containing a mix of local and global actions. The FIC FIA ESG Global BDR Level I, has 50% of stocks of Local Variable Income and 50% of stocks related to the Global Variable Income. Now the FIC MM ESG Global, has 50% of stocks of Local Fixed Income and 50% of stocks of Global Fixed Income. Both seeking excellence in ESG assets. The other two funds, FOF Global ESG RV IE and FOF Global ESG RF IE are funds of ESG funds, with the objective of investing in global funds, of fixed income and variable income with the best global performance in ESG.

Insurance

Grupo Bradesco Seguros integrates ESG aspects into its business by offering widely diversified and accessible solutions, products and services, seeking to further our commitment to contribute towards the country’s sustainable development. Therefore, since 2012, Grupo Bradesco Seguros has integrated into its business the Principles for Sustainable Insurance (PSI) and its voluntary commitment to the United Nations Environment Programme Finance Initiative (UNEP-FI), which seeks to continuously evaluate the demand for financial and insurance products that offer adequate solutions to clients, both in order to boost a low-carbon economy and protect clients from the impacts of, or adapt them to, the transformations originating from climate change. The Group also participates as a member of the UNEP-FI Global Steering Committee.

In May 2022, the Group signed the Task Force Climate-Related Financial Disclosures (TCFD) commitment initiative that seeks to develop and implement recommendations for the dissemination and analysis of risks and opportunities related to climate issues and the way they are managed.

In addition, the Group has its own Sustainability Committee, subject to the Steering Committee of Bradseg Participações S.A., which relies on the participation of the Executive Officers and Superintendents of the companies of the Company, and aims to develop business strategy and propose solutions fostering the implementation of sustainability best practices to the activities and business. Bradesco Seguros also has its own area of Social and Environmental Risk Management, which reports to its Risk Committee and, via the latter, to the Boards of the business units on the evolution of social and environmental risks.

The Group is also governed by internal rules on Social and Environmental Responsibility and Social and Environmental Risk, which adopt environmental, social and governance criteria in the monitoring of the

processes and operations of the companies of Grupo Bradesco Seguros and BSP Empreendimentos Imobiliários.

c)

reliance on patents, trademarks, licenses, concessions, franchises, contracts of royalties relevant to the development of the activities

No reliance on patents, trademarks, licenses, concessions, franchises, contracts of royalties relevant to the development of the Bradesco activities.

d)

financial contributions, with indication of the respective values, made directly or through third parties:

i. in favor of occupiers or candidates for political positions

ii. in favor of political parties

iii. to fund the exercise of influence activity in public policy decisions, especially in the content of normative acts

According to the provisions of Law No. 9,504/1997 (Electoral Law) and Law No. 9,096/1995 (Political Party Law), and in our “Bradesco Integrity Program” Standard donations of legal entities to candidates or political parties are prohibited, therefore, Bradesco Organization and its jointly or individually controlled companies are expressly prohibited from making any political donations.

Although donations by Individuals are allowed, it is recommended to all who exercise statutory functions in the Bradesco Organization to refrain from making personal donations to electoral campaigns, extending the same recommendation to those who are inserted in their circle of economic dependence.

The Bradesco Integrity Program standard is available on the Bradesco RI website (https://www.bradescori.com.br/wp-content/uploads/sites/541/2022/08/Programa-de-Integridade-Bradesco_v6_PORT.pdf).

 

1.7 – Countries from which the issuer generates significant revenue

Bradesco does not get relevant revenues from its holdings in foreign countries.

 

1.8 – Foreign countries disclosed in item 1.7, describing relevant impacts arising from the regulation of these countries on the issuer's business

Since they do not provide relevant revenues, specific regulations of the countries where Bradesco has business do not have relevant impacts on the operations of the Bank.

 

1.9 – Environmental, social and corporate governance (ESG) information, indicate:

a)  if the issuer discloses ESG information in an annual report or other specific document for this purpose

Bradesco’s Integrated Report comprises main financial and non-financial actions and results based on topics considered most relevant to the Organization and its stakeholders. In addition, specific contents are disclosed such as the positioning on Climate Change Management and the paper on the incorporation of ESG issues. The content is available on the Investor Relations (bradescori.com.br) and Sustainability (bradescosustentabilidade.com.br) websites.

b)  The methodology or standard followed in the preparation of this report or document

To prepare the Report we follow the Global Reporting Initiative (GRI) and International Integrated Reporting Council (IIRC) methodologies. We also consider the transparency guidelines of the Sustainability Accounting Standards Board (SASB) and the Abrasca Code for Self-Regulation and Good Practices of Publicly Traded Companies. We seek to meet the transparency requirements used by B3’s Corporate Sustainability Index (ISE) and the Dow Jones Sustainability Index (DJSI); and the disclosure of climate information follows, where possible, the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD).

 

c)  If this report or document is audited or reviewed by an independent entity, identifying that entity, if applicable

The process of preparation and the information published in the Integrated Report are ensured by KPMG Auditores Independentes Ltda.

 

d)  The page on the internet where the report or document can be found

More information about the Integrated Report, and Bradesco’s policies, practices and rules, is available on: http://www.bradescori.com.br and www.bradescosustentabilidade.com.br.

 

e)  If the report or document produced considers the disclosure of a materiality matrix and ESG key performance indicators, and what are the material indicators for the issuer

The prioritization of more material themes follows our Framework of Relevance, built from the engagement of the Board of Directors, Presidency and various stakeholders, including employees. The Matrix presents graphically the most relevant and strategic themes of the Organization to be addressed in the disclosure of information to the market.

Several key ESG indicators are presented throughout the document, with special emphasis on those inserted in the sections on Sustainable Business, Climate Change and Financial Citizenship, in the sustainability chapter on pages 136 to 224 of the 2021 report. Available on: Relatorio-Integrado-2021.pdf (bradescori.com.br).

 

f) If the report or document considers the Sustainable Development Goals (SDGs) established by the United Nations and what are the material SDGs for the issuer's business

Aligned with the Sustainability Strategy and leveraging our commitment to generating value to our stakeholders, we prioritize six SDGs, which reinforce the commitment to align business with the 2030 Agenda, monitoring the impact and contribution to the goals of society and its progress in the implementation of the Principles for Banking Responsibility (PRB).

The prioritization process took place in 2019 and considered consultation with stakeholders, comparative study of industry benchmarking, relevance matrix and strategic pillars of the Organization, Brazilian scenario (main social and environmental issues) and recommendations and reporting and performance guidelines, among others. The result and the prioritization process were verified by external consulting, with opinion.

The priority SDGs listed in the process are:

4 – Quality education

5 – Gender equality

8 – Decent work and economic growth

9 – Industry, innovation, and infrastructure

10 – Reduced inequalities

13 – Climate action

g)

If the report or document considers the recommendations of the Task Force for Climate Change-Related Financial Disclosures (TCFD) or recommendations for financial disclosures of other recognized entities that are related to climate issues

Yes, we follow Task Force guidelines for Climate Change-Related Financial Disclosures (TCFD) and also report climate-related requirements for key market indices and ratings, such as CDP, ISE and Dow Jones.

h)

If the issuer performs greenhouse gas emission inventories, indicating, if applicable, the scope of the inventoried emissions and the page on the world computer network where additional information can be found

Since 2006, we have developed the Emission Inventory of our operations, following the guidelines of the ABNT ISO 14,964-1 Standard. From 2008, we also incorporated the specifications of the Brazilian GHG Protocol Program into the process. The inventory can be found on: https://banco.bradesco/assets/classic/pdf/sustentabilidade/Bradesco-Inventario_Emissoes_GEE_2021.pdf

 

1.10 – Specific information of mixed economy companies

Not applicable.

 

1.11 – Indicate the acquisition or disposal of any relevant asset that is not classified as a normal operation in the issuer's business

2022:

On August 24, 2022, Bradesco, through its subsidiary Kartra Participações Ltda., firmed with Banco Votorantim S.A., a contract for the formation of an independent investment manager, through the acquisition of the equity stake of 51% of the capital of BV Distribuidora de Títulos e Valores Mobiliários S.A. (“BV DTVM”), whereby Banco Votorantim S.A. remains as a holding shareholder of 49%. On February 28, 2023, after compliance with the previous legal and regulatory conditions, the acquisition was completed.

The companies involved in the transaction are as follows: (i) Banco Bradesco S.A. (“Bradesco”); (ii) Banco Votorantim S.A. (“Banco BV”); (iii) Kartra Participações Ltda. (“Kartra”); and (iv) BV Distribuidora de Títulos e Valores Mobiliários S.A. (“BV DTVM”).

2021:

On October 8, 2021, Banco Bradesco S.A. (“Bradesco”) through its subsidiary Bradescard Elo Participações S.A. signed a contract with BB Elo Cartões Participações S.A., a subsidiary of Banco do Brasil S.A., for the purchase of a 49.99% stake in Banco Digio S.A. (“Digio”). On February 25, 2022, after obtaining the approval of the Central Bank of Brazil and the Administrative Council for Economic Defense – CADE, the operation was completed. Bradescard Elo Participações S.A. paid R$645 million to BB Elo Cartões and with the completion of the operation, Bradesco indirectly held 100% of the share capital of Digio. Digio offers credit cards, accounts and personal loans to its clients. This transaction is aligned with the strategy of Bradesco of investing in digital businesses, complementing its operations in a diversified manner and reaching different audiences, with different models.

The companies involved in the transaction are the following: (i) Banco Bradesco S.A.; (ii) Banco Digio S.A.; (iii) Banco do Brasil S.A. (“BB”); (iv) Elo Participações Ltda. (“Elopar”); (v) Bradescard Elo Participações S.A.; and (vi) BB Elo Cartões Participações S.A.

2020:

On October 30, 2020, Bradesco announced to the market the end of the acquisition, assuming the operations of BAC Florida Bank (“BAC Florida”).

Bradesco assumed the operations of BAC Florida, with the main objective of expanding the offering of investments in the United States to high net worth (Prime) and Private Bank clients, in addition to other banking services, such as checking accounts, credit card and real estate financing, as well as the opportunity to expand business related to corporate and institutional clients.

The companies involved in the transaction are the following:

Purchasing Companies: (i) Lecce Holdings S.A.; wholly owned subsidiary of Bradesco (guarantor).

Selling Companies: (i) CAICO Investments Group Corp.; (ii) Empresa de Inversiones Alcastre Limited; (iii) Valores Intercontinentales de Panama Limited; (iv) Consorcio Nuevo Laredo Limited; (v) Consorcio Novara del Sur Limited; and (vi) Sociedad Internacional Yreka.

Target company: BAC Florida Bank.

On January 14, 2020, Banco Bradesco S.A. announced to the market the completion of the sale of all shares held in Chain Serviços e Contact Center S.A. (“Chain”), to Almaviva do Brasil Telemarketing e Informática S.A. (“Almaviva”). Chain’s corporate purpose is the provision of call center services.

The companies involved in the transaction are as follows: (i) Celta Holdings S.A. (“Celta”); (ii) Banco Bradesco S.A. (“Bradesco”); and (iii) Almaviva do Brasil Telemarketing e Informática S.A. (“Almaviva”).

 

1.12 – Indicate merger, division, incorporation, equity incorporation, capital increase or reduction involving the issuer and documents in which more detailed information can be found

In the fiscal years 2022, 2021 and 2020, there was a capital increase in each fiscal year in the amount of R$4 billion, with a share bonus, through the capitalization of part of the balance of the account of “Reserves of Profits – Statutory Reserves.

 

1.13 – Indicate the firming, extinction or modification of shareholders’ agreements and the documents in which more detailed information can be found

This did not happen in the fiscal years 2022, 2021 and 2020.

 

1.14 – Indicate significant changes in the way of conducting the issuer's business

In the fiscal years 2022, 2021 and 2020 there were no significant alterations in the issuer’s manner of conducting its business.

 

1.15 – Indicate significant contracts not directly related to operating activities entered into by the issuer or by its subsidiaries

All contracts that we consider relevant for the fiscal years 2022, 2021 and 2020 have been duly described in item 1.11 of this Reference Form.

 

1.16 – Other relevant information

There is no other information deemed relevant at this time.

2. Officers’ notes

2.1 – General Financial and Equity Conditions

a)

general financial and equity conditions

The Officers of the Organization understand that the Company has all financial and asset conditions to ensure the compliance with obligations, guaranteeing the business expansion in the short- and long-term.

The Officers’ analysis is based on information from the last three financial statements on the balance sheet date in accordance with international accounting standards (IFRS – International Financial Reporting Standards), as follows:

2022

Economic activity showed incipient signs of loss of traction throughout the fourth quarter. The employment market continues to show growth in hirings, with income recovery. We estimated a GDP growth of 3% in 2022 and a projected growth of 1.5% in 2023. The positive performance of the employment market will continue to sustain the household consumption in 2023, in a context in which the domestic demand has been resilient. The performance of agribusiness should also be positive. The restrictive monetary policy and the global environment, however, will contribute to the slowdown of the activity.

Inflation has gradually shown more benign behavior, including services. As a result, the IPCA is expected to close 2022 at 5.8%. In 2023, we projected that inflation should remain relatively stable at 5.7%. Therefore, the Central Bank of Brazil should keep the Selic rate stable at 13.75% for an extended period, with cuts only at the end of the year, to 12.25%.

The risks related to the global economy remain. The greater magnitude and duration of monetary tightening in developed economies, the conflict in Eastern Europe and the expectation of recession ahead increased the level of uncertainty and volatility of assets. In addition, economic activity shows signs of deceleration. Inflation control will continue to demand a restrictive monetary policy this and next year. The performance of central banks will continue to be the determining factor for asset prices and expectations.

In 2022, the net income was R$21.217 billion in the fiscal year, corresponding to a profitability of 13.6% on the average net shareholders’ equity. The return on the average total assets was 1.2%. The consolidated shareholders’ equity attributed to the controlling shareholders reached R$158.265 billion and the total balance of the assets was R$1.800 trillion.

Loan and Fundraising Operations and Resource Management

We expanded and diversified offers in the distribution channels, especially in the digital media, supplemented by the Branch Network and Banking Correspondents. Our capillarity allows us to offer loans and financing directly or through strategic partnerships with various business chains, keeping the focus on improving the customer experience and assessing their real needs.

We are in full operational capability. The policy we have guides management’s actions, which is constantly updated and consistent with the economic reality.

Among the lines, we highlight:

Agribusiness: we are featured among the biggest financiers in this niche, with offers and solutions for the development of production, with offers and solutions for the development of production. We participate in the 8 largest agribusiness fairs, keeping in accordance with the main manufacturers of agricultural tools of the country. We have 14 Agribusiness Platforms distributed throughout Brazil, which have experts and agronomist engineers, providing advice to the Service Network and rural producers;

Special Business: solutions in structured operations for wholesale clients, among the largest funders in Emergency Programs, leader in transfer of resources of the BNDES (National Bank for Economic and Social Development), leader in the leasing market, largest portfolio of securities in the market and market leader in advances to suppliers;

Real Estate Financing: we are one of the most relevant in this market, maintaining a commitment to meet the demand of the sector, financing both the construction industry and the acquisition of property by the final borrowers, they have 100% digital hiring for residential properties and digitizing of the processes carried out through real estate partners by means of APIs. We have real estate platforms with coverage throughout the national territory;

For companies: working capital items, advances on receivables and financing of goods focused on small and medium-sized enterprises. With Bradesco Corporate, leader in assets of the Brazilian market for large and medium-sized enterprises, we offer complete solutions for different needs and business sectors; and

Individuals (mass-market): highlighting all personal loans, payroll-deductible loans, vehicle and rotary credit lines, where we continue transforming our customer experience with these products through the modernization of commercialization and after-sales journeys and the massive use of algorithms and advanced analytics, mapping the clients’ needs in real time, responding with the best product and business conditions considering the context and moment of life for each profile, with a smooth, multi-channel approach.

Balance of the main portfolios in the fiscal year:

·

R$663.303 billion was the balance at the end of the year, reflecting the increase in operations with: (i) legal entities that showed growth of 4.2% compared to 2021, with emphasis on the increase of 5.7% in loans (including working capital, rural credit and others) and 23.0% in operations with limits (includes credit card and guaranteed account); and (ii) individuals who showed an increase of 11.6% compared to 2021, with highlights for the growth of 29.5% in operations with limits (includes credit card and overdraft), 9.7% in loans (includes payroll-deductible and personal loans, rural loans and others), and 5.2% in financing and transfers (includes real estate and vehicle financing, BNDES/Finame transfers and others);

·

R$590.682 billion in client resources, including: cash deposits, savings and term deposits, showing an increase of 3.7% compared to the previous year;

·

R$316.155 billion in technical provisions for insurance and pension, with an evolution of 10.4% compared to the previous year;

·

R$281.948 billion in financial institution resources, an increase of 1.1% compared to the previous year, including: demand deposits, interfinancial, funds obtained funds on the open market and bonds for loans and transfers;

·

R$52.241 billion in subordinated debts, reduction of 4.1% compared to the previous year, comprising higher volume of settlement and interest payments; and

·

R$222.257 billion in securities issuance resources, of which R$209.866 billion is issued in the country and R$12.391 billion is issued abroad.

By the end of 2012, the market value of Bradesco, considering the closing prices of the common and preferred shares, totaled R$152.5 billion, representing 1.0 times the shareholders’ equity.

 

2021

The economic recovery was consolidated in the first half of 2021, due to advances in vaccination, pandemic control and economic stimuli. From the second half of the year, we noted that the Brazilian economy showed more moderate impetus. This loss of economic breath is largely due to the reduction of available income due to the acceleration of inflation. The widespread rise in prices last year imposed important challenges for the monetary policy, leading to an increase in the Selic rate. In order to coordinate inflation expectations and to make inflation converge to lower levels, the Central Bank of Brazil has signaled that it will take the Selic to a significantly contractive terrain.

In a perspective, the deceleration of inflation should contribute to the expansion of consumption. The full reopening of the economy will allow jobs to be created and the unemployment rate to fall, in contrast to the partially closed economy of 2021.

The National Financial System continues working effectively and sustainably expanding the credit, both for families and for businesses. The strengthening of institutions, the preservation of the fiscal framework

and the resumption of structural reforms should be a priority of the entire Brazilian society. Continued advancements in this agenda should have positive impacts on the economic confidence, productive investments and the growth potential in the country.

In the global scenario, the economic activity continues to show favorable growth. The control of the pandemic and the regularization of productive chains are important vectors for the maintenance of the recovery. In addition, the possibility that monetary tightening will be faster in the US. Given this, emerging economies, especially those most vulnerable in fiscal and external accounts, can be impacted.

In 2021, the net income was R$23.381 billion in the fiscal year, corresponding to a profitability of 15.8% on the average shareholders’ equity. The return on Average Total Assets was 1.4%. The consolidated shareholders’ equity attributed to controlling shareholders reached R$149.777 billion and the total of the assets stood at R$1.676 trillion.

Loan and Fundraising Operations and Resource Management

We expanded and diversified offers in the distribution channels, especially in the digital media, supplemented by the Branch Network and Banking Correspondents. Our capillarity allows us to offer loans and financing directly or through strategic partnerships with various business chains, keeping the focus on improving the customer experience and assessing their real needs.

We are in full operational capability. The policy we have guides management’s actions, which is constantly updated and consistent with the economic reality.

We highlight:

Agribusiness: we are featured among the biggest financiers in this niche, with offers and solutions for the development of production, keeping in accordance with the main manufacturers of agricultural tools of the Country. We have 14 Agribusiness Platforms distributed throughout Brazil, which have experts and agronomist engineers, providing advice to the Service Network and rural producers;

Onlendings: leader in BNDES – Banco Nacional de Desenvolvimento Econômico e Social (National Bank for Social and Economic Development) onlendings;

Real Estate Financing: we are one of the most relevant in this market, maintaining a commitment to meet the demand of the sector, financing both the construction industry and the acquisition of property by the final borrowers, they have 100% digital hiring for residential properties and digitizing of the processes carried out through real estate partners by means of APIs. We have 39 Real Estate Platforms and their extensions, with coverage throughout the national territory;

For companies: working capital items, advances on receivables and financing of goods focused on small and medium-sized enterprises. With Bradesco Corporate, leader in assets of the Brazilian market for large and medium-sized enterprises, we offer complete solutions for different needs and business sectors; and

Individual (mass-market): highlighting all personal loans, payroll-deductible loans, vehicle and rotary credit lines, where we continue transforming our customer experience with these products through the modernization of commercialization and after-sales journeys and the massive use of algorithms and advanced analytics, mapping the clients’ needs in real time, responding with the best product and business conditions considering the context and moment of life for each profile, with a smooth, multi-channel approach.

Balance of the main portfolios in the fiscal year:

•

R$613.834 billion was the balance at the end of the year, reflecting the increase in operations with: (i) legal entities that had a growth of 14.3% in comparison to 2020, highlighting the increase of 20.8% in loans (including working capital, rural credit and others); and (ii) Individuals that had a growth of 24.9% in comparison to 2020, with highlights to: (a) 38.3% in real estate financing and (b) 20.9% in payroll-deductible loans;

•

R$569.726 billion in deposits from clients, including: demand deposits, savings deposits and time deposits, presenting a 4.5% increase compared to the previous year;

•

R$286.387 billion in technical provisions of insurance and social security, an evolution 2.5% higher than the previous year;

•

R$279.009 billion in financial institution resources, an increase of 4.4%, including: demand deposits, interfinancial, open-market borrowing, loan bonds and onlending operations;

•

R$54.451 billion in subordinated debts, of which R$48.204 billion were issued in the country and R$6.247 billion issued abroad; and

•

R$166.229 billion in resources from issuing securities, of which R$155.243 billion were issued in the country and R$10.986 billion were issued abroad.

In December 2021, our market value, considering the closing prices of the common and preferred shares, totaled R$171.480 billion, representing 1.2 times the shareholder’s equity of December 2021.

 

2020

In 2020, we experienced a period of great challenges and uncertainties arising from the Covid-19 pandemic. It is, according to the World Health Organization (WHO), the largest global pandemic of our time. We are going through an unprecedented moment, a unique situation, in which the flow of new information is intense and can change the reading of the scenario. The crisis did not originate in the financial system or was related to external geopolitical threats. It is an event that affects the lives of people in general, as well as the routine of companies and the financial market. In Brazil, we have a solid, robust financial system, which has contributed with various measures to mitigate and overcome the crisis. The scenario that emerged for the Brazilian economy was very different to the one predicted at the beginning of 2020. Even though the Country has advanced structurally, it was not immune to a crisis of this magnitude. It is important that we move forward to minimize the loss of human life, firstly, and the economic loss, with joint actions of the whole of society, workers, entrepreneurs, private sector and government, of which the responses, so far, have been appropriate.

In order to mitigate the impacts of this crisis, governments and central banks around the world have intervened in the economy of their countries and have adopted unconventional measures, like the closing of non-essential economic activity and actions of monetary stimulus, with the practice of zero interest in addition to fiscal expansion.

In Brazil, various measures have been adopted, including some directly impacting the liquidity of the financial markets, the credit markets, monetary and fiscal policy and exchange rates. In this context, in addition to the various measures taken by the Monetary Policy Committee (COPOM) and the Central Bank of Brazil, such as reducing the interest rate, in August 2020, to 2.0% p.a., the National Monetary Council and the Federal Government approved, in extraordinary meetings, measures to help the Brazilian economy tackle the adverse effects caused by the virus.

The second half of 2020 was a period of recovery for the Brazilian economy. This process, evidenced in indicators related to production, demand, confidence and generation of jobs, has been consistent, reflecting the adoption of stimuli of different natures. In some cases, the most recent data pointed to levels even higher than those observed prior to the pandemic. At the same time, expectations for 2021 remain quite favorable, with the beginning of vaccination in the Country and the resumption of the agenda of structural reforms.

The National Financial System continues working effectively and expanding the credit sustainably, both for families and for businesses, helping them overcome the difficulties caused by the pandemic. The maintenance of the public spending ceiling and the signaling, on the part of the authorities, of declining trajectories of government debt should actively contribute towards the gradual process of normalization of the monetary policy that is expected. In the environment returning to normality in the global economy, Brazil tends to be benefited by the reduced aversion to risk.

In the global scenario, the economic activity in the major economies has also recovered, despite the recent upsurge of the pandemic in some developed countries. This process of resumption should continue on course, favored by the beginning of the vaccination in several regions, political transition in the USA and by the continued expansion of the Chinese economy.

In 2020, the net income was R$16.034 billion in the fiscal year, corresponding to a profitability of 11.7% on the average shareholders’ equity. The return on Average Total Assets was 1.1%. The consolidated shareholders’ equity attributed to controlling shareholders reached R$145.620 billion and the total of the assets stood at R$1.605 trillion.

Loan Operations and Funding and Asset Management

Our broad diversity of products offered through digital channels, branch network, multi-platform allows us to offer loans or direct financing or in strategic partnerships with the various business chains, keeping the focus on improving the clients’ experience and assessing their real needs. We expanded and diversified our offers in the d