I. ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS

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1 GENERAL INFORMATION The Bank operates under a General License granted by the Superintendency of Banks of Panama ( SBP ), which allows it to carry out different banking business in Panama or abroad. Banco General, S.A and subsidiaries will be referred as "the Bank." I. ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS Total Assets As of December 31st, 2017, the Bank s gross loan portfolio increased 6.8% from U.S $10,769.0 million in December 2016 to U.S $11,506.1 million. During this period, the Bank s residential mortgage portfolio expanded 10.8% to U.S.$4,053.4 million, the consumer loan portfolio grew 9.1% to U.S.$1,669.6 million, and the corporate loan portfolio, comprised of both local and regional corporate clients, grew by 3.3% to U.S.$5,230.8 million. The Bank s local corporate loan portfolio increased by 7.9% or U.S.$311.1 million to U.S.$4,270.7 million in the last twelve months, and the Bank s regional corporate portfolio decreased by 12.9% or U.S.$142.2 million to U.S.$960.1 million in this period. The Bank s total investments portfolio, made up of (i) the Bank s primary liquid assets, and (ii) the Bank s local and regional corporate fixed income portfolio, expanded by 8.7% from U.S.$4,082.5 million in December 2016 to U.S.$4,436.9 million in December Total Liabilities The Bank s total client deposits grew by U.S.$392.0 million or 3.6% in the year ended December 31st, 2017 to U.S.$11,367.4 million. Client time deposits, the Bank s main source of funds, increased U.S.$418.7 million to U.S.$5,474.4 million, comprising of 48.2% of total client deposits as of December 31st, 2017, having an average remaining life of 15.2 months, and 67.7% having original maturities of over one year. Savings accounts grew by U.S.$118.5 million to U.S.$3,398.6 million or 29.9% of client deposits, while demand deposits decreased U.S.$145.2 million and stood at U.S.$2,494.4 million as of December 31st, In keeping with the Bank s financial policies, we have been able to develop and access medium and long term funding alternatives. As of December 31st, 2017, the Bank s total medium and long term borrowings and placements grew by U.S.$483.3 million, or 19.8%, to U.S.$2,924.9 million as compared to the same period in In the fourth quarter of 2017, the Bank concluded a medium-term financing of U.S.$800 million; these funds were used to pay a 2015 U.S.$500 million financing maturing in May Liquidity and Funding The Bank s Assets and Liabilities Committee ( ALCO ) is responsible for developing and proposing policies relating to the management of the Bank s assets and liabilities to enable us to maintain interest rates, market, maturity and liquidity, and foreign exchange exposures within the Bank s established limits while maximizing the return on shareholders equity. The Bank s asset and liability management policy seeks to ensure that sufficient liquidity is available to honor withdrawals of deposits, to make payments at maturity of other liabilities, to extend loans or other forms of credit to the Bank s customers and to meet the Bank s working capital needs. The Bank s treasury department is responsible for managing the Bank s liquidity and funding positions, as well as executing investment strategies. The Bank s current policy requires high absolute levels of liquidity composed of high quality liquid assets, a key pillar of the Bank s conservative financial strategy. Consistent with the Bank s conservative financial policies, we have historically maintained high levels of liquidity in investment grade liquid investments, which are complemented by (i) an adequate maturity structure of assets and liabilities, (ii) a diversified and stable base of deposits, (iii) medium and long term financings (representing 1

2 18.5% of total liabilities as of December 31st, 2017), and (iv) low levels of short term institutional liabilities (0.9% of total liabilities as of December 31st, 2017), all of which provide us with a very stable liability structure in the Bank s balance sheet. The Bank s primary liquidity ratio, measured as primary liquid assets (comprised of cash, bank deposits and investment grade fixed income liquid investments) to total deposits and borrowings was 26.1% as of December 31st, 2017, corresponding to U.S.$3.7 billion in primary liquidity. This represented a 7.0% increase, from U.S.$3.5 billion in 2016, and a liquidity ratio of 26.0%. The Bank s total primary liquidity has an overall average credit rating of AA-; 52.3% are investments with a AAA rating. As of December 31st, 2017, these liquid assets represented 32.5% of total deposits and 21.1% of total assets. In addition to being subject to the Bank s own asset and liability management policy, we must comply with liquidity requirements imposed by the SBP, which consist of a minimum balance of liquid assets equivalent to 30% of selected deposits received (total deposits received with maturities not exceeding 186 days, less subsidiary deposits and pledged deposits). As of December 31st, 2017, we met the liquidity requirements established by law by maintaining a level of 38.81% of liquid assets to deposits. Loan Portfolio The Bank s loan portfolio is well-diversified across client segments, products and borrowers. As of December 31st, 2017, total loans amounted to U.S.$11.5 billion, 45.4% of which is comprised of corporate loans (37.1% local corporate loans and 8.3% foreign corporate loans), 49.7% of retail loans (35.2% residential mortgages and 14.5% consumer loans) and 4.9% in other loans (comprised of pledge loans, overdrafts, and leasing). To diminish the risk of losses, we strongly emphasize the extension of loans secured by collateral, preferably single-family homes, properties and deposits, in addition to the application of strict underwriting guidelines and know your customer policies. At December 31st, 2017, 79.7% of total loans were secured by real properties or deposits at the Bank; 73.2% of total loans were secured by a first lien mortgage on land and improvements (residential mortgages, commercial mortgages and interim construction loans) and 6.5% were secured by cash collateral at the Bank (pledge loans and overdrafts). The combination of adequate underwriting policies and quality collateral has historically resulted in low levels of charge-offs, averaging 0.38% of total loans per year during the five-year period ending December 31st, As of December 31st, 2017, 88.4% of the Bank s loan portfolio was with local clients, which are borrowers (individuals and corporations) located in Panama, and 11.6% was with regional clients in Costa Rica, Mexico, Colombia, Guatemala, El Salvador and Peru. As of December 31st, 2017, 99.9% of the Bank s loans were denominated in U.S. dollars, which is Panama s legal tender. We segment the Bank s portfolio by loan type, economic activity, and income group, among other variables. Moreover, the Bank s credit policies provide for managing concentration within economic sectors in the case of corporate lending and provide for various underwriting criteria depending on income levels in the case of retail lending. 2

3 The following table summarizes the Bank s loan portfolio by type of loan as of December 31st, 2017, 2016, 2015, and 2014: For the Years Ended December 31st % Change Local loans Commercial 371, , % 272, ,377 Interim construction loans 807, , % 615, ,527 Lines of credit 1,301,407 1,233, % 1,281,098 1,182,481 Residential mortgage loans 3,798,892 3,405, % 3,043,017 2,600,280 Commercial mortgage loans 1,789,765 1,644, % 1,502,432 1,391,333 Installment loans to individuals 1,652,578 1,513, % 1,342,808 1,217,675 Pledge loans and overdrafts 333, , % 298, ,824 Leasing and factoring 120, , % 111, ,600 Total local Loans 10,176,209 9,317, % 8,466,960 7,521,096 Foreign loans Commercial 382, , % 441, ,027 Interim construction loans % 47,841 15,362 Lines of credit 317, , % 266, ,324 Residential mortgage loans 254, , % 229, ,282 Commercial mortgage loans 259, , % 184, ,495 Installment loans to individuals 17,034 15, % 11,803 8,399 Pledge loans and overdrafts 98,242 82, % 103,850 88,446 Total foreign loans 1,329,851 1,451, % 1,285,264 1,234,334 Total loans 11,506,061 10,769, % 9,752,225 8,755,430 Allowance for loan losses 144, , % 112, ,035 Unearned discount 38,255 35, % 32,091 29,616 Total loans, net 11,322,974 10,604, % 9,607,858 8,619,779 The Bank s gross loan portfolio has consistently maintained low levels of non accrual and past due loans, with levels of 0.78% and 1.03%, respectively, of the total loan portfolio as of December 31st, The Bank s loan loss reserve covers past due loans at % as of December 31st, 2017 (compared to % in 2016), and coverage of non accrual loans stood at % (compared to % in 2016), while charge-offs in 2017 amounted to US$49.9 million, or 0.43% of total loans (compared to 0.44% in 2016). The Bank s loan charge-offs have historically been low, as a result of the following factors: (i) application of rigid and consistent underwriting policies over time, (ii) the Bank s preference to extend high quality secured loans, collateralized mostly by residential and commercial properties, the quality and value of which are carefully scrutinized; and (iii) the diligent monitoring and managing of loan performance to enable appropriate action to minimize losses. Non Accrual Loans The SBP requires us to place a loan on non accrual status if any of the following conditions are met: (i) the payment performance measured by past due amounts of interest and principal reach the threshold set out below; or (ii) the financial condition of the debtor, individual or corporate, has suffered a material adverse effect (payment capacity deterioration, collateral weakness or other factors known to us, such as fraud, death 3

4 of debtor, or personal or corporate bankruptcy) which weakens our ability to collect the loan. All past due loans (see the definition below under Past Due Loans ) fall within non accrual status, except for residential mortgage loans which stop accruing interest after 120 days past due in interest and/or principal payments. The following table presents our nonaccrual loans by type of loan, as of December 31st, 2017, 2016, 2015, and 2014: Non accrual loans For the Years Ended December 31st Commercial 395 5,608 2, Interim construction loans 7,238 6,170 6,540 6,245 Lines of credit 6,525 4,389 7,189 15,984 Residential mortgage loans 41,875 33,628 30,078 24,117 Commercial mortgage loans 11,106 9,427 6,404 2,843 Installment loans to individuals 20,811 19,147 16,434 12,636 Pledge loans and overdrafts , Leasing and factoring 1, Total Non accrual loans 89,729 79,947 70,289 63,067 Total Loans 11,506,061 10,769,010 9,752,225 8,755,430 Allowance for loans losses 144, , , ,035 Non accrual loans as a percentage of total loans 0.78% 0.74% 0.72% 0.72% Allowance for loans losses as a percentage of non accrual loans % % % % Past Due Loans The bank classifies its loan portfolio based on: (i) interest and principal payment status (current, overdue days, and more than 90 days past due); and (ii) the principal payment status of a loan at final maturity as current or, if not paid after 30 days past final maturity, as past due. Our total past due loans include the entire principal outstanding of all loans with past due interest and/or principal amortization payments of 91 days or more and/or with principal payments overdue 31 days or more at final maturity The following table presents our past due loans by type of loan, as of December 31st, 2017, 2016, 2015, and 2014: Past due loans For the Years Ended December 31st Commercial 385 5,608 1, Interim construction loans 7,238 6,170 6,540 6,245 Lines of credit 6,486 4,489 7,124 15,915 Residential mortgage loans 69,565 56,322 43,667 34,246 Commercial mortgage loans 11,173 9,347 5,834 2,843 Installment loans to individuals 20,711 19,110 16,289 12,554 Pledge loans and overdrafts 1,344 1,074 1, Leasing and factoring 1, Total past due loans 118, ,564 83,064 73,580 Total Loans 11,506,061 10,769,010 9,752,225 8,755,430 Allowance for loan losses 144, , , ,035 Past due loans as a percentage of total loans 1.03% 0.95% 0.85% 0.84% Allowance for loans losses as a percentage of past due loans % % % % 4

5 Analysis of Allowance for Loan Losses Our allowance for loan losses is assessed using IAS 39 provisioning guidelines as well as the SBP s requirements. Two types of provisions exist under IAS 39 and SBP guidelines: (a) Specific Provisions, and (b) Collective Provisions, (defined as those expected to be incurred, based on past historical performance of the Standard portfolio). In addition, we have also added a Country Risk Provision as part of our model. Provisions for loan losses are accounted for as charges on income and added to the allowance for loan losses to bring the allowance to the required level. Any subsequent charge-off is applied against this allowance. The Bank s historical allowance levels provide good coverage of non accrual loans, and amounted to % as of December 31st, Additionally, the Bank s allowance for loan losses far exceeds the requirements of the SBP. At December 31st, 2017, the Bank s allowance for loan losses amounted to 1.26% of total loans outstanding. The following table presents the Bank s allowance for loan losses as of December 2017, 2016, 2015, and 2014: For the Years Ended December 31st Allowance at the beginning of period 128, , , ,015 Provision charged to expenses, net of recoveries 44,485 45,532 29,237 28,761 Charge-offs: Commercial Interim construction loans Lines of credit 1,462 1, Residential mortgage loans Commercial mortgage loans 4 1, Installment loans to individuals 46,663 41,815 34,888 31,956 Pledge loans and overdrafts Leasing and factoring Total charge-offs 49,938 47,088 36,098 33,427 Recoveries 21,368 18,198 13,102 10,684 Allowance at the end of period 144, , , ,035 Total Loans 11,506,061 10,769,010 9,752,225 8,755,430 Allowance for loans losses as a percentage of total loans 1.26% 1.20% 1.15% 1.21% Net charge-off to loans 0.25% 0.27% 0.24% 0.26% Ratio of income statement charges to loans 0.43% 0.44% 0.37% 0.38% Capital Resources The cornerstone of our overall financial strategy is our solid capital position, which exceeds local and international regulatory requirements contained in the Basel Accords and has supported our investment grade ratings from Fitch (BBB+) and Standard & Poor s (BBB, with a Stand Alone Credit Profile Rating of BBB+ as of May 2017), since 1997, when we successfully issued U.S.$115 million senior unsecured Eurobonds, distributed in both the U.S. and Europe. As of December 31st, 2017, our total regulatory capital amounted to U.S.$2,201.4 million, or 238.8% of the total minimum capital required (Tier I and Tier II capital). Our total capital to risk weighted assets ratio was 5

6 19.11%, comprised entirely of Tier 1 capital. Our shareholder s equity to total assets ratio was 11.64%, with a dividend payout ratio averaging 56.20% of our net income in the five years ended December 31st, Based on the Bank s total risk weighted assets of U.S.$11,521.6 million as of December 31st, 2017, under Panamanian requirements, we are required to have total capital of 8.0%, or U.S.$921.7 million. Furthermore, Accord , which became effective in fiscal year 2014, requires banks to create a dynamic provision, defined as a general reserve to cover future unexpected losses on the loan portfolio classified as standard (the Dynamic Reserve ), with a minimum of 1.25%, and a ceiling of 2.50%, of the risk weighted loan portfolio classified as standard. The Dynamic Reserve is presented within legal reserves in the equity section of the Bank s financial statements. The credit balance of the Dynamic Reserve becomes part of regulatory capital if the Bank s regulatory capital exceeds the minimum of 8.0% of risk weighted assets to capital. As of December 31st, 2017, the balance of the Dynamic Provision was U.S$150.7 million. The Bank s securities brokerage, insurance and other pension fund management subsidiaries are also subject to minimum capital requirements as stipulated under Panamanian law. As of December 31st, 2017, all subsidiaries are in compliance with all applicable minimum regulatory capital requirements. The following table sets forth information regarding the Bank s capital levels as of December 31st, 2017, 2016, 2015, and 2014: Regulatory Primary Capital (Tier I) Common Shares 500, , , ,000 Legal reserve 180, , , ,752 Other items comprehensive income 35,797 32, Retained earnings 1,329,585 1,121, , ,718 Less regulatory adjustments 61,725 64,343 66,960 69,578 Total Regulatory Primary Capital (Tier I) 1,983,736 1,767,505 1,579,813 1,449,892 Additional Primary Capital (Tier I) Subordinated debt - perpetual bonds 217, , Total Additional Primary Capital 217, , Total Capital 2,201,416 1,985,185 1,579,813 1,449,892 Secondary Capital (Tier II) For the Years Ended December 31st Subordinated debt - perpetual bonds , ,680 Total Secondary Capital , ,680 Total Capital (Tier I + Tier II) 2,201,416 1,985,185 1,797,493 1,667,572 Risk-weighted assets 11,521,593 10,684,527 10,444,406 9,443,022 Captial ratios Total primary capital (Tier I) 19.11% 18.58% 15.13% 15.35% Total capital (Tier I + Tier II) 19.11% 18.58% 17.21% 17.66% 6

7 Results of Operations for the quarter ended December 31st, 2017 and 2016, and the years ended December 31st, 2017 and The following table presents the principal components of the Bank s net income for the three months ended December 31st, 2017 and 2016, and for the years ended December 31st, 2017 and 2016: For the Three Months Ended December 31st For the Years Ended December 31st % Change % Change Net interest and commission income 154, , % 598, , % Total provisions, net (1) (12,249) (12,416) (1.3%) (45,025) (46,321) (2.8%) Other income (expenses): Fees and other commissions 53,004 48, % 199, , % Insurance premiums, net 7,191 6, % 26,885 22, % Gain (loss) on financial instruments, net (5,258) (2,330) 125.7% 16,477 4, % Other income, net 5,938 5, % 39,086 18, % Commissions expenses and other expenses (20,289) (18,942) 7.1% (77,758) (72,253) 7.6% Total other income, net 40,586 38, % 204, , % General and administrative expenses 70,936 65, % 280, , % Equity participation in associates 2,291 1, % 8,570 8, % Net income before income tax 114, , % 485, , % Income tax, net 14,267 14, % 55,941 48, % Net income 100,371 93, % 429, , % (1) Total provisions, net includes: provision for loan losses, provision for securities impairment and provision (reversal) for foreclosed assets For the three months ended December 31st, 2017, the Bank s net income was U.S.$100.4 million, which represented an increase of U.S.$7.2 million, or 7.7% over the net income of U.S.$93.2 million in the same period in ROAE was 19.35% for the three months ended December 31st 2017, compared to 20.02% in the same period in ROAA for the three months ended December 31st, 2017 was 2.30% as compared to 2.29% in the same period of These results in net income, ROAE and ROAA were primarily the product of the following factors: Net Interest and Commission Income The following table shows the Bank s net interest and commission income and related average rate and margin information for the three months ended December 31st, 2017 and 2016, and for the years ended December 31st, 2017 and 2016: For the Three Months Ended December 31st For the Years Ended December 31st % Change % Change Total interest and commission income 233, , % 891, , % Total interest expenses 78,753 67, % 293, , % Net interest and commission income 154, , % 598, , % Average interest-earning assets 15,977,467 14,936, % 15,565,485 14,422, % Average interest-bearing liabilities 11,755,074 10,806, % 11,360,764 10,422, % Net interest margin (1) 3.88% 3.86% 3.84% 3.85% Average interest rate earned (2) 5.85% 5.66% 5.73% 5.61% Average interest rate paid (3) 2.68% 2.49% 2.58% 2.44% (1) Net interest and commission income (before provisions for loan losses) as a percentage of average total interest-earning assets for the indicated period. (Percentages for the three months ended are annualized) (2) Total interest and commission income divided by average interest-earning assets. (Percentages for the three months ended are annualized) (3) Total interest expenses divided by average interest-bearing liabilities. (Percentages for the three months ended are annualized) 7

8 The 7.4% increase in net interest and commission income for the three months ended December 31st, 2017 as compared to the same period in 2016 was primarily a result of (i) a 7.0% increase in average interestearning assets, which in turn was mainly due to an 7.8% increase in the average loan portfolio, and (ii) an increase in the Bank s net interest margin from 3.86% in 2016 to 3.88% in The Bank s net interest margin increased slightly in the three months ended December 31st, 2017 as compared to the same period in 2016, primarily as a result of an increase in the average interest rate earned on interest-earning assets of 19 basis points, from 5.66% in 2016 to 5.85% in 2017, which was driven by an increase in the rate earned on our loan portfolio which increased 18 basis points from 6.78% in 2016 to 6.96% in This increase was offset by a 19 basis point increase in the average interest rate paid on average interest bearing liabilities, from 2.49% to 2.68%, which was primarily caused by a 52 basis point increase in the average rate paid on medium and long term borrowings and placements which increased from 3.01% in 2016 to 3.53% in 2017 with the increase in Libor. Total Interest and Commission Income The following table presents the information as to the Bank s total interest and commission income for the three months ended December 31st, 2017 and 2016, and for the years ended December 31st, 2017 and 2016: For the Three Months Ended December 31st For the Years Ended December 31st % Change % Change Total interest and commission income 233, , % 891, , % Average interest - earning assets: Deposits with banks 326, , % 275, , % Loans, net 11,327,306 10,502, % 10,976,984 10,092, % Securities and other financial assets 4,323,491 4,150, % 4,312,723 4,043, % Total 15,977,467 14,936, % 15,565,485 14,422, % Average nominal rates earned: Deposits with banks (1) 2.15% 2.09% 2.25% 1.79% Loans, net (1) 6.96% 6.78% 6.85% 6.73% Securities and other financial assets (1) 3.22% 3.08% 3.09% 3.08% Total (1) 5.85% 5.66% 5.73% 5.61% (1) Percentages for the three months ended December 2016 and 2017 are annualized The Bank s total interest and commission income is derived principally from a diversified loan portfolio, which represented 70.9% of the Bank s total average earning assets for the three months ended December 31st, 2017, generating 84.3% of all total interest and commission income for this period. The 10.5% increase in total interest and commission income for the three months ended December 31st, 2017 as compared to the same period in 2016, resulted primarily from (i) a 7.0% increase in average interest-earning assets as compared to the same period in 2016, and (ii) an increase in the average rate earned on interest-earning assets of 19 basis points, from 5.66% in 2016 to 5.85% in The increase in average interest-earning assets was primarily driven by an 7.8% increase in average net loans, which in turn was mainly due to (i) increases in installment loans to individuals which increased by 9.2% (driven by credit cards (increased by 19.3%), personal loans (increased by 7.5%), and (ii) continued growth in both the residential mortgage portfolio (increased by 10.8%), and corporate loan portfolio (increased by 3.3%). The increase in the average rate earned on interest earning assets was due primarily to higher rates on loans, which increased from 6.78% in 2016 to 6.96% in

9 Total Interest Expenses The following table presents information as to the Bank s total interest expenses for the three months ended December 31st, 2017 and 2016, and for the years ended December 31st, 2017 and 2016: For the Three Months Ended December 31st For the Years Ended December 31st % Change % Change Total interest expenses 78,753 67, % 293, , % Average interest - bearing liabilties: Savings deposits 3,364,807 3,215, % 3,320,687 3,170, % Time deposits - clients 5,473,052 5,052, % 5,339,354 4,893, % Time deposits - interbank 130, , % 151, , % Borrowings and placements 2,786,377 2,433, % 2,549,394 2,222, % Total 11,755,074 10,806, % 11,360,764 10,422, % Average nominal rates paid: Savings deposits (1) 0.72% 0.73% 0.71% 0.70% Time deposits - clients (1) 3.50% 3.41% 3.44% 3.40% Time deposits - interbank (1) 0.71% 0.52% 0.78% 0.46% Borrowings and placements (1) 3.53% 3.01% 3.34% 2.90% Total (1) 2.68% 2.49% 2.58% 2.44% (1) Percentages for the three months ended December 2016 and 2017 are annualized The Bank s total interest expenses is primarily attributable to interest paid on client deposits, which accounted for 68.5% of total interest expenses in the three months ending December 31st, 2017, as compared to 72.6% in the same period in The 17.0% increase in total interest expenses for the three months ended December 31st, 2017 as compared to the corresponding period in the prior year, was primarily a result of (i) an 8.8% increase in average interestbearing liabilities compared to the same period in 2016, and (ii) a 19 basis point, or 7.6% increase in the average rate paid on interest-bearing liabilities which increased from 2.49% in 2016 to 2.68% in The increase in average interest-bearing liabilities was mainly due to (i) a 14.5% increase in average medium and long term borrowings and placements to complement deposit growth and fund loan growth, (ii) an 8.3% increase in average client time deposits, the Bank s principal source of funding, and (iii) a 4.6% growth in average savings deposits. The increase in the average interest rate paid on interest-bearing liabilities was mainly due to the increase in the cost of borrowings and placements of 52 basis points, to 3.53% as of December 31st, 2017 from 3.01% in the same period in 2016, as a result of the increase in Libor rates. The following table sets forth the effect of changes in the Bank s total interest expense as a result of changes in (i) the average volume of interest-bearing liabilities, and (ii) the average nominal interest rates paid during the three months ended December 31st, 2017 and 2016: Increase (decrease) Due to changes in average volume of interest - bearing liabilities Due to changes in average nominal interest rates paid Net change 2016/2017 (in thousands of U.S. dollars) 5,910 5,540 11,450 9

10 The increase of U.S.$949.0 million in average interest-bearing liabilities for the three months ended December 31st, 2017 resulted in an increase of U.S.$5.9 million in interest expenses for the period, while the increase in the average rate paid on interest-bearing liabilities, from 2.49% to 2.68%, resulted in an increase of U.S.$5.5 million in interest expenses as compared to the same period in 2016 Provision for Loan Losses The following table presents the Bank s allowance for loan losses, net, charge-offs and recoveries included in the Bank s results of operations for the three months ended December 31st, 2017 and 2016, and for the years ended December 31st, 2017, and 2016: For the Three Months Ended December 31st For the Years Ended December 31st % Change % Change Balance at beginning of year 140, , % 128, , % Provision charged to expenses, net of recoveries 11,917 12,010 (0.8%) 44,485 45,532 (2.3%) Recoveries of loan charge-offs 5,128 4, % 21,368 18, % Loan charge-offs (13,149) (9,611) 36.8% (49,938) (47,088) 6.1% Balance at end of year 144, , % 144, , % Provisions to average loans 0.10% 0.11% 0.40% 0.44% Loan charge-offs to average loans (1) 0.46% 0.36% 0.45% 0.46% Allowance to total loans 1.26% 1.20% 1.26% 1.20% (1) Percentages for the three months ended December 2016 and 2017 are annualized The provision for loan losses of U.S.$11.92 million, or 0.10% of loans, was flat in the quarter as a result of a 0.9% growth in the loan portfolio in the quarter and improved credit quality. The U.S.$11.92 million provision covered net charge off of U.S.$8.02 million, allowing the reserve to grow 2.8% in the quarter, and as a percentage of loans increase from 1.24% in the third quarter 2017 to 1.26% in the fourth quarter of The Bank s allowance for loan losses totaled U.S.$144.8 million as of December 31st, 2017, representing a % coverage of non accrual loans, and/or % of past due loans. We believe that the Bank s allowance for loan losses adequately covers the credit risk of the Bank s portfolio. Fees, Commissions and Other Income, Net The following table presents information as to the Bank s fees, commissions and other income, net for the three months ended December 31st, 2017 and 2016, and for the years ended December 31st, 2017 and 2016: For the Three Months Ended December 31st For the Years Ended December 31st % Change % Change Fees and commission income, net 32,715 29, % 121, , % Insurance premiums, net 7,191 6, % 26,885 22, % Gain (loss) on financial instruments, net (5,258) (2,330) 125.7% 16,477 4, % Other income, net 5,938 5, % 39,086 18, % Total other income, net 40,586 38, % 204, , % 10

11 Total Other Income, Net The 5.2% increase in the Bank s total other income, net for the three months ended December 31st, 2017 and 2016, and for the years ended December 31st, 2017 and 2016, primarily reflects the following factors: Fees and Commission Income, Net The 12.1% increase in fees and commission income, net of commission expenses for the three months ended December 31st, 2017 was mainly due to (i) a 10.6% increase in commissions and fees related to credit and debit card operations (ii) a 15.2% increase in wealth management revenue, (iii) a 12.6% increase in banking services, and (iv) a 14.8% increase in mutual fund and pension fund income. This increase in income was partially offset by a 7.1% increase in commissions and other expenses, mainly attributable to an 8.1% increase in credit and debit card commissions and ATM charges Insurance Premiums, Net The 17.0% increase in the Bank s insurance premiums, net, for the period ending December 31st, 2017 as compared to the same period in 2016, primarily reflects higher premiums in life insurance coverage from the Bank s growing automobile, personal, credit cards and residential mortgage loan portfolios, as compared to the same period in 2016, and slightly lower levels of claims. Gain (loss) on Financial Instruments, Net Loss on financial instruments, net, increased by U.S.$2.9 million for the three months ended December 31st, 2017 as compared to the same period in 2016, principally due to the decrease in the market values of fixed income instruments as a result of the increase in international interest rates. Other Income, Net The 6.0% or U.S.$0.3 million increase in the Bank s other income, net for the three months ended December 31st, 2017 as compared to the same period in 2016, was principally a result of the increase in dividends received of U.S.$0.4 million. General and Administrative Expense The following table presents information as to the Bank s general and administrative expenses for the three months ended December 31st, 2017 and 2016, and for the years ended December 31st, 2017 and 2016: For the Three Months Ended December 31st For the Years Ended December 31st % Change % Change Salaries and other employee expenses 42,250 39, % 165, , % Premises and equipment expenses 5,307 4, % 23,925 18, % Depreciation and amortization 6,206 5, % 22,214 18, % Other expenses 17,173 15, % 68,584 60, % Total 70,936 65, % 280, , % 11

12 The 9.0% increase in general and administrative expenses primarily reflects the growth of the Bank s business, with a 6.8% increase in net loans and a 6.5% increase in deposits and borrowings, as well as the following: Salaries and Other Employee Expenses Salaries and other employee expenses represented 59.6% of total general and administrative expenses for the three months ended December 31st, 2017 as compared to 61.2% for the same period in The 6.1% increase in salaries and other employee expenses was primarily attributable to (i) increases in the average number of employees, with a 4.3% increase in headcount as compared to 2016, to support our growing operations, and (ii) a moderate annual increase in salaries paid which are typically in the range of 3% to 5%. Premises and Equipment Expenses The 23.6% or U.S.$1.0 million increase in premises and equipment expenses for the three months ended December 31st, 2017 as compared to the same period in 2016 was primarily due to an increase of U.S.$0.6 million in the costs of maintenance of equipment and software licenses. Depreciation and Amortization Expense The 6.8% or U.S.$0.4 million increase in the Bank s depreciation and amortization expense for the three months ended December 31st, 2017 as compared to the same period in 2016 was driven by additional depreciation from new software developed internally. Other Expenses The 13.4% or U.S.$2.0 million increase in other expenses for the three months ended December 31st, 2017 as compared to the same period in 2016, was mainly due to (i) a 21.9% or U.S.$1.0 million increase in legal and professional services, (ii) a U.S.$0.4 million increase in utilities expense, and (iii) a U.S.$0.3 million increase in donations. Taxes We incurred corporate income taxes amounting to U.S.$14.3 million for the three months ended December 31st, 2017 as compared to the U.S.$14.1 million in the same period in This U.S.$0.2 million or 1.4% increase primarily reflects a slightly higher taxable income as compared to the same period in Operating Efficiency The Bank s operating efficiency amounted to 35.86% for the three months ended December 31st, 2017 as compared to 35.22% in the same period in 2016, principally as a result of lower revenues caused by losses on financial instruments amounting to U.S.$5.3 million. The Bank s expenses as a percentage of average interest-earning assets increased 1% in the quarter, to 1.82% for the three months ended December 31st, 2017 as compared to 1.80% in the same period in 2016, driven principally by an increase in depreciation expense in the period, and costs associated with our new operating center. 12

13 Annex N. 1 BANCO GENERAL, S. A. Y SUBSIDIARIAS Consolidated Income Statement For the Quarter Ended December 31st, dic sep jun mar dic-16 Total interest and commission income 233, , , , ,525 Total interest expenses (78,753) (76,187) (70,711) (67,611) (67,302) Net interest and commission income 154, , , , ,222 Total Provisions, net (12,249) (11,193) (10,527) (11,056) (12,416) Net interest and commission income after provisions 142, , , , ,807 Other Income (expenses): Fees and other commissions 53,004 50,661 48,543 47,255 48,121 Insurance premiums, net 7,191 6,783 6,696 6,214 6,145 Loss (gain) on financial instruments, net (5,258) 10,906 7,200 3,629 (2,330) Other income, net 5,938 23,451 4,946 4,751 5,600 Commissions expenses and other expenses (20,289) (19,328) (19,011) (19,130) (18,942) Total other income, net 40,586 72,474 48,373 42,719 38,594 General and administrative expenses (70,936) (72,789) (68,875) (67,799) (65,071) Equity participation in associates 2,291 2,274 2,088 1,917 1,958 Net income before income tax 114, , , , ,288 Income tax, net (14,267) (14,618) (14,348) (12,708) (14,075) Net income 100, , ,513 97,505 93,212 13

14 Annex N. 2 BANCO GENERAL, S.A. Y SUBSIDIARIAS Consolidated Balance Sheet For the Period Ended December 31st, dic sep jun mar dic-16 (in thousands of U.S. dollars, unless otherwise indicated) Assets Cash and deposits with banks 845, , , , ,703 Securities and other financial assets 4,414,784 4,239,165 4,287,189 4,289,825 4,063,953 Loans 11,506,061 11,405,634 11,037,315 10,910,361 10,769,010 Allowance for possible loan losses (144,832) (140,936) (137,853) (133,493) (128,917) Unearned commissions (38,255) (38,089) (37,216) (36,118) (35,511) Investments in associates 22,076 21,834 21,592 20,460 18,591 Other assets 966, ,082 1,049, , ,995 Total assets 17,571,922 17,251,809 16,872,396 16,728,509 16,415,824 Liabilities and shareholder's equity Local deposits 11,044,313 10,912,741 10,847,372 10,767,675 10,668,732 Foreign deposits 414, , , , ,954 Total Deposits 11,458,427 11,331,154 11,273,995 11,226,626 11,072,686 Securities sold under repurchase agreements 45, , , , ,300 Medium and long term borrowings and placements 2,661,365 2,323,100 1,959,682 1,892,142 1,950,624 Perpetual bonds 217, , , , ,680 Other liabilities 1,142,792 1,178,461 1,253,474 1,197,362 1,069,348 Shareholder's equity 2,045,843 2,053,930 1,964,315 1,889,287 1,832,186 Total liabilities and shareholder's equity 17,571,922 17,251,809 16,872,396 16,728,509 16,415,824 Operational data (in units): Number of customers (1) 906, , , , ,436 Number of employees (2) 4,649 4,594 4,518 4,461 4,457 Number of branches Number of ATMs Assets under management (3) 10,219,936 9,735,681 9,578,915 9,277,079 8,946,365 (1) Total number of clients at the end of the period includes Banco General, Banco General Overseas, Profuturo, and Banco General Costa Rica clients (2) Total number of permanent full-time employees at the end of the period (3) In thousands of U.S. dollars. See note 26 of the Audited Financial Statements 14

15 Annex N. 3 BANCO GENERAL, S.A. Y SUBSIDIARIAS Financial Ratios For the Quarter Ended December 31st, dic sep jun mar dic-16 Profitability and efficiency: Net interest margin (1) (2) 3.88% 3.86% 3.84% 3.80% 3.86% Return on average assets (1) (3) 2.30% 2.98% 2.49% 2.35% 2.29% Return on average equity (1) (3) 19.35% 25.13% 21.53% 20.81% 20.02% Operating Efficiency (4) 35.86% 32.21% 34.74% 35.86% 35.22% Operating expenses / average total assets (1) (3) 1.63% 1.70% 1.64% 1.64% 1.60% Other income / operating income (5) 22.14% 34.11% 26.06% 24.26% 22.65% Liquidity: Primary Liquidity (6) / total deposits and obligations 26.12% 25.90% 25.76% 25.97% 26.00% Regulatory liquidity (7) / total deposits 38.81% 37.87% 39.81% 39.64% 38.90% Loans, net / total client deposits 99.61% % 98.19% 97.13% 96.62% Capital: Total capital ratio (8) 19.11% 19.31% 19.61% 18.99% 18.58% Tier 1 common equity ratio 17.22% 17.41% 17.59% 16.97% 16.54% Total Tier 1 capital ratio (9) 19.11% 19.31% 19.61% 18.99% 18.58% Equity / assets 11.64% 11.91% 11.64% 11.29% 11.16% Earnings retention ratio (10) 4.29% 67.56% 60.47% 57.63% -2.88% Asset quality: Past due loans (10) / loans 1.03% 1.08% 1.13% 1.09% 0.95% Non accrual loans (11) / loans 0.78% 0.88% 0.92% 0.84% 0.74% Allowance for possible loan losses / loans 1.26% 1.24% 1.25% 1.22% 1.20% Allowance for possible loan losses / past due loans % % % % % Allowance for possible loan losses / non accrual loans % % % % % Charge-offs / loans (1) 0.46% 0.49% 0.42% 0.42% 0.36% (1) Percentages are annualized (2) Net interest margin refers to net interest and commission income divided by average interest-earning assets. Average interest-earning assets are determined on average monthly balances (3) Percentages have been calculated using monthly averages (4) Efficiency is defined as general and administrative expenses divided by the sum of net interest and commission income and other income and equity participation in associates (5) Operating income is defined as the sum of net interest and commission income and other income (6) Primary liquidity is comprised of (a) cash and due from banks, (b) interest bearing deposits with banks, and (c) high quality (investment grade) fixed income securities including repos, fixed income mutual funds, treasury bills, negotiable CDs, commercial paper, corporate and sovereign bonds, MBS, CMOs and ABS. (7) As defined in Accord by the SBP (8) Total capital as a percentage of assets based on risk weighted assets, in accordance with the requirements of the SBP (9) Tier 1 capital as a percentage of assets based on risk weighted assets, in accordance with the requirements of the SBP (10) Net income for the period minus dividends paid for the period diviided by net income (11) Past due loans: All loans past due 90+ days on interest / principal payments and all loans past due 30 days post maturity (12) Non accrual loans: All loans past due 90+ days on interest / principal payments, and residential mortgages past due 120+ days in accordance with SBP requirements 15