Banco Modal S.A. Update to credit analysis. Exhibit 1 Rating Scorecard - Key financial ratios. 7% -3% -0.8% -2% Analyst Contacts 8.

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1 CREDIT OPINION 9 November 218 Banco Modal S.A. Update to credit analysis Update Summary Banco Modal S.A.'s (Modal) baseline credit assessment (BCA) of takes into consideration the bank's reliance on market funds, deteriorating profitability, moderate capitalization, high level of charge offs and high level of concentrations. The bank's ample liquidity, partially offsetting these challenges. The standalone assessment also factors in the risks associated with the bank's large exposure to merchant banking investments. RATINGS Banco Modal S.A. Domicile Rio de Janeiro, Rio de Janeiro, Brazil Long Term CRR Ba3 Type LT Counterparty Risk Rating - Fgn Curr Outlook Not Assigned Long Term Debt Not Assigned Long Term Deposit B1 Type LT Bank Deposits - Fgn Curr Exhibit 1 Rating Scorecard - Key financial ratios Banco Modal S.A. (BCA: ) Median -rated banks 12% 77% 67% 1% Stable 57% 8% 47% 6% 37% 4% 27% 17% 2% 1.8% % Alexandre Albuquerque VP-Senior Analyst alexandre.albuquerque@moodys.com 67.7% 7% -3% -.8% -2% Analyst Contacts 13.4% 8.4% Asset Risk: Problem Loans/ Gross Loans Capital: Tangible Common Equity/Risk-Weighted Assets Solvency Factors (LHS) Profitability: Net Income/ Tangible Assets -13% Funding Structure: Market Funds/ Tangible Banking Assets Liquid Resources: Liquid Banking Assets/Tangible Banking Assets Liquidity Factors (RHS) Source: Moody's Financial Metrics Farooq Khan Analyst farooq.khan@moodys.com Vicente Gomez Associate Analyst vicente.gomez@moodys.com Aaron Freedman Associate Managing Director aaron.freedman@moodys.com» Contacts continued on last page CLIENT SERVICES Americas Asia Pacific Japan EMEA THIS REPORT WAS REPUBLISHED ON 14 NOVEMBER 218 TO INCLUDE A PARAGRAPH ON PAGE 3 REGARDING THE BANK'S LOAN BOOK AND A PARAGRAPH ON PAGE 4 DISCUSSING POTENTIAL FUTURE EARNINGS GENERATION FROM FEE-BASED ACTIVITIES, INCLUDING 'MODALMAIS' DIGITAL PLATFORM. Liquidity Factors Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Solvency Factors Outlook The deposit and senior debt ratings of B1 are based on Modal's BCA of, and do not benefit from any parental and government support uplift, given our assessment of a low probability of support, owing to the bank's modest market share in domestic deposits.

2 Credit strengths» Adequate liquidity management» Capitalization is moderate Credit challenges» Profitability challenged to show stable earnings generation capacity» Asset risk strained by single-name concentration, market risk and non-banking investments and high charge offs Outlook The stable outlook on Modal's ratings reflects our expectation that the potential negative pressures from the bank's asset risk and profitability are appropriately counterbalanced by its capital position and adequate liquidity management. Factors that could lead to an upgrade» There is limited upward pressure to Modal s ratings. However, ratings could benefit from substantial and sustained improvement in its profitability metrics and a reduction on its earnings volatility. A decline in the exposure to risky merchant banking investments and the maintenance of its capital position above current levels could bring ratings up. Factors that could lead to a downgrade» The bank s ratings could face downward pressure if it is unable to sustain its capitalization in conjunction with keep posting losses, or if the bank encounters problems with its merchant banking investments, or both. Key indicators Exhibit 2 Banco Modal S.A. (Consolidated Financials) [1] Total Assets (BRL billion) Total Assets (USD billion) Tangible Common Equity (BRL billion) Tangible Common Equity (USD billion) Problem Loans / Gross Loans (%) Tangible Common Equity / Risk Weighted Assets (%) Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) Net Interest Margin (%) PPI / Average RWA (%) Net Income / Tangible Assets (%) Cost / Income Ratio (%) Market Funds / Tangible Banking Assets (%) Liquid Banking Assets / Tangible Banking Assets (%) Gross Loans / Due to Customers (%) CAGR/Avg [1] All figures and ratios are adjusted using Moody's standard adjustments. [2] Basel III - fully-loaded or transitional phase-in; LOCAL GAAP. [3] May include rounding differences due to scale of reported amounts. [4] Compound Annual Growth Rate (%) based on time period presented for the latest accounting regime. [5] Simple average of periods presented for the latest accounting regime. [6] Simple average of Basel III periods presented. Source: Moody's Financial Metrics This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on for the most updated credit rating action information and rating history. 2 9 November 218

3 Profile Modal is an investment bank, with BRL2.9 billion of assets as of June 218. The bank's main businesses are advisory, capital market, brokerage, and merger and acquisition services. The bank is small compared with Brazil's overall banking system, with a market share of less than 1% each in terms of deposits, assets and loans as of June 218. Created in 1996, Modal has offices in Rio de Janeiro and Sao Paulo, and a branch in the Cayman Islands. Detailed credit considerations This assessment takes into account Modal's Prudencial Conglomerate financial statements, which include the statements of Banco Modal S.A. and its subsidiaries, and Modal Administradora de Recursos Ltda. Asset risk strained by single-name concentration, market risk and non-banking investments and high charge offs The score for Asset Risk reflects the inherent borrower concentration in Modal's loan book and relevant non-lending credit risks. Also, it is somewhat weighted by the bank's exposure to market risk, which represented 8.9% of its total capital requirement as of June 218, though down from the 25% of the same period last year. Modal's total credit risk exposure, including loans, private securities and guarantees, declined by 2.6% in the 12 months ended June 218. This decline was driven mainly by a sharp decline in the bank's loan book (-27%). The problem loan ratio was equivalent to.4% as of June 218, and experienced high volatility in the last years, which reflects the facts that (1) the bank's loan book is somewhat concentrated, and (2) there are still negative pressures arising from the economic environment. In addition, the bank presented charge offs equivalent to 4.8% of the bank's gross loans as of June 218. However, the bank's reserve coverage is still ample as loan loss reserves represented a high 727% of problem loans as of June 218, which can give an ample loss absorbing cushion against unexpected losses. Modal has a meaningful volume of investments allocated to merchant banking. In the last few years, the fair value assessment of these investments resulted in gains that are accounted for directly in the bank s shareholders' equity. Although an impairment analysis of these investments is carried out each six to 12 months, the continued success and future valuation of these investments is difficult to forecast with any certainty because these investments are mostly in non-financial private companies with limited transparency. Risks related to high borrower concentration remains a concern, particularly when compared to same rated peers. This challenge reflects Modal s exposure to a limited number of sectors and will continue to expose asset quality to potentially high volatility. As of June 218, the bank s exposure to the infrastructure sector, including loans and private securities, represented about 27% of the bank s total loans. That said, we expect that the bank will maintain reasonable levels of reserves for loan losses, which will help mitigate asset risks. Capitalization is moderate The b2 Capital score reflects Moody's capital measure, represented by the ratio of tangible common equity to risk-weighted assets (TCE/RWA) of 8.4% as of June 218, which declined from 11.2% in December 216. The sharp drop in capital levels was because of a significant increase in intangible assets, which we deduct from TCE because such assets do not have good extraordinary loss absorption capacity. However, Modal has reported adequate regulatory capital, illustrated by its Common Equity Tier 1 ratio of 12.8% as of June 218 compared with 13.9% as of June 217. The trend of Modal s capital position will be directly linked to its ability to generate capital with internal results to support its ongoing growth in operations. Profitability challenged to show stable earnings generation capacity The caa2 profitability score captures the potential challenges arising from Modal's ability to sustain stable earnings in a slow business environment. Also, the score takes into account the revenue contribution from segments that are more subject to volatility, including investment banking, sales, and trading and merchant banking. As such the bank posted a net income to tangible banking assets of -.8% due to a lower net interest income, net interest margin compressed to.87% from the last three year average of 3%. At the same time the bank efficiency worsened due to higher 3 9 November 218

4 administrative and personnel expenses. The operating expense increased 47% year-over-year, while its loan book contracted a significantly 27%. Historically, Modal has recorded meaningful volumes of unrealized gains, which were equivalent to.4% of its tangible assets as of June 218. The current unrealized gains are mainly related to the positive evaluation of the bank's merchant banking investments and securities. The unrealized gains and losses are incorporated into our profitability assessment when they become effectively realized. Therefore, the bank's stock of unrealized gains may benefit its future results if they are realized at current levels. Moody s expects future earnings recurrence to improve in the next 12 to 18 months as Modal focuses on enhancing fee-based income activities, that helps to insulate earnings volatility from trading and credit. To this end, the bank is promoting its newly created digital platform ModalMais, which will add more granular revenues, and increasing its mutual and private equity funds activities, including custody and administration services. That said, we will continue to closely monitor the bank s ability to implement its business plan and to consistently improve its recurring earnings. Large volume of liquid resources The Combined Liquidity score of baa3 captures the bank's large volume of liquid assets. Modal holds a large volume of liquid resources even after deducting the illiquid investments from its securities portfolio, mainly including its merchant banking investments, and other instruments with lower liquidity, such as debentures. The bank also maintains a favorable tenor gap in the maturity of its assets and liabilities. Modal's rating is supported by the Moderate- Macro Profile of Brazil Brazil's Moderate- Macro Profile reflects the large size and diversified nature of the country's economy, more credible monetary policy, increasing commitment to addressing corruption and improving overall government effectiveness, and very low susceptibility to external shocks. However, Brazil's economic rebound, which began in 217 after a deep two-year recession, has been weaker than expected, reflecting the high degree of uncertainty surrounding policy continuity beyond 219. Although public-sector banks continue to account for a substantial portion of total credit, loans granted by them have been contracting since 215, which has reduced the market distortions created by their previous aggressive lending policies. Moderate economic growth in 218 and 219 will support modest lending growth over the next 12 months. Consequently, banks will face little to no pressure on their funding needs, while low interest rates and low inflation will improve borrowers' repayment capacity, leading to a stabilization in asset quality. Support and structural considerations Government support We believe there is a low likelihood of government support for Modal's rated deposits, given its modest market share of deposits in Brazil. Counterparty Risk (CR) Assessment CR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails and are distinct from debt and deposit ratings in that they (1) consider only the risk of default rather than both the likelihood of default and the expected financial loss suffered in the event of default, and (2) apply to counterparty obligations and contractual commitments rather than debt or deposit instruments. The CR Assessment is an opinion on the counterparty risk related to a bank s covered bonds, contractual performance obligations (servicing), derivatives (e.g., swaps), letters of credit, guarantees and liquidity facilities. Modal's CR Assessment is positioned at Ba3(cr)/Not Prime(cr) The CR Assessment is one notch above the bank's adjusted BCA of, and, therefore, above the bank's deposit rating, reflecting our view that the probability of default is lower at the operating obligations than at the level of deposits. Modal's CR Assessment does not benefit from government support because such support is not incorporated in the bank's deposit ratings. Counterparty Risk Rating (CRR) Moody s Counterparty Risk Ratings are opinions of the ability of entities to honor the uncollateralized portion of non-debt counterparty financial liabilities (CRR liabilities) and also reflect the expected financial losses in the event such liabilities are not honored. CRR 4 9 November 218

5 liabilities typically relate to transactions with unrelated parties. Examples of CRR liabilities include the uncollateralized portion of payables arising from derivatives transactions and the uncollateralized portion of liabilities under sale and repurchase agreements. CRRs are not applicable to funding commitments or other obligations associated with covered bonds, letters of credit, guarantees, servicer and trustee obligations, and other similar obligations that arise from a bank performing its essential operating functions. Modal's CRR is positioned at Ba3/Not Prime Modal's global local and foreign currency CRRs are positioned at Ba3 and Not Prime, one notch above the bank's adjusted BCA, reflecting the lower probability of default of CRR liabilities and our expectation of a normal level of loss given default. About Moody's Bank Scorecard Our scorecard is designed to capture, express and explain in summary form our Rating Committee s judgment. When read in conjunction with our research, a fulsome presentation of our judgment is expressed. As a result, the output of our scorecard may materially differ from that suggested by raw data alone (though it has been calibrated to avoid the frequent need for strong divergence). The scorecard output and the individual scores are discussed in rating committees and may be adjusted up or down to reflect conditions specific to each rated entity. Rating methodology and scorecard factors Exhibit 3 Banco Modal S.A. Macro Factors Weighted Macro Profile Moderate - Factor Historic Ratio Initial Score Expected Trend Assigned Score Key driver #1 Key driver #2 Solvency Asset Risk Problem Loans / Gross Loans 1.8% baa3 Single name concentration Non lending credit risk Capital TCE / RWA 8.4% b2 b2 Risk-weighted capitalisation Profitability Net Income / Tangible Assets -.8% caa2 caa2 Expected trend Combined Solvency Score Liquidity Funding Structure Market Funds / Tangible Banking Assets 13.4% baa3 ba2 Market funding quality Liquid Resources Liquid Banking Assets / Tangible Banking Assets 67.7% a3 baa1 Quality of liquid assets Combined Liquidity Score Financial Profile Business Diversification Opacity and Complexity Corporate Behavior Total Qualitative Adjustments Sovereign or Affiliate constraint: Scorecard Calculated BCA range Assigned BCA Affiliate Support notching Adjusted BCA 5 1% 9 November 218 baa2 b2 baa3 ba Ba2 ba3-b2

6 Instrument class Counterparty Risk Rating Counterparty Risk Assessment Deposits Loss Given Failure notching 1 1 Additional Preliminary Rating Notching Assessment ba3 ba3 (cr) Government Support notching Local Currency Rating Ba3 Ba3 (cr) B1 Foreign Currency Rating Ba3 -B1 [1] Where dashes are shown for a particular factor (or sub-factor), the score is based on non-public information. Source: Moody's Financial Metrics 6 9 November 218

7 Ratings Exhibit 4 Category BANCO MODAL S.A. Outlook Counterparty Risk Rating Bank Deposits NSR Bank Deposits Baseline Credit Assessment Adjusted Baseline Credit Assessment Counterparty Risk Assessment Moody's Rating Stable Ba3/NP B1/NP Baa2.br/BR-3 Ba3(cr)/NP(cr) Source: Moody's Investors Service 7 9 November 218

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9 Analyst Contacts 9 CLIENT SERVICES Alexandre Albuquerque VP-Senior Analyst alexandre.albuquerque@moodys.com Farooq Khan Analyst farooq.khan@moodys.com Vicente Gomez Associate Analyst vicente.gomez@moodys.com Aaron Freedman Associate Managing Director aaron.freedman@moodys.com 9 November Americas Asia Pacific Japan EMEA