FINANCIAL STATEMENTS September/2018 1

Transcription

1 FINANCIAL STATEMENTS September/2018 1

2 INDEX PRESS RELEASE... 7 BUSINESS ENVIRONMENT... 9 FINANCIAL HIGHLIGHTS... 9 OPERATIONAL HIGHLIGHTS GUIDANCE ANALYSIS OF PERFORMANCE MARKET SHARE MARGIN ANALYSIS Financial Intermediation Performance...16 Variations in Interest Income and Expenses: Volumes and Rates...17 STOCK MARKET PERFORMANCE ASSET EVOLUTION Total Assets...21 Securities and Derivatives...22 Credit Operations...23 Cover Ratio...28 Default Rate...29 Funds Raised...29 Assets Under Management...31 Shareholders Equity...31 Basel Ratio...32 EVOLUTION OF INCOME STATEMENT ACCOUNTS Net Income...33 Financial Income...34 Revenues from Credit, Leasing Operations and Sale or Transfer of Financial Assets...35 Revenues from Securities and Derivatives...37 Revenues from Foreign Exchange...37 Revenues from Compulsory Deposits...38 Financial Expenses...38 Expenses with Market Funding Operations...39 Expenses with Borrowings and Onlendings...39 Funding Cost...40 Allowance for Loan Losses...41 Financial Margin...41 Revenues from Services and Banking Fees...42 Recurring Administrative Expenses...42 Other Recurring Operating Income...43 Other Operating Expenses...44 SUMMARY CONSOLIDATED PRO FORMA BALANCE SHEET PRO FORMA INCOME STATEMENT MANAGEMENT REPORT ECONOMIC SCENARIO BUSINESS STRATEGY CONSOLIDATED PERFORMANCE Net Income...49 Shareholders Equity...50 Total Assets...50 Loan Operations...51 Individuals and Corporate Non-earmarked Loans...51 Agricultural Loans...51 Earmarked Loans...51 Funds Raised and Under Management...52 PRODUCTS AND SERVICES Vero Acquiring Network...53 BanriCard Benefit and Business Cards Financial Statements September 2018

3 Banricompras...53 Credit Cards...53 Insurance...54 Public Sector Relations...54 BANRISUL S CUSTOMER SERVICE Service Network...54 Digital Channels...54 Banrisul Banking Correspondents Banriponto...55 SUBSIDIARIES Banrisul Cartões S.A Banrisul S.A. Administradora de Consórcios...55 Banrisul S.A. Corretora de Valores Mobiliários e Câmbio...56 Banrisul Armazéns Gerais S.A Banrisul Icatu Participações S.A Bem Promotora de Vendas e Serviços S.A CORPORATE GOVERNANCE OWNERSHIP STRUCTURE INTEREST ON EQUITY AND DIVIDENDS PAYOUT POLICY INTERNAL CONTROLS AND COMPLIANCE CAPITAL AND RISK MANAGEMENT Integrated Management Structure...58 Capital Management...59 Credit Risk...59 Market Risk...59 Liquidity Risk...60 Operational Risk...60 Socio-Environmental Risk...60 Basel Ratio...60 TECHNOLOGICAL MODERNIZATION Technology and Information Security...61 Digital Transformation...62 HUMAN RESOURCES SOCIAL AND ENVIRONMENTAL RESPONSIBILITY AWARDS ACKNOWLEDGMENTS FINANCIAL STATEMENTS BALANCE SHEET INCOME STATEMENT STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY CASH FLOW STATEMENT STATEMENT OF VALUE ADDED NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS NOTE 01 - OPERATIONS NOTE 02 - PRESENTATION OF FINANCIAL STATEMENTS NOTE 03 - SIGNIFICANT ACCOUNTING POLICIES NOTE 04 - CASH AND CASH EQUIVALENTS NOTE 05 - INTERBANK INVESTMENTS NOTE 06 - SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS NOTE 07 - RESTRICTED DEPOSITS NOTE 08 - LOANS, LEASE AND OTHER OPERATIONS WITH LOAN CHARACTERISTICS NOTE 09 - OTHER CREDITS NOTE 10 - OTHER ASSETS NOTE 11 - PERMANENT ASSETS NOTE 12 - DEPOSITS, MONEY MARKET FUNDING AND FUNDS FROM ACCEPTANCE AND ISSUANCE OF SECURITIES NOTE 13 - BORROWINGS NOTE 14 - ONLENDINGS NOTE 15 - OTHER PAYABLES NOTE 16 - RESERVES, CONTINGENT ASSETS AND LIABILITIES

4 NOTE 17 - INCOME FROM SERVICES RENDERED NOTE 18 - INCOME FROM BANK FEES NOTE 19 - PERSONNEL EXPENSES NOTE 20 - OTHER ADMINISTRATIVE EXPENSES NOTE 21 - OTHER OPERATING INCOME NOTE 22 - OTHER OPERATING EXPENSES NOTE 23 - EQUITY - BANRISUL NOTE 24 - COMMITMENTS, GUARANTEES AND OTHERS NOTE 25 - INCOME TAX AND SOCIAL CONTRIBUTION NOTE 26 - POST-EMPLOYMENT LONG-TERM BENEFIT OBLIGATIONS TO EMPLOYEES NOTE 27 - CORPORATE RISKS AND CAPITAL MANAGEMENT NOTE 28 - TRANSACTIONS WITH RELATED PARTIES NOTE 29 - IMPACT FROM ADOPTION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) NOTE 30 - SUBSEQUENT EVENT REPORT INDEPENDENT AUDITORS REPORT ON THE FINANCIAL STATMENTS ÍNDICE DE GRÁFICOS Graph 1: Average Financial Volume, Number of Trades and Number of Shares Graph 2: Total Assets Graph 3: Securities and Liquid Interbank Transactions Graph 4: Interbank and Interbranch Transactions Graph 5: Credit Operations Graph 6: Non-earmarked Credit Portfolio Evolution - Individuals and Companies Graph 7: Credit Portfolio by Risk Levels (%) Graph 8: Breakdown of Allowance for Loan Losses Graph 9: Cover Ratio Graph 10: Default Rate Graph 11: Funds Raised and Under Management Graph 12: Shareholders Equity Graph 13: Basel Ratio Graph 14: Net Income Graph 15: Recurring Efficiency Ratio Graph 16: Financial Income Graph 17: Revenues from Credit and Leasing Operations Graph 18: Revenues from Securities and Derivatives Graph 19: Revenues from Foreign Exchange Graph 20: Revenues from Compulsory Deposits Graph 21: Financial Expenses Graph 22: Expenses with Market Funding Operations Graph 23: Expenses with Borrowings and Onlendings Graph 24: Allowance for Loan Losses Graph 25: Financial Margin Graph 26: Revenues from Services and Banking Fees Graph 27: Recurring Administrative Expenses Graph 28: Other Recurring Operating Income Graph 29: Other Operating Expenses Graph 30: Net Income R$ Million Graph 31 : Shareholders Equity Growth Graph 32 : Total Assets Growth Graph 33: Loan Operations Growth Graph 34: Ownership Structure Financial Statements September 2018

5 ÍNDICE DE TABELAS Table 1: Economic and Financial Indicators... 8 Table 2: Key Items of the Income Statement... 9 Table 3: Accounting Net Income Statement x Recurring Net Income Table 4: Asset Evolution Statement Table 5: Statement of the Credit Portfolio Table 6: Other Indicators Table 7: Guidance Table 8: Market Share Table 9: Margin Analysis Table 10: Variations in Interest Income and Expenses: Volumes and Rates Table 11: Communication and Relationship Efforts Table 12: Ratings from Risk Agencies Table 13: Breakdown of Credit to Companies by Company Size Table 14: Breakdown of Credit by Sector Table 15: Breakdown of Credit by Portfolio Table 16: Composition of non-earmarked Credit - Individuals and Companies Table 17: Composition of Issued Credit Volumes by Financing Lines Table 18: Balance of Allowance for Loan Losses Table 19: Funding Composition Table 20: Revenues from Non-earmarked Credit - Individuals and Companies Table 21: Monthly Average Non-earmarked Credit Rates - Individuals and Companies Table 22: Funding Cost Table 23: Summary Consolidated Pro Forma Balance Sheet Table 24: Pro Forma Income Statement

6 6 Financial Statements September 2018

7 PRESS RELEASE This Press Release contains forward-looking statements, which not only relate to historic facts but also reflect the targets and expectations of the Company management. The terms anticipate, desire, expect, project, plan, intend and similar words are intended to identify statements that necessarily involve known and unknown risks. Known risks include uncertainties which are not limited to the impact of competitive services and pricing, acceptance of services by the market, Banrisul s and its competitors services transactions, regulatory approval, currency fluctuations, changes in the mix of the portfolio of services and other risks described in the Company's reports. This Press Release is up to date and Banrisul may or may not update it with new information and/or future events. 7

8 TABLE 1: ECONOMIC AND FINANCIAL INDICATORS Main Income Statement Accounts - R$ 9M18/ 3Q18/ 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 Million 9M17 2Q18 Net Interest Income 4, , , , , , , % 6.8% Allowance for Loan Losses Expenses , % -10.9% Gross Profit from Financial Operations 3, , , , , , % 11.5% Financial Income 7, , , , , , , % -2.7% Financial Expenses 3, , , , , , , % -13.1% Income from Services and Fees 1, , % -0.7% Recurring Administrative Expenses (1) 2, , % 3.4% Other Operational Expenses % 19.7% Other Recurring Operational Income % 7.4% Recurring Net Income % 10.8% Net Income % 10.8% Main Balance Sheet Accounts - R$ Sep 2018/ Sep 2018/ Sep 2018 Sep 2017 Sep 2018 Jun 2018 Mar 2018 Dec 2017 Sep 2017 Million Sep 2017 Jun 2018 Total Assets 75, , , , , , , % 0.7% Securities (2) 22, , , , , , , % 6.2% Total Credit Portfolio 31, , , , , , , % -0.8% Allowance for Loan Losses 2, , , , , , , % -10.0% Past Due Loans > 90 Days , , , , , % -14.6% Funds Raised and Under Management 65, , , , , , , % 3.8% Shareholders Equity 7, , , , , , , % 3.1% Prudential Conglomerate Reference Equity 6, , , , , , , % 3.8% Average Shareholders Equity 7, , , , , , , % 0.4% Average Total Assets 74, , , , , , , % 2.8% Average Profitable Assets 66, , , , , , , % 2.6% 9M18/ 3Q18/ Stock Market Information - R$ Million 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 9M17 2Q18 Interest on Own Capital / Dividends (3) % -24.1% Market Capitalization 6, , , , , , , % 1.6% Book Value Per Share % 3.1% Average Price per Share (R$) % -12.0% Earnings per Share (R$) % 10.9% Financial Index 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 ROAA (pa.) (4) 1.4% 1.1% 1.5% 1.4% 1.4% 1.8% 1.2% 1.3% 1.0% ROAE (pa.) (5) 15.1% 12.1% 17.3% 15.6% 14.4% 20.2% 13.9% 13.5% 10.3% Efficiency Ratio (6) 51.8% 54.7% 51.8% 51.8% 52.5% 52.8% 54.7% 50.6% 52.1% Net Interest Margin on Profitable Assets 8.32% 8.21% 8.73% 8.38% 8.37% 9.21% 8.31% 8.3% 8.70% Recurring Operating Cost 4.9% 5.1% 4.9% 4.9% 5.1% 5.0% 5.1% 5.0% 5.0% Default Rate > 90 Days (7) 2.91% 4.30% 2.91% 3.37% 3.43% 3.56% 4.30% 3.99% 5.63% Cover Ratio 90 days (8) 258.9% 205.9% 258.9% 245.7% 256.0% 248.6% 205.9% 3.56% 5.00% Provisioning Index (9) 7.5% 8.9% 7.5% 8.3% 8.7% 8.9% 8.9% 221.8% 154.5% Basel Ratio (Prudential Conglomerate) 15.9% 16.5% 15.9% 15.0% 15.6% 17.0% 16.5% 248.6% 174.0% Structural Indicators Sep 2018 Sep 2017 Sep 2018 Jun 2018 Mar 2018 Dec 2017 Sep 2017 Branches Service Stations Electronic Service Stations Employees 10,732 10,591 10,732 10,705 10,732 10,516 10,591 Economic Indicator 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 Effective Selic Rate 4.82% 8.04% 1.59% 1.56% 1.59% 1.76% 2.26% Exchange Rate (R$/USD - end of period) Exchange Rate Variation (%) 21.04% -2.80% 3.84% 16.01% 0.48% 4.42% -4.24% IGP-M (General Market Price Index) 8.30% -2.12% 2.75% 3.86% 1.48% 1.62% -0.15% IPCA (Extended Consumer Price Index) 3.34% 1.78% 0.72% 1.89% 0.70% 1.14% 0.59% (1) Includes Recurring Personnel Expenses and Other Administrative Expenses. (2) Includes Interbank Deposits and deduces Repurchase Obligations. (3) Interest on Own Capital and Dividends paid, credited and/or provisioned (before retention of income tax). (4) Net Income / Average Total Asset. (5) Net Income / Average Shareholders Equity. (6) Efficiency Ratio for the last 12 months. Personnel Expenses + Other Administrative Expenses / Financial Margin + Income from Services and Fees + (Other Operational Income Other Operational Expenses). (7) Past Due Loans > 90 days / Total Credit Portfolio. (8) Allowance for Loan Losses / Past Due Loans > 90 days. (9) Allowance for Loan Losses / Credit portfolio. 8 Financial Statements September 2018

9 BUSINESS ENVIRONMENT In connection to the new management model adopted since 2017, improvements in credit risk models for the individual and corporate retail segments and in processes of credit origination and recovery aim at improving risk-adjusted net interest income and capturing new business opportunities, all supported by effective management of credit exposure and risk-based pricing models, seeking to improve risk-adjusted financial margin and the capture of new business. Within the commercial strategy with individuals, targeting is grounded on high liquidity operations, especially payroll loans to the public sector. In addition, Banrisul has fostered performance and positioning within the corporate segment, by launching, in the first half-year of 2018, a program aimed at micro and small enterprises, which also seeks to promote the prepayment of receivables, the use of corporate account, corporate credit card and the supply of Vero Mobile equipment. The strengthening of the Vero s acquiring network is also an important goal for the Bank, and new products and services have been made available. FINANCIAL HIGHLIGHTS The summary of Banrisul s results for the 9M18 and 3Q18 are presented below. The Analysis of Performance, Management Report, Financial Statements and the Accompanying Notes are available at the Bank s website TABLE 2: KEY ITEMS OF THE INCOME STATEMENT Result - R$ Million 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 9M18 / 9M17 Net Interest Income 4, , , , , , , % 6.8% Allowance for Loan Losses , % -10.9% Gross Profit from Financial Operations , , , , , % 11.5% Income from Services and Fees , % -0.7% Recurring Administrative Expenses , % 3.4% Operating Income % 13.9% Net Income % 10.8% Recurring Net Income % 10.8% 3Q18/ 2Q18 Net income amounted to R$796.1 million in 9M18, 48.4% above 9M17. In 3Q18, net income amounted to R$290.2 million, 31.6% above 3Q17 and 10.8% above 1Q18. Recurring net income increased 35.4% from 9M17 to 9M18. Banrisul s year to date performance from September 2017 to September 2018 reflects the increase of net interest income, lower provision expenses, increasing banking service fees and recurring administrative expenses and the unfavorable evolution of other operating expenses/income. From 2Q18 to 3Q18, performance was mainly influenced by NII expansion, increasing in fee revenues and administrative expenses, lower provision expenses and the growth of other operational expenses. Net interest income of R$4,113.1 million in 9M18 increased 8.6% (R$325.7 million) year-on-year. NII in 3Q18 amounted to R$1,428.6 million, growing 6.8% or R$91.5 million from 2Q18. Increasing NII from 9M17 to 9M18 resulted from the reduction of interest expenses, in a higher proportion then the decrease of interest income in an environment of falling interest rates. From 2Q18 to 3Q18, NII performance reflects the decrease in interest expenses, partially offset by the decrease in interest income. Provision for loan losses reached R$830.2 million in 9M18, decreasing 23.9% (R$261.2 million) from 9M17 because of lower delinquency rates and the rollover of the credit portfolio by risk ratings. In 3Q18, provision expenses amounted to R$247.6 million, decreasing 10.9% (R$30.2 million) from 2Q18, influenced by the aforementioned conditions. 9

10 Banking Fees totaled R$1,398.7 million in 9M18, increasing 9.3% (R$119.2 million) from 9M17, particularly driven by current account fees, insurance, pensions and capitalizations products, credit cards fees and the acquiring network. In 3Q18, revenues from banking fees reached R$465.2 million and were mostly flat from 2Q18. Administrative expenses totaled R$2,819.3 million in 9M18, increasing 3.8% (R$101.9 million) year-on-year. Administrative expenses of R$960.0 million in 3Q18 increased 3.4% (R$31.2 million) over 2Q18. Personnel expenses increased R$74.3 million in 9M18, growing 5.4% over the (recurring) personnel expenses of the same period in the last year, mainly due to the 2017 and 2018 collective agreement. In 3Q18, personnel expenses increased 4.7% (R$22.7 million) from 2Q18 due to the accounting of recurring effects from the collective agreement. Other administrative expenses increased 2.1% (R$27.6 million) from 9M17 to 9M18, especially impacted by the expenses related to business growth. From 2Q18 to 3Q18, other administrative expenses increased 1.9% (R$8.5 million). The reconciliation between reported and recurring net income is presented below, due to extraordinary events that were recorded throughout ROAE, ROAA and efficiency ratio are based on the recurring net income. TABLE 3: ACCOUNTING NET INCOME STATEMENT X RECURRING NET INCOME Extraordinary Events - R$ Million 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 Recurring Net Income Extraordinary Events - (51.3) Voluntary Retirement Plan (1) - (93.2) Voluntary Dismissal Plan (2) (4.7) - Capitalization Distribution Agreement (3) Tax Credit Plano Verão (4) Tax Effects (5) (118.7) - Net Income Recurring ROAA 1.4% 1.1% 1.5% 1.4% 1.4% 1.8% 1.2% Recurring ROAE 15.1% 12.1% 17.3% 15.6% 14.4% 20.2% 13.9% Recurring Efficiency Ratio (6) 51.8% 54.7% 51.8% 51.8% 52.5% 52.8% 54.7% (1) Voluntary Retirement Plan, implemented in February 2017 and offered to employees retired and eligible for the national pension plan (INSS); 664 employees left the Bank under the Plan. (2) Voluntary Dismissal Plan focused on employees working in branches in the state of Santa Catarina and other states outside Rio Grande do Sul; 56 employees left the Bank. (3) Agreement for the distribution of capitalization products, in accordance with a partnership signed between Banrisul and Icatu Seguros. (4) Accounting recognition of tax credit from IRPJ and CSLL, arising from a lawsuit that stablished the right to full financial application of January IPC from 1989, Plano Verão. (5) Tax benefit related to the Voluntary Retirement Plan PAV, the Insurance Distribution Agreement and Tax Credits. (6) Based on the last 12 months. Recurring ROAE reached 15.1% in 9M18, 3.0 pp. above 9M17, as the result of increasing NII, decreasing provision expenses, increasing banking fees, higher administrative expenses and the worse performance of other operational expenses/income. Recurring efficiency ratio (based on the accumulated last twelve months figures until September 2018) reached 51.8% in 9M18 from 54.7% in 9M17, reflecting the expansion of financial margin and banking fees, and increasing administrative expenses, mostly influenced by business opportunities. 10 Financial Statements September 2018

11 OPERATIONAL HIGHLIGHTS TABLE 4: ASSET EVOLUTION STATEMENT Asset Evolution Statement - R$ Million Sep 2018 Jun 2018 Mar 2018 Dec 2017 Sep 2017 Sep 2018/ Sep 2017 Sep 2018/ Jun 2018 Total Assets 75, , , , , % 0.7% Credit Operations 31, , , , , % -0.8% Securities + Interbank Transactions - Repurchase Obligations 22, , , , , % 6.2% Funds Raised and Under Management 65, , , , , % 3.8% Shareholders Equity 7, , , , , % 3.1% Total assets reached R$75,840.0 million in September 2018, growing 6.3% (R$ million) from September 2017 and rather flat since June The year-on-year asset increase was mainly driven by the R$4,673.2 million growth in funding (deposits, bank notes and the subordinated debt), minimized by the reduction of R$1,328.3 million in open market funding. As to asset allocation, it is worth pointing out the increase of R$1,318.2 million in treasury, of R$1,250.6 million in the loan book, and of R$966.6 million in the stock of reserve requirements deposited at the Central Bank of Brazil. In the last three months, the asset trend particularly reflected, the expansion of R$1,725.7 million in fund raising, minimized by the reduction of R$1,546.4 million on the balance of open market funding. As for asset allocation, reserve requirements from the Central Bank of Brazil increased R$468.5 million, in an environment of flattish credit assets and treasury portfolio. Total credit assets (expanded concept) reached R$32,247.9 million in September 2018, increasing 3.9% in twelve months. Excluding sureties and guarantees, loan book increased 4.1% year-on-year, especially driven by the growth of R$1,982.4 million in non-earmarked credit to individuals and R$237.8 in real estate loans, trend minimized by the reduction of R$701.1 million in corporate non-earmarked loans and by the reduction of R$398.9 million in long term financing. From June 2018 to September 2018, credit portfolio was mostly stable, decreasing R$264.4 million due to the decrease of R$363.5 million in corporate non-earmarked credits, while partially offset by the increase of R$144.9 million in individuals non-earmarked credit. TABLE 5: STATEMENT OF THE CREDIT PORTFOLIO % Total Sep 2018/ Sep 2018/ Credit Operations - R$ Million Sep 2018 Jun 2018 Mar 2018 Dec 2017 Sep 2017 Credit Sep 2017 Jun 2018 Foreign Exchange % % -5.9% Commercial 22, % 22, , , , % -1.0% Individuals 16, % 16, , , , % 0.9% Payroll 12, % 11, , , , % 3.9% Other 4, % 4, , , , % -6.6% Companies 5, % 6, , , , % -5.8% Working Capital 3, % 4, , , , % -5.7% Other 1, % 2, , , , % -5.9% Long-term Financing 1, % 1, , , , % -5.5% Real Estate Financing 4, % 3, , , , % 1.8% Agricultural Financing 2, % 2, , , , % 3.9% Other (1) % 1, % -10.5% Total of Credit-like Transactions 31, % 32, , , , % -0.8% (1) Includes leasing, credits linked to acquired portfolio and public sector. Securities and interbank investments totaled R$25,543.4 million with net balance of R$22,121.9 million (deducted of repurchase transactions) at the end of September 2018, increasing 13.6% or R$2,646.5 million. The evolution of the treasury portfolio in the period was influenced by the expansion of deposits in an environment in which reserve requirements and loan portfolio increased. From June 2018 to September 2018, the balance of securities and interbank investments, net of repo operations, increased 6.2% (R$1,294.8 million), impacted by the increase of deposits in a context of increasing reserve requirements and flattish in credit portfolio. Funds raised and under management, composed by deposits, bank notes, subordinated bond and third-party funds, totaled R$65,330.8 million in September 2018, increasing 7.7% (R$4,662.5 million) in twelve months, especially driven by the increase of R$3,819.5 million in deposits. In the last quarter, funds raised and under management increased 3.8% (R$2,367.1 million) because of the growth of R$1,227.2 million in deposits, R$641.4 million in third-party funds and of R$440.7 million in bank notes. 11

12 Shareholders' equity reached R$7,251.9 million at the end of September 2018, increasing 7.7% (R$520.8 million) from September 2017 and 3.1% (R$216.9 million) from June 2018 on account of the incorporation of results after the payments of interest on own capital and dividends, and the R$353.3 million capital reduction deliberated at the General Shareholders Meeting and approved by the Central Bank of Brazil, the reassessment of actuarial liabilities on post-employment benefits pursuant to the procedures set forth by CPC 33 (R1), and the exchange rate adjustments upon the equity of foreign branches, as put forth by National Monetary Council resolution No. 4524/16. In the last quarter, the trend reflects the incorporation of results after the payment of interest on own capital and the exchange rate adjustments on equity of foreign branches. Banrisul paid and provisioned R$1,045.3 million in taxes and contributions in 9M18. Taxes withheld and paid, directly levied on financial intermediation and other payments, amounted to R$840.3 million in the period. TABLE 6: OTHER INDICATORS Indicators - % 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 Net Interest Margin 8.32% 8.21% 8.73% 8.38% 8.37% 9.21% 8.31% Basel Ratio (Prudential Conglomerate) 15.9% 16.5% 15.9% 15.0% 15.6% 17.0% 16.5% Loan Portfolio Normal Risk / Total Credit 88.6% 88.0% 88.6% 87.9% 87.4% 87.8% 88.0% Loan Portfolio Risks 1 and 2 / Total Credit 11.4% 12.0% 11.4% 12.1% 12.6% 12.2% 12.0% Default Rate > 90 Days 2.91% 4.30% 2.91% 3.37% 3.43% 3.56% 4.30% Cover Ratio > 90 Days 258.9% 205.9% 258.9% 245.7% 256.0% 248.6% 205.9% Provision Ratio 7.5% 8.9% 7.5% 8.3% 8.7% 8.9% 8.9% From 9M17 to 9M18, the evolution of NIM demonstrates the flattish behavior of profitable assets as a proportion of the total assets, as well as the reduction of the Selic rate, with a direct effect on financial income and expenses. 90-day default rate reached 2.91% in September 2018, decreasing 1.39 pp. in twelve months and 0.46 pp. in the last three months. The balance of 90-day past due credit reached R$924.0 million in September 2018, decreasing 29.5% in twelve months and 14.6% in the last quarter. Coverage ratio reached 258.9% in September 2018 (90- day past due portfolio), compared to 205.9% in September 2017 and 245.7% in June The trend of the 90- day coverage ratio in the last quarter was influenced by the decrease in the balance of provision for loan losses and overdue credit. Total provisions reached 7.5% of the outstanding credit portfolio in September 2018, 1.4 pp. below September 2017 and 0.8 pp. below June Credit provisions reduced R$307.7 million in twelve months due to the decrease in overdue credit and the rollover of risk rating levels, in a context of increasing credit portfolio. The portfolio of normal risk loans increased 0.6 pp. in relation to September In the last quarter, the balance of provision expenses decreased R$266.1 million and the participation of normal risk loan portfolio in relation to the total loan book increased 0.7 pp. GUIDANCE The expected trend for credit, funding and performance indicators for 2018, as revised and disclosed at the end of 1H18, have being maintained. Guidance was prepared based on the settlement in cash of Banrisul's capital reduction related to the process of obtaining the registration of Banrisul Cartões as a publicly held company. Should the capital reduction be paid in shares issued by Banrisul Cartões, in the likelihood of an IPO of the subsidiary still in 2018, the resulting impacts from said event will be treated as extraordinary. 12 Financial Statements September 2018

13 TABLE 7: GUIDANCE 2018 Guidance Expectedd (1) Revised 1H18 Credit Portfolio 5% to 9% 3% to 7% Non-direct Lending - Individuals 5% to 9% 5% to 9% Non-direct Lending - Companies 5% to 9% -5% to -1% Real Estate Loans 0% to 4% 3% to 7% Provision Expenses / Credit Portfolio 3.5% to 4.5% 3.5% to 4.5% Balance of Loan Losses / Credit Portfolio 8% to 9% 8% to 9% Funding 8% to 12% 8% to 12% Recurring Return on Average Shareholders' Equity 11% to 14% 12.5% to 15.5% Efficiency Ratio 51% to 55% 50% to 54% Net Financial Margin / Interest-Earning Assets 7% to 8% 7.5% to 8.5% (1) Disclosed in 1Q18. Porto Alegre, November 13,

14 ANALYSIS OF PERFORMANCE Following is the analysis of the performance of Banco do Estado do Rio Grande do Sul S.A. related to 9M18 and 3Q Financial Statements September 2018

15 MARKET SHARE In June 2018, Banrisul occupied the 10 th position in total assets, 12 th and equity, the 9 th place in funding (total deposits, open market funding and borrowings and onlendings) and the 6 th place in number of branches, according to ranking published by the Central Bank of Brazil (BNDES not included). Banrisul s domestic market share in time deposits reached % in September 2018 from % in September 2017; deposits grew 7.3% year-on-year in Banrisul vis-à-vis the 15.4% expansion observed within the banking industry in the same period. As to demand deposits, Banrisul s participation in the domestic market reached % in September 2018, increase of pp. from % in September 2017; as for savings accounts, Banrisul s portfolio reached % from the domestic market balance in September 2018, from % in September In relation to credit, Banrisul s representativeness in the Brazilian credit market reached % in September 2018, compared to % in September Credit market share reached % of the total credit granted within Rio Grande do Sul in June 2018, increasing pp. in comparison to June In the State of Rio Grande do Sul, Banrisul's market share reached % in time deposits, in June 2018, increasing pp. in twelve months and reached % in saving deposits in the same month, decreasing pp year on year. Demand deposits increased pp. in twelve months, reaching % in June 2018 vis-à-vis the % in June TABLE 8: MARKET SHARE Brazil Rio Grande do Sul Sep/18 (1) Sep/17 Jun/18 (2) Jun/17 Demand Deposits (3) % % % % Saving Deposits % % % % Time Deposits % % % % Credit Operations % % % % Number of Branches % % % % (1) Last information disclosed. (2) Last information available. (3) Restated according to new criteria of the Central Bank series. 15

16 MARGIN ANALYSIS FINANCIAL INTERMEDIATION PERFORMANCE The presented margin analysis was calculated based on average balances of assets and liabilities, calculated from the closing balances of the months that compose the respective analyzed period. The chart shows the revenuegenerating assets and interest-bearing liabilities, the corresponding financial incomes on assets and financial expenses on liabilities, as well as the effective average rates practiced. Credit operations include advances on foreign exchange contracts and leasing agreements, which are shown at the current net value of the leasing agreements. Income from credit operations more than 60 days overdue, irrespective of their risk level, will only be booked as revenues when received. Average balances of interbank investments, funds invested or raised in the interbank market correspond to the redemption amount deducted from the income or expenses corresponding to future periods. Average balances of deposits, open-market funding, borrowings and onlendings include the fees payable till the date of closing of the financial statements, booked on a pro rata die basis. As for expenses related to these items, fees relating to deposits include contributions to the Deposit Guarantee Fund (Fundo Garantidor de Crédito - FGC). Margins generated by interest-earning assets increased from 9M17 to 9M18. Average interest-earning assets grew 7.1% year-on-year, while interest-bearing liabilities increased 6.9%. The absolute margin of 9M18 increased 8.6% and the relative annualized margin increased 0.11 pp. compared to the 9M17. The reduction of the effective Selic rate in the period was reflected in decreasing rates of profitable assets and interest-bearing liabilities. Besides the basic interest rates that index transactions in the financial sector, the assets and liabilities structure, as well as the time and interest rate conditions of transactions, are determinant factors in the formation of the margin recorded in each period. Representing 43.6% of the total average interest-earning assets, credit assets decreased 1.0 pp. from 9M17 to 9M18; treasury operations participation increased 0.6 pp. amounting to 36.8% in 9M18. Compulsory deposits increased their share in the total earning assets by 0.8 pp., reaching 17.6% in 9M18. As to interest-bearing liabilities, the average balance of time deposits represented 62.3% of the cost-generating liabilities in 9M18 (61.3% in 9M17). Savings deposits increased 0.6 pp., reaching 15.0% in 9M18. Among the other interest-bearing liabilities, market-funding participation reached 8.9%, decreasing 0.3 pp. from 9M17. All together, these variations increased spreads, which reached 5.48% in 9M Financial Statements September 2018

17 TABLE 9: MARGIN ANALYSIS Average Balance 9M18 9M Income Expense Average Rate Average Balance Income Expense Average Rate Average Balance Income Expense Average Rate Average Balance Income Expense Interest-Earning Assets 66, , % 62, , % 62, , % 59, , % Loan Portfolio 29, , % 27, , % 27, , % 28, , % Resale Pending Settlement 1, % % % % Trading Securities 23, , % 21, , % 22, , % 19, , % Interbank Deposits % % % % Other Interest-Earning Assets 12, % 11, % 11, , % 9, , % Compulsories 11, % 10, % 10, % 8, , % Other % % % % Non Interest-Earning Assets 8, , , , Total Assets 75, , % 70, , % 70, , % 67, , % Interest-Bearing Liabilities 57,941.0 (2,989.0) 5.16% 54,224.0 (3,738.2) 6.89% 54,651.3 (4,763.5) 8.72% 51,813.4 (5,499.3) 10.61% Interbank Deposits 99.4 (4.7) 4.69% (16.2) 6.74% (18.7) 8.56% (53.7) 12.00% Saving Deposits 8,664.5 (310.7) 3.59% 7,817.6 (387.7) 4.96% 7,911.4 (496.6) 6.28% 7,515.6 (587.4) 7.82% Time Deposits 36,107.3 (1,590.9) 4.41% 33,228.4 (2,376.9) 7.15% 33,618.6 (2,953.8) 8.79% 29,111.4 (3,485.2) 11.97% Money Market Funding 5,163.3 (246.0) 4.76% 4,969.9 (429.4) 8.64% 4,979.7 (521.6) 10.47% 5,727.0 (807.0) 14.09% Subordinated Debt 1,949.5 (358.7) 18.40% 1,785.2 (87.5) 4.90% 1,805.1 (200.9) 11.13% 1,898.5 (2.9) 0.15% Borrowings and Onlendings 2,883.1 (337.0) 11.69% 3,327.3 (224.6) 6.75% 3,253.1 (304.6) 9.36% 3,914.9 (172.8) 4.41% Domestic 2,085.2 (67.6) 3.24% 2,461.2 (121.9) 4.95% 2,411.3 (152.3) 6.32% 2,760.7 (134.2) 4.86% Foreign (269.3) 33.75% (102.7) 11.86% (152.4) 18.10% 1,154.2 (38.6) 3.35% Other 3,073.9 (141.0) 4.59% 2,855.3 (215.9) 7.56% 2,865.1 (267.3) 9.33% 3,198.2 (390.2) 12.20% Non-Interest-Bearing Liabilities 9, , , , Shareholders Equity 7, , , , Liabilities and Shareholders Equity Average Rate 75,029.6 (2,989.0) 3.98% 70,216.9 (3,738.2) 5.32% 70,772.1 (4,763.5) 6.73% 67,563.8 (5,499.3) 8.14% Spread 5.48% 5.39% 7.37% 7.65% Margin 4, % 3, % 5, % 5, % Annualized Margin 8.32% 8.21% 8.33% 8.70% VARIATIONS IN INTEREST INCOME AND EXPENSES: VOLUMES AND RATES The following table shows the variations in the interest incomes and expenses by the change in average volume of interest-earning assets and interest-bearing liabilities (i) from 9M17 to 9M18, (ii) from 2016 to 2017 and (iii) from 2015 to The variations in the volume and interest rates were calculated based on the average balances in the period and the variations in the average interest rates on interest-earning assets and interest-bearing liabilities. Variation of interest rate was calculated by variation on interest rate in the period multiplied by the average interest-earning assets or average interest-bearing liabilities in the second period. The volume change was computed as the difference between the interest amounts from the current period to the previous one. The decrease of R$423.5 million to the income produced by the interest-earning assets in 9M18 is linked to the downfall of average interest rates, driving down revenues by R$881.0 million, especially treasury and credit revenues, even though the average volume of interest-earning assets increased R$457.5 million. The decrease of R$749.2 million in the expenses generated by interest-bearing liabilities in 9M18 was mainly influenced by the decrease of average interest rates, which decreased expenses by R$991.1 million, mainly those related to time deposits. The increase of R$241.9 million in funding expenses produced by funding volume was driven especially by the increase of savings and time deposits. 17

18 Expenses originated by decreasing average rates of interest-bearing liabilities were higher than the revenues produced by decreasing average rates of interest-earnings assets, thus producing gains of R$110.1 million. The increase generated by the growth in the average volume of earning assets, in a more expressive amount than that of the costs of interest-bearing liabilities, produced an overall increase of R$215.6 million. Altogether, their combined effect produced gains of R$325.7 million from 9M17 to 9M18. TABLE 10: VARIATIONS IN INTEREST INCOME AND EXPENSES: VOLUMES AND RATES Interest-Earning Assets 9M18/9M / /2015 Increase / Decrease According to change in: Increase / Decrease According to change in: Increase / Decrease According to change in: Average Volume Interest Rate Net Change Average Volume Interest Rate Net Change Average Volume Interest Rate Net Change Loans, Leasing Operations and Other Receivables (244.0) (1.2) (141.1) (135.9) (277.0) (238.9) Resale pending Settlement 41.7 (44.2) (2.4) (38.0) (6.0) (44.0) Securities and Derivatives 97.7 (249.1) (151.5) (447.9) (228.4) 93.3 (715.8) (622.5) Interbank Deposits (10.7) (10.5) (21.3) 26.8 (4.3) Compulsories 83.0 (310.0) (227.0) (332.3) (154.8) Other 3.0 (23.2) (20.2) 5.5 (13.7) (8.2) 5.9 (0.6) 5.3 Total Interest-Earning Assets (881.0) (423.5) (940.1) (689.9) (320.3) (135.9) Interest-Bearing Liabilities Interbank Deposits (17.3) 32.0 Saving Deposits (38.7) (29.7) (21.0) (11.6) Time Deposits (191.4) (486.8) 1, (503.3) (220.2) (723.5) Money Market Funding (16.1) (48.1) (79.4) (127.4) Subordinated Debt (8.8) (262.4) (271.2) 0.1 (198.1) (198.0) Borrowings and Onlendings 25.1 (137.4) (112.3) 23.4 (155.2) (131.8) Other (15.5) Total Interest-Bearing Liabilities (241.9) (301.8) 1, (30.7) Financial Statements September 2018

19 STOCK MARKET PERFORMANCE Listed under Corporate Governance Level 1 since July 2007, and committed to the best market practices, the Bank voluntarily adopts certain rules from other levels of Corporate Governance, strengthening and consolidating a transparent relationship with stakeholders in events, conferences and meetings in Brazil and abroad. TABLE 11: COMMUNICATION AND RELATIONSHIP EFFORTS 3Q18 2Q18 1Q18 4Q17 3Q17 Meetings Conference Calls APIMEC Meetings Total Banrisul s stock capital was R$4,396.7 million in September 30, 2018, represented by 408,974,477 shares (205,060,532 common shares and 203,913,945 preferred shares) in book entry form and without nominal value. The Bank's largest shareholder is the Government of the State of Rio Grande do Sul, which directly holds 98.1% of common capital and 49.9% of total capital. There were 63,629 shareholders domiciled in Brazil (99.3% of all shareholders and 68.3% of all shares) and 474 foreign shareholders (0.7% of the shareholders and 31.7% of the shares). Banrisul is listed in eight indexes of B3 S.A. Brasil, Bolsa, Balcão, and its PNB share (BRSR6) was among the 100 mostly traded share on the B3 S.A. Brasil, Bolsa, Balcão, listed in the 87 th position as of September 30, In 3Q18, the average daily traded financial volume increased by 0.7% in relation to 3Q17; in the same period, the daily average number of transactions increased 31.5%. Average financial volume decreased 60.9% and the average number of transactions increased 35.4% in the last three months. Graph 1: Average Financial Volume, Number of Trades and Number of Shares Daily Average Trading 31,429,155 23,834,026 19,674,255 12,197,399 4,763 4,221 12,288,501 3,534 3,079 2, ,866 1,315,692 1,337,730 1,762, ,923 3Q17 4Q17 1Q18 2Q18 3Q18 Financial Volume (R$) Traded Shares Trading Volume In September 2018, Banrisul s market value reached R$6,126.4 million, decreasing 15.1% in comparison with September 2017 and increasing 1.6% in relation to June

20 The table with Banrisul's ratings is as follows. TABLE 12: RATINGS FROM RISK AGENCIES Fitch Ratings Foreign Currency - Long-Term IDR B+ Foreign Currency - Short-Term IDR Local Currency - Long-Term IDR B+ Local Currency - short-term IDR National Rating - Long-Term Rating National Rating - Short-Term Rating Support Rating 4 Viability Rating b+ Tier II Capital Subordinated Notes Maturing 2/22/22 Outlook National Rating Outlook Foreign-Currency, Long-Term IDR Outlook Bank Deposits NSR Bank Deposits -Dom Curr Individual Credit Risk Counterparty Risk Assessment Subordinate Issuer Credit Rating - Local Currency Issuer Credit Rating - Foreign Currency Perspective Individual Credit Profile (SACP) Moody s Standard & Poor s B B A(bra) F1(bra) B-/RR6 Stable Stable Stable Ba3/NP A1.br/BR-1 ba3 Ba2(cr)/NP(cr) B1 BB- BB- Stable bb- 20 Financial Statements September 2018

21 ASSET EVOLUTION TOTAL ASSETS Total assets reached R$75,840.0 million in September 2018, and are divided into (i) loans (41.9% of total assets); (ii) securities and interbank deposits (33.7%); (iii) interbank and interbranch accounts (17.4%) and (iv) other assets (7.0%). Assets maturing up to 360 days are mainly composed by securities, derivatives and interbank deposits (34.8%), interbank and interbranch accounts (28.6%) and loans and leases (22.4%). Among long term assets (over 360 days), loans and leases (53.1%) and securities and derivatives (33.8%) stood out. Total assets grew 6.3% (R$4,517.6 million) in the period, mostly from the growth of R$4,673.2 million in fundraising (deposits, bank noted and subordinated debt) which were partially offset by the reduction of R$1,328.3 million in borrowings and onlendings. As to asset allocation, treasury expanded R$1,318.2 million, credit portfolio increased R$1,250.6 million and compulsory deposits placed at the Central Bank of Brazil increased R$966.6 million. Assets increased 3.5% (R$2,552.6 million) in 9M18 mainly due to the R$2,909.6 million increase in funding, R$412.3 million in interbank and interbranch accounts, which were partially offset by the reduction of R$1,431.1 million in borrowings and onlendings. As to asset allocation, compulsory deposits increased R$919.2 million, treasury increased R$725.8 million and loans grew R$373.5 million. In the last quarter, assets were mostly stable, R$508.8 million especially due to the increases of R$1,725.7 million in funding sources, that were partially offset by the open market funding decrease of R$1,546.4 million. As for asset allocation, compulsory deposits in the Central Bank increased R$468.5 million, in a context of relative stability of credit assets and treasury portfolio. Graph 2: Total Assets 3 months % Change 9 months 12 months 0.7% 3.5% 6.3% 71, , , , , % 6.6% 6.4% 6.5% 7.0% 17.0% 16.7% 18.1% 16.8% 17.4% 34.0% 33.9% 31.2% 34.2% 33.7% 42.8% 42.8% 44.3% 42.5% 41.9% Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 Total Assets Credit Operations Securities and Liquid Interbank Transactions Interbank and Interbranch Transactions Others 21

22 SECURITIES AND DERIVATIVES Securities, derivatives and interbank investments, net of repo transactions, totaled R$22,121.9 million in September 2018, increasing 13.6% (R$2,646.5 million) from September 2017, 10.8% (R$2,156.9 million) and 6.2% (R$1,294.8 million) over December 2017 and June 2018, respectively. In twelve months, the balance of treasury and repo transactions was mainly driven by the increase in deposits along with the increase of credit portfolio and reserve requirements at the Central Bank of Brazil. Until 9M18, the growth of securities and interbank investments net of repurchase obligations was mainly driven by the increase in the balance of deposits and letters resources, in a period in which the credit assets and reserve requirements in the Central Bank of Brazil increased. In the last quarter, securities and interbank investments, net of repurchase obligations, increased mostly driven by the increase of deposits and letters resources, in a context of increasing reserve requirements at the Central Bank of Brazil and relative stability of credit assets. Totaling R$25,543.4 million and mostly composed by federal government bonds, which together represent 98.0% of the treasury allocations, securities portfolio is distributed as follows: 56.2% (R$14,346.3 million) as held to maturity, 12.5% (R$3,200.0 million) as trading, 30.0% (R$7,652.8 million) as interbank investments, and 1.3% (R$344.3 million) as available for sale. Graph 3: Securities and Liquid Interbank Transactions (1) % Change 3 months 9 months 12 months 6.2% 10.8% 13.6% 19, , , , ,121.9 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 (1) Excluding repo transactions. Interbank and interbranch transactions Interbank and interbranch transactions reached R$13,173.6 million in September 2018, increasing 8.4% (R$1,020.4 million) from September 2017, 7.6% (R$928.2 million) from December 2017 and 4.0% (R$502.1 million) from June The increases of interbank and interbranch transactions in twelve months and in the last quarter was mainly due to the growth of credits linked to compulsory deposits placed at the Central Bank of Brazil, especially on account of the increase in the balance of compulsory deposits related to time deposits. Effective from 2Q18, there have been changes in the percentage of mandatory reserves upon funds raised from agricultural savings deposits and from savings deposits, as set forth by CMN Resolution No. 4650/18 and the compulsory collection rate on demand deposits, by the Central Bank of Brazil Resolution No. 3888/ Financial Statements September 2018

23 Graph 4: Interbank and Interbranch Transactions % Change 3 months 9 months 12 months 4.0% 7.6% 8.4% 12, , , , ,173.6 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 CREDIT OPERATIONS Banrisul's credit portfolio totaled R$31,742.6 million in September 2018, up 4.1% (R$1,250.6 million) over September 2017, 1.2% (R$373.5 million) over December 2017 and stable since June 2018, decreasing R$264.4 million. The expanded credit portfolio, which includes co-obligations and risks on granted guarantees, reached R$32,247.9 in September 2018, increasing 3.9% (R$1,221.8 million) from September 2017 and 1.0% (R$317.6 million) in comparison to December 2017 and stable since June 2018, decreasing R$258.0 million. Graph 5: Credit Operations % Change 3 months 9 months 12 months -0.8% 1.2% 4.1% 30, , , , , Over Total Assets % 42.8% 42.8% 44.3% 42.5% 41.9% Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 The year-on-year growth of the loan book resulted from the increase of R$1,982.4 million in non-directed lending to individuals, due mainly to the increase in payroll loans, increase of real estate loans in R$237.8 million, trend partially offset by the reduction of R$701.1 million in loans to companies and of R$398.9 million in long-term portfolio. In comparison to December 2017, the increase in the credit balance was mainly driven by the growth of R$843.0 million in credit to individuals, of R$217.5 million in real estate loans and of R$132.6 million in the acquired credit portfolio, yet partially offset by the reduction of R$652.3 million in loans to companies and of R$220.4 million in long-term financing. In comparison to June 2018, the balance trajectory of credit was mainly driven by the reduction of R$363.5 million in corporate loans, R$100.2 million in acquired credit portfolio, evolution minimized in part by the expansion of R$144.9 million in credit to individuals, payroll loans particularly, and of R$89.5 million in rural credit. 23

24 Breakdown of Credit by Company Size Credit to corporations totaled R$9,241.3 million in September 2018, equivalent to 29.1% of the total loan portfolio. 56.9% of the outstanding balance of corporate credit is allocated into micro, small and medium size companies. From September 2017 to September 2018, credit to micro, small and medium size companies decreased 14.9% (R$922.5 million), and credit to large-sized companies was stable, decreasing R$13.9 million. In the last three months, there was a decrease of 10.2% (R$394.0 million) in credit to medium size companies. TABLE 13: BREAKDOWN OF CREDIT TO COMPANIES BY COMPANY SIZE Size Sep 2018 Jun 2018 Sep 2017 Sep 2018/ Sep 2018/ Balance % Company % Total Balance % Company % Total Balance % Company % Total Jun 2018 Sep 2017 Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Large Companies 3, % 12.6% 3, % 12.5% 3, % 13.1% 0.0% -0.3% Total Middle/Small/Micro 5, % 16.6% 5, % 17.8% 6, % 20.3% -7.8% -14.9% Middle Companies 3, % 10.9% 3, % 12.1% 4, % 14.4% -10.2% -21.2% Small Companies 1, % 4.3% 1, % 4.3% 1, % 4.6% -1.6% -4.3% Micro-Companies % 1.4% % 1.4% % 1.2% -5.7% 19.8% Total Companies 9, % 29.1% 9, % 30.3% 10, % 33.4% -4.6% -9.2% Criteria: average monthly revenue (Micro - up to R$30,000; Small - up to R$400,000; Mid-sized - up to R$25 million). For Large companies: average monthly revenue above R$25 million or Total Asset above R$240 million. Breakdown of Credit by Sector Loans to the private sector represented 99.7% of the total credit assets in September Credit by sector is composed by individuals (55.2% share), followed by housing (12.7%), industry (9.9%) and services (7.9%) of the total credit portfolio per activity sector. TABLE 14: BREAKDOWN OF CREDIT BY SECTOR Sep 2018/ Sep 2018/ Sep 2018 Jun 2018 Mar 2018 Dec 2017 Sep 2017 Jun 2018 Set 2017 Private Sector 31, , , , , % 4.1% Rural 2, , , , , % 1.9% Industrial 3, , , , , % -5.3% Commercial 2, , , , , % -8.1% Others and Services 2, , , , , % -22.0% Individuals 17, , , , , % 13.0% Housing 4, , , , , % 6.2% Public Sector % 12.5% Total 31, , , , , % 4.1% Loans to individuals and real estate loans increased from September 2017 to September 2018, while industrial, commercial and service sectors operations retracted. In comparison to December 2017, the increase in credit came mainly from the expansion of lending to individuals, partially offset by the decrease in credit operations into services economic sectors. In the last quarter, the trajectory was impacted, especially by reductions observed in service sectors. Breakdown of Credit by Portfolio The breakdown of credit by portfolio presents both earmarked and non-earmarked loan assets. The nonearmarked portfolio, leasing, credits linked to acquired portfolio with recourse and public sector are freely funded from time deposits and equity and, in September 2018, composed 74.3% of the total credit portfolio. Development (long-term finance), agricultural, real estate finance and foreign exchange portfolios, which have specific funding sources and are used for mandatory credit allocation, represented 25.7% of total credit balance in the same period. 24 Financial Statements September 2018

25 TABLE 15: BREAKDOWN OF CREDIT BY PORTFOLIO R$ MILLION Sep 2018/ Sep 2018/ Credit Operations Sep 2018 Jun 2018 Mar 2017 Dez 2017 Sep 2017 Jun 2018 Sep 2017 Private Sector 31, , , , , % 4.1% Foreign Exchange % 7.1% Non-direct 22, , , , , % 6.0% Individuals 16, , , , , % 13.4% Companies 5, , , , , % -10.5% Long-term Financing 1, , , , , % -28.3% Real Estate Financing 4, , , , , % 6.2% Leasing % -23.6% Agricultural Financing 2, , , , , % 1.9% Credits Linked to Acquired Portfolio % 5.1% Public Sector % 12.5% Total of Credit-like Transactions 31, , , , , % 4.1% Co-obligation, sureties and guarantees % -5.4% Total 32, , , , , % 3.9% Comprising 71.4% of Banrisul's total loan book, the balance of non-earmarked credit portfolio at the end of September 2018 reached R$22,679.1 million. Within the non-earmarked credit portfolio, credit to individuals corresponded to 73.8% of the balance of the non-earmarked portfolio and to 52.7% of the total loan book in September Credit to companies represented 26.2% of the balance of non-earmarked credit and 18.7% of the total stock of credit in the same period. Graph 6: Non-earmarked Credit Portfolio Evolution - Individuals and Companies % Change Individuals 3 months 9 months 12 months 0.9% 5.3% 13.4% % Change Companies 3 months 9 months 12 months -5.8% -9.9% -10.5% 14, , , , , , , , , ,945.5 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 Individuals Companies Real estate finance totaled R$4,046.4 million in September 2018, increasing 6.2% (R$237.8 million) since September 2017, 5.7% (R$217.5 million) since December 2017 and 1.8% (R$72.2 million) since 2Q18. The outstanding balance of the real estate portfolio includes R$29.9 million related to a credit assignment operation with recourse. Agricultural loans totaled R$2,408.5 million in September 2018, increasing 1.9% (R$46.0 million) in twelve months, 1.1% (R$25.1 million) from December 2017 and 3.9% (R$89.5 million) from June Agricultural loans represented 7.6% of the loan portfolio in September Long-term finance totaled R$1,010.9 million in September 2018, with decreases of 28.3% (R$398.9 million) in twelve months, of 17.9% (R$220.4 million) in nine months and of 5.5% (R$58.3 million) from June Foreign exchange portfolio totaled R$699.9 million in September 2018, increasing 7.1% (R$46.3 million) from September 2017, 3.7% (R$25.2 million) from December 2017 and decreasing 5.9% (R$43.5 million) from June

26 Non-earmarked Credit In line with Banrisul s conservative credit risk policy, non-earmarked credit to individuals reached R$16,733.5 million in September 2018, increasing 13.4% (R$1,982.4 million) from September 2017, 5.3% (R$843.0 million) since December 2017 and flat since June 2018, increasing of R$144.9 million. TABLE 16: COMPOSITION OF NON-EARMARKED CREDIT - INDIVIDUALS AND COMPANIES Sep 2018/ Sep 2018/ Sep 2018 Jun 2018 Mar 2018 Dez 2017 Sep 2017 Jun 2018 Sep 2017 Individuals 16, , , , , % 13.4% Credit and Debit Card (1) 1, , , , , % 17.8% Overdraft % -8.6% Payroll-deductible Loan 12, , , , , % 14.8% Non Payroll-deductible Loan 1, , , , , % 24.9% Other % -10.1% Companies 5, , , , , % -10.5% Credit Card (1) % - Working Capital 3, , , , , % -8.9% Debtor Accounts % -17.2% Compror/Vendor % -30.5% Foreign Credit % 6.1% Debt Instruments Discount % -5.5% Other , , , , % -15.8% Total 22, , , , , % 6.0% (1) Of the R$1,844.9 million balance, R$284.9 million refers to revolving credit card lines. Accounting for 73.4% of the non-direct lending to individuals and for 54.1% of the total non-earmarked portfolio, payroll loans totaled R$12,278.5 million in September 2018, increasing 14.8% (R$1,585.8 million) in twelve months, 11.4% (R$1,252.3 million) in nine months and 3.9% (R$458.1 million) quarter-on-quarter. Including the transfer of assets, related to credits linked to acquired credit portfolios pursuant to Central Bank of Brazil s Circular Letter No. 3,543/2012, non-earmarked credit to individuals in September 2018 totaled R$17,517.2 million, with payroll loans totaling R$13,062.1 million. Of the payroll loans amount, 61.1% (R$7,979.5 million) corresponded to operations with customers, 32.8% (R$4,286.2 million) were loans originated by banking correspondents and 6.1% (R$796.4 million) from loans acquired with recourse. Non-earmarked credit to individuals, including transfers of assets, increased 13.0% (R$2,020.5 million) in twelve months, especially driven by the growth of R$1,623.8 million in payroll loans with Social Security (INSS) retirees and of R$274.4 million in debit and credit card. In comparison to December 2017, non-earmarked credit, including asset transfers, increased 5.9% (R$975.6 million), mainly due to the increased of R$1,384.9 million in payroll loans, while offset by the reduction of R$463.5 million in personal loans. Relatively stable in the last three months, the expansion of R$44.7 million in non-earmarked credit to individuals, including asset transfers, was driven by the increases of R$357.8 million in payroll loans, partially offset by the decrease of R$281.1 million in personal credit and of R$74.2 million in overdraft accounts. Non-earmarked credit to companies reached R$5,945.5 million in September 2018, decreasing 10.5% (R$701.1 million) in twelve months, 9.9% (R$652.3 million) in nine months and 5.8% (R$363.5 million) in three months. Non-earmarked lending to companies was mainly driven by working capital, representing 67.2% of said portfolio and 17.6% of non-earmarked loans. The trend of non-direct lending to companies was especially influenced by the reduction of R$391.8 million in working capital lines in the last twelve months, and of R$142.3 million in debit accounts. In comparison to December 2017 and June 2018, the business portfolio was influenced by the decrease in the balance of working capital lines by R$456.6 million and R$241.3 million, respectively. 26 Financial Statements September 2018

27 Breakdown of Credit Disbursement Banrisul's credit disbursement reached R$33,663.1 million, increasing 3.8% (R$1,236.6 million) fromo 9M17. Credit granted reached R$11,281.5 million, increasing 11.0% (R$1,120.5 million) from 3Q17 and decreasing 3.2% (R$369.6 million) from 2Q18. TABLE 17: COMPOSITION OF ISSUED CREDIT VOLUMES BY FINANCING LINES 3Q18/ 9M18/ Credit Operations 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 2Q18 9M17 Foreign Exchange % -5.8% Non-earmarked (1) 30, , , , , , , % 2.8% Individuals 19, , , , , , , % 13.5% Companies 10, , , , , , , % -12.3% Leasing % -2.1% Long-term Financing % 12.9% Real Estate Financing % 66.9% Agricultural Financing 1, , % 9.4% Total 33, , , , , , , % 3.8% (1) Credit granting does not include receivables from credit and debit cards. From 9M17 to 9M18, the growth was mainly due to the increases of 13.5% (R$2,345.0 million) in credit to individuals and of 66.9% (R$298.0 million) in real estate financing, partially offset by the decreases of 12.3% (R$1,502.0 million) in companies. From 3Q17 to 3Q18, the trajectory of credit disbursement resulted mainly by the increases of 23.9% (R$1,303.2 million) in credit to individuals, of 43.9% (R$179.3 million) in rural credit and of 97.7% (R$129.9 million) in real estate loans, partially offset by the decrease of 12.6% (R$487.4 million) in companies, and of 21.5% (R$51.2 million) in foreign exchange. In relation to last quarter, the decrease in credit disbursement reflects the retraction of 3.6% (R$383.2 million) in non-earmarked lending and of 41.0% (R$129.9 million) in trade finance, partially offset by the increase of 34.0% (R$149.4 million) in agricultural lending. Breakdown of Credit by Rating Credit operations rated between AA and C, normal risk according to the Resolution No. 2682/99 of the National Monetary Council, accounted for 88.6% of the credit portfolio in September 2018, increasing 0.6 pp. from September 2017 and decreasing 0.8 pp. from December 2017 and 0.7 pp. from June Graph 7: Credit Portfolio by Risk Levels (%) 88.0% 87.8% 87.4% 87.9% 88.6% 6.5% 6.3% 6.5% 6.6% 6.6% 6.5% 6.5% 6.6% 6.6% 5.5% 5.5% 5.9% 6.1% 6.3% 6.1% 5.5% 5.5% 4.8% 4.8% Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 Normal Risk ("AA" to "C") Risk 1 ("D" to "G") Risck 2 ("H") Allowance for Loan Losses Representing 7.5% of the loan portfolio, allowance for loan losses totaled R$2,392.4 million in September 2018, decreasing 1.4 pp. from September and December 2017, and 0.8 pp. from June The changes in allowance for loan losses in the period reflected the reduction of delays and the rolling over of the portfolio by risk rating. 27

28 Graph 8: Breakdown of Allowance for Loan Losses % Change Credit Operations 3 months 9 months 12 months -0.8% 1.2% 4.1% % Change Allowance for loan Losses 3 months 9 months 12 months -10.0% -13.8% -11.4% 30, , , , , % 8.9% 8.7% 8.3% 7.5% 2, , , , ,392.4 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 Credit Operations The breakdown of the allowance for loan losses in September 2018, according to Resolution No. 2682/99 of the National Monetary Council, was as follows: (i) R$845.6 million for operations with installments 60 days overdue; (ii) R$1,457.6 million for contracts due or less than 60 days overdue; Allowance for loan Losses (iii) R$89.2 million relating to the excess allowance to the minimum required by Resolution No. 2682/99 of the National Monetary Council, established based on periodic review carried out by the administration of the quality of the customer, in order to cover possible events not identified by internal customer rating model. TABLE 18: BALANCE OF ALLOWANCE FOR LOAN LOSSES Risk Levels Required Provision % Portfolio Relative Accumulated Share% Past Due Credits Receivable Credits Minimum Provision Past Due Receivables Additional Provision Total Provision Provision Over Portfolio % AA 0.0% 3, % - 3, % A 0.5% 20, % - 20, % B 1.0% 3, % - 3, % C 3.0% 1, % , % D 10.0% % % E 30.0% % % F 50.0% % % G 70.0% % % H 100.0% 1, % , % Total 31, , , , , % COVER RATIO The cover ratio, the percentage between the allowance for loan losses and the balance of operations 90 days overdue over, shows the capacity to cover defaults with provisions and remains at comfortable levels. In September 2018, cover ratio for 90-day overdue transactions reached 258.9%, higher than in the previous periods. In the analyzed periods, the increase of the cover ratio reflects the reduction of loan loss provisions and credit operations. Graph 9: Cover Ratio 90 days % 248.6% 256.0% 245.7% 258.9% Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 28 Financial Statements September 2018

29 DEFAULT RATE The default rate is the amount of credit operations overdue by more than 90 days in relation to the total amount of active credit operations. NPLs above 90 days reached 2.91% of the loan book in September 2018, decreasing 1.39 pp. in twelve months, 0.65 pp. in six months and 0.46 pp. quarter-on-quarter. 90-day and above overdue loans totaled R$924.0 million in September 2018, decreasing 29.5% (R$387.3 million) from September 2017, 17.3% (R$193.0 million) from December 2017 and 14.6% (R$158.2) million from June days 0 Graph 10: Default Rate 4.30% 3.56% 3.43% 3.37% 2.91% Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 FUNDS RAISED Consisting of deposits, bank notes and subordinated bond, funding totaled R$53,925.1 million in September 2018, an increase of 9.5% (R$4,673.2 million) year-on-year, of 5.7 % (R$2,909.6 million) year-to-date and 3.3% (R$1,725.7 million) quarter-on-quarter. The growth of deposits was the main driver of funding raising in the period. TABLE 19: FUNDING COMPOSITION Sep 2018/ Sep 2018/ Sep 2018 Jun 2018 Mar 2018 Dec 2017 Sep 2017 Jun 2018 Sep 2017 Total Deposits 49, , , , , % 8.4% Time Deposits 37, , , , , % 7.3% Demand Deposits 2, , , , , % 16.0% Saving Deposits 9, , , , , % 11.8% Interbank Deposits % -26.7% Resources from Notes (1) 2, , , , , % 25.5% Subordinated Debt 2, , , , , % 18.0% Total 53, , , , , % 9.5% Assets Under Management 11, , , , , % -0.1% Total Funding and Assets Under Management 65, , , , , % 7.7% (1) Bank Notes and Real Estate Notes. Total Deposits Total deposits reached R$49,199.9 million in September 2018, 8.4% (R$3,819.5 million) above September 2017, 4.5% (R$2,115.3 million) above December 2017 and 2.6% (1,227.2 million) above June In the period, the expansion of deposits was mostly driven by the growth of time deposits. Demand Deposits In September 2018, demand deposits reached R$2,842.3 million, increasing 16.0% (R$392.8 million) in twelve months, while decreasing 20.0% (R$711.6 million) in nine months and increasing 2.9% (R$79.2 million) in three months. The evolution in the last nine months was driven by the seasonal increase in incomes at year-end that temporarily increases the balances of checking accounts. Saving Deposits Savings deposits totaled R$9,020.0 million at the end of September 2018, increasing 11.8% (R$952.1 million) in twelve months, 8.5% (R$707.5 million) in nine months and 3.2% (R$279.9 million) in three months. Time Deposits Banrisul s main funding vehicle, time deposits totaled R$37,212.6 million in September 2018, increasing 7.3% (R$2,520.2 million) in twelve months, 6.1% (R$2,143.5 million) in the last nine months and 2.2% (R$812.7 million) in the last quarter. 29

30 Subordinated Bond The subordinate bond amounted to R$2,099.4 million at the end of September 2018, increasing 18.0% (R$319.7 million) in the last twelve months, 10.9% (R$206.3 million) in the last nine months and 2.8% (R$57.8 million) in the last three months, due to the exchange rate variation in the periods. Resources from Bank and Real Estate Notes The balance of bank and real estate notes reached R$2,625.8 million in September 2018, with a year-on-year growth of 25.5% (R$533.9 million), 28.9% (R$588.0 million) in the last nine months and 20.2% (R$440.7 million) from June Financial Statements September 2018

31 ASSETS UNDER MANAGEMENT Assets under management totaled R$11,405.7 million at the end of September 2018, stable since September 2017, decreasing R$10.7 million, increasing 7.7% (R$817.2 million) from December 2017 and 6.0% (R$641.4 million) from June Banrisul mandate focus on a conservative strategy in managing third party assets, focusing on portfolio liquidity. Graph 11: Funds Raised and Under Management 3 months % Change 9 months 12 months 3.8% 6.0% 7.7% 60, , , , , , , , , , , , , , ,925.1 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 Total Funding and Assets under Management Total Funding Assets under Management SHAREHOLDERS EQUITY Banrisul s shareholders' equity reached R$7,251.9 million at the end of September 2018, an increase of 7.7% (R$520.8 million) from September 2017, of 3.1% (R$216.8 million) from December 2017 and of 3.1% (R$216,9 million) from June The twelve-month and the nine months evolution of shareholders' equity is the result of net income incorporation (net of the payments of interest on equity and dividends), of the R$353.3 million capital reduction approved in a General Shareholding Meeting and ratified by Central Bank of Brazil, and of the reassessment of the actuarial liabilities related to post-employment benefits (pursuant the Committee of Accounting Pronouncement 33-R1), as well as of exchange variation adjustments upon the equity of foreign branches, as set forth by the Resolution No. 4524/16 of the National Monetary Committee. The reassessment of actuarial liabilities aside, all other previously mentioned factors also affected the formation of shareholder s equity in 2Q18. Graph 12: Shareholders Equity % Change 3 months 9 months 12 months 3.1% 3.1% 7.7% 6, , , , ,251.9 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 31

32 BASEL RATIO From January 1, 2015, the assessment of Regulatory Capital and Risk-Weighted Assets is e based on the Prudential Conglomerate, pursuant to CMN Resolutions No. 4192/13 and No. 4193/13. The reference equity reached R$6,190.4 million in September 2018, decreasing R$130.1 million from September 2017, impacted by the reduction of R$177.7 million in the Tier II subordinated bond due to the application of the Basel III timeline, and the increase of R$47.5 million in Tier I, as the result of the incorporation of net income, the reduction of the capital stock and prudential adjustments. Quarter-on-quarter, reference equity increased R$227.0 million in Tier I, affected by the application of the Basel III timeline for prudential adjustments and by the reduction of capital stock. Risk Weighted Assets (RWATOTAL) reached R$38,921.0 million in September 2018, increasing R$716.0 million in twelve months mainly due to the increase of R$1,229.1 million in the operational risk (RWAOPAD) resulting from of the addition of newly six-month periods into the calculation basis. The credit risk share (RWACPAD) decreased R$20.5 million, while market risk share (RWAMPAD) reduced by R$492.5 million due to the decrease in the foreign exchange exposure (RWACAM). Risk-weighted assets decreased R$769.0 million since June 2018, mainly related to the decrease of R$671.6 million in RWACAM due to the reduction of the mismatch of operations, to the decrease of R$381.5 million in RWACPAD, as consequence of the result of reduced exposures and lower risk. Quarterly calculated, RWAOPAD presented an increase of R$278.4 million, with the entry of a new six-month period into the calculation basis. Basel ratio reached 15.9% in September 2018, decreasing 0.6 pp. since September 2017 and increasing 0.9 pp. from June 2018, taking into account the recorded amounts for regulatory capital and risk-weighted assets. Core capital and Tier I capital reached 14.1% in September 2018, both above minimum requirements, decreasing 0.1 pp. from September Leverage ratio reached 7.0% in September 2018, with a minimum defined as 3% since January 2018, according to CMN Resolution No.4615/17 Graph 13: Basel Ratio 16.5% 17.0% 15.6% 15.0% 15.9% Minimum Level 10.5% 0 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 32 Financial Statements September 2018

33 EVOLUTION OF INCOME STATEMENT ACCOUNTS NET INCOME In 9M18, reported net income reached R$796.1 million, which resulted in a ROAE of 15.1%. The 35.4% (R$208.2 million) increase from 9M18 came from (i) the growth of R$325.7 million in interest margins due to the fall of the Selic rate, which reflected the lower funding costs in volume more expressive than the reductions in interestearning revenues, (ii) the decrease of R$261.2 million in loans losses provisions, (iii) the increase of R$119.2 million in banking fees, (iv) the increase of R$101.9 million in administrative expenses, especially those related to specialized technical services and related to the collective agreement of 2017 and 2018, (v) the negative net growth of R$111.0 million in other operating revenues/expenses especially, as well as the consequently higher income tax and social contribution (R$244.3 million). Net income in 9M17 was impacted by expenses with the voluntary retirement plan, an one-off event that impacted the annual net income by additional R$51.3 million. In 3Q18, net income reached R$290.2 million, 31.6% (R$69.8 million) higher than 3Q17, reflecting the NII growth of R$155.2 million, the decrease of R$128.3 million in NPL expenses, the increase of R$59.2 million in administrative expenses, the growth of R$58.1 million in other operating revenues as well as the increase of R$108.3 million in tax. Net income increased 10.8% (R$28.3 million) from 2Q18 to 3Q18, particularly influenced by the growth of NII of R$91.5 million, due to the decrease of interest expenses partially offset by the reduction of the interest income, the reduction of R$30.2 million in provisions expenses, the increase of R$31.2 million in administrative expenses (particularly impacted by the category collective agreement), the increase of R$30.1 million in other operational expenses, as well as the higher income tax and social contribution of R$29.5 million. Graph 14: Net Income % Change 35.4% * ¹ ,7 ¹ ¹ ¹ ROAE * 3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M % 20.2% 14.4% 15.6% 17.3% 12.1% 15.1% ¹ Recurring net income * Based on recurring net income Return on Average Shareholders Equity Annualized return on average shareholders' equity reached 15.1% in 9M18, 3.0 pp. above from 9M17, in an environment that combined (i) increase of net interest income, (ii) reduction of provisions expenses, (iii) increase of revenues from fees and services, (iv) increase in administrative expenses and (v) the negative performance in other recurring operational revenues/expenses. 33

34 Recurring Efficiency Ratio The recurring efficiency ratio, accrued in the last twelve months until September 2018, reached 51.8%, compared to the 54.7% in the last twelve months until September The efficiency ratio trend reflects the increase of net financial income and revenues from banking fees, in higher amounts than the increase in administrative expenses, especially those connected to business increase. Graph 15: Recurring Efficiency Ratio 54.7% 52.8% 52.5% 51.8% 51.8% Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 FINANCIAL INCOME Financial income amounted to R$7,102.0 million in 9M18, decreasing 5.6% (R$423.5 million) from 9M17. In 3Q18, financial income reached R$2,445.2 million, increasing 4.2% (R$98.5 million) from 3Q17 and decreasing 2.7% (R$68.2 million) from 2Q18. Financial income was affected by the effective Selic Rate and the foreign exchange variation. Graph 16: Financial Income % Change -5.6% 7, , , , , , , Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 The downward trend in revenues from financial intermediation from 9M17 to 9M18 was mainly influenced by the decrease in compulsory deposits, as well as the revenues from securities and derivatives. From 3Q17 to 3Q18, the increase of the financial income came mainly from the increase in revenues from securities and derivatives, partially offset by the reduction in revenues from loans, leases and the sale or transfer of financial assets. The decrease in revenues from financial intermediation in the last quarter was influenced by the decrease in revenues from credit operations, leasing and sale or transfer of financial assets, and the result of foreign exchange transactions, partially offset by the expansion of securities and derivatives and the result of compulsory applications. 34 Financial Statements September 2018

35 REVENUES FROM CREDIT, LEASING OPERATIONS AND SALE OR TRANSFER OF FINANCIAL ASSETS Revenues from credit, leasing operations and sale or transfer of financial assets totaled R$4,853.2 million in 9M18, 2.5% (R$125.3 million) below 9M17. In 3Q18, they reached R$1,589.7 million, decreasing 3.8% (R$62.8 million) from 3Q17 and 3.9% (R$63.8 million) from 2Q18. Graph 17: Revenues from Credit and Leasing Operations % Change -2.5% 4, , , , , , , Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 The decrease in credit revenues, leasing and sale or transfer of financial assets in the last twelve months came mainly from the R$116.9 million reduction in revenues from non-earmarked lending, influenced by the decrease in the effective Selic Rate, with particular impact in the reduction of interest rates in corporate loans (floating rate transactions), as well as the retraction of the balance of the consumer credit portfolio, in a context of expansion of payroll loans. The declining trend in credit revenues was also influenced by the decrease of R$25.2 million in revenues from rural credit, of R$17.6 million in revenues from sale or transfer of financial assets, while partly offset by the increase of credit recovery revenues of R$22.4 million and of long-term financing revenues of R$17.0 million, as the result of the increase in revenues from foreign currency financing, impacted by the exchange variation of the period. In relation to 3Q17, the revenue from credit, leasing operations and the sale or transfer of financial assets in 3Q18 was mainly influenced by the decrease of R$67.5 million in commercial credit revenues, partially offset by the increase of R$9.6 million in recovery of loans written off. In the last quarter, the trend of revenues from credit, leasing operations and sale or transfer of financial assets was mainly influenced by the decrease of R$37.1 million in revenues from commercial credit and of R$21.9 million in revenues from long-term finance, due to the decrease of trade finance revenues, originated from the exchange devaluation of 3.84% in 3Q18 face the exchange devaluation of 16.01% in 2Q18. Revenues from Non-Earmarked Credit - Individuals and Companies In 9M18, total non-earmarked credit revenues reached R$4,070.9 million, 2.8% (R$116.9 million) below the amount recorded in 9M17. In 3Q18, the revenues from non-earmarked credit reached R$1,331.3 million, decreasing 4.8% (R$67.5 million) from 3Q17 and decreasing 2.7% (R$37.1 million) from 2Q18. 35

36 TABLE 20: REVENUES FROM NON-EARMARKED CREDIT - INDIVIDUALS AND COMPANIES 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 9M18/ 9M17 Individuals 3, , , , , , , % Credit Card (1) % Overdraft % Payroll-deductible Loan 1, , % Non Payroll Loan - Personal Credit % Other % Companies , % Credit Card (1) Working Capital % Debtor Accounts % Compror/Vendor % Foreign Credit % Discount of Receivables % Other % Total 4, , , , , , , % (1) Refers to credit card revolving credit. The upward trend of revenues from non-earmarked credit to individuals from 9M17 to 9M18 and from 3Q17 to 3Q18 was especially driven by payroll loans, due to the growth in balance, offset by the retraction of revenues from overdraft accounts and personal loans. From 2Q18, the performance was driven by the decrease of revenues from overdraft accounts and personal loans, partially offset by payroll loans and credit card. Revenues from non-earmarked credit to companies decreased due to the reduction of the working capital and debtor credit lines in the period. The decrease of revenues from non-earmarked loans to companies was driven by the effective Selic Rate. TABLE 21: MONTHLY AVERAGE NON-EARMARKED CREDIT RATES - INDIVIDUALS AND COMPANIES 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 Individuals 2.45% 2.80% 2.40% 2.47% 2.47% 2.63% 2.74% Credit Card (1) 7.47% 8.00% 7.35% 7.59% 7.47% 7.31% 7.40% Overdraft 12.03% 11.97% 12.02% 12.02% 12.04% 12.04% 12.02% Payroll-deductible Loan 1.86% 2.03% 1.81% 1.86% 1.91% 1.95% 1.99% Non Payroll-deductible Loan - Personal Credit 2.96% 4.78% 3.21% 2.95% 2.71% 4.38% 4.77% Other 1.58% 1.61% 1.57% 1.59% 1.59% 1.59% 1.60% Companies 1.58% 1.94% 1.56% 1.59% 1.60% 1.71% 1.86% Credit Card (1) 11.68% % 11.63% 11.18% - - Working Capital 1.28% 1.63% 1.24% 1.29% 1.31% 1.42% 1.55% Debtor Accounts 4.33% 4.52% 4.35% 4.38% 4.26% 4.21% 4.51% Compror/Vendor 1.59% 1.85% 1.53% 1.56% 1.67% 1.78% 1.84% Discount of Receivables 2.05% 2.50% 1.96% 2.05% 2.14% 2.24% 2.41% Other 0.92% 1.06% 0.91% 0.91% 0.93% 0.97% 1.03% Total 2.19% 2.48% 2.16% 2.20% 2.20% 2.33% 2.43% (1) Refers to credit card monthly average revolving rates. The monthly average interest rates charged on non-earmarked credit transactions decreased 0.29 pp. from 9M17 to 9M18. The monthly average interest rates charged in non-earmarked corporate credit transactions decreased 0.36 pp. in the period, while the monthly average interest rates on non-earmarked credit operations with individuals decreased 0.35 pp. in the same period. The average monthly rates of non-earmarked credit to companies were particularly influenced by competition and the trend of the Selic rate, while the monthly average interest rates on credit to individuals bore the carry-over effect upon the stock of operations with fixed interest rates. Credit cards average monthly rates for individuals were impacted in the period by the new payment rules for revolving lines, as put forward by CMN Resolution No. 4549/17, in force since April 3, In comparison 3Q18 with 3Q17, the reduction in the average rates of individuals and corporate loans was particularly influenced by the decreasing trend of the Selic rate. From 2Q18 to 3Q18, the average monthly rates of non-earmarked credit decreased, offset by the decrease in the average rates of non-earmarked credit to corporate and individuals, trend influenced by market competitive conditions. 36 Financial Statements September 2018

37 REVENUES FROM SECURITIES AND DERIVATIVES Revenues from securities and derivatives totaled R$1,453.8 million in 9M18, 11.5% (R$189.8 million) below 9M17. In 3Q18, treasury revenues reached R$592.3 million, increasing 38.0% (R$163.0 million) from 3Q17 and increasing 8.5% (R$46.3 million) from 2Q18. Graph 18: Revenues from Securities and Derivatives % Change -11.5% 1, , Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 The year-on-year trend of treasury revenues in 2Q18 resulted from the decrease of R$548.9 million in treasury results, affected by the decrease in the effective Selic Rate, minimized by the increase of R$359.2 million in the income from financial derivative instruments, influenced by the exchange variation and mark-to-market of the contracts, in accordance with the hedge accounting methodology designed to minimize the impact of the exchange rate on foreign funding. The increase in treasury income from 3Q17 to 3Q18 was due to the expansion of derivative financial instruments in the amount of R$193.3 million, due to mark-to-market and exchange variation in the period, partially offset by the result of securities, in R$30.3 million, impacted, in particular, by the decrease of the effective Selic rate. The increase in treasury income in the last quarter was due to the increase of R$146.3 million in securities, specially from the mark-to-market of shares received as a bonus when the demutualization of a card company took place, partly minimized, by the reduction of R$100.0 million in revenues from derivative financial instruments, in view of the mark-to-market and exchange variation of the period. REVENUES FROM FOREIGN EXCHANGE Revenues from foreign exchange transactions totaled R$224.5 million in 9M18, R$124.1 million above 9M17. In 3Q18, revenues from foreign exchange reached R$70.7 million, R$49.2 million above 3Q17 and R$55.6 million below 2Q18. Foreign exchange operations in Banrisul are matched to their funding in foreign currencies; hence, any variation in revenues is proportionally offset by the variation of costs with foreign currency loans and onlendings. The trend of revenues from foreign exchange in the last twelve months reflects the currency appreciation of 2.80% in 9M17 vis-à-vis the depreciation of 21.04% in 9M18. From 3Q17 to 3Q18, the increase was influenced by the currency appreciation of 4.24% from 3Q17, and of 3.84% from 3Q18. From 2Q18, revenues from foreign exchange were affected by the currency depreciation of 16.01%. 37

38 Graph 19: Revenues from Foreign Exchange % Change 123.7% Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 REVENUES FROM COMPULSORY DEPOSITS Revenues from compulsory deposits reached R$570.5 million in 9M18, 29.0% (R$232.6 million) below 9M17. In 3Q18, revenues from compulsory deposits reached R$192.4 million, 20.9% (R$50.9 million) below 3Q17 and 2.6% (R$4.8 million) above 2Q18. Graph 20: Revenues from Compulsory Deposits % Change -29.0% Q17 4Q17 1Q18 2Q18 3Q18 The decreases in revenues from compulsory deposits was mainly driven by the decrease of the effective Selic Rate, in a context of increasing credits linked to reserve requirements held by the Central Bank of Brazil. From 2Q18 to 3Q18, revenues from compulsory deposits increased due to the growth of the balance of credits linked to reserve requirements deposited at the Central Bank of Brazil. 9M17 9M18 FINANCIAL EXPENSES Financial expenses totaled R$3,819.2 million in 9M18, decreasing 20.9% (R$1,010.4 million) from 9M17. In 3Q18, financial expenses totaled R$ million, decreasing 12.8% (R$185.0 million) from 3Q17, and 13.1% (R$189.9 million) from 2Q18. The trend of financial expenses was mostly affected by the Selic rate and by the exchange variation rate. The decrease of financial expenses from 9M17 to 9M18 and from 3Q17 to 3Q18 came from the reductions in market funding expenses and in provision expenses, offset by the increase of expenses with loans, assignments and onlendings. In the last quarter, the decrease of financial expenses came from the decrease of market funding expenses, expenses with loans, assignments and onlendings and provision expenses. 38 Financial Statements September 2018

39 Graph 21: Financial Expenses 4,829.6 % Change -20.9% 3, , , , , , Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 EXPENSES WITH MARKET FUNDING OPERATIONS In 9M18, expenses with market funding reached R$2,610.3 million, 24.1% (R$828.6 million) below 9M17. In 3Q18, expenses with market funding reached R$897.9 million, 7.0% (R$67.7 million) below 3Q17 and 8.5% (R$83.2 million) below 2Q18. Graph 22: Expenses with Market Funding Operations 3,438.9 % Change -24.1% 2, Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 The decrease of funding expenses from 9M17 to 9M18 was mainly due to the decrease of R$782.6 million in expenses from time deposits, the reduction of R$183.4 million in expenses with repo operations, the decrease of R$77.0 million in expenses with savings accounts and the decrease of R$44.3 million in expenses related to bank notes, minimized by the increase of R$271.2 million in expenses related to the subordinated debt, impacted by cost, exchange rate variation and mark-to-market. The decrease in the effective Selic rate, which indexes most of the funding sources, affected the trend of funding costs in the period. The trend of funding expenses from 3Q17 to 3Q18was mainly influenced by the decrease of R$173.7 million in expenses with time deposits, of R$36.4 million in expenses with repo operations and of R$18.7 million in expenses with savings account, partially offset by the increase of R$173.4 million in expenses related to the subordinated debt due to the mark-to-market and exchange variation rate. Quarter-on-quarter, the downward trend of market funding expenses was largely related to the decrease of R$100.6 million in expenses related to the subordinated debt on account of the variation of the exchange rate, partly minimized by the increase of R$8.7 million in repo operations, of R$4.8 million in expenses with savings and time deposits, and of R$3.6 million in expenses with bank notes. EXPENSES WITH BORROWINGS AND ONLENDINGS Expenses with borrowings and onlendings totaled R$378.7 million in 9M18, 26.5% (R$79.4 million) above 9M17. In 3Q18, expenses with borrowings and onlendings totaled R$118.6 million, 10.2% (R$11.0 million) above 3Q17 and 39.2% (R$76.5 million) below 2Q18. 39

40 The trend of expenses with borrowings and onlendings from 9M17 to 9M18 was mainly influenced by the increased of expenses with foreign currency due to foreign exchange variation, minimized by the decrease in expenses with escrow deposit funds due to the reduction of the effective Selic rate. In the comparison between 3Q18 and 3Q17, expenses with loans, assignment and onlendings increased due to, in particular, the increase in expenses with onlendings in foreign currency, due to the exchange variation of the period, partially offset by the reduction of onlendings expenses to the BNDES. In the last quarter, the variation in expenses with borrowing and onlendings reflects the decrease with onlendings in foreign currency due to foreign exchange variation in the period. Graph 23: Expenses with Borrowings and Onlendings % Change 26.5% Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 FUNDING COST Funding cost was calculated based on average balance of funding sources, from the balances at the end of the months over the analyzed periods, linked to the corresponding funding expenses and the cost of borrowings, adjusted by the results of derivative financial instruments, thus producing the average funding rates. Among the funding products liabilities are deposits, open market funding, resources from acceptance and issuance of securities, and the subordinated bond (net of the mark-to-market of swaps contracts), linked directly to their respective expenses for the calculation of the average cost. The average funding cost in 3Q18 was 1.39%, lower than the 1.41% in 2Q18 and the 1.99% in 3Q17. The most relevant items in the composition of the costs were time deposits, savings deposits and matched transactions. The average funding cost reached 87.58% of the Selic rate in 3Q18, decreasing 2.42 pp. in relation to 2Q18 and increasing 0.46 pp. in relation to 3Q17. Accounting for 63.5% of the average balance of all funding items shown in the following table, the average cost of time deposits reached 1.42% in 3Q18, a decrease of 0.02 pp. from 2Q18 and of 0.62 pp. from 3Q17. The average cost with time deposits reached 89.37% of the Selic rate in 3Q18, decreasing 2.72 pp. from 2Q18 and 0.97 pp. from 3Q17. Adjusted to the changes in hedging derivatives, the average cost of the subordinated bond reached 2.31% in 3Q18, 0.16 pp. lower than in 2Q18, and 1.53 pp. below the cost in 3Q17, impacted by the foreign exchange variation and the mark-to-market of the contracts. 40 Financial Statements September 2018

41 TABLE 22: FUNDING COST AND % 3Q18 2Q18 3Q17 Average Accumulated Average Average Accumulated Average Average Accumulated Average Balance Expense Cost Balance Expense Cost Balance Expense Cost Demand Deposits 2, , , Saving Deposits 8,915.6 (103.7) 1.16% 8,635.0 (102.7) 1.19% 7,994.3 (122.4) 1.53% Time Deposits 36,825.3 (522.6) 1.42% 36,047.2 (518.8) 1.44% 34,175.0 (696.3) 2.04% Interbank Deposits (1.3) 1.10% 74.3 (1.3) 1.76% (3.4) 1.92% Credit Guarantee Fund Expenses - (14.5) - - (14.2) - - (16.8) - Matched Transactions 4,830.5 (78.7) 1.63% 4,496.6 (70.1) 1.56% 5,018.1 (115.2) 2.30% Funds from Acceptance and Issue of Securities 2,459.1 (37.1) 1.51% 2,154.7 (33.5) 1.56% 2,073.7 (44.9) 2.17% Subordinated Debt (1) 2,086.2 (48.2) 2.31% 1,974.8 (48.9) 2.47% 1,770.8 (68.0) 3.84% Total Average Balance / Total Expenses 57,966.0 (806.2) 1.39% 56,117.5 (789.4) 1.41% 53,745.9 (1,067.1) 1.99% Selic 1.59% 1.56% 2.26% Average Cost / Selic 87.58% 90.00% 88.04% Cost of Time Deposits / Selic 89.37% 92.09% 90.34% (1) Adjusted for gains and losses on hedging instruments (swaps). ALLOWANCE FOR LOAN LOSSES Expenses with allowance for loan losses totaled R$830.2 million in 9M18, 23.9% (R$261.2 million) below 9M17. In 3Q18, expenses with allowance for loan losses reached R$247.6 million, 34.1% (R$128.3 million) below 3Q17 and 10.9% (R$30.2 million) below 2Q18. The decrease in provision expenses for loan operations in the period was influenced by the decrease in the volume of credit in arrears by and rollover of the loan book by risk rating. Graph 24: Allowance for Loan Losses 1,091.4 % Change -23.9% Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 FINANCIAL MARGIN Net interest income totaled R$4,113.1 million in 9M18, 8.6% (R$325.7 million) above 9M17. In 3Q18, net interest income totaled R$1,428.6 million, 12.2% (R$155.2 million) above 3Q17 and 6.8% (R$91.5 million) higher than 2Q18. Increasing interest income from 9M17 to 9M18 was mainly affected by the decrease in funding costs, especially deposit costs, partially offset by the decrease in interest-earning revenues, securities and compulsory deposits revenues. Funding costs and the interest-earning revenues were affected by the reduction of the Selic rate. Comparing 3Q18 to 3Q17, net interest income was influenced by the increase in interest income and the decrease in interest income. In the last quarter, the trend of the net interest income reflected, mainly, by the decrease of interest expense partially offset by lower interest income. 41

42 Graph 25: Financial Margin % Change 8.6% 3, , , , , , , Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 REVENUES FROM SERVICES AND BANKING FEES Revenues from services and banking fees totaled R$1,398.7 million in 9M18, 9.3% (R$119.2 million) above 9M17. In 3Q18, revenues from services and banking fees totaled R$465.2 million, increasing 5.7% (R$25.1 million) from 3Q17, while stable quarter-on-quarter, decreasing R$3.2 million. Service and banking fees in 9M18 vis-à-vis 9M17 was impacted by the increase of R$33.0 million in checking account fees, of R$21.0 million in insurance, pension plan and savings bonds, R$19.1 million in credit card revenues, of R$14.0 million from the acquiring network, of R$10.5 million in revenues of poll sales consortium management fees, and of R$6.3 million in account debit fees. The increase in revenues from services and banking fees from 3Q17 to 3Q18 was mainly influenced by the increase of R$16.3 million in revenues from checking account fees, of R$7.7 million in revenues from insurance, pension plan and savings bonds, by the expansion of R$5.4 million in credit card fee revenues, of R$4.4 million in poll sales consortium management fees, while partially offset by the retraction of R$11.9 million in revenues from the acquiring network due to the change in the Vero network accreditation agreement, with effects on the accounting of revenues and expenses produced by the acquired network. In the last quarter, the trend of revenues from service and bank fees was particularly influenced by the decreases of R$10.6 million in revenues from the acquiring network, of R$3.5 million in revenue from tax collection services, and R$2.0 million in credit card fee revenues, partially offset by the increase of R$15.4 million in current account fee revenues. Graph 26: Revenues from Services and Banking Fees % Change 9.3% 1, , Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 RECURRING ADMINISTRATIVE EXPENSES In 9M18, recurring administrative expenses totaled R$2,819.3 million, 3.8% (R$101.9 million) above 9M17. In 3Q18, recurring administrative expenses totaled R$960.0 million, increasing 6.6% (R$59.2 million) from 3Q17 and 3.4% (R$31.2 million) from 2Q Financial Statements September 2018

43 Personnel expenses totaled R$1,462.5 million in 9M18, 5.4% (R$74.3 million) above 9M17, mainly impacted by the collective wage agreement for the years 2017 and 2018 and including the payment of the bonus related to the 2018 agreement. Other administrative expenses totaled R$1,356.8 million in 9M18, increasing 2.1% (R$27.6 million) from 9M17, especially influenced by specialized technical services (R$78.2 million, in connection with consulting services), minimized by the decrease of R$41.6 million in third-party services expenses, mainly due to the expenses with interchange and the origination of payroll loans through banking correspondents channels, and of R$15.5 million in marketing expenses. Personnel expenses totaled R$505.2 million in 3Q18, 9.4% (R$43.4 million) above 3Q17, mainly impacted by the collective wage agreement, including the payment of the corresponding negotiated bonus. Other administrative expenses totaled R$454.8 million in 3Q18, increasing 3.6% (R$15.8 million) from 3Q17, mostly by the increases of R$27.6 million in specialized technical services and of R$6.7 million in expenses with amortization and depreciation, partially offset by the reduction of R$21.4 million third-party services expenses, due to modifications in accreditation agreements to Vero network, with effects on the accounting of acquiring revenues and expenses. Quarter-on-quarter, personnel expenses increased 4.7% (R$22.7 million) due to the accounting of the resulting effects of the collective wage agreement of 2018, including the payment of the R$1, bonus per employee. Other administrative expenses increased 1.9% (R$8.5 million), especially because of the increases of R$9.7 million in specialized technical services expenses, of R$7.8 million in marketing expenses, of R$2.7 million in expenses with surveillance, security and transportation services, of R$2.3 million in materials expenses, of R$1.8 million in amortization and depreciation expenses and R$1.6 million in expenses related to financial system services, partially offset by the reduction of R$20.7 million in expenses with outsourced services. Graph 27: Recurring Administrative Expenses % Change 3.8% ¹ 2,717.3 ¹ 2, ¹ , , % ¹ ,388.1¹ 1, % ¹ 3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 Administrative Expenses ¹ Adjusted Personnel Expenses Other Administrative Expenses OTHER RECURRING OPERATING INCOME Other operating income totaled R$312.4 million in 9M18, 7.2% (R$24.3 million) below 9M17. In 3Q18, other operating income totaled R$113.8 million, decreasing 12.5% (R$16.3 million) from 3Q17 and increasing 7.4% (R$7.9 million) from 2Q18. Graph 28: Other Recurring Operating Income % Change -7.2% Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 43

44 Lower other operating income from 9M17 to 9M18 was especially due to the reduction of R$17.9 million in revenues from escrow accounts, of R$16.7 million in revenues from the reversal of provisions for payments pending settlement and of R$14.1 million in profits from the sale of assets not in use, partly offset by the increased of R$30.5 million in the income from portability of credit operations. Quarter-on-quarter, other operating revenues decreased mainly due, to the accounting for the reversal of R$10.5 million in provisions linked to the loyalty program Banriclube de Vantagens that took place in 3Q17, by the reductions of R$6.5 million in profit income from the sale of assets not in use, of R$4.8 million in commission and fees on insurance and savings bonds and of R$4.3 million in reversal provisions for pending payments, partially offset by the increase of R$12.3 million in the income from portability of credit operations. Quarter on quarter, other operating revenues increased due to the growth of R$8.0 million in revenues from reversal of provisions for pending payments and of R$2.9 million in the income from portability of credit operations, while partially offset by the retraction of R$3.6 million in commissions and fees on insurance and savings bonds. OTHER OPERATING EXPENSES Other operating expenses reached R$470.8 million in 9M18, 22.6% (R$86.8 million) above 9M17. In 3Q18, other operating expenses reached R$183.0 million, 29.6% (R$41.8 million) above 3Q17 and 19.7% (R$30.1 million) above 2Q18. The increase of other operating expenses from 9M17 to 9M18 was particularly driven by the increase of R$101.4 million in expenses related to labor provisions, partially offset by the decreases of R$14.4 million in expenses from the portability of credit operations and of R$7.2 million related to the expenses with the reassessment of provisions for tax risks. From 3Q17 to 3Q18, the increase in other operating expenses was mainly due to the increase of R$34.7 million in expenses with provisions related to labor provisions and of R$13.8 million in provision expenses for guarantees offered by Banrisul, yet partially offset by the decreases of R$4.5 million in expenses for civil lawsuits provisions and of R$2.0 million in card expenses. In the last quarter, the increase in other operating expenses was mainly due to the increases of R$25.2 million in provisions for civil lawsuits and of R$13.7 million in expenses with provision expenses for guarantees offered by Banrisul, partially offset by the decrease of R$12.0 million in provisions for civil lawsuits. Graph 29: Other Operating Expenses % Change 22.6% Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 44 Financial Statements September 2018

45 SUMMARY CONSOLIDATED PRO FORMA BALANCE SHEET TABLE 23: SUMMARY CONSOLIDATED PRO FORMA BALANCE SHEET - R$ THOUSAND Assets Sep 2018 Jun 2018 Mar 2018 Dec 2017 Sep 2017 Sep 2018/ Jun 2018 Sep 2018/ Sep 2017 Current and Long-Term Assets 74,376,434 73,848,643 70,275,336 71,757,481 69,784, % 6.6% Cash 778, , , , , % -2.0% Interbank Investments 7,652,774 1,266, , ,744 2,478, % 208.8% Securities and Derivatives 17,890,640 24,528,172 21,459,038 24,188,904 21,746, % -17.7% Interbank and Interbranch Accounts 13,173,552 12,671,469 13,013,736 12,245,331 12,153, % 8.4% Credit Operations 28,661,937 28,840,965 29,091,845 28,490,034 27,755, % 3.3% Allowance for Loan Losses (2,286,240) (2,553,487) (2,670,490) (2,674,934) (2,610,120) -10.5% -12.4% Leasing Operations 35,018 38,303 41,991 44,146 45, % -23.6% Allowance for Doubtful Lease Receivables (2,276) (4,037) (5,469) (5,973) (5,587) -43.6% -59.3% Other Receivables 8,414,194 8,388,525 7,606,910 8,070,312 7,387, % 13.9% Allowance for Losses on Other Receivables (165,578) (169,666) (175,063) (174,353) (142,820) -2.4% 15.9% Other Assets 223, , , , , % 23.4% Permanent 1,463,572 1,482,574 1,508,203 1,529,910 1,537, % -4.8% Investments 116, , , , , % 3.2% Property in Use 195, , , , , % 11.6% Intangible 1,151,812 1,177,843 1,216,295 1,231,194 1,249, % -7.8% Total Assets 75,840,006 75,331,217 71,783,539 73,287,391 71,322, % 6.3% Liabilities Sep 2018 Jun 2018 Mar 2018 Dec 2017 Sep 2017 Sep 2018/ Jun 2018 Sep 2018/ Sep 2017 Current and Long-Term Liabilities 68,588,155 68,296,269 64,585,266 66,252,366 64,591, % 6.2% Deposits 49,199,868 47,972,669 47,013,960 47,084,589 45,380, % 8.4% Demand Deposits 2,842,310 2,763,100 2,808,267 3,553,902 2,449, % 16.0% Saving Deposits 9,019,984 8,740,123 8,486,221 8,312,468 8,067, % 11.8% Interbank Deposits 124,967 69,592 88, , , % -26.7% Time Deposits 37,212,582 36,399,854 35,630,647 35,069,107 34,692, % 7.3% Other Deposits Money Market Funding 3,421,508 4,967,889 3,197,299 4,852,616 4,749, % -28.0% Funds from Acceptance and Issue of Securities 2,625,820 2,185,085 1,989,851 2,037,848 2,091, % 25.5% Interbank and Interbranch Accounts 593, , , , , % -1.0% Borrowings and Onlendings 2,784,448 2,897,552 2,864,871 2,938,172 3,108, % -10.4% Derivatives 31, , , , , % -93.2% Other Payables 9,931,886 9,610,632 8,636,306 8,751,979 8,200, % 21.1% Collected Taxes and Other 219, , ,513 61, , % -6.4% Foreign Exchange Portfolio 101,585 41,210 86,735 29,422 33, % 203.6% Social and Statutory 29,135 93,684 50, ,614 76, % -62.1% Tax and Social Security 1,354,484 1,183,080 1,096,731 1,065,126 1,199, % 12.9% Trading Account 7,036 12,951 24,077 99,329 4, % 53.6% Financial and Development Funds 979, , , , , % 11.7% Subordinated Debt 2,099,448 2,041,686 1,801,076 1,893,138 1,779, % 18.0% Other 5,140,902 5,096,605 4,556,329 4,617,384 3,994, % 28.7% Shareholders Equity 7,251,851 7,034,948 7,198,273 7,035,025 6,731, % 7.7% Total Liabilities and Shareholders Equity 75,840,006 75,331,217 71,783,539 73,287,391 71,322, % 6.3% 45

46 PRO FORMA INCOME STATEMENT TABLE 24: PRO FORMA INCOME STATEMENT R$ THOUSAND 9M18 9M17 3Q18 2Q18 1Q18 4Q17 3Q17 Financial Income 7,102,041 7,525,590 2,445,158 2,513,374 2,143,509 2,452,902 2,346, % -5.6% Lending and Leasing Operations 4,792,847 4,900,595 1,567,323 1,632,902 1,592,622 1,636,364 1,629, % -2.2% Securities 1,240,675 1,789, , , , , , % -30.7% Derivatives 213,159 (146,012) 91, ,748 (70,339) 59,717 (101,516) -52.2% % Foreign Exchange 224, ,363 70, ,337 27,411 44,731 21, % 123.7% Compulsory Investments 570, , , , , , , % -29.0% Sale or Transfer of Financial Assets 60,362 77,943 22,352 20,549 17,461 20,227 23, % -22.6% Financial Expenses (3,819,202) (4,829,628) (1,264,066) (1,453,982) (1,101,154) (1,378,242) (1,449,064) -13.1% -20.9% Funding Operations (2,610,322) (3,438,931) (897,916) (981,148) (731,258) (930,651) (965,609) -8.5% -24.1% Borrowings Assignments and Onlendings (378,662) (299,286) (118,600) (195,084) (64,978) (94,626) (107,615) -39.2% 26.5% Allowance for Loan Losses (830,218) (1,091,411) (247,550) (277,750) (304,918) (352,965) (375,840) -10.9% -23.9% Gross Profit from Financial Income 3,282,839 2,695,962 1,181,092 1,059,392 1,042,355 1,074, , % 21.8% Financial Margin 4,113,057 3,787,373 1,428,642 1,337,142 1,347,273 1,427,625 1,273, % 8.6% Other Recurring Operational Income / Expenses (1,916,196) (1,797,481) (677,338) (617,186) (621,672) (596,669) (577,293) 9.7% 6.6% Fees and Services 1,398,714 1,279, , , , , , % 9.3% Recurring Personnel Expenses (1,462,455) (1,388,142) (505,160) (482,433) (474,862) (460,049) (461,785) 4.7% 5.4% Other Administrative Expenses (1,356,800) (1,329,189) (454,846) (446,377) (455,577) (453,554) (439,055) 1.9% 2.1% Equity in Subsidiaries 27,279 20,564 9,228 9,989 8,062 10,497 6, % 32.7% Other Recurring Operational Income 312, , , ,939 92, , , % -7.2% Tax Expenses (364,538) (332,863) (122,537) (119,765) (122,236) (120,891) (112,377) 2.3% 9.5% Other Operational Expenses (470,765) (384,008) (183,005) (152,895) (134,865) (156,907) (141,171) 19.7% 22.6% Income from Recurring Operations 1,366, , , , , , , % 52.1% Income Before Income Taxes 1,366, , , , , , , % 52.1% Income Tax and Social Contribution (476,024) (231,682) (179,276) (149,745) (147,003) (108,958) (70,988) 19.7% 105.5% Employee Profit Sharing (93,956) (78,431) (34,080) (30,318) (29,558) (45,191) (28,694) 12.4% 19.8% Minority Interest (521) (445) (177) (186) (158) (168) (153) -4.8% 17.1% Recurring Net Income 796, , , , , , , % 35.4% Voluntary Retirement Plan - (93,204) , Voluntary Dismissal Plan (4,703) Capitalization Bonds Placement Agreement , Tax Assets (Plano Verão) , Tax Adjustments - 41, (118,665) Net Income 796, , , , , , , % 48.4% 3Q18/ 2Q18 9M18/ 9M17 46 Financial Statements September 2018

47 MANAGEMENT REPORT We present the Management Report and Financial Statements of Banco do Estado do Rio Grande do Sul S.A. for the nine months of 2018, prepared in accordance with the rules established by the Securities Commission and the Central Bank of Brazil. 47

48 ECONOMIC SCENARIO The period from January to September 2018 was marked by the increase of uncertainties and volatility in the international environment, mainly associated with prospects for the realignment of financial conditions connected to the evolution of economic activity in central economies and to the increase of commercial tensions. In spite of this, the US economy has consistently expanded, with effects in additional acceleration of inflation in a context of narrowing idleness in the labor market and advancing household consumption, contributing to the gradual growing cycle of the interest rate. On the other hand, lower economic activity and the absence of inflationary pressures in Europe drove the cautious stance of the monetary policy within the Continent, without altering interest rates and with the gradual reduction of economics stimuli. The Chinese economy maintained stable growth compatible with the trend of the yearly growth target set for the country and with the ongoing rebalancing process. In Brazil, regardless of the more complex external environment and the domestic uncertainties, the set of activity indicators demonstrated that the Brazilian economy has retaken its recovery trend, even though at a more modest pace, in an environment that mix high idleness and current inflation rate, with inflationary expectations in levels compatible with the inflation target, despite the occurrence of adverse shocks arising from the truck drivers strikes and the recent exchange devaluation. Retail business and the industry kept the increase in the period, in line with the gradual improvement of credit market, particularly within the segment of individuals due to the reduction of household indebtedness and the monetary policy measures, bringing the Selic interest rate down to 6.50% p.a. at the end of the third quarter of In Rio Grande do Sul despite margins oscillations largely driven by the adverse effects of the mentioned strikes, the state economic activity sustained a gradual recovery, although lower than previously planned, such as that observed in the national aggregate, reflecting the favorable performance of commerce, industry and services sectors. In the same sense, the credit market has also contributed to the dynamic of the state economy, with growth observed both in the individual and corporate portfolios. In turn, foreign trade in the State of Rio Grande do Sul performed positively in the first nine months of 2018, accumulating a surplus of US$8.2 billion in comparison to the positive balance of US$6.3 billion in the same period of 2017, resulting from increases of 23.7% and 18.0% in exports and imports, respectively. BUSINESS STRATEGY In the suitability process towards the management model in use since 2017, improvements in credit risk models for the individual and corporate retail segments and in processes of credit origination and recovery aim at improving risk-adjusted net interest income and capturing new business opportunities, all supported by effective management of credit exposure and risk-based pricing models. Complementing the new management model, and focusing on commercial productivity, the Banrisul Mais program seeks to qualify service and commercial activities through the training of sales teams, the standardization of routines and the definition of commercial drivers. The focus of commercial activity remains on the individual segment, especially in payroll loans for public servants and retirees, as well as the extension of customer relationship within the Afinidade segment. In the corporate segment, the drives remain on the Special Credit Program for Micro and Small Enterprises Banrisul Simple Credit, which include the anticipation of receivables, the use of business account, business credit cards and the supplying of Vero Mobile equipment. The strengthening of the Vero acquisition network is also a highlight in the Institution, a line of business for which new products and services were made available. In this context, in the year of its 90 Th anniversary, Banrisul has turned into a more modern, efficient and sustainable bank, ready for the future. In the period, Banrisul created the Digital Transformation area, with endto-end journeys with the use of agile processes that put together IT employees in a unique and multidisciplinary team. 48 Financial Statements September 2018

49 CONSOLIDATED PERFORMANCE NET INCOME In September 2018, Banrisul reported year-to-date net income of R$796.1 million, 48.4% above the same period of In recurring terms, 2018 year-to-date grew 35.4% (R$208.2 million) over the accumulated amount produced from January to September ROAE reached 15.1%. When compared to the same period of 2017, the performance of year, until September reflects the net interest income expansion, lower credit provision expenses, and the increase of fees and of administrative expenses, and the unfavorable evolution of other operational expenses/revenues. Of the generated income, R$289.2 million were destined to pay interest on own capital and dividends and R$506.9 million was retained earnings for the period. Measured by the concept of added value, Banrisul generated wealth of R$3,272.0 million from January to September 2018, of which 41.3% (R$1,351.7 million) for payroll, 32.0% (R$1,045.3 million) for taxes, fees and contributions, 2.4% (R$78.3 million) for the payment of third party capital and 24.3% (R$796.6 million) for remuneration of shareholders' equity. Graph 30: Net Income R$ Million % Change 35.4% * ¹ ,7 ¹ ¹ ¹ ROAE * 3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M % 20.2% 14.4% 15.6% 17.3% 12.1% 15.1% ¹ Recurring net income * Based on recurring net income 49

50 SHAREHOLDERS EQUITY Banrisul shareholders equity reached R$7,251.9 million at September The growth of 7.7% (R$520.8 million) in twelve months came from the incorporation of results (net of the payment and provisions of dividends and interest on capital), the capital reduction in the amount of R$353.3 million approved in the General Shareholders Meeting and ratified by the Central Bank of Brazil, the reassessment of actuarial liabilities related to the post-employment benefits (CPC 33 R1) and the adjustments of exchange variation upon the equity of branches abroad, according to the Resolution No. 4524/16 of the National Monetary Council (CMN). Graph 31 : Shareholders Equity Growth - R$ Million % Change 3 months 9 months 12 months 3.1% 3.1% 7.7% 6, , , , ,251.9 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 TOTAL ASSETS Total assets reached R$75,840.0 million at the end of September 2018, an increase of 6.3% over the R$71,322.4 million in September 2017, mostly from the increase of deposits. Total assets are broken down into credit assets (41.9% of total assets), securities and interbank investments (33.7%), interbank and interbranch deposits (17.4%) and other assets (7.0%). The portfolio of securities portfolio and interbank/interbranch transactions reached R$25,543.4 million at the end of September 2018, growing 5.4% over September 2017, reflecting the deposits growth, in a context of increase of credit operations and of compulsory deposits placed at the Central Bank of Brazil in the form of reserve requirements. As internal technical studies confirm, Banrisul is financially capable of and intends to hold until maturity the securities classified as held-to-maturity, pursuant to Article 8 of the Central Bank of Brazil Circular Letter No. 3068/01. Graph 32 : Total Assets Growth - R$ Million 3 months % Change 9 months 12 months 0.7% 3.5% 6.3% 71, , , , , % 6.6% 6.4% 6.5% 7.0% 17.0% 16.7% 18.1% 16.8% 17.4% 34.0% 33.9% 31.2% 34.2% 33.7% 42.8% 42.8% 44.3% 42.5% 41.9% Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 Total Assets Credit Operations Securities and Liquid Interbank Transactions Interbank and Interbranch Transactions Others 50 Financial Statements September 2018

51 LOAN OPERATIONS Expanded loan portfolio, which includes sureties and guarantees, reached R$32,247.9 million in September 2018, value that includes co-obligation and risk in provided collaterals. Sureties and guarantees excluded, credit operations balance totaled R$31,742.6 million in September 2018, increasing 4.1% (R$1,250.6 million) in the last twelve months mainly due to the performance of the portfolio of non-earmarked lending, which ended 9M18 with a balance of R$22,679.1 million, increasing 6.0% (R$1,281.3 million) in a year. The credit portfolio is classified by risk levels in accordance to procedures established by CMN Resolution No. 2682/99. At the end of September 2018, Normal Risk operations, which include risk levels from AA to C, totaled R$28,134.3 million, representing 88.6% of the total portfolio. Operations classified under Risk 1, which include risk levels from D to G, totaled R$2,074.4 million and corresponded to 6.6% of the portfolio. Consisting exclusively of risk H credit operations, Risk 2 level reached R$1,533.9 million or 4.8% of the total loan book. INDIVIDUALS AND CORPORATE NON-EARMARKED LOANS Non-earmarked loans to individuals reflected the Institution's business strategy, growing 13.0% (R$2,020.5 million) in the last twelve months and totaling R$17,517.2 million at September 2018, and include asset transfers recorded as credits linked to acquired portfolio pursuant to Circular Letter No. 3543/12 of the Central Bank of Brazil. The evolution was influenced especially by the growth of balance of payroll loans, which reached R$13,062.1 million in September 2018, of which R$7,979.5 million of own origination (transactions with customers), R$4,286.2 million of transactions produced by payroll loan correspondents, and R$796.4 million related to portfolios acquired from other institutions. Non-earmarked corporate loans amounted to R$5,945.5 million in September 2018, with a reduction of 10.5% (R$701.1 million) in relation to September The decrease in the corporate portfolio reflects, especially, the retraction in working capital lines and of the debtors accounts. AGRICULTURAL LOANS Agricultural loan portfolio reached R$2,408.5 million in September 2018, an increase of 1.9% (R$46.0 million) in relation to September In the nine months of 2018, 25,543 rural loans were hired, totaling R$1,258.3 million. Of this amount, 779 operations (R$61.6 million) refer to long-term funds (onlendings from BNDES), and 24,764 operations (R$1,196.7 million) were funded by Banrisul s short-term funding. Throughout 2018, Banrisul has been closely operating together with the agricultural sector of the State, empowering it through the offering of credit destined to finance investment, funding, commercialization and industrialization of agricultural products, observing the policies and directives drawn to the sector by the State Government and in consonance with the financial system of Rio Grande do Sul, meeting the demands of agricultural credit from family farmers, medium producers and business farmers, as well as for cooperatives, agroindustry and other companies in the agribusiness segment. Furthermore, the Bank has intensified agricultural business and has been present in agricultural fairs within the State, especially by attending the 41 st Expointer, which reached R$225.2 million in credit transactions. During the event, credit analysis was offered in order to speed up the process of granting loans and the release of resources to clients. EARMARKED LOANS The portfolio of real estate loans totaled R$4,046.4 million in September 2018, with growth of 6.2% (R$237.8 million) in relation to September Of this amount, R$3,378.8 million refers to the individual s portfolio. In the period, 2,774 real estate financing operations were contracted, at the amount of R$723.3 million. The long-term credit portfolio reached R$1,010.9 million in September 2018, a reduction of 28.3% (R$398.9 million) in relation to September Pre-shipping (ACC) and post-shipping (ACE) foreign exchange contracts reached R$699.9 million in September 2018, increasing 7.1% (R$46.3 million) over September

52 Graph 33: Loan Operations Growth - R$ Million % Change 3 months 9 months 12 months -0.8% 1.2% 4.1% 30, , , , , Over Total Assets % 42.8% 42.8% 44.3% 42.5% 41.9% Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 FUNDS RAISED AND UNDER MANAGEMENT In September 2018, funds raised and under management totaled R$65,330.8 million, an increase of 7.7% compared to the same period of 2017, and included time deposits (share of 57.0%), savings deposits (13.8% share), demand deposits (4.4%), bank notes (4.0%), subordinated debt (3.2%) and assets under management (17.5%). Total deposits reached R$49,199.9 million at the end of September 2018, increasing 8.4% (R$3,819.5 million) over September Time deposits reached R$37,212.6 million in September 2018, increasing 7.3% (R$2,520.2 million); savings deposits increased 11.8% (R$952.1 million) over September 2017, reaching R$9,020.0 million in September 2018 and demand deposits increased 16.0%, (R$392.8 million) totaling R$2,842.3 million at the end of September With balance of R$2,099.4 million in September 2018, the subordinated debt increased 18.0% (R$319.7 million) over September Funds from bank notes and real estate bonds reached R$2,625.8 million in September 2018, increasing 25.5% (R$533.9 million) in twelve months. Funds under management presented relative stability with a balance of R$11,405.7 million in September Financial Statements September 2018

53 PRODUCTS AND SERVICES VERO ACQUIRING NETWORK Amongst the major accomplishments of the Vero acquiring network until September 2018, important drivers were (i) digital accreditation into Vero made through the website features; (ii) the option for receiving the product of sales directly into the Banrisul Visa - Vero prepaid card, for store owners who do not have a checking account with Banrisul; (iii) the launch of the Vero Banrisul app for the management of sales and the use of receivables anticipation products; and (iv) the launch of Vero RePay, with recurring debit features that are charged directly into the credit card and similar to those of the automatic debit product, without using the client's limit. In the period, Vero was awarded the Vero Mobile Accessibility social inclusion project in the 4 th Best Practices Prize - Ideas that revolve around the world and in the efinance Prize, as well as reaching 16th place in the Nilson Report ranking of the biggest buyers of Latin America in Vero ended September of 2018 with thousand operational POS and mobile equipment installed and able to transact and thousand active accredited establishments in twelve months, of these, thousand establishments performed at least one transaction per month, values 9.2%, 5.2% and 4.1% respectively higher than what was reported in the end of September of In the first nine months of 2018, million transactions were captured, of which million with debit cards (14.4% year-on-year growth) and 75.9 million with credit cards (increase of 12.5% from the same period of the previous year). The total financial volume produced by the captured transactions reached R$19.1 billion, growth of 18.2% when compared to the first nine months of Of this amount, R$10.2 billion came from transactions with debit cards and R$8.9 billion with credit cards. BANRICARD BENEFIT AND BUSINESS CARDS In the first nine months of 2018 was implanted the new solution for the processing of BanriCard benefit and corporate cards was implemented, bringing more efficiency to operations and modernizing the operational platform. Within the portfolio of benefit and corporate cards products, with the use of BanriCard prepaid and postpaid cards, revenues reached R$1.1 billion, increasing 4.7% over the same period of There were 7,200 active customers using BanriCard in September BANRICOMPRAS Charge free and exclusively for Banrisul s customers product. Using their checking account cards, customers can pay for purchases at merchant stores affiliated to Banrisul. The payments can be debited at sight or on a future due date (pre-dated or in installments payment), with no annual fee, taxes or interest rate. In the first nine months of 2018, million transactions were made with the use of Banricompras cards, 13.5% higher than in the same period of 2017, and produced a financial turnover of R$9.1 billion, 14.9% higher than the first nine months of CREDIT CARDS Banrisul has offered exclusive products and services to individual customers. In a venture with MasterCard, Banrisul launched new features for the Banking and Mobile Internet channels, as well as Travel Insurance and Original Extended Warranty benefits to Black and Platinum MasterCard cardholders. Important highlights was also that all MasterCard and Visa credit cards issued by Banrisul to individuals will be entitled to making payments through Samsung Play and Google Pay digital portfolios, enabling transactions to be made without the need to carry physical cards and adding higher security to the use of plastics. In July 2018, Banrisul launched Visa prepaid card to be used initially into Vero network, with the purpose of reducing bureaucratic access to means of payment and encouraging the substitution of cash payments by electronic means. In addition, Banrisul provides Banriclube, a rewards program for credit cards issued by the Bank, which is always looking for new partners and improvements, adding value and expanding benefits. In this sense, in August 2018, the Bank made a new partnership with Loyalty Friend Program, from Avianca. MasterCard and Visa credit cards issued by Banrisul reached one million card users by the end of September 2018, increasing 15.6% compared to September In the period, credit cards issued by Banrisul produced turnover of R$3.8 billion in 45.5 million of transactions, with increases of 16.8% and 16.4%, compared to the 53

54 same period of 2017, respectively. Credit and fee income from credit cards and BNDES cards totaled R$265.6 million from January to September INSURANCE Seeking to leverage the potential of the insurance business, in the first nine months of 2018 Banrisul invested into the automation of processes, the launching of features to speed up commercialization of products and the qualification of services at branches, on the adequacy of the portfolio of products for Afinidade customers linked to the launching of the BanriCap Afinidade product, and on the released of Auto Compacto, a new car insurance modality suited to tailored to focused on the demand for lower cost insurance products. Campaigns and sales promotions were launched aiming to market life insurance, saving bonds and private pension plans for clients and employees. The results of insurance operations increased 15.5% (R$873.3 million) in the nine months of 2018 over the same half of the previous year. Total revenues reached R$ million, and revenues from insurance operations totaled R$ million, increasing 18.0% in relation to the same period of In September of 2018, active insurance operations totaled R$2.3 million, increasing 3.4% in compared to the same period of the previous year. PUBLIC SECTOR RELATIONS In the nine months of 2018, Banrisul s commercial strategy along with the public sector remained in the establishment of contracts to services related to the public sector payroll (from federal, municipal and state levels), aiming to maintain actual clients and to incorporate new ones, considering the relevant participation of this segment in the Bank s business. The Bank gives special attention on the accreditations of third parties for the provision of services related to the collection of tax, accounts payable and fund-raising products. In the municipal level, negotiations for the acquisition of payroll services rights that started in 2016 resulted in agreements with 280 municipalities by September Also in the municipal level, The Bank also concentrated commercial efforts towards private pension plans offered by local counties. As the result of a bidding contest, the Bank successfully obtained the rights to administer State judicial deposits BANRISUL S CUSTOMER SERVICE SERVICE NETWORK In September 2018, Banrisul's service network had 1,160 service points distributed in 518 branches (495 in Rio Grande do Sul, 17 in Santa Catarina, four in other Brazilian states and two overseas), 187 service stations and 455 electronic service stations. In line with the strategy, the Banrisul Mais program is being executed, aiming at the standardization and efficiency in the banking environment, using market best practices and aimed at increasing businesses. The initiative seeks to optimize and qualify service and is being implemented in all Banrisul branches. In line with the strategy of realigning the Bank s efforts to the needs and potential of every single market, the network restructuring was followed up by the Bank s repositioning outside the State of Rio Grande do Sul. In pursuit of excellence, the Bank has implanted special ongoing qualification and training and workshops programs, mobilizing employees in order to ensure high quality standards in customer service. DIGITAL CHANNELS Following market trends, digital channels operations continue to evolve, accounting for 50.6% of the total number of operations carried out from January to September 2018, which also including POS, ATM, bank correspondents, tellers and Banrifone transactions. This evolution is a reflection of changes in customer profile, by the increase in the use of mobile devices, the offering of new services and the implementation of improvements in line with the convenient and easy-to-use features in the digital channels and of the actions that promote the adhesion to these channels. 54 Financial Statements September 2018

55 To facilitate the communication between Afinidade customers and their account managers, phone and access features have been made available in the Banrisul Digital App, swift, jointly with the Afinidade Solutions that allows clients to get to know some Bank s tailor-made products made. In September 2018, the Bank released the Check Deposit service, allowing the deposit and consultation of checks directly from Minha Conta, Office and Afinidade apps. In addition, in June and July 2018, the Bank started tendering customers and users in the virtual platform consumidor.gov.br, a public service that offers a direct link between consumers and companies to solve consumer conflicts. As of September 2018, the Internet Banking (which includes Home and Office Banking features) and the Mobile Banking (My Account, Affinity and Office App) channels, accessed by means of Banrisul Digital, had million accesses, 33.8% higher than in the same period of 2017, and equivalent to an average of thousand daily accesses. The total number of operations carried out in these channels increased by 53.9% in relation to the same period of Among these, the number of financial transactions and the volume transacted was 24.0% and 14.2% higher, respectively, when compared to the same period of BANRISUL BANKING CORRESPONDENTS BANRIPONTO Banriponto Correspondents are commercial establishments able to process payments, deposits and withdrawals, among other banking services. For clients, the benefits are many, including business hours flexibility, convenience and freedom of choice, besides being able to select the nearest establishment. Banrisul maintains close relationship with its partners, acting in the prospection, training, support and management of Banripontos. As of September 2018, the 1,240 Banriponto Correspondents accounted for 44.1 million transactions, with a financial volume of R$15.7 billion in the period. In the Business Banriponto Correspondents, which offer payroll loans to INSS retirees and open current and savings accounts, 1,724 consigned payroll operations were contracted, in the amount of R$12.4 million. SUBSIDIARIES BANRISUL CARTÕES S.A. Banrisul Cartões manages the acquiring network Vero and the issuance of BanriCard benefits and corporate cards, with thousand active establishments accredited and 7,200 active agreements, respectively. In September, Banrisul Cartões obtained, from the Brazilian Securities and Exchange Commission (CVM), the Category A Securities Issuer registration and, from B3 SA - Brasil, Bolsa, Balcão, the listing permit and admission to trade of preferred shares under the Basic listing Segment. However, at the request of Banrisul Cartões, the application for the registration of the initial public offering for the distribution of preferred shares issued by Banrisul Cartões filed on May 25, 2018 has been on hold by CVM since August 22, 2018, while awaiting better market conditions. For the second consecutive year, Banrisul Cartões was ranked among the 1,000 largest companies in the country, listed in the 961 st position in the Exame Magazine's Best and Largest 2018 ranking for net sales in 2017, while ranked 753 rd in the ranking of Empresas Mais of the Jornal Estadão in relation to the 2017 net revenues. In the nine months of 2018, gross operating revenues totaled R$449.9 million, with growth of 2.4% in relation to the same period of Of this total, R$424.5 million came from the acquiring network, which grew 5.2% in relation to the same period of the previous year. In the first none months of 2018, the cost of services provided totaled R$173.9 million, while administrative expenses, composed by personnel and other operating expenses, totaled R$26.5 million in the period. Financial revenues totaled R$103.1 million, of which 76.1% came from the discount of sales receivables. The anticipation of the sales receivables amounted to R$2.2 billion in the first nine months of 2018, representing 23.7% of the total financial product of captured transactions, which represents an increase of 54.7% comparing with the same period of Banrisul Cartões net income in the first nine months of 2018 was R$190.3 million, an increase of 17.8% over the same period in BANRISUL S.A. ADMINISTRADORA DE CONSÓRCIOS Banrisul Consórcios manages sales pool groups for the acquisition of vehicles, trucks, motorcycles and real estate properties. Seeking to offer customers alternatives for the acquisition of goods, the Bank sells real estate and 55

56 vehicles consortia groups with maturities of up to 186 months and 72 months, respectively. In the real estate segment, letters of credit can be used for housing construction, remodeling and enlargement, as well as for the acquisition of new properties, land, parking space and commercial rooms. In September 2018, Banrisul Consórcios managed 158 groups and had 58.0 thousand active customers, totaling R$3.6 billion in outstanding letters of credit. In the period, 6,663 customers obtained purchases certificates at the equivalent amount of R$327.5 million for the acquisition of consumer goods. Net Income reached R$2.69 million in 9M18. BANRISUL S.A. CORRETORA DE VALORES MOBILIÁRIOS E CÂMBIO The broker company operates with stocks, options, forward and future markets, and aims at not only increasing the Bank s investment portfolio, but also offering products and assets with quality and security, providing technical support to customers, helping them identify the best opportunities within the capital markets. In the first nine months of 2018, Banrisul Corretora brokered R$3.4 billion in operations, of which 24.4% (R$780.3 million) via Home Broker system. As of July 2017, the management of investment funds was transferred to Banrisul Corretora, resulted in the increase of revenues. Net income in the first nine months of 2018 was R$2.0 million. BANRISUL ARMAZÉNS GERAIS S.A. Banrisul Armazéns Gerais S.A. operates in the city of Canoas, in the State of Rio Grande do Sul, as general warehouse facility; as dry dock (Grantee of the Brazilian federal revenue service, providing storage and logistics services to the public in general) and in Document Management, Storage and Scanning. 56 Financial Statements September 2018

57 BANRISUL ICATU PARTICIPAÇÕES S.A. Banrisul holds a stake of 49.9% of Banrisul Icatu Participações S.A. BIPAR holding company in partnership with Icatu Seguros SA to sell life insurance, private pension plans products and savings bonds. Rio Grande Seguros e Previdência S.A.-a subsidiary of BIPAR, operates exclusively into Banrisul s distributions channels in relation to life insurance and private pension plans products, achieving 15% of market share in Rio Grande do Sul in September 2018 with mostly 1.5 million insurers in its portfolio, producing revenues of R$550.5 million in the nine months of In December 2017, Banrisul entered into a new partnership with Icatu Seguros, aiming the constitution of Rio Grande Capitalização SA, a company that exclusivity offers savings bonds through Banrisul's distribution channels with exclusivity, and also to be controlled by BIPAR. The operation was approved by the Central Bank of Brazil in April 2018, and pre-approved by the Superintendence of Private Insurance (SUSEP) in May of the same year. From January to September 2018, BIPAR s net income was R$49.2 million. BEM PROMOTORA DE VENDAS E SERVIÇOS S.A. Bem Promotora de Vendas e Serviços, in which Banrisul stake is 49.9% of the capital, acts as originator of payroll loans offered to INSS retirees and pensioners and federal civil servants. The balance of Banrisul s credit transactions originated through Bem s payroll loan platform reached R$4,286.2 million in June Bem Promotora ended the first half of 2018 with a net income of R$5.6 million. CORPORATE GOVERNANCE Listed on B3 S.A. - Brasil, Bolsa, Balcão (Brazilian Securities and Derivatives Stock Exchange) Corporate Governance Level 1, Banrisul fully meets the requirements of its listing level and other corporate governance s requirements as well, in line with best market practices, on behalf of greater transparency, fairness and proper accountability, while enhancing credibility of investors and customers. Pursuant to CVM (Brazilian Securities and Exchange Commission) Instruction No. 381/2003, Banrisul informs that KPMG Auditores Independentes was hired in 2016 as the result of a bidding process (Public Bid 586/2015), as established by the Public Procurement Law No. 8666, provided services related to independent audit during the period from January to September OWNERSHIP STRUCTURE Banrisul has higher ownership dispersion than that required for the Level 1 of Corporate Governance: free float represents 50.1% of the total shares issued by the Bank, while the minimum required is 25%. September 29, 2018, Banrisul s ownership structure was presented as follows: Graph 34: Ownership Structure Voting Capital Total Capital State of Rio Grande do Sul 98.13% State of Rio Grande do Sul 49.89% Free Float 1.87% Free Float 50.11% Main Controller: 98.13% of Voting Capital Main Controller: 49.89% of Total Capital 57

58 INTEREST ON EQUITY AND DIVIDENDS PAYOUT POLICY Since early 2008, Banrisul has been paying interest on equity every quarter, and historically has remunerated its shareholders with a payout policy higher than the minimum required level. Interests on equity and dividends related to 9M18 were paid out and/or provisioned and totaled R$275.7 million. INTERNAL CONTROLS AND COMPLIANCE Considering the guidelines set by Banrisul management in relation to internal control system, to systematically monitor developed activities, the procedures for the application of the internal control evaluation methodology were continued, in order to promote control identification for risk mitigation and to keep monitoring the required action to improvements implementation. The Three Lines Defense structure model established in the Bank seeks to improve communication by clarifying the roles and responsibilities of those involved in risk and control management. The internal control and compliance activities were revalued to fully comply with the current regulatory context, specifically CMN Resolutions No. 2554/98 and No. 4595/17, and best market practices. In this sense, the corporate policies focusing on control environment were updated, improving alignment of internal control and compliance functions, in convergence with the areas of risk management and internal audit. Money Laundering Prevention and Combating Terrorist Funding policies were revaluated and updated, as well as to their correlated procedures, included into the MLP/CTF program. Furthermore, it is under development improvements in the monitoring corporative tools that will permit to qualify even further the controls and activities related to this process. Banrisul also maintains an exclusive team dedicated to executing activities focused on the prevention of money laundering, on constant legislation updating and on the development of training programs for all employees. CAPITAL AND RISK MANAGEMENT Capital management and credit, market, Interest Risk Rate in the Banking Book - IRRBB, liquidity, operational and socio-environmental risks integrated management is a strategic tool essential for a financial institution. The constant improvement in processes of: i) monitoring, control, evaluation, goal planning and capital requirements; and ii) identification, measurement, evaluation, monitoring, reporting, control and mitigation of risks allows the betterment of Banrisul's corporate governance practices, aligned to its strategic objectives. The process of capital and risk management involves the participation of all hierarchical layers of the Institution and the companies comprising the Prudential Conglomerate (Banrisul S.A. Administradora de Consórcios, Banrisul S.A. Corretora de Valores Mobiliários e Câmbio, Banrisul Cartões S.A.), as well as its subsidiary Banrisul Armazéns Gerais S.A. The processes are mapped, sorted and consolidated according to the exposures features of the transactions, in accordance with the recommendations of regulatory agencies. INTEGRATED MANAGEMENT STRUCTURE The capital and risk integrated management structure of Banrisul Group is coordinated by the Corporate Risks Management Department, responsible for capital management and for managing credit, market, IRRBB, liquidity, operational and socio-environmental risks with the support of the Chief Control and Risk Officer. The information produced by the department subsidizes the Risk Committee (advisory body to the Board of Directors), and other Management Committees, the Executive Board and the Board of Directors in the decision-making process. The Control and Risk Executive Officer supervises that department, and the Board of Directors is responsible for the released information related to risk management. The institutional structures of capital management and corporative risks management are reviewed at least annually and are available on the Banrisul Investors Relations website, at Corporate Governance > Risk Management, as well as other public reports relating to Risk Management and the calculation of the amount of Risk-Weighted Assets RWA, Reference Equity - RE and Leverage Ratio. 58 Financial Statements September 2018

59 CAPITAL MANAGEMENT The capital management is a continuous process of monitoring, controlling, evaluation and planning of goals and capital needs considering risks that the Institution is subject to, as well as with its strategic objectives. According to definitions set forth by the National Monetary Council s (CMN) definitions, the minimum capital calculation considers the 8.625% multiplier, F-factor denominator, of and the Principal Capital Additional-ACP of 1.875%, valid for the year 2018, the minimum requirement for the Basel Rate, which is the sum of these two factors applied to the total amount of RWA, changed to 10.5%. The calculation and submission of information in relation to the Additional Core Capital (ACC) have been required since January This additional capital has the following composition as of January 2018: (i) Additional Conservation Core Capital (1.875% of the RWA amount); (ii) Additional Countercyclical Core Capital (up to 1.875% of the RWA amount), and (iii) Additional Systemic Importance Core Capital (up to 1.0% of the RWA amount). Currently, Banrisul is subject only to the Additional Conservation Core Capital. CREDIT RISK Credit risk is defined as the possibility of losses associated with the failure to meeting obligations by the counterparty in accordance to the agreed terms: devaluation or reduction of remuneration, expected gains on financial instrument arising from the deterioration of the credit quality of the counterparty, the intervening party or the mitigating instrument; restructuring of financial instruments; and the credit exposure recovery costs on troublesome assets. The structure of Credit Risk assessment is based on Application and Behavior Score statistical methodologies and/or on the principle of collegiate technical decision, and thresholds of credit and risk limits corresponding to the various decision-making levels are defined, aimed at speeding up credit grant, on the grounds of technically pre-defined credit limits for customers, according to the maximum exposures that Banrisul is willing to operate with each one of them, given the risk/return relation. Seeking to be more efficiency when dealing with the financial market, Banrisul has reviewed models for the distribution of credit limit distribution based on credits and statistics modeling studies, in addition to reviewing rules for the automatic renewal of overdraft accounts limits and established uniform risk limits for companies with similar characteristics. Pursuant to Febraban guidelines, Banrisul has been stimulating the proper use of the overdraft account limit in line customer s needs, while improving processes to review and monitor global limits to reflect accurately the economic scenario. Lastly, to make the most out of asset allocation in rural loans, it was developed for the coming summer harvest a new model of risk assessment, customized for agribusiness; aimed at implementing improvements in risk management systems, the coding of profiles were altered, aiming for greater accuracy in the classification of customer risk. MARKET RISK Market risk is defined as the possibility of losses arising from fluctuation on market values of instruments held by the institution. This definition includes the risk of changes in interest rates and stock prices, for instruments classified in the trading book, and foreign exchange risk and commodity prices, for instruments classified in the trading book or banking portfolio. The management of market risk in Banrisul is segregated between transactions classified as to trade, which comprises transactions in financial instruments, including derivatives, held for trading, intended for the hedge of other elements of the trading book, and that are not subject to the limitation of its negotiability, and transactions classified in the non-trading banking book portfolio, which consists of all transactions of the Institution that are not classified in the trading portfolio, such as the loan portfolio, the securities held to maturity, the time deposits funding, the savings deposits and other transactions held to maturity. Banrisul is in the process of developing new measurement metrics for the risk of variation of interest rate upon the loan portfolio, known as the IRRBB, which is defined as the existing or prospective risk of the impact of adverse movements of interest rates on capital and in the results of the financial institution, according to BACEN Circular No. 3876/18, which becomes effective as of January 1, In addition to the referred norm, the Bank 59

60 has joined discussion forums and technical study sessions at Febraban, together with other financial institutions and the support of by specialized consultant. In this context, concluding the project execution of the migration of individualized interfaces from their origin systems. Also noteworthy was the ongoing implementation of the requirements of CMN Resolution No. 4557/17, which provides for the new integrated risk management structure through the preparation and execution of action plans in conjunction with consulting firms. Another important point is Banrisul's participation in the Central Bank of Brazil s Public Consultation No. 65/18, which aims to improve disclosure requirements by local financial institutions, through the document Pillar 3 Report. LIQUIDITY RISK The liquidity risk consists on the possibility of occurring losses resulting from the lack of sufficient liquid funds to efficiently honor expected and unexpected obligations, current and future, including those in connection to collaterals, without affecting its daily obligations and without incurring in significant losses; and the possibility the institution not being able to trade assets at market prices due to their relevant amount in relation to average usually traded volume, or to some market discontinuity. From January to September 2018, the liquidity risk monitoring processes did not report the occurrence of liquidity crisis events, with risk indicators remaining at adequate levels in accordance with the risk policy and the limits set forth in the Risk Appetite Statement. OPERATIONAL RISK The operational risk is defined as the possibility of losses resulting from external events or failure, deficiency or inadequacy of internal processes, people and systems. The management of operational risks aims at obtaining control over the risks, seeking to minimize them to protect the Bank and, hence, safeguard its equity and the interests of customers, shareholders, employees and stakeholders in general. In the nine months of 2018, projects aiming to improve operational risk management process were executed, including methodologic review and governance. It was implemented action plans towards the adequacy of the management structure to CMN Resolution no. 4557/17, in force since February for the companies listed under the Segment L2. SOCIO-ENVIRONMENTAL RISK Socio-environmental risk is defined as the possibility of losses arising from social and environmental damages and must be identified by financial institutions as a component of the various risk modalities to which they are exposed to. Its management should consider routines and procedures that identify, classify, evaluate, monitor, mitigate and control the risk present in the institution's activities and operations. Under management since the commencing date of CMN Resolution No. 4327/14 social and environmental risk has been included in the list of risks that must be managed in an integrated manner with other relevant risks affecting the Company, starting at the beginning of the validity of CMN Resolution No. 4557/17. Therefore, it has begun to be incorporated into the Risk Appetite Statement and stress tests. BASEL RATIO Since January 1, 2015, regulatory capital and risk-weighted assets is based on the prudential conglomerate. In September 2018, reference equity reached R$6,190.4 million, a reduction of R$130.1 million in relation to September 2017, due to the decrease of R$177.7 million in Tier II Capital subordinated debt, due to the application of the Basel III schedule, and due to the increase of R$47.5 million in Tier I, impacted by the incorporation of the net income of the period, by the deduction of prudential adjustments and by the reduction of equity share. The total exposure of risk-weighted assets (RWATOTAL) reached R$38,921.0 million in September 2018, increasing R$716.0 million in comparison with September 2017, mainly due to the growth of R$1,229.1 million in market risk (RWAOPAD) in view of the addition of six-months in the calculation basis, by the decrease of R$20.5 million in 60 Financial Statements September 2018

61 market risk RWACPAD, and by the decrease of R$492.5 million in market risk RWAMPAD, in view of the decrease of the exchange rate - RWACAM. Taking into account the values of reference equity and of risk-weighted assets, Basel ratio reached 15.9% in September Core capital and Tier I Capital reached 14.1%, both above minimum requirements. Leverage ratio calculated for September 2018 was 7.0%, with a minimum defined in 3.0% by CMN Resolution No. 4615/17, to be effective since January TECHNOLOGICAL MODERNIZATION TECHNOLOGY AND INFORMATION SECURITY Investment of R$166.5 million in the first nine months of 2018, in hardware, software, third-party services and assets maintenance contributed to technological modernization in addition to further enhancing the commitment to customer data privacy and security, secluded operations, communication secrecy and agility in the conduct of administrative processes. In May 2018, the 11 th IT International Forum took place, with the theme The Disruptive Innovation Era, when renowned Brazilian and foreign experts interacted with2,700 participants. The Forum highlights were the Bank s announcement of the first Fintech corporate venture fund, which will help Banrisul to be more efficiency and offer better solutions to customers, and of the Digital Financial System project, a blockchain network for the decentralization and secure settlement of operations, jointly developed by Banrisul and four other Brazilian banks. In June 2018, this project was also presented at the CIAB 2018 event in São Paulo, when Banrisul representatives gave lectures on "The challenges of digital transformation in public banks" and "The benefits of cooperation between banks and Fintechs". In May 2018, Banrisul presented the case Digital Transformation during the 15 th Global Digital Banking Conference held in Spain. Committed to information security and technology, Banrisul constantly acts in the prevention of threats and vulnerabilities, researching and defining the use of technologies that bring greater security to customers and the Bank alike. In its website, Banrisul presents a thematic area named Security Center, with security tips from the most diverse service channels available to its customers. During the Secure Internet Day celebrated on February month, Banrisul and other organizations around the world carried out activities aimed at promoting security, guiding customers about taking care on the use of technology to perform consultations and financial transactions. To improve data safety features from card transactions acquired by Vero, the 2018 PCI DSS certification (Card Payment Industry Data Security Standard) was successfully completed. This certification, required by the card banners, establishes a set of security requirements and procedures that protect and reduce the risk of data theft and, consequently, of fraud. In order to keep the Institution in line with the most modern market applications and to increase the availability of IT infrastructure, Banrisul has modernized computational servers and solutions for corporate data storage in the mainframe environment, resulting in lower operating and data storage costs as well as increasing reliability. In the period, internal improvements in the access control system of the operational environment were also conducted, from the implementation of a new Single Sign-On (SSO) infrastructure, which allows agility on the employee s access on several apps, systems and services with a single click. It was also noteworthy the Wi Fi Net project, which consist in making available for customers wireless Internet access inside the Bank s premises, making easier connections to Banrisul Digital App services, as well as the updating of Banrisul's Blades Servers technology park, whose technology improves the processing performance of current activities and allows meeting the new demands of the Institution, ensuring quality and continuous availability of the Bank's systems. It is also worth mentioning the acquisition of automation software to control batch processing, improving the efficiency and operational reliability of the processes. Regarding the development of systemic solutions, highlights the WebService BDK-PayPal project, which promotes the integration between the accreditation of Vero s networking acquirer to the PayPal web system. This interplatforms integration provides the payment of the membership fee to the network Vero by PayPal system, on the Internet. Another project worth mentioning is the development of an unprecedented testator of the authorization system for credit card transactions through the Vero network. This project aims to mitigate the 61

62 risk of performance declines in transaction authorization and also to avoid transaction losses due to errors after updating the authorization system. DIGITAL TRANSFORMATION In 2018, Banrisul created its Digital Transformation department with the finality to develop a favorable environment for digital ecosystems, as well as for providing the Bank with governance focused on digital transformation, in line with the Institution's strategic objectives. The initial objective is to promote the culture of fast delivering of products, focusing on solutions that best meet the user s experience, stimulating the work with multidisciplinary teams. Until September 2018, the most important highlights were the development of solutions for account opening and debt negotiation services available for individuals customers in the Banrisul Digital App, both, as well as solutions for the Vero Banrisul App, in partnership with Banrisul Cartões, that will allow customers to improve the monitoring of the sales. Efforts were also made to improve other products and services, as well as to design the experience of the new Vero Banrisul application solutions. Lastly, user usability testing activities were carried out to capture and comprehend behaviors and validate hypotheses of business models, as well as workshops to promote culture towards expediting the development of in-house customers-oriented solutions HUMAN RESOURCES In September 2018, Banrisul s workforce included 10,732 employees and 1,412 interns. Year to date, 2,025 training and qualification courses were offered in 2018, with 138,241 participants. For that, Banrisul invested about R$9.8 million, of which R$3.3 million into graduate and undergraduate education programs and language courses. Among all Banrisul s Corporative University actions in the period, highlights included the qualification of executives by the Leaders School and the Banrisul Distance Learning Program, in its fifth consecutive year and having surpassed the one-million training hours mark. Also in the period, the Sou Banrisul - Excellence in Customer Service Program improved; starting during the second half of 2017, the program promotes business sustainability by focusing in service excellency and by stimulating employees' commitment to best perform their role within the organization. Banrisul s service model follows the guidelines requested from all professionals, where every employee has the challenge of transforming the service into a differential to be perceived and recognized by customers. Banrisul also offers programs that promote and encourage physical activities. Amongst them, it is worth mentioning the running and walking groups, available in Porto Alegre and in other cities throughout the State of Rio Grande do Sul, and the BanriBike group, which promoted, during this period, cycling tours to employees and family members. SOCIAL AND ENVIRONMENTAL RESPONSIBILITY Banrisul's Social and Environmental Responsibility Policy guidelines lead the Bank s social and environment responsibility actions as well as for all the companies within Banrisul Group. In line with this policy, Banrisul is member of the Deliberative Committee of Sustentare Program of the State of Rio Grande do Sul, which aims to standardizing the disposal of electrical and electronic equipment used by public companies, in order to minimize damages caused to the environment and to enhance social inclusion. In the environment context, the Bank participates in the managing committees of the Agroecology and Organic Production State Plan, and State Program for Soil and Water Conservation Plan, besides encouraging sustainable agriculture by the Banrisul Seed Program. Banrisul also promotes inclusion, educative and cultural actions such as the Banrisul Program See, Listen and Feel, broadcasting films with accessibility features in many cities within of Rio Grande do Sul and Santa Catarina; Banrisul s Projeto Pescar, benefiting 20 young people in situations of socioeconomic vulnerability; Museu Banrisul which offered the public an audience of Coral Banrisul at Banrisul s Memory Hall situated at its Main Branch. 62 Financial Statements September 2018

63 Upon celebrating its 90 anniversary on September 12, Banrisul promoted festive events simultaneously in all branches and headquarters, with the presence of customers, employees and the public in general. AWARDS Banrisul is the most remembered bank and the preferred public company to the population of the State of Rio Grande do Sul, according to the Brands of Who Decides survey, promoted by Jornal do Comércio in partnership with Qualidata. Banrisul Cartões was the winner of the 4 th Best Practices Prize - Ideas that Revolve the World, event promoted by the Brazilian Association of Credit Card Companies and Services (ABECS), referring to Vero Mobile-Accessibility project. The Symphonic Orchestra of Porto Alegre performed a concert in tribute to Banrisul s 90 Anniversary, as a recognition of the Bank s cultural role. Banrisul is the most remembered branch in the Bank category, according to Top of Mind 2018 survey Rio Grande do Sul Branches, promoted by Tomorrow Group. Banrisul received the ESARH Prize 2018, in the Human Resources category, delivered in the South American RH Meeting, by the Leader School Project, produced by its Corporative University. Banrisul Cartões was again awarded with the Vero Mobile Accessibility Project, which this time was winner of the E-Finance Prize 2018, in the Accessibility category, promoted by Editora Executivos Financeiros. Banrisul stands on the Finanças Mais national yearbook, presented by the newspaper O Estado de São Paulo, in partnership with Austin Rating consulting, in the Bank category, where occupying the fourth position. Banrisul Corretora de Valores Mobiliários e Câmbio and Rio Grande Seguros e Previdência, also appear in the survey, under Brokers and Distributors and Life and Pension Plans companies, respectively. Bagergs is recognized for its 65 th anniversary in event promoted by the Chamber of Industry, Commerce and Services of the Municipality of Canoas, Rio Grande do Sul. Banrisul is one of the 100 largest listed companies by market value in Brazil, according to Exame magazine's "Melhores e Maiores", 2018 edition. Banrisul Cartões stood out among the 1,000 largest companies in the country by net sales in Rio Grande Seguros is one of the winners of the Top Marketing ADVB/RS 2018, in the category Market Sectors - Financial. Banrisul is among the country's 100 largest banks in the Finance ranking, as reported in the 2018 edition of Valor 1,000, jointly produced by the newspaper Valor Econômico from São Paulo, Serasa Experian and Centro de Estudos em Finanças da Fundação Getúlio Vargas. Rio Grande Seguros is highlighted in the yearbook, appearing amongst the 50 largest companies in the segment of life insurance and private pension plans. Banrisul is highlight in the ranking of the 1,500 Largest Companies in Brazil, in the category of Financial Services - Retail Banks, according to the case the Estadão Empresas Mais 2018 carried out by the newspaper O Estado de S. Paulo, jointly with Fundação Instituto de Administração and Austin Rating. In the same case, Banrisul Cartões also appears in the ranking of the 1,500 largest Brazilian companies, based on the net revenue produced in ACKNOWLEDGMENTS Throughout the first nine months of 2018, the year of its 90 th anniversary - celebrated on September 12 -, Banrisul continued its growth and innovation trend, presenting itself before customers, shareholders and general stakeholders as a modern and competitive company within the financial industry. This performance was only possible with the active participation of employees, who demonstrated technical capacity and professionalism. Thanks to the contribution of each protagonist, Banrisul will continue as a reference in the national context. Board of Executive Officers 63

64 FINANCIAL STATEMENTS 64 Financial Statements September 2018

65 BALANCE SHEET As of September 30, 2018 and 2017 (In Thousands of Reais) Parent Company Consolidated ASSETS CURRENT ASSETS 40,985,345 44,127,160 42,588,448 45,625,624 CASH (Note 04) 778, , , ,486 INTERBANK INVESTMENTS (Note 05) 7,640,849 2,459,531 7,652,774 2,478,264 Reverse Repurchase Agreements 7,579,244 1,801,828 7,591,169 1,820,561 Interbank Deposits 61, ,703 61, ,703 SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (Note 06) 6,784,869 16,540,500 7,157,847 16,984,713 Own Portfolio 2,515,437 11,844,759 2,998,354 12,417,082 Linked to Repurchase Agreements 3,545,680 4,687,619 3,424,219 4,550,598 Derivative Financial Instruments 2 8, ,031 Linked to Banco Central 699, ,225 - Linked to Guarantees 24, ,038 8,994 Privatization Certificates INTERBANK ACCOUNTS 12,148,854 11,184,948 12,148,854 11,184,948 Payments and Receipts Pending Settlement 127, , , ,696 Restricted Deposits (Note 07) Central Bank of Brazil 11,997,298 11,030,650 11,997,298 11,030,650 Agreements Correspondents 24,278 29,554 24,278 29,554 INTERBRANCH ACCOUNTS 24,072 25,408 24,072 25,408 Third-party Funds in Transit 2,756 7,561 2,756 7,561 Internal Transfers of Funds 21,316 17,847 21,316 17,847 LOANS (Notes 08) 9,504,330 9,404,369 9,504,330 9,404,369 Lending Operations Public Sector 11,716 11,107 11,716 11,107 Private Sector 9,969,362 9,814,094 9,969,362 9,814,094 Credit Linked to Credit Assignment 4,423 5,414 4,423 5,414 Allowance for Loan Losses (481,171) (426,246) (481,171) (426,246) LEASES (Note 08) 17,333 19,832 17,333 19,832 Leases Receivables Public Sector 3,494 4,319 3,494 4,319 Private Sector 14,988 16,839 14,988 16,839 Allowance for Doubtful Lease Receivables (1,149) (1,326) (1,149) (1,326) OTHER RECEIVABLES (Note 09) 3,961,974 3,612,147 5,179,246 4,646,764 Endorsements and Sureties Paid 1, , Foreign Exchange Portfolio 799, , , ,946 Income Receivable 105,456 98,226 92, ,477 Trading Accounts - - 6,312 4,585 Specific Credits Other 3,137,056 2,929,063 4,369,867 3,940,578 Allowance for Losses on Other Receivables (82,344) (80,003) (92,151) (90,252) OTHER ASSETS (Note 10) 124,512 85, ,145 86,840 Other Assets 1,597 2,104 1,685 2,192 Prepaid Expenses 122,915 83, ,460 84,648 65

66 Parent Company Consolidated ASSETS (cont.) NONCURRENT ASSETS 31,592,182 24,130,475 31,787,986 24,159,290 SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (Note 06) 10,723,092 4,751,111 10,732,793 4,762,204 Own Portfolio 10,722,930 3,725,767 10,722,930 3,725,767 Linked to Repurchase Agreements - 200, ,827 Derivative Financial Instruments 16 92, ,564 Linked to Central Bank of Brazil - 655, ,471 Linked to Guarantees ,482 9,847 87,575 INTERBANK ACCOUNTS 1,000, ,828 1,000, ,828 Restricted Deposits (Note 07) National Housing System 1,000, ,828 1,000, ,828 LENDING OPERATIONS (Notes 08) 16,871,367 15,741,244 16,871,367 15,741,244 Lending Operations Public Sector 67,492 57,224 67,492 57,224 Private Sector 18,583,496 17,835,220 18,583,496 17,835,220 Credit Linked to Credit Assignment 25,448 32,674 25,448 32,674 Allowance for Loan Losses (1,805,069) (2,183,874) (1,805,069) (2,183,874) LEASE OPERATIONS (Note 08) 15,409 20,393 15,409 20,393 Lease Receivables Public Sector 1,569 2,283 1,569 2,283 Private Sector 14,967 22,371 14,967 22,371 Allowance for Doubtful Lease Receivables (1,127) (4,261) (1,127) (4,261) OTHER RECEIVABLES (Note 09) 2,883,267 2,580,585 3,069,370 2,598,307 Foreign Exchange Portfolio 35,793 5,924 35,793 5,924 Other 2,920,901 2,627,229 3,107,004 2,644,951 Allowance for Losses on Other Receivables (73,427) (52,568) (73,427) (52,568) OTHER ASSETS (Note 10) 98,421 94,314 98,421 94,314 Other Assets 148, , , ,792 Allowance for Valuation (71,956) (36,283) (71,956) (36,283) Prepaid Expenses 22,298 21,805 22,298 21,805 PERMANENT ASSETS 2,720,635 2,582,978 1,463,572 1,537,521 INVESTMENTS (Note 11 (a)) 1,390,436 1,175, , ,971 Investments in Domestic Subsidiaries and associates 1,383,736 1,168, , ,150 Other Investments 11,485 11,514 11,646 11,709 Allowance for Losses (4,785) (4,785) (4,853) (4,888) PROPERTY AND EQUIPMENT (Note 11 (b)) 178, , , ,851 Land and Buildings 113, , , ,458 Other 639, , , ,399 Accumulated Depreciation (573,963) (567,867) (595,438) (587,006) INTANGIBLE ASSETS (Note 11 (c)) 1,151,616 1,249,369 1,151,812 1,249,699 Intangible Assets 1,578,258 1,504,100 1,580,417 1,506,259 Accumulated Amortization (426,642) (254,731) (428,605) (256,560) TOTAL ASSETS 75,298,162 70,840,613 75,840,006 71,322,435 See accompanying notes. 66 Financial Statements September 2018

67 Parent Company Consolidated LIABILITIES AND EQUITY CURRENT LIABILITIES 28,989,432 27,579,769 29,527,062 28,057,302 DEPOSITS (Note 12) 16,382,026 14,264,105 16,344,426 14,231,862 Demand Deposits 2,847,426 2,456,626 2,842,310 2,449,543 Saving Deposits 9,019,984 8,067,876 9,019,984 8,067,876 Interbank Deposits 112,120 75, ,120 75,688 Time Deposits 4,402,471 3,663,915 4,369,987 3,638,755 Other Deposits MONEY MARKET FUNDING (Note 12) 3,542,854 4,885,084 3,421,508 4,749,766 Own Portfolio 3,542,854 4,885,084 3,421,508 4,749,766 FUNDS FROM ISSUANCE OF SECURITIES (Note 12) 846,778 1,481, ,452 1,222,922 Mortgage Notes and Similar 846,778 1,481, ,452 1,222,922 INTERBANK ACCOUNTS 287, , , ,443 Receipt and Payment Pending Settlement 287, , , ,299 Correspondents INTERBRANCH ACCOUNT 305, , , ,646 Third-party Funds in Transit 305, , , ,497 Internal Transfers of Funds BORROWINGS 798, , , ,567 Domestic Borrowings - Other Institutions Foreign Borrowings (Note 13) 798, , , ,850 DOMESTIC ONLENDINGS OFFICIAL INSTITUTIONS (Note 14) 598, , , ,139 National Treasury 168, , , ,358 National Economic and Social Development Bank (BNDES) 294, , , ,673 Federal Savings and Loan Bank (CEF) 5,833 5,888 5,833 5,888 National Equipment Financing Authority (FINAME) 129, , , ,714 Other Official Institutions FOREIGN ONLENDINGS (Note 14) 2,752 2,177 2,752 2,177 Foreign Onlendings 2,752 2,177 2,752 2,177 DERIVATIVE FINANCIAL INSTRUMENTS (Note 06 (d)) 2,525 29,570 2,525 29,570 Derivative financial instruments 2,525 29,570 2,525 29,570 OTHER PAYABLES (Note 15) 6,222,362 4,857,790 7,188,929 5,761,210 Collected Taxes and Other 219, , , ,326 Foreign Exchange Portfolio 101,585 33, ,585 33,455 Social and Statutory 29,025 76,846 29,135 76,938 Tax and Social Security 690, , , ,484 Trading Account and Intermediation - - 7,036 4,581 Financial and Development Funds 979, , , ,118 Subordinated Debt 151, , , ,921 Other 4,050,326 2,948,304 4,880,900 3,736,387 67

68 Parent Company Consolidated LIABILITIES AND SHAREHOLDERS EQUITY (cont.) NONCURRENT LIABILITIES 39,060,673 36,533,066 39,061,093 36,534,049 DEPOSITS (Note 12) 32,855,442 31,148,466 32,855,442 31,148,466 Interbank Deposits 12,847 94,824 12,847 94,824 Time Deposits 32,842,595 31,053,642 32,842,595 31,053,642 FUND FROM ISSUANCE OF SECURITIES (Note 12) 2,049, ,969 2,049, ,969 Mortgage Notes and Similar 2,049, ,969 2,049, ,969 BORROWINGS 34 3, ,061 Borrowings - Other Institutions Foreign Borrowings (Note 13) 34 3, ,278 DOMESTIC ONLENDINGS - OFFICIAL INSTITUTIONS (Note 14) 1,382,364 1,637,810 1,382,364 1,637,810 National Economic and Social Development Bank (BNDES) 988,230 1,138, ,230 1,138,368 Federal Savings and Loan Bank (CEF) 42,680 47,099 42,680 47,099 National Equipment Financing Authority (FINAME) 349, , , ,276 Other Official Institutions 1,613 2,067 1,613 2,067 FOREIGN ONLENDINGS (Note 14) 2,090 3,834 2,090 3,834 Foreign Onlendings 2,090 3,834 2,090 3,834 DERIVATIVE FINANCIAL INSTRUMENTS (Note 06 (d)) 28, ,690 28, ,690 Derivative Financial Instruments 28, ,690 28, ,690 OTHER PAYABLES (Note 15) 2,742,607 2,439,019 2,742,957 2,439,219 Tax and Social Security 535, , , ,117 Subordinated Debts 1,947,770 1,657,823 1,947,770 1,657,823 Other 259, , , ,279 SHAREHOLDERS EQUITY (Note 23) 7,248,057 6,727,778 7,251,851 6,731,084 Capital 4,396,719 4,750,000 4,396,719 4,750,000 Capital Reserves 4,511 4,511 4,511 4,511 Income Reserves 2,773,613 1,989,244 2,773,613 1,989,244 Valuation Adjustment (128,707) (153,395) (128,707) (153,395) Retained Earnings 201, , , ,418 Non-controlling Interest - - 3,794 3,306 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 75,298,162 70,840,613 75,840,006 71,322,435 See accompanying notes. 68 Financial Statements September 2018

69 INCOME STATEMENT Periods ended September 30, 2018 and 2017 (In Thousands of Reais, except Earnings per Share) 01/01 to 09/30/2018 Parent Company 01/01 to 09/30/ /01 to 09/30/2018 Consolidated 01/01 to 09/30/2017 INCOME FROM FINANCIAL INTERMEDIATION 7,076,838 7,484,516 7,102,041 7,525,590 Lending Operations 4,790,472 4,895,095 4,790,472 4,895,095 Lease Operations 2,375 5,500 2,375 5,500 Securities 1,215,472 1,748,549 1,240,675 1,789,623 Derivative Financial Instruments 213,159 (146,012) 213,159 (146,012) Foreign Exchange 224, , , ,363 Compulsory Investments 570, , , ,078 Sales or Transfer of Financial Assets 60,362 77,943 60,362 77,943 EXPENSES OF FINANCIAL INTERMEDIATION (3,833,895) (4,852,747) (3,819,202) (4,829,628) Funding Operations (2,626,038) (3,463,660) (2,610,322) (3,438,931) Borrowings, Assignments and Onlendings (378,628) (299,228) (378,662) (299,286) Allowance for Loan Losses (Note 08 (e)) (829,229) (1,089,859) (830,218) (1,091,411) GROSS INCOME FROM FINANCIAL INTERMEDIATION 3,242,943 2,631,769 3,282,839 2,695,962 OTHER OPERATING INCOME (EXPENSES) (1,989,532) (1,925,821) (1,916,196) (1,890,685) Income from Services Rendered (Note 17) 106, , , ,986 Income from Bank Fees (Note 18) 766, ,379 1,136,463 1,042,532 Personnel Expenses (Note 19) (1,451,480) (1,471,405) (1,462,455) (1,481,346) Other Administrative Expenses (Note 20) (1,211,780) (1,154,736) (1,356,800) (1,329,189) Tax Expenses (283,160) (256,892) (364,538) (332,863) Share of Profit of Equity Accounted Investees 246, ,074 27,279 20,564 Other Operating Income (Note 21) 308, , , ,639 Other Operating Expenses (Note 22) (471,071) (378,710) (470,765) (384,008) OPERATING INCOME 1,253, ,948 1,366, ,277 INCOME BEFORE INCOME TAX AND PROFIT SHARING 1,253, ,948 1,366, ,277 INCOME TAX AND SOCIAL CONTRIBUTION (Note 25 (a)) (363,313) (90,926) (476,024) (189,740) Current (237,486) (236,802) (350,263) (336,212) Deferred (125,827) 145,876 (125,761) 146,472 EMPLOYEE PROFIT SHARING (93,956) (78,361) (93,956) (78,431) NON-CONTROLLING INTEREST - - (521) (445) NET INCOME 796, , , ,661 Number of Outstanding Shares - Thousands (Note 23 (a)) 408, , Earning per Thousand Shares (R$) 1, , See accompanying notes. 69

70 STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Periods ended September 30, 2018 and 2017 (In Thousands of Reais) Attributable to the Controlling Shareholders Income Reserves Capital Capital Capital Asset Valuation Retained Retained Non-Controlling Legal Statutory For Expansion Increase Reserves Adjustments Earnings Earnings Participation Total Consolidated Balance as of January 01, ,500,000-4, ,971 1,464, ,017 (149,808) - 6,440,523 2,903 6,443,426 Capital increase - 250, (52,983) (197,017) Valuation Adjustments Mark-to-Market of Securities Available for Sale ,674-5,674-5,674 Actuarial Valuation Adjustments (Note 26 (d)) (1,316) - (1,316) - (1,316) Foreign Exchange Effects in Equity Abroad (7,945) - (7,945) - (7,945) Variation in Non-Controlling Interest Net Income , , ,661 Allocation of Net Income (Note 23 (b)) Reserves Constitution ,810 79,051 58,563 - (153,424) Interest on Equity (245,819) (245,819) - (245,819) Balance as of September 30, ,500, ,000 4, ,781 1,490,900 58,563 (153,395) 137,418 6,727,778 3,306 6,731,084 Balance as of January 01, ,750,000-4, ,623 1,675, ,884 (191,377) - 7,031,749 3,276 7,035,025 Capital Increase (353,281) (353,281) - (353,281) Valuation Adjustments Mark-to-Market of Securities Available for Sale (411) - (411) - (411) Actuarial Valuation Adjustments (Note 26 (d)) (1,740) - (1,740) - (1,740) Foreign Exchange Effects in Equity Abroad ,821-64,821-64,821 Variation in Non-Controlling Interest Net Income , , ,142 Allocation of Net Income (Note 23 (b)) Reserves Constitution , , ,222 - (304,998) Interest on Equity (261,100) (261,100) - (261,100) Dividends (28,123) (28,123) - (28,123) Balance as of September 30, ,396,719-4, ,919 1,801, ,106 (128,707) 201,921 7,248,057 3,794 7,251,851 See accompanying notes. 70 Financial Statements September 2018

71 CASH FLOW STATEMENT Periods ended September 30, 2018 and 2017 (In Thousands of Reais) Parent Company 01/01 to 01/01 to 09/30/ /30/2017 Consolidated 01/01 to 01/01 to 09/30/ /30/2017 CASH FLOW FROM OPERATING ACTIVITIES Income Before Taxes on Income and Employee Profit Sharing 1,253, ,948 1,366, ,277 Adjustments to Income Before Income Tax and Employee Profit Sharing Depreciation and Amortization 146, , , ,741 Share of Profit of Equity Accounted Investees (246,465) (209,074) (27,279) (20,564) Deferred Taxes 125,827 (145,876) 125,761 (146,472) Income from Subordinated Debt 358,679 87, ,679 87,497 Provision for Loan Losses 829,229 1,089, ,218 1,091,411 Securitization Loss Provision Provision for Contingencies 270, , , ,818 Adjusted Income Before Income Tax and Employee Profit Sharing 2,737,305 1,815,049 3,073,791 2,106,708 Changes in Assets and Liabilities 184,294 (964,048) (210,428) (1,129,691) (Increase) Decrease in Interbank Deposits 580,431 (115,943) 580,431 (115,943) (Increase) Decrease in Trading Securities 772,572 (254,719) 776,691 (257,838) (Increase) in Derivative Financial Instruments (269,672) (65,846) (269,672) (65,846) (Increase) in Interbank and Interbranch Accounts (517,585) (878,035) (515,882) (878,543) (Increase) in Lending Operations (1,374,029) (1,545,696) (1,374,029) (1,545,696) Decrease in Lease Operations 8,714 8,439 8,714 8,439 (Increase) Decrease in Other Receivables (403,111) 96,846 (505,047) 344,393 (Increase) Decrease in Other Assets (82,102) 27,779 (80,000) 27,444 Increase in Deposits 2,112,864 2,590,186 2,115,279 2,840,663 (Decrease) in Money Market Funding (1,463,335) (725,439) (1,431,108) (703,607) Increase in Funds from Acceptance and Issuance of Securities 599, , , ,953 (Decrease) in Borrowings (153,190) (465,385) (153,724) (465,918) Increase (Decrease) in Other Liabilities 583, , ,546 (156,743) Income tax and social contribution paid (210,011) (250,950) (233,599) (273,449) NET CASH FROM (USED IN) OPERATING ACTIVITIES 2,921, ,001 2,863, ,017 CASH FLOW FROM INVESTING ACTIVITIES Capital Reduction (353,281) - (353,281) - Dividends Received from Subsidiary 103,132 21, ,132 21,792 (Increase) Decrease in Securities Available for Sale 840,454 (53,709) 900,495 (174,219) (Increase) Decrease in Securities Held to Maturity 4,519,527 91,677 4,515,463 79,921 Disposal of Investments 1, , Disposal of Property and Equipment ,430 1,320 Write Off of Intangible Assets Acquisition of Investments (728) (1,828) (728) (1,828) Acquisition of Property and Equipment (27,210) (21,234) (30,016) (23,190) Acquisition of Intangible Assets (51,672) (60,797) (51,672) (60,937) NET CASH (FROM) USED IN INVESTING ACTIVITIES 5,033,174 (22,208) 5,086,575 (155,758) CASH FLOW FROM FINANCING ACTIVITIES Subordinated Debt (8,973) (17,928) (8,973) (17,928) Payment of interest on Subordinated Debt (143,396) (122,198) (143,396) (122,198) Dividends Paid (20,204) (16,677) (20,204) (16,677) Interest on Equity Paid (261,100) (245,819) (261,100) (245,819) Change in Non-controlling Interest NET CASH FROM (USED IN) FINANCING ACTIVITIES (433,673) (402,622) (433,155) (402,219) Effects of the Exchange Rate Variation on Cash and Cash Equivalents 64,821 (7,945) 64,821 (7,945) NET INCREASE IN CASH AND CASH EQUIVALENTS 7,585, ,226 7,581, ,095 Cash and Cash Equivalents at the Beginning of the Period 833,480 2,287, ,017 2,312,954 Cash and Cash Equivalents at the End of the Period 8,419,401 2,705,272 8,431,621 2,724,049 See accompanying notes. 71

72 STATEMENT OF VALUE ADDED Periods ended September 30, 2018 and 2017 (In Thousands of Reais) Parent Company Consolidated 01/01 to 09/30/ /01 to 09/30/ /01 to 09/30/ /01 to 09/30/2017 INCOME (a) 7,461,378 7,519,525 8,015,047 8,048,421 Financial Income 7,109,113 7,482,536 7,134,182 7,523,675 Services Rendered and Bank Fees Income 873, ,361 1,398,714 1,279,518 Allowance for Loan Losses (829,229) (1,089,859) (830,218) (1,091,411) Other 308, , , ,639 FINANCIAL INTERMEDIATION EXPENSES (b) (3,004,666) (3,762,888) (2,988,984) (3,738,217) INPUTS ACQUIRED FROM THIRD PARTIES (c) (1,489,113) (1,314,533) (1,632,935) (1,493,438) Supplies, Energy and Other (928,444) (859,497) (964,443) (895,588) Third-party Services (528,394) (457,016) (636,351) (599,765) Assets Value Impairment (Recovery) (32,275) 1,980 (32,141) 1,915 GROSS VALUE ADDED (d=a-b-c) 2,967,599 2,442,104 3,393,128 2,816,766 DEPRECIATION AND AMORTIZATION (e) (146,130) (138,236) (148,445) (140,741) PRODUCED BY THE BANK (f=d-e) 2,821,469 2,303,868 3,244,683 2,676,025 VALUE ADDED RECEIVED IN TRANSFER (g) 246, ,074 27,279 20,564 Equity in earnings (losses) in subsidiaries 246, ,074 27,279 20,564 ADDED VALUE FOR DISTRIBUTION (h=f+g) 3,067,934 2,512,942 3,271,962 2,696,589 DISTRIBUTION OF VALUE ADDED 3,067,934 2,512,942 3,271,962 2,696,589 Personnel 1,341,486 1,352,207 1,351,668 1,361,545 Salaries 1,023,600 1,037,686 1,031,205 1,044,419 Benefits 255, , , ,543 FGTS 62,519 60,415 63,653 61,583 Taxes, Fees and Contributions 850, ,377 1,045, ,835 Federal 805, , , ,550 State , Local 45,133 40,734 71,089 65,234 Debit remuneration 79,883 78,697 78,326 77,103 Rentals 79,883 78,697 78,326 77,103 Equity remuneration 796, , , ,106 Interest on Equity 261, , , ,819 Dividends 28,123-28,123 - Retained Earnings for the Period 506, , , ,842 Non-controlling Interests See accompanying notes. 72 Financial Statements September 2018

73 73

74 NOTES TO THE FINANCIAL STATEMENTS We present below Notes to the Financial Statements, which are an integral part of the individual and consolidated Financial Statements of Banco do Estado do Rio Grande do Sul S.A. (Banrisul), amounts expressed in thousands of Reais (unless otherwise indicated) and presented as follows: 74 Financial Statements September 2018

75 NOTES TO THE FINANCIAL STATEMENTS NOTE 01 - OPERATIONS Banco do Estado do Rio Grande do Sul S.A. ( Banrisul or Institution ) is a corporation controlled by the Estado do Rio Grande Sul, publicly traded, which acts as a multiple-service bank, engaged in retail banking, lending, financing and investment, mortgage loan, development, lease portfolio, and foreign exchange activities. Through its subsidiaries and affiliated companies, Banrisul engages in various other activities, including securities brokerage, management of sales poll groups, credit cards, insurance, and pension plan and capitalization products. Financial market transactions are conducted within the context of an integrated group of financial institutions. Banrisul also operates as an economic and financial agent for the state of Rio Grande do Sul, in conformity with the state government s plans and programs. NOTE 02 - PRESENTATION OF FINANCIAL STATEMENTS (a) The individual and consolidated financial statements have been prepared in accordance with accounting policies adopted in Brazil applicable to the financial institutions authorized to operate by the Central Bank of Brazil observing from the Brazilian corporation law, observing the standards and instructions of the National Monetary Council (CMN), the Central Bank of Brazil (BACEN) and the Brazilian Securities and Exchange Commission (CVM). The financial statements include accounting policies and estimates relating to the recognition of allowances and determination of the value of the assets that comprise the Institution s securities portfolio, derivatives financial instruments and deferred tax. Actual results may differ from these estimates. (b) Banrisul's individual financial statements include Banrisul s Brazilian operations as well as the operations of its foreign branches (Miami and Grand Cayman). The sum of assets and liabilities, income and expenses reported by foreign branches, before eliminations, are summarized as follows: Assets Lending Operations 428, ,915 Operations in Brazil 307, ,529 Other Lending Operations 121, ,386 Other Assets 101, ,044 Property and Equipment 10 6 Total Assets 530, ,965 Liabilities and Equity Deposits 120, ,355 Operations in Brazil 85,900 98,200 Other Deposits 34,125 32,155 Other Obligations Other Liabilities 31,632 39,328 Equity 378, ,961 Total Liabilities and Equity 530, ,965 Income Statement 01/01 to 09/30/ /01 to 09/30/2017 Financial Intermediation Income 15,429 20,951 Financial Intermediation Expenses (1,863) (8,723) Other Operational Income (Expenses) (1,876) (1,850) Net Income 11,690 10,378 The effects of foreign exchange variation on the operations of foreign branches are recognized in the Income Statement according to the nature of the corresponding assets and liabilities, and the exchange variation adjustments arising from the conversion process are recorded as a component of Shareholders' Equity, amounting to R$64,821 (2017 R$(7,945)). 75

76 (c) The consolidated financial statements include the accounts of Banrisul, its foreign branches, subsidiaries and investment fund that Banrisul assumes or retains substantially the risks and benefits. In preparing the consolidated financial statements, the balance of income and equity accounts and the amounts of transactions between consolidated companies were eliminated. Non-controlling interests are measured initially at their proportionate share of the acquiree s identifiable net assets at the date of acquisition. Changes in the Banrisul s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The following table shows subsidiaries and investment fund included in the consolidated financial statements: Activity Ownership Interest Subsidiaries Banrisul Armazéns Gerais S.A. Services 99.50% 99.50% Banrisul S.A. Corretora de Valores Mobiliários e Câmbio Broker 98.98% 98.98% Banrisul S.A. Administradora de Consórcios Consortia Management 99.68% 99.68% Banrisul Cartões S.A. Cards 99.78% 99.78% Investment Fund Banrisul Giro Fundo de Investimento Renda Fixa Curto Prazo Investment Funds % % (d) Finance Lease Operations are stated in the Balance Sheet at present value. Related income and expenses, which represent the financial result of such operations, are reported in Lease Operations in the Income Statement. (e) The financial statements prepared for the reported period were approved by the Board of Directors on November 7, NOTE 03 - SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies used in preparing the consolidated financial statements are as follows: (a) Income and expenses Income and expenses are recorded on an accrual basis. (b) Cash and Cash Equivalents For purposes of the cash flows statements (as defined in CMN Resolution No. 3604/08), cash and cash equivalents comprise cash and readily convertible, highly liquid interbank investments, with original maturity not exceeding ninety days and that have an insignificant risk of change in their fair value. (c) Interbank Investments These comprise funds invested in the interbank market, stated at present value, calculated on pro rata die basis, based on the variation of both the agreed index and the interest rate. (d) Securities Pursuant to Circular No. 3068/01, issued by the Central Bank of Brazil, and supplementary regulations, securities are classified and measured in three specific categories, as follows: - Trading Securities - these include securities acquired for purposes of being actively and frequently traded, measured at fair value, with related gains or losses recognized in the income statement. - Available-for-Sale Securities - these include securities used as part of the strategy to manage risk of changes in interest rates and may be traded as a result of these changes, changes in payment conditions or other factors. These securities are adjusted to fair value less impairment losses, if applicable, and income earned is recorded in the income statement. Unrealized gains and losses from changes in fair value are recorded directly in shareholders equity, net of taxes, under Valuation Adjustments until they are realized through sale. When realized, the gains and losses are recognized in the income statement on the trading date, with a counter-entry to equity, net of taxes. 76 Financial Statements September 2018

77 - Held-to-Maturity Securities these are securities for which Management has the positive intent and financial capacity to hold to maturity. These securities are carried at amortized cost, less any impairment losses, plus income earned on a pro rata basis. Financial capacity is determined based on cash flow projections, disregarding the possibility of selling such securities. (e) Derivative financial instruments Derivative financial instruments are classified at the date of acquisition, in accordance with management s intent to use them as protective (hedge) instruments or not, in accordance with BACEN Circular No. 3082/02. Transactions involving financial instruments carried out at customers requests or at the Bank s discretion, or which do not meet the criteria for hedge accounting (mainly derivatives used to manage the overall risk exposure) are recorded at market value, with gains and losses recognized directly in the income statement. Derivative financial instruments are measured at fair value on the contract date. The method for recognizing subsequent changes in the fair value of derivatives depends on whether the derivative is designated or not as a hedging instrument. This being the case, they are recorded according to the nature of the item being hedged. The Bank uses hedge accounting and assigns the derivative contracts to hedge the subordinated debts (Note 15) as a hedge of fair value of recognized assets or liabilities or a firm commitment (market risk hedge). On initial designation of the hedge, Banrisul formally documents the relationship between hedging instruments and hedged items, as well as the objectives of risk management and the strategy behind the various hedge transactions. Both at the beginning of the hedge and on an ongoing basis, the Bank also registers its assessment that derivatives used in hedging transactions are highly effective in offsetting changes in fair value or the cash flows of the hedged items. The fair values of the various derivative instruments used for hedging purposes are disclosed in Note 06. The total fair value of a hedge derivative is classified as Noncurrent Asset or Noncurrent Liabilities when the remaining maturity of the hedged item exceeds 12 months and as current assets or liabilities when the remaining maturity of the hedged item is less than 12 months. Market Risk Hedge derivative financial instruments intended to offset risks from exposure to changes in market value of hedged items are recorded in this category. Banrisul included in this category the derivative contracts used for hedging the proceeds of the US dollar denominated subordinate debt against foreign exchange variation, with a USD 523,185 million notional amount due on February 2, 2022, described in Note 15. As of September 30, 2018, the only current derivatives refer to swap transactions. The fair value variations of derivatives designated and qualified as market risk hedges are recorded in the income statement, together with any changes in fair value of the hedged asset or liability attributable to the hedged risk (Note 6 (d)). The gains or losses related to this operation are recognized in the income statement as Income from Financial Intermediation. (f) Loans, Lease Operations and Other Credit-Like Receivables with credit granting characteristics. All loans and lease transactions are classified based on Management s risk assessment, taking into account the economic scenario, past experience and specific risks related to transactions, debtors and guarantors, pursuant to National Monetary Council (CMN) Resolution No. 2682/99, which requires a periodic analysis of the portfolio and classification into nine risk levels, from AA to H. A summary of this classification is presented in Note 08. Loans and lease operations are recorded at present value, calculated on a daily pro-rata basis, based on the agreed index and interest rate, and are adjusted through the 60 th day past due. Thereafter, revenue is recognized only when the payments are actually received. 77

78 The risk of renegotiated loans is classified in accordance with the criteria established by National Monetary Council (CMN) Resolution No. 2682/99, i.e. the rating assigned before the renegotiation is maintained. Renegotiated loans previously written-off against the allowance for loan losses and controlled in memorandum accounts are rated level H. Any gains on renegotiation are recognized as revenue only when actually received. (g) Allowance for loan losses This is recorded in an amount considered sufficient to cover probable losses considering the risk level classification of the customer based on periodic assessment of credit quality, and on the minimum percentages required by the National Monetary Council (CMN) Resolution No. 2682/99 upon event of default. The total amount related to the allowance for loan losses, allowance for doubtful lease receivables and losses on other receivables, as stated in Note 08, exceeds the minimum amount required if only the rating of transactions based on the number of past due days is considered as set forth by National Monetary Council (CMN) Resolution No. 2682/99. This procedure was adopted by the Bank s management in addition to those foreseen on Resolution No. 2682/99, as a measure to ensure that all events with the purpose of setting up allowance for doubtful receivables were captured by the process established for rating credit operations and customers based on their respective history of delay. As provided by CMN Resolution No. 2682/99, it is used the double counting of the delay intervals set for each nine risk levels for abnormal credit operations with maturities longer than 36 months. (h) Other Assets Comprises mainly Assets Not in Use, relating to real estate available for sale, own and deactivated or received in lieu of payment, which are adjusted to market value through provision, according to current regulations; and by Prepaid Expenses, corresponding to investments whose benefits will occur in future years. (i) Permanent Assets - Investments investments in subsidiaries and associates are accounted for by the equity method, based on their equity value, in conformity with the accounting practices adopted by the parent company, i.e. the Brazilian accounting practices applicable to financial institutions authorized to operate by the Central Bank of Brazil. Other investments are stated at cost and adjusted for allowances for losses, when applicable. Goodwill corresponds to the excess amount paid on the acquisition of investments due to expected generation of future economic gains. Goodwill is annually tested for impairment. - Property and Equipment property and equipment in use comprise mainly land and buildings. As set forth by CMN Resolution No. 4535/16, from January 1, 2017, the property and equipment in use are stated at historical cost less depreciation, as are all other permanent assets. Historical cost includes expenses directly attributable to the acquisition or construction of assets. Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset, as appropriate, only when future economic benefits associated with the item are likely to flow and its cost can be reliably measured. All other repairs and maintenance are recognized in the income statement as operating expenses provided they do not effectively result in increase in lifespan, efficiency or productivity, when incurred. Land is not depreciated. Depreciation of other assets is calculated using the linear method to allocate their costs to their residual values over the estimated lifespan, as presented below: Permanent Assets Estimated Lifespan in Years Property 59 Facilities 25 Equipment in Use 19 Other 7 78 Financial Statements September 2018

79 The residual amounts and the lifespan of assets are reviewed and adjusted, if appropriate, at the end of each fiscal year. By legal requirements, Banrisul annually reviews the lifespan and produces the corresponding report. Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the book value may not be recoverable. The book value of an asset is immediately written off to its recoverable value if it is greater than its estimated recoverable value. The recoverable value is the higher amount between an asset's fair value less costs to sell and the value in use. Gains and losses on disposals are determined by comparing the revenue with the book value and are recorded into Other Operating Income (Expenses), in the income statement. - Intangible corresponds to vested rights that have as object intangible assets intended for the maintenance of the company or to use for that purpose. CMN Resolution No. 4534/16 establishes that, commencing on from January 1, 2017, intangible assets be stated by their cost, and that assets with defined lifespan be amortized by the linear method throughout their lifespan. This group is composed by contracts for banking services and the acquisition of software, as follows: Intangible Estimated Lifespan in Years Payroll Services 5 and 10 Softwares 7 Acquisition of Payroll Services Public Sector - refers to agreements to obtain exclusive rights for the tendering of payroll services to the State of Rio Grande do Sul, to the Judiciary Branch of the State of Rio Grande do Sul, local town halls and other public agencies. Internal analysis and independent studies were conducted and no evidence of impairment related to these assets has been identified (Note 11(c)). Private Sector - refers to the five-year agreements signed with private entities, amortized throughout the contractual term. No impairment losses were identified on these assets. Software Software licenses are capitalized based on acquisition and readiness costs. These costs are amortized throughout the estimated lifespan of the software, from three to seven years. The costs associated with maintaining software are recognized as expense, as incurred. Development costs that are directly attributable to the project and to the testing of identifiable and unique software products controlled by Banrisul are recognized as intangible assets. Directly attributable costs, capitalized as part of the software, include the costs of employees responsible for software development and the apportionment of the applicable indirect costs. Costs also include financing costs incurred during the software development period. Other costs with software development that do not meet these criteria are recognized as incurred. Software development costs previously recorded into expense accounts are not recorded into d as asset in the following period. Software development costs recognized as assets are amortized over their estimated lifespan. The book value of an intangible asset is immediately written off to its recoverable value if it is greater than its estimated recoverable value, which is reviewed annually. (j) Impairment of Assets Banrisul annually reviews intangible assets for impairment losses. When identified, losses are recognized in the income statement of the period. 79

80 (k) Foreign Currency Conversion Banrisul s financial statements are presented in Reais, functional and reporting currency, which was defined to be used by its branches abroad, as put forward by National Monetary Council (CMN) Resolution No. 4524/16. Banrisul two branches overseas - Miami and Grand Cayman, whose financial statements are translated into USD. Their financial statements (none of which uses currency from hyperinflationary economies) are converted at the reporting date using current rates when their functional currency differs from the reporting one, according to the following criteria: Assets and liabilities are converted using the exchange rate of the balance sheet date; and Income and expenses are converted using the monthly average exchange rate. Foreign exchange variation adjustments arising from the conversion process are recorded in the converted financial statements of the subsidiaries abroad, into Asset Valuation Adjustments, a component of their Equity. (l) Deposits, Money Market Funding, Funds from Acceptances and Issuance of Securities, Borrowings and Onlendings These are stated at liability amounts plus charges incurred through the reporting date, recognized on a pro rata die basis. The amounts and terms are shown in Notes 12, 13 and 14. (m) Contingent Reserves, Assets and Liabilities and Tax, Labor and Civil Contingencies Contingent reserves, assets and liabilities, and legal obligations are recognized, measured and disclosed in accordance with the criteria set forth by Technical Pronouncement CPC 25, approved by the National Monetary Council (CMN) Resolution No. 3823/09. - Contingent Assets - they are not recognized in the financial statements, except when there is evidence that realization thereof is virtually certain, and that no further appeal can be opposed. - Contingent Reserves and Liabilities a contingent liability provision is recognized in the financial statements when, based on the opinion of management and of legal advisors, the risk of losing a lawsuit or administrative claim is deemed probable, there will be a probable outflow of funds for the settlement of liabilities and the amounts involved can be reliably measured. Contingent liabilities assessed as possible losses are not provided for; however, disclosure is made in the Notes to the Financial Statements. Contingent liabilities assessed as remote losses are neither accrued nor disclosed. - Legal, Tax and Social Security Liabilities legal obligations are recorded as liabilities, regardless of the evaluation of loss probability. (n) Other Current and Noncurrent Assets and Liabilities These are stated at realizable or settlement amounts, including earnings and charges incurred through the reporting date, calculated on a daily pro rata basis, and, where applicable, the effect of fair value adjustments. Amounts receivable and payable within twelve months are classified as current assets and current liabilities, respectively. (o) Income tax and Social Contribution Social contribution tax (CSLL) is calculated as follows: at the rate of 20% from September 1, 2015 to December 31, 2018, and 15% from January 1, 2019 onwards for financial companies and similar entities (9% for nonfinancial companies). Income tax (IRPJ) is calculated at 15% upon the taxable profit for the period (plus a 10% surtax pursuant to legislation) adjusted for permanent differences. 80 Financial Statements September 2018

81 Deferred tax credit or income tax liability and social contribution are measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets are recorded under Other Receivables, with a balancing entry in the income statement for the period. The realization of these deferred tax assets will occur upon realization of the temporary differences. (p) Post-Employment Long Term Benefit Obligations to Employees - Post-Employment Obligations Banrisul sponsors FBSS Fundação Banrisul de Seguridade Social (Banrisul Social Security Foundation) and CABERGS Caixa de Assistência dos Empregados do Banco do Estado do Rio Grande do Sul (Medical Assistance for Employees of Banco do Estado do Rio Grande do Sul) which, respectively, ensure the completion of retirement benefits and medical care to its employees. - Retirement Plans The Bank sponsors pension plans of the defined benefit and variable contribution types. A defined benefit plan is different from a defined contribution plan. In general, defined benefit plans provide a value of pension benefit that the employee will receive upon retirement, usually depending on one or more factors such as age, length of service and salary. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets. Independent actuaries calculate the defined benefit obligation annually using the Projected Credit Unit Method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using rates consistent with market yields, on high quality corporate bonds denominated in the currency in which the benefits will be paid and that have terms to maturity similar to those of the respective obligations of the pension plan. The actuarial valuation is established based on assumptions and projections of interest rates, inflation, increases in benefits, life expectancy, the effect of any limitation upon the contribution of the employer in the cost of future benefits and contributions or third-party contributions that reduce the ultimate cost of those benefits to the Bank, among others. The actuarial valuation and its assumptions and projections are updated on an annual basis at the end of each year. Actuarial gains and losses resulting from adjustments based on experience and changes in actuarial assumptions are recognized directly in Equity, as Equity Valuation Adjustments. The cost of benefits under the defined benefit plans is determined separately for each plan using the Projected Individual Benefit method. When existing, costs of past services are immediately recognized in profit or loss as incurred. The variable contribution plans cover benefits with defined contribution characteristics, which are expected retirement, early retirement and funeral assistance. In this case, Banrisul has no further payment obligations besides contributions already paid. The contributions are recognized as employee benefit expense when due. Contributions made in advance are recognized as an asset to the extent that cash refund or a reduction in future payments is available. In addition, there are benefits with defined benefit characteristics, which are retirement for disability, proportionate benefit, sickness allowance, annual bonus, minimum benefit and retirement annuity with life insurance coverage. - Health Plans plans provided by Caixa de Assistência dos Empregados do Banco do Estado do Rio Grande do Sul (Cabergs, the Assistance Fund for the Employees of Banco do Estado do Rio Grande do Sul), which offer health care benefits in general and whose cost is established through an agreement of accession. Banrisul also offers the benefit of post-retirement health care to its employees. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology used for defined benefit pension plans. Actuarial gains and losses resulting from adjustments based on experience and changes in actuarial assumptions are charged or credited to equity, under Equity Valuation Adjustments. Independent qualified actuaries measure these obligations annually. Plan assets are not available to creditors of Banrisul and cannot be paid directly to the Bank. The fair value is based on information about market price and, in the case of traded assets, their market value. The value of any 81

82 recognized defined benefit asset is limited to the sum of any previous service cost not yet recognized and to the present value of any economic benefit available as reductions in future employer contributions to the plan. - Retirement Award upon retirement, Banrisul gives its employees a premium for retirement that is proportional to their monthly salary, effective at the time of retirement. Additionally, the results of the actuarial valuation can generate an asset to be recognized. The Institution records this asset only when: it controls a resource, which is the ability to use the surplus to generate future benefits; this control is the result of past events (contributions paid by the Bank and service provided by the employee); and future economic benefits to the Bank are available in the form of reductions in future contributions or of cash refund, either directly to the Bank, or indirectly to compensate for the deficit of another post-employment benefit plan (in compliance with law). The commitments to these three types of post-employment benefits are annually assessed and reviewed by independent qualified actuaries. (q) Earnings per Share The institution calculates earnings per thousand shares by dividing the weighted average number of total common and preferred shares outstanding during the period by the net income for the period. Earnings per share is disclosed in accordance with CVM Rule No. 636/10. NOTE 04 - CASH AND CASH EQUIVALENTS Parent company Consolidated Cash and Cash Equivalents 778, , , ,486 Availabilities in Local Currency 631, , , ,696 Availabilities in Foreign Currency 146, , , ,790 Net Interbank Investments 7,640,849 1,910,830 7,652,774 1,929,563 Reverse Repurchase Agreements 7,579,244 1,801,828 7,591,169 1,820,561 Investments in Interbank Deposits (1) 61, ,002 61, ,002 Total 8,419,401 2,705,272 8,431,621 2,724,049 (1) Refer to operations with an original maturity of 90 days or less and that present insignificant risk of a change in fair value. NOTE 05 - INTERBANK INVESTMENTS Parent company Consolidated Money Market Investments 7,579,244 1,801,828 7,591,169 1,820,561 Reverse Repurchase Agreements - Own Portfolio Financial Treasury Bills LFT - 1,642-1,642 National Treasury Bills LTN 3,507,770 1,800,186 3,507,770 1,800,186 National Treasury Letter NTN 4,071,474-4,071,474 - Bank Deposit Certificates - - 1,212 1,151 Other ,713 17,582 Interbank Deposits 61, ,703 61, ,703 Interbank Deposits 61, ,703 61, ,703 Total 7,640,849 2,459,531 7,652,774 2,478, Financial Statements September 2018

83 NOTE 06 - SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS Breakdown of the portfolio of Securities and Derivative financial instruments: Parent company Consolidated Trading Securities 3,147,587 3,799,020 3,200,053 3,830,325 Available-for-sale Securities 23, , ,311 1,255,224 Held-to-Maturity Securities 14,336,557 16,540,777 14,346,258 16,560,773 Derivative financial instruments , ,595 Total 17,507,961 21,291,611 17,890,640 21,746,917 The fair value presented in the chart below was assessed as follows: actively traded Treasury Bills are determined based on prices published by the ANBIMA (Brazilian Association of Financial and Capital Markets); shares of publicly-held companies are based on the average last day trade; investment fund shares are updated daily with the respective share price informed by the fund administrator; and for securities where no prices are available Banrisul uses internal technical pricing as a parameter for calculating the market value, using B3 s future curves. (a) Trading Securities Breakdown of Trading Securities per type, at fair value: Parent company Consolidated Financial Treasury Bills LFT 3,126,395 3,799,020 3,133,647 3,799,020 Shares of Publicly-Held Companies 21,192-21,192 - Fixed Income Fund Shares ,242 21,489 Referenced Fund Shares , Other Fund Shares - - 4,260 9,388 Total 3,147,587 3,799,020 3,200,053 3,830,325 Breakdown per maturity: Maturity Updated Acquisition Cost Parent company Fair Value Updated Acquisition Cost Consolidated Without Maturity (1) 17 21,192 45,231 66,406 3 to 12 months 610, , , ,218 1 to 3 years 814, , , ,829 3 to 5 years 291, , , ,788 5 to 15 years 1,409,521 1,409,560 1,416,772 1,416,812 Total in ,126,303 3,147,587 3,178,768 3,200,053 Total in ,799,519 3,799,020 3,830,824 3,830,325 (1) Fair Value includes shares received as bonuses in the amount of R$21,192 as the result of the demutualization of a card payment company. Fair Value In accordance with BACEN regulations, these securities are classified in current assets at their fair value. (b) Available-for-Sale Securities Breakdown of Available-for-Sale Securities per Type, at fair value: Parent company Consolidated Financial Treasury Bills LFT - 826, ,791 Shares of Publicly-Held Companies 23,653 24,292 23,653 24,613 Privatization Certificates Fixed Income Fund Shares , ,609 Real Estate Fund Shares - - 2,111 2,067 Other Fund Shares Total 23, , ,311 1,255,224 83

84 Breakdown per maturity: Maturity Updated Acquisition Cost Parent company Fair Value Updated Acquisition Cost Consolidated Without Maturity 22,018 23, , ,311 Total in ,018 23, , ,311 Total in , ,219 1,252,409 1,255,224 (c) Held-to-Maturity Securities Breakdown of Held-to-Maturity Securities per Type, at cost plus yield: Fair Value Updated Acquisition Cost Parent company Fair Value Updated Acquisition Cost Consolidated Federal Government Securities Financial Treasury Bills LFT 14,222,205 14,220,602 14,231,906 14,230,303 Federal Bonds - CVS 96,725 78,191 96,725 78,191 Certificate of Real Estate Receivables CRI 17,627 17,686 17,627 17,686 Total in ,336,557 14,316,479 14,346,258 14,326,180 Total in ,540,777 16,506,579 16,560,773 16,526,576 Fair Value Breakdown per maturity: Parent company Consolidated Maturity Up to 3 months - 88,786-88,786 3 to 12 months 3,613,481 11,793,444 3,613,481 11,802,347 1 to 3 years 1,426,628 3,405,115 1,436,329 3,405,115 3 to 5 years 4,140, ,146 4,140, ,239 5 to 15 years 5,155, ,286 5,155, ,286 Total 14,336,557 16,540,777 14,346,258 16,560,773 Management declares that Banrisul has the financial capability to hold these securities to maturity. (d) Derivative financial instruments Banrisul conducts transactions involving derivatives in the form of swaps recorded in balance sheet and memorandum accounts. These swaps are designed to meet Banrisul s needs and to manage its global exposure. The use of derivatives is mainly to mitigate the risks from currency fluctuations in the international funding operation carried out by Banrisul, as mentioned in Note 15, which results in the rate swap to the CDI variation. With this objective, swap transactions are long-term, aligned with the flow and maturity of foreign funding maturing to the extent that portions of the external funding have natural hedges. The operations are based on OTC contracts registered with B3 S.A. - Brasil, Bolsa, Balcão, and have as counterparties top-tier financial institutions. The table below demonstrates the effectiveness of the structure of hedge accounting developed by Banrisul, demonstrating the amortized cost value, fair value and fair adjustments of the hedged item (subordinated debt) and the hedging instrument (swaps): Parent company and Consolidated Derivatives Used as Fair Value Hedge Notional Value Curve-Sketching Value Mark-to-Market Fair Value Fair Value Hedging Instrument Swaps 2,102,648 (7,539) (23,736) (31,275) (360,665) Foreign Currency (USD) 2,102,648 (7,539) (23,736) (31,275) (360,665) Hedged Item Subordinated Debt (Note 15) 917,665 2,122,162 (23,882) 2,098,280 (1,779,423) Foreign Currency (USD) 917,665 2,122,162 (23,882) 2,098,280 (1,779,423) 84 Financial Statements September 2018

85 The following table shows the breakdown of derivatives (assets and liabilities) by notional value and fair value: Swaps Notional Value Receivable (Payable) Amortized Cost Value (1) Parent company and Consolidated Fair Value Adjustments to Results (1) Fair Value (1) Assets Foreign Currency (USD) % p.a. 2,102,648 19,829 (24,192) (4,363) Liabilities % of Interbank Deposit Rate (CDI) (2,102,648) (27,368) 456 (26,912) Total in 2018 (7,539) (23,736) (31,275) Total in 2017 (453,229) 92,564 (360,665) (1) Values presented net of the notional value. The table below shows the information of derivatives segregated by contractual cashflow: Swaps Notional Value Fair Value (1) 3 to 12 months Parent company and Consolidated 1 to 3 3 to 5 years years Assets Foreign Currency (USD) % p.a. 2,102,648 (4,363) (308) (547) (3,508) Liabilities % of Interbank Deposit Rate (CDI) (2,102,648) (26,912) (2,215) (4,936) (19,761) Net Adjustment in 2018 (31,275) (2,523) (5,483) (23,269) Net Adjustment in 2017 (360,665) (21,539) (49,448) (289,678) (1) Values presented net of the notional value. Banrisul or counterparties are mutually subject to providing and giving additional guarantees on a reciprocal basis if the derivatives exceed the fair value limits stipulated by contract. The margin deposited by Banrisul as guarantee in operations involving derivatives consists of Interbank deposits in the amount of R$2,700, and margin received amounted to R$16,499. Banrisul uses hedge accounting practices established by BACEN and the effectiveness expected from the designation of hedging instruments and in the course of the operation is in accordance with the provisions of the BACEN. 85

86 NOTE 07 - RESTRICTED DEPOSITS Parent company and Consolidated Description Interest Rate Compulsory Deposits - Central Bank of Brazil 11,997,298 11,030,650 Demand Deposits and Other Funds None 731, ,562 Saving Deposits Savings account 1,795,739 1,957,802 Other Deposits None 44,780 36,650 Time Deposits SELIC 9,425,011 8,443,636 Credits with the National Housing System 1,000, ,828 Acquired Portfolio Fixed Rate 14.07% p.a. 617, ,687 Acquired Portfolio TR + Interest (1) 381, ,669 Own Portfolio TR + Interest (1) 2,566 2,472 Correspondents None 24,278 29,554 Agreements SELIC Total 13,022,245 12,003,080 (1) Refers to credits with Salary Variation Compensation Fund - FCVS indexed according to the payment of funds being TR % for loans from own resources and TR % for credits from FGTS. National Housing System (SFH) - Acquired Portfolio - From October 2002 to March 2005, Banrisul acquired from the State Government of Rio Grande do Sul receivables related to the Salary Variation Compensation Fund (FCVS). The acquisition terms include a clause guaranteeing financial settlement by the State Government of non-performing contracts, if any. On September 30, 2018, the receivables were stated at the acquisition cost updated pro-rata basis by the acquisition rate, amounting to R$998,060 ( R$940,356). The face value is R$1,065,473 ( R$1,022,071). These receivables will be converted into CVS securities pursuant to ratification and novation processes, which are beyond the original deadline and the amounts already due are separately presented and indexed by reference to TR variation plus interest. While no maturity date has been set to these receivables, market values, upon the issuance of securities, could significantly differ from the carrying amounts. National Housing System (SFH) - Own Portfolio - Refers to FCVS credits arising from Banrisul s own mortgage loans portfolio that have already been approved by the FCVS regulatory body. 86 Financial Statements September 2018

87 NOTE 08 - LOANS, LEASE AND OTHER OPERATIONS WITH LOAN CHARACTERISTICS (a) Breakdown by Type of Operation and Risk Level: Parent company and Consolidated AA A B C D E F G H Loan and Discounted Receivables 411,165 15,102,560 2,059, , , , , ,333 1,258,981 21,047,073 19,983,471 Financing 137, , ,230 74,059 34,415 3,474 1,127 3,567 58,798 1,081,866 1,535,367 Rural and Agro-Industrial Financing 579,399 1,114, , ,354 77,786 35,877 20,407 5,639 73,818 2,408,204 2,362,358 Real Estate Financing 1,247,273 1,858, ,038 88,268 79, ,135 11,509 4, ,723 4,016,489 3,770,514 Credit Linked to Credit Assignment (1) 5,526 21,280 1, ,870 38,088 Infrastructure and Development Financing - 59,614 18, ,435 65,935 Subtotal Loans 2,380,646 18,588,691 3,205,607 1,052, , , , ,881 1,493,621 28,661,937 27,755,733 Lease Operations 6,797 7,267 12,634 5, ,538 35,018 45,812 Advances on Foreign Exchange Contracts (2) 6, , ,290 61,869 54,801 25,520-39,726 9, , ,814 Other Receivables (3) 37,863 1,304, ,516 35,328 7,765 2,961 1, ,084 1,582,934 1,295,037 Credits Linked to Acquired Portfolio with Recourse (Note 09) 782, , , ,601 Total Operations with Credit Characteristics 3,214,352 20,143,532 3,621,047 1,155, , , , ,285 1,533,872 31,742,612 30,491,997 Sureties and Guarantees (4) 333,957 57,680 72,633 2,947 5, , , ,137 Total in ,548,309 20,201,212 3,693,680 1,158, , , , ,285 1,566,089 32,247,939 31,026,134 Total Operations with Loans Characteristics in ,538,981 17,940,426 3,756,304 1,593, , , , ,012 1,676,651 30,491,997 (1) Credit Linked to Credit Assignment - Refers to contract of assignment of receivables with recourse where Banrisul has assigned to Cibrasec mortgage loans operations; (2) Composed of Advances on Foreign Exchange Contracts and Income from Advances Granted, reclassified from Other Liabilities - Foreign Exchange Portfolio/Other Credits; (3) Other Receivables - Refer to debit and credit cards, securitization credit, credit for guarantees honored and receivable income on foreign exchange and receivables from export contracts; (4) Guarantees given and other coobligations - Recorded in Memorandum Accounts. For sureties and guarantees, the provision was recorded as shown in Notes 15 and

88 (b) Customer Breakdown per Maturity and Risk Levels: Parent company and Consolidated Operations in Ordinary Course (1) AA A B C D E F G H Falling due 3,213,364 20,128,652 3,581,364 1,114, , , , , ,812 30,788,954 28,295, to 30 days 107,518 1,637, , ,049 63,294 23,478 6,247 4,418 24,914 2,322,237 2,145, to 60 days 91,525 1,129, ,216 66,716 37,595 17,310 4,985 3,157 31,230 1,682,629 1,669, to 90 days 94, , ,530 77,148 39,292 23,831 4,655 4,560 26,746 1,505,296 1,572, to 180 days 216,124 1,876, , , ,599 39,800 10,336 32,737 62,890 3,026,854 2,806, to 360 days 467,002 2,731, , ,194 92, ,343 22,206 24,881 84,962 4,328,514 3,994,704 Over 360 days 2,237,096 11,792,777 1,438, , , , , , ,070 17,923,424 16,106,973 Past-due ,880 20,343 9,517 8,671 4,986 1,460 5,008 5,314 71,167 96,639 Up to 14 days ,880 20,343 9,517 8,671 4,986 1,460 5,008 5,314 71,167 96,639 Subtotal 3,214,352 20,143,532 3,601,707 1,123, , , , , ,126 30,860,121 28,392,561 Nonperforming Operations (1) Falling due ,218 17,306 31,681 30, , ,687 1,403, to 30 days ,336 8,858 46, to 60 days ,579 7,939 46, to 90 days ,514 7,896 42, to 180 days ,600 1,492 17,377 21, , to 360 days ,697 3,175 2,949 30,102 37, ,642 Over 360 days ,110 13,726 25,219 24, , , ,599 Past-due ,340 31,394 40,747 44,183 38,894 57, , , , to 14 days ,558 4,245 22, to 30 days ,202 11,800 4,701 7,980 2,906 2,094 11,075 58,758 66, to 60 days - - 1,138 18,494 9,374 8,103 6,515 3,745 26,871 74,240 75, to 90 days ,100 25,622 9,313 8,082 32,695 42, ,624 71, to 180 days ,050 17,875 19,233 15, , , , to 360 days ,776 2, , , ,540 Over 360 days ,719 40, ,182 Subtotal ,340 31,403 41,965 61,489 70,575 87, , ,491 2,099,436 Total in ,214,352 20,143,532 3,621,047 1,155, , , , ,285 1,533,872 31,742,612 Total in ,538,981 17,940,426 3,756,304 1,593, , , , ,012 1,676,651 30,491,997 (1) Nonperforming Operations consists of loans with overdue installments of more than 14 days, the other operations are considered Normal Course. 88 Financial Statements September 2018

89 (c) Portfolio Breakdown by Business Sector: Parent company and Consolidated Local Public Sector Government Direct and Indirect Administration 84,271 74,933 Total Public Sector 84,271 74,933 Private sector Rural 2,408,529 2,362,505 Industry 3,132,833 3,306,735 Commerce 2,041,961 2,222,173 Services and Other 2,506,389 3,213,991 Individuals 17,522,270 15,503,058 Housing 4,046,359 3,808,602 Total Private Sector 31,658,341 30,417,064 Total 31,742,612 30,491,997 (d) Loans Concentration: Parent company and Consolidated Value % of Portfolio Value % of Portfolio Main Debtor 471, , Next 10 Largest Debtors 1,493, ,455, Next 20 Largest Debtors 1,314, ,145, Next 50 Largest Debtors 1,537, ,692, Next 100 Largest Debtors 1,380, ,579, (e) Changes in Allowances for Loan Losses, Doubtful Lease Receivables and Other Operations with Loan Characteristics: Parent company and Consolidated 01/01 to 09/30/ /01 to 09/30/2017 Opening Balance 2,776,618 2,638,629 Allowance Recorded in the Period 845,089 1,089,859 Write-Offs to Memorandum Accounts (1,229,343) (1,028,471) Ending Balance 2,392,364 2,700,017 Allowance for Loan Losses 2,286,240 2,610,120 Allowance for Doubtful Lease Receivables 2,276 5,587 Allowance for Losses on Other Operations with Loans Characteristics (Note 09) 103,848 84,310 As of September 30, 2018 there was a reversal of provisions of further allowance for other receivables without loan characteristics in the amounted of R$15,860 ( there was no constitution/reversal of allowance), and R$14,871 (2017 R$1,552) in the Consolidated. (f) Breakdown of Allowances for Loan Losses, Doubtful Lease Receivables and Other Operations with Loan Characteristics per Risk Level: Risk Level Loan Portfolio Minimum Allowance Required by CMN Resolution No. 2682/99 Minimum Allowance Required Parent company and Consolidated Recorded Allowance Additional Allowance (Note 03 (g)) AA 3,214, % A 20,143, % 100,718 20, ,862 B 3,621, % 36,210 7,242 43,452 C 1,155, % 34,661 17,330 51,991 D 943, % 94,350 18, ,220 E 607, % 182,328 12, ,483 F 225, % 112,947 4, ,465 G 297, % 208,100 8, ,019 H 1,533, % 1,533,872-1,533,872 Total in ,742,612 2,303,186 89,178 2,392,364 Total in ,491,997 2,585, ,390 2,700,017 Total 89

90 (g) Recovery and Renegotiation of Credits Recoveries of loans previously written off as losses were recognized as income from lending operations and amounted to R$204,452 ( R$182,061) in the period, net of related losses. The balance of renegotiated loans during the period amounted to R$885,737 ( R$729,403), pursuant to CMN Resolution No. 2682/99. NOTE 09 - OTHER CREDITS Parent company Consolidated Endorsements and Sureties Paid 1, , Receivables from Endorsements and Sureties Paid 1, , Foreign Exchange Portfolio 835, , , ,870 Purchased Foreign Exchange, Pending Settlement 803, , , ,673 Rights on Sale of Foreign Exchange 61,118 27,301 61,118 27,301 Advances in Local Currency (51,638) (22,501) (51,638) (22,501) Income Receivable from Advances 22,972 16,397 22,972 16,397 Income Receivable 105,456 98,226 92, ,477 Dividends and Bonuses Receivable 14,504 15, Receivables from Services Rendered 87,100 74,944 87,679 75,563 Income Receivable MDR (Merchant Discount Rate) - - 1,153 43,429 Other 3,852 7,485 3,852 7,485 Negotiation and Intermediation of Amounts - - 6,312 4,585 Negotiation and Intermediation of Amounts - - 6,312 4,585 Specific Credits Specific Credits Sundry 6,057,957 5,556,292 7,476,871 6,585,529 Advances to Employees 36,796 35,087 37,161 35,580 Advances for Payment by Our Account 7,995 5,999 8,851 19,064 Deferred Income and Social Contribution Taxes (Note 25(b)) 2,271,633 2,235,818 2,276,771 2,241,000 Escrow Deposits (Note 16 (b)) 416, , , ,656 Recoverable Taxes 218, , , ,735 Reimbursable Payments 80,799 76,611 80,799 76,618 Credit Linked to Credit Assignment 1,576 1,576 1,576 1,576 Notes and Credits Receivable (1) 1,327,404 1,119,537 2,645,015 2,032,159 Surplus Benefit Plans (Note 26) 142, , , ,219 Credit Cards 515, , , ,500 Other Receivables Domestic 255, , , ,821 Credits Linked to Acquired Portfolio with Recourse (Note 08 (a)) 783, , , ,601 Allowance for Losses on Other Receivables (155,771) (132,571) (165,578) (142,820) Credit-Like Receivables (Note 08 (e)) (2) (103,848) (84,310) (103,848) (84,310) Non-Credit-Like Receivables (51,923) (48,261) (61,730) (58,510) Total Other Receivables 6,845,241 6,192,732 8,248,616 7,245,071 (1) Notes and Credit Receivables mainly comprise: (a) Securities issued to cover court-ordered debts ( precatórios ) involving the National Treasury. In the first quarter of 2005, as part of its receivables recovery policy, Banrisul received as payment in kind securities issued by the Federal Government to pay court-ordered debts from companies that belonged to the same Economic Group. The amount is represented by a judicial deposit on behalf of Banrisul, which will be released once the Federal Government ends litigation against the Economic Group. As of September 30, 2018, these securities amount to R$156,537 ( R$147,533) and are indexed to the variation of the Extended National Consumer Price Index (IPCA-E) and interest; (b) Refer to non-credit-like receivables, acquired by the Bank from the State Government of Rio Grande do Sul, in the amount of R$61,195 ( R$62,861) related to receivables arising from transactions of the State Government of Rio Grande do Sul or its controlled entities, with the municipality of cities in the State of Rio Grande do Sul. These receivables have yield of 0.50% to 9.37% p.a. plus TR or IGP-M variation with maturity through 2029; (c) Debit and Credit Cards: refers to receivables from card holders when using Banricompras and cards from Visa and MasterCard issued by Banrisul. As of September 30, 2018, totaled R$1,056,874 (2017 R$877,905) and in the Banrisul and the Consolidated; and (d) Vero Products - refer to receivables from credit card issuers (Visa, Mastercard, Verdecard and Elo) captured by the Vero acquiring network and the amounts receivable related to the Banricard business and benefit card agreements and of the accredited network Vero. As of September 30, 2018, totaled R$1,315,323 ( R$909,393) in the Consolidated. (2) Provision for Credit-Like Receivables - recognized over credit transactions composed by Endorsements and Sureties, Credit and Debit Cards, Foreign Currency Portfolio and Credit related to Credit Portfolios Acquired with Recourse. 90 Financial Statements September 2018

91 NOTE 10 - OTHER ASSETS Parent company Consolidated Other Assets 149, , , ,984 Assets Not in Use 148, , , ,880 Other 1,597 2,104 1,597 2,104 Allowance for Valuation Losses (71,956) (36,283) (71,956) (36,283) Prepaid Expenses 145, , , ,453 Prepaid Personnel Expenses 18,208 16,673 18,208 16,673 Prepaid Other Administrative Expenses 79,498 13,768 80,043 14,537 Cost of Credit Banking Correspondents 36,598 69,863 36,598 69,863 Other 10,909 5,380 10,909 5,380 Total 222, , , ,154 NOTE 11 - PERMANENT ASSETS (a) Investment Parent company Consolidated Investments in Domestic Subsidiaries and associates 1,383,736 1,168, , ,150 Investments in Subsidiaries 1,273,968 1,062, Investments in Associates 96,978 89,617 96,978 89,617 Goodwill from Investment Acquisitions (1) 12,790 16,533 12,790 16,533 Other Investments 11,485 11,514 11,646 11,709 Allowance for Investment Losses (4,785) (4,785) (4,853) (4,888) Total 1,390,436 1,175, , ,971 (1) The goodwill represents the future economic benefits resulting from the acquisition of Bem Promotora de Vendas e Serviços S.A., whose value is being amortized within 10 years. As of September 30, 2018 Adjusted Shareholders Equity Participation on Capital Stock (%) Investment Net Income Equity Results Subsidiaries 1,277,762 1,273, , ,188 Banrisul Armazéns Gerais S.A. 37,608 99,50 37, Banrisul S.A. Corretora de Valores Mobiliários e Câmbio 83,678 98,98 82,828 2,023 2,001 Banrisul S.A. Administradora de Consórcios 259,616 99,68 258,793 26,878 26,793 Banrisul Cartões S.A. 896,860 99,78 894, , ,888 Associates 194,051 96,978 54,757 27,278 Bem Promotora de Vendas e Serviços S.A. 31,315 49,90 15,626 5,580 2,832 Banrisul Icatu Participações S.A. 162,736 49,99 81,352 49,177 24,446 As of September 30, 2017 Adjusted Shareholders Equity Participation on Capital Stock (%) Investment Net Income Equity Results Subsidiaries 1,065,575 1,062, , ,510 Banrisul Armazéns Gerais S.A. 36,326 99,50 36,143 (835) (831) Banrisul S.A. Corretora de Valores Mobiliários e Câmbio 81,739 98,98 80,909 1,586 1,568 Banrisul S.A. Administradora de Consórcios 248,525 99,68 247,737 26,695 26,610 Banrisul Cartões S.A. 698,985 99,78 697, , ,163 Associates 179,320 89,617 41,138 20,564 Bem Promotora de Vendas e Serviços S.A. 28,496 49,90 14,220 2,165 1,081 Banrisul Icatu Participações S.A. 150,824 49,99 75,397 38,973 19,483 (b) Property and Equipment Parent company Property in Use Original Cost Accumulated Depreciation Net Balance in 2018 Net Balance in 2017 Land and Buildings in Use 113,220 (95,331) 17,889 17,970 Other Furniture and Equipment in Inventory 1,865-1,865 1,329 Facilities 206,710 (127,967) 78,743 62,206 Furniture and Equipment in Use 120,724 (77,662) 43,062 40,332 Other Communication System 7,122 (4,252) 2,870 3,178 Data Processing System 286,548 (255,946) 30,602 29,537 Security System 12,923 (9,852) 3,071 3,344 Transportation System 3,434 (2,953) Total in ,546 (573,963) 178,583 Total in ,329 (567,867) 158,462 91

92 Consolidated Property in Use Original Cost Accumulated Depreciation Net Balance in 2018 Net Balance in 2017 Land and Buildings in Use 125,342 (100,089) 25,253 25,461 Other Furniture and Equipment in Inventory 1,865-1,865 1,329 Property and Equipment in Progress 1,392-1, Facilities 214,938 (132,716) 82,222 66,421 Furniture and Equipment in Use 126,615 (81,570) 45,045 42,598 Other Communication System 14,235 (9,694) 4,541 4,649 Data Processing System 287,646 (256,789) 30,857 29,632 Security System 12,923 (9,852) 3,071 3,344 Transportation System 5,681 (4,728) 953 1,401 Total in ,637 (595,438) 195,199 Total in ,857 (587,006) 174,851 (c) Intangible Assets Parent company Consolidated Intangible Assets Original Net Balance Net Balance Net Balance Net Balance Amortization Cost in 2018 in 2017 in 2018 in 2017 Right from Acquisition of Payroll operations Public Sector (1) 1,431,969 (349,348) 1,082,621 1,207,006 1,082,621 1,207,006 Private Sector (2) 18,120 (6,742) 11,378 12,404 11,378 12,404 Software Acquisition 126,451 (69,884) 56,567 28,909 56,648 29,124 Other 1,718 (668) 1,050 1,050 1,165 1,165 Total in ,578,258 (426,642) 1,151,616 1,151,812 Total in ,504,100 (254,731) 1,249,369 1,249,699 (1) The net balance of R$1,082,621 is comprised by: a) R$958,823 related to the agreement signed with the State of Rio Grande do Sul granting Banrisul the exclusive right of servicing the payroll of state civil servants for the next ten years. No indications that these assets are impaired were identified by internal or experts analyses, and b) R$38,400 related to the agreement signed with the Judiciary Power of the State of Rio Grande do Sul to provide payroll services to the Court of Justice's servants for a period of 5 years. The contract also establishes that the Judiciary Power must centralize at Banrisul all of its financial transactions and investments of cash and cash equivalents, with the exception of investments subject to agreements with the Federal Government, and that Banrisul will not receive any remuneration, payment or fees due by the provision of banking services to the Judiciary Power. Banrisul will also make available to the Judiciary Power digital certificates and similar services. Internal and expert studies were carried out and no evidence of impairment related to this asset was identified. c) R$85,398 refers to contracts signed with town halls and other public sector bureaus, for the provision of banking services related to the payroll of their civil servants. (2) Refers to agreements entered into with private sector, are effective for five years and are amortized over the agreement period. No indications that these assets are impaired were identified. NOTE 12 - DEPOSITS, MONEY MARKET FUNDING AND FUNDS FROM ACCEPTANCE AND ISSUANCE OF SECURITIES Without Maturity Up to 3 Months 3 to 12 Months Parent company Over 12 Months Deposits Demand Deposits (1) 2,847, ,847,426 2,456,626 Savings Deposits (1) 9,019, ,019,984 8,067,876 Interbank Deposits - 38,145 73,975 12, , ,512 Time Deposits (2) 7,406 2,691,531 1,703,534 32,842,595 37,245,066 34,717,557 Other Deposits Total 11,874,841 2,729,676 1,777,509 32,855,442 49,237,468 45,412,571 Securities sold under repurchase agreements Own Portfolio (3) - 3,542, ,542,854 4,885,084 Total - 3,542, ,542,854 4,885,084 Funds from Acceptance and Issuance of Securities Funds from Real State, Mortgage, Credit and Similar Bonds - 216, ,133 2,049,368 2,896,146 2,350,426 Total - 216, ,133 2,049,368 2,896,146 2,350, Financial Statements September 2018

93 Consolidated Without Maturity Up to 3 Months 3 to 12 Months Over 12 Months Deposits Demand Deposits (1) 2,842, ,842,310 2,449,543 Savings Deposits (1) 9,019, ,019,984 8,067,876 Interbank Deposits - 38,145 73,975 12, , ,512 Time Deposits (2) 7,406 2,691,531 1,671,050 32,842,595 37,212,582 34,692,397 Other Deposits Total 11,869,725 2,729,676 1,745,025 32,855,442 49,199,868 45,380,328 Securities sold under repurchase agreements Own Portfolio (3) - 3,421, ,421,508 4,749,766 Total - 3,421, ,421,508 4,749,766 Funds from Acceptance and Issuance of Securities Funds from Real State, Mortgage, Credit and Similar Bonds - 216, ,807 2,049,368 2,625,820 2,091,891 Total - 216, ,807 2,049,368 2,625,820 2,091,891 (1) Classified as without maturity since there is no contractual maturity date. (2) Consider the maturities set for each investment. Time deposits are made up of individuals and companies, with floating or fixed charges equivalent to 98.05% and 1.95% of the total portfolio, respectively. The average funding rate for floating-rate deposits corresponds to 85.41% ( %) of the CDI variation, and for fixed-rate deposits, to 5.93% ( %) p.a. Of total time deposits, 63.02% ( %) have some kind of early redemption option, and the cost recognition made by the use of contracted rate due upon maturity, excluding discounts or reductions applicable at the date of early redemption. The stated maturity dates do not consider the possibility of early redemption. (3) Funding through money market purchase and sale commitments operations - own portfolio -, conducted with financial institutions, has an average funding rate of 100% of the CDI variation. NOTE 13 - BORROWINGS Foreign Borrowings - represented by funds obtained from foreign banks to be used in foreign exchange commercial transactions subject to the variation of the corresponding currencies plus annual interest at rates ranging from 1.70% to 5.87% ( % to 5.27%) with maximum term of up to 946 days (2017-1,312 days), and presents the balance of R$798,186 ( R$769,128). NOTE 14 - ONLENDINGS Parent company and Consolidated Domestic Onlendings Official Institutions Foreign Onlendings Total Up to 3 months 139, , , ,441 3 to 12 months 458, ,210 2,095 1, , ,875 1 to 3 years 658, ,157 2,090 3, , ,991 3 to 5 years 414, , , ,095 Over 5 years 310, , , ,558 Total 1,980,633 2,331,949 4,842 6,011 1,985,475 2,337,960 Internal funds for onlendings refer primarily to funds from Official Institutions (BNDES - National Bank for Economic and Social Development, FINAME - National Equipment Financing Authority, Caixa Econômica Federal - Federal Savings and Loan Bank and FINEP - Funding Authority for Studies and Projects). These liabilities mature on a monthly basis through November 2032, and are subject to interest of 0.50% to 8.00% ( % to 8.00%) p.a., plus variation of the indexes (TJLP Long-term interest rate, URTJ-01, US Dollar, currency basket, UPRD, IPCA and SELIC) for floating-rate operations and up to 20.09% ( %) p.a. for fixed-rate operations. Funds are transferred to customers on the same terms and with the same funding rates, plus commission on financial intermediation. These funds are collateralized by the same guarantees received for the related loans. 93

94 NOTE 15 - OTHER PAYABLES Parent company Consolidated Collected Taxes and Other 219, , , ,326 Receipt of Federal Taxes 219, , , ,061 Other Foreign Exchange Portfolio 101,585 33, ,585 33,455 Foreign Exchange Sold Pending Settlement 60,675 27,174 60,675 27,174 Financed Imports Foreign Exchange Contracts (9,169) (2,127) (9,169) (2,127) Foreign Exchange Purchased 706, , , ,823 Advances on Foreign Exchange Contracts (656,131) (633,415) (656,131) (633,415) Social and Statutory 29,025 76,846 29,135 76,938 Dividends and Bonuses Payable 29, , Bonuses and Profit Sharing Payable 12 76, ,087 Taxes and Social Security 1,225,637 1,088,939 1,354,484 1,199,601 Taxes and Contributions Payable 104,012 87, ,799 97,051 Provision for Income and Social Contribution Taxes 237, , , ,103 Provision for Deferred Taxes and Contributions (Note 25 (b)) 348, , , ,808 Provision for Tax Contingencies (Note 16 (b)) 535, , , ,639 Trading and Intermediation of Securities - - 7,036 4,581 Trading and Intermediation of Securities - - 7,036 4,581 Financial and Development Funds 979, , , ,118 Payables for Financial and Development Fund 664, , , ,113 Other 315, , , ,005 Subordinated Debts (1) 2,099,448 1,779,744 2,099,448 1,779,744 Subordinated Debts Marked to Market (Note 06) 2,098,280 1,779,423 2,098,280 1,779,423 Embedded Goodwill/Negative Goodwill and Expenses 1, , Sundry 4,309,978 3,206,383 5,140,902 3,994,666 Payables for Unreleased Funds 82,380 48,115 82,759 48,429 Obligations Related to Assignment Operations 26,207 33,172 26,207 33,172 Payables for Acquisition of Assets and Rights 34,399 27,401 34,576 27,584 Liabilities Under Government Agreements 49,319 60,488 49,319 60,488 Retailers Acquiring Payable Obligations 651, ,485 1,498,353 1,169,453 Accrued Vacation and Related Charges 378, , , ,085 Refinancing of Actuarial Deficit of Fundação Banrisul (Note 26) 68,637 67,322 68,637 67,322 Provision for Labor Contingencies (Note 16 (b)) 531, , , ,724 Brazilian Central Bank Fines on Foreign Exchange (Note 16 (b)) 151, , , ,645 Provision for Other Tax Contingencies (Note 16 (b)) 7,661 7,368 7,661 7,368 Provision for Securitization Losses (2) 1,658 1,631 1,658 1,631 Provision for Post-Employment Benefits (3) 464, , , ,298 Reserve for Civil Contingencies (Note 16 (b)) 269, , , ,489 Provision for Debts From Companhia União de Seguros Gerais (GESB) 17,333 13,714 17,333 13,714 Unemployment Indemnity Fun FGTS for Amortization 8,391 8,296 8,391 8,296 Sundry Payables Domestic 131, , , ,151 Capital Reduction to be Settled 353, ,281 - Payable Card Transactions 831, , , ,316 Provision on Commitments, Guarantees and Others(Note 24 (b)) 34,274 24,470 34,274 24,470 Other 216, , , ,031 Total 8,964,969 7,296,809 9,931,886 8,200,429 (1) Subordinated Debt Banrisul concluded the issuance of subordinated bond abroad in two tranches, as follows: (a) On January 26, 2012, at the total amount of USD500 million (500 million U.S. Dollars). The financial settlement was on February 02, 2012, for a 10-year term transaction maturing on February 02, The coupon pays interest of 7.375% per annum, payable semi-annually from the settlement date. The issue price amounted to % of the face value of the bond, resulting in an effective yield of 7.50% p.a. (b) On November 26, 2012, at the total amount of USD275 million (275 million U.S. Dollars). The financial settlement was on December 03, 2012, maturing on February 02, The coupon pays interest of 7.375% per annum, payable semi-annually from the settlement date. The issue price amounted to % of the face value of the bond, resulting in an effective yield of 5.95% p.a. As of September 30, 2015, Banrisul partially repurchased its Subordinated Debt for USD million ( million U.S. Dollars), at 80% of par value, namely USD million ( million U.S. Dollars). As a result of this tender offer, on September 30, 2015 there was also the payment of the contractual interest, accrued to the settlement date, in the amount of USD2.96 million (2.96 million U.S. dollars), related to repurchased subordinated bonds, as well as the settlement of the hedging derivatives related to it. On October 15, 2015, there was new partial repurchase of subordinated debt amounting USD2.85 million for 77% of face value, in the amount of USD2.2 million. As described in Note 03 (e), the remaining amount of the subordinated debt, equal to USD million, and the derivatives transactions contracted to hedge the risk of changes in foreign currency and interest rates arising from the issuance of this debt were designated as market risk hedge. (2) Banrisul s management recognizes a provision for co-obligation of securitized receivables with the National Treasury for R$8,986 (2017 R$9,595), controlled in a memorandum account, which are of responsibility of agricultural borrowers. (3) Refers to the sponsor's obligations on defined benefit plan deficits offered to employees and former employees of Banrisul and subsidiaries. 94 Financial Statements September 2018

95 NOTE 16 - RESERVES, CONTINGENT ASSETS AND LIABILITIES (a) Contingent Assets No contingent assets were recorded and there are no ongoing lawsuits with probable gains. (b) Contingent Reserves and Liabilities In the normal course of their activities, Banrisul and its subsidiaries are parties to tax, labor and civil lawsuits at the judicial and administrative levels. The provisions were calculated based on the opinion of Banrisul s legal counselors, using measurement models and benchmarks available, despite the inherent uncertainty as to the period and outcome of the suits. Banrisul records a provision in the total amounts involved in lawsuits that have been assessed as probable losses. Management believes that the provisions are sufficient to cover probable losses arising from lawsuits. The changes in reserves are as follows: Parent company Tax Labor Civil Other Total Opening Balance at 12/31/ , , , ,508 1,284,911 Recognition and Inflation Adjustment 9, ,507 61,565 2, ,407 Provision Reversal (81) (81) Payment (37) (42,846) (16,717) - (59,600) Ending Balance at 09/30/ , , , ,741 1,495,637 Guaranteed Deposits (Note 9) 51, ,838 86, ,786 Parent Company Tax Labor Civil Other Total Opening Balance at 12/31/ , , , ,793 1,176,877 Recognition and Inflation Adjustment 15,131 96,012 49,394 3, ,389 Provision Reversal (799) (799) Payment (42) (55,894) (22,233) - (78,169) Ending Balance at 09/30/ , , , ,645 1,262,298 Guaranteed Deposits (Note 9) 16, , , ,127 Consolidated Tax Labor Civil Other Total Opening Balance at 12/31/ , , , ,508 1,293,734 Recognition and Inflation Adjustment 9, ,811 61,899 2, ,433 Reversal of Provision (81) (44) (152) - (277) Payment (37) (43,850) (16,750) - (60,637) Ending Balance at 09/30/ , , , ,741 1,504,253 Guaranteed Deposits (Note 9) 53, ,485 87, ,201 Consolidated Tax Labor Civil Other Total Opening Balance at 12/31/ , , , ,793 1,183,867 Recognition and Inflation Adjustment 16,653 96,445 49,558 3, ,508 Reversal of Provision (799) (173) (65) - (1,037) Payment (42) (56,198) (22,233) - (78,473) Ending Balance at 09/30/ , , , ,645 1,270,865 Guaranteed Deposits (Note 9) 21, , , ,656 Tax Contingencies Provisions for tax contingencies relate primarily to liabilities related to taxes whose legality or constitutionality is being challenged at the administrative or judicial levels and the likelihood of loss is considered probable, being recognized at the full amount under dispute. For lawsuits collateralized by escrow deposits, the provisioned amounts and respective escrow deposits are not adjusted for inflation. When legal permits are issued as the result of a favorable outcome, the provisioned amounts and respective escrow deposits are adjusted for inflation and withdrawn. 95

96 The main tax contingencies refers to: (i) income tax and social contribution on the deduction of expenses arising from the settlement of the actuarial deficit of Fundação Banrisul de Seguridade Social (Banrisul Social Security Foundation), challenged by the Brazilian Internal Revenue Service for the years 1998 to 2005 in the amount of R$535,185 ( R$523,117), in which Banrisul, through its legal counsel, has been discussing the matter in court and recorded a provision for contingencies in the amount of the estimated loss; and (ii) National Fund for Educational Development - FNDE tax assessment notice related to education allowance, whose likelihood of loss is classified by our legal counsel as probable, and recorded provisions in the amount of R$6,878 ( R$6,878). There is no record of other fiscal actions of this nature in the Consolidated Statements. There are also some tax contingencies whose likelihood of loss, based on their nature, is considered as possible, in the amount of R$83,812 ( R$78,660), and in the Consolidated - R$114,388 ( R$106,505). These contingencies are mostly related to litigations of municipal and federal taxes nature and that a provision for contingencies was not recognized, in accordance with applicable accounting practices. In addition, in the period there was an infraction notice presented by the Brazilian Internal Revenue Service contesting the deductibility of the incentives paid by Banrisul, in the quality of sponsor of supplementary retirement plans administered by Banrisul Foundation and under the terms of the voluntary process of plan switch that took place in 2014, with the Bank being notified for the payment of Income Tax and Social Contribution in the amount of R$159,520 (2017 R$147,179), classified as possible loss by legal advisors. Labor Contingencies Refer to lawsuits filed mainly by active employees, former employees, employees of contractors, Associations, Unions and Prosecutors Office, relating to alleged violation of labor rights. This account records the provision for labor claims filed against Banrisul, whose likelihood of loss is considered probable. The provision amount is calculated according to the disbursement estimated by Banrisul s management, timely reviewed based on data received from our legal counsel, and adjusted to the escrow deposit when required. Of the aforementioned provision, R$213,044 ( R$203,812) - consolidated R$216,298 ( R$208,142) - has been deposited in an escrow account. Additionally, R$65,794 ( R$51,496) - consolidated R$67,187 ( R$52,882) - was required for appeals. There are also some labor contingencies whose likelihood of loss, based on their nature, is considered as possible, in the amount of R$1,638,878 ( R$1,440,221) - consolidated R$1,652,927 ( R$1,452,127), relating principally to overtime, reintegration to active positions and wage parity. A provision for contingencies was not recognized for the amounts of possible loss on labor claims, in accordance with applicable accounting practices. Civil Contingencies Lawsuits for damages refer to compensation for property damage and/or pain and suffering, referring to consumer relations, in particular, matters relating to credit cards, consumer credit, checking accounts, savings accounts, banking collection and loans. This account records the provision for civil suits when a court notification is received, and is adjusted monthly based on the amount claimed, on evidence produced and on the assessment of the related risk of loss made by the legal counsel, considering case law, factual information gathered, evidence produced in the records and court decisions on the lawsuit. From the previously mentioned allowance, the amount of R$86,740 ( R$129,848) - consolidated R$87,048 ( R$130,398) - has been deposited in court. There is also the amount of R$1,558,106 ( R$1,804,794) - consolidated R$1,562,457 ( R$1,811,579) - related to lawsuits filed by third parties against Banrisul, relating to personal injury, duplicate payments, and housing finance. The likelihood of loss is classified by our legal counsel as possible, and, therefore, no provisions were recorded. 96 Financial Statements September 2018

97 Other Contingencies On September 29, 2000, Banrisul received an assessment notice from the Central Bank of Brazil in connection with administrative proceedings filed by that authority related to supposed irregularities in foreign exchange transactions between 1987 and In an appeal decision at the administrative level, Banrisul was required to pay a fine equivalent to 100% of the amount of the supposedly irregular transactions. This decision is being challenged in court by Management, which, preventively and in compliance with the Central Bank of Brazil requirements, recorded a provision in the amount of R$151,741 ( R$148,645) for this contingency. NOTE 17 - INCOME FROM SERVICES RENDERED Parent company Consolidated 01/01 to 09/30/ /01 to 09/30/ /01 to 09/30/ /01 to 09/30/2017 Funds Management 54,469 60,461 60,541 61,993 Income from Collection and Custody 49,113 46,486 49,094 46,469 Income from Guarantees 2,894 3,035 2,894 3,035 Income from Group Financing Management Fee ,878 42,358 Income from Brokerage of Operations - - 6,074 2,850 BanriCard Management Services Agreement - - 4,988 4,824 Vero Acquiring Network Management Services Agreement ,671 66,716 Other Services Incomes ,111 8,741 Total 106, , , ,986 NOTE 18 - INCOME FROM BANK FEES Parent company Consolidated 01/01 to 09/30/ /01 to 09/30/ /01 to 09/30/ /01 to 09/30/2017 Vero Acquiring Network , ,436 Fees from Benefit Card ,021 30,331 Check Returns 16,240 16,966 16,240 16,966 Checking Account Debits 50,054 43,801 50,054 43,801 Collection Services 42,848 41,663 42,848 41,663 Security Commissions 169, , , ,414 Transactions with Checks 14,059 14,267 14,059 14,267 Bank Fees from Checking Accounts 385, , , ,530 Credit Card 52,181 33,118 52,181 33,118 Fees from Withdrawals 5,868 5,868 5,868 5,868 Fees from Internet Banking Fees from Bank Guarantee 8,559 7,555 8,559 7,555 Other Income from Fees 21,071 19,410 22,397 19,796 Total 766, ,379 1,136,463 1,042,532 Individuals 381, , , ,938 Corporations 385, , , ,594 NOTE 19 - PERSONNEL EXPENSES Parent company Consolidated 01/01 to 09/30/ /01 to 09/30/ /01 to 09/30/ /01 to 09/30/2017 Salary (1) 816, , , ,526 Benefits (1) 245, , , ,306 Social Charges 379, , , ,277 Training 9,779 8,226 9,784 8,237 Total 1,451,480 1,471,405 1,462,455 1,481,346 (1) In 2017, Direct Remuneration and Benefits Expenses include R$93,204 related to incentives granted and provisioned under the Voluntary Retirement Plan with the respective charges. 97

98 NOTE 20 - OTHER ADMINISTRATIVE EXPENSES Parent company Consolidated 01/01 to 09/30/ /01 to 09/30/ /01 to 09/30/ /01 to 09/30/2017 Communication 44,448 46,528 44,979 46,964 Data Processing and Telecommunication 80,610 90, , ,246 Security and Money Transportation 101, , , ,857 Amortization and Depreciation 146, , , ,741 Rentals and Related Fees 86,819 85,555 85,264 83,961 Supplies 14,327 10,195 22,095 15,714 Outsourced Services (1) 402, , , ,066 Specialized Technical Services 126,146 49, ,891 49,699 Advertising, Promotions and Publicity (2) 60,010 72,657 63,237 78,721 Maintenance and upkeep 44,608 43,231 44,809 43,502 Water, Electricity and Gas 24,161 20,685 24,573 21,169 Financial System Services 36,756 41,225 38,215 41,527 Other 43,533 35,978 45,224 39,022 Total 1,211,780 1,154,736 1,356,800 1,329,189 (1) Of the amount of R$402,249, (2017 R$407,870), R$178,739 (2017 R$208,731) is related to service expenses for the origination of payroll loans through Bem Promotora de Vendas e Serviços S.A. (2) Comprises mainly institutional advertising expenses of R$23,327 ( R$36,776) and sponsorship of sport events and clubs of R$30,939 ( R$29,928). NOTE 21 - OTHER OPERATING INCOME Parent company Consolidated 01/01 to 09/30/ /01 to 09/30/ /01 to 09/30/ /01 to 09/30/2017 Recovery of Charges and Expenses 119, ,501 34,481 32,447 Reversal of Operating Reserves for: Labor Civil Tax Other 630 5, ,076 Securitization Interbank Fees 25,041 24,233 25,041 24,233 Credit Notes Receivable 6,845 7,454 6,845 7,454 Reserve Fund - Escrow Deposit - Law No /04 10,391 28,287 10,391 28,287 Commission and Fee on Insurance and Capitalization Placement 4,952 6,945 4,952 6,945 Miscellaneous Revenues from Cards 69,345 56,874 69,345 56,874 Profits from Assets Sale , ,724 Reversal of Provisions for Pending Payments 12,227 29,934 13,258 29,969 Acquiring Fees - Advance on of Performed Operations ,438 60,711 Income from Portability of Loans Operations 46,772 16,293 46,772 16,293 Other Operating Income 12,081 43,365 21,350 52,587 Total 308, , , ,639 NOTE 22 - OTHER OPERATING EXPENSES 01/01 to 09/30/2018 Parent company 01/01 to 09/30/ /01 to 09/30/2018 Consolidated 01/01 to 09/30/2017 Discount Granted from Renegotiations 30,178 37,092 30,178 37,092 Labor Provisions 197,507 96, ,811 96,445 Provision for Properties - Assets not in use (Note 16) 4,383 3,422 4,383 3,422 Provision for Securitization Losses Provision for Civil Lawsuits (Note 16) 61,565 49,394 61,899 49,558 Collection of Federal Taxes 3,231 5,826 3,231 5,826 Provision for Tax Contingencies (Social Contribution Tax/ Income Tax) (Note 16) 9,102 15,131 9,490 16,653 Inflation Adjustment of Brazilian Central Bank fines on Foreign Exchange Operations (Note 16) 2,233 3,852 2,233 3,852 Inflation Adjustment of Borrowing from Banrisul Foundation 7,906 2,187 7,906 2,187 Provision for Debts Assumed with GESB 3,643 1,066 3,643 1,066 Card Expenses 12,746 18,025 12,746 18,025 Provision for Endorsements and Sureties Provided by Banrisul 14,000 11,140 14,000 11,140 Expenses with Portability of Loans Operations 59,576 73,949 59,576 73,949 INSS Agreement Fees 32,415 26,937 32,415 26,937 Other Operating Expenses 32,418 34,675 31,086 37,854 Total 471, , , , Financial Statements September 2018

99 NOTE 23 - EQUITY - BANRISUL (a) Capital Fully subscribed paid-up capital as of September 30, 2018 is R$4,396,719, represented by 408,974 thousand shares with no par value as follows: ON (common) PNA (preferred A) PNB (preferred B) Total Amount % Amount % Amount % Amount % Rio Grande do Sul State 201,225, , ,056, ,033, Management, Board of Directors and Committee Members ,514-2,688 - Other 3,835, , ,313, ,937, Total 205,060, ,541, ,372, ,974, In the period, 1,971,955 (PNA) shares were converted, mainly into (PNB) shares, in view of requests from shareholders. The Extraordinary Shareholders Meeting held on April 10, 2018, approved of a capital decrease in the amount of R$353,281, approved by the Central Bank of Brazil in June 22, The payment to Banrisul shareholders of their shareholding subject to capital reduction will occur upon the delivery of 204,487,238 (two hundred and four million, four hundred and eighty-seven thousand, two hundred and thirty-eight) preferred shares issued by Banrisul Cartões S.A. ( Banrisul Cartões ), in the proportion of 1 (one) preferred share of the latter for each 2 (two) shares issued by Banrisul, conditioned to the conclusion of the listing process of Banrisul Cartões SA in B3 S.A. - Brasil, Bolsa, Balcão. If the listing process of Banrisul Cartões is not completed by December 15, 2018, shareholders will be entitled to receiving in cash according to their shareholding in Banrisul, as the result of the capital reduction. Preferred shares do not carry voting rights and are entitled to the following payments: Class A Preferred Shares: (i) Priority to receive fixed non-cumulative dividends of six percent (6%) p.a. on the figure resulting from the division of capital by the related number of shares comprising it; (ii) Right to take part, after Class B Common and Preferred Shares have been paid dividends equal to that paid to those shares, in the distribution of any other cash dividends or bonuses paid out by Banrisul, under the same conditions as Class B Common and Preferred Shares, plus an additional ten percent (10%) over the amount paid to those shares; (iii) Interest in capital increases deriving from the capitalization of reserves, under the same conditions as Class B Common and Preferred Shares; and (iv) Priority in capital reimbursement, without premium. Class B Preferred Shares: (i) Interest in capital increases deriving from the capitalization of reserves, under the same conditions as Class A Common and Preferred Shares; and (ii) Priority in capital reimbursement, without premium. (b) Allocation of Income Net Income for the year, adjusted in accordance with Law No. 6404/76, is allocated as follows: (i) 5% to the Legal Reserve, not exceeding 20% of total Capital, (ii) 25% to the Statutory Reserve, and (iii) mandatory minimum dividends limited to 25% of adjusted net income. The remaining net income is allocated as decided in the Shareholders Meeting. The Statutory Reserve is intended to ensure funds for investments in information technology, and is limited to 70% of paid-up capital. 99

100 The Expansion Reserve is intended to finance capital and operational expenditures, according to the capital budget proposed by the Management and approved by the General Shareholders Meeting. The Ordinary Shareholders Meeting held on April 27, 2018 approved the proposed distribution of additional dividends for 2018 equivalent to 15% of the Adjusted Net Income, totaling 40%. The payout policy adopted by Banrisul aims to pay interest on capital for the maximum tax-deductible amount calculated in accordance with prevailing legislation, which is included, net of withholding tax, in the calculation of mandatory dividends for the fiscal year, as stated in the Bank s articles of incorporation. As permitted by Law No. 9249/95 and CVM Rule No. 207/96 and Policy of Quarterly payment of interest on equity, Banrisul management paid the amount of R$261,100 relating to interest on the period," (2017 R$245,819), to be credited to dividends, net of withholding tax. The payment of such interest on equity resulted in a tax benefit for Banrisul in the amount of R$117,495 ( R$110,619). NOTE 24 - COMMITMENTS, GUARANTEES AND OTHERS (a) State Law No , enacted on April 22, 2004, as amended by Law No /15, instructs that Banrisul must transfer to Rio Grande do Sul State up to 95% (ninety five percent) of the escrow deposits made to the Reserve Fund for the Return of Legal Deposit Guarantee, in which the disputing parties are neither the State nor municipalities. The remaining amount of collected escrow deposits not transferred will be recorded into a reserve fund to ensure the refund of said deposits. As of September 30, 2018, the balance of said collected resources, adjusted through the reporting date by reference to the TR (managed prime rate) variation plus interest of 6.17% p.a., totaled R$10,910,262 (2017 R$10,881,516), of which R$10,238,286 ( R$10,199,378) was transferred to the State upon its request. The remaining balance, which makes up the aforementioned fund, is recorded in Other Payables - Financial and Development Fund. (b) Sureties and guarantees granted to customers amount to R$415,183 ( R$469,006), and are subject to financial charges and backed by the beneficiaries sureties, and provisions for possible losses amounting to R$34,274 ( R$24,470) have been made. (c) Banrisul is responsible for custody operations for R$903,038 (2017 R$852,109). (d) Banrisul has confirmed import and export credits for R$81,158 ( R$55,536) and co-obligations in credit assignments for R$8,986 ( R$9,595). (e) Banrisul manages various funds and portfolios, which have the following net assets: Consolidated Investment Funds (1) 10,582,719 10,582,641 Investment Funds in Investment Fund Shares 90, ,078 Equity Funds 74,426 70,452 Individual Retirement Programmed Funds 15,888 17,726 Fund to Guarantee the Liquidity of Rio Grande do Sul State Debt Securities 7,215 83,440 Managed Portfolios 642, ,463 Total 11,412,924 11,499,800 (1) The investments fund portfolios consist primarily of fixed-rate and variable rate securities, and their carrying amounts already reflect fair value adjustments at the balance sheet date. (f) Subsidiary Banrisul S.A. Administradora de Consórcios is responsible for the management of 158 buyers pools (159 in 2017), including real estate, motorcycles and vehicles, comprising 57,983 active pool members (50,241 in 2017). (g) Banrisul leases properties, mainly used for branches, based on standard contracts which may be cancelled at its own discretion and include renewal options and adjustment clauses. Total future minimum payments under non-cancelable lease agreements as of September 30, 2018 were R$281,321, of which R$82,319 matures in up 100 Financial Statements September 2018

101 to one year, R$162,820 from one to five years and R$36,182 over five years. From January to September 2018, lease payments recognized as expenses amounted to R$79,883 (2017 R$78,697). NOTE 25 - INCOME TAX AND SOCIAL CONTRIBUTION (a) Reconciliation of Income Tax and Social Contribution Expenses/Revenue 01/01 to 09/30/2018 Parent company 01/01 to 09/30/ /01 to 09/30/2018 Consolidated 01/01 to 09/30/2017 Income for the Period before Taxes and Profit Sharing 1,253, ,948 1,366, ,277 Income Tax (IRPJ) - Rate 25% (313,353) (176,487) (341,661) (201,319) Social Contribution Tax (CSLL) - Rate of 9% - - (29,600) (25,646) Social Contribution Tax (CSLL) - Rate of 20% (250,682) (141,190) (207,551) (104,064) Total Income and Social Contribution Taxes calculated at Current Rate (564,035) (317,677) (578,812) (331,029) Effect of Law No /15 in Deferred Taxes (1) (73,694) (16,321) (73,694) (16,344) Adjustment of Fine on Foreign Exchange Operations (1,005) (1,733) (1,005) (1,733) Profit Sharing 42,193 35,262 42,193 35,262 Interest on Equity 117, , , ,619 Equity in earnings (losses) in subsidiaries and Foreign Exchange Adjustment on Branches 116,169 98,754 12,369 9,253 Other Additions, Net of Exclusions (436) 170 5,430 4,232 Total Income and Social Contribution Taxes (363,313) (90,926) (476,024) (189,740) Current (237,486) (236,802) (350,263) (336,212) Deferred (125,827) 145,876 (125,761) 146,472 (1) Law No of October 6, 2015, increased the Social Contribution Tax (CSLL) rate applicable on the financial industry from 15% to 20%, valid from September 1, 2015, to December 31, Such increase has also affected the tax credits accrued from the temporary differences in the deferred taxes. (b) Deferred Income and Social Contribution Taxes - Deferred Tax Assets A Summary of deferred tax items, by origin and disbursements made, are as follows: Balance at 12/31/2017 Recognition Realization Parent Company Balance at 09/30/2018 Allowance for Loan Losses 1,434, , ,376 1,207,791 Provision for Labor Contingencies 154,866 79,003 19, ,419 Provision for Tax Contingencies 142,817 4,096 4, ,780 Mark-to-Market Adjustment 181,169 87, ,908 Other Temporary Provisions 414,562 32,796 9, ,758 Total Tax Assets on Temporary Differences 2,327, , ,804 2,271,656 Unrecorded Tax Assets (23) - - (23) Total Tax Assets Recorded (Note 09) 2,327, , ,804 2,271,633 Deferred Tax Liabilities (277,026) (71,928) - (348,954) Tax Assets, Net of Deferred Tax Liabilities 2,050, , ,804 1,922,679 Balance at 12/31/2017 Recognition Realization Consolidated Balance at 09/30/2018 Allowance for Loan Losses 1,434, , ,960 1,208,870 Provision for Labor Contingencies 157,237 79,220 19, ,689 Provision for Tax Contingencies 144,141 4,228 4, ,719 Mark-to-Market Adjustment 181,169 87, ,908 Other Temporary Provisions 415,620 32,796 9, ,608 Total Tax Assets on Temporary Differences 2,332, , ,431 2,276,794 Unrecorded Tax Assets (23) - - (23) Total Tax Assets Recorded (Note 09) 2,332, , ,431 2,276,771 Deferred Tax Liabilities (277,593) (71,741) - (349,334) Tax Assets, Net of Deferred Tax Liabilities 2,055, , ,431 1,927,

102 Expected realization of these tax assets is as follows: Temporary Differences Year Income Tax Social Contribution Tax Total Parent company Total Recorded Consolidated Total Recorded , ,062 1,052,065 1,052,065 1,052, , , , , , , , , , , ,132 84, , , , ,342 63, , , , to ,227 54, , , , to ,899 27,540 73,439 73,439 74,675 After Total on 09/30/2018 1,366, ,070 2,271,656 2,271,633 2,276,771 Total on 09/30/2017 1,296, ,835 2,235,841 2,235,818 2,241,000 The total present value of tax assets is R$2,017,110, calculated based on the expected realization of temporary differences at average funding rate projected for the corresponding periods. - Deferred Tax Liabilities The balance of the Deferred Taxes and Contributions is represented by: Parent company Consolidated Excess Depreciation (12,569) (14,329) (12,569) (14,329) Available for Sale Securities (433) (1,313) (433) (1,313) Fair Value Adjustment of Trading Securities (271,864) (176,373) (272,020) (176,624) Actuarial Surplus (64,088) (49,366) (64,312) (49,542) Total (348,954) (241,381) (349,334) (241,808) NOTE 26 - POST-EMPLOYMENT LONG-TERM BENEFIT OBLIGATIONS TO EMPLOYEES Banrisul is the sponsor of Banrisul Foundation ( Fundação Banrisul ) and Cabergs, ensuring the supplementary retirement benefits and medical care to its employees. Banrisul Foundation is an independent entity that seeks to offer pension benefit plans to its participants, employees from its sponsors and their beneficiaries, through specific contributions established in their respective plans and regulations. Banrisul s Social Security Policy, operated through Fundação Banrisul de Seguridade Social, and established in January 29, 1963, in accordance with the rules then in force, is legally grounded on article 202 of the Federal Constitution of October 5, 1988, Supplementary Laws No. 108 and No. 109 of May 29, 2001 and other legal provisions in force, issued by regulators of Social Security associated with the Ministry of Finance (formerly Ministry of Labor and Social Security - MTPS), the National Supervisory Office of Supplementary Pension (Previc) and the National Council on Supplementary Pension (CNPC), the articles of incorporation of Fundação Banrisul and the relevant regulations of the Benefit Plans and in accordance with Resolution No. 3792/09 of the National Monetary Council, amended by CMN Resolution nº 4611 of November 30, 2017, CMN Resolution No of March 25, 2010, CMN Resolution No of October 31, 2013, from which the technically qualified portfolio manager are designated by the Deliberative Committee of the Pension Fund, the Directors for Management of Investments, CMN Resolution No of November 20, 2015 and CMN Resolution No of May 25, The Benefit Plans which support the Banrisul s Private Pension Policy are grounded on the respective regulations of the Plans, which set forth all rights and obligations of the Participants, Sponsors, Actuarial Funding Plan, legal deadlines, way of payment of monthly contributions and benefits, length of minimum contribution and other parameters required for the actuarial sizing. All regulations are approved by the legal internal management bodies, by the Sponsor(s) and by the Federal Supervision and Regulation bodies, pursuant to the legislation currently in force. In accordance with Previc Instruction No. 23 of June 26, 2015, the Executive Council of Banrisul Foundation has appointed the Administrator Responsible for the Benefit Plan - ARPB. 102 Financial Statements September 2018

103 The set of hypotheses and actuarial methods adopted for the actuarial calculations arose from interaction with an external actuarial advisory firm which performed the calculations for the Benefit Plans managed by Fundação Banrisul, Executive Board and the representatives of the Decision-making Board of the Foundation and supported by the sponsors of Benefit Plan I and Settled Plan (defined benefit type) and FBPREV and FBPREV II Plan (variable contribution type), pursuant to MPS/CGPC Resolution No. 18/2006, amended by MPS/CNPC Resolution No. 9/2012, MPS/CNPC Resolution No. 15/2014 and MPS/CNPC Resolution No. 22/2015. As of September 30, 2018, Banrisul s remaining portion of the debt, in the amount of R$68,637 (2017 R$67,322), was distributed as follows: R$38,904 to the Defined Benefit Plan I (PBI), R$17,509 to the Settled Defined Benefit Plan (PBS), and R$12,224 to the FBPREV Benefit Plan II (FBPREV II), recorded in Other Liabilities (Note 15). This debt, due 2028, is paid with the interest rate of 6% p.a., restated by the General Price Index Internal Availability (IGP-DI), periodically updated and with monthly payments. (a) Major Assumptions The main assumptions below were based on information available at December 31, 2017 and 2016, being reviewed annually. Economic Assumptions 12/31/2017 Benefit Plan I (PB1, p.a.) Settled Defined Benefits Plan (PBS, p.a.) Benefit Plan FBPREV II (p.a.) Benefit Plan FBPREV (p.a.) Health Plan, Dental and Drug Assistance (p.a.) Retirement Award (Postemployment Benefits, p.a.) Discount Rate 9.84% 9.84% 9.84% 9.84% 9.84% 9.84% Inflation Rate 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% Real Salary Increase 7.42% n/a 8.71% 10.97% n/a 10.98% Growth Rate of Granted Benefits 4.25% 4.25% 4.25% 4.25% n/a 4.25% Growth Rate of Deferred Benefits 4.25% 4.25% 4.25% 4.25% n/a 4.25% Growth Rate of Pharmaceutical Cost n/a n/a n/a n/a 5.25% n/a Economic Assumptions 12/31/2016 Benefit Plan I (PB1, p.a.) Settled Defined Benefits Plan (PBS, p.a.) Benefit Plan FBPREV II (p.a.) Benefit Plan FBPREV (p.a.) Health Plan, Dental and Drug Assistance (p.a.) Retirement Award (Postemployment Benefits, p.a.) Discount Rate 11.14% 11.14% 11.14% 11.14% 11.14% 11.14% Inflation Rate 4.85% 4.85% 4.85% 4.85% 4.85% 4.85% Real Salary Increase 8.74% n/a 8.58% 8.59% n/a 8.58% Growth Rate of Granted Benefits 4.85% 4.85% 4.85% 4.85% n/a 4.85% Growth Rate of Deferred Benefits 4.85% 4.85% 4.85% 4.85% n/a 4.85% Growth Rate of Pharmaceutical Cost n/a n/a n/a n/a 5.85% n/a Demographic Assumptions 12/31/2017 Benefit Plan I (PB1) Settled Defined Benefits Plan (PBS) Benefit Plan FBPREV II Benefit Plan FBPREV Health Plan, Dental and Drug Assistance Retirement Award (Postemployment Benefits) Mortality Table (Able) Mortality Table (Disable) Disability Entry Table Turnover Table AT-2000 Basic, segregated by gender AT-2000 Basic, segregated by gender AT-2000 Basic, segregated by gender, established with basis on AT-2000 Basic decreased by 10% AT-2000 Basic, segregated by gender, established with basis on AT-2000 Basic decreased by 10% Correspond to those considered in the plans: PBI, PBS, FBPREV II and FBPREV AT-2000 Basic, segregated by gender, established with basis on AT-2000 Basic decreased by 10% RRB 1983 decreased by 50% RRB 1983 decreased by 50% RRB 1983 decreased by 50% RRB 1983 decreased by 50% Correspond to those considered in the plans: PBI, PBS, FBPREV II and FBPREV Not applicable Strong Light, specific by gender decreased by 60% Low Light, decreased by 60% Low Light, decreased by 60% Low Light, decreased by 60% Correspond to those considered in the plans: PBI, PBS, FBPREV II and FBPREV Low Light, decreased by 60% Knowledge of the actuarial consulting firm adjusted to the sponsor s expertise, modified (+0.10) Knowledge of the actuarial consulting firm adjusted to the sponsor s expertise, increased by 125% Knowledge of the actuarial consulting Knowledge of the actuarial Consulting, modified (+0.10) Correspond to those considered in the plans: PBI, PBS, FBPREV II and FBPREV Knowledge of the actuarial Consulting, modified (+0.01) 103

104 Demographic Assumptions Mortality Table (Able) Mortality Table (Disable) Disability Entry Table Turnover Table 12/31/2016 Benefit Plan I (PB1) Settled Defined Benefits Plan (PBS) Benefit Plan FBPREV II Benefit Plan FBPREV Health Plan, Dental and Drug Assistance Retirement Award (Postemployment Benefits) AT-2000 Basic, segregated by gender, established with basis RRB 1983 decreased by 50% on AT-2000 Basic decreased by 10% AT-2000 Basic, segregated by gender, established with basis RRB 1983 decreased by 50% on AT-2000 Basic decreased by 10% AT-2000 Basic, segregated by gender, established with basis RRB 1983 decreased by 50% on AT-2000 Basic decreased by 10% AT-2000 Basic, segregated by gender, established with basis RRB 1983 decreased by 50% on AT-2000 Basic decreased by 10% AT-2000 Basic, segregated by gender, established with basis RRB 1983 decreased by 50% on AT-2000 Basic decreased by 10% AT-2000 Basic, segregated by gender, established with basis Not applicable on AT-2000 Basic decreased by 10% Strong Light, specific by gender decreased by 60% Strong Light, specific by gender decreased by 60% Strong Light, specific by gender decreased by 60% Strong Light, specific by gender decreased by 60% Strong Light, specific by gender decreased by 60% Strong Light, specific by gender decreased by 60% Knowledge of the actuarial consulting firm adjusted to the sponsor s expertise, increased by 125% Knowledge of the actuarial consulting firm adjusted to the sponsor s expertise, increased by 125% Knowledge of the actuarial consulting firm adjusted to the sponsor s expertise, increased by 125% Knowledge of the actuarial Consulting, modified (+0.01) Knowledge of the actuarial consulting firm adjusted to the sponsor s expertise, increased by 125% Knowledge of the actuarial consulting firm adjusted to the sponsor s expertise, increased by 125% The assumptions relating to mortality experience are set based on the actuarial opinion, adjusted according to the demographic profile of Banrisul employees. The current value of obligations for the defined benefit pension plan is obtained from actuarial calculations, which use a set of financial, economic and biometric assumptions. The discount rate is among the assumptions used in determining the net cost (income) for these plans. Any changes in these assumptions will affect the carrying value of the obligations of pension plans. Banrisul determines the appropriate discount rate at the end of each year, in observance of CVM Rule No. 695/12 and CMN Resolution No. 4424/15, which is used to determine the present value of estimated future cash outflows that shall be required to settle the obligations of pension plans. In determining the appropriate discount rate, Banrisul considers the interest rates of the Treasury bills, denominated in Reais, the currency in which benefits will be paid, and which have maturities close to the terms of the corresponding obligations. Pursuant to MPS/Previc Ruling No. 12, of October 13, 2014, amended by Previc Instructions No 22 of April 15, 2015, No. 24 of September 08, 2015 and No. 10 of September 27, 2017 combined with Previc Ruling No. 23, of June 26, 2015, with MTPS/CNPC Resolution No. 22, of November 25, 2015 and Previc Instruction No. 375, of April 17, 2017, Fundação Banrisul de Seguridade Social carries out studies to establish the profile of the obligation maturities of the Benefit Plans I and determine the duration and other analyses of distribution of the payment of benefits. Other important assumptions for pension obligations are based in part on current market conditions. (b) Descriptions of the Plans and Other Long-Term Benefits Benefit Plan I (PBI) This plan, incorporated as a defined benefit plan, encompass post-retirement benefits, salary payment during any sickness period of the participant, prisoner s family grant, funeral allowance and annual bonus: The plan participants monthly contribution is computed based on variable percentages ranging from 4.77% to 19.07% according to the level of the salary of participation: The Benefit Plan was closed to new members as from July Settled Defined Benefits Plan (PBS) - the benefits provided by this defined benefit plan include settled retirement benefit, settled disability benefit, death benefits, funeral assistance and annual bonus. There will not be ordinary contributions to the settled benefit plan and, upon retirement, the participant will receive a benefit proportional to the period of contribution to PBI plan. 104 Financial Statements September 2018

105 Benefit Plan FBPREV II - the benefits provided by this plan, in the form of "variable contribution", cover benefits with defined contribution characteristics, which include normal retirement, early retirement and funeral assistance, and benefits with defined benefit characteristics, which include disability retirement, proportional benefit, illness assistance, annual bonus, minimum pension and death pension. The participant s regular contributions comprise three portions: (i) Basic portion: 3% to 5% of the monthly contribution pay base; (ii) Additional portion: may vary from 5% to 10% of the monthly contribution pay base in excess of 9 (nine) reference units; and (iii) Variable portion: percentage applied to the monthly contribution pay basis, annually established by the actuary to cover 50% of the costs of risk benefits and 50% of the plan s administrative expenses, calculated at 10% of the total of other contributions. In addition to regular contributions, the participant may opt to make contributions not lower than 1 (one) reference unit not matched by the sponsor. Banrisul s contributions match the participants regular contributions. Benefit Plan FBPREV - provides variable contribution benefits with defined contribution characteristics, such as regular retirement, early retirement and funeral allowance, and benefits with defined benefit characteristics, such as disability retirement, proportional benefits, sick pays, annual bonus, minimum benefit and life insurance with survival coverage benefit. The participant s regular contributions comprise three portions: (i) Basic portion: 1.5% to 3% of the monthly contribution pay base; (ii) Additional portion: may vary from 1% to 7.5% of the monthly contribution pay base in excess of 9 (nine) reference units; and (iii) Variable portion: percentage applied to the monthly contribution pay basis, annually established by the actuary to cover 50% of the costs of risk benefits and 50% of the plan s administrative expenses, calculated at 12% of the total of other contributions. In addition to regular contributions, a participant may opt to make monthly contributions not lower than 1 (one) reference unit and not matched by the sponsor. Banrisul s contributions match the participants regular contributions. Health Plan, Dental and Drug Assistance - Banrisul offers health, dental plans and drug assistance plans through CABERGS, to its active employees and retirees by Banrisul Foundation. Retirement Award (Post-employment Benefits) Banrisul grants its employees a premium for retirement that is paid in full on the date the employee leaves the company for retirement. (c) Main Actuarial Risks Banco do Estado do Rio Grande do Sul and Fundação Banrisul de Seguridade Social together may carry out studies for Assets/Liabilities comparison in order to seek operations in the financial, capital and insurance markets in order to reduce or eliminate the actuarial risks of the Plans. Through its defined benefit plans, the Bank is exposed to a number of risks, the most significant being: Volatility of Assets the plan s obligations are calculated using a discount rate that is established based on the profitability of corporate or government bonds, in the absence of an active market; If the event that the plan assets do not achieve such profitability, a deficit is created. The pension plans in Brazil and in the United States maintain a significant proportion of their assets invested in equity, whose yield is expected to exceed the yield of the corporate bonds in the long term, while resulting in volatility and risk in the short term. 105

106 Variation in Bond Yields a decrease in the yield of private or government bonds will result in the increase of the liabilities of the plan, although this variation may be partially offset by an increase in the fair value of securities held by the plans. Inflation Risk certain obligations of the Banrisul s pension plans are linked to inflation indexes, and higher inflation will lead to higher level of obligations (though, in many cases, there are limits to the level of inflation adjustments allowed to protect the plan against extreme inflation fees). Most of the plan assets either are not affected (securities with fixed interest) or have a small correlation (equity) with inflation, which means that higher inflation will also result in higher deficits. Life Expectancy most of the obligations of the plans is to grant lifetime benefits to participants. Therefore, increases in life expectancy will result in increased obligations of the plans. (d) Actuarial Reviews The net actuarial (asset)/liability breakdown summary for December 31, 2017 and 2016, prepared based on the actuarial report as of December 31, 2017 and in accordance with CPC 33 (R1), is shown below: Liabilities (Assets) Recorded in the Balance Sheet with Benefits of: 12/31/ /31/2016 Pension Plans Benefit Plan I (PBI) 340, ,311 Settled Defined Benefit Plan (PBS) 49,502 37,556 FBPREV II Benefit Plan (FBPREV II) - - FBPREV Benefit Plan (FBPREV) - 1,055 Health, Dental and Drug Plans (143,076) (110,219) Retirement Award (1) 179, ,812 Total 427, ,515 (1) The amount of R$70,154 (2016 R$60,975), related to incidents charges on the provision for retirement awards, should be added to this item, totaling R$249,646 (2016 R$218,480). On December 31, 2017, the accounting recognition in equity, as Equity Valuation Adjustments, stems from gains and losses arising from the reassessment of the actuarial report totaled R$(51,221) (R$(164,223) in 2016). On the period, tax credit Equity Valuation Adjustments was altered to the amount of R$ (1,740) ( R$ (1,316)). 106 Financial Statements September 2018

107 The breakdown of the Net Actuarial Liability prepared based on the actuarial report as of December 31, 2017 and 2016, and according to CPC 33 (R1), is as follows: Changes in the Balance Net Position as of 12/31/2017 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Present Value of Actuarial Liabilities (2,311,644) (1,178,380) (104,141) (10,966) (198,704) (179,913) Fair Value of Assets 1,970,817 1,128, ,583 12, ,780 - Surplus/(Deficit) (340,827) (49,502) 23,442 1, ,076 (179,913) Asset Ceiling - - (23,442) (1,645) - - Net Actuarial Assets (Liabilities) (340,827) (49,502) ,076 (179,913) Changes in the Balance Net Position as of 12/31/2016 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Present Value of Actuarial Liabilities (2,098,547) (1,096,231) (82,791) (9,887) (184,223) (157,812) Fair Value of Assets 1,814,236 1,058,675 85,108 8, ,442 - Surplus/(Deficit) (284,311) (37,556) 2,317 (1,031) 110,219 (157,812) Asset Ceiling - - (2,317) (24) - - Net Actuarial Assets (Liabilities) (284,311) (37,556) - (1,055) 110,219 (157,812) Changes in the Present Value of Actuarial Liabilities as of 12/31/2017 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Present Value of Actuarial Liabilities as of January 1 st 2,098,547 1,096,231 82,791 9, , ,812 Cost of Current Service (89) - 1, ,894 4,918 Financial Cost 220, ,178 8,983 1,095 20,161 14,701 Contributions from Plan Participants 64,063 6, Actuarial (Gains)/Losses - Experience adjustment 62,080 (11,778) 22, (12,048) (11,233) Actuarial (Gains)/Losses - Demographic Assumptions (60,523) (24,076) (12,758) (7,520) (4,616) 177 Actuarial (Gains)/Losses - Financial Assumptions 156,913 75,565 7,545 5,110 16,690 38,822 Benefits Paid on Plan Assets (230,276) (80,755) (7,213) (173) (4,443) (25,284) Benefits Paid Directly by the Sponsor (3,157) - Present Value of Actuarial Liabilities at end of Period 2,311,644 1,178, ,141 10, , ,913 Changes in the Present Value of Actuarial Liabilities as of 12/31/2016 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Present Value of Actuarial Liabilities as of January 1 st 1,717, ,797 61,135 6, , ,490 Cost of Current Service ,325 3,932 Financial Cost 202, ,426 7, ,601 12,421 Contributions from Plan Participants 66,057 6, Actuarial (Gains)/Losses - Knowledge 67,223 56,148 15, ,185 13,428 Actuarial (Gains)/Losses - Demographic Assumptions (2,644) (5,552) (4,334) (1,068) (83) - Actuarial (Gains)/Losses - Financial Assumptions 263, ,697 6, ,664 9,413 Benefits Paid on Plan Assets (215,784) (72,339) (4,989) (126) (4,167) - Benefits Paid Directly by the Sponsor (2,982) (1,872) Present Value of Actuarial Liabilities at end of Period 2,098,547 1,096,231 82,791 9, , ,

108 Changes in the Fair Value of the Plan Assets as of 12/31/2017 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Fair Value of the Plan Assets as of January 1 st 1,814,236 1,058,675 85,108 8, ,442 - Interest Income on Plan Assets 196, ,003 9,327 1,034 31,866 - Expected Return on Plan Assets 65,232 21,048 37,487 1,508 15,472 - Contributions from Plan Sponsors 61,546 9,892 2, Contributions from Plan Participants 64,063 6, Benefits Paid on Plan Assets (230,276) (80,755) (7,213) (173) - - Fair Value of the Plan Assets at end of Period 1,970,817 1,128, ,583 12, ,780 - Changes in the Fair Value of the Plan Assets as of 12/31/2016 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Fair Value of the Plan Assets as of January 1 st 1,654, ,890 52,539 6, ,649 - Interest Income on Plan Assets 200, ,536 6, ,584 - Expected Return on Plan Assets 36, ,038 27, ,209 - Contributions from Plan Sponsors 72,169 10,496 2, Contributions from Plan Participants 66,057 6, Benefits Paid on Plan Assets (215,784) (72,339) (4,989) (126) - - Fair Value of the Plan Assets at end of Period 1,814,236 1,058,675 85,108 8, ,442 - Changes in the Net Actuarial Plan Assets (Liabilities) as of 12/31/2017 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Net Actuarial Assets (Liabilities) at End of Previous Year (284,311) (37,556) - (1,055) 110,219 (157,812) Cost of Current Services 89 - (1,257) (997) (1,894) (4,918) Interest on (Assets) Liabilities from Net Benefits (24,913) (3,175) 86 (64) 11,705 (14,701) Effects of Adjustment Recognized in Comprehensive Income (93,238) (18,663) (1,008) 1,472 15,446 (27,766) Benefits Paid Directly by the Sponsor ,157 - Employer Contributions 61,546 9,892 2, ,443 25,284 Net Actuarial Assets (Liabilities) at the of Current Year (340,827) (49,502) ,076 (179,913) Changes in the Net Actuarial Plan Assets (Liabilities) as of 12/31/2016 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Net Actuarial Assets (Liabilities) at End of Previous Year (62,702) - (8,647) (598) 105,969 (120,490) Cost of Current Services (99) - (601) (973) (1,325) (3,932) Interest on (Assets) Liabilities from Net Benefits (1,905) 1,081 (913) 17 12,983 (12,421) Effects of Adjustment Recognized in Comprehensive Income (291,774) (49,133) 7,865 (170) (14,557) (22,841) Benefits Paid Directly by the Sponsor ,982 - Employer Contributions 72,169 10,496 2, ,167 1,872 Net Actuarial Assets (Liabilities) at the of Current Year (284,311) (37,556) - (1,055) 110,219 (157,812) Estimated Cost of Defined Benefit for 2018 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Cost of Current Services (1,702) ,049 7,748 Net Interest on Actuarial Liabilities (Assets) 26,405 4,359 (74) (29) 2,844 15,791 Actuarial Estimated Expenses (Income) 24,703 4, ,893 23, Financial Statements September 2018

109 The estimated benefit payments for the next 10 years are as follows: Estimated Payment per Year Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award ,673 92,954 6, ,827 38, ,777 96,851 6, ,017 8, , ,138 7, ,640 7, , ,858 7, ,801 8, , ,791 7, ,730 11, to ,388, ,988 41,347 1,517 90, ,878 Other information concerning the plan: Number of Participants as of 12/31/2017 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Active 501 1,007 4,496 5,037 4,017 10,631 Retired 3,564 1, ,282 - Pensioners Total 4,988 3,071 4,953 5,061 10,020 10,631 Number of Participants as of 12/31/2016 Benefit Plan I Settled Defined Benefit Plan FBPREV II Plan FBPREV Plan Health Plan Retirement Award Active 638 1,262 4,999 4,924 4,944 11,300 Retired 3,551 1, ,842 - Pensioners Total 5,112 3,126 5,279 4,939 10,730 11,

110 (f) Sensitivity Analysis The assumptions adopted for the actuarial valuation of the defined benefit plan have a significant effect on the amounts reported. The following tables show the impact on the calculation of benefits considering changes in the assumptions considered in the last actuarial revaluation performed for each post-employment benefit. Benefit Plan I (PBI) 12/31/2017 Impact on R$ Thousand Assumption Description Data Considered in the Actuarial Effect on Present Value of Actuarial Impact Assessment Report Liabilities Discount Rate 9.84% 0.5% Increase (116,180) Discount Rate 9.84% 0.5% Decrease 115,061 Mortality Table AT (1) 10% Increase (65,424) Mortality Table AT (1) 10% Decrease 61,148 Settled Benefit Plan (PBS) 12/31/2017 Impact on R$ Thousand Data Considered in the Actuarial Effect on Present Value of Actuarial Assumption Description Impact Assessment Report Liabilities Discount Rate 9.84% 0.5% Increase (54,900) Discount Rate 9.84% 0.5% Decrease 59,690 Mortality Table AT (1) 10% Increase (22,500) Mortality Table AT (1) 10% Decrease 24,484 FBPREV II Benefit Plan (FBPREV II) 12/31/2017 Impact on R$ Thousand Data Considered in the Actuarial Effect on Present Value of Actuarial Assumption Description Impact Assessment Report Liabilities Discount Rate 9.84% 0.5% Increase (4,539) Discount Rate 9.84% 0.5% Decrease 4,948 Valid Mortality Table AT (2) 10% Increase (106) Valid Mortality Table AT (2) 10% Decrease 212 FBPREV Benefit Plan (FBPREV) 12/31/2017 Impact on R$ Thousand Data Considered in the Actuarial Effect on Present Value of Actuarial Assumption Description Impact Assessment Report Liabilities Discount Rate 9.84% 0.5% Increase (525) Discount Rate 9.84% 0.5% Decrease 574 Valid Mortality Table AT (2) 10% Increase 541 Valid Mortality Table AT (2) 10% Decrease (539) Health Plan 12/31/2017 Impact on R$ Thousand Assumption Description Data Considered in the Actuarial Effect on Present Value of Actuarial Impact Assessment Report Liabilities Discount Rate 9.84% 0.5% Increase (3,188) Discount Rate 9.84% 0.5% Decrease 3,449 Mortality Table AT 2000 (3) 10% Increase (1,261) Mortality Table AT 2000 (3) 10% Decrease 1,375 Drug Assistance 12/31/2017 Impact on R$ Thousand Assumption Description Data Considered in the Actuarial Effect on Present Value of Actuarial Impact Assessment Report Liabilities Discount Rate 9.84% 0.5% Increase (7,304) Discount Rate 9.84% 0.5% Decrease 8,163 Mortality Table AT 2000 (3) 10% Increase (3,822) Mortality Table AT 2000 (3) 10% Decrease 4,317 Retirement Award 12/31/2017 Impact on R$ Thousand Assumption Description Data Considered in the Actuarial Effect on Present Value of Actuarial Impact Assessment Report Liabilities Discount Rate 9.84% 0.5% Increase (6,886) Discount Rate 9.84% 0.5% Decrease 7,495 Mortality Table AT (2) 10% Increase (513) Mortality Table AT (2) 10% Decrease 515 (1) AT Basic segregated by gender (2) AT Basic decreased by 10% (3) AT Basic 110 Financial Statements September 2018

111 NOTE 27 - CORPORATE RISKS AND CAPITAL MANAGEMENT The joint management of Capital and credit, market, Interest Risk Rate in The Banking Book (IRRBB, the variation of interest rates for instruments classified in the banking portfolio), liquidity, operational and socioenvironmental risks is an essential and strategic tool for a financial institution. The constant improvement on processes of i) monitoring, control, evaluation, goal planning and capital requirements; and ii) identification, measurement, evaluation, monitoring, control and mitigation of risks contribute to good governance practices aligned to the strategic objectives of the Institution. Controlling corporate risk and capital management rely on all layers involved on Banrisul s administration and others companies of its Prudential Conglomerate. The integrated risk management structure for managing risks related to Banrisul Group is led by the Corporate Risk Management Department, responsible for capital management and credit, market, IRRBB, liquidity, operational and socio-environmental risks, with the support of the Control and Risk Executive Board. The information produced by that Department subsidizes the Risk Committee (as well as others Management Committees), the Board of Directors and the Executive Board in the decision-making process. The Control and Risk Executive Board is responsible for the Corporate Risk Management Department and the Board of Directors is responsible for information disclosed in regards to risk management. Banrisul seeks to align its management activities to the recommendations from the Basel Committee, adopting the best market practices to maximize profitability and to ensure the best possible combination of asset applications and required capital use. Credit Risk This corresponds to the possibility of incurring losses related to the nonperformance of a loan or obligation by the counterparty under the agreed terms, the devaluation, the reduction of remuneration and earnings expected for a financial instrument arising from the deterioration of the credit quality of the counterparty, the intervening party or the mitigating instrument; restructuring of financial instruments; or recovery costs of troublesome assets. The credit risk assessment structure is based on the statistical methodologies of Application and Behavior Score and/or the principle of joint technical decision. Banrisul defines different credit limits corresponding to the decision levels, from the widespread branch network (with different categories) to the credit and risk committees at the Head Office and the Board of Directors. This process aims at expediting the concession of credit limits based on technically predefined customers, which establish Banrisul s risk exposure for each customer, in conformity with the risk/return ratio. Risk assessments are increased and strengthened through the continuous and growing use of statistical models to assess customers risks, the improvements in customers segmentation, the standardization of credit and business policies along with the optimization of the registry information controls by using models of certification. The use and improvement of Application and Behavior Score systems have permitted that pre-approved credit limits to individuals be established in accordance with their risk ratings, as set by the statistical models that are more appealing for dealing with mass credit. For the corporate customers, Banrisul uses technical studies conducted by a specialized risk assessment department, which evaluate companies from financial, management, market and production standpoints, with periodic reviews that also take into account current and future economic environments. The management of the Credit Risk exposure is based on a selective, conservative approach, pursuant to the strategies set by Banrisul s management and the Board of Directors. 111

112 (a) Credit Risk Assessment Lending Operations - Banrisul assesses the probability of default of each counterparty individually by using credit rating tools designed for different categories of counterparties. Such proprietary tools, which combine statistical analyses and the opinion of the staff of the credit area, are validated, when appropriate, by comparing external available data. The rating tools are reviewed and updated when necessary. Periodically, Management validates the rating performance and its capacity to forecast default events. Default exposure is based on the total amounts that may be owed to Banrisul at the time of default; in the case of a loan, for example, it corresponds to the nominal value. (b) Risk Limit Control and Risk Mitigation Policy Among the procedures in use to manage, limit and control credit risk concentration, the main highlights are herein presented: (i) Management controls assumed risk levels by setting limits to the extent of acceptable risk in relation to a specific borrower, or groups of borrowers and industry segments. These risks and the related profile of each customer are continuously monitored and subject to annual or more frequent reviews when necessary. The limits on the level of credit risk by product and industry sector are approved by the Executive Board and by the Board of Directors, if applicable; (ii) In the case of a counterparty, the exposure to any borrower, including financial agents, is additionally restricted by sublimit that covers adventitious exposures, whether recorded or not, in the financial statements. The actual exposures are monitored on a monthly basis in accordance with the established limits; and (iii) The credit risk exposure is also managed through the regular analysis of actual or potential borrowers, with respect to payments of principal and interest and change in the registration status and their limits when appropriate. (c) Credit-Related Commitments Credit commitments, unconditionally and unilaterally non-cancellable by the Institution, represent unused portions of established limits by the counterparty, normally attributed to working capital, overdraft accounts and credit cards, among others. The amount of the contracts represents the maximum credit risk in these transactions, if the counterparty effectively uses the available funds. However, exposure to losses resulting from such contracts is less than the total funds to be released, since part of them expires without being fully used, either by the customer s or Banrisul s decision, which adopts criteria for the provision of said resources as required by certain contractual clauses. (d) Releasable Credits Releasable credits are future disbursements related to credit transactions, whether or not subject to the fulfillment of pre-specified conditions by the debtor. The exposure amount of releasable credits corresponds to the sum of the installments of loans to be released up to 360 days. Market Risk The Bank is exposed to market risks arising from the possibility of loss due to the fluctuation in the market values of instruments held by the institution. This definition includes the risk of changes in interest rates and stock prices for instruments classified in the trading portfolio and the risk of exchange variation and commodity prices for instruments classified in the trading or banking portfolio. 112 Financial Statements September 2018

113 The Bank is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the U.S. dollar. Foreign exchange risk arises from the operation of foreign funding described in Note 15. To manage its foreign exchange risk, Banrisul uses derivative contracts as an instrument of protection (hedge market risk), as described in Note 03 (e). The management of market risk in Banrisul is held by the Corporate Risk Management Unit, responsible for executing and annually updating risk policies, managing strategies of Banrisul's market risk, establishing operational limits to identify, monitor, assess and manage exposure to risks of trading and non-trading portfolios. The management of market risk in Banrisul is segregated among operations classified in the trading portfolio; in others words, operations in financial instruments, including derivatives held for trading or intended for the hedging of other elements in the trading portfolio, and which are not subject to the limitation of their negotiability, and operations classified under non-tradeable portfolio or banking portfolio, that includes all operations of the institution not classified in the trading portfolio, as the loan portfolio, portfolio of securities held to maturity, time deposits, savings deposits and other transactions held up to maturity. Banrisul is in the process of developing the new measurement metric for interest rate risk to be used in the banking loan portfolio, known as the IRRBB, which is defined as the current or prospective risk of impacts on capital and in the results of the financial institution of adverse movements of interest rates, for all instruments classified in such portfolio (Central Bank of Brazil Circular No. 3876/2018, which will become effective as of January 01, 2019). In measuring the market risk of the trading portfolio, the Value at Risk (VaR) methodology is used for calculating the exposure of operations with a risk factor for pre-determined interest rates. VaR is a measure of the maximum expected loss in monetary value under normal market conditions in a given time horizon of ten days, with a probability level of 99%, used to measure the exposures subject to market risk. For the calculation of exposure in other indexes, the Maturity Ladder approach is used. The calculation of the risk of operations of the banking portfolio is held by the Institution's own approach and the methodology used is VaR. The Institution also conducts quarterly sensitivity analysis based on specific scenarios for each risk factor. The goal is to measure the impact of market fluctuations on the portfolio of the institution and its ability to recover from a potential worsening of crisis. Sensitivity Analysis of Trading Portfolio - to enhance risk management and be in compliance with corporate governance practices and CVM Rule No. 475/08, Banrisul conducted a sensitivity analysis of its trading portfolios, without considering derivatives. Stress tests are carried out for upward or downward variations on the following scenarios: 1% (Scenario 1), 25% (Scenario 2) and 50% (Scenario 3). Trading Portfolio - to set the scenarios that compose the table of sensitivity analysis, Banrisul considered the situations set forth by CVM Rule No. 475/08, as follows: Scenario 1: Probable situation. Assumptions: a deterioration of 1% in market risk variables, taking into account prevailing conditions at September 30, Scenario 2: Possible situation. Assumptions: an elevation of 25% in market risk variables, taking into account prevailing conditions at September 30, Scenario 3: Remote situation. Assumptions: an elevation of 50% in market risk variables, taking into account prevailing conditions at September 30, The following table shows the highest and the lowest expected loss considering scenarios 1, 2 and 3 and their upward or downward variations. For Foreign Exchange Risk, the rate of R$4.0039/USD1.00 as of September 30, 2018 (PTAX - Central Bank of Brazil) was used. 113

114 Sensitivity analyses identified below do not consider the responsiveness of the risk and treasury areas because, once loss is observed on these positions, risk mitigating measures are rapidly deployed, minimizing the possibility of significant losses. Sensitivity Test: Trading Portfolio Scenario Risk Factors Interest Rate Exchange Rate Equity 1 1% , % ,338 5,869 30, % ,677 11,738 60,891 Definitions: Interest Rate - exposures subject to variations in interest rates, fixed-coupon interest rates and inflation indexes. Exchange Rate - exposures subject to currency fluctuations. Equity - exposures subject to the variation of stock prices. Total Analyzing the results, the Risk Factor "Exchange Rate" can be identified as the one with the largest expected loss, which represents approximately 79.9% of the entire expected loss for the three scenarios. The expected loss in Scenario 2 was 25 times greater than in Scenario 1. From Scenario 2 to Scenario 3, the change is 100%. The highest expected loss on these Sensitivity Test Scenarios, occurs in Scenario 3 (65.7%), totaling R$60,891. Sensitivity Analysis of Derivative financial instruments - Banrisul also conducted a sensitivity analysis of its derivatives positions (trading portfolio) and the international funding transactions carried out for USD million ( million U.S. Dollars) recorded in the Banking Portfolio (Note 15). These external funding transactions had an original value of USD775 million (775 million U.S. dollars); however, on September 30, 2015, Banrisul repurchased USD million ( million U.S. dollars), and on October 15, 2015, repurchased an additional USD2.85 million (2.85 million U.S. Dollars) therefore remaining the outstanding balance of USD million ( million U.S. dollars), upon which stress tests were conducted for upward and downward variations in Scenarios I, II and III. Stress tests were carried out on the value of foreign currency U.S. Dollar considering the rate of R$ on September 28, 2018 (1:00 p.m. SPOT price Central Bank of Brazil). Scenario I is the most probable one and considers the changes expected by the Bank in relation to the market reference curves (B3 S.A. Brasil, Bolsa, Balcão), used to mark to market such financial instruments. Scenarios II and III are defined in accordance with CVM Rule No. 475/08, which demands that high scenarios should consider upward variations of +25% and +50% and downward scenarios variations of -25% and -50%. Thus, Scenario I is defined by the increase of 1% in the U.S. Dollar coupon, the Scenario II is defined by the increase of 25% in the U.S. Dollar coupon, and the scenario III is defined by the increase of 50% in the U.S. Dollar coupon, according to the Bank's position, considering the conditions prevailing at September 30, The sensitivity analyses shown below were established using premises and assumptions regarding future events. The estimated scenarios show the impacts on the outcome for each scenario in a static position of the portfolio as of September 30, The table below shows the probability of impact on the cash flow in the three scenarios of derivatives exposures (or trading portfolio) and in the instrument being hedged (banking portfolio or held to maturity) on September 30, 2018 independently, since the Bank does not practice hedge accounting. Trading and Banking Portfolio Operation Portfolio Risk Scenario I Scenario II Scenario III Swap Trading Increase in U.S. Dollar Coupon (4,202) (99,921) (190,188) Line Item Being Hedged Debt 1 Banking Increase in US Dollar Coupon 4,202 99, ,191 Net Effect Financial Statements September 2018

115 U.S. Dollar coupon: all the products with price variations tied to changes in the U.S. Dollar and interest rates in U.S. Dollars. Additionally, the results do not necessarily translate into accounting results, because the analysis has the sole objective of disclosing the risk exposure and the respective protective actions considering the fair value of financial instruments, decoupled from any accounting practices adopted by the institution. Banrisul considers that the risk of having a debt in CDI by way of swaps would be the rise in the CDI rate and this would be offset by the increase in revenues from its investments linked to the CDI rate. Liquidity Risk The definition of Liquidity Risk is the possibility of incurring losses due to the lack of sufficient liquid funds to meet payment obligations in a defined timeframe, and also of being unable to negotiate at market prices certain positions due to their high amounts in relation to the volume usually transacted or by reason of any interruption of the market itself. Banrisul establishes operating limits for liquidity risk consistent with the Bank s business strategies for financial instruments and other exposures whose achievement of grandness parameters are regularly reviewed by committees and submitted to the Board in order to ensure its effectively operability by managers. The Corporate Risks Management Unit is in charge of Banrisul s Consolidated Liquidity Risk Management, being responsible for executing and updating annually the policy and strategies for managing liquidity risk of Banrisul. Liquidity management is centralized at the Treasury Department and is responsible to maintain a satisfactory level of cash to meet the financial needs in the short-, medium- and long-term, both in normal scenario and in a crisis scenario, taking the necessary corrective action, when necessary. Throughout the control process, mismatches arising from the use of short-term liabilities to ballast long-term assets are monitored, in order to avoid liquidity shortfalls and ensure that the Bank s reserves are sufficient to meet daily cyclical and non-cyclical cash needs, as well as the long-term needs, The Bank seeks to maintain a proper level of highly funding market assets, along with access to other liquidity sources, and seeks to ensure an appropriate mix of funding operations. Pursuant to its Liquidity Contingency, Banrisul aims to identify beforehand and minimize potential crises and their effects on business continuity, the parameters used for the identification of crisis events consist of a range of responsibilities and procedures to be followed to ensure the stability of the required level of liquidity. Periodically, reports are sent to Committees, Commissions, Executive Board and Board of Directors, containing information for management of liquidity risk, once a year or more frequently when needed, the Liquidity Risk Management Policy is presented to the Board of Directors, containing the guidelines for risk management, which includes budget, financial planning, appetite for risks and optimization of available resources. Operational Risk Operational risk is defined as the possibility of losses resulting from external events or failure, deficiency or inadequacy of internal processes, individuals or systems. The methodology of Operational Risk management requires the conduction of analysis for the identification, measurement, assessment, monitoring, reporting, controlling and reduction of operational risks to which Banrisul is exposed. Through key risk indicators and the Internal Operational Risk Data Base, it is possible to monitor the evolution of losses and exposure to risk and propose improvement actions. The results of the analysis and the records of the Internal Database of Operational Risk are reported to the Board of Executive Officers, to the Risk Committee and the Board of Directors. Socio-environmental Risk 115

116 Socio-environmental risk is defined as the possibility of losses arising from social and environmental damages and must be identified by financial institutions as a component of the various risk modalities to which they are exposed. Socio-environmental risk management covers financing, projects and operations, whose characteristics allow the previous identification of the allocation of resources, and does not prevent those that do not meet the definition above from being analyzed. As to the Institution activities, socio-environmental risk management covers the waste management process, the compliance with requirements required in contracting suppliers, and the monitoring of contracts with contractors during their term, aiming at mitigating socio-environmental risks, The results of the analyzes and the records of socio-environmental risk events on the Internal Operational Risk Data Base records are reported to the Board of Executive Officers and to the Board of Directors. Basel Ratio As set forth by the CMN Resolution No. 4192/13, the calculation of the Regulatory Capital must have as basis the financial statements for the Prudential Conglomerate, CMN Resolution No. 4193/13 set the minimum levels for Core Capital, Tier I Capital and Reference Equity (RE), besides introducing the concept of Additional Capital (AC). The following table summarizes the composition of Reference Equity, Risk Weighted Assets (RWA) and the Basel Index of the Prudential Conglomerate as of September 30, 2018: Conglomerate Prudential Reference Equity 6,190,425 6,320,563 Tier I 5,479,795 5,432,275 Core Capital 5,479,795 5,432,275 Equity 4,403,823 4,756,734 Capital, Earnings and Revaluation Reserve 2,779,115 1,994,636 Credit Income Accounts 3,806,587 3,611,429 Deduction from Core Capital 3,737,863 3,631,898 Asset and Securities Valuation 128, ,397 Treasury and Other instruments Issued by the Bank 4,490 4,490 Debit Income Accounts 3,604,665 3,474,011 Prudential Adjustments 1,771,867 1,298,626 Except Non-Consolidated Participations and Tax Credit 1,299,299 1,089,261 Tax credits from Temporary Difference and Senior Investments 472, ,365 Tier II 710, ,288 Tier II Eligible Instruments 710, ,288 RWA - Risk Weighted Assets 38,921,017 38,204,981 RWA Credit Risk (RWA CPAD) 28,628,369 28,648,851 RWA Market Risk (RWA MPAD) 728,775 1,221,310 Fixed Interest Rates in Real (RWA JUR1) 3,620 1,638 RWA Equity Risk (RWA ACS) 43,548 41,302 RWA Exchange Risk (RWA CAM) 681,607 1,178,370 RWA Operational Risk (RWA OPAD) 9,563,873 8,334,820 Banking Portfolio (RBAN) 540, ,915 Reference Equity Margin with Rban 1,562,855 2,016,125 Basel Ratio (Risk Factor/RRE) 15.91% 16.54% Tier I Ratio 14.08% 14.22% Core Capital Ratio 14.08% 14.22% Permanent Assets Ratio 5.41% 8.89% Leverage Ratio 6.97% 7.33% The Basel Ratio represents the ratio between Reference Equity and Risk Weighted Assets. Under current regulations, the Basel Ratio demonstrates the company's solvency. For 2018, the minimum required capital limits are 8.63% for Basel Ratio (Reference Equity), 6.00% for Tier I Ratio and 4.50% for the Core Capital Index, The additional required capital is 1.88%, totaling 10.50% for Basel Ratio, 7.88% for Tier I and 6.38% for Core Capital. The Reference Equity reached R$6,190,425 in September Compared to September 2017, the Reference Equity decreased R$130,138, impacted by the decrease of R$177,658 in the subordinates debt registered as Tier II, due to the Basel III implementation schedule, and by the increase of R$47,520 in Tier 1 Capital due to profit retention, deduction of prudential adjustments and reduction of capital. 116 Financial Statements September 2018

117 On September 30, 2018, the Basel Ratio of the Prudential Conglomerate was 15.91%, higher than the minimum required by the Brazilian regulator, Tier 1 ratio was 14.08% and Core Capital, 14.08%; Leverage ratio in September 2018 was 6.97%. Banrisul manages and monitors the requirements and capital margins in order to meet the minimum requirements of the CMN. Thus, the Banrisul Group Prudential Conglomerate has fulfilled all the minimum requirements to which it is subject. NOTE 28 - TRANSACTIONS WITH RELATED PARTIES (a) Transactions among related parties are disclosed in compliance with CVM Resolution No. 642/10 and CMN Resolution No. 3750/09. Account balances referring to transactions among consolidated Banrisul companies are eliminated in the consolidated financial statements and take into consideration the absence of risk, As to the transactions carried out with the State Government and its fully or partially controlled entities, Banrisul has opted for the partial exemption instructed by Resolution No. 3750/09 of CMN, In this case, only the most significant transactions are disclosed, With related parties, Banrisul operates banking transactions such as current account deposits (not remunerated), remunerated deposits, open market funding, loans (except for key management personnel) and the provision of services, These operations are carried out at amounts, terms and average rates of usual market practices during the period, and under reciprocal conditions, The unconsolidated related parties are as follows: (i) Rio Grande do Sul State - in June 17, 2016, Banrisul signed with the State Government an agreement for the rights to service the payroll of state employees, Such agreement aims at centralizing at Banrisul the processing of 100% (one hundred percent) of the payroll of the State, which will be processed and deposited at checking accounts owned by the state employees, civil and military alike, or their beneficiaries, for the deposit of their salaries as well as credit of benefits and earnings payable to retirees and pensioners of the State s own pension plan, while preserving any portability rights to the state s employees. The contract is valid for a period of ten years, and the agreed price of R$1,250,638 was paid on June 20, The agreement also establishes that Banrisul will not be entitled to receiving any payment from the State, such as banking fees, for example, in relation to banking services and similar provided. In April 2018, the State of Rio Grande do Sul sold 28,974,500 shares issued by Banrisul by means of auctions procedures carried out at B3 S.A. - Brasil Bolsa Balcão, of which 26,000,000 preferred shares B and 2,974,500 common shares, equivalent to a 7.44% shareholding reduction in relation to Banrisul s total share capital. No changes in the control of Banrisul by the State of Rio Grande do Sul have occured. The transaction was carried out by Banrisul S/A Corretora de Valores Mobiliários e Câmbio, with BTG Corretora de Títulos e Valores Mobiliários S/A as co-broker. For the provision of these services, Banrisul Corretora earned a brokerage fee of 0.1% (zero point one percent) of the traded securities; (ii) Companhia Estadual de Energia Elétrica (CEEE), Companhia Riograndense de Saneamento (CORSAN), Companhia de Gás do Rio Grande do Sul (SULGÁS), Centrais de Abastecimento do Rio Grande do Sul S,A, (CEASA), Companhia Estadual de Silos e Armazéns (CESA), Companhia Rio-grandense de Artes Gráficas (CORAG), Companhia Rio-grandense de Mineração (CRM), Companhia de Processamentos de Dados do Estado do Rio Grande do sul (PROCERGS) and BADESUL Desenvolvimento S,A, Agência de Fomento/RS companies controlled by the Government of the State of Rio Grande do Sul; (iii) Affiliated Bem Promotora de Vendas e Serviços S.A., engaged in payroll loan origination, and Banrisul Icatu Participações S,A, (BIPAR), holding company owning 100% of Rio Grande Seguros e Previdência S,A,, a life and pension insurance company; (iv) Fundação Banrisul de Seguridade Social (FBSS), closed supplementary pension entity that manages the pension plans sponsored by Banrisul and/or its subsidiaries; (v) Caixa de Assistência dos Empregados do Banco do Estado do Rio Grande do Sul (Cabergs) is a non profitable assistance association, regulated by private law; and 117

118 (vi) Investment Funds and Managed Portfolios, managed by Banrisul. Transactions with parent company are as follows: Assets (Liabilities) /01 to 09/30/2018 Parent company Income (Expense) 01/01 to 09/30/2017 State of Rio Grande do Sul Government (174,846) (220,898) (13,645) (31,986) Other Credits (1) 17,532 15, Demand Deposits (159,999) (143,507) - - Money Market Funding (2) (7,215) (83,440) (12,540) (30,909) Other Payables (3) (25,164) (9,298) (1,105) (1,077) Subsidiaries and Investment Fund (1,064,177) (844,127) 64,311 45,201 Other Credits 30,835 26,847 86,053 73,085 Demand Deposits (5,116) (7,082) - - Time Deposits (32,484) (25,161) (1,402) (1,440) Money Market Funding (2) (18,733) (19,357) (900) (2,633) Funds from Acceptance and Issuance of Securities (270,326) (258,536) (13,415) (20,926) Other Payables (768,353) (560,838) (6,025) (2,885) Banrisul Foundation (69,591) (68,228) (15,300) (15,012) Other Payables (69,591) (68,228) (15,300) (15,012) Total (1,308,614) (1,133,253) 35,366 (1,797) (1) The amount of R$17,532 refers to assigned employees. (2) These funds bear interest at 100% of the Selic rate. (3) Of the amount R$25,164, R$9,003 refers to attachés employees. Assets (Liabilities) /01 to 09/30/2018 Consolidated Income (Expense) 01/01 to 09/30/2017 State of Rio Grande do Sul Government (163,749) (201,476) (12,999) (30,210) Cash 10,713 17, ,733 Other Credits (1) 17,916 17, Demand Deposits (159,999) (143,507) - - Money Market Funding (2) (7,215) (83,440) (12,540) (30,909) Other Payables (3) (25,164) (9,298) (1,105) (1,077) Banrisul Foundation (69,591) (68,228) (15,300) (15,012) Other Payables (69,591) (68,228) (15,300) (15,012) Total (233,340) (269,704) (28,299) (45,222) (1) Of the amount R$17,916, R$17,532 refers to assigned employees. (2) These funds bear interest at 100% of the Selic rate. (3) Of the amount R$25,164, R$9,003 refers to attachés employees. (b) Compensation of Key Management Personnel Annually, the General Shareholders Meeting determines the total annual compensation of the members of Management, comprising the Executive Board, the Board of Directors, the Supervisory Board, Audit Committee, Compensation Committee and Risk Committee, as stated in the Bank s bylaws. Short Term Benefits 01/01 to 09/30/ /01 to 09/30/2017 Salaries 8,683 6,771 Bonuses 6,724 5,146 Social Security 1,959 1,625 Post-Employment Benefits Supplementary Pension Plans (1) Total 9,154 7,228 (1) Banrisul pays for complementary pension plans to managers who belong to the staff. Banrisul does not offer its key management personnel any long-term, termination and stock-based compensation benefits. Banrisul has a D&O liability insurance policy for its officers and members of the Boards, and paid insurance premium in the amount of R$900. (c) Additional information According to existing legislation, financial institutions may not grant loans or advances to: 118 Financial Statements September 2018

119 Officers, directors or members of the advisory, supervisory or similar boards, as well as their spouses and relatives up to the 2 nd degree of kinship; Individuals or legal entities holding equity interest equal to or more than 10%; and Legal entities having more than 10% of capital held by the financial institution itself, any of its directors or officers as well as their spouses and relatives up to the 2 nd degree of kinship. Thus, Banrisul does not grant any loans or advances to any subsidiary, members of the Board or the Executive Board and their relatives. (d) Shareholding As of September 30, 2018, members of the Executive Board, the Board of Directors, the Supervisory Board, the Audit Committee, the Compensation Committee and the Risk Committee jointly hold 2,688 Banrisul s shares, as presented in Note 23(a). NOTE 29 - IMPACT FROM ADOPTION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) During the IFRS convergence process, some standards and their interpretations were issued by the Brazilian FASB (CPC), which will be applicable to financial institutions only when approved by the National Monetary Committee (CMN). Currently, financial institutions and other institutions regulated by the Central Bank must adopt the following pronouncements: Basic Concept Statement (R1); Impairment of Assets (CPC 01 (R1)); Statement of Cash Flows (CPC 03 (R2)); Related Party Disclosures (CPC 05 (R1)); Share-Based Payment (CPC 10 (R1)); Accounting Policies, Changes in Accounting Estimate and Errors (CPC 23); Subsequent Events (CPC 24); Provisions, Contingent Liabilities and Contingent Assets (CPC 25) and Employee Benefits (CPC 33 (R1)). CMN Resolution No. 3786/09 and Official Letters No. 3472/09 and No. 3516/10, issued by the Central Bank of Brazil (Bacen), established that financial institutions and other institutions authorized to operate by Bacen, either incorporated as a public company or required to establish an Audit Committee, must, as of December 31, 2010, annually prepare and disclose in a period not exceeding 90 days after the December 31 reporting date, their consolidated financial statements prepared in accordance with the international financial reporting standards (IFRS), and following international pronouncements issued by the International Accounting Standards Board (IASB). The financial statements for the year ended December 31, 2017, prepared in accordance with International Financial Reporting Standards (IFRS), were disclosed by Banrisul on March 27, 2018 on its website as well as on the website of the Brazilian Securities Exchange Commission (Comissão de Valores Mobiliários - CVM 119

120 NOTE 30 - SUBSEQUENT EVENT Incentivized Plan for the Voluntary Termination of Employment upon Retirement On November 6, 2018, it was forwarded for evaluation and analysis by the Federation of Workers in Financial Institutions in Rio Grande do Sul ("FETRAFI - RS"), a proposal of collective labor agreement with the terms and conditions for the offering of an Incentivized Plan for the Voluntary Termination of Employment upon Retirement ("Plan") to employees. To join the Plan, employees must already be retired or fulfill the conditions set forth by the rules of the National Institute of Social Security, and comply with the existing rules for obtaining postemployment benefits from Banrisul Social Security Foundation. The Plan will be limited to a maximum of 600 (six hundred) employees, served according to their service time at the Bank.If approved and signed the agreement, further required steps towards its implementation will be adopted by Banrisul and duly communicated to the market, shareholders and other interested parties. 120 Financial Statements September 2018

121 REPORT 121

122 INDEPENDENT AUDITORS REPORT ON THE FINANCIAL STATMENTS To The Board of Directors and Shareholders Banco do Estado do Rio Grande do Sul S.A. Porto Alegre - RS Introduction We have reviewed the accompanying individual and consolidated statement of financial position of Banco do Estado do Rio Grande do Sul. ( Banrisul ) as at September 30, 2018 and the related statements of income, changes in equity and cash flows for the nine-month period then ended, as well as the summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation of this interim individual and consolidated financial information in accordance with accounting practices adopted in Brazil, applicable to financial institutions authorized to operate by the Central Bank of Brazil. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and International Standards on Review of Interim Financial Information (NBC TR Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, we do not express an audit opinion. Conclusion Based on our review, we are not aware of any facts that would lead us to believe that the accompanying interim individual and consolidated financial information were not prepared, in all material aspects, in accordance with accounting practices adopted in Brazil applicable to financial institutions authorized to operate by the Central Bank of Brazil. Other matters Interim statement of value added The statement of value added for the nine-month period ended September 30, 2018, prepared under the responsibility of the Company's management, was submitted to the review procedures followed together with the review of the Company's interim financial statements. In order to form our conclusion, we evaluated whether these statements are reconciled to the Company's interim financial statements and accounting records, as applicable, and whether their form and content are in accordance with the criteria set on Technical Pronouncement CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added are not prepared, in all material respects, in accordance with the individual interim financial statements taken as a whole. Porto Alegre, November 7, KPMG Auditores Independentes CRC SP /F-7 Fernando Antonio Rodrigues Alfredo Contador CRC 1SP252419/O Financial Statements September 2018

123 GOVERNO DO ESTADO DO RIO GRANDE DO SUL Secretaria da Fazenda Banco do Estado do Rio Grande do Sul Executive Board LUIZ GONZAGA VERAS MOTA Chief Executive Officer IRANY DE OLIVEIRA SANT ANNA JUNIOR Vice-President JORGE FERNANDO KRUG SANTOS JORGE LUIZ OLIVEIRA LOUREIRO JÚLIO FRANCISCO GREGORY BRUNET OBERDAN CELESTINO DE ALMEIDA OSMAR PAULO VIECELI RICARDO RICHINITI HINGEL SUZANA FLORES COGO Officers Board of Directors LUIZ GONZAGA VERAS MOTA Vice Chairman Chairman in Office ADEMAR SCHARDONG ADRIANO CIVES SEABRA DILIO SERGIO PENEDO IRANY DE OLIVEIRA SANT ANNA JUNIOR JOÃO VERNER JUENEMANN MARCO ANTÔNIO MAYER FOLETTO Board Members WERNER KÖHLER Accountant CRCRS 38,

124 124 Financial Statements September 2018