Banco Regional S.A.E.C.A.

CREDIT OPINION 1 May 217 Banco Regional S.A.E.C.A. Semiannual Update Update Summary Rating Rationale RATINGS Banco Regional S.A.E.C.A. Moody's assigns a stand-alone credit assessment (BCA) of to Banco Regional S.A.E.C.A. (Regional), the third largest bank in Paraguay by market share of deposits. The BCA reflects Regional's below system delinquency levels, the high concentration of its loan book to the agriculture sector as well as its adequate capital and profitability. The BCA also incorporates the bank's strong reliance on deposit based funding, in large part due to its broad geographic footprint, and adequate levels of liquid assets. Regional's long-term global local currency deposit rating of derives from the bank's BCA of and incorporates a one notch uplift as a result of Moody's assessment of a high probability of government support to the bank in an event of stress. Domicile Paraguay Long Term Debt Type Senior Unsecured - Fgn Curr Outlook Stable Long Term Deposit Ba2 Exhibit 1 Type LT Bank Deposits - Fgn Curr Banco Regional - Key Financial Ratios Outlook Not Assigned Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Banco Regional (BCA: ) Median -rated banks 16% 35% 14% 3% 12% 25% 1% 2% 8% 15% 6% 1% 4% 2% Contacts Asset Risk: Problem Loans/ Gross Loans Farooq Khan 55-11-343-687 Analyst farooq.khan@moodys.com Maria Valeria +54.11.5129.2611 Azconegui VP-Senior Analyst mariavaleria.azconegui@moodys.com Rodrigo Marimon 54-11-5129-2651 Bernales Associate Analyst rodrigo.bernales@moodys.com 2.% 13.8% % 1.6% 24.7% 19.4% 5% % Capital: Profitability: Net Funding Structure: Liquid Resources: Liquid Tangible Common Income/ Tangible Market Funds/ Banking Assets/Tangible Equity/Risk-Weighted Assets Tangible Banking Assets Banking Assets Assets Solvency Factors (LHS) Liquidity Factors (RHS) Source: Moody's Financial Metrics Credit Strengths Profitability is supported by the bank's well-established position in the market, with the second largest participation in loans and third largest in deposits in the Paraguayan banking system Stable core funding sources and high liquidity profile as a result of broad branch network Adequate capitalization as a result of good earnings generation

Credit Challenges High concentration of lending operations with borrowers in the agriculture segment increases asset risk volatility Potential for increase in provisions for loan losses that would pressure profitability Rating Outlook The outlook on all ratings is stable. The stable outlook reflects our expectation that Regional's standalone credit profile will remain resilient to a the deterioration in asset quality in the Paraguayan banking system over the next 12 to 18 months. Factors that Could Lead to an Upgrade Regional's standalone BCA could face positive pressure if the bank reports steady improvement of its financial metrics, particularly profitability and asset risk, while being able to achieve higher earning diversification and reducing sector concentration in its loan portfolio. Currently, the bank's BCA is one notch below the government bond rating. Factors that Could Lead to a Downgrade Negative pressure on Regional's BCA could result from persistent deterioration in asset quality, which could stem from problem loans from borrowers in the agricultural segment. The bank's BCA could also be pushed down due to a potential decline in profitability associated with higher provisions. Additionally, a potential downgrade of Paraguay's deposit ceilings could move its deposit ratings down. Key Indicators Exhibit 2 Banco Regional S.A.E.C.A. (Unconsolidated Financials) [1] Total Assets (PYG billion) Total Assets (USD million) Tangible Common Equity (PYG billion) Tangible Common Equity (USD million) Problem Loans / Gross Loans (%) Tangible Common Equity / Risk Weighted Assets (%) Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) Net Interest Margin (%) PPI / Average RWA (%) Net Income / Tangible Assets (%) Cost / Income Ratio (%) Market Funds / Tangible Banking Assets (%) Liquid Banking Assets / Tangible Banking Assets (%) Gross Loans / Due to Customers (%) 12-162 12-152 12-142 12-132 12-122 Avg. 15,33 2,67 1,169 23 2. 13.8 15.6 4.5 5.1 1.6 46.7 24.7 19.4 115.5 15,37 2,647 976 169 2.2 1.2 2.1 4.3 4.5 1.4 48.9 26.1 17.2 121.8 13,712 2,958 89 174 2. 9.5 19.9 3.6 2.9 1. 6.2 25.9 18.3 115.5 11,985 2,66 65 141 2.2 8.4 21.7 4.1 3.2 1.3 59.2 2.1 2.8 12.6 9,215 2,184 55 13 2.2 9.3 21.4 4.6 3.8 1.5 6.2 18.2 21.1 18.7 13.3 4.53 2.73 11.73 2.14 1.25 19.74 4.24 3.95 1.34 55.14 23.4 19.44 112.84 [1] All figures and ratios are adjusted using Moody's standard adjustments [2] Basel I; LOCAL GAAP [3] Compound Annual Growth Rate (%). Any interim period amounts presented are assumed to be fiscal year end amounts for calculation purposes [4] Simple average of periods presented [5] Simple average of Basel I periods presented Source: Moody's Financial Metrics Detailed Rating Considerations PROBLEM LOANS ARE BELOW THE SYSTEM'S WEAKER ASSET QUALITY The score for asset risk reflects bank's better than system problem loan ratios in spite of the high exposure of Regional's loan book to borrowers in the agriculture sector, which accounted for approximately 45% of total loans in 216. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. 2 1 May 217

In 216, Regional reported a problem loans of 2.%, slightly down from 2.2% reported in 215 and below the system's average of 2.8%. The bank's asset quality has benefited from the still adequate performance of its loan book with corporate clients and SMEs. In addition, Regional also benefits from the risk-management practices, risk discipline and expertise in the agribusiness sector of Rabobank (Aa2 stable, a2), which holds a 39% ownership stake in the bank. The bank also reported an adequate level of reserves to withstand potential losses derived from loan operations and as of December 216 they represented 2.5% of gross loans, although down from 2.8% a year earlier, yet still covering problem loans by 123%. Regional has the second largest market share in terms of loan and third largest in deposits in Paraguay. The bank has roughly 75% of its loan book, comprised mostly of working capital credit lines and foreign trade facilities, with corporate clients, while small and medium sized companies (SME) answer for 19% of the total. The bank's exposure to consumer finance is small, representing about 5% of total loans, mostly in the form of personal loans and credit cards. In 216, Regional's loan book fell by 7.6% versus growth of 17% in 215, a result of demand volatility from the agricultural sector in light of commodity price swings. The Paraguayan banking system's problem loans were affected by the drop in commodity prices in 214 and 215, which has also affected Regional's asset risk through corporate clients associated with the agriculture segment. The cyclical nature of the agribusiness sector is also a challenge for management of asset risk, as it adds volatility to the performance of the loan book. The score for asset risk also incorporates our view of potential volatility in asset quality. CAPITALIZATION REMAINS ADEQUATE In 216, Regional reported a regulatory total capital ratio of 17.3%, which provided an adequate cushion above the 12% minimum required by the central bank. The ratio improved from 13.8% in 215 mostly becaused of the reinvestment of earnings into the bank's operation. The bank's capital position was also more than adequate when measured with Moody's ratio of TCE to risk-weighted assets (RWA), at 13.8%. Despite recent increase in loan delinquency, banking activity is still supported by estimates of GDP growth of 3.7% in 217, which will likely allow loan growth in incoming quarters. In our view, Regional's capital position would allow the bank to expand its loan book, although additional conservatism must be employed when originating new operations. Regional also has Tier 2 subordinated capital which accounted for 35 basis points of capital as of December 216. EARNINGS SUPPORTED BY AMPLE NETWORK, BUT CONSTRAINED BY LACK OF DIVERSIFICATION Our ba3 score for profitability reflects Regional's good earnings power generation, which benefits from the bank's countrywide distribution network, with 38 branches, and strong franchise in the agribusiness sector. However, the bank's profitability has a high reliance on lending activities as a main source of revenues, a feature that is in line with other Paraguayan banks. This lack of diversification in earning sources is incorporated into our score for profitability. In 216, Regional reported net income of PYG259 billion, up from PYG23 billion, in the previous year, despite an 11% increase in provision expenses to PYG197 billion as the volume of problem loans went up in the same period. The improvement in Regional's bottom-line result was supported by a 6% rise in interest income from loans and a 5% growth in non-interest income, mainly driven by earnings from foreign exchange transactions. STABLE CORE FUNDING AND HIGH LIQUIDITY PROFILE Our ba1 funding score for Regional reflects the bank's moderate exposure to foreign currency deposits and incorporates its ample access to core deposits. In our view, the bank's steady funding sources stands as a positive rating driver. Total deposits represented approximately 74% of total funding in 216. Within total deposits, 47% are demand and 53% are time deposits, which is relatively in line with the financial system. The bank's deposits base is well diversified among corporate and retail clients. Similar to other banks in Paraguay, Regional's largest depositor is the Instituto de Previsión Social, Paraguay's social security system. 3 1 May 217

In recent years, Regional has improved its funding mix by adding credit lines from international financial institutions to its deposits in the domestic market. The bank also holds a sufficient level of liquid assets to counter its exposure to market funds and as of December 216 they represented 19.4% of liquid banking assets over tangible banking assets. REGIONAL'S RATING IS CONSTRAINED BY THE WEAK+ MACRO PROFILE ON PARAGUAY As a primarily domestic bank, the bank's operating environment is heavily influenced by Paraguay and its Macro Profile is thus aligned with that of Paraguay at Weak+. Paraguay's weak if improving institutional framework, heavy dependence on agriculture, and vulnerability to climate-related shocks continue to weigh on the country's macro profile. Political event risk is low despite the impeachment of the president in 212 and energy exports keep the current account in surplus, limiting vulnerability to international market conditions, an important consideration given the high level of dollarization of the banking system. Banks performance has remained stable despite the country's sometimes volatile economic growth. Notching Considerations In the absence of a bail-in resolution regime framework in Paraguay, the ratings of subordinated debts, bank hybrids, and contingent capital securities follow the Additional Notching Guidelines, as per the Rating Methodology: Banks. In these cases, the approach takes into account other features specific to debt classes, resulting in additional notching from the adjusted baseline credit assessment (BCA) of the issuer. Government Support Regional's long-term global local currency deposit rating of derives from the bank's BCA of and incorporates a one-notch uplift as a result of Moody's assessment of a high probability of government support to the bank in an event of stress. Counterparty Risk Assessment CR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails and are distinct from debt and deposit ratings in that they (1) consider only the risk of default rather than both the likelihood of default and the expected financial loss suffered in the event of default and (2) apply to counterparty obligations and contractual commitments rather than debt or deposit instruments. The CR assessment is an opinion of the counterparty risk related to a bank's covered bonds, contractual performance obligations (servicing), derivatives (e.g., swaps), letters of credit, guarantees and liquidity facilities. Regional's CR Assessment is positioned at (cr) and Not Prime (cr), which is one-notch above the bank's Adjusted BCA of. However, the CR Assessment is at the same level as Regional's deposit rating, which benefit from one-notch of government support. About Moody's Bank Scorecard Our Scorecard is designed to capture, express and explain in summary form our Rating Committee's judgment. When read in conjunction with our research, a fulsome presentation of our judgment is expressed. As a result, the output of our Scorecard may materially differ from that suggested by raw data alone (though it has been calibrated to avoid the frequent need for strong divergence). The Scorecard output and the individual scores are discussed in rating committees and may be adjusted up or down to reflect conditions specific to each rated entity. Rating Methodology and Scorecard Factors Exhibit 3 Banco Regional S.A.E.C.A. Macro Factors Weighted Macro Profile Factor Solvency Asset Risk Problem Loans / Gross Loans 4 1 May 217 Weak + 1% Historic Macro Ratio Adjusted Score 2.3% Credit Trend Assigned Score Key driver #1 Key driver #2 Sector concentration Expected trend

Capital TCE / RWA 11.8% b2 Expected trend Profitability Net Income / Tangible Assets 1.3% ba3 Earnings quality Combined Solvency Score Liquidity Funding Structure Market Funds / Tangible Banking Assets 26.1% b1 ba1 Market funding quality Liquid Resources Liquid Banking Assets / Tangible Banking Assets 17.2% b1 Access to committed facilities Combined Liquidity Score Financial Profile Business Diversification Opacity and Complexity Corporate Behavior Total Qualitative Adjustments Sovereign or Affiliate constraint: Scorecard Calculated BCA range Assigned BCA Affiliate Support notching Adjusted BCA Instrument class Counterparty Risk Assessment Deposits ba3 b1 Loss Given Failure notching 1 ba1 ba1-ba3 Additional Preliminary Rating Notching Assessment Term structure ba1 (cr) Government Support notching Local Currency Rating 1 (cr) Foreign Currency Rating -Ba2 Source: Moody's Financial Metrics Ratings Exhibit 4 Category BANCO REGIONAL S.A.E.C.A. Outlook Bank Deposits -Fgn Curr Bank Deposits -Dom Curr Baseline Credit Assessment Adjusted Baseline Credit Assessment Counterparty Risk Assessment Senior Unsecured Moody's Rating Stable Ba2/NP /NP (cr)/np(cr) Source: Moody's Investors Service 5 1 May 217

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