Banco do Estado do Rio Grande do Sul S A : Financial Statements 4Q22 IFRS

Consolidated Financial Statements under IFRS

December 2022

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Management Report

We present the Management Report, parent and consolidated financial statements of Banco do Estado do Rio Grande do Sul S.A., for the fiscal year 2022, prepared according to the International Financial Reporting Standards - IFRS, issued by the International Accounting Standards Board - IASB, and in compliance with the requirements and guidelines of the National Monetary Council - CMN

Economic Scenario

The year 2022 was particularly demanding for world economies, vis-à-vis a post-pandemic environment, wherein most of the monetary authorities around the globe, with stringent policies, had to manage a scenario of resuming activities, amid a rampant inflation, and the outbreak of the Russia and Ukraine conflict.

During 2022, major countries' economic growth expectations gradually slowed down, to the extent that inflation, employment, income, and activity indicators have been released. In Brazil, the domestic scenario is relatively positive, although the last publication of GDP in 3Q22 revealed certain idleness in the pace of economic activity.

The Extended Consumer Price Index (IPCA) reached 5.79% in 2022, above the upper end of the 1.50 p.p. tolerance interval nearly the annual target of 3.50%. If on the one hand, high commodities prices, the bottlenecks in global production chains, and the upswing of demand for services and employment drove inflation indicators, leading the Central Bank of Brazil to resolutely raise benchmark interest rates (Selic) by 13.75% p.a. by mid-August; on the other hand, lower taxes on fuels, electricity, and telecommunications, also the change to electricity tariff green flag post- water shortage inhibited an even worse inflation scenario, driving the Brazilian monetary authority to hold Selic at this same level by the end of 2022.

Amid this scenario, Brazil's credit market in Brazil by 2022 surged 16.3% with delinquency rates in an ascending trend, 2.99%, while in the state of Rio Grande do Sul, these rates soared 17.5% with delinquency rate of 2.09%. Highlighting the 18.6% increase in the individual portfolio and agricultural credit, wherein the Rio Grande do Sul state accounted for 15% of Brazil's total in contracted amounts.

The Rio Grande do Sul's economy advanced 1.3% in 3Q2022 versus the previous quarter, a performance 0.4% higher than the Brazilian economy. Compared to 3Q21, Rio Grande Sul's economy slowed down by 2.8%, lower than Brazil's growth of 3.6%. The services sector and industrial activity drove the economic upturn of Rio Grande do Sul, which struggled with drought in agribusiness.

BanriDay 2022- Nossa Conexão Transforma (Our Connection

Tansforms)

Banrisul is committed to build an increasingly trendiest, efficient and sustainable bank which firmly promotes the economic and social development of people and communities. Our rebranding is a two-way road that goes beyond changing our logotype and visual identity: while Banrisul transforms the reality with new products and services for society, customers transform the Bank with new demands, projects and expectations.

Banrisul Investor Day took place on December 12.

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Rebranding

On May 23, 2022, Banrisul began a comprehensive rebranding process, re-positioning it to the new concept Nossa conexão transforma (Our connection transforms) connected with a more inclusive, human, and connected Bank. This change was extended to Banrisul's strategic areas - innovation, people, sustainability, and agribusiness, and fine-tuned with these deliveries, heightening the connection with customers and partners. All service channels upgraded their layouts in 2022, starting from ATMs, Banrisul App, Home & Office Banking, and our website www.banrisul.com.br.

Banrisul's rebranding maintained the blue color that recollects its security, strength, and credibility attributes, respecting its history and essence, and added two new colors that represent innovation and sustainability, our key objectives to a more collective, human, and contemporary financial institution.

Banrisul's smart virtual assistance, bah, still has been trained, but soon will be available, quickly clarifying doubts concerning the Bank's digital channels, and with optimized resources. This advancement will enable a greater customer's journey experience when using these channels, translated into convenience and security.

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Company and business strategy

Banrisul's corporate strategy is anchored in five pillars:

the mission of which is to become the financial agent that fosters Rio Grande do Sul's economic and social development, keeping a focus on sustaining the vision of a state-owned, profitable, robust, and competitive bank integrated with communities, and providing excellent services.

Banrisul has been achieving efficiency gains by expediting and streamlining processes that enable efficient use of resources. In 2022, Banrisul adopted the best practices by enhancing risk management, its IT infrastructure, and architecture, including greater customer digitalization. Our first smart virtual assistant, bah, was implemented in 2022, which has been trained. The On-Site Service Network remains focused on serving various segments, keeping pace with changes and the financial market's technological advances.

Concerning Banrisul's transformational journey, BanriTech's second edition took place in 2022, its startup acceleration program, which totaled 30 startups accelerated and connected to its ecosystem, also inaugurated an advanced technology, innovation, and sustainability center, the Data Center Margarete Fenner. Banrisul sponsored the innovation event, South Summit Brazil, and took part in teams and workgroups of Febraban (Brazilian Federation of Banks) and Central Bank of Brazil, among them, the Open Finance groups, also the construction of CBDC - o Real Digital (the Digital Real). Another highlight in 2022 was Banrisul's 1st Week of Innovation with a focus on Artificial Intelligence, User Journey, Equal Gender, Diversity, Innovation, and Sustainability in the financial market, besides acting as a co-founder of the innovation hub, Instituto Caldeira and sponsor of NAVI, an artificial intelligence, and emerging technologies hub.

With a customer-centric focus, the marketplace cashback, points, and payments with Banricompras and the online store Banrishopping were the digital channels highlights. At the branches network, the major service improvement was the installation of the Customer Management Terminal - TGA. Also, various customer services underwent a voice and language adjustment, thus, promoting a friendlier, lighter, direct, informative, and global communication.

Our people strength pillar is the path to achieving organizational success. In this regard, Banrisul builds its agile culture, and transforms and stimulates employee engagement. In 2022, the performance evaluation system and the feedback policy were upgraded; also a new variable compensation system was implemented coupled with strategy- linked defined objectives. Other highlights included the conclusion of the public exam for IT areas and another one for overall staff. Banrisul also created a new Career, Position, and Salary Plan, and a new Succession Management methodology. The setup of a Theme Committee and three Affinity Groups broadened the scope of Diversity, Equal Gender & Inclusion, and mobilized employees from various areas.

Banrisul remains loyal to its retail essence that foments the development of micro, small, and medium-sized business activities, especially in the state of Rio Grande do Sul, investing in sustainable development-related products. In 2022, we maintained payroll agreements with various state government bodies, and the first Affinity branch was inaugurated, with a focus on phygital services (online functionalities built into physical services), targeting high-income customers. The agribusiness, a relevant sector in the state of Rio Grande do Sul, in 2022, gained five new exclusive sites to expand services and bolster Banrisul as a business partner and facilitator.

Business innovation and sustainability guide Banrisul's actions that direct lines of credit targeting sustainable practices financing, such as the implementation of photovoltaic energy systems, biodigesters, and low-carbon agriculture, besides the Solar and Wind Energy Sustainability CDC which finances the renewable energy installation. In 2022, The 365 Operation relied on partnerships with Embrapa (Brazilian Agricultural and Research Corporation) and CCGL intending to encourage rural producers to adopt technologies and good practices in the production chain. Banrisul also neutralized direct carbon emissions, and energy consumption referring to 2021 and was recognized with a Gold seal by the Brazilian GHG Protocol Program.

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