Banco Safra S.A

Consolidated Financial Statements | Banco Safra S.A. Consolidated Financial Statements for the year ended December 31, 2020 Banco Safra S.A. CNPJ 58.160.789/0001-28 Avenida Paulista, 2.100 - Bela Vista, São Paulo, SP José Manuel da Costa Gomes Accountant – CRC nº 1SP219892/O-0 Independent Auditors’ Report Deloitte Touche Tohmatsu Auditores Independente (A free translation of the original report in Portuguese as published in Brazil Consolidated Financial Statements | Banco Safra S.A. CONTENTS CONSOLIDATED FINANCIAL STATEMENTS MANAGEMENT REPORT STATEMENT OF FINANCIAL POSITION_____________________________________________________________2 STATEMENT OF INCOME AND COMPREHENSIVE INCOME FOR THE PERIOD ________________________________3 STATEMENT OF CHANGES IN EQUITY _____________________________________________________________4 STATEMENT OF CASH FLOWS ___________________________________________________________________5 NOTES TO THE FINANCIAL STATEMENTS 1. OPERATIONS _____________________________________________________________________________________ 6 2. PRESENTATION OF THE FINANCIAL STATEMENTS _______________________________________________________ 6 3. SIGNIFICANT ACCOUNTING POLICIES ________________________________________________________________ 8 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS ___________________________________________________ 5 5. CASH AND CASH EQUIVALENTS _____________________________________________________________________ 14 6. INTERBANK INVESTMENTS AND CENTRAL BANK COMPULSORY DEPOSITS _________________________________ 14 7. OPEN MARKET INVESTMENTS AND FUNDING - GOVERNMENT SECURITIES _________________________________ 15 8. FINANCIAL ASSETS _______________________________________________________________________________ 16 9. CREDIT PORTFOLIO _______________________________________________________________________________ 25 10. FINANCIAL LIABILITIES AND MANAGED ASSETS ______________________________________________________ 29 11. INSURANCE, REINSURANCE AND PRIVATE PENSION OPERATIONS _______________________________________ 34 12. OTHER FINANCIAL ASSETS AND LIABILITIES AND REVENUE, EXPENSES AND INCOME FROM OPERATIONS______ 39 13. OTHER ASSET, LIABILITY, AND INCOME ACCOUNTS ____________________________________________________ 41 14. CONTINGENT ASSETS AND LIABILITIES AND LEGAL OBLIGATIONS – TAX AND SOCIAL SECURITY _____________ 42 15. TAXES __________________________________________________________________________________________ 43 16. PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS _________________________________________________ 45 17. EQUITY _________________________________________________________________________________________ 46 18. RISK AND CAPITAL MANAGEMENT __________________________________________________________________ 47 19. RELATED-PARTY TRANSACTIONS ___________________________________________________________________ 59 20. OTHER INFORMATION_____________________________________________________________________________ 60 SUMMARY AUDIT COMMITTEE REPORT _______________________________________________________________61 INDEPENDENT AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS______________________________62 Management Report December 2020 We present the Management Report and the Financial Statements of Banco Safra S.A. and Subsidiaries (“Safra Consolidated”) for the periods ended December 31, 2020 and 2019. Management Report | December 2020 Tribute The legacy of Mr. Joseph Safra is part of J. Safra Group’s essence and DNA. It is renewing through his sons who, since their adolescences came with him to the Bank and learned about the day-to- day administration of its business, and the timeless principles that transformed this institution into a solid and secure company that is renowned and admired. It is present through the executives and board members, as well as in each one of more than 9,000 employees, who are inspired by, hold and are proud of the values that he ensured to transmit, and the great example that he provided through his actions. He was a great leader and very respected inside and outside the organization. The culture developed by Mr. Joseph will continue to be a trademark of business ethics, solidity and We note with sorrow the passing of Mr. Joseph security. Perpetuating these values is undoubtedly the best way to pay tribute and Safra, who was 82 years old, on December 10, 2020. remember him every day, in big and small things, of his teachings and how he led the many The selected facts that we included in this report companies comprising the J. Safra Group. represent some chapters of a life dedicated to his family, charity and the building and consolidation Throughout his life, Mr. Joseph loved arts and of Safra as one of the largest private banks in the was a great philanthropist. Always eager to country and which reputation transcends Brazil. support noble causes, people or organizations in need, his actions had major repercussion and “Seu José”, how he was called by those who were worldwide recognition, despite being discreet closest, was born in 1938 in Lebanon and and simple. immigrated to Brazil in the 1960s, to continue the businesses of his father, Mr. Jacob Safra, He helped and supported countless social, religious and cultural causes, such as the building building solid foundations for the Safra Group, popularly known in Brazil as Banco Safra. and improvement of Hospitals, Nurseries, Museums, and Temples of all religions. He felt a Mr. Joseph Safra became internationally strong sense of responsibility towards the recognized as one of the greatest bankers and society. He led with courage, wisdom and financial strategists of his generation, a man determination. He grew by cultivating altruism, ahead of his time, due to his strategic and commitment and excellence. entrepreneurial vision. His attention to details, Mr. Joseph leaves a legacy that will influence relentless pursuit of excellence, and care with customers and their assets are characteristics many generations and values that he ensured to that attest that he was a determined leader, transmit to his children and grandchildren. where the human aspect and consistent results lived in harmony. 2 Management Report | December 2020 Economic Scenario particularly because of Food prices. The cash transfer programs in many countries led to The Brazilian economy showed very distinct spending on basic products. Besides, the dynamics in both halves of 2020, in view of the currency rate devaluation, which reflected pandemic’s impact. The GDP for the 3Q20 weaker tax foundations and stronger global showed a robust growth of 7.7% in the aversion to risk, gave rise to a strong unseasoned quarterly change, promoted by a devaluation of the local currency. In view of the 7.6% increase in Consumption, affected by the above, the inflation for 2020 stood at 4.52%, massive cash transfers implemented by the whereas it stood at 4.31% for 2019, above the federal government as a way to offset the inflation target of 4.0%. impact of the contraction of activities in With a historic contraction of economic activity, previous quarters. As to Supply, the main and an inflation with great concentration in expansion was noted in the industrial sector Food, the Central Bank of Brazil (BCB) reduced (14.8%). In addition, the service sector recorded the country’s base rate (Selic) to 2%, the lowest an increase of 6.3%, giving the first clearer signs level in the history of inflation target system. In of recovery. For the 4Q20, we expect a 2.9% addition, the monetary institution used a new GDP growth, as the economy reopened, with monetary policy tool, the forward guidance, in flexibilization of travel restriction measures. which it committed to keep the Selic rate stable Therefore, the decisions related to control of for a long period, under certain conditions. In pandemic propagation played a fundamental summary, the monetary policy has largely role in the economic scenario in 2020. stimulated active growth in 2020. The uncertainties over the pandemic In relation to tax, the consolidated public sector developments also led to a significant showed a primary deficit of 8.9% of GDP in deterioration in the labor market. The November 2020, equivalent to R$ 654.6 billion. unemployment rate stood at 14.6% in October This result reflects the payments of R$ 293.1 2020, above the rate posted in the end of 2019 billion through Emergency Aid, the cash transfer (11.6%). It is worth noting that such increase program. So the gross debt-to-GDP shall reach was held back by the lower participation of 89% in the end of 2020, a strong increase as workers, who felt discouraged to seek compared to 75.8% of GDP in 2019. employment, due to the poor employment prospects, or even due to the travel restrictions. As to exchange rate, real reached R$ 5.20/US$ In this sense, the unemployment rate could at the end of 2020, a weaker level as compared have reached even higher levels. to the end of 2019, of R$ 4.03/US$. Two reasons caused this movement: (1) the global In the meantime, the credit market showed risk aversion increase, generating strong dollar 15.5% growth until December 2020, well above outflows, and (2) the BCB regulation of the the 6.5% recorded in 2019. The policies foreign exchange market, aimed at eliminating implemented by the federal government were the overhedge trades, which affected the the main reason for this expansion, as they futures curve of currencies, and, consequently, included reduction in compulsory deposits, loan the spot prices. The foundations

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