Mercantil Servicios Financieros Semi-Annual Report 2016

SEMI-ANNUAL 2016 REPORT 2 SEMI ANNUAL 2016 REPORT SEMI ANNUAL REPORT 2016

CONTENTS

Presentation 3 Mercantil’s Stock Performance 4 Financial Highligths 5 Board of Directors and Administration 6 Notice of Ordinary General Shareholders’ meeting 7 Board of Directors’ Report 8 Statutory Auditors’ Report 18 Financial Statements 19 Economic Climate 23 Management Discussion and Analisys 27 Performance of Subsidiaries 37 Corporate Contacts and Subsidiaries 43

1 Mercantil Servicios Financieros 2 SEMI ANNUAL 2016 REPORT Mercantil Servicios Financieros is the first and most comprehensive financial services provider in Venezuela. It operates in 10 countries in the Americas and Europe. It registered Bs 829,633 million in total assets and Bs 65,202 million in equity with over 8,000 employees. It shares are listed on the Caracas Stock Exchange (MVZ.A and MVZ.B), it holds a level 1 American Depositary Receipt program (ADR) in the over-the-counter market (OTC) in the United State of America (MSFZY and MSFJY). Mercantil has played an active role in the development of the various markets and geographical areas where it operates in the banking, insurance and wealth management businesses. The mission of Mercantil Servicios Financieros (Mercantil) is “to fulfill the needs of our customer by providing excellent financial products and services, attain the aspirations of our employees, support the development of the communities where Mercantil has presence and add value for our shareholders through a long term outlook.” Mercantil operates through the following subsidiaries: Mercantil Banco Universal in Venezuela, founded in 1925. At June 30, 2016, it has a national network of 264 branches, one agency in Coral Gables, Florida, one branch in Curaçao and representative offices in Bogotá, Lima, México, Sao Paulo and New York; Mercantil Commercebank, N.A. in the United States of America, with 16 branches in Florida, 7 branches in Houston and one in New York; Mercantil Bank (Schweiz) AG in Switzerland; Mercantil Bank (Curaçao) N.V. in Curaçao; Mercantil Bank (Panamá) with 4 branches in Panama; Mercanti Bank and Trust, Ltd. (Cayman) in the Cayman Islands; Mercantil Merinvest C.A. in Venezuela; Mercantil Capital Markets (Panamá) y Panama; Mercantil Seguros with 33 offices in Venezuela; Mercantil Seguros Panamá in Panama and Mercantil Inversiones y Valores, holding of other support subsidiaries. It also carries out important social commitment in various sectors of the community, in Venezuela through Fundación Mercantil; in South Florida and Houston; through Mercantil Commercebank, N.A.; and in Panama through Mercantil Bank (Panamá).

3 Mercantil Servicios Financieros Mercantil’s Stock Performance

"Caracas Stock Exchange: MVZ A & MVZ B June 30 December 31 June 30 December 31 June 30 Level 1 ADR: MSFZY y MSFJY" 2016 2015 2015 2014 2014 Semester ended bolivars bolivars bolivars bolivars bolivars Earnings per share (1) 67.31 71.56 70.18 59.32 40.08

Closing Price Class A share 4,785.00 5,000.00 4,760.00 1,400.00 650.00 Class B share 4,700.00 5,000.00 4,800.00 1,400.00 650.00

Market price/ Earnings per share (1) Class A share 71.1 69.9 67.8 23.6 16.2 Class B share 69.8 69.9 68.4 23.6 16.2

Book value per share (2) 622.38 435.69 370.11 318.49 262.22

Market price / book value (2) Class A share 7.7 11.5 12.9 4.4 2.5 Class B share 7.6 11.5 13.0 4.4 2.5

Number of outstanding shares Class A share 60,880,929 59,401,343 59,401,343 59,401,343 59,401,343 Class B share 43,880,032 42,813,618 42,813,618 42,813,618 42,813,618

Daily Average Traded Volume (Shares) Class A share 5,230 3,238 1,651 44,723 18,767 Class B share 4,297 1,824 4,889 28,005 1,348

Paid Dividends In stock (new shares for each share held) - - - - - In cash (Bs per share) 15.75 0.00 14.50 1.50 9.50

Cash dividends for the year / Market price (%) Class A share 0.3 0.0 0.3 0.1 1.5 Class B share 0.3 0.0 0.3 0.1 1.5

.Calculated based on weighted average shares issued minus repurchased shares adjusted b y stock dividens (1) (2) Calculated based on outstanding shares issued minus repurchased shares adjusted by stock dividens.

Market Quote for Mercantil Class A and B Shares vs. Caracas Stock Exchange (CSEI) Index

7,000

6,000

5,000

4,000

3,000

2,000

1,000 MVZ.A (1) MVZ.B 0 Adjusted CSEI d d d d d d d d d d d d d d d d d j j j j j j j j j j j j j j j j (1) j u u u u u u u u u u u u u u u u e e e e e e e e e e e e e e e e u e No Stock Exchange activities at this time n n n n n n n n n n n n n n n n c c c c c c c c c c c c c c c c n c ------0 0 0 0 0 0 0 0 1 1 1 1 1 1 0 0 9 0 0 0 0 0 0 0 1 1 1 1 1 0 0 0 1 1 0 1 2 3 4 5 6 6 5 4 3 2 7 0 9 8 9 0 1 2 3 4 5 6 5 4 3 2 0 9 8 7 1 1

4 SEMI ANNUAL 2016 REPORT Financial Highligths

Consolidated Earnings June 30 December 31 June 30 December 31 June 30 (In thousands of Bs except percentages and Other Indicators) 2016 2015 2015 2014 2014 Semester ended bolivars bolivars bolivars bolivars bolivars Balance Sheet Total Assets 829,833,387 634,324,610 459,082,436 355,520,544 287,517,063 Loan Portfolio (Net) 447,418,252 344,140,584 251,400,477 197,382,285 156,840,303 Deposits 686,186,861 534,903,166 379,040,095 294,674,670 236,080,975 Shareholders’ Equity 65,201,497 44,533,603 37,830,808 32,553,965 26,802,902

Income Statement Net Interest Income 30,145,648 21,458,241 15,274,974 10,414,687 7,666,441 Commissions and Other Income 14,888,097 9,474,206 5,949,807 4,944,737 3,317,555 Operating Expenses (37,676,888) (22,020,643) (13,529,785) (10,977,682) (7,762,908) Net Income 6,761,894 7,129,971 6,961,792 5,880,449 3,973,940

Profitability Indicators (%) Net Interest Income / Average Financial Assets (NIM) 13.4 % 12.0 % 11.3 % 9.3 % 8.5 % Commissions and Other Income / Total Income 35.7 % 32.3 % 31.1 % 33.2 % 33.0 % Net Earnings for the Period / Average Equity (ROE) 24.6 % 37.1 % 39.8 % 36.3 % 31.1 % Net Earnings for the Period / Average Assets (ROA) 1.9 % 3.0 % 3.5 % 3.4 % 3.0 %

Capital Adequacy Indicators (%) Equity / Risk-Weighted Assets (regulatory minimum 8 %) (1) 12.7 % 11.4 % 13.4 % 15.2 % 15.9 % Equity / Assets 7.9 % 7.0 % 8.2 % 9.2 % 9.3 %

Loan Portfolio Quality Indicators (%) Past-Due and Non-Performing Loans / Gross Loan Portfolio 0.3 % 0.2 % 0.2 % 0.3 % 0.4 % Allowances for Loan Losses / Past-Due + Non-Performing Loans 940.3 % 1,273.3 % 1,378.7 % 1,186.9 % 784.8 % Allowances for Loan Losses / Gross Loan Portfolio 3.0 % 3.0 % 3.0 % 3.1 % 3.0 %

Efficiency Indicators (%) Operating Expenses / Average Total Assets 9.0 % 6.4 % 5.6 % 5.3 % 4.8 % Operating Expenses / Total Income 61.9 % 48.3 % 45.1 % 49.1 % 49.2 %

Liquidity Indicators (%) Cash and Due from Banks / Deposits 29.2 % 29.1 % 27.4 % 26.1 % 22.0 % Cash and Due from Banks and Investment Portfolio / Deposits 47.6 % 47.1 % 49.0 % 49.5 % 51.5 %

Other Indicators (%) Gross Loans / Deposits 67.2 % 66.3 % 68.4 % 69.2 % 68.5 % Financial Assets / Total Assets 70.6 % 70.9 % 74.1 % 76.5 % 80.2 % Financial Assets / Deposits 85.4 % 84.1 % 89.7 % 92.3 % 97.7 %

Number of Employees Employees in Venezuela 7,952 8,696 8,902 8,850 8,917 Employees Abroad 1,133 1,161 1,107 1,003 957

Banking Distribution Network Branches in Venezuela (2) 297 298 298 299 299 Branches Abroad 34 34 32 30 29 Representative Offices 5 5 5 5 5 Mercantil Aliado Network Correspondent Desk 85 109 120 125 127 Correspondent Trading Point s 68 72 89 122 185

Automatic Teller Machines (ATM) 1,245 1,333 1,331 1,379 1,385 Point of Sale Terminals (POS) (3) 52,268 53,023 50,293 50,903 51,750

(1) In accordance with the standards of the National Securities Superintendency (2) Excludes internal branch for employees, at Edificio Mercantil (Caracas) (3) Physical Points of Sale (POS)

5 Mercantil Servicios Financieros Board of Directors

Administration

Principal Directors Gustavo Vollmer A. Gustavo Vollmer A. * Chairman & CEO Chairman & CEO

Alfredo Travieso P. 2 Millar Wilson * Luis Calvo Blesa * 2 Luis A. Romero M. Executive Director Global Human Resources and 3 Gustavo Galdo C. of International Business Corporate Communications Manager Miguel A. Capriles L. 2 Víctor J. Sierra A. 2 Alfonso Figueredo D. * Luis Alberto Fernandes * Federico Vollmer A. 3 Global Executive Vice President Global Chief Legal Counsel Roberto Vainrub A. 3 of Operations and Administration Vincenza Garofalo S. * Millar Wilson Fernando Figueredo M. * Global Chief Risk Officer 1 Gustavo Marturet Medina Global Executive Vice President of Business Rodolfo Gasparri G. * 1 Alternate Directors Eduardo Mier y Terán Global Operations and Technology Luis A. Marturet M. 2 Nelson Pinto A. * Manager Francisco Monaldi M. 3 Executive President Claudio Dolman C. 2 Mercantil Banco Universal Jorge Pereira * Carlos Zuloaga T. 3 Global Personal Banking Manager María Silvia Rodríguez F. * 2 Alejandro González Sosa Executive President Miguel A. Capriles C. 1 Isabel Pérez S. * Mercantil Seguros Global Chief Financial Officer Luis Pedro España N. 1 Alberto Sosa S. 3 Carlos Tejada G. * 1 Alexandra Mendoza Valdés Global Commercial Banking Manager Rafael Sánchez B. 3 Nelson Pinto A. René Brillembourg C. 1 Nerio Rosales R. 2 Guillermo Ponce Trujillo Fernando Eseverri I. 1 Board of Directors Secretary 2 Oscar A. Machado K. Rafael Stern S. 1 Francisco Torres P. Alternate Secretary Gustavo A. Vollmer S. 3 Gustavo Machado C. 3 Anahy Espiga Carlos Acosta 1 Corporate Strategic Planning Manager

Secretary Guillermo Ponce Trujillo Luis M. Urosa Z. Corporate Compliance

Alternate Secretary Rafael Stern S. Maigualida Pereira C. Compliance Officer - Prevention of Statutory Auditors Francisco De León Money Laundering and Terrorist Manuel Martínez Abreu Financing

Alternate Umberto Chirico Statutory Auditor Gladis Gudiño

Legal Counsel Luis Alberto Fernandes Alternate Legal Counsel Paolo Rigio C.

(1) Member of the Audit Committe (2) Member of the Compensation Committe (3) Member of the Risk Committe

Note: The Audit, Compesation and Risk Committees were created pursuant to provision in the By-laws and in accordance with a resolution by the Board of directors. These commitees are made up of independent Directors and are attended by the Chairman and the CEO (ex-officio). (*) Member of the Committe Executive

6 SEMI ANNUAL 2016 REPORT Notice of Ordinary General Shareholder’s meeting

MERCANTIL SERVICIOS FINANCIEROS, C.A. Authorized Capital Bs 1,361,892,493.00 Subscribed and Paid-In Capital Bs 680,946,246.50 Caracas - Venezuela

The Board of Directors hereby convenes the General Shareholders Meeting, to be held at the Auditorium of Edificio Mercantil, Av. Andrés Bello, Nº 1, San Bernardino, Caracas, on September 16, 2016 at 9:30 am, with the following:

1. Consideration of the Board of Directors’ Report and the Company’s Audited Financial Statements as of June 30, 2016, in light of the Statutory Auditors’ Report.

2. Consideration of the “Proposal for the 34th Phase of the Company’s Share Repurchase Program,” presented by the Board of Mercantil Servicios Financieros, C.A.

3. Consideration of the “Proposal for Authorizing the Board to Issue and Allocate Debt and/or Securities, presented by the Board of Mercantil Servicios Financieros, C.A. to the consideration of the Ordinary General Shareholders Assembly of September 16, 2016.”

4. Consideration of an adjustment in the remuneration of the members of the Board.

N.B.: The shareholders are hereby notified that the Balance Sheet, Income Statement, Statement of Shareholders’ Equity, and Statement of Cash Flows for the period ending June 30, 2016, duly audited by the External Auditors “Espiñeira, Pacheco y Asociados”; the Statutory Auditors’ Report; the Board of Directors’ Report, and the aforementioned proposals, that the Board of Directors of Mercantil Servicios Financieros, C.A., submits to the consideration of the Ordnary General Shareholders Meeting to be held September 16, 2016 will be available to them 15 days in advance of the Meeting, at the Company’s headquarters: Av. Francisco de Miranda entre Segunda y Tercera Transversal de la Urbanización Los Palos Grandes, Centro Comercial El Parque, Segunda y Tercera Etapas, P03, Locales C-3-10 y C-3-11, Municipio Chacao, Estado Miranda.

Caracas, August 18, 2016

On behalf of Mercantil Servicios Financieros, C.A.

Guillermo Ponce Trujillo Secretary of the Board of Directors

7 Mercantil Servicios Financieros Board of Directors’ Report

Caracas, August 18, 2016

Dear Shareholders:

We are please to present the consolidated results and main activities of Mercantil Servicios Financieros for the first semester of 2016. The Financial Statements of Mercantil Servicios Financieros, included in this report, consolidate the activities of its subsidiaries and were prepared in accordance with the standards of the National Securities Superintendency.

Financial Results Mercantil reported semi-annual net income of Bs 6,762 million, compared with Bs 7,130 million achieved in the second half of 2015. The main contributions to this income were Mercantil, C.A., Banco Universal with Bs 8,743 million; Mercantil Seguros, C.A. with Bs 891 million; Mercantil Commercebank Florida Bancorp with Bs 29 million and Mercantil Merinvest, C.A. with 27 million. It should be noted that in accordance with various regulatory provisions both in Venezuela and abroad, several Mercantil’s subsidiaries have made contributions to various government agencies in Venezuela and abroad, totalling Bs 8,830 million and accounting for 20.9 % of Mercantil’s expenses. These, combined with Corporate Income Tax, amount to Bs 13,416 million and represent 31.8 % of its expenses. Bs 8,768 million of the Bs 8,830 million correspond to the amount paid in Venezuela and Bs 62 million to the amount paid abroad. Mercantil Servicios Financieros’ total assets grew 30.8 % to Bs 829,833 million compared to December 2015 and shareholders’ equity closed at Bs 65,202 million, 46.4 % more than in December 2015. The net loan portfolio grew 30.0 % to Bs 447,419 million compared with Bs 344,141 million at the close of 2015. Loan portfolio quality remained at acceptable levels. The ratio of past-due and nonperforming loans to total loans was 0.3 %, considering the overall loan portfolio of Mercantil Servicios Financieros, which consolidates the portfolios of Mercantil, C.A., Banco Universal, Mercantil Commercebank Florida Bancorp, Mercantil Bank (Schweiz) AG, Mercantil Bank (Curaçao) N.V. and Mercantil Bank (Panamá) S.A. The ratio of allowances for loan losses over past-due and nonperforming loans was 940.3 %, compared to 1,273.3 % at the close of 2015 .

8 SEMI ANNUAL 2016 REPORT For this six-month period, the efficiency ratio measured by calculating operating expenses as a percentage of average assets, was 9.0 %, compared to 6.4 % at the close of 2015; while the efficiency ratio, measured by calculating operating expenses as a percentage of total net income was 61.9 %, compared to 48.3 % in 2015.

The equity/risk-weighted assets ratio was 12.7 % (regulatory minimum 8 %). This ratio was 11.4 % at the close of 2015 and is determined according to the guidelines of the National Securities Superintendency, which are based on the standards of the Basel Committee on Banking Supervision of the Bank for International Settlements.

The Ordinary General Shareholders' Meeting held on March 18, 2016, approved an ordinary cash dividend to be paid out of the profits at December 31, 2015, for each common Class A and B outstanding shares, payable in two portions (one for Bs 2.25 and another for Bs 3.00 per share), the first on April 10, 2016 and the second on October 10, 2016. It also announced an extraordinary cash dividend for each common Class A and B outstanding share paid at the rate of Bs 13.50 per common share payable on May 27, 2016. The amount paid for the first portion of the ordinary cash dividend was Bs 229,983,662.25, while the sum paid out in extraordinary dividends was Bs 1,414,272,973.50, for a total of Bs 1,644,256,635.75.

During 1H 2016, Mercantil had placed the entire series 1 and 2 of Issue 2015-I of Unsecured Bonds amounting to Bs 100 million. In addition, series 8 of Issue 2015-I of Commercial Papers was placed, for Bs 40 million, and series 1 to 5 of Issue 2015-II of Commercial Papers for Bs 440 million.

Similarly, Mercantil has the following outstanding Unsecured Bonds for series 1 and 2 of Issue 2013-I for Bs 60 million, series 1 and 2 of Issue 2014-I for Bs 40 million and series 1 and 2 of Issue 2014-II for Bs 100 million. In addition series 3, 4, 6 and 7 of Issue 2015-I for Bs 220 million of Commercial Papers are outstanding.

The Stock Repurchase Program initiated in May 2000 is currently in its Thirty-Third Phase, as approved at the Shareholders' Meeting held on March 18, 2016. Given the stock market situation, no new shares were repurchased between January 1 and June 30, 2016. At the close of the first half of 2016 Mercantil did not hold any shares in Treasury .

9 Mercantil Servicios Financieros Credit Ratings Mercantil Servicios Financieros obtained “A1” and “A2” risk ratings from Fitch Ratings and Clave Sociedad Calificadora de Riesgo, for its commercial paper and unsecured bond issues, respectively. These are among the highest possible ratings for a debt instrument, in Venezuela.

In its recent evaluation issued in April 2016, Fitch Ratings also ratified Mercantil Servicios Financieros' long-term national rating of "A+” and its short-term national rating of “F1+.”

In January 2016, Fitch Ratings also affirmed Mercantil Banco's national risk ratings of “AA-(ven)” long term, and “F1+(ven)” short term, the best national qualifications granted to a private financial institution in Venezuela. In addition, Fitch Ratings ratified Mercantil Banco Universal's international risk ratings of “CCC” for the long-term, “C” for short-term, and “ccc” for Viability. These ratings are in line with Venezuela's sovereign rating, considering that the Bank's international ratings are largely dependent on the country risk.

Fitch Ratings also affirmed in June 2016 the international ratings of Mercantil Commercebank Holding Corp., Mercantil Commercebank Florida Bancorp and Mercantil Commercebank N.A. subsidiaries at “BB” long term with a "Stable" outlook, “B” short term and “bb” Viability. Venezuela’s sovereign rating also influences these ratings .

Products and Services The Mercantil Banco subsidiary continued to offer products and services to suit the needs of more than 4,899,000 customers, around 110,000 of which were incorporated during the six- month period.

In the credit card product the bank has a market share of 13.46 %, for a total portfolio of Bs 83,307 million (including parallel lines of credit). During the first half of the year, the bank implemented a strategy focused on selectively increasing credit limits to the best clients in its portfolio, to promote loyalty and preference, which resulted in an additional exposure of almost Bs 7,700 million.

In addition, the credit limits of the parallel lines Préstame and CrediPlan/CrediFácil instant loans products were increased to Bs 600,000, throughout various promotional strategies for these modalities.

The bank continued to implement its consolidation process to include the unbanked sector of the population and support the Majorities Banking segment through the Mercantil Aliado network, operating in 14 states and the Capital District, and through the offer of Microenterprise Credits product. At the close of June 30, 2016 the Microenterprises Credits reached Bs 14,216 million, with 12,182 active borrowers, reflecting a 31 % increase from December 2015 and 106 % from June 2015. More than 291,429 Tarjetas Efectivo (Cash Cards) are in operation, representing 10 % more than at the close of 2015.

10 SEMI ANNUAL 2016 REPORT There are over 7,200 active users in Mercantil Business Mobile and over 600,000 users in Mercantil Personal Mobile, which together carried out over 65 million transactions.

It should be note the growth of the Online Fast Business Credit (Pronto Crédito Empresarial) functionality, which generated 91 % of a total 5,979 requests for credit, representing 89 % of total amount of loans settled (Bs 20,070 million).

The boost and development of the Mercantil Business Mobile new app, has been of particular significance, which allows clients to carry out banking transactions using their mobile device (smartphone or tablet), available 24 hours daily . Mercantil Banco has been the first bank to grant loans through a mobile application maintaining the security standards usually applied by the Bank, thereby increasing clients loyalty.

During the first half of 2016, 9,012 mobile devices have been registered, being associated with 7,291 companies affiliated to Mercantil Business Online Banking, which generated over 700,000 transactions through this new mobile application corresponding to 609,000 consultations, and more than 91,000 financial transactions, of which 323 were requests for Online Fast Business Credit (Pronto Crédito Empresarial) and 91,296 for money transfers.

Mercantil Online Banking continues to garner preference among clients, reaching at the end of June 2016 more than 1,390,000 users of Mercantil Personal Online Banking and more than 86,000 active users in Mercantil Business Online Banking. Together Mercantil Online Banking processed over 382 million transactions, representing 58 % of the transactions carried out through all channels.

At the close of June 2016, the Mercantil Vía Rápida fast-track self service areas processed more than 3 million transactions, 50.84 % of the total transactions managed through branch offices were processed by Mercantil Vía Rápida.

The distribution of transactions by channel for the period was as follows:

TRANSACTIONS PRODUCT WEIGHT (%) (In MillIons ) Mercantil Business and Personal Online Banking 382 58 Point-of-sale 115 18 Automatic Teller Machine Network 64 9 Mobile Devices (Personal and Business) 65 10 Office Network 22 3 Mercantil Customer Call Center 8 1.6 Mercantil Aliado Network 1 0.4

11 Mercantil Servicios Financieros At the close of the semester, the official Twitter account of the Bank, @MercantilBanco had more than 234,000 followers. This account is primarily intended to provide information and advice on bank’s services products and activities. With more than 38,700 approaches in three and a half years, this account is ranked fourth in the Venezuelan financial sector, according to the “Klout” indicator, which measures the account followers influence interactions.

The Mercantil Commercebank subsidiary, maintaining the focus on providing client-friendly services, updated its Mercantil Mobile platform. The new system has better navigation and a fingerprint recognition sensor. This app is available to AppleWatch® users, also allowing the user to select the language of their choice, English or Spanish. The new platform continues the goal of improving the quality of new technologies.

Also during this last semester, in order to reduce the risk of check fraud, it made available to clients the Positive Pay service, which allows the clients to provide the Bank with a list of the issued checks daily to be compared electronically when presented for payment; in the case of discrepancies, it generates a client alert through Online Banking. Also available is the ACH Collections service, which allows clients to manage and collect transactions, both incoming and outgoing, in an efficient and cost-effective manner.

During the semester, the Mercantil Seguros subsidiary continued to consolidate the sales channel Business Referral for Individuals and Companies, increasing the ratio of new client and reaching high levels of contact and effectiveness; focusing on the high profitability products such as Línea Vital (Personal Accidents Life, Funeral and Income Protection insurance) and Industry and Commerce (SME), with new options for contracting the Renta Vital and Tranquilidad Vital policies.

On the other hand, the range of options offered in policies covered in foreign currency has been expanded, which allow better protection and safeguarding of the insured persons or goods, minimizing the effects of inflation, also providing services abroad for International Health Products.

Mercantil Seguros has started a process of client acquisition and loyalty through alliances with providers and service centers, actively participating in events; organized by them which allow an approach to potential new clients to whom the benefits of the available products and services are shown, expanding channels sales. At the same time, the direct marketing strategy was strengthened, with campaings for the renewal and sale of e-mail marketing, considered as a reference in the insurance market, allowing clients and advisors to select the best contract options in a fast and easy way.

As part of the optimization process implemented in order to offer greater advantages at the time of claim payments, Mercantil Seguros implemented electronic transfers to the insured’s account, as a payment method, for claims declared as total loss in the vehicle segment, reducing response times, improving quality of service and attention to clients.

12 SEMI ANNUAL 2016 REPORT Always at the forefront of technological advances, differentiating new features were added to the digital platforms in order to facilitate attention processes via the Advisor Portal, expanding the web service for individual vehicles policies: allowing to select the amount, deductibles and coverages options to hire in a quickly and easy manner in addition to other self-management possibilities already offered in this Portal.

In terms of internal and external communications, the Coffee sessions with the Expert continued, as an institutional voice mechanism to reinforce the communication channels and boost new businesses, focusing on Property Insurance products, Línea Vital and Single Payment of certain illnesses, with the active participation of insurance advisors and staff.

In Venezuela the Mercantil Fixed Income Portfolio, Fondo Mutual de Inversión de Capital Abierto, C.A. mantained its leading position in the investment services business reaching Bs 3,036 million in assets for a total of 195,113 clients, with an increase of 15 % in the period. Within the Mercantil Fixed Income Fund, the Plan Crecer Mercantil product, which is a systematic form of investment affordable to anyone, continued its expansion to Bs 2,169 million in assets. The Mercantil Fixed Income Portfolio celebrates, this year, 20 years of presence in the Venezuela securities market, acknowledging the loyalty of its clientes during all these years.

On the other hand, the Mercantil, C.A., Banco Universal Trust recorded a managed volume of Bs 33,850 million, 20 % up from the close of 2015, mainly due to Occupational Contingency Trust and Escrow Trust. During this period, the activities focused on the optimization of the quality of service, improving the information provided to clients.

In the United States, Mercantil Commercebank Investment Services, Inc. (MCIS), a subsidiary of Mercantil Commercebank, N.A., offers Brokerage and Investment Advisory services. The first half of 2016 closed with 3,232 clients. The volume of assets under management grew by 0.3 % compared to 2015, mainly due to the stock markets performance. In 2016, the effort on continuous improvement to generate operational efficiencies and increase the customer base.

In terms of trust, Mercantil Commercebank Trust Company, N.A. registered 3.0 % increase in consolidated assets under management over the same period in 2015, for the same reasons cited for Mercantil Commercebank Investment Services, Inc. (MCIS). It should be noted that efforts continued aimed at optimizing customer service levels, focusing on the needs of estate planning and inheritance, as well as identifying opportunities to increase efficiency.

13 Mercantil Servicios Financieros Prevention and Control of Money Laundering and Terrorism Financing Prevention and control of money laundering and terrorism financing is a priority for Mercantil and an integral part of our organizational culture. The company has maintained internal control and monitoring of its subsidiaries' activities to ensure early detection of suspicious transactions, and has stepped up staff training in this area. To ensure compliance with anti-money laundering legislation, Mercantil has in place a wellstructured “Comprehensive Money Laundering and Terrorism Financing Prevention and Control System” at its Venezuelan and overseas subsidiaries, in addition to Operational and Follow-Up Plans, and Monitoring and Oversight programs. The company's “Know your Customer” policy is the main guideline in this area .

Corporate Social Commitment During the first half of 2016, Mercantil executed a social investment through its Mercantil Banco Universal, Mercantil Seguros, Mercantil Merinvest and Mercantil Commercebank subsidiaries, as well as Fundación Mercantil, which targeted various programs, projects and initiatives undertaken by renowned educational and social development organizations in Venezuela and the United States.

Mercantil earmarked 17 % of the contributions to Elementary and Higher Educational Institutions, particularly entrepreneurship and college scholarships programs; and 83 % for Social Development Organizations that foster health prevention programs, social programs for children and young people.

Mercantil’s strategy and focus has been the joint development, with various social institutions in the geographical areas where the companies operate, of several initiatives with a direct impact on the communities and its citizens, whose added value tends to strengthen the organization of these institutions and, at the same time, create opportunities for better educational and entrepreneurial formation of the young and the promotion of values, as well as other social assistance actions.

14 SEMI ANNUAL 2016 REPORT During the first half of 2016, highlights the continued programs of Fe y Alegría, and the support to the educational sector through the Asociación Venezolana de Escuelas de Educación Católica (AVEC - Venezuelan Association of Catholic Schools), that benefits approximately 500,000 students; as well as the contributions and support to programs and initiatives of several social, health and cultural institutions, such as: Fundación para el Desarrollo de la Educación, Asociación Venezolana de Buena Voluntad, Fundación Alzheimer, Un Techo para mi País Venezuela A.C., Fundación Patronato del Hospital J.M. de los Ríos, Fundación Jacinto Convit and the Caracas Archidiocese, all welknown social institution that carry out community support programs. As part of Mercantil’s Social Commitment a new program was promoted by Fundación Mercantil, together with Alianza Social VenAmCham and Red Venezolana de Organizaciones para el Desarrollo Social, named “Institutional Strengthening of Social Development Organizations”. The purpose of which is to provide tools and methodologies to those institutions; in order to serve as a formation program to support the management of their activities in a more efficient way promoting their sustaintability in the long term. More than 100 representatives of 22 organizations in the country were part of this program. Mercantil continued to develop the Online Donation Program in Venezuela “Un Aporte por Venezuela”, as well as the culture support program that develops Espacio Mercantil, a place of diffusion and promotion of the historiography of the national art. During this semester the “Revisiones” exhibition was presented (two decades of Venezuelan artists’ paintings). In the United States, as part of its Corporate Social Commiment, several programs developed by educational, social and health organizations in South Florida and Houston were supported, among which stand out: Florida National University, FIU Foundation, Miami-Dade College Foundation, Accion USA, American Cancer Society, Habitat for Humanity, Saludarte Foundation, Museum of Fine Arts, Houston and Miami Symphony Orchestra. Special mention and recognition deserves Mercantil’s volunteers in Venezuela, for their participation in various nationwide activities and programs, such as: support to Fe y Alegría and the Hospital Ortopédico Infantil. Also highligthts, the participation in environmental activities of the Ponle Cariño a tu Escuela and Árboles Para Vivir programs carried out jointly with the Sociedad de Ciencias Naturales La Salle. In the United States, volunteers from Mercantil worked together with the League Against Cancer, Habitat for Humanity and the March of Dimes.

15 Mercantil Servicios Financieros Awards and Acknowledgements

The Banker magazine once again included Mercantil Servicios Financieros among the World’s Top 500 Banking Brands. Mercantil ranks 273rd, raising 61 steps from 2015, and the first among the Venezuelan institutions included in the ranking.

Mercantil Servicios Financieros leads venezuelan companies included among the World’s Biggest 2,000 public companies according to Forbes magazine. It is the first of four venezuelan companies included in this year’s list. The Global 2,000 is a ranking based on total income, profit, assets and market value.

The Global Finance magazine, in its February 2016 edition has selected Mercantil Banco, for the 11th consecutive year, as the “Venezuela’s Best Trade Finance Provider in 2016”. The magazine selection process took into consideration the volume of transactions, geographical coverage, customer services, price competitiveness, new business development and technological innovations.

Aon Hewitt international consulting firm granted the Mercantil Banco and Mercantil Commercebank the “2016 Best Employer” award. Among other criteria, the consulting firm takes into account workers opinion of the banks’commitment, leadership, performance culture, and brand, compiled in the Organizational Climate and Commitment research for 2015.

The Banker magazine included Mercantil Bank (Panamá) among the Top 10 Central America Banks, for the fourth consecutive year, to rank 76 and 34 among Panamá’s banks.

Development and Working Environment

During the first half of 2016, Mercantil in Venezuela continued to apply compensation policies to benefit and support workers, in order to improve their economic situation and quality of life, a distinctive mark of Mercantil’s competitiveness in this matter among other financial institutions. Mercantil increased ordinary salaries by 20 %, effective from January 1, 2016, which served as the basis for the calculation of the annual wage increase policy for performance applied from March 1, 2016, which reached 35 % on average. Therefore, the average salary increase between January and June 2016 was 62 %. Similarly, a new social benefit denominated “Educational Scholarship Aid” for workers or their children was implemented for an amount of Bs 6,000 per month. Monthly payments related to the Food Tickets have been maintained, which have been increased according to the current legislation. It should be noted that Mercantil will continue implementing actions in this area.

16 SEMI ANNUAL 2016 REPORT Mercantil and its Venezuelan subsidiaries have also implemented a Special Program which aims to identify and develop retention benefits for Key Managerial, Professional and Technical staff.

All these benefits are complemented with various activities to promote community and recreational spaces for workers and their families nationwide. Relations between bank officials and employees have continued to evolve within the traditional spirit of harmony and cooperation, and the Board of Directors wishes to acknowledge them for their efficiency and dedication to their work. Pursuant to the National Superintendency Securities (formerly National Securities Commission) resolution, please note that form CNV-FG-010 reflects Bs 21,296.543.96 in remunerations paid to Company Directors and Executives in the second half of 2016. During the first half of 2016, a number of Alternate Directors attended Board meetings, either standing in as Principal Directors in their absence, or as invitees. On the occasion of the Chairman of the Board's temporary absences, some of his CEO functions were delegated to members of the Executive Committee .

Sincerely,

Gustavo J. Vollmer A.

Alfredo Travieso P.

Luis A. Romero M.

Gustavo Galdo C.

Víctor J. Sierra A.

Miguel Ángel Capriles L.

Roberto Vainrub A.

Federico Vollmer A.

Gustavo Marturet M.

Millar Wilson

17 Mercantil Servicios Financieros Statutory Auditors’ Report

18 SEMI ANNUAL 2016 REPORT Financial Statements (In accordance with the standards of the National Securities Superintendency)

Balance Sheet Unconsolidated June 30 December 31 June 30 (in thousands of Bs) 2016 2015 2015 Semester ended bolivars bolivars bolivars Assets Cash and Due from Banks 181,047 491,265 531,142 Investment Portfolio 68,661,036 49,424,889 39,163,600 Other Assets (36,841) (20,944) 181,101 Total Assets 68,805,242 49,895,210 39,875,843

Liabilities and Shareholders’ Equity Unsecured Bonds and Commercial Paper 960,000 995,000 470,000 Other Liabilities 2,643,745 4,366,607 1,575,035 Total Liabilities 3,603,745 5,361,607 2,045,035

Shareholders’ Equity 65,201,497 44,533,603 37,830,808

Total Liabilities and Shareholder’s Equity 68,805,242 49,895,210 39,875,843

Income Statement Unconsolidated June 30 December 31 June 30 (in thousands of Bs) 2016 2015 2015 Semester ended bolivars bolivars bolivars Income Financial Income 121,465 14,549 20,871 Equity Investments in subsidiaries and affiliates and others 8,163,622 7,346,229 7,109,422 Total Income 8,285,087 7,360,778 7,130,293

Expenses Operating (765,732) (202,349) (132,270) Financial (95,461) (28,458) (36,231) Deferred Corporate Income Tax (662,000) 0 0 Total Expenses (1,523,193) (230,807) (168,501)

Net Income 6,761,894 7,129,971 6,961,792

Aury Oliveros Alfonso Figueredo Davis Isabel Pérez Sanchis Gustavo Vollmer A. Administration Manager Global Executive Vice President of Global Chief Financial Officer Chairman and CEO Operations and Administratio n

19 Mercantil Servicios Financieros Consolidated Balance Sheet (In thousand of Bs) Semester ended June 30 December 31 June 30 December 31 June 30 Assets 2016 2015 2015 2014 2014 bolivars bolivars bolivars bolivars bolivars Cash and Due from Banks Cash and Due from Banks 8,522,979 8,541,437 4,641,783 4,363,473 2,776,144 Central Bank of Venezuela 174,296,037 137,641,397 86,758,924 66,235,157 43,118,285 Venezuelan Banks and other Financial Institutions 344,497 287,861 724,789 921,286 517,485 Foreing Banks and Other Financial Institutions 3,271,021 1,663,855 1,549,800 1,641,022 1,562,580 Pending Cash Items 13,998,482 7,525,966 10,350,988 3,740,214 4,019,839

200,433,016 155,660,516 104,026,284 76,901,152 51,994,333

Invesments Portfolio Invesments in Trading Securities 285,568 6,554 5,576 11,519 66,784 Invesments in Securities Available-for-Sale 52,259,664 38,773,837 40,338,224 36,684,481 37,899,125 Invesments in Securities Held-to-Maturity 49,487,491 47,804,801 31,963,415 26,404,305 21,164,297 Share Trading Portfolio 487,218 386,732 314,768 307,313 301,850 Invesments in Time Deposits and Placements 20,162,053 7,396,830 8,338,497 4,813,424 9,333,638 Restricted Investments and Repos 3,291,082 1,651,470 664,138 646,892 900,545

125,973,076 96,020,224 81,624,618 68,867,934 69,666,239

Loan Portfolio Current 459,334,731 353,346,672 258,024,429 202,742,735 160,524,257 Restructured 430,966 510,653 524,493 500,986 540,771 Past-Due 1,436,562 777,495 559,003 530,681 588,802 In Litigation 32,857 50,640 19 8,618 28,105

461,235,116 354,685,460 259,107,944 203,783,020 161,681,935 (Allowance for losses on Loan Portfolio ) (13,816,864) (10,544,876) (7,707,467) (6,400,735) (4,841,632) 447,418,252 344,140,584 251,400,477 197,382,285 156,840,303

Interest and Commissions Receivable 6,352,737 5,053,051 2,980,586 2,481,114 2,078,490 Long-Term Investments 4,105,502 1,613,928 235,831 338,801 168,807 Assets Available for Sale 871,979 377,827 40,054 28,116 42,503 Property and Equipment 6,900,603 5,348,577 4,311,714 2,044,681 1,291,680 Other Assets 37,778,222 26,109,903 14,462,872 7,476,461 5,434,708

Total Assets 829,833,387 634,324,610 459,082,436 355,520,544 287,517,063

20 SEMI ANNUAL 2016 REPORT Consolidated Balance Sheet (In thousand of Bs) Semester ended

June 30 December 31 June 30 December 31 June 30 Liabilities and Shareholders’ Equity 2016 2015 2015 2014 2014 bolivars bolivars bolivars bolivars bolivars Liabilities Deposits Non-Interest Bearing Checking Accounts 262,320,388 190,706,706 127,259,236 94,244,958 73,747,401 Interest Bearing Cheking Accounts 227,866,630 177,429,396 134,338,576 101,175,773 84,327,523 Saving Deposits 175,742,175 155,482,821 107,662,570 91,069,337 70,921,341 Time Deposits 20,257,668 11,284,243 9,779,713 8,184,602 7,084,710

686,186,861 534,903,166 379,040,095 294,674,670 236,080,975

Debt Authorized by the National Securities Superintendency Publicly Offered Debt Securities 878,045 887,621 387,995 619,507 166,240

878,045 887,621 387,995 619,507 166,240

Financial Liabilities Obligations with Banks and Savings and Loan Institutions In Venezuela up to one year 2,870,818 3,357,500 2,000,004 300,127 695,127 Abroad up to one year 4,241,869 2,490,114 3,801,941 2,620,511 2,859,311 Abroad for more than one year 4,349,100 2,048,649 1,805,136 1,805,136 1,522,347 Liabilities Under Repurchase Agreements 698,250 439,894 439,894 439,894 628,420 Other Liabilities up to one year 8,116 42,042 14,946 127,739 112,837 12,168,153 8,378,199 8,061,921 5,293,407 5,818,042

Interest and Commissions Payable 216,613 154,268 126,424 93,504 63,632 Other Liabilities 64,025,984 44,737,862 32,920,611 21,573,322 17,877,043 Subordinated Debt 1,127,215 706,169 696,414 696,338 696,058

Total Liabilities 764,602,871 589,767,285 421,233,460 322,950,748 260,701,990

Minority Interest in Consolidated Subsidiaries 29,019 23,722 18,168 15,831 12,171

Shareholders’ Equity Capital 680,946 664,397 664,397 664,397 664,397 Maintenance of Paid-In Capital 191,709 191,709 191,709 191,709 191,709 Premium for Issuing Stock 12,713,451 0 0 0 0 Capital Reserves 166,715 166,715 166,715 166,715 166,715 Adjustment for Conversion of Net Assets by Subsidiaries Abroad 6,396,559 2,983,244 2,998,777 2,982,241 3,005,619 Retained Earnings 44,756,752 39,914,413 32,366,773 27,054,686 21,145,563 Shares Repurchased and Held by Subsidiaries (600,633) (234,638) (144,753) (91,626) (15,149) Pension plan remeasurement (504,556) (504,556) (93,223) (93,223) (69,185) Unrealized Gain from Adjustment at Market Value of Investments 1,400,554 1,352,319 1,680,413 1,679,066 1,761,841

Total Shareholders’ Equity 65,201,497 44,533,603 37,830,808 32,553,965 26,802,902

Total Liabilities and Shareholders’ Equity 829,833,387 634,324,610 459,082,436 355,520,544 287,517,063

21 Mercantil Servicios Financieros Consolidated Income Statement (In thousand of Bs) Semester ended June 30 December 31 June 30 December 31 June 30 2016 2015 2015 2014 2014 bolivars bolivars bolivars bolivars bolivars

Interest Income Income from Cash and Due from Banks 674,244 347,769 115,943 189,598 26,066 Income from Investment Portfolio 3,635,361 2,944,593 2,473,136 2,163,700 2,513,251 Income from Loan Portfolio 42,981,699 32,071,802 20,890,929 15,375,964 9,871,519

Total Interest Income 47,291,304 35,364,164 23,480,008 17,729,262 12,410,836 Interest Expenses Interest on Demand and Savings Deposits (12,529,533) (10,112,307) (6,341,427) (5,224,271) (3,634,021) Interest on Time Deposits (118,446) (71,190) (74,334) (50,224) (60,899) Interest on Securities issued by the institution (63,290) (28,458) (26,481) (22,817) (7,696) Interest on Financial Liabilities (633,575) (429,096) (103,152) (78,632) (106,829)

Total Interest Expenses (13,344,844) (10,641,051) (6,545,394) (5,375,944) (3,809,445) Net Interest Income 33,946,460 24,723,113 16,934,614 12,353,318 8,601,391

Provision for Losses on Loan Portfolio (3,800,812) (3,264,872) (1,659,640) (1,938,631) (934,950)

Net Financial Margin 30,145,648 21,458,241 15,274,974 10,414,687 7,666,441 Commissions and Other Income Trust Fund Operations 198,275 150,251 100,785 106,950 60,458 Foreing Currency Transactions 14,097 33,134 (2,540) 32,063 3,988 Commissions for account Transactions 3,095,782 2,240,251 1,107,201 855,360 563,738 Commissions on Letters of Credit and Guarantees Granted 13,402 11,744 12,565 18,950 11,266 Equity in Long-Term Investment 61,527 216,692 112,348 169,393 69,232 Exchange Gains 859,959 (1,480) 272,379 (32,250) 122,339 Income on Sale of Investments Securities 673,409 585,872 331,014 190,797 269,533 Other income 9,971,646 6,237,742 4,016,055 3,603,474 2,217,001

Total Commissions and Other Income 14,888,097 9,474,206 5,949,807 4,944,737 3,317,555 Insurance Premiums. Net of Claims Premiums 25,142,841 16,864,906 10,991,945 7,734,901 5,642,528 Claims (21,174,294) (14,053,190) (9,315,390) (6,500,123) (4,716,228)

Total Insurance Premiums. Net of Claims 3,968,547 2,811,716 1,676,555 1,234,778 926,300 Operating Income 49,002,292 33,744,163 22,901,336 16,594,202 11,910,296 Operating Expenses Salaries and Employee Benefits (10,106,429) (5,551,487) (4,501,073) (3,492,659) (2,781,564) Depreciation, Property and Equipment Expenses, Amortization of Intangibles and Other (4,767,470) (3,281,473) (1,433,701) (1,029,856) (683,612) Fees Paid to Regulatory Agencies (4,992,482) (3,385,344) (2,457,415) (1,885,215) (1,448,810) Other Operating Expenses (17,810,507) (9,802,339) (5,137,596) (4,569,952) (2,848,922)

Total Operating Expenses (37,676,888) (22,020,643) (13,529,785) (10,977,682) (7,762,908) Net before Income taxes, Extraordinary items and Minority Interest 11,325,404 11,723,520 9,371,551 5,616,520 4,147,388 Taxes Current (4,585,986) (4,764,354) (2,672,860) (66,366) (151,335) Deferred 27,664 174,543 266,978 334,393 (20,244)

Total Taxes (4,558,322) (4,589,811) (2,405,882) 268,027 (171,579)

Minority Interest (5 ,188) (3,738) (3,877) (4,098) (1,869)

Net Income for the Year 6,761 ,894 7,129,971 6,961,792 5,880,449 3,973,940

22 SEMI ANNUAL 2016 REPORT Economic Climate

World Economy During the first half of the year, world economy continues to recover, although with lower pre-crisis growth rates, in both developed and emerging economies and with high diversity in the current and expected growth rates between countries. Factors that currently cause the weak growth rate are centered on the inestability of financial markets, the evolution of prices of the main crude oil markets, the U.S. monetary policy, the change in the Chinese economic growth model, and the expansive monetary policy implemented by the European Central Bank (ECB) a little over a year ago.

In the first quarter of 2016 there was some turbulence in the financial markets, with declining stock ratios or indexes, increasing interest rate spreads, and the general toughening of financing conditions as a result of market response to the significant decline of oil prices, the deceleration of the Chinese economy and its side effects on the world economy and the doubts regarding the capacity of central banks to continue boosting the economy with unconventional liquidity injections.

These financial imbalances threatened to enunciate growth deceleration, or even induce a recession. However, during the second quarter of 2016 this outlook improved, partly due to economic policy measures: a somewhat expansive Chinese fiscal policy, the delay in increasing interest rates by the Federal Reserve, and the reinforced expansive monetary measures by the ECB.

Following the first increase of the official interest rates since 2006, the Federal Reserve has announced that this upward trend will continue, however will act prudently and in line with the evolution of the economic data.

On the other hand, the new orientation of the Chinese economic model towards domestic consumption, from exports and investments, had resulted more complex than expected. The economy has slowed below 7 % and this year’s growth is expected to decelerate to 6.5 %, and to 6 % in 2017. An even larger slowdown than expected would reinforce the downward pressure on commodities and oil prices, as well as increase financial markets volatility and aversion to risk.

In the Euro Zone, the ECB increased the purchases of assets from €60 billion to €80 billion per month, and reduced interest rates on bank deposits to 0.4 %.

Finally, the results of the June 23 Referendum in Great Britain to decide whether or not the UK would remain in the European Union (Brexit) surprised world financial markets and, for some time, provoked some fear of additional declining of the world economic growth. In response to that event the International Monetary Fund (IMF) updated its World Economic Outlook (WEO) in July showing 0.1 % decline in its world economy growth forecast to 3.1 % in 2016 and to 3.4 % in 2017, compared to its April report.

23 Mercantil Servicios Financieros The United States Economic growth during the first quarter of 2016 was limited by the strength of the US Dollar and the weak world demand still affecting US exports. Production also suffered from corporations’ attempts of reducing stock surplus, together with lower oil prices, which have caused deep cuts in capital spending. During the same period, according to the Bureau of Economic Analysis (BEA), the US economy grew at an annual 1.1 % rate, twice the initial estimate. For the second quarter of 2016, an annualized expansion between 2.5 % and 3 % is expected.

Advance activity indicators, such as retail sales and a healthy real estate market, seem to confirm the previous statement. Retail sales in June rose by 0.6 % month-on-month to reach US$ 457 billion. This represents a 2.7 % year-on-year increase. On the other hand, when evaluating the average of the second quarter of 2016, retail sales increased by 8.4 % compared to the same period of 2015, while in the first quarter of 2016 retail sales showed a slightly 2.8 % growth.

The real estate market has benefited from the low interest rates for mortgages and from an increased demand of new buyers (the so-called millennials). The sale of homes in the secondary market registered a 1.1 % year-on-year increase in June, to reach 5.57 million units sold, the highest growth since February 2007, while in the primary market (10 % of the total market), the sale of homes registered a 3.5 % month-on-month increased to 592 thousand units sold, the largest variation since February 2008.

There are also better results in the labor market in terms of generation of jobs and slight increases in salaries. According to the Bureau of Labor Statistics (BLS), 287,000 new jobs were added by the close of June, which represents a significant trend change, also showing that employers continue to hiring at a solid pace.

During the first half of 2016, the US monetary policy continued its expansive trend, with the aim of generating additional improvements to the already strong labor market and reaching the 2 % inflation target. Therefore, the Federal Open Market Committee (FOMC) has kept the target rate for the federal funds between 0.25 % and 0.5 % since December 2015.

According to the BLS, inflation measured using the Consumer Price Index increased in June, as in May, by 0.2 %, rising prices in the real estate, energy and health sectors, which further reduces the fears of deflation. Price registered 1 % year-on-year growth, below the 1.7 % annual average of the last 10 years.

Latin America During the first half of 2016, as in 2015, the region continued to show, on one hand, a significant weakness in its growth, due to the decline of external demand for its products and to the lower domestic consumption and investments. On the other hand, there are progressively more sub- regional differences in macroeconomic performance, with Mexico and Central America gaining

(1) Highlights that the first estimates of April showed a growth advantage with lower energy prices, improved exports and larger remittances, while the of 0,5 % adjusted in May forecast to 0,8 % growth. Sourthern economies have been affected by the deterioration terms of trade, the lower Asian (2) This date was the first adjustments of the federal funds rates, in the target range, since June 2006. external demand and the reduction of areas for policies to promote internal spending.

24 SEMI ANNUAL 2016 REPORT For this year, Latin American GDP is forecasted to fall by 0.8 % (-0.05 % in 2015), with a consequent reduction of per capita income (2 %) and unemployment increase to 8.1 % (7.4 % the previous year). The recent worst inflation results in some countries in the region are forcing the rate to rise from 16.5 % to 33 %.

The diminished demand of the main commercial associates of South America, in contrast with other economies in the region, and the stability of commodity prices in a low range, make it improbable that exports volumes and trade terms improve, on average, from their 11 % decline in 2015 (the lowest since the 2009 financial crisis). In spite of the contraction of imports that the lack of income in the region is causing, a new deficit is expected in the current account of 2.5 points of the GDP (-3.6 % in 2015); this could be only partially offset this year, as in 2015, by direct and portfolio investments, when the 2015 global balance closed with a deficit of US$ 30.296 billion, which lowered the aggregate international reserves to US$ 812 billion, the lowest level since 2011. In most countries, the negative external context has forced a devaluation of their currencies against the US dollar both in 2015 and in the first months of this year.

Domestic demand continues to decline (-1.6 % in 2015), both in consumption (0.2 %) and in investments (6.5 %); not even the announcement of the fiscal deficit (-3 %) could slow down or reverse this trend. In fact, fiscal accounts continue to worsen as a result of lower tax collections, increased spending and the financial burden of public debt, causing the adjustment variable to centered in capital expenditures, which will tend to reduce the expectations of growth in the mid- and long-term for the region.

Venezuela During the first half of 2016, the Venezuelan economy continued to suffer the effects of the prolonged low phase of oil prices cycle under circumstances in which, a contrast of the negative oil shock of 2009, there is a much lower stock of foreign assets to prevent the curtailing the imports required to maintain the level of economic activity and control the upward trend of prices.

In spite of the recovery of the nominal value of the oil basket following the minimum values in the first two months of the year, the average price for the first half of the year was just US$/b 32, almost 36 % less than the US$/b 49.7 average price in the same period of 2015; this has pushed back the price of Venezuelan basic export product to the levels of 2014. This price contraction, even with the same levels of oil production and exportation at those seen in the same period of 2015, shows that the value of the oil exports bill might reach US$ 12.5 billion, US$ 7.327 billion less than in the first half of 2015 (-37 %). To this negative effect of prices, must be add the result of 251,000 barrels per day (bd) contraction in production of crude oil this semester, in comparison with the first half of 2015. This result together with the significant capital and interest payments of public debt and in spite of the efforts to reduce imports, has caused international reserves to continue contracting to close at US$ 12.077 billion, a 26 % reduction from the US$ 16.367 million at the close of 2015, a level not seen since December 2002.

25 Mercantil Servicios Financieros Public spending, as during the past two years, has been the strongest component of domestic demand, to compensate the lower performance of private spending; this was reflected in the Central Government’s total spending, which exclude the service of the debt, accumulated in June Bs 1,300 billion (Bs 652 billion in the first half of 2015), virtually double the nominal comparative levels in the same semester of the previous year. A significant increase can also be observed in income from taxes collected by SENIAT, partly as a result of the nominal adjustment of all transactions caused by the current inflationary process. During the first four months of the year, collections went from Bs 279 billion to Bs 765 billion, a 175 % expansion.

Monetary liquidity during this period rose 30.9 % in nominal terms (32.6 % in the first half of 2015), as result of the 28.6 % increase of the monetary base (compared to 36.2 % in the first semester of last year), and of the secondary creation of money through bank loans, which grew by 42 % (40.4 % in the same semester of 2015). In contrast with the first half of 2015 when the monetary policy of the Venezuelan Central Bank in its Open Market Operation, generated a net absorption of the means of payment in the hands of the public of Bs 15,500 million, in the first half of 2016, the Open Market Operations effect on monetary policy was moderately expansive, with a net injection of Bs 2,700 billion.

Interest rates, in this monetary environment, moved slightly upward, within the regulatory maximum and minimum rates. Lending rates were adjusted from 19.2 % on average in the first half of 2015 to 20.9 % this year, representing 177 basis points (bp) increase. Borrowing rates for 90-day term deposits increased by 56 bp, going from a 14.6 % average to 15.1 %, in contrast with savings rates, which declined by 76 bp, going from 13.5 % to 12.7 % in the same period.

Summary of Economic Performance 1st Half 2015 1st Half 2016

Variation of Gross Domestic Product % Total -3.1 nd Oil Sector -0.4 nd Non Oil Sector -3.3 nd

Exchange Rate Bs/US$ End of Period 12.7 56.9 Average 12.2 34.1 Exchange Rate Variation % End of Period -24.2 % 349.5 % Average -14.4 % 180.4 %

Inflation (Caracas) % Cumulative Variation 47.3 nd Annualized Variation 187.3 nd

Interest Rate - End of Period Average Leading Rates (6 main Banks) 19.2 20.8 90 day Time Deposits (6 main Banks) 14.6 14.7

Source: Central Bank of Venezuela and in-house calculations

26 SEMI ANNUAL 2016 REPORT Management Discussion and Analysis

Balance Sheet

A summary balance sheet is shown below and the main variations comparing June 2016 with December 2015 are commented on:

Jun. 2016 Vs. Dec. 2015 Jun. 2016 Vs. Jun. 2015 Summary of Consolidated June 30 December 31 June 30 Increase / Increase / Balance Sheet 2016 2015 2015 (Decrease) (Decrease) (In thousands of Bs except percentages) bolivars bolivars bolivars bolivars % bolivars %

Total Assets 829,833,387 634,324,610 459,082,436 195,508,777 30.8 370,750,951 80.8

Cash and Due from Banks 200,433,016 155,660,516 104,026,284 44,772,500 28.8 96,406,732 92.7

Investment Portfolio 125,973,076 96,020,224 81,624,618 29,952,852 31.2 44,348,458 54.3

Loan Portfolio, Net 447,418,252 344,140,584 251,400,477 103,277,668 30.0 196,017,775 78.0

Deposits 686,186,861 534,903,166 379,040,095 151,283,695 28.3 307,146,766 81.0

Shareholders’ Equity 65,201,497 44,533,603 37,830,808 20,667,894 46.4 27,370,689 72.4

Trust Fund Assets 28,321,477 24,874,057 20,952,093 3,447,420 13.9 7,369,384 35.2

The audited financial statements and their notes are attached to this report. The accounting standards used are summarized at the end of this chapter.

Total Assets

Total assets were Bs 829,833 million, representing 30.8 % semi-annual growth, as a result of the combined performance of cash and due from banks, and the investment and loan portfolios, which grew 28.8 %, 31.2 % and 30.0 % respectively. The ratio of performing assets to total assets is 71.9 %, up Bs 139,904 million (30.6 %) compared to the previous six months.

The variations for this item during the period, taken individually by subsidiary, are as follows:

Jun. 2016 Vs. Dec. 2015 June 30 December 31 Increase / (In thousands except percentages) 2016 2015 (Decrease) Mercantil Banco Universal Bs 709,058,708 563,052,568 146,006,140 25.9 % Mercantil Seguros Bs 43,570,860 31,838,781 11,732,079 36.8 % Mercantil Commercebank Us$ 8,269,702 8,130,082 139,620 1.7 %

27 Mercantil Servicios Financieros Investment Portfolio

At June 30, 2016, investments totaled Bs 125,973 million, Bs 29,953 million (31.2 %) up from Bs 96,020 million in December 2015. This increase was observed mainly in the investments issued by the Bolivarian Republic of Venezuela, state-owned companies and decentralized entities.

The most significant variations for this item during the period, taken individually by subsidiary, are as follows :

Jun. 2016 Vs. Dec. 2015 June 30 December 31 Increase/ (In thousands except percentages) 2016 2015 (Decrease) Mercantil Banco Universal Bs 92,680,852 81,541,577 11,139,275 13.7 % Mercantil Seguros Bs 18,433,640 11,694,491 6,739,149 57.6 % Mercantil Commercebank Us$ 2,449,594 2,198,375 251,219 11.4 %

Government bonds issued by the Venezuelan State account for 0.45 times Mercantil's equity a nd 3.6 % of its asset s (0.5 7 times and 4.0 %, respectively in December 2015). At Mercantil Banco Universal, these securities represent 0.40 times its equity and 3.2 % its assets (0.39 times and 3.5 %, respe ctively i n D ecember 20 15).

At June 30, 2016, the M ercantil, C .A. Banco Univ ersa l subsidiary, in line with regulations issued by the Venezuelan National Executive Branch, purchased Bs 47,888 million in Mortgage Bonds, Participation Certificates, Agriculture Bonds and Stocks. These represent 59.3 % of the bank's

investme nt portfolio and 1.0 times its shareholders' equity (Bs 47,243 million representing 68.2 % of its investment portfolio and 1.3 times its shareholders' equity on December 31, 2015).

Investments in Securities by Issuer Bs 125,973 million June 2016

Jun-2016 Dec -2015 Jun-2015 Venezuelan Central Bank 7.5 % 2.2 % 4.8 % Venezuelan State and Goverment Entities 61.5 % 75.4 % 70.2 % Goverment and US Goverment-sponsored Bodies 15.0 % 10.6 % 12.3 % Others 16.0 % 11.8 % 12.7 %

28 SEMI ANNUAL 2016 REPORT Investment by maturity and yield at June 30, 2016 are broken down as follows:

Investments by Maturity and Yield (Stated in millions of Bs, except percentages) Trust Funds and Available Held to Time Deposits Restricted Years Trading for Sale Maturity Shares and Placements Investments

Bs 1 Bs 1 % 3 Bs 2 % 3 Bs 1 Bs 1 % Bs 1 % 3 TOTAL

Bs Less than 1 10 6,237 7.3 1,798 5.5 20,162 8.8 3,261 5.6 31,467 From 1 to 5 155 9,007 8.5 7,121 5.1 1 14.4 16,284 Over 5 121 37,016 7.5 40,569 6.1 487 29 2.0 78,222

286 52,260 49,488 487 20,162 3,291 125,973

(1) Market value (2) Amortized cost (3) Yield is based on the amortized cost at the end of the period. It is the result of dividing income from securities (including amortized premiums or discounts) over the amortized cost or market value.

Net Loan Portfolio

At June 30, 2016, net loans totaled Bs 447,418 million, up Bs 103,278 million (30.0 %) from Bs 344,141 million in December 2015.

The most significant variations for this item during the period, taken individually by subsidiary, are as follows :

Jun. 2016 Vs. Dec. 2015 Net Loan Portfolio by June 30 December 31 Increase/ Business Segment (In thousands except percentages) 2016 2015 (Decrease) Bs 447,418 million Mercantil Banco Universal Bs 389,929,043 307,416,423 82,512,619 26.8 % June 2016 Mercantil Commercebank Us$ 5,440,529 5,558,623 (118,094) (2.1 %)

The ratio of past-due and nonperforming loans to gross loans is 0.3 % (0.2 % at December 2015). The ratio by subsidiary is as follows:

• Mercantil Banco Universal 0,3 % the same as for the Venezuelan financial system.

• Mercantil Commercebank, N.A. 0,3 %, the same as at the close of December 2015. Non- accrual loans amounted to 1.1 % of total loans (1.2 % at December 31, 2015).

99.6 % of Mercantil’s loan portfolio is outstanding at June 30, 2016. The allowance for losses on loan portfolio covers 940 % of past-due and nonperforming loans (1,273 % at December Large Corporations 15 % 31, 2015); this indicator is 1.066 % at Mercantil Banco Universal (1,467 % at December 31, 2015) Small and Medium Enterprise 48 % and 515 % at Mercantil Commercebank (480 % at December 2015). Individuals 37 %

29 Mercantil Servicios Financieros Compulsory Percentage of Mercantil Banco Universal Loan Portfolio by economic sector and interest rates

Percentages June 2016 June 2016 Sector of Compliance % % Interest rates in force reached required

Calculated on the average gross loans at 12/31/2015 and 12/31/2014. Monthly compliance. Maximum per customer 5 % of the current portfolio. It requires a minimum number of new clients (10 % annually). Agriculture Additionally, the portfolio must be quarterly 27.59 1 24.0 Set by the Venezuelan Central Bank. classified among areas: strategic sectors (75 %), At 06/30/2016 the maximum is 13 %. non-strategic sectors (5 %), agribusiness investment (15 %) and trading (5 %), according to the Ministery of Agriculture and Lands. 20 % of the portfolio must be allocated to medium and long-term credits.

Calculated on the gross loan portfolio at 12/31/2015, distributed as follows: 7.6 % for home purchase, 0.4 % for self-construction, improvements Set by the Housing and Habitat Ministry. and expansion, and 12 % for self-construction of Set in accordance with family income of Mortgage main dwellings, from the latter 9.0 % should be 2.86 2 - debtors, ranging between 4.66 % and allocated for the purchase of bonds and 3.0 % for 10.66 %. construction. Annual Compliance, only applies for new credits. Within minimum and maximum rates Microcredits 3 % calculated on the gross loan portfolio at 4.48 3.0 established by the Venezuelan Central 12/31/2015. Monthly Compliance. Bank. At 06/30/2016 the rate cannot be higher than 24 %. The Venezuelan Central Bank establishes Calculated on the average gross loans at 12/31/2015 a preferential rate for the sector on a and 12/31/2014. The Tourism Ministry set in 5.25 % monthly basis. As of 06/30/2016, the Tourism the percentage that full-service banks have to 3.58 1 2.5 maximum rate is 12.07 % and, in some earmark to the tourism sector in 2016. Compliance cases, could be decreased in 3bps must be achieved at 12/31/2016. (minimum 9.07 %) in accordance with the Law for Tourism Loans.

Set by the Venezuelan Central Bank at 10 % Calculated on the gross loan portfolio at 18 %. For SME, state-owned industries, 12/31/2015. The percentage of compliance must be Manufacturing community industries and joint ventures, earmarked to strategic development sectors in 7.13 - the applicable interest rate may not 60 % and to the financing of SME, joint ventures, exceed 90 % of the rate set by the community and state-owned companies in 40 % . Venezuelan Central Bank. At 06/30/2016 Annual compliance. this is equivalent to 16.2 %.

(1) Includes Bs 818 million in Agricultural Bonds issued by the Venezuelan State and Government Entities valid for the compulsory agricultural portfolio; and Bs 207 million in Class "B" shares of the company guaranteeing the loans of tourism SMEs "Sociedad de Garantías Recíprocas para la Pequeña y Mediana Empresa" applicable for compliance with the tourism portfolio . (2) Includes Bolivarian Mortgage Securities 2015-II .

Loan Portfolio, gross June 30 December 31 June 30 Classified by Status 2016 % 2015 % 2015 % (In thousands of Bs except percentages) bolivars bolivars bolivars Current 459,334,731 99.6 353,346,672 99.7 258,024,429 99.6 Restructured 430,966 0.1 510,653 0.1 524,493 0.2 Past Due 1,436,562 0.3 777,495 0.2 559,003 0.2 In Litigation 32,857 0.0 50,640 0.0 19 0.0 461,235,116 100.0 354,685,460 100.0 259,107,944 100.0

30 SEMI ANNUAL 2016 REPORT Deposits Deposits by At June 30, 2016 deposits totaled Bs 686,187 million, which represents 28.3 % more than the Business Segment Bs 534,903 million registered in December 2015. Demand deposits were the main component Bs 686,187 million of total deposits and reached Bs 490,187 million, up 33.2 % compared to December 2015, June 2016 representing 71.4 % of total deposits. Savings deposits increased Bs 20,259 million (13.0 %) and time deposits Bs 8,973 million (13.0 %) over the same period.

The most significant variations for this item during the period, taken individually by subsidiary, are as follows:

Jun. 2016 Vs. Dec. 2015 June 30 December 31 Increase/ (In thousands except percentages) 2016 2015 (Decrease) Mercantil Banco Universal Bs 625,003,701 492,825,991 132,177,710 26.8 % Large Corporations 24 % Mercantil Commercebank Us$ 6,451,074 6,507,626 (56,552) (0.9 %) Small and Medium Enterprise 29 % Individuals 47 %

Shareholders’ Equity At June 30, 2016, shareholders' equity was Bs 65,201 million, 46.4 % up from Bs 44,534 million in December 2015. This variation mainly includes Bs 6,762 million in net income for the first half of 2015, Bs 12,730 million social capital increase approved in the General Shareholders’ Meeting held on September 2015, and Bs 1,920 million reduction corresponding to cash dividends declared.

Capital Ratios

Mercantil’s Equity/Assets ratio at June 30, 2016 is 7.9 % and its Equity/Risk-Weighted Assets ratio is 12.7 %, based on the standards of the National Securities Superintendency, (7.0 % and 11.4 % at December 31, 2015).

• Mercantil Banco Universal’s in accordance with the requirements of the Superintendency of Banking Sector Institutions in Venezuela), the Equity/Assets ratio is 11.9 % at June 30, 2016 and its Equity/Risk-Weighted Assets ratio is 14.2 % (10.5 % and 12.7 % on December 31, 2015, respectively).

• Mercantil Commercebank , N.A. , based on the standards of the U.S. Office of the Comptroller of the Currency (OCC), the Equity/Assets ratio is 9.4 % at June 30, 2016 and the Equity/Risk-Weighted Assets ratio is 12.5 % (9.4 % and 12.3 % at December 31, 2015, respectively).

The equity ratios of Mercantil and its subsidiaries exceed the regulatory minimums.

31 Mercantil Servicios Financieros Income Statement The main variations between the figures for June 30, 2016 and June 30, 2015 are summarized below:

Jun. 2016 Vs. Dec. 2015 Jun. 2016 Vs. Jun. 2015 Financial Margin June 30 December 31 June 30 Increase/ Increase/ Semester ended 2016 2015 2015 (Decrease) (Decrease) (In thousands of Bs except percentages) bolivars bolivars bolivars bolivars % bolivars %

Interest Income 47,291,304 35,364,164 23,480,008 11,927,140 33.7 23,811,296 101.4 Interest Expense (13,344,844) (10,641,051) (6,545,394) 2,703,793 25.4 6,799,450 103.9 Net Interest Income 33,946,460 24,723,113 16,934,614 9,223,347 37.3 17,011,846 100.5 Provision for losses on Loan Portfolio and - Commissions Receivable (3,800,812) (3,264,872) (1,659,640) 535,940 16.4 2,141,172 129.0 Net Financial Margin 30,145,648 21,458,241 15,274,974 8,687,407 40.5 14,870,674 97.4

Net Interest Income Net Interest Income during the first half of 2016 was Bs 33,946 million, 100.5 % higher than the Bs 16,935 million reached in the first half of 2015. This increase is mainly due to the growth of financial assets and liabilities. Interest income was Bs 47,291 million, which reflects 101.4 % year-on-year increase, resulting from 105.7 % growth in income from the loan portfolio. Interest expenses reached Bs 13,345 million, 103.9 % more than in the first half of 2015. The financial intermediation ratio (loans to deposits) was 67.2 % at the close of June 2016 and 68.4 % at June 2015. • Mercantil Banco Universal reached Bs 32,333 million, up 101.6 % year-on-year from Bs 16,040 million, mainly due to the increase of financial assets and liabilities. The financial intermediation ratio was 63.8 % in June 2016 and 64.7 % in June 2015. • Mercantil Commercebank , N.A. achieved US$ 142 million 1 (Bs 1,238 million), 69.4 % up from US$ 84 million 1 (Bs 525 million) in the first half of 2015. The Bank continues to hold a significant portion of its assets, US$ 2,426 million (more than 29 %), in short-term investments and securities issued by the U.S. government or U.S. government-sponsored agencies. This high level of liquidity has continued to allow the Bank ample flexibility to increase its credit operations. Mercantil’s net interest income/average financial assets ratio at June 30, 2016 was 13.4 %, compared to 11.3 % in the previous year. Evolution of Net Interest In com e

13.4 % 35,000 13.5 %

30,000 12.0 % 12.5 % 11.3 % 11.5 %

)

s 25,000

f 10.5 %

o 20,000

n 9.3 % 9.5 %

l 15,000 i 8.5 % 8.5 % m

n i 10,000 ( 7.5 % Net Interest Income Net Interest Income / Average Financial Assets 5,000 8,601 12,353 16,935 24,723 33,946 6.5 % 5.5 % 1 H 2 H 1 H 2 H 1 H 2014 2014 2015 2015 2016

(1) Dollar figures are given for reference only. Balance sheet figures are converted at the period-end exchange rate of Bs 9.975/US$ 1 and Income Statement figures at the average exchange of Bs 8.747/US$ 1. Excha nge con trol have been in place in Venezuela since February 2003.

32 SEMI ANNUAL 2016 REPORT Loan Portfolio Provision

During the first half of 2016, loan loss provision were Bs 3,801 million, up 129.0 % from Bs 1,660 million in the first half of 2015, bringing the accumulated provision to Bs 13,817 million at the close of June 2016. This represents 3.0 % of Mercantil’s gross loans (3.0 % on December 31, 2015) and 940 % coverage of past-due and nonperforming loans (1,273 % on December 31, 2015).

• Mercantil Banco Universal registered Bs 3,674 million in loan loss provision in the first half of 2016 (Bs 1,612 million in the first half of 2015) mainly aimed at provisions in the construction, commercial, industrial and service sectors, resulting from loan portfolio growth during the six month period. At June 30, 2016, the accumulated loan portfolio provision was Bs 12,872 million, which represents 1,066 % of coverage of past-due and nonperforming loans (1,569 % on June 30, 2015). The ratio of past-due and nonperforming loans to gross loans reached 0.3 % in June 2016, which compares to 0.2 % in June 2015.

• Mercantil Commercebank, N.A. registered US$ 19 million 1 (Bs 165 million) in loan loss provision during the first half of 2016. At June 30, 2016, the accumulated provision for the loan portfolio was US$ 72 million 1 (Bs 776 million) and covers 515 % of past-due and nonperforming loans (525 % at the close of June 2015).

Loan Portfolio Evolution

480,000 4.4 % 440,000 4.0 % 400,000 3.1 % 3.6 %

) 3.0 % 3.0 % 3.0 % 3.0 %

s 360,000

B 3.2 %

f 320,000

2.8 % s 280,000 n 2.4 % o

l 240,0 00

l i 2.0 % 200,000 m

n 1.6 % i 160,000

( 12 0,000 1.2 % 0.8 % 80,000 0.4 % 0.3 % 0.2 % 0.2 % 0.3 % 40,0 00 0.4 % 0 0.0 % 1 H 2 H 1 H 2 H 1 H 2014 2014 2015 2015 2016

Loan Portfolio

Past due and n onpe r fo rmi n g loa ns Past-due and nonperforming Loan / Gross Loan Portfolio Loan Portfolio Provision / Gross Loan Portfolio

(1) Dollar figures are given for reference only. Balance sheet figures are converted at the period-end exchange rate of Bs 9.975/US$ 1 and Income Statement figures at the average exchange of Bs 8.747/US$ 1. Exchange control have been in place in Venezuela since February 2003.

33 Mercantil Servicios Financieros Commissions, Other Income and Insurance Premiums, Net of Claims

Commissions, Other Income and Jun. 2016 Vs. Dec. 2015 Jun. 2016 Vs. Jun. 2015 Insurance Premiums, Net of Claims June 30 December 31 June 30 Increase/ Increase/ Semester ended 2016 2015 2015 (Decrease) (Decrease) (In thousands of Bs except percentages) bolivars bolivars bolivars bolivars % bolivars %

Net Financial Margin 30,145,648 21,458,241 15,274,974 8,687,407 40.5 14,870,674 97.4 Commissions and Other Income 14,888,097 9,474,206 5,949,807 5,413,891 57.1 8,938,290 150.2 Insurance Premiums, Net of Claims 3,968,547 2,811,716 1,676,555 1,156,831 41.1 2,291,992 136.7

Operating Income 49,002,292 33,744,163 22,901,336 15,258,129 45.2 26,100,956 114.0

Commissions and Other Income in the first half of the year totaled Bs 14,888 million, reflecting Bs 8,938 million (150.2 %) year-on-year increase from Bs 5,950 million. This increase is mainly due to:

• Bs 8,059 million (154.0 %) growthin earnings from commissions on the use of debit and credit cards, income from financing insurance policies, as well as other commissions on customer operations, among others.

• Bs 342 million (103.4 %) increase in earnings from securities trading activities .

Insurance premiums, net of commissions, reinsurance and claims totaled Bs 3,969 million in the first half of 2016, reflecting 136.7 % increase compared with Bs 1,677 million in the first half of 2015. Net collected premiums in the first half of 2016 totaled Bs 35,024 million, which represents a year-on-year increase of Bs 20,770 million or 145.7 %. This growth was mainly in the automobile (140.4 %) and health (145.6 %) businesses. Mercantil Seguros is the country’s second largest insurance company in terms of net collected premiums, with a market share of 10.7 % at the close of June 30, 2016. Claims and administrative expenses totaled Bs 21,174 million, reflecting a year-on-year increase of Bs 11,859 million (127.3 %). The claims ratio was 65.0 % in the first half of 2016 (66.1 % at June 30, 2015).

Net Results

Operating Expenses Jun. 2016 Vs. Dec. 2015 Jun. 2016 Vs. Jun. 2015 June 30 December 31 June 30 Increase/ Increase/ Semester ended 2016 2015 2015 (Decrease) (Decrease) (In thousands of Bs except percentages) bolivars bolivars bolivars bolivars % bolivars %

Earnings from Financial Operation 49,002,292 33,744,163 22,901,336 15,258,129 45.2 26,100,956 114.0 Operating Expenses (27,570,459) (16,469,156) (9,028,712) 11,101,303 67.4 18,541,747 205.4 Personal Expenses (10,106,429) (5,551,487) (4,501,073) 4,554,942 82.0 5,605,356 124.5 Taxes (Current and Deferred) (4,558,322) (4,589,811) (2,405,882) (31,489) (0.7) 2,152,440 89.5 Minority Interest (5,188) (3,738) (3,877) 1,450 38.8 1,311 33.8 Net Income for the Period 6,761,894 7,129,971 6,961,792 (368,077) (5.2) (199,898) (2.9)

34 SEMI ANNUAL 2016 REPORT Operating Expenses During the first half of 2016, Operating and Personnel Expenses registered a year-on-year increase of 178.5 % (Bs 24,147 million), mainly due to: • Bs 5,605 million increase in personnel expenses, reflecting 124.5 % year-on-year rise. This increase in expenses is mainly due to the application of compensation policies and benefits consistent with the market. Assets per employee at Mercantil Banco Universal rose from Bs 52.0 million in 2015 to Bs 104.8 million in 2016. At Mercantil Seguros, net earned premiums per employee rose from Bs 5.2 million in 2015 to Bs 14.9 million in 2016. In the case of the overseas business, assets per employee amounted to US$ 8.4 million in 2016, less than the US$ 8.5 million in 2015. • Bs 10,974 million (250.2 %) increase in expenses from commissions on the use of the point- of-sale and ATM network, among others. • Bs 2,535 million (103.2 %) increase in expenses for contributions to regulatory agencies. • Bs 3,333 million (232.5 %) rise in depreciation, property and equipment expenses, amortization of intangibles and others. • Bs 1,699 million (225.7 %) increase in expenses for taxes and contributions. • Expenses for corporate income tax increase Bs 2,152 million (89.5 %), compared to the first half of 2015. The efficiency ratio measured by calculating operating expenses as a percentage of average assets was 9.0 % in June 2016, compared with 5.6 % in June 2015. The ratio of operating expenses to total revenue was 61.9 % in June 2016 (45.1 % in June 2015). Personnel and Operating expenses are affected by inflation in Venezuela, estimated at 180.9 % over the last 12 months at the close of December 31, 2015.

Taxes and Contributions For the first half of 2016, Mercantil and its subsidiaries reported significant expenses for various kinds of taxes and contributions. Operations in Venezuela generated the following expenses: Bs 4,528 million in estimated payable corporate income tax, which includes Bs 698 million in deferred corporate income tax; Bs 2,307 million in value added tax; Bs 2,434 million in municipal taxes; Bs 3,633 million in contributions to the Deposit Guarantee Fund; Bs 427 million in contributions to the Superintendency of Banking Sector Institutions; Bs 902 million in contributions to the Superintendency of Insurance Activity; and Bs 523 million in contributions to the National Community Council Fund. Operations abroad registered the following expenses: Bs 58 million in expenses for payable corporate income tax, which included Bs 8 million in deferred corporate income tax, Bs 11 million in municipal taxes and other contributions, and Bs 30 million for contributions to regulatory agencies of the banking activity. Mercantil Servicios Financieros and its subsidiaries also complied with other compulsory contributions provided for under the applicable legislation. Total contributions to the various official entities both in Venezuela and abroad account for 20.9 % of Mercantil's expenses which, combined with corporate income tax, make up 31.8 % of those expenses (25.6 % and 42.4 % as of June 30, 2015, respectively) .

35 Mercantil Servicios Financieros Summary of the Accounting Principles used to prepare the Financial Statements

Financial statements are presented in accordance with Inflation Adjustment the accounting standards of the National Securities According to the National Securities Superintendency Superintendency (SNV), in bolívares (Bs). A summary of standards, Mercantil’s financial statements, as of December 31, some of the accounting principles applied is given below: 1999 must be presented in historic figures. Since then Mercantil has ceased to adjust for inflation in its primary financial Investment Portfolio statements. As a result, fixed and other assets are shown at their Securities Held for Trading - Unrealized gains or losses resulting inflation-adjusted value up to December 31, 1999. The market from differences in market value due to market fluctuations are value determined by independent assessments is higher than included in the results for the period. Available-for-Sale the inflation cost adjusted for inflation indicated above. New Securities – Recorded at their market value. Unrealized gains or additions are being recorded at their acquisition value. losses resulting from differences in market value and exchange rate fluctuations are included in shareholders’ equity. Held-to- Differences between the accounting standards of the Maturity Securities – Recorded at their acquisition cost, adjusted National Security Superintendency and Superintendency for amortization of premiums or discounts. For all portfolio of Banking Sector Institutions and USGAAP (United investments, permanent losses in market value are recorded as States Generally Accepted Accounting Principles) a charge to income in the period in which they occur. Permanent investments – are investments that represent 20 % to 50 % stock The main accounting differences for the reconciliation of ownership. Those greater than 50 % are recorded as an equity items under the National Securities Superintendency of interest and consolidated, except when control is likely to be Banking Sector Institutions (SUDEBAN) for Mercantil temporary. Servicios Financieros are : • Amortization of premiums or discounts of securities carried Loan Portfolio out on a straight-line basis under SUDEBAN standards and Loans are classified as overdue 30 days after their maturity. in accordance with the constant amortization rate under Allowances for loan portfolio losses are determined through a SNV standards. collectability assessment that quantifies the amount that must • The effects of exchange fluctuations are recorded in the be set aside for each loan. These assessments take into account results, with the exception of those that SUDEBAN indicates such aspects as economic conditions, credit risk by customer, to be included in equity and are subsequently recorded in credit history and the collateral received. When assessing loans the results when SUDEBAN authorizes, with the exception for small amounts of the same nature, these are grouped of foreign exchange rate fluctuations of available-for-sale together to determine the provisions required. investments and stock trading portfolio included in equity. The main accounting differences for Mercantil Servicios Recognition of income and expenditure Financieros between the SNV standards indicated above and Income, costs and expenses are recorded as they are earned or USGAAP are: incurred. Interest earned on past-due loan portfolios is • Deferred Income Tax: USGAAP allows deferred tax to be recorded as income when collected. Fluctuations in the market recognized for the total amount of loan portfolio loss value of derivatives are recognized as income in the period in allowances, while SNV standards only allow recognition of which they occur. Insurance premiums are recorded as income allowances for loans classified as high risk and unrecoverable. when earned. • Provision for assets received in lieu of payment: SNV Consolidation standards stipulate a 100 % allowance for real property The cconsolidated financial statements include the accounts received in lieu of payment after one year from the date of of Mercantil and its more than 50 % -owned subsidiaries and incorporation; under USGAAP no amortization deadlines are other institutions in which Mercantil has a controlling interest. established.

36 SEMI ANNUAL 2016 REPORT Performance of Subsidiaries

Mercantil’s global business includes the company’s operations in Venezuela and abroad. Its results are explained in the Consolidated Financial Statement Review chapter.

A summary of Mercantil’s operations carried out through each subsidiary at June 30, 2016, prepared in accordance with the accounting standards of the National Securities Superintendency is presented below.

Mercantil Servicios Financieros (1) (In thousands of Bs) as of June 30, 2016 Shareholders’ Equity Bs 65.201.497

Mercantil Mercantil, C.A. Commercebank Other Mercantil Mercantil Banco Universal Florida BanCorp Banks Overseas Seguros, C.A. Merinvest, C.A. Others Equity Bs 56,787,069 Bs 6,777,910 Bs 2,439,011 Bs 7,150,174 Bs 312,060 Bs 964,551

Main Activity Venezuelan Commercial Bank, International Insurance in Investment Other Non Universal Brokerage and Bank Venezuela Banking, Mutual Financial Trust Funds, Trading & Bussinesses Bank Services Brokegare in the US

Main Subsidiaries Mercantil Mercantil Bank Mercantil Mercantil Merinvest Commercebank (Schweiz), AG. Seguros Casa de Bolsa, C.A. N.A. Pa namá, S.A. Mercantil Mercantil Mercantil Bank Servicios de Commercebank and Trust Limited Inversión, C.A. Investment (Cayman Island) Services (MCIS) Mercantil Sociedad Mercantil Mercantil Bank Administradora Commercebank (Curaçao) NV de Entidades Trust Company de Inversión (MCTC) Mercantil Bank Colectiva, C.A. (Panamá) S.A. Mercantil Capital Markets (Panamá) Total

(In thousand of Bs) 1 Total Assets 697,036,280 82,346,265 7,519,946 41,769,406 102,089 1,059,401 829,833,387 Investment 80,832,678 24,579,392 2,376,348 17,664,104 72,986 447,568 125,973,076 Loan Portfolio, Net 389,921,950 54,269,276 3,227,026 - - - 447,418,252 Deposits 617,545,863 63,821,892 4,819,106 - - - 686,186,861 Net Income for the Semester 8,742,838 29,459 (397,118) 891,205 26,86 6 (2,531,356) 6,761,894

Number of Employees 6,655 989 126 1,238 43 34 9,085

(1) In accordance with the standards of the National Securities Superintendency. Figures net of elimination resulting from the consolidation process.

37 Mercantil Servicios Financieros Comments and a summary of the financial statements of Mercantil’s main subsidiaries are presented below, based on the accounting standards applicable to each of them. This explains why they differ from the consolidated information presented according to the accounting standards of the National Securities Superintendency. Mercantil C.A., Banco Universal consolidated with foreign subsidiaries is presented in accordance with the standards of the Superintendency of Banking Sector Institutions; Mercantil Commercebank Florida Bancorp, according to USGAAP; Mercantil Seguros, C.A., according to the Superintendency of Insurance Activity; and Mercantil Merinvest, C.A., according to the accounting standards of National Securities Superintendency.

Mercantil Banco Universal During the first half of 2016, Mercantil Banco Universal's total assets grew Bs 146,711 million (26.6 %), net loan portfolio increased Bs 82,510 million (26.8 %) and total deposits grew Bs 134,189 million (27.0 %). Loan portfolio quality remains favorable, with a ratio of past- due and nonperforming loans to gross loans of 0.3 %, the same as for the Venezuelan financial system as a whole. The loan portfolio provision covers 1,066 % of past-due and nonperforming loans (1,467 % at December 31, 2015).

At June 30, 2016, the Mercantil Banco Universal subsidiary ranks fourth in the Venezuelan private financial system in terms of total assets with 10.8 % of the market. The leading institution has a 21.2 % share, and Venezuela’s four main banks account for 59.5 % of the total for the financial system. Mercantil Banco Universal is the leading bank in Venezuela's private financial system in terms of savings deposits with a market share of 21.3 %, and ranks second in the Venezuelan private financial sector in loans to the tourism, manufacturing, agricultural and mortgage sectors with market shares of 9.7 %, 8.1 %, 11.9 % and 6.5 %, respectively.

At June 30, 2016 investments in securities totaled Bs 80,657 million, reflecting Bs 11,409 million (16.5 %) growth compared to December 2015. At June 30, 2016 investments in securities are made up of 87.2 % in securities issued or guaranteed by the Venezuelan State and Government Entities; 11.7 % in certificates of deposit issued by the Venezuelan Central Bank (BCV) with maturities under 30 days; and 1.0 % in securities issued by the Venezuelan and international private sectors, and others.

Shareholders’ equity grew Bs 8,541 million (22.9 %) compared to December 2015 reaching Bs 45,880 million at the close of June 2016. This increase mainly includes Bs 8,096 million in net income for the first half of 2016; Bs 811 million increase due to adjustments in exchange fluctuation, and Bs 367 million reduction from adjusting available-for-sale investments to their market value.

The equity/assets ratio as of June 30, 2016 is 11.9 % 1 (minimum requirement 9 %) and the equity/risk-weighted assets ratio is 14.2 % (minimum requirement 12 %), according to the standards of the Superintendency of Banking Sector Institutions . (1) Obtained by dividing equity plus generic provision and anticyclical for the loan portfolio and microcredits by total assets minus investments and cash and due from banks at the BCV, as well as bonds and securities issued by the BCV and Petróleos de Venezuela, S.A. (PDVSA).

38 SEMI ANNUAL 2016 REPORT Net income in the first half of 2016 was Bs 8,096 million, reflecting Bs 2,114 million (35.3 %)

year-on-year increase. This variation is mainly due to:

Evolution of Net Interest Income Bs 16,565 million (104.3 %) increase in net interest income, attributed mainly to a higher volume of financial assets and liabilities. Mercantil's 15.0 % 35,000 15.0 % 13.0 % net interest margin (net interest income/average financial assets) at

) 12.0 %

s 30,000 B 10.9 % 12.0 % f June 30, 2016 was 15.0 % compared to 13.0 % in the same period of the o 25,000 9.8 % s n o i

l 9.0 % l 20,000 previous year. i

n 6.0 % i ( 15,000 6.0 % Bs 2,108 million (130.1 %) growth of expenses for nonperforming loans, 3.7 % 3.7 % 10,000 3.3 % 3.3 % 3.0 % Bs 2,656 million (114.3 %) increase in earnings from commissions on debit 5,000 7,637 11,497 15,896 23,633 32,456 0 0.0 % and credit cards, other commissions on client transactions, net of 1 H 2 H 1 H 2 H 1 H 2014 2014 2015 2015 2016 commissions for the use of the point-of-sale and ATM network, generated

Net Interest Margin by a higher volume of transactions during the six-month period, Bs 118 Operating Expenses / Averag e T ot al Assets million (31.3 %) increase in net earnings from the sale of investments in Net Interest Inco me securities as a result of trading in securities, issued by the Venezuelan government, an activity that totaled Bs 495 million in net earnings in the first half of 2016 Bs. 38 million (38.2 %) increase in income from commissions on investments in trust funds, and Bs 462 million (49.8 %) increase in expenses from available-for-sale assets, expenses from provision for other assets and operating expenses, among other.

Operating expenses rose Bs 14,636 million (177.2 %) compared to the first half of 2015, mainly due to Bs 4,699 million (146.6 %) increase in personnel expenses as a result of the application of wage and benefits policies according to the market; Bs 1,980 million (95.2 %) increase in contributions to regulatory agencies; and Bs 7,956 million (267.5 %) increase in general and administrative expenses. This increase is primarily due to Bs 2,944 million (284.5 %) in expenses to outsource services such as securities transportation, surveillance, among others, Bs 3,091 million (249.2 %) in expenses for depreciation of property and equipment, amortization of intangibles and others, Bs 849 million (191.2 %) in taxes and contributions, and Bs 1,072 million (421.2 %) in other general administrative expenses.

Mercantil C .A., Banco Universal Consolidated with Foreign Subsidiaries June 30 December 31 June 30 Semester ended 2016 2015 2015 (In thousand of Bs ) bolivars bolivars bolivars Total Assets 697,813,678 551,102,948 382,840,865 Investments in Securities 80,656,798 69,247,833 53,950,519 Loan Portfolio, Net 389,921,946 307,411,935 214,848,791 Deposits 631,330,107 497,141,013 342,964,955 Equity 45,879,966 37,339,031 28,176,012 Net Earnings for the Period 8,096 ,157 6,179,352 5,982,226

Historic figures presented in accordance with the Superintendency of Banking Sectors Institutions.

39 Mercantil Servicios Financieros Mercantil Commercebank Florida Bancorp At June 30, 2016 Mercantil Commercebank Florida Bancorp registered US$ 8,310 million in total assets, reflecting 1.8 % increase compared to Assets Quality Ratios December 2015. The investment portfolio reached US$

2,295 million, 9.0 % up from the close of December 13.5 % 3 % 14 % 2015. The net loan portfolio reached US$ 5,556 million, 12.1 % 11.4 % 12 % 2.0 % down from the close of 2015. Total deposits by 9.5 % 10 % June 30, 2016 were US$ 6,471 million, similar to US$ 2 % 7.7 % 1.7 % 1.4 % 1.4 % 1.5 % 8 % 6,522 million at the close of December 2015. 1.1 % 6 % Shareholders' equity at the close of June 30, 2016 was 1 % 1.2 % 1.3 % 1.1 % 4 % US$ 708 million, representing 4.2 % growth compared 0.8 % 0.8 % 2 % to December 2015 when it totaled US$ 679 million. This 0 % 0 % Jun. 14 Dec. 14 Jun. 15 Dec. 2015 Jun. 16 variation is mainly due to US$ 8 million in net income for the period and US$ 21 million increase from Non Accrual / Gros s Loan s adjusting available-for-sale investments to their Total Classif ied L oan s / G ross L oans Total Classified Loans + Oreo / Tier 1 + Allowance for loan los - market value. ses Mercantil Commercebank Florida Bancorp registered US$ 8 million in net income at June 30, 2016, less than the net income of the first half of 2015. Net earnings of its main subsidiary Mercantil Commercebank, N.A., Mercantil Commercebank Florida BanCorp, Inc was US$ 14 million in the first half of 2016 versus the Consolidated US$ 12 million registered in the same period of 2015. June 30 June 30 December 31 June 30 This variation is mainly due to US$ 12 million increase Semester ended 2016 2016 2015 2015 (In thousands of Bs and millions of US$ ) US$ (1) bolivars bolivars bolivars in net income, US$ 5 million increase in the loan loss Total Assets 8,310 82,893,876 51,289,824 51,541,356 provision requirement, and US$ 7 million increase in Investments in Securities 2,295 22,894,421 13,234,619 13,563,289 operating and personnel expenses. Loan Portfolio, Net 5,445 54,315,950 34,914,456 34,731,058 The ratio of non-accrual loans to total loans was 1.1 % Deposits 6,471 64,543,836 40,983,780 39,951,336 Equity 708 7,064,355 4,269,498 4,286,227 in June 2016, similar to 1.2 % in the first half of 2015. Ne t Earnings for the Period 8 67,939 35,751 61,378 Mercantil Commercebank N.A.’s main capital adequacy indicators are 9.4 % for equity/assets ratio, and 12.5 % for equity/risk-weighted assets ratio, in accordance with the Figures in accordance with Generally Accepted Accounting Principles (US GAAP). standards of the Office of the Comptroller of the Currency.

(1) Dollar figures are given for reference only. Balance sheet figures are converted at the period-end exchange rate of Bs 9.975/US$ 1 and Income Statement figures at the average exchange of Bs 8.747/US$ 1. Exchange control have been in place in Venezuela since February 2003.

40 SEMI ANNUAL 2016 REPORT Mercantil Seguros In the first half of 2016, collected premiums registered 145.7 % year-on-year growth to Bs 14,254 million, reflecting an outstanding achievement of the company’s sales force. At June 30, 2016, Mercantil Seguros was the country’s second insurance company in terms of net collected premiums, with 10.7 % of the insurance market.

Total assets at June 30, 2016 were Bs 65,814 million, 44.0 % more than at December 31, 2015. Shareholders’ equity was Bs 27,158 million at June 30, 2016, 17.8 % up from the close of December 2015, which means the company’s solvency margin complies the regulations in force.

The figures presented include all the mandatory and voluntary reserves required to guarantee the company’s operations, including outstanding Evolution of Net Collected Premiums claims reserves and end-of-period payments. Guarantees and reserves and Combined Operating Ratio 1 totaled Bs 31,011 million and reflect 52.7 % growth compared to the close of December 2015.

At the close of June 30, 2016 the company’s investment portfolio totals 98.5% 100 % 98.2% 97.4% Bs 52,463 million, 48.3 % more than at the close of December 31, 2015. Total 98 % 95.9% 95.3% 96 % investments representing technical reserves were Bs 34,506 million, 21.1 % 94 % 35,024 92 % up from December 31, 2015, with sufficient liquidity levels maintained to 90 % 24,763 88 % diligently meet commitments with policyholders, insurance advisers and 86 % 14,254 84 % 10,639 reinsurers. 82 % 6,866 80 % 1 H 2 H 1 H 2 H 1 H Net collected premiums for the Individual Business Lines grew from Bs 7,999 2014 2014 2015 2015 2016 million in the first half of 2015 to Bs 19,515 million at June 30, 2015, mainly Net Collected Premiums due to 143.9 % growth of the health and automobile businesses. Comb ined Operating Ratio Net collected premiums for the Collective Business Lines grew from Bs 5,413 million at June 30, 2015 to Bs 13,020 million at June 30, 2016, with 140.5 % growth.

The technical result 1 at June 30, 2016 was Bs 387 million, with a combined operating ratio 2 of 98.5 %. Net income for the first half of 2016 registered Bs 3,654 million, 273.7 % up from the first half of 2015.

Mercantil Seguros, C.A. June 30 December 31 June 30 Semester ended 2016 2015 2015 (In thousands of Bs) bolivars bolivars bolivars Total Assets 65,814,242 45,697,902 21,464,971 Investments in Securities 52,463,018 35,374,297 15,991,966 Equity 27,158,490 23,045,766 5,496,522 Net Earnings for the Period 3,654,400 1,222,496 977,875 Net Premiums 35,023,900 24,763,095 14,253,705

Historic figures presented in accordance with the standars of the Superintendency of Insurance Activity. (1) Technical result = Earned Premiums - Incurred claims - Commissions - Administrative Expenses. (2) Combined Operating Ratio (COR) = Claims + Commissions + Administrative Expenses + Contributions / Earned Premiums.

41 Mercantil Servicios Financieros Other Subsidiaries of Mercantil Servicios Financieros The subsidiaries of Mercantil Servicios Financieros include a brokerage company, a mutual fund and investment portfolio management company which are consolidated with Mercantil Merinvest, C.A., as well as other overseas banks, and other non-financial subsidiaries in Venezuela, as listed below:

• Mercantil Merinvest Casa de Bolsa, C.A. reached Bs 261 million in total consolidated assets at June 30, 2016, reflecting 93.3 % growth compared to December 31, 2015. This variation is reflected in the investments in securities, which grew 101.7 % compared to December 2015 to Bs 293 million at the close of the first half of 2016. Semi-annual net income was Bs 77 million, up by Bs 58 million from the same period of last year. This variation was mainly due to Bs 148 million growth of net earnings from commissions on portfolio management, securities trading operations issued by private companies and brokerage services; Bs 20 million in expenses from information services, taxes and contributions to regulatory agencies, and Bs 51 million in corporate income tax expenses.

• Mercantil Bank (Schweiz) AG , which includes its Mercantil Bank and Trust Limited (Cayman) subsidiary, reached US$ 245 million in total assets at June 30, 2016, reflecting 1.2 % decrease compared to December 31, 2015. Net income for the six-month period reached US$ 0.4 million, 19.9 % down from the net income registered at June 30, 2015.

• Mercantil Bank (Panamá) S.A. reported US$ 263 million in total assets at June 30, 2016, 0.3 % up from the close of December 2015. The net loan portfolio totaled US$ 152 million, reflecting US$ 19 million (14.0 %) increase compared to US$ 222 million for the previous six-month period. Deposits totaled US$ 219 million, 1.4 % less than US$ 222 million registered at the close of December 2015. Net income in the first half of the year totaled US$ 1.2 million, up US$ 3.3 million compared to the negative result of US$ 2.1 million registered during the same period the previous year. The variation was mainly due to reduced earnings from trading securities operations of US$ 1.1 million during the first half of 2016 compared to US$ 0.5 million in the same period of 2015, and lower loan portfolio provision requirements of US$ 0.6 million in the first half of 2016 compared to US$ 1.5 million at the first half of 2015.

• Mercantil Inversiones y Valores comprises Mercantil Servicios Financieros’ non-financial companies, such as Servibien, Almacenadora Mercantil and others that invest in securities. At June 30, 2016, Mercantil Inversiones y Valores C.A. had Bs 555 million and Bs 526 million in consolidated assets and equity, respectively.

(1) Dollar figures are given for reference only. Balance sheet figures are converted at the period-end exchange rate of Bs 9.975/US$ 1 and Income Statement figures at the average exchange of Bs 8.747/US$ 1. Exchange control have been in place in Venezuela since February 2003.

42 SEMI ANNUAL 2016 REPORT Corporate Contacts and Subsidiaries

LIMA MERCANTIL MERINVEST, C.A. Mercantil Servicios Financieros Av. Canaval y Moreyra Nº 452, 15th and 17th floor Avenida Andrés Bello, N° 1 Av. Francisco de Miranda, between Segunda and Tercera San Isidro, Lima 27, Peru Edificio Mercantil, 24th floor. Transversal, Urb. Los Palos Grandes, Centro Comercial Phone: (511) 442 5100 Caracas 1050, Venezuela Fax. (511) 442 5100 Ext. 237 El Parque, Segunda y Tercera Etapa, P03, suites C-3-10 Phone: (58-212) 503.2700 [email protected] y C-3-11, Chacao, Caracas, Venezuela. Fax: (58-212) 503.2757 Phone: (58-212) 287.8200 MEXICO www.mercanti lmerinvest.com www.msf.com Eugenio Sue N° 58, @MMerinvest Colonia Polanco Chapultepec, INVESTOR RELATIONS Delegación Miguel Hidalgo MERCANTIL CAPITAL MARKETS (PANAMÁ), S.A. Av. Andrés Bello N° 1, Edificio Banco Mercantil C.P.11560, México, D.F. Edificio Torre de Las Américas 25th floor, Caracas 1050, Venezuela Phone: (52-55) 5282 2300/1224 Torre A, 14th floor, suite 1403, Punta Pacifica P.O. Box 789, Caracas 1010-A Fax: (52-55) 5280 9418 Panama City, Panama Phone: (58-212) 503.1335 [email protected] Phone: (507) 282 5800 Fax: (58-212) 503.1075 [email protected] [email protected] NEW YORK www.mercantilcapitalmarketspanama.com 11 East 51st. Street New York NY, CORPORATE COMMUNICATIONS 10022-5903, EE.UU. MERCANTIL SEGUROS, C.A. Av. Andrés Bello N° 1, Edificio Banco Mercantil Phone: (1-212) 891 7479 Av. Libertador con calle Isaías 14th floor, Caracas 1050, Venezuela Fax: (1-212) 891 7995 “Látigo” Chávez, P.O. Box 789, Caracas 1010-A [email protected] Edificio Mercantil Seguros, Chacao. Caracas Phone: (58-212) 503.1670 1060, Venezuela [email protected] SAO PAULO Av. Paulista, N° 1765, Conjunto 131 -13° andar Phone: (58-212) 276.2000 Bela Vista- São Paulo- Brasil Fax: (58-212) 276.2001 Subsidiaries Cep: 01311-020 www.mercantilseguros.com @MercantilSeg MERCANTIL, C.A. BANCO UNIVERSAL Phone: (55-11) 5105-8204 [email protected] Av. Andrés Bello N° 1, Edificio Banco Mercantil MERCANTIL SEGUROS PANAMÁ, S.A. [email protected] San Bernardino. Caracas 1050, Venezuela Calle Punta Darién, Edificio Torre de las Américas Phone: (58-212) 503.1111 MERCANTIL COMMERCEBANK N.A. Torre A, 14th floor, suite 1403, Punta Pacífica Telex 27002/27003 BMERVC 220 Alhambra Circle, Coral Gables, Panama City, Panama P.O. Box 789, Caracas 1010-A. Venezuela. Fl. 33134, U.S.A. Phone: (507) 304 1150 [email protected] Phone: (1-305) 460.8701 [email protected] www.mercantilbanco.com Fax: (1-305) 460.4010 www.mercantilseguros.com.pa @MercantilBanco www.mercantilcb.com Call Center: MERCANTIL BANK (PANAMÁ), S.A. @MercantilCB (inglés) Phone: 0-500-600 2424/ 0-500-503 2424 Torres de las Américas, 14th floor @MercantilCBesp (español) (58-212) 600.2424 -(58-212) 503 2424 Torre A, Suites 1401-1402. Punta Pacífica MERCANTIL COMMERCEBANK TRUST COMPANY, N.A. P.O. Box 0819-05811. MERCANTIL, C.A. BANCO UNIVERSAL 220 Alhambra Circle, 11th floor, Panama City, Panama. CORAL GABLES AGENCY Coral Gables, Phone: (507) 282.5000 220 Alhambra Circle, Coral Gables, Fl. 33134, U.S.A. Fax: (507) 830.5963 Fl. 33134, U.S.A. Phone: (1-305) 441.5555 [email protected] Phone: (1-305) 460.8500 Fax: (1-305) 441.5560 www.mercantilbankpanama.com Fax: (1-305) 460.8595 www.mercantilctc.com Telex: 681278 BMER UW MERCANTIL BANK & TRUST, LIMITED [email protected] MERCANTIL COMMERCEBANK Harbour Place, 4th floor 103 South Church Street MERCANTIL, C.A. BANCO UNIVERSAL INVESTMENT SERVICES, Inc. P.O. Box 1034 Grand Cayman, CURAÇAO BRANCH 220 Alhambra Circle, Penthouse, Coral Gables, Abraham de Veerstraat #1 Fl. 33134, U.S.A. KY1-1102 Cayman Islands Willemstad, Curazao Phone: (1-305) 460.8599 Phone: (1-345) 949-8455 Phone: (5999) 432 5000 Fax: (1-305) 460.8598 Fax: (1-345) 949-8499 Fax: (5999) 461 1974 / 432 5049 www. mercantilcis.com [email protected] MERCANTIL BANK (CURAÇAO) N.V. MERCANTIL BANK (SCHWEIZ) AG Abraham Mendez Chumaceiro Kasernenstrasse 1 Boulevar 1 Willemstad, Curazao 8004 Zurich, Phone: (5999) 432 5000 REPRESENTATIVE OFFICES Suiza Fax: (5999) 461 1974 / 432 5049 Phone: (41) - 433 444 555 master [email protected] BOGOTA Carrera 13, Nº 119-95, Office 105 (0800) 134 1143 From Venezuela (without additional costs) www.mercantilbankcuracao.com Bogota, Colombia Fax: (41) - 433 444 550 Phone: (57-1) 635 0035 [email protected] [email protected] www.mercantilbanksuiza.com

43 Mercantil Servicios Financieros General Production: Corporate Communications Management Graphic Design: Arte Impreso H.M., C.A. Caracas, Venezuela, October 2016.

44 SEMI ANNUAL 2016 REPORT 2 SEMI ANNUAL 2016 REPORT www.msf.com Av. Francisco de Miranda, entre Segunda y Tercera Transversal, Urb. Los Palos Grandes, Centro Comercial El Parque, Segunda y Tercera Etapa, P03, locales C-3-10 y C-3-11. Chacao, Caracas, Venezuela Phone: (58-212) 287.8200