Banco Safra S.A

Consolidated Financial Statements | Banco Safra S.A. Consolidated Financial Statements for the period ended June 30, 2021 Banco Safra S.A. CNPJ 58.160.789/0001-28 Avenida Paulista, 2.100 - Bela Vista, São Paulo, SP José Manuel da Costa Gomes Accountant – CRC nº 1SP219892/O-0 Independent Auditors’ Report Deloitte Touche Tohmatsu Auditores Independente A free translation of the original report in Portuguese as published in Brazil 1 Consolidated Financial Statements | Banco Safra S.A. CONTENTS CONSOLIDATED FINANCIAL STATEMENTS MANAGEMENT REPORT STATEMENT OF FINANCIAL POSITION __________________________________________________________ 2 STATEMENT OF INCOME _____________________________________________________________________ 3 STATEMENT OF COMPREHENSIVE INCOME _______________________________________________________ 4 STATEMENT OF CHANGES IN EQUITY ____________________________________________________________ 5 STATEMENT OF CASH FLOWS __________________________________________________________________ 6 NOTES TO THE FINANCIAL STATEMENTS 1. OPERATIONS _________________________________________________________________________________ 7 2. PRESENTATION OF THE FINANCIAL STATEMENTS ____________________________________________________ 7 3. SIGNIFICANT ACCOUNTING POLICIES _____________________________________________________________ 9 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS _______________________________________________ 14 5. CASH AND CASH EQUIVALENTS _________________________________________________________________ 14 6. INTERBANK INVESTMENTS AND CENTRAL BANK COMPULSORY DEPOSITS ________________________________ 14 7. OPEN MARKET INVESTMENTS AND FUNDING - GOVERNMENT SECURITIES ________________________________ 15 8. FINANCIAL ASSETS AND DERIVATIVE FINANCIAL INSTRUMENTS _______________________________________ 16 9. CREDIT PORTFOLIO __________________________________________________________________________ 24 10. FINANCIAL LIABILITIES AND MANAGED ASSETS ____________________________________________________ 28 11. HEDGE OF FINANCIAL ASSETS AND LIABILITIES ____________________________________________________ 33 12. INSURANCE, REINSURANCE AND PRIVATE PENSION OPERATIONS ______________________________________ 34 13. OTHER FINANCIAL ASSETS AND LIABILITIES AND REVENUE, EXPENSES AND INCOME FROM OPERATIONS _______ 41 14. OTHER ASSET, LIABILITY, AND INCOME ACCOUNTS__________________________________________________ 43 15. CONTINGENT ASSETS AND LIABILITIES ___________________________________________________________ 44 16. TAXES _____________________________________________________________________________________ 45 17. PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS _______________________________________________ 47 18. EQUITY ____________________________________________________________________________________ 48 19. RISK AND CAPITAL MANAGEMENT _______________________________________________________________ 49 20. RELATED-PARTY TRANSACTIONS ________________________________________________________________ 62 21. OTHER INFORMATION ________________________________________________________________________ 63 SUMMARY AUDIT COMMITTEE REPORT ______________________________________________________________ 64 INDEPENDENT AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS ____________________________ 65 Management Report June 2021 We present the Management Report and the Financial Statements of Banco Safra S.A. and Subsidiaries (“Safra Consolidated”) for the period ended June 30, 2021. Management Report | June 2021 Economic Scenario The GDP for the 1Q21 grew 1.2% as compared to related to electricity cost, as the hydrological risk the previous quarter, considering the unseasoned has increased. data, still reflecting the economy’s recovery after Accordingly, the Central Bank decided to begin a the pandemic impact on 2020. The highlight was cycle of high interest rate in the meeting of March the 4.6% increase in investments, while household 2021. The Selic rate began the year at 2% and consumption fell 0.1%, a modest fall considering reached 4.25% at the end of the 2Q21. In the the end of the cash transfer programs. As to following months, the increases shall continue, supply, the main groups grew, of which we with Selic reaching 6.5% at the end of the year. highlight agriculture, which recorded a 5.7% The scenario remains uncertain, with risks of expansion. In the industry, the mining and either slowdown, caused by the drop in construction sectors posted growth, while in international commodity prices, or additional service, the transportation sector stood out. increase, depending on fuel prices, new electricity In the 2Q21, we expect a slowdown of 0.3%, in price adjustment and potential impacts of the view of the additional transport restrictions international economy on the domestic exchange implemented because cases and deaths are rate. rebounding as the pandemic continues. However, In relation to tax, the consolidated public sector the economy’s adjustment to the new reality shall showed a primary deficit of 5.4% of the GDP for support the continued expansion of service of the accumulated 12-month period ended in May, 0.6%, particularly due to the remote work and equivalent to R$ 428.6 billion, reflecting the online service capacity. Household consumption recovery of collection and beginning of a reduction shall thus grow 0.7%. in expenditure implemented in 2020. In the The labor market shows signs of recovery, meantime, the gross debt/GDP reached 84.5% in although still unequal. The formal job creation the same period, as compared to 88.8% noted in data, calculated by the CAGED (official record of the end of 2020. employment and unemployment), showed 836 The external accounts continued the adjustment thousand new job opportunities in the 1Q21, as that began during the pandemic, with current compared to the creation of only 66 thousand account deficit changing from 0.85% of the GDP in vacancies in the 1Q20. However, the creation of April to 0.55% in May, equivalent to -US$ 8.3 informal employment is still slow, the billion in the 12-month period ended in May, unemployment rate standing at 13.6% on average financed by the inflow of US$ 39.3 billion in Direct for the 1Q21, as compared to 10.9% in the same Investments in Brazil (2.6% of GDP). Meanwhile, period of the previous year. For the rest of the the currency flow ended the year with an inflow of year, we expect that the unemployment rate US$ 15.3 billion. remains steady, as the increase in employment shall be counterbalanced by an increase in active The international scenario was marked by the seek for employment, as workers come back to acceleration of vaccination in developed countries, the labor market with the reopening of economy. notably in the UK and in the US. Meanwhile, most emerging countries are still at a slow pace due to Inflation accelerated rapidly in the 1Q21, reaching the difficulty in vaccine supply. With this, global 6.1% in the accumulated 12-month period. In the growth points to acceleration in the 1H21. In 2Q21, IPCA continued its upward trend, reaching China, growth showed signs of gradual slowdown, 8.35%, with average monthly changes of 0.56%. in view of the reduction in the stimuli provided last For the 2H21, we expect a slight slowdown in year, as it overcame the pandemic faster than the inflation indexes, with a monthly average of 0.42%, rest of the world. With global interest rates still reducing the IPCA for the accumulated 12-month low, despite some signs of inflationary pressure, period to 6.4% at the end of the year. Besides the and continuity of growth, the international impacts of the economy reopening, specific shocks scenario remains favorable to the Brazilian have influenced this trend, particularly those economy. Management Report | June 2021 Covid 19 – Current state Overview in-person, following all prevention measures. Our electronic channels are always available and On March 11, 2020, the World Health constantly updated so that we are able to meet Organization (WHO) declared a pandemic as a all needs of our customers. result of the outbreak of Covid-19. After more than one year, even though many In addition, Safra has kept sponsoring lives and vaccines were made available in Brazil, which producing videos with the bank’s specialists and keeps vaccinating its population, the pandemic guests. Safra also has the content site is not yet under control. OEspecialista.com.br. These are channels and people from several segments in order to offer In view of the above, Safra’s management customers, employees and the general continues to monitor the developments of this population quality content, since access is free crisis, adopting the measures required to minimize the adverse effects on our businesses, most of the time. All to allow the dissemination employees, customers, and the society. of news and information regarding investments, financial literacy, and also prevention and new forms of coexistence that were brought by the Our employees and business continuity pandemic reality. Safra keeps following a robust contingency plan, with business expansion supported by the Our Society launch of products and services that assure the maintenance of our activities, without Banco Safra has donated R$ 48.5 million since compromising the health and safety of our the beginning of the pandemic. In 2020 were R$ employees and customers. 37 million were allocated to help to build field hospitals, purchase equipment to philanthropic All preventive measures adopted in the hospitals

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