Banco Safra S.A

Banco Safra S.A. Consolidated Financial Statements Period ended June 30, 2020 Independent Auditors’ Report Deloitte Touche Tohmatsu Auditores Independentes (A free translation of the original report in Portuguese as published in Brazil) José Manuel da Costa Gomes Accountant – CRC nº 1SP219892/O-0 CONTENTS PAGE CONSOLIDATED FINANCIAL STATEMENTS MANAGEMENT REPORT STATEMENT OF FINANCIAL POSITION ________________________________________________________________ _____________ 2 STATEMENT OF INCOME AND COMPREHENSIVE INCOME____________________________________________ ________________ ___3 STATEMENT OF CHANGES IN EQUITY__ _____________________________________________________________________________ 4 STATEMENT OF CASH FLOWS _______________ _____________________________________________________________________5 NOTES TO THE FINANCIAL STATEMENTS 1. OPERATIONS _________________________________________________________________________________________________ 6 2. PRESENTATION OF THE FINANCIAL STATEMENTS _____________________________________________________________________ 6 3. SIGNIFICANT ACCOUNTING POLICIES______________________________________________________________________________ 7 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS ________________________________________________________________ 12 5. CASH AND CASH EQUIVALENTS __________________________________________________________________________________ 13 6. INTERBANK INVESTMENTS AND CENTRAL BANK COMPULSORY DEPOSITS ________________________________________________ 13 7. OPEN MARKET INVESTMENTS AND FUNDING - GOVERNMENT SECURITIES ________________________________________________ 14 8. FINANCIAL ASSETS ___________________________________________________________________________________________ 15 9. CREDIT PORTFOLIO ___________________________________________________________________________________________ 24 10. FINANCIAL LIABILITIES AND MANAGED ASSETS _____________________________________________________________________ 28 11. INSURANCE, REINSURANCE AND PRIVATE PENSION OPERATIONS ______________________________________________________ 32 12. OTHER FINANCIAL ASSETS AND LIABILITIES _______________________________________________________________________ 37 13. REVENUE, EXPENSES AND INCOME FROM OPERATIONS _______________________________________________________________ 38 14. OTHER ASSET, LIABILITY, AND INCOME ACCOUNTS __________________________________________________________________ 39 15. CONTINGENT ASSETS AND LIABILITIES AND LEGAL OBLIGATIONS – TAX AND SOCIAL SECURITY ______________________________ 40 16. TAXES ______________________________________________________________________________________________________ 41 17. PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS _______________________________________________________________ 43 18. EQUITY _____________________________________________________________________________________________________ 44 19. RISK AND CAPITAL MANAGEMENT ________________________________________________________________________________ 44 20. RELATED-PARTY TRANSACTIONS _________________________________________________________________________________ 56 21. OTHER INFORMATION _________________________________________________________________________________________ 56 SUMMARY AUDIT COMMITTEE REPORT __________________________________________________________________________________57 INDEPENDENT AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS _____________________________ _________________ 58 Management Report June 2020 We present the Management Report and the Financial Statements of Banco Safra S.A. and its Subsidiaries (“Safra Consolidated”) for the periods ended June 30, 2020 and 2019 and December 31, 2019. Management Report | June 2020 Economic Scenario components decreased from 3.0% in March to 2.0% in June, standing below the bottom-end of The GDP for the first quarter of 2020 contracted the band of the seasonal range. 1.5% as compared to the previous quarter, In this scenario that is pointing to recession and considering unseasoned data, already showing inflation is substantially below the midpoint of the effects of the coronavirus pandemic on the target, the Central Bank continues with the economy. Signs of poor performance are policy of cutting the base rate (SELIC), reducing indicated by the 0.8% drop in trade, 4.6% it to 2.25% per year, the new historical low. shrinkage of services provided to families, and 2.5% fall in transportation sector. As a result, In relation to tax, the consolidated public sector household consumption contracted 2.0% in the showed a primary deficit of 3.91% of the GDP period. The highlights were the 3.1% growth in for the accumulated 12-month period ended in investments, recovering after a 2.7% fall in the May, equivalent to R$ 282.9 billion, reflecting fourth quarter of 2019, indicating that economy the strong growth in expenditure due to the was preparing to begin a period slightly stronger pandemic and also the reduction in collection. when it was reduced by the pandemic. In the meantime, the gross debt/GDP reached 81.9% in the same period, as compared to In the second quarter of 2020, in view of the 75.8% noted in the end of 2019. adoption of travel restriction measures and the shutdown of plants and particularly of stores in The real showed strong volatility in the first half response to the pandemic, we estimate that of 2020, reflecting the uncertainties over the GDP will contract 9.0% as compared to the international scenario and the concern about previous quarter. The service sector will be the the pandemic effects on local economy. The most damaged one. exchange rate ended the semester quoted at R$ 5.47/US$, as compared to R$ 4.03/US$ noted in The labor market has been severely affected, the end of the year of 2019. In this scenario, the although the unemployment rate has not Central Bank of Brazil (BC) held auctions of increased much because many people had foreign exchange swaps, increasing the stock to already left the workforce in the beginning of US$ 56.9 billion, besides holding auctions in the the quarantine measures. In May, the spot market, which already total US$ 19.2 billion unemployment rate reached 12.5%, as in the first half of 2020. compared to 11.5% in February (before the pandemic), after discounting the seasonal As a result of the economic contraction, the effects. However, employment shows a sharp external accounts started to be significantly drop in the period, when 7.8 million adjusted, with deficit in current account employments vanished, of which we highlight changing from 2.9% of the GDP in March to the informal sector. 2.5% in May, equivalent to US$ 42.4 billion in the 12-month period ended in May, largely Meanwhile, the credit supply posted a 9.3% financed by the inflow of US$ 67.5 billion in accumulated growth in the 12-month period Direct Investments in the Country (4.0% of ended in May. We highlight the increase in the GDP). Meanwhile, the currency flow ended the balance to business customers, which grew semester with an outflow of US$ 12.5 billion. 10.3% in the year-on-year change in May. But it is important to stress that most of this result is The international scenario continued to be very due to the effects of the coronavirus pandemic, challenging, but the slower growth in the which reflected in the increase in loans, mainly contagion in the major economies have revived for working capital. the markets and allowed the gradual reopening of operations, creating space for the beginning Inflation slowed down sharply in the second of economic recovery. This scenario made the quarter of 2020, reflecting the effects of the recovery of asset prices possible. The S&P index economic crisis. The IPCA increased only 0.02% increased 23.6% in the second quarter of 2020, in June, causing the 12-month inflation to however, the variation the first half was only decrease 1.9%. The 12-month average of its 0.41%. Management Report | June 2020 Finally, we must stress that the current moment contribute to the recovery of the worldwide is extremely delicate, because the nature of this economy. crisis is completely different from the ones that have recently surfaced, when problems have arisen because of unbalances in the economic and financial systems. However, the situation has triggered a global movement towards injection of economic stimulus that will Covid 19 – Actions and Impacts Overview Our employees and business continuity On March 11 of this year, the World Health We have implemented a robust contingency Organization (WHO) declared a pandemic as a and business continuity plan, which ensures the result of the outbreak of Covid-19. Brazil has maintenance of our activities without adopted social isolation measures compromising the safety and health of our recommended by the WHO, which resulted in employees. In this sense, we have adopted a the suspension of economic activities series measures, even before the first social considered non-essential businesses. To face isolation recommendation by the government. these challenges, governments from all over the We are preparing a gradual and coordinated world have adopted measures to maintain plan for the return of our employees to the income, business and employment as much as headquarters’ buildings. The preventative possible. actions adopted in the beginning of the In Brazil, the situation is not different. In the pandemic and those aimed at a safe reopening scope of the monetary and fiscal authority, with include the sorting of employees and giving emphasis

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