Banco do Brasil S A : 3Q22 Financial Statements - IFRS

Management Report IFRS

1H22

Banco do Brasil S.A. - Management Report/1H22

Dear reader,

We started 2022 by renewing our commitment to bring robust, growing and consistent results, as a consequence of our structuring initiatives, prioritized based on Banco do Brasil's Corporate Strategy, which are summarized in three pillars: (i) proximity to all stakeholders; (ii) acceleration of digital transformation and innovation to deliver the best customer experience; and (iii) focus on profitability. At the same time, we strengthened our sustainable operations, with businesses that generate positive socio-environmental externalities and through the programs of Fundação Banco do Brasil.

We delivered record net income in the first half of 2022 (1H22), totaling R$13.7 billion, a growth of 63.8% in one year, with emphasis on the robust generation of quality business, disciplined efficiency and solid management of capital. More than a strong result, we delivered to society, just in the first half, an added value1 of R$32.2 billion.

We reinforce our commitment to creating value for all our stakeholders and we invite you to learn more about our deliveries on the following pages. Good reading!

Corporate Strategy

Banco do Brasil's Corporate Strategy (ECBB) has a time horizon of 5 years and is reviewed annually, in the third quarter, through a structured, participatory process based on consolidated methodologies; and its approval is carried out by the Board of Directors (CA), which strengthens the decisions on the Company's performance for the coming years.

To guide us in this direction, we have defined our main strategic objectives for the next five years, which are divided into five perspectives: Customers, Financial, Sustainability, Processes and People.

We place the customer at the center of our actions and decisions, at all organizational levels, in order to provide them with the best experience. With this, we continually seek to make BB their main relationship bank, improving the offer of customized and innovative solutions and serving them wherever, whenever and however they wish.

We want to be a competitive, profitable, efficient and innovative bank. To this end, we excel in optimizing capital allocation, improving operational efficiency, optimizing the structure, new businesses and revenue streams, as well as accelerating our cultural transformation and intensifying the use of data.

We have consolidated day by day, together with our employees, one of the main components of the Banco do Brasil Corporate Strategy, the Purpose of "Taking care of what is valuable to people". This means that our focus is on people and what matters to them (return on investments, security, preservation of assets, achievements, etc.), and not simply about our products and services. People, in turn, cover all our stakeholders, i.e. customers, shareholders, employees and society as a whole.

With solid organizational values, we seek to transform each one's contribution to the Company's perpetuity into attitudes. Values constitute principles that guide the organization, emphasizing customer focus, efficiency, innovation, sense of ownership, ethics, reliability and public spirit.

Our Vision is "To be the company that provides the best experience for people's lives and promotes the development of society in an innovative, efficient and sustainable way".

We accelerate digital transformation and innovation, evolving in the development of analytical intelligence, as well as maintaining a focus on operational efficiency and improving processes, products and channels, making them simpler, more agile and integrated into the customer experience.

We seek to transform the organizational culture with a focus on the customer, innovation and meritocracy.

1 The Consolidated Statement of Added Value (DVA) is the accounting report that shows, in a synthetic way, the values corresponding to the formation of wealth generated by the company in a given period and its respective distribution.

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Banco do Brasil S.A. - Management Report/1H22

Macroeconomic Scenario

The international environment remained uncertain throughout most of the first half of the year due to the conflict between Russia and Ukraine, which began in mid- February. European Union member sanctions on Russia have led to soaring energy prices, in particular oil and natural gas, as well as agricultural inputs such as fertilizers and grains such as wheat and corn. The increase in the prices of these commodities affected the world economy, putting pressure on inflation in the main globalized economies.

The uncertainties and pressure on global prices fueled the adoption of tougher monetary policies by central banks around the world, leading to higher interest rates and raising the risks of a more intense slowdown in world economic activity.

In the US, inflation reached its highest level since the early 1980s, affecting more pronouncedly the services and recreation sectors, no longer concentrated in the energy and food sectors. This pressure on inflation indices has required a firmer stance from the monetary authority to contain the rise in prices, also influenced by the heated North American labor market. As a result, the American Central Bank (Federal Reserve) implemented an intense monetary adjustment during the semester, ending the period with an interest rate between 1.50% and 1.75%.

In relation to China, the aggregate indicators of economic activity pointed to a loss of dynamism in the second quarter of this year. Small business confidence dropped to the second lowest level in the historical series. Demand remains low given the possibility of further lockdowns as a result of the government's Covid zero policy. In addition, the drop in vehicle and housing sales surprised negatively, despite the reduction in taxes and interest.

In Brazil, the first semester showed a better perspective on Brazilian economic activity, contrary to the path taken by the main global economies. The better performance, after the most intense period of the pandemic, had repercussions on the resumption of the labor market, with emphasis on the recovery of the service sector and confidence indicators, leading to an improvement in expectations for GDP growth in 2022.

In terms of inflation, the semester was marked by the rise in domestic prices, driven by the greater resilience of domestic demand and the effects derived from the European conflict. In this sense, despite the Brazilian monetary tightening cycle already at an advanced stage, the Copom continued with successive hikes in the basic interest rate, reaching 13.25% p.a. at the June meeting.

Shareholders and Holders of debt instruments

Banco do Brasil has a base of more than 886 thousand shareholders, 98.3% of which are individuals and 1.6% are legal entities. Between January 2019 and June 2022, our individual shareholder base grew from 430 thousand to 871 thousand. At the end of June, our shareholding composition was distributed between 50% of shares with the Federal Government and 49.6% in free float, of which 78.5% are held by local investors and 21.5% by foreign investors.

Our shares (BBAS3) represented 2.343% of the Ibovespa for the last four months.

The Equity Value per share ended the period at R$53.22, a variation of +6.4% in relation to December/21. The Closing Price was R$33.38 for BBSA3 and US$6.36 for ADRs that are part of a level I program, traded on the North American OTC market.

ESG Agenda (Environmental, Social and Governance)

Sustainability is not a new subject for us, it is present in our strategy, practices, management and business, and has been constantly evolving for over 36 years, starting with the Fundação Banco do Brasil operations in 1985. We have adopted the best practices Environmental, Social and Governance that allow actions to anticipate and manage risks and opportunities, in addition to translating into positive externalities for our stakeholders. These premises are materialized in the Sustainability Plan - Agenda 30 BB, our main instrument for promoting social and environmental practices since 2005, which is aligned with the United Nations (UN) Sustainable Development Goals (SDGs). The Plan, revised in 2021, has 40 actions and 110 indicators for the period 2021-2023.

Compliance with sustainability indicators and goals impact the remuneration of the entire staff, including senior management, ensuring the nexus between business, people and the environment.

Commitments to the future

In order to continue as protagonists in the search for an increasingly sustainable world, in 2020 we released 10 Commitments with goals by 2030, which involve the Sustainable Business, Responsible Investment and ESG Management fronts. We highlight the commitments "One Million Entrepreneurs" and "Compensate 100% of Direct GHG Emissions", which have already achieved the proposed targets.

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Banco do Brasil S.A. - Management Report/1H22

Figure 1. 10 Commitments to Sustainability

1. Balance. (2) Disbursements. (3) Entrepreneurs. (4) Agriculture, culture, civil defense, education, energy efficiency and public lighting, sports and leisure, road infrastructure, public cleaning, environment, urban mobility, health, safety and sanitary surveillance. (5) AuM applicable. (6) Renewable energy purchased on the free market (ACL) and own production at the end of the period (7) Accumulated value from 2021 to 1H22. (8) BB neutralizes its scope 2 emissions in the following year, through the acquisition of I-RECs.

Fundação Banco do Brasil

For almost four decades, with the purpose of valuing lives to transform realities, Fundação Banco do Brasil invests in projects and actions to generate work and income. Through transversal and structuring programs in Education, Environment, Social Assistance, Social Technology, Volunteering and Health and Welfare, Fundação BB promotes and multiplies solutions for the socio-environmental transformation of the country, adopting the best governance and integrity practices.

In 1H22, R$96.5 million were mobilized in social investment, together with resources from Banco do Brasil, companies of the conglomerate and partners, which enabled support for 224 projects, positively impacting more than one million people. Between 2012 and 2021, there were more than R$2.7 billion in social investments, benefiting more than six million people.

Here are the main highlights of the programs in the first half of 2022:

Health and wellness

In May, Fundação Banco do Brasil and Sociedade Beneficente Israelita Brasileira Albert Einstein formalized a partnership with the objective of promoting health in underserved places.

The initiative supports a Telemedicine Center project that will provide training and improvement of primary care teams for specialized outpatient telemedicine care in communities with

limited access to public health services, in the North, Midwest and Southeast regions.

We have also supported the specialized work of institutions that offer treatment, prevention, rehabilitation and research in the oncology segment.

Education for the Future

In June, Fundação Banco do Brasil, the Ministério do Trabalho e Previdência, Microsoft, Sebrae, FENABB and Alelo launched the Young Market Connection - Education for the Future initiative, an action that aims to prepare young people between 14 and 17 years old, public school students for adult life and inclusion in the world of work through the development of socio-emotional and cognitive skills, integration of digital technologies in the pedagogical context of teaching and learning and training in basic techniques for entering the market.

Environment and Income

In June, BB Consórcios launched, as a way of supporting economic growth and socio-environmental returns, the new Green Groups for the acquisition of goods aimed at efficient use of natural resources and low carbon emissions. For each quota sold, 10 trees will be planted by partner institutions, with the support of Fundação Banco do Brasil. With the commercialization objectives achieved, the increase in trees to be planted will be 35% higher compared to the project carried out in 2021.

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Banco do Brasil S.A. - Management Report/1H22

Social, Environmental and Climate Responsibility Policy (PRSAC)

We have updated the Social, Environmental and Climate Responsibility Policy (PRSAC), a set of principles and guidelines of a social, environmental and climate nature to be observed by the institution and by all employees in the conduct of their daily activities, which results in the consideration of economic, social and environmental variables in the design and development of processes, products and services and in each decision-making process.

The PRSAC is an evolution of the Specific Policy on Social and Environmental Responsibility (PRSA), existing at Banco do Brasil since 2015. The policy now brings the climate perspective together with the environmental and social ones. The approved adaptation reinforces BB's strategic positioning and performance in relation to the best market practices and continues to generate value in a sustainable manner for its customers, shareholders, employees and society as a whole.

Carbon Market

In May, we expanded our sustainability positioning in the carbon market with the holding of the Global Carbon Market Congress - Decarbonization and Green Investments. The event had the institutional support of the Central Bank of Brazil, the Ministério do Meio Ambiente (MMA) e do Governo Federal and aimed to promote debates on the carbon credit market, in addition to presenting corporate strategies, projects and cases to boost green business, focusing on innovation and sustainability. It also sought to connect leaders from different segments and Brazilian audiences around the topic, according to the results presented at the 26th Conference of the Parties to the United Nations Climate Change Convention (COP 26).

At the same time, we launched a set of initiatives to support our clients in the origination, development and trading of carbon credits. For this, we structure partnerships with renowned companies active in the voluntary carbon market to offer technical support for the elaboration of projects following internationally recognized and validated methodologies such as: avoided deforestation, forest recovery, low carbon agriculture, recovery of degraded areas, crop-livestock-forest and energy integration.

We negotiated the first customer support contract to generate carbon credits, using the avoided deforestation methodology. Altogether, we have mapped 500 thousand hectares for this methodology, with more than 70 prospected clients. The first contract is in an area located in the border of the State of Amazonas and Acre, with about 17 thousand hectares of preserved Amazon forest. In the partnership, the Bank's client commits to keeping the area preserved for 20 years. In exchange, it will be remunerated annually for the sale of carbon credits generated and traded, guaranteeing resources for environmental conservation.

Furthermore, we celebrated an important partnership with the World Bank, raising US$500 million to finance projects that generate carbon credits.

Complementing our portfolio of sustainable investments, in May we launched our first fund with exposure to the carbon credit market, BB Multimercado Carbono. The fund's strategy is aimed at this market, in which permits, or credits, are traded between companies, taking advantage of the full potential of these transactions. We seek to provide a return to clients by investing in future carbon credit contracts, through derivatives, while supporting the fight against climate change.

Sustainable Loan Portfolio

At the end of June/22, we reached R$292.2 billion in sustainable credit operations, growth of 13.3% in 12 months. This amount was contracted in credit lines with high environmental and/or social additionality, or intended to finance activities and/or segments that have positive socio-environmental impacts for the sectors of renewable energy, energy efficiency, construction, sustainable transport and tourism, water, fishing, forestry, sustainable agriculture, waste management, education, health and local and regional development, reinforcing our transformative role in supporting the country's development and building an increasingly sustainable future for society.

In line with our long-term commitments and to assist our clients in the transition to a more sustainable portfolio, we have the following goals to be achieved by 2025: (i) promote renewable energy, expanding our credit portfolio for this purpose to R$15 billion; (ii) expand the sustainable agriculture portfolio to R$125 billion and support state and municipal efficiency projects, with disbursements of R$20 billion.

In May/2021 we launched a specific credit line for the acquisition of solar energy generation systems. BB Crédito Energia Renovável benefits individual customers, who can finance up to 100% of the value of photovoltaic systems, including installation. Since the launch of the line, more than R$345 million have been disbursed, contributing to the transition to green energy in approximately 11 thousand residential projects. In May 2022, the Renewable Energy Credit had its term extended from 60 to 96 months, making the line even more competitive. More than 35% of the amount disbursed was carried out by the application.

Our sustainable business portfolio undergoes an independent assessment, which considers the main international taxonomies to classify the portfolio.

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