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Overview KPMG The SFN - Brazilian National Financial System is basically formed by banks, savings banks, exchange brokers, fintechs, consortium administrators, credit cooperatives, payment institutions, brokers and distributors, all under the supervision of the Central Bank of Brazil and under the structure of the National Monetary Council. It is considered a system with advanced technological infrastructure and its formation over the years has participants of different profiles and activities, and among the largest banks in the country there are public banks, national banks and international banks, in addition to large banks, others with activities in niches, international banks, banks with regional operations and, more recently, fintechs have emerged with specific service offerings. Large banks have a bancassurance structure, in which, through investees or alliances, they operate in the insurance market. Banks also have Asset Management activities in their structures and, more recently, fintechs have expanded their activities in the financial system. A few years ago, physical presence, through the branch network, was a relevant factor for the performance of a retail bank, which created a challenge due to Brazil's territorial extension. This has naturally changed due to new technologies, new entrants and the recent context of the pandemic. According to the regulations of the Central Bank of Brazil, the financial system is segmented into 5 levels, called S1, S2, S3, S4 and S5, based on their representativeness in relation to GDP, if greater than or equal to 10% of GDP in the case of S1, and so on, even those smaller than 0.1% of GDP, S5. Between the end of 2019 and the beginning of 2020 around 50 institutions were classified in the three highest levels S1, S2 and S3 and around 1,200 institutions in levels S4 and S5, which include credit unions. The concentration observed in the Brazilian banking sector has not been very different from the concentration observed in other sectors of the economy and the Central Bank's role has been to encourage the entry of new participants while maintaining regulatory demands to ensure the stability of the system. © 2021 KPMG Auditores Independentes Ltda., a Brazilian limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. BD210890 Página | 94

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