Banco BMG S A : Dados Econômico-Financeiros

Banco BMG S.A.

Individual and consolidated financial statements on December 31, 2021

(A free translation of the original in Portuguese)

Independent auditor's report on the parent company and consolidated financial statements

To the Board of Directors and Stockholders

Banco BMG S.A.

Opinion

We have audited the accompanying parent company financial statements of Banco BMG S.A. ("Bank") which comprise the balance sheet as at December 31, 2021 and the statements of income, comprehensive income, changes in equity and cash flows for the six-month period and year then ended, as well as the accompanying consolidated financial statements of Banco BMG S.A. and its subsidiaries ("Financial Conglomerate"), which comprise the consolidated balance sheet as at December 31, 2021 and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the six-month period and year then ended, and notes to the financial statements, including significant accounting policies and other explanatory information.

In our opinion, the parent company and consolidated financial statements referred to above present fairly, in all material respects, the financial position of Banco BMG S.A. and of Banco BMG S.A. and its subsidiaries as at December 31, 2021, and the financial performance and the cash flows, as well as the consolidated financial performance and the consolidated cash flows for the six-month period and year then ended, in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by the Brazilian Central Bank (BACEN).

Basis for opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the "Auditor's responsibilities for the audit of the parent company and consolidated financial statements" section of our report. We are independent of the Bank and its subsidiaries in accordance with the ethical requirements established in the Code of Professional Ethics and Professional Standards issued by the Brazilian Federal Accounting Council, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

PricewaterhouseCoopers, Av. Francisco Matarazzo 1400, Torre Torino, São Paulo, SP, Brasil, 05001-903, Caixa Postal 60054, T: [phone], www.pwc.com.br

Banco BMG S.A.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements

of the current six-month period and year. These matters were addressed

in the context of our audit of the parent company and consolidated financial statements as a whole, and in forming our opinion thereon. We do not provide a separate opinion on these matters.

Our audit for the six-month period and year ended December 31, 2021 was planned and performed taking into consideration that the operations of the Bank had not changed significantly compared to the prior year. Accordingly, the Key Audit Matters, as well as our audit approach, were substantially aligned with those of the prior year.

Matters

Why it is a key audit matter

How the matter was addressed

Why it is a Key Audit Matter	How the matter was addressed in the audit

Provision for credit risk losses - (Notes 2.2.g and 8)

The credit operations of the Bank and its subsidiaries comprise mainly retail and wholesale operations. The measurement of the provision for losses associated with credit risk is required to consider the determinations of the National Monetary Council (CMN) and of the BACEN, notably CNM Resolution 2,682/99. In order to comply with these regulations, the Bank's management applies judgment and selects assumptions to define the credit risk of the counterparties to the transactions.

Incorrect judgments or assumptions or the misapplication of current regulations could result in an incorrect estimate of the provision for losses associated with credit risk.

Because of the significance of the provision for credit losses and sensitivity of the matters above, this remained an area of focus during our audit.

Our procedures included, among others, updating our understanding and performing tests of the internal controls over the measurement of the provision for losses associated with credit risk. We carried out tests on: (i) the consistency of the main assumptions used by management pursuant to the requirements of the BACEN;

1. the completeness of the underlying database;
2. the internal classification processes adopted for counterparty risks; and iv) analyses of underlying the provision.

We assessed the reasonableness of the information disclosed in the notes to the financial statements.

We believe that the assumptions and criteria adopted by management to measure and record the provision for credit risk losses to be consistent with the information analyzed in our audit.

Deferred income tax and social contribution assets (Notes 2.2.p, 9 and 25)

Deferred tax assets, which arise substantially from income tax and social contribution losses and temporary differences, are recognized to the extent that management concludes it is probable that the Bank and its subsidiaries will generate sufficient taxable profits which will be available for offset. Projections of taxable profits are made

Our audit procedures considered, among others, gaining an understanding of management's processes for determining and measuring tax credits to record assets in accordance with the accounting standards and the specific requirements of the BACEN.

Banco BMG S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit

by management within a horizon of ten years, all of which rely on subjective assumptions.

This matter remained an area of focus in our audit since the use of a different set of assumptions for projecting taxable profit could significantly change the estimated period of realization of tax credits, with a corresponding accounting effect, as well as conflict with the requirements of the BACEN for recording these assets in the financial statements.

Working together with our specialists, we analyzed the key assumptions made by management in its process of evaluating the prospects of realization of these assets based on projections of taxable profits of the Bank and its subsidiaries.

We obtained the study of taxable profit projections as approved by the Board of Directors and, with our specialists' support, compared the main assumptions to those used in prior years, adjusted to the current economic scenario.

We assessed the reasonableness of the information disclosed in the notes to the financial statements.

Our tests indicated the studies for the realization of tax credits to be consistent with the methodologies used in the prior year. We consider the criteria and assumptions adopted by management to determine asset realization to be consistent with respect to the recording, maintenance and realization of the deferred

tax asset.

Provisions and disclosures of contingent liabilities (Notes 2.2.r and 18)

The Bank and its subsidiaries are party to labor, civil and, particularly, tax administrative and judicial proceedings, inherent to the normal course of their business, filed by third parties and governmental bodies.

Specific labor, tax and civil lawsuits are monitored individually by specialized external legal counsel to assist management in determining the risk of loss classification and in calculating the related outflow of resources for probable (provisioned) and possible (disclosure only) loss amounts. Other civil proceedings are assessed under the advice of legal counsel and provisions recorded and/or disclosed on the basis of internal accounting policies which consider the history of past average disbursements.

The final settlement of the proceedings is typically a lengthy process involving discussions

Our audit procedures involved understanding the processes for the identification, evaluation, monitoring, measurement and recording of the provisions for lawsuits, including tests of amounts and the completeness of the database.

We performed procedures, on a sample basis, to confirm, with the internal and external legal advisors responsible for monitoring the tax proceedings, the background information and progress of the proceedings. We obtained confirmations relating to the labor and civil proceedings from the external counsel and performed consistency tests comparing these to the Bank and its subsidiaries' databases and to information received from the legal departments.

We analyzed the reasonableness of the likelihood of loss for the significant tax cases in the light of case law and legal developments.

Banco BMG S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit

that can depend on case law and judicial precedence.

This matter continued to be an area of focus in our audit due to the nature of the proceedings under discussion and the subjective aspects for determining the likelihood of losses.

Our procedures indicated that management's bases for assessing the sufficiency of the provision and disclosures to be reasonable.

Information technology environment

The Bank and its subsidiaries rely heavily of the development of information technology. The large volume of daily transactions carried out by the Bank and its subsidiaries requires a complex technology environment structure to process the transactions.

Failure to update information technology and related supporting controls could lead to the incorrect processing of critical information used for decision-making and result in the interruption of operations.

Because of the importance of this matter, the information technology environment continued to be an area of focus in our audit work.

We performed tests on the information technology general controls covering aspects related to accesses, alterations and systems development.

We also tested the automated and manual technology-dependent controls and compensating controls for the main business processes.

The audit procedures applied provided sufficient audit assurances that were considered in the determination of the nature, timing and extent of the audit procedures.

Material event notice - investigation (Note 28.d)

In the third quarter of 2020, the Bank and its subsidiaries were subject to search and seizure measures under Operation "Macchiato", following developments from Operation "Descarte". The Board of Directors formed a Special Committee to investigate the facts. A law firm specialized in corporate investigations and a firm specialized in forensic audit were contracted. As a result of the investigative procedures, management has concluded that no instances of the alleged illegal acts suggested by the authorities were identified.

However, investigations by the federal public authorities are still in progress and management is not able to conclude at this time if the results of the investigations may affect the Bank's financial statements at December 31, 2021 or require further disclosures.

With the support of our internal forensic specialists, we applied the following audit procedures:

1. Discussed the bases for the allegations, scope of the investigation and findings with the Special Committee and with Bank's governance bodies;
2. Discussed the procedures adopted by management and follow-up of the main investigative actions;
3. Tested, on a sample basis, evidence/information collected in the investigation process; and
4. Obtained and read the lawyers' updated opinions on the tax and criminal implications to the Bank and its subsidiaries.