4A. History and Development of the Company
General
We are a publicly held corporation (sociedade
anônima), incorporated under Brazilian law on August 9, 1985. Documentation of our incorporation is duly registered with the
Commercial Registry of the State of São Paulo (Junta Comercial do Estado de São Paulo or “JUCESP”), under
NIRE (Registry Number) 35300332067. Our corporate name is Banco Santander (Brasil) S.A. and our commercial name is Banco Santander. Our
headquarters are located in Brazil, in the city of São Paulo, state of São Paulo, at Avenida Presidente Juscelino Kubitschek,
2041, Suite 281, Block A, Condomínio WTORRE JK - Vila Nova Conceição, 04543-011, in the city of São Paulo,
state of São Paulo, Federative Republic of Brazil. Our telephone number is +55-11-3553-3300 and our website is https://www.santander.com.br/ri.
In addition, the SEC maintains a website at www.sec.gov that contains information filed by us electronically. The information contained
on our website, any website mentioned in this annual report, or any website directly or indirectly linked to these websites, is not part
of, and is not incorporated by reference in, this annual report and you should not rely on such information.
Our agent for service is Mercedes Pacheco,
Managing Director – Senior Legal Counsel, Banco Santander, S.A., New York Branch, 45 E. 53rd Street New York, New York 10022.
History
We are currently the third largest privately
owned bank in Brazil, and the only international bank that operates countrywide. We operate in both the retail and wholesale segments
with high-added value offers, which allows us to provide our products and services to individuals, small and medium enterprises, and large
corporate customers.
We are part of the Santander Group, a
financial institution founded in Spain in 1857, and that has expanded globally through numerous acquisitions. Under the Santander Group’s
business model, each major unit is autonomous and self-sufficient in terms of capital and liquidity. However, our relationship with the
Santander Group allows us to:
• access the Santander Group’s global operation network, using the operational synergies with the Santander Group to enhance our ability to provide global products and services to our customers, while reducing technology development costs;
• provide our customers with the benefits of a strong presence in certain international markets, predominantly in Latin America and Western Europe;
• assimilate best practices with respect to products, services, internal controls and risk management that were implemented by the Santander Group internationally; and
• develop our employees’ skills by means of local and international training and development initiatives, including international experiences at the Santander Group’s offices worldwide.
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Our history in the Brazilian banking industry
goes back to the 1970s and is summarized in the following figure:
Santander Brasil Timeline
In 1957, the Santander Group entered the
Brazilian market for the first time through an operating agreement with Banco Intercontinental do Brasil S.A. In 1970, the Santander Group
opened a representative office in Brazil, followed by its first branch in 1982.
Since the 1990s, the Santander Group established
its presence in Latin America, particularly in Brazil, by capitalizing on organic growth and pursuing an acquisition strategy, including
the following most notable acquisitions:
• In November 2000, the Santander Group acquired Banespa, a bank owned by the State of São Paulo which resulted in the Santander Group becoming one of Brazil’s largest financial groups.
• On July 24, 2008, Santander Spain took an indirect share control of Banco ABN AMRO Real S.A. and ABN AMRO Brasil Dois Participações S.A. and their respective consolidated subsidiaries in 2008, or “Banco Real,” which was then absorbed into the Santander Group in order to further consolidate its investments in Brazil. Santander Brasil’s acquisition of Banco Real’s share capital was approved through a share exchange transaction on August 29, 2008, which resulted in Banco Real becoming a wholly owned subsidiary of Santander Brasil. Subsequently, it was merged into Santander Brasil on April 30, 2009.
Since October 7, 2009, our units and common
and preferred shares have been listed and traded on B3 under the symbols “SANB11,” “SANB3” and “SANB4,”
respectively. Our ADRs have been registered with the SEC under the Securities Act and are listed and traded on the NYSE under the symbol
“BSBR.” For further information, see “Item 9. The Offer and Listing—A. Offering and Listing Details.”
Important Events
We have set forth below important recent
events in the development of our business. For further information, please see note 11 (d) to our audited consolidated financial statements,
included elsewhere in this annual report.
Purchase of Equity Interest in Toro Corretora
de Títulos e Valores Mobiliários S.A.
On September 29, 2020, Santander Brasil’s
subsidiary, Santander Distribuidora de Títulos e Valores Mobiliários S.A., or “Santander DTVM,” entered into
an investment and other covenant agreement with the shareholders of Toro Controle e Participações S.A., or “Toro
Controle,” to invest in Toro Controle. Toro Controle is the holding company of Toro Corretora de Títulos e Valores Mobiliários
S.A., or “Toro Corretora,” and Toro Investimentos S.A., or “Toro Investimentos,” which jointly run an investment
platform focused on the retail market, founded in Belo Horizonte in 2010. Before the conclusion of the transaction Toro Controle was
merged into Toro Corretora. We refer to Toro Controle, Toro Corretora and Toro Investimentos as “Toro.”
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In addition, Santander DTVM and Toro Corretora
combined their market experiences to develop a comprehensive platform of fixed and variable income products. This platform is based on
shared expertise and technology and operates in the growing Brazilian investment market. The completion of the transaction occurred in
April 2021, following the execution of certain customary agreements between the parties, the fulfillment of customary conditions precedent
and the receipt of certain regulatory approvals, including the approval of the Brazilian Central Bank.
Following this transaction, on June 7,
2023, we entered into an agreement with the shareholders of Toro Participações S.A., or “Toro Participações,”
for the acquisition of the remaining shares of Toro Participações. Once this transaction was completed, we became the indirect
holder of all the share capital of Toro Corretora. and Toro Investimentos. After the conditions precedent established in the agreement
were fulfilled, the transaction closed on January 3, 2024. Following this acquisition Toro Participações was merged into
Toro Corretora on February 29, 2024. On November 4, 2025 Toro Corretora changed its name to Santander Corretora de Títulos e Valores
Mobiliários S.A. following a restructuring of Toro Corretora into Santander Brazil’s ecosystem of retail brokerage.
Acquisition of Equity Interest
in Apê11 Tecnologia e Negócios Imobiliários Ltda.
On September 2, 2021, Santander Holding
Imobiliária S.A., or “SHI,” a wholly owned subsidiary of Santander Brasil, entered into a Share Purchase and Sale Agreement
and Investment Agreement with the shareholders of Apê11 Tecnologia e Negócios Imobiliários Ltda., or “Apê11,”
for the acquisition of 90% of the capital stock of Apê11. Apê11 acts as a collaborative marketplace, pioneering the digitization
of the purchase journey of houses and apartments. After the conditions precedent established in the agreement were fulfilled, the closing
of the transaction occurred on December 16, 2021.
On December 22, 2023, SHI entered into an agreement
to acquire all of the outstanding shares of Apê11. As a result of this second transaction, SHI became the sole shareholder of 100%
of Apê11 share capital. Following this acquisition Apê11 was merged into SHI on June 28, 2024.
Investment in Biomas – Serviços Ambientais,
Restauração e Carbono S.A.
On November 9, 2022, our wholly owned
subsidiary, Santander Corretora, entered into an investment agreement to acquire up to 20% of the share capital of Biomas – Serviços
Ambientais, Restauração e Carbono S.A., or “Biomas.” Biomas provides biodiversity and ecosystem restoration
and conversation services, which is aligned with our sustainability objectives. Following the closing of the transaction on March 21,
2023, Santander Corretora now holds 16.66% of the outstanding shares of Biomas.
Sale of equity stake in Banco PSA and Stellantis
Corretora de Seguros
On November 29, 2022, we, through our
subsidiaries, entered into an agreement to sell our 50% equity interest in each of Banco PSA Finance Brasil S.A., or “Banco PSA”
(which we held through Aymoré), and Stellantis Corretora de Seguros e Serviços Ltda., or “Stellantis Corretora”
(which we held through Santander Corretora), to Stellantis Financial Service, S.A. and Stellantis Services Ltd., respectively. Closing
of the transaction occurred on August 31, 2023, and, as a result, we are no longer a shareholder of either of these entities.
Sale of a portion of Santander Corretora’s
shareholding in Webmotors
On April 28, 2023, Santander Corretora
sold a 40% stake in the share capital of Webmotors to Carsales.com Investments Pty Ltd., or “Carsales.” As a result, Santander
Corretora now holds 30% of the share capital of Webmotors while Carsales holds the remaining 70%. Carsales is part of CAR Group Limited,
an Australian multinational company.
Acquisition of Equity Interest and Investment
in Fit Economia de Energia S.A.
On August 1, 2023, Santander Corretora
entered into an investment agreement with HB Fit Participações Ltda. to acquire up to 65% of the share capital of Fit Economia
de Energia S.A. After the conditions precedent established in the agreement were fulfilled, the closing of the transaction occurred on
March 6, 2024.
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Partnership with Sodexo Pass International and
Sodexo Pass do Brasil Serviços de Inovação Ltda.
On July 24, 2023, we entered into a partnership
agreement with Sodexo Pass International and Sodexo Pass do Brasil Serviços de Inovação Ltda. On June 27, 2024, after
the conditions precedent established in the agreement were fulfilled, our partnership with the Pluxee Group (which was spun-off from Sodexo)
became operational. As a result of the transaction, we and the Pluxee Group now hold 20% and 80% equity stakes, respectively, in the share
capital of Pluxee Benefícios Brasil S.A.
Call Option and Issuance of Notes
In October and November 2023, Santander
Brasil exercised our option to repurchase the Tier 2 debt instruments issued in 2018 in the amount of U.S.$1.25 billion. In their place
to compose our Tier 2 regulatory capital, we issued financial bills (letras financeiras) with a subordination clause in the total
amount of R$6.0 billion. These financial bills have a term of 10 years, and redemption and repurchase options in accordance with the applicable
regulations.
Furthermore, on November 8, 2024, we also
exercised our option to repurchase the Tier 1 debt instruments issued in 2018. In order to replace these as part of our Tier 1 regulatory
capital, we issued financial bills with a subordination clause in the total amount of R$7.6 billion. These new financial bills have a
repurchase clause exercisable from the date that is 10 years after their issuance date, in accordance with the applicable regulations.
Investment in América Gestão Serviços
em Energia S.A.
On March 12, 2024, Santander Corretora
entered into an agreement to acquire 70% of the share capital of América Gestão Serviços em Energia S.A. (“América
Gestão”). After the conditions precedent established in the agreement were fulfilled, the closing of the transaction occurred
on July 4, 2024. América Gestão is an energy management company with a diversified client portfolio and a large range of
service offerings such as strategic and operational energy management for consumers and plants in the free and captive markets, and sustainability
projects in line with environmental and social factors. The company has more than 20 years of experience in the power sector.
Reorganization of Return Capital
On May 17, 2024, Return Capital, a wholly
owned subsidiary of Santander Brasil, entered into a share purchase and sale agreement with certain minority investors in Return Capital
Gestão de Ativos e Participações S.A. (formerly known as Gira, Gestão Integrada de Recebíveis do Agronegócio
S.A.), or “Return Gestão,” to acquire the remaining 20% of the share capital of Return Gestão. As a result,
Santander Brasil became the owner of the entire issued share capital of Return Gestão. Following this acquisition, Return Capital
was merged with and into Return Gestão on September 30, 2024. As a result of this merger, Return Capital ceased to exist and its
activities were taken over by Return Gestão, of which Santander Brasil is the sole shareholder. Subsequently, on November 28, 2025,
a spun off portion of Return Participações was merged into Santander Brasil, as part of an initiative aimed at simplifying
the group’s corporate and ownership structure.
Merger of Santander Leasing S.A. Arrendamento
Mercantil into Santander Brasil
On November 28, 2025, the merger of Santander
Leasing S.A. Arrendamento Mercantil, or “Santander Leasing,” into Santander Brasil was approved. The transaction aims to simplify
the corporate structure of the group, unify accounting processes and reduce operating costs. The merger will only become effective upon
approval by the Brazilian Central Bank. There was no increase in the share capital of Santander Brasil as a result of the transaction,
since Santander Brasil already held 100% of the share capital of Santander Leasing.
Issuance of Tier 2 Financial Bills
On December 4, 2025 Santander Brasil carried
out the private issuance and offering of subordinated financial bills in the total amount of R$2,362.8 million to private investors. The
proceeds from the issuance will be used to compose our Tier 2 regulatory capital. The financial bills have a maturity of 10 years, with
a repurchase option exercisable as of 2030, in accordance with the applicable regulations. The financial bills are eligible to be included
in our Tier 2 capital, pursuant to Brazilian Central Bank Resolution No. 122, dated August 2, 2021.
Capital Expenditures and Divestitures
Our main capital expenditures include
investments in our information technology platform. Our information technology platform focuses on our customers and supports our business
model. In 2025, 2024 and 2023, total investments in information technology for Santander Brasil were R$2,111 million, R$1,832 million
and R$2,259 million, respectively.
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In 2025, 2024 and 2023, we continued to
improve our technology platforms by investing in our digital applications, especially through the implementation of new solutions in the
areas of artificial intelligence (e.g., machine learning, and AI for operations, or AIOPs), micro services, blockchain technology, cyber
insurance, facial recognition and cloud-based technologies, among others. We believe that the application of these new technologies improved
our interaction with our customers and enabled us to provide solutions across credit, consortiums (“consórcios”),
payroll loan, insurance, private banking, cards, payments, agribusiness and investments to better address client needs. We also continued
to invest in our physical distribution network (branches, PABs and PAEs), including biometric identification for corporate customers,
digital purchase and payment of exchange, among other initiatives. For more details about our technology and infrastructure, see the item
“—B. Business Overview—Technology and Infrastructure.”
Our ongoing capital expenditure consists
primarily of investments in information technology. We expect to fund our ongoing capital expenditures principally from our cash flow
from operations.
For more information, see “Item
5. Operating and Financial Review and Prospects—A. Operating Results—Principal Factors Affecting Our Financial Condition and
Results of Operations.”
4B. Business Overview
Our Strategy
Our strategy is centered on pursuing profitable,
diversified and sustainable operations.
We are focused on becoming the most present
bank in our customers’ lives, striving to deliver the best-in-class experience to individuals and businesses alike. We believe that
our use of technology leads improves our customers’ journeys by offering relevant, tailored products to enable us to meet our customers’
need when, how, and where they desire. We have strived to strengthen our customer service channels, particularly our digital platform
and remote services. In addition, in our physical channels, we have a store model that positions our stores as a convenient stopover integrated
within our multichannel offering.
We are guided by our strategic pillars
of (i) customer centrality, (ii) scaling up, through the expansion of the customer base and a comprehensive multichannel offering, (iii)
revenue diversification, striving to grow in retail deposits and commissions, (iv) expertise in credit and efficiency, seeking to strengthen
our portfolio and cost management for the benefit of our customers, and (v) leveraging our key enablers, which we believe are people and
technology, the key components to support our business transformation. We are aiming to build an operation capable of generating consistent
and long-term results.
We also focus on maintaining sound risk
management, and work to continuously improve our internal models to maintain our credit risk indicators at levels consistent with our
risk management policies. In terms of costs and efficiency, we continue to develop our productivity culture, seeking to improve our operational
efficiency by simplifying and digitizing processes and implementing technologies. Additionally, we are focused on maintaining discipline
in capital allocation, and seek to prioritize operations with higher profitability and good asset quality.
We recorded net income of R$12,965 million,
R$13,414 million, and R$9,499 million in the years ended December 31, 2025, 2024 and 2023, respectively, representing a 3.3% decrease
in the year ended December 31, 2025, compared to the year ended December 31, 2024. In the years ended December 31, 2025,
2024 and 2023, we achieved capital adequacy ratios of 15.4%, 14.3%, and 14.5%, respectively. In the years ended December 31, 2025,
2024 and 2023, we reached efficiency ratios of 27.9%, 27.7%, and 29.7%, respectively. In addition, we achieved a return on average stockholders’
equity of 10.6%, 11.2%, and 8.5% in 2025, 2024 and 2023, respectively, and an adjusted return on average stockholders’ equity of
13.7%, 14.6%, and 11.3% in 2025, 2024 and 2023, respectively. Adjusted return on average stockholders’ equity is a non-GAAP financial
measure. For further information, see “Item 3. Key Information—A. Selected Financial Data—Reconciliation of Non-GAAP
Measures and Ratios to Their Most Directly Comparable IFRS Financial Measures.” We believe that these metrics demonstrate our track
record of consistent performance and the results of our constant efforts to improve our productivity.
In recent years, we have undergone significant
transformations, thereby enabling us to identify and capitalize on business opportunities. We have expanded our business to diversify
our offering of products and services:
• In 2024, we remained focused on being the bank of first choice for customers in their financial decisions, striving to provide a highly personalized offering to our 69 million customers.
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◦ We believe this can only be done with the intensive use of technology, which we believe improves the customer experience and reduces the cost incurred to serve our customers. We are prioritizing the primary relationship focusing on three pillars:
▪ Transactionality: which we define as transactions our customers do through Santander Brasil, such as paying with credit cards or using PIX and wire transfers. We believe this is an essential part of our customer primacy strategy and a driver of our revenue diversification efforts;
▪ Investments: the fundamental lever of our retail funding expansion plan; and
▪ Credit: with relentless discipline in capital allocation, being a complementary element to the other pillars.
◦ In innovation and technology, we consistently worked to strengthen our culture of productivity and cost management, always focused on providing the best experience for our customers.
◦ We also began a new engagement approach with our customers by launching “Começa Agora” (which means “It Starts Here”) to foster closer connections with our customers. We introduced our “Santander Free” offering which is focused on low income customers. We also sought to strengthen our tailored offering of products to our “Santander Select” high income customers. We have also shifted our positioning in the SMEs segment, to be closer, more available and integrated into our customers’ businesses. Additionally, we have made progress in combining our Toro and other Santander Brasil offerings to develop a market-leading investment platform combining a digital experience with human relationships with scale and technological excellence, which we believe are key levers of our retail funding expansion plan.
• In 2025, we continued to pursue our commitment to be the primary bank of our clients through intensive and efficient use of technology aiming to create value, hyper-personalized offers and continuously improve customer experience. Thus, we continued to make progress with our strategic priorities:
◦ Individuals: we increased the number of customers for which we believe we are the primary bank (which we define as customers who use at least two of the following services we provide: transaction services, loans, and investments) by 1% in the year ended December 31, 2025 compared to the year ended December 31, 2024, which we believe is due to our efforts to improve our offerings and customer service by combining human contact with the digital environment;
◦ Consumer Finance: we continue to provide solutions that deliver value to our clients within a comprehensive ecosystem which we believe enables cross-selling opportunities;
◦ Companies: we continue to reinforce our commitment to being close, available, and fully integrated into our clients’ businesses, delivering tailored solutions that translate into higher productivity, profitability, and satisfaction;
◦ Payments: we are transforming the client journey and delivering a new experience. This year, we launched PIX via credit card, combining PIX’s speed with the flexibility of credit cards;
◦ Investments: we continue to evolve in our expansion plan, leveraging technology to hyper-personalize the experience of our customers and boost productivity. In this regard, we launched Pitch Maker, an artificial intelligence assistant that further enhances our advisors' ability to serve our customers. We also advanced in the integration of Santander Corretora and Toro, combining the tools into a single application to simplify the customer journey with the aim of achieving gains in efficiency and scale;
◦ We were dedicated to continuing to have a pivotal role as a hub for innovation and global integration within the Santander Group, working in close partnership with other regions as one Santander. The main project launched this year was the One App, in which we put technology and global expertise at the service of customers’ experience. We believe this tool helps us understand our customers’ needs by offering a solution that allows our customers to manage their entire financial lives through this new app;
◦ In parallel, we keep prioritizing our portfolio diversification, and endeavor to optimize our cost of funding by expanding our presence in the Individuals’ segment; and
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◦ To support this process, we continue to strengthen our culture based on empowerment, leadership, and diversity, and seek to foster an environment of innovation to leverage our digital transformation.
Our Business
We provide a full range of products and
services to our customers through the following business segments:
• Commercial Banking: provides services and products to individuals and companies (excluding global corporate customers, who are managed by our Global Wholesale Banking division). The revenue generated from this segment is derived from the banking and financial products and services offered to both account holders and non-account holders.
• Global Wholesale Banking: offers a wide range of national and international tailor-made financial services and structured solutions for our global corporate customers, which are primarily local and multinational corporations.
We outline below the business divisions
pertaining to each of our operating segments:
Commercial Banking Global Wholesale Banking
Retail Banking Individuals SMEs Consumer Finance Corporate Santander Corporate & Investment Banking (“SCIB”)
In addition, provided below is a breakdown
of our net interest income and operating income before tax by segment:
For the Year Ended December 31,
Net interest income Operating income before tax
2025 2024 2023 2025 2024 2023
(in R$ millions)
Commercial Banking 53,126 51,563 44,652 8,938 12,461 5,953
Global Wholesale Banking 4,509 5,115 2,232 7,791 6,730 5,969
Total 57,634 56,679 46,884 16,729 19,190 11,922
The following table presents a managerial
breakdown of our loans and advances by customer type as of the dates indicated:
As of December 31, Change between 2024 and 2025 Change between 2023 and 2024
2025 2024 2023
(in R$ millions)
Individuals 274,003 287,021 255,704 (4.5) % 12.2 %
Consumer Finance 83,811 75,119 62,501 11.6 % 20.2 %
SMEs 83,327 73,274 64,970 13.7 % 12.8 %
Corporate(1) 160,898 164,273 168,361 (2.1) % (2.4) %
Loans and advances to customers, gross 602,040 599,688 551,536 0.4 % 8.7 %
Guarantees and private securities 176,841 150,669 168,345 17.4 % (10.5) %
Credit risk exposure (2) 778,881 750,357 719,881 3.8 % 4.2 %
(1) For loan portfolio purposes, “Corporate” refers to companies with annual gross revenues exceeding R$200 million, including our Global Corporate Banking customers.
(2) Credit risk exposure is a non-GAAP financial measure. Credit risk exposure is the sum of the amortized cost amounts of loans and advances to customers (including impaired assets), guarantees and private securities (securities issued by nongovernmental entities). We include off-balance sheet information in this measure to better demonstrate our total managed credit risk. For further information, see “Item 3. Key Information—A. Selected Financial Data—Reconciliation of Non-GAAP Measures and Ratios to Their Most Directly Comparable IFRS Financial Measures.”
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Commercial Banking
Retail – Individuals
Our strategy for individual customers
revolves around five main pillars:
• Cost Optimization – Providing a more digital offering to increase the proportion of digital interactions with our customers relative to physical interactions, which we believe improves customer experience and lowers costs.
• Credit – Capital optimization by shifting the portfolio mix to prioritize transactional and higher profitability products, focusing on credit cards in particular.
• Engagement Model – The app as the main sales and engagement driver. Growth squads focused on e-commerce, in addition to personalization through extensive use of open finance. In terms of human contact, we strive to leverage every touchpoint to improve customer relationships.
• Service Model – The app as the primary customer channel, migrating an extensive array of communications from the call center to the chatbot. Providing the customer with a conversational experience remotely, 90% through chats and 10% through voice conversations, while continuing to offer brick-and-mortar branches.
• Offering – A simpler, digital bank focused on customer experience, featuring a free account and card offering (our “Santander Free” offering), unlimited withdrawals, and 10 days of interest-free overdraft to strengthen our “Santander” and “Santander Select” brands.
As of December 31, 2025, we structured
the individual customer service segment as follows:
• Private Banking – customers who have at least R$5.0 million in assets available for investment. Private banking provides a comprehensive and customized range of financial products and services, including investment advisory services, loans, and asset management, delivered by a dedicated investment and banking services manager.
• Santander Select – customers with a monthly income starting from R$7,000, or at least R$100,000 in investments, or customers who choose to pay for this service category, regardless of their income or amount of investments. Within Santander Select, our goal is to understand our customers’ needs at each stage of their lives and provide them with financial advisory services through a multichannel solution in which they have the option of receiving human assistance across all channels, including financial products and services that support their wealth accumulation and investment goals.
• Santander Especial – customers with a monthly income of up to R$6,999. Santander Especial offers simple and efficient solutions with a suitable cost-benefit ratio for our customers, primarily through digital channels.
Retail – Small and Medium-Sized Enterprises
(SMEs)
As of December 31, 2025, we served SMEs
using the following customer service segmentation model:
• Companies 3 (“Empresas 3”) – responsible for companies with annual revenues between R$30 million and R$200 million. Our service model is based on dedicated relationship managers, a team of specialists for more complex demands, and credit managers specializing in risk management. We also provide customized services to multinational technology companies and other large corporations to meet their specific needs.
• Companies 2 (“Empresas 2”) – responsible for companies with annual revenues ranging from R$3 million to R$30 million. We provide these clients with a wide array of products and services, supported by dedicated specialists in specialized hubs.
• Companies 1 (“Empresas 1”) – responsible for companies with annual revenues of up to R$3 million. We offer these customers a streamlined banking solution through an integrated account that combines a business account with a point-of-sale, or “POS” terminal hosted by our former subsidiary and current affiliate Getnet. Through this arrangement, our customers receive benefits for utilizing the Getnet platform to handle their credit card sales, with their proceeds being directly deposited into a Santander Brasil checking account.
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• Empresas Mei – responsible for companies with an annual revenue of up to R$97,000 and registered as an Individual Microentrepreneur (microempreendedor individual), or “MEI,” with the Brazilian Federal Revenue Service (Receita Federal do Brasil). We offer these customers a streamlined and cost-effective solution through our Santander MEI account, a remote service and digital channels.
In January 2026, we announced a review
of our SME segmentation model as follows: (1) Digital ("Empresas Digital"): businesses with annual revenues of up to R$500,000;
(2) Companies 1 ("Empresas 1"): companies with annual revenues ranging from R$500,000 to R$10 million; (3) Companies 2 ("Empresas
2"): companies with annual revenues ranging from R$10 million to R$80 million; and (4) Middle Corporate, formerly Companies 3 ("Empresas
3"), which now comprises companies with annual revenues ranging from R$80 million to R$500 million.
Consumer Finance
We provide consumer loans for financing
vehicles, goods and services, directly or through intermediary agencies, dealers and partners. Santander Financiamentos is our primary
service channel, and we also operate under other brands with associated companies.
The following table presents our market
share in auto loans (a subset of our consumer finance business) as of the dates indicated:
As of December 31, Change between 2024 and 2025 Change between 2023 and 2024
2025 2024 2023
Market share in auto loans to individuals 20.3 % 21.9 % 21.1 % (1.6) p.p. 0.8 p.p.
Source: Brazilian Central Bank.
Corporate
Our corporate segment aims to be the main
distribution channel of the Santander Group to Brazilian and foreign and/or multinational corporate customers. The product offering ranges
from simple cash accounts to mergers and acquisitions advisory services. We serve companies with annual gross revenues in excess of R$80
million (as of January 1, 2026) located across Brazil through physical and digital channels. Our corporate business has been constantly
evolving as a business line relying on a disciplined analytical toolkit, consistent communication, and workforce upskilling.
Global Wholesale Banking
Santander Corporate & Investment Banking,
or SCIB, is the global business unit that serves customers who, due to their size and complexity, require tailored services or high-value-added
wholesale products. In this segment, we provide a wide range of domestic and international financial services to large Brazilian and multinational
companies. Our customer portfolio comprises a range of industries, including telecommunications, retail, aviation, real estate and logistics,
power, construction and infrastructure, natural resources, food, agribusiness, and financial institutions. Our customers in the SCIB segment
benefit from the Santander Group’s global structure of services, which is supported by its worldwide-integrated wholesale banking
network and global services solutions, as well as local market expertise and integrated services.
Our Portfolio of Products and Services
Payments and Loyalty
Cards
We operate in the credit and debit card
market, catering to both account holders and non-account holders. Most of our customers are individuals to whom we offer a range of cards
to address each customer profile.
In 2025, we focused on our business expansion
through integrated initiatives that combined data, technology, and customer centricity.
We sought to improve our pricing with
Smart Pricing, using AI, machine learning, and elasticity testing to price our credit products better. Another example is PIX no Cartão,
which allows customers to make payments and transfers via PIX using their credit card limit, with options for payment in full or in up
to 12 installments, including payment in up to three future billing cycles. This initiative unified traditional credit with instant payments.
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Furthermore, to attract new customers
and boost the frequency of service usage, we rolled out promotions with offerings, such as the Bateu Ganhou campaign, which set
monthly spending goals for customers and rewarded them with points or cash back, and the Temporada de Férias campaign, which
was designed to strengthen relationships with high-income clients by offering convenience and exclusive benefits such as loyalty points
and exemptions from the payment of certain fees.
In the SMEs segment, we offer an integrated
solution in a digital journey for businesses, with a unified offering of account, credit card, and merchant acquiring services within
a single ecosystem. We believe this integrated approach simplifies financial management and improves cash flow.
We also launched a new, redesigned and
unified app that integrates account and card services into a single experience, while also allowing users to view information regarding
accounts they have at other banks. We believe that this solution strengthens our relationship with our customers and offers a more fluid,
modern, and intuitive journey.
The following table shows key financial
and operational metrics of our credit card business as of the dates and for the periods indicated.
As of and for the Year Ended December 31, Change between 2024 and 2025 Change between 2023 and 2024
2025 2024 2023
Individual credit card portfolio market share (1) 9.3 % 9.6 % 9.3 % (0.3) p.p. 0.3 p.p.
Credit card portfolio (in R$ billion) 71.3 62.6 53.9 13.9 % 16.1 %
Total card turnover (in R$ billion) 406.4 383.1 347.9 6.1 % 10.1 %
Credit card turnover (in R$ billion) 303.7 274.4 238.3 10.7 % 15.1 %
Total card transactions (in millions) 4,040.5 4,010.6 3,764.2 0.7 % 6.5 %
Credit card transactions (in millions) 1,999.6 1,911.2 1,731.8 4.6 % 10.4 %
Credit card share in household consumption (debit only) – Market overview (2) (%) 12.1 % 13.3 % 14.5 % (1.2) p.p. (1.2) p.p.
Credit card share in household consumption (credit only) – Market overview (2) (%) 38.8 % 36.1 % 34.4 % 2.7 p.p. 1.7 p.p.
Credit card share in household consumption (total: debit, credit, and prepaid) – Market overview (2) (%) 55.7 % 54.3 % 53.4 % 1.4 p.p. 0.9 p.p.
(1) Source: Brazilian Central Bank.
(2) Source: ABECS – “Brand Monitor,” as of September 30, 2025. Data for the period ending December 31, 2025 was not available as of the date of this annual report.
Santander Way
Santander Way is an app designed for our
cardholders, allowing them to manage their Santander Brasil cards effortlessly, at any time and from anywhere. This comprehensive card
management tool features numerous functionalities, such as the ability to make payments, add cards to digital wallets, and participate
in promotional campaigns, among others. We are committed to regularly updating the app with new functionalities to further enrich the
user experience.
Esfera
We continue to offer our loyalty program,
Esfera, which we believe creates avenues to expand into new markets and leveraging cross-selling within our ecosystem.
Payroll Loans
We provide payroll loans to both account
holders and non-account holders. Loan repayments are automatically deducted from customers’ monthly salaries by their employers
and then transferred to Santander Brasil, significantly lowering our credit risk in comparison to other types of loans. Payroll loans
are accessible to our customers through our digital platforms and physical branches. Our customers can refinance their payroll loans,
as well as choose from other options to help them manage their debts.
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The following table sets forth certain key
financial and operating data regarding our payroll loans as of the dates indicated.
As of December 31, Change between 2024 and 2025 Change between 2023 and 2024
2025 2024 2023
Market share of the portfolio (1) 8.5 % 10.5 % 10.8 % (2.0) p.p. (0.3) p.p.
Payroll loan portfolio (in R$ billions) 61.1 70.5 67.3 (13.3) % 4.7 %
(1) Source: Brazilian Central Bank.
Real Estate Loans
We offer long-term financing to our customers
for the purchase of real estate, with the property itself serving as collateral for the loan. For this reason, a real estate loan is a
strategic product due to its lower risk and potential for increasing customer loyalty.
We provide real estate financing that
adheres to regulatory standards for prime loans for this type of lending. This means: (i) capping the financing at a maximum of 80% of
the property’s purchase price; (ii) requiring customers to have a minimum monthly income, verified by recent pay stubs and tax documents
that confirm their employment status or other income sources, enabling us to assess their creditworthiness; and (iii) ensuring that any
additional debt combined with the financing does not surpass 35% of the customer’s gross monthly income.
To streamline the property financing process
for our customers, we have created an innovative digital platform, including digital signatures and electronic registration, ensuring
a digital journey and structured data transmission directly to the property registry office.
The following table sets forth certain key
financial and operating data regarding our real estate business as of the dates indicated:
As of December 31, Change between 2024 and 2025 Change between 2023 and 2024
2025 2024 2023
(in R$ billions, unless otherwise indicated)
Real estate loan portfolio 70.2 64.8 61.7 8.2 % 5.1 %
Individual real estate loan portfolio 66.1 61.0 59.5 8.4 % 2.5 %
Loan-to-value (1) – Origination (quarterly average %) 61.8 % 55.4 % 57.1 % 6.4 p.p. (1.7) p.p.
Loan-to-value – Portfolio (%) 52.2 % 48.3 % 49.3 % 3.9 p.p. (1.0) p.p.
(1) Ratio between loans and the value of the collateral, excluding home equity.
Home Equity
We offer a home equity financing solution
named “UseCasa” for individuals and “UseImóvel” for businesses, where customers can secure a loan by using
their property as collateral. We are the market leaders among private-sector banks in Brazil for this type of financing, holding a portfolio
market share of 20% as of December 31, 2025, according to ABECIP.
Microfinance
The mission of “Prospera Santander
Microfinanças,” our microfinance program, is to foster financial inclusion by providing access to credit and financial guidance
to low-income micro and small entrepreneurs. The microcredit offer is made by our local specialists, through a fully digitized process,
empowering microfinance loan recipients to expand their businesses. In addition to microcredit, we offer access to checking accounts
and other banking services, products and financial education. We hope to positively impact the social and economic development of the
local communities in which we operate.
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The following table shows key financial
and operating data from our microfinance operations as of the dates indicated.
As of December 31, Change between 2024 and 2025 Change between 2023 and 2024
2025 2024 2023
Active customers (million) 1.19 1.15 1.10 3.5 % 4.5 %
Microfinance loan portfolio (in R$ billion) 3.5 3.3 3.0 5.2 % 10.2 %
Consortiums (“Consórcios”)
Consortiums operate on a collaborative
financing model, where a group of individuals and/or companies come together to purchase a specific asset in an egalitarian and self-funded
manner. Contributions are pooled into a common fund, which is dedicated to acquiring the asset agreed upon at the start. Throughout the
duration of the agreement, members of the consortium group receive the asset through lotteries and competitive bidding. Typically, consortium
groups are formed for the purchase of durable goods, such as real estate and vehicles.
We provide a consortium offering for our
customers aligned with the prevailing interest rate and credit conditions in the market. In 2025, we broadened the distribution of the
product through our “Perto Patrimonial,” a channel dedicated to sale of consortiums. Seeking better customer satisfaction,
we have sought to strengthen the post-sales journey and to improve our offering with new features.
As of December 31, Change between 2024 and 2025 Change between 2023 and 2024
2025 2024 2023
Total consortium origination (R$ million) 17,652 17,378 15,639 1.6 % 11.1 %
Real estate consortiums origination (R$ million) 11,874 11,230 9,599 5.7 % 17.0 %
Consortium loan portfolio (in R$ billion) 45,792 40,189 38,600 13.9 % 4.1 %
Agribusiness
Agribusiness remains a relevant sector
for Santander Brasil, despite the turmoil the sector has faced in recent years. After nearly a decade of expansion, the sector entered
a period of structural deterioration that began during the pandemic, when rising production costs—driven by disruptions in supply
chains—coincided with exceptionally high margins and abundant credit availability. This environment led many producers to significantly
increase their leverage. Starting with the 2022/2023 harvest, climate events in the South and Northeast regions of Brazil reduced national
production, while competing countries such as Argentina logged record harvests. This imbalance expanded global supply and pressured commodity
prices, pushing margins down to historic lows. Further climate events occurred during the 2023/2024 harvests, which led to further pressure
on margins. At the same time, the increase in the SELIC rate to contain inflation raised the cost of credit and made the debt levels assumed
by some producers during periods of high margins unsustainable.
Although the crisis is significant, its
impacts are not uniform. Many producers maintained adequate leverage levels and continue to operate normally within the sector’s
historical margin parameters. The 2025/2026 harvest, for example, is already almost entirely planted, with no productive areas being abandoned.
We are working closely with customers,
offering renegotiation solutions and guiding the necessary deleveraging process, whether through narrowing operational scope or selling
assets. To strengthen risk governance, we have expanded our credit recovery teams and created a dedicated portfolio to monitor the most
stressed clients. We expect a full normalization of the sector will take a few years. During this period, more robust and selective credit
models—less dependent on traditional guarantees—are likely to emerge, changes that should structurally strengthen the market
and reduce vulnerabilities like those seen in the recent cycle.
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The following table sets forth certain key
financial and operating data regarding our agribusiness portfolio as of the dates indicated.
As of December 31, Change between 2024 and 2025 Change between 2023 and 2024
2025 2024 2023
(in R$ billions, except for percentages)
Agribusiness portfolio (1) 52.1 52.9 53.7 (1.5) % (1.5) %
(1) Including credit, securities and other products.
emDia
emDia is a 24/7 omnichannel collection
company offering its customers both call center and digital solutions. We have been investing in the use of technology, focusing on hyper-personalization
and a multichannel journey.
Return Capital
Return Capital specializes in managing
and securitizing nonperforming assets. We actively seek cross-selling opportunities within our ecosystem, leveraging the flow of customers
and the extensive reach of our business.
Insurance Ecosystem
We offer our insurance products through
Santander Corretora de Seguros, helpS, Auto Compara, and Santander Auto S.A., or “Santander Auto.” Our insurance business
as a whole generated R$17.1 billion in premiums in the year ended December 31, 2025.
Santander Corretora de Seguros
Santander Corretora de Seguros provides
a diverse range of products designed to meet the needs of every customer profile. We offer a comprehensive portfolio of insurance and
protection services, delivering all-encompassing solutions. Our portfolio includes life and personal accident insurance, vehicle and property
coverage, credit insurance, as well as insurance for travel and banking transactions, among other products.
According to the SUSEP report from October
2025, we have a market share of 8.2% across the lines of business which we operate.
We are continually refining our insurance
solutions to address the evolving needs of our customers, striving to deliver an enhanced experience from the first purchase to the policy
renewal.
helpS
helpS is our assistance and convenience
services business, providing 24/7 emergency solutions for homes, cars, motorcycles and pets. It also provides access to a 24/7 telemedicine
platform, a network of discounts on consultations, exams, and pharmacies, bodywork and painting repairs, and streaming services. The benefits
are linked to the individual’s taxpayer ID, rather than to a specific asset, thus allowing customers to request assistance
whenever, wherever, and for however they want. Through “Santander+ Combos,” the customer can create a basket of services of
their choice for a fixed monthly fee, which is designed to be lower than the cost of these same services when purchased separately.
Automotive Insurance Ecosystem
The Brazilian insurance market is characterized
by: (i) a low level of insurance penetration relative to its GDP; (ii) outdated technology and dominated by companies with low innovation
rates that prioritize financial results (due to a history of high interest rates); and (iii) a distribution network predominantly composed
of retail brokers. Consequently, only approximately 30% of Brazilian vehicles were insured as of September 2025, according to CNSeg (Confederação
Nacional das Seguradoras). In this context, we provide the following automotive insurance solutions:
• Santander Auto: Santander Auto provides a fully digital vehicle insurance solution that uses data analytics to set prices and features a one-click purchase process, seamlessly integrated with vehicle financing options. Leveraging actuarial techniques and behavioral modeling, Santander Auto offers insurance quotes without requesting additional information from customers. This is possible with data that is already available to us. Our objective is to grow the business by capitalizing on our ecosystem and engaging a larger portion of our customer base. We believe this approach has been key to the development of Santander Auto. In March 2025, we launched a new insurance product called Mão na Roda. It combines coverage for minor repairs, wheel and suspension services, and small damages caused by theft or robbery, for cars and motorcycles. We are also planning to offer Santander Auto’s products through new channels.
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• Auto Compara: Auto Compara is a leading digital comparison platform that offers car and motorcycle insurance alternatives. We offer an end-to-end digital journey so that customers can purchase their car insurance in a simple, fast and secure way. In addition, we are the car insurance solution for our retail bank and are available to millions of customers through our mobile app or through our commercial team. As of December 31, 2025, we featured products from 11 different insurers (which accounted for nine out of the 10 largest in the Brazilian market, according to SUSEP).
Consumer Finance
+Negócios | Santander Financiamentos
Our “+Negócios” platform
enables credit simulations, processes credit approvals, and formalizes vehicle financing proposals, while also providing portfolio management
reports. The platform has evolved and is now also used to cross-sell insurance products, as well as new offerings, such as car equity
loans.
Additionally, we offer the “+Fidelidade”
program, a loyalty-building initiative aimed at providing incentives to banking correspondents based on their engagement with the entire
Santander Brasil ecosystem. We centralize the business strategy in the program by implementing a loyalty journey for dealers and sellers.
We also have a structure to support our
customers after sales, through several tools, such as our customer portal and WhatsApp.
Webmotors
Webmotors is a Brazilian technology company
that operates an online marketplace specializing in car buying and selling solutions for dealerships, original equipment manufacturers,
or “OEMs,” and private sellers. Moreover, it is the largest automotive ecosystem platform in Brazil, according to IPSOS Branding
Tracking 2023.
On April 28, 2023, Santander Corretora
de Seguros, Investimentos e Serviços S.A. completed the sale of a 40% equity stake in Webmotors S.A. to CAR Group Limited, an Australian
multinational company. As a result, Santander Corretora now holds a 30% stake in Webmotors, while CAR Group Limited owns the remaining
70%. This strategic partnership combines the market-leading position of Santander Brasil in automotive financing in Brazil with the expertise
of CAR Group Limited, a global leader in the automotive marketplace.
For more information, see “Item
4. Information on the Company—A. History and Development of the Company—Important Events—Sale of a portion of Santander
Corretora’s shareholding in Webmotors.”
Santander Corporate & Investment Banking (SCIB)
We offer our customers a full range
of services and products. Thus, our portfolio includes offerings that range from basic to tailor-made and highly complex solutions across
the following areas:
Global Transaction Banking
The Global Transaction Banking area is
responsible for providing transactional and short-term financing solutions that support the management of working capital, cash flows,
and commercial operations of corporate and institutional clients, in Brazil and internationally.
• Cash Management: Responsible for providing cash management solutions, including payments, collections, receivables, reconciliation, liquidity management, and account structuring, encompassing digital solutions and transactional platforms.
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• Structured Trade & Working Capital Solutions: Responsible for structuring financing solutions linked to supply chains, foreign trade, and working capital, including structured trade finance products, supply chain finance, receivables prepayment, forfaiting, export and agency finance, and customized financing solutions.
• Trade & Lending: Responsible for the origination, structuring and execution of traditional trade finance and transactional credit products, including letters of credit, guarantees, documentary collections, import and export financing, as well as short-term credit facilities.
Global Banking
The Global Banking area is responsible
for the origination, structuring, and execution of strategic medium- and long-term financial solutions, supporting clients in growth,
investment, financing, and corporate reorganization decisions.
• Mergers & Acquisitions: Responsible for providing financial advisory services in mergers, acquisitions, divestitures, joint ventures, corporate restructurings, and business valuations, acting throughout the entire transaction lifecycle, from origination to execution.
• Equity Capital Markets: Responsible for the structuring and execution of equity capital markets transactions, including initial public offerings (IPOs), follow-ons, block trades, and other capital raising and monetization solutions.
• Investment Grade & Emerging Markets Debt: Responsible for the origination, advisory, execution, and distribution of fixed income instruments and syndicated loans, offering flexible solutions in terms of structure, tenor and currency, across both local and international debt capital markets.
• Structured Finance: Responsible for advising on and structuring tailor-made financing solutions for corporate and institutional clients, including project finance, acquisition finance, and asset financing, in both local and foreign currencies.
Global Markets
The Global Markets area provides risk
management solutions, investment products, and execution services, serving corporate clients, institutional clients, investors, financial
sponsors, and other Santander Group clients.
• Sales Markets: Responsible for structuring and offering foreign exchange, derivatives, commodities, rates, investment products, and equities solutions to clients across the bank’s various segments, including institutional, corporate, and retail clients.
• Market Making: Responsible for the pricing of transactions originated by the Sales Markets teams.
• Energy Trading: Operates in the energy market by executing transactions with qualified clients and end consumers, acting as a hedge provider and market maker.
• Equities: Responsible for the intermediation and execution of equity and listed derivatives brokerage transactions for institutional and corporate investors.
• Research: Area responsible for producing economic, macroeconomic, sectoral, and market analyses, with a focus on supporting client decision-making and commercial areas.
• Private Debt Mobilization (PDM) and Securitization: Responsible for structuring and distributing private debt transactions, including structured financings, private placements, and asset securitizations, connecting originators with institutional investors and expanding off-balance-sheet funding alternatives.
We received numerous awards related to capital
markets and financial advisory services in 2025. A few of our most notable accolades are listed in the table below.
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Company Acknowledgments
Dealogic December 2025 #5 Brazil M&A Deals by Advisor #8 Brazil M&A Total Fee by Advisor #4 Brazil ECM Deals by Advisor #4 Brazil ECM Volume by Advisor (Equal apportionment) #4 Brazil ECM Volume by Advisor (Full apportionment)
ANBIMA November 2025 #4 Brazil DCM Local Capital Markets Origination by Volume #3 Brazil DCM Local Capital Markets Origination by Deals #5 Brazil DCM Local Capital Markets Distribution by Volume
Bond Radar October 2025 #4 Brazil DCM International Capital Markets Origination by Volume #3 Brazil DCM International Capital Markets Origination by Deals
Institutional Investor Year 2025 #3 Best Analyst in Capital Goods Brazil #3 Best Analyst in Equity Strategy Brazil #4 Research Team #4 Brazil Sales #3 Corporate Access - LatAm
SRP America Awards Best House for Structured Products Brazil 2025 Best Distribution for Structured Products Brazil 2025
Brazilian Central Bank October 2025 #1 Total FX by Volume
B3 October 2025 #5 Brazil Commodities by volume #3 Brazil Structured Notes by volume #4 Brazil Derivatives by volume
Global Capital Latin America Derivatives House of the Year 2025
Global Finance Best Bank for Transaction Banking –LatAm 2025 Best Corporate Cross-border Payments Solutions – LatAm 2025
Best Bank for payments LatAm
ICC September 2025 #1 Brazil Local Trade Finance by volume
Latin Finance Infrastructure Bank of the Year 2025 Infrastructure Financing of the Year LatAm Road Financing of the Year LatAm Renewable Energy Financing of the Year LatAm
Euromoney Best FX Bank 2025 — LatAm
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Cash Management
We offer a broad suite of online cash
management solutions for corporate customers and SMEs through our internet banking and mobile banking platforms. Our cash management revenue
streams include fees derived from the following services:
• Collections – assisting customers in executing commercial transactions through printed or electronic payment slips.
• Payments – enabling efficient and automated processing of accounts payable, whether through individual transactions or batch file submissions.
• Instant payments – allowing customers to make and receive payments with immediate debiting or crediting of accounts. This capability can be integrated with our collections, payments, or product-acquisition products.
• Payroll services – streamlining the distribution of wages and benefits to employees via an online platform.
• Custody services – providing management and safekeeping of predated checks until their clearing dates.
In addition, we offer customized cash-management
and treasury solutions designed to meet the specific operational needs of our customers, supporting efficiency, liquidity management,
and day-to-day business operations.
“Advance Program” (Programa Avançar)
In addition to our financial services
offering, we also have the “Advance Program” (Programa Avançar), a free, non-financial platform designed to support
entrepreneurs — whether they are Santander Brasil customers or not. Launched in 2015, the program gives SMEs access to a comprehensive
set of business-development resources, including educational content, certified courses, and events focused on management, innovation,
internationalization, and team development. We believe the Advance Program is a strategic differentiator within our SME value proposition
and an important tool for fostering entrepreneurship in Brazil.
Customer Funding
Our main sources of liquidity are customer
funding through deposits and other bank funding instruments. These deposits, combined with equity and other instruments, enable us to
meet most of our liquidity and legal reserve requirements.
For further information, please refer to “Item
5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Liquidity and Funding.”
Investments – Funding Plan
Progress
Our investment ecosystem is designed to provide
a comprehensive advisory experience that supports customers in achieving their financial objectives. The model is structured around five
fundamental pillars:
• Customer investment profile – We assess each customer’s circumstances in order to determine their level of financial knowledge, investment horizon, liquidity needs and risk tolerance. Customer profiles are reviewed periodically to ensure continued alignment with their objectives and with applicable regulatory requirements.
• Investment strategy – Our investment philosophy focuses on generating long-term returns through a disciplined asset allocation process supported by a robust model that incorporates historical asset behavior and advanced financial simulations. Diversification across asset classes is an essential element for mitigating portfolio risks.
• Recommendations – We prepare model portfolios on a monthly basis to guide product recommendations for each customer profile. These portfolios are the result of a rigorous process led by our asset allocation committee, which considers economic projections, product scoring systems and ongoing market monitoring. Products with stronger evaluations are included in the recommended portfolio, while those with lower performance are reviewed for potential reallocation. This process incorporates analysis from our Advisory, Economics, Santander Asset Management, Private Banking and Santander Corretora teams.
• Execution and implementation – We offer a broad range of financial instruments, including banking products, fixed income securities, equities, structured notes, multimarket funds, real estate funds, exchange-traded funds (ETFs) and other capital markets solutions. We follow an open architecture approach that includes third-party funds selected through a rigorous curation process, as well as diversified fixed income alternatives and structured products distributed by Santander Corretora. Our partnership with Zurich Santander further expands this offering with a comprehensive portfolio of private pension plans.
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• Monitoring – We conduct ongoing reviews of each customer’s profile, objectives and performance to ensure their investments remain aligned with current recommendations and market conditions.
AAA
Launched in June 2022, AAA offers a comprehensive
range of products, complemented by a sophisticated digital experience and expert guidance to further strengthen our investment advisory
services. AAA provides an exclusive investment advisory service for high-net-worth individuals. To incentivize our AAA investment advisors,
their remuneration includes a substantial variable component that is contingent on the results they generate for our customers. As of
December 31, 2025, AAA had 1,754 investment advisors and was present in 180 cities across Brazil.
Toro
In 2025, Santander Brasil integrated Toro
Investimentos into its ecosystem and initiated a new phase of its investment strategy, which includes the consolidation of the retail
brokerage operation under the Santander Corretora brand. This phase also includes the expansion of our product offering, including the
distribution of cryptoassets, which we believe supports our strategy to expand available options, modernize the customer experience and
enhance our competitiveness in an increasingly dynamic market. This initiative is part of our strategic plan to simplify the client journey,
strengthen market positioning and accelerate innovation.
Customer Service Channels
We offer our financial services and products
to customers through a multichannel distribution network, which includes: (i) physical channels, such as branches, mini branches, and
ATMs; (ii) remote channels, such as call centers; (iii) external channels, consisting of banking correspondents and third-party vendors
of our products and services; and (iv) digital channels, including online banking and mobile banking platforms.
The following table provides an overview
of the weight of each key distribution channel in our overall distribution system.
For the Year Ended December 31,
2025 2024 2023
(%)
Digital channel (1) 98.5 97.0 96.1
Physical Channel (2) 0.9 1.6 2.1
Remote Channel (3) 0.7 1.4 1.8
(1) Includes Internet and mobile banking.
(2) Includes ATMs and branches.
(3) Includes interactive voice response, call centers and chatbot.
Digital Channels
In 2025, we focused on attracting qualified
customers and increasing the profitability and loyalty of our customer base. We achieved an NPS of 69 for our digital channels as of December
31, 2025.
Our number of digital customers, which
we define as individuals who have utilized at least one of Santander Brasil’s digital channels, such as mobile or internet banking,
within the 30 days prior to the end of the applicable year, reached 25 million, an increase of 6.2% in the year ended December 31, 2025
compared to the same period in 2024. Additionally, 98.5% of all of the transactions processed by Santander Brasil in 2025 were digital,
that is, transactions conducted through internet banking, mobile banking, and other digital platforms. We believe that these numbers
demonstrate the importance of digital channels in enhancing customer experience and fostering sustainable business growth. In addition,
we believe these numbers are evidence of the increased adoption of digital channels by customers and the efficiency of the digital model
in addressing their needs.
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Remote Channel
Our remote channel consists of voice customer
services and sales, interactive voice response, or “IVR,” and a chatbot with the option for human interaction in the chat.
In 2025, we continued to focus on providing
a unique experience for our customers by offering personalized services. We recorded 49.8 million interactions during the year, with 42%
of interactions happening through chat.
In line with this purpose, we focus on
assisting vulnerable customers (i.e., individuals who, due to their personal conditions (whether temporary or permanent), demonstrate
a reduced ability to understand and assess information for decision-making or to represent their own interests) through the IVR fast pass,
enabling them to receive prompt service. This has enabled us to provide a more human interaction to these vulnerable customers.
External Channel
Our external channel consists of sales
representatives and banking correspondents who distribute our products and services alongside our other channels. The channel focuses
on the origination of four main products: payroll loans, consortiums (“consórcios”), real estate loans, insurance,
customer prospecting and integrated accounts.
Physical Network
Our distribution network provides integrated
financial services and products to our customers. The table below presents our physical distribution network, all located within Brazil,
as of the dates indicated.
As of December 31,
2025 2024 2023
Branches 916 1,239 1,486
Mini branches 769 1,025 1,191
Own ATMs 6,006 7,615 9,406
Shared ATMs 26,705 24,214 24,169
Branch Network
Our branch network delivers our full range
of products and services to customers. The following table shows the geographic distribution of our branches as of the dates indicated.
As of December 31,
2025 2024 2023
Northeast 14.1 % 11.6 % 10.8 %
North and Midwest 10.0 % 10.0 % 9.0 %
Southeast 62.6 % 63.8 % 65.5 %
South 13.3 % 14.6 % 14.7 %
Mini branches (“PABs”)
We provide everyday banking services to
our SME customers, as well as to corporate customers and their employees, through our mini branches (“PABs”). These exclusive
service locations are strategically placed within our customers’ buildings, including hospitals and universities. The presence of
PABs at our customers’ facilities bolsters our relationships and fosters loyalty, as they benefit from the convenience of conducting
banking transactions on-site at their workplaces.
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Automated teller machines (“ATMs”)
As of December 31, 2025, we operated a
network of 6,006 ATMs, including those located in our branches and mini branches. Furthermore, our clients have access to the “Banco24Horas”
network, which, as of December 31, 2025, consisted of 26,705 self-service terminals. Through this network, our customers can access their
accounts, conduct banking transactions, and purchase most of the products and services available in our portfolio.
Technology and Infrastructure
In 2025, we reinforced the central role
of technology in enabling our strategy of being a digital bank with branches with a strong presence in our customers’ lives, further
accelerating the digitalization of our businesses and optimizing the integrated operation of our physical, digital and remote channels.
In a context of increasing account creation
per person and rising competitiveness among the digital solutions offered by the main players in the Brazilian financial market, we intensified
the use of technology to deeply understand customers’ real needs and offer hyper-personalized products and services, as well as
solutions that enable customers to manage their financial lives, including across several banks, without losing our focus on the continuous
improvement of customer service and experience across all journeys.
F1RST Digital Services, our technology
company, maintained its key strategic role in enabling and supporting the businesses, with a culture driven by innovation and the development
of technology talent to deliver secure and stable technological solutions with agility. F1RST Digital Services works in a partnership
model with our various business areas and with a mindset focused on making customers’ lives easier, going beyond delivering products
and services to strive for excellence in customer experience. We also highlight notable advances across the main pillars of the technology
operating model:
• Technology Teams Merged with the Business: Our functional structures for delivering technology solutions, the Business and Enterprise Domains, were reviewed and aligned to the global operating model, with the local implementation of the Global Domains, our functional structures for delivering products and services for the businesses, in alignment with the global operating model, seeking to expand collaboration with global teams in the design, development and implementation of components for the global platforms. We believe this change enhances our ability to develop scalable solutions that bring greater value to the business and to customers at the global, regional and local levels.
• Innovation and Technical Excellence: We strengthened our innovation culture by creating a Chief Data Analytics and AI Office structure aligned with our global strategy, dedicated to accelerating the cross-functional application of AI solutions across businesses and internal processes, with the objective of expanding the potential gains in productivity and efficiency. In addition, we increased the sharing of code and engineering and architecture best practices between local and global teams, enhancing the technical quality of our technology solutions.
• Operations Stability and Resilience: Our “Always On” culture, which centers on ensuring the highest level of stability and resilience in our operations, remained central. We strengthened the active and cross-functional participation of technical specialist teams in resilience engineering to monitor, educate, and enable tools that help solution-delivery teams enhance the stability of their systems. Additionally, we restructured the governance area, placing greater emphasis on the periodic monitoring and reporting of key operational indicators, and we established new stability forums, with the participation of our Chief Information Officer and technical leadership, to ensure continuous follow-up on the definitive remediation of incidents’ root causes.
• Talent Attraction and Training: In line with our strategy of attracting and developing technology talent, we invested in training so that our employees can build a solid foundation in technology topics and thereby enhance the value delivered to the business. We expanded the training offerings in our cloud enablement program in partnership with Amazon Web Services (AWS Level Up Program), including new tracks for certification in “AI” and “Machine Learning Engineering”, and today our internal training platform (Tech Knowledge) includes more than 110 learning journeys and training programs for various technology career paths.
We believe these advancements enable
technology to support the growth of the business, delivering high-quality services and experiences to our customers. Below we list other
technology highlights from 2025:
• Investments: In pursuit of becoming a leading investment platform in the market, grounded in human-scale relationships and digital excellence, we invested in technology to deliver a hyper-personalized experience to our customers and increase the productivity of our advisors. We launched Pitch Maker, an AI assistant that correlates and analyzes data in real time to understand the investor profile and generate portfolio and product recommendations within seconds, enabling faster, smarter, and more tailored service for each customer. This empowers our advisors to deliver high-quality, personalized service, as evidenced by the high customer satisfaction levels, with an NPS of 87 points as of December 31, 2025 (an increase of six points since December 31, 2024).
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• Individual Bank Account (Digital Channels): In line with our ambition to be the customer’s primary bank, we improved our digital experience with the launch of our new mobile application (One App), an innovative and comprehensive multi-bank solution that seamlessly connects our customers to our entire ecosystem, allowing them to manage their financial lives simply and fully. The application was built on a global platform with a modern architecture, delivering greater efficiency and standardization in the development of scalable components, while ensuring increased resilience and security. Moreover, the new application was developed based on continuous customer feedback, with more than 90 surveys conducted and over 100,000 customers consulted, with the goal of offering an experience that goes beyond the traditional banking relationship, focusing on value creation through intuitive and personalized journeys. We highlight three main advantages of the new home screen (Global Position), which serves as the customer’s gateway to the new digital experience:
◦ A consolidated view of all the customer’s financial information such as balances, limits, cards, and investments supporting faster and more informed decisions.
◦ Dedicated conversational spaces designed to enable more personal conversations between the bank and customers through financial-management content and personalized offers that are always aligned with the customer’s products and life stage.
◦ Simplified customer service through quick access to the main support channels, such as the chatbot, specialists, and the help center.
• Corporate Bank Account (Digital Channels): We refined the experience we offer, making it simpler, more efficient and better aligned with what we believe are the real needs of businesses. We introduced new open finance and payments features in the channel, enabling the centralization of customers' financial resources at Santander Brasil and ensuring greater automation and efficiency for recurring payments. We also enhanced the transactional experience with improvements to the checking account statement and by increasing the number of simultaneous DDA (Authorized Direct Debit – “Débito Direto Autorizado” in Portuguese) payments from 10 to up to 150, ensuring greater agility for high-volume operations. On the security front, we provided a new “Security Center,” increasing customers’ ability to monitor and control access and devices, ensuring greater protection in the digital environment. These initiatives reinforce our commitment to offering secure and productivity-oriented digital solutions that simplify companies’ financial management, customer primacy and satisfaction, in a context of increasing digital channel usage.
• Cards: We advanced in the development of our new global card platform, built on a cloud infrastructure and a modern architecture that enables simplified creation and integration of new offers and products, in addition to customer-centric limit management. More than 20 million debit cards have already been migrated to the new processing platform, delivering immediate benefits such as the automation of the card dispute workflow. In addition, we introduced Pix via credit cards, a new payment method that combines the speed of Pix transactions with the flexibility of credit cards. This new option allows customers to make Pix payments via mobile using their credit card limit and to split the amount into up to 12 installments, offering greater financial flexibility—especially in situations where there is no available account balance or when customers prefer to allocate their balance to other priorities.
• Payments: We modernized our payments architecture, enabling all Pix processing on the new global payments platform of the Santander Group (Payments Hub), and facilitated the payment experience by introducing a unified field that recognizes all types of payments, allowing customers to make all their payments in one place. Additionally, we implemented new payment solutions, including:
◦ PIX payments using the customer’s credit card limit.
◦ Contactless PIX, enabling customers to make payments even faster and more securely using Google Wallet by simply tapping their smartphones on NFC-enabled terminals, eliminating the need to open the banking app or scan QR codes.
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◦ Automatic PIX, which enables simple and instant recurring payments, replacing the traditional direct debit system that depends on business days and banking hours.
We also enhanced payment security
by offering customers “AutoMed”, a mobile feature for disputing Pix transactions resulting from scams or fraud, and by strengthening
our internal security and resilience capabilities for Pix and payment application programming interfaces.
• Security: We invested in technology to strengthen security layers across our products and financial transactions. For example, we created “Security Alert,” an additional protection layer in the mobile app that combines artificial intelligence with financial-behavior analysis to identify risk situations in real time during financial transactions such as Pix transfers or “boletos” (Brazilian bank payment slips) payments to suspicious contacts. The alert is triggered whenever the system detects unusual transaction behavior, and the app displays a notification prompting the customer to review and confirm whether they want to proceed with the transaction.
• Generative Artificial Intelligence, or GenAI: We continued to expand the adoption of GenAI across the organization to deliver a better customer experience, supported by a newly established Data Analytics and AI structure dedicated to ensuring alignment with the global strategy and the responsible use of this technology, in accordance with the frameworks and policies set within the Santander Group. We highlight the following domains in which we expanded GenAI adoption:
◦ Sales and Investment Advisory: Improved quality and agility in personalized product and investment recommendations, contributing to higher offer-conversion rates and increased customer satisfaction and retention, while also improving the productivity of sales teams.
◦ Customer Service: AI models were enhanced to improve chatbot and virtual-assistant capabilities, enabling faster and more accurate responses, resulting in higher customer satisfaction.
◦ CRM Models: Categorization of credit card and checking account transactions using data collected through Open Banking, enabling a deeper understanding of customers’ financial lives, both within and outside Santander Brasil, and supporting more tailored product offerings that better meet customer needs.
◦ Security: Improvements in capabilities for detecting and preventing fraudulent activities.
◦ Technology Operational Efficiency: Expanded adoption of tools that support our developers throughout the software development lifecycle, ensuring greater quality and efficiency in planning, design, coding, testing, and systems maintenance. In addition, the adoption of our system obsolescence reduction solution was broadened.
• Hyper-Personalization: We continued to invest in our customer interaction platform, which enables the capture of insights and the development of a 360º view of the customer’s profile and behavior based on their interactions with us, optimizing the intelligent and personalized offering of products and services. We believe this has allowed us to improve our ability to anticipate customers’ needs, enhance their digital experience and strengthen their relationship with us. As a result of this behavior-based product offer strategy, we have sought to increased customer engagement with contextualized campaigns as well as the digital conversion of offered products.
• Open Finance: We enhanced our open finance platform with the implementation of solutions that help customers easily manage their financial lives through a complete multi-bank experience, including:
◦ We introduced the new “Bring Money” feature in the mobile app, allowing customers to easily and securely transfer money or salary from their accounts at other banks to Santander Brasil, without leaving the app or undergoing repeated authentication steps. The app connects to the selected bank to complete the validation and displays the transfer confirmation on the screen. The app can also notify customers to bring money from another account whenever their Santander balance is low near a bill’s due date, helping them better manage financial commitments. Since its launch in June 2025, more than 100,000 customers have adopted the service, which we believe has also generated value for companies by enabling more efficient payment and cash-flow management.
◦ We expanded the strategic use of customer-authorized data from other institutions to improve the accuracy of our risk models and further tailor our product and service offerings, in addition to digital navigation improvements, such as simplifying how balances from other bank accounts are displayed on the home screen.
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We believe that these developments,
among others, further refined customer experience and will help us strengthen our position as our customers’ primary bank.
• Operational Resilience: Providing high-quality and stable products and services remained a strategic priority for our technology group. In addition to our ongoing focus on refining our secure-development, telemetry and automation capabilities, we established new recurring executive forums with the participation of senior technology group leaders to conduct an in-depth review of the major incidents that affected our operations, with an emphasis on identifying vulnerabilities and permanently resolving issues—for example, contingency strategies involving alternative providers to maintain the availability of critical services for customers. Additionally, we continued investing in the development of resilience-engineering specialists, who work cross-functionally, supporting all software development teams with expertise and tools to ensure end-to-end availability of systems and platforms for customers. We believe that these practices help strengthen our operational resilience over the medium and long term and contribute to delivering a differentiated customer experience.
Communications and Marketing
In 2025, our Global Brand Guide was launched,
establishing a new visual identity and unified communication guidelines. All marketing and communication initiatives were conducted with
a clear focus on customer benefits, aiming to enhance brand relevance and reinforce its strategic positioning.
Several institutional and commercial campaigns
were implemented throughout the year. At the beginning of the year, the “Começos” (which means “beginnings”
in Portuguese) campaign was launched to open the year and reinforce the global brand tagline. Subsequently, an investment-focused campaign
was rolled out under Santander Select, targeting the high-net-worth and affluent client segment.
In the second half of the year, the positioning
of Santander Empresas, under the theme “The bank that left the bank to enter your business” highlighted Santander Brasil’s
value proposition for the corporate and SME segments, emphasizing its strengths in relationship management, proximity to clients, and
specialized service capabilities.
In addition, several other relevant initiatives
were undertaken during 2025, including:
• The continued development of the Smusic platform, offering exclusive discounts and benefits for clients at international concerts, as well as sponsorship of the Todo Mundo no Rio event featuring a performance by Lady Gaga. We believe these initiatives contributed to increased brand awareness and high levels of engagement across digital and social media channels. We believe the Smusic campaign has boosted Santander Brasil’s engagement on social media.
• Global sponsorship of Formula 1, providing exclusive experiences for Santander Brasil clients during the São Paulo Grand Prix, alongside tailored commercial offerings during the period, including vehicle financing solutions.
In terms of internal
communications, we continued with our monthly live event “Together with Mario Leão,” broadcast to our employees through
the “Santander Now” app. In 2025, we created a newsletter called “Acontece Santander” (which means “It happens
at Santander” in Portuguese) covering culture, people, sponsorships, innovation and sustainability. We achieved an average email
opening rate of 47% across the 10 issues we published. We also worked on non-financial asset campaigns, generating engagement and pride
in belonging. At Santander Now, our main content platform for the internal audience, we had more than 600 thousand unique users accessing
content in the year. In addition, we had the launch of the NOW Assistant, using GenAI, to streamline and support mainly the service of
the commercial network, with content for day-to-day action. We also launched Open NOW, a forum for sharing ideas and improvements (of
processes and experience), to bring inputs to strengthen the organization’s reputation for our products and services. We also launched
the Single Communication Guide, a document with guidelines and good communication practices to help employees have a clear, simple, and
objective conversation with customers (internal and external) in all service channels. Finally, we worked on the review of chatbot journeys
with the objective of standardizing and disseminating the tone of voice, through participation in squads and review of journeys with customers
in the channels (chatbot, voice, human chat, apps, internet banking and Whatsapp).
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Sustainability Initiatives
Our sustainability history started over
20 years ago. Throughout this period, we have refined our programs, businesses and governance relating to sustainability.
The key focus throughout this time has
been on the assessment and mitigation of social, environmental, and climate risks when providing loans, assistance to businesses that
support customers’ transition toward a low-carbon economy, and the building of a more inclusive society through actions in education,
employability and entrepreneurship. To ensure proper governance of this process, we rely on internal policies and controls supported by
our senior leadership.
Our sustainability efforts are carried
out under our Social, Environmental and Climate Responsibility Policy (“PRSAC”, in Portuguese), which outlines social, environmental,
and climate principles and directives for conducting business and engaging with the organization’s stakeholders. The PRSAC aims
to prevent negative impacts and to maximize positive impacts arising from our financial operations and activities. The PRSAC meets the
requirements of CMN Resolution No. 4,945/2021 and SUSEP Resolution No. 666/2022.
We expanded our internal training course
offerings on sustainability topics to some of our affiliates. We monitor specific sustainability goals, which are used to evaluate the
performance of executives and other employees and directly impact their variable compensation.
In 2021, we announced our ambition to
achieve net zero emissions in our operations, credit portfolios, and investments by 2050, through the use of internal methodologies that
take input and recommendations from the Net Zero Banking Alliance, or “NZBA” guidelines. We expect that customer engagement
and support, through transition financing, will be the main paths to achieving our reduction targets.
We have engaged with the Brazilian federal
government’s initiatives to steer the transition to a low-carbon economy, not only through advocacy efforts but also through active
and direct participation. One example is the “Eco Invest Program,” structured by the Brazilian National Treasury and aimed
at attracting foreign capital to finance projects supporting climate transition through blended financing mechanisms. In 2025, one Eco
Invest auction took place - focused on the restoration of degraded pastures - and two new auctions have been announced, aimed at exchange
rate mechanisms to attract private equity investments and projects in the bioeconomy, respectively. Santander has been actively contributing
to the dialogue with the National Treasury and has been granted one of the largest allocations in the two auctions that have already taken
place, with a total commitment to mobilizing R$7.15 billion to eligible projects.
In relation to the establishment of our
decarbonization plans for the most carbon intensive sectors, we have focused our efforts on the agriculture sector given the significance
of agricultural production in Brazil. To start this journey, in 2022 we sought the specialized support of WayCarbon, a Brazilian company
renowned for solutions aimed at decarbonizing the economy. Since then, we have been working together on the development of methodologies
and metrics with scientific references, which enable us to estimate the sector’s emissions and understand the production links with
decarbonization potential. In 2025, we participated in a study by the FGV to develop decarbonization curves for soy, corn, and beef cattle.
We also participate in the Banking for
Impact on Climate in Agriculture (B4ICA) initiative, coordinated by the World Business Council for Sustainable Development in partnership
with the United Nations Environment Programme Finance Initiative (UNEP FI), the Partnership for Carbon Accounting Financials (PCAF), and
the Environmental Defense Fund (EDF), along with other banks, contributing to the development of guidelines that assist the sector in
transitioning to a low-carbon economy, continuously improving the measurement and accounting of emissions associated with agribusiness.
As part of our climate ambition, we manage
the environmental impact of our own operations by measuring and disclosing scope 1, 2 and relevant scope 3 emissions from our buildings,
offices and branches, prioritizing reduction over compensation. Over the past decade, our efficiency initiatives have significantly reduced
scope 1 and 2 emissions, supported by multi-year plans that combine more efficient facilities, better maintenance and operations, technology
upgrades, and the purchase and self-production of renewable energy. We continue to offset the residual scope 1 and 2 emissions we are
unable to eliminate through carbon credits selected based on a rigorous due diligence process. With respect to scope 3, our focus is on
emissions from our portfolio, that is, financed emissions; at the Santander Group level, we have decarbonization targets for the most
carbon-intensive sectors.
Regarding sustainability frameworks,
we continue to follow the guidelines of the Global Reporting Initiative (GRI), the Task Force on Climate-Related Financial Disclosures
(TCFD), Sustainability Accounting Standards Board (SASB) and of the principles of integrated reporting. We also connect our activities
to the UN Sustainable Development Goals. Since 2023, we began considering the impact of the IFRS S1 and S2 standards, launched by the
International Sustainability Standards Board (ISSB), which became mandatory for a large range of companies in Brazil as of January 1,
2026, in accordance with CMN Resolution No. 5,185/2024 and CVM Resolution No. 193/2023.
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Our main achievements in 2025 include
the following:
• We enabled R$38.6 billion in sustainable businesses (including both balance sheet financing and issuances of indebtedness or other financing which we have facilitated) including green bond issuances, clean energy financing, and dedicated product options.
• We maintained market leadership in decarbonization credits (créditos de descarbonização), or CBIOs, with a 41% share of the CBIOs in Brazil in the year ended December 31, 2025 according to data from the B3.
• With the aim of supporting our customers in the transition towards a low-carbon economy, we hosted a series of events called “Climate Dialogues” as preparation for the COP30. In partnership with WayCarbon, we discussed topics such as transportation and mobility, decarbonization of basic industries and agribusiness. We also participated in more than 50 strategic forums held in Brazil and abroad on the subject, reinforcing our commitment to the global climate agenda. Among the events we participated in, we can highlight the Brazil Climate Investment Week, the London Climate Week, Febraban Tech, and the World Economic Forum.
• In 2025, we facilitated the first transaction of the New Climate Fund focused on reforestation in Brazil, with an investment of R$ 100 million, of which R$ 80 million came from the climate fund and R$ 20 million from a BNDES financing line. The transaction was guaranteed by Santander Brasil, which we believe marks a significant advance in the mobilization of private capital for climate solutions. The beneficiary was Mombak, a startup specializing in carbon removal, which works on the restoration of degraded areas in the Amazon. This Mombak project will be implemented in the state of Pará and aims at the recovery of Amazonian biodiversity, large-scale carbon removal, and the generation of local jobs, promoting a new economy of the standing forest.
• Biomas, an ecological restoration company co-founded by Santander Brasil and five other companies, launched its first forest restoration project in partnership with Veracel Celulose in the south of the state of Bahia. The Muçununga Project aims to recover 1,200 hectares of the Atlantic Forest, planting two million seedlings of over 70 native species, such as yellow ipê, jatobá, and jacaranda-da-bahia. With an initial investment of R$ 55 million, we believe the project has the potential to generate 500,000 carbon credits over 40 years, with a premium market value due to the high integrity of the credits and the positive impacts on biodiversity and local communities. We believe that this initiative also promotes environmental benefits, such as improved soil and water quality, and social benefits, such as job and income generation in municipalities in the region.
• We launched the “Ability without Limits” program, a journey for hiring and training professionals with disabilities.
• In microfinance, Prospera achieved a credit production of R$ 5.2 billion in the year ended December 31, 2025, a 6% increase over the year ended December 31, 2024. The total portfolio grew 5% compared to December 31, 2024, reaching R$3.5 billion as of December 31, 2025, with a total active customer base of 1.2 million as of December 31, 2025. Beyond the financial results, Prospera impacted more than 10,000 people with Educar para Prosperar, our in-person financial education program for clients and non-clients in the communities where we operate.
• In educational initiatives carried out by Santander Brasil, more than 11,000 people have benefited through programs in Brazil. The awarding of 80 scholarships to university students at the University of Salamanca to learn Spanish and the offering of 15,000 Artificial Intelligence scholarships for teachers are some of the initiatives undertaken. In 2025, the innovation and technology committee was created and added to the structure of the advisory committees to the board of directors to foster and oversee the implementation of innovation initiatives throughout our organization.
• The pillars of our volunteering program are financial education, professional development and safeguarding the rights of children, teenagers and the elderly. We have provided financial education to teenagers and adults and mentoring for young people, as well as organized a winter clothing campaign, among other volunteering initiatives.
In 2025, we monitored the execution
of 65 projects from the Amigo de Valor program and 47 projects from the Parceiro do Idoso program. More than 8,000 children,
elderly people, and their families were directly benefited by the assistance we provided. When taking into account the total amount mobilized
by Santander Brasil, its affiliates, clients and employees, the reach of the initiatives exceeds 20,000 people.
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We also launched a new campaign
to support projects that will be executed throughout 2026. Over R$26 million were raised to support 59 projects of the Amigo de Valor
program aimed at expanding and improving the provision of social assistance services for children and adolescents in vulnerable situations.
R$18.5 million were raised to support 47 projects of the Parceiro do Idoso program that will contribute to promoting dignified
aging and improving local public policies.
• We launched the Santander Integrated Social Program with the goal of expanding social impact in municipalities with greater social vulnerability and a strong bank presence. The initiative combines different areas of action, focusing on local development, income generation, and improving the quality of life for the population. The first phase took place in 30 municipalities in the states of Pernambuco and Maranhão, all with low human development index scores, and focused on cultural and sporting activities.
• Through the provision of tools based on our financial education policy, such as communication processes in the customer journey and product journey, lectures, and courses, more than 48 thousand people were impacted by some form of financial education action. Our financial education portal presents content, guides, and spreadsheets to support financial health. We also engage in community-oriented volunteer activities and various lectures.
• We also have a diverse and independent board of directors, with 45% of members being women and 45% of members being independent as of December 31, 2025.
In recognition of our environmental, social
and governance efforts, we have been awarded “Best Bank for Sustainable Finance in Brazil 2025” by Euromoney magazine and
we also received the “LatinFinance Project & Infrastructure Finance Awards” in three different categories in 2025: Infrastructure
Bank of the Year in Latin America; Renewable Energy Finance of the Year; and Road Finance of the Year.
During COP30, we participated in the “B3
ESG Index Triad Celebration,” which brought together 30 companies that stand out for their good ESG practices and performance. The
award-winning companies are part of the three main sustainability indices of B3: ISE (Corporate Sustainability Index), ICO2 (Efficient
Carbon Index), and iDIVERSA (Diversity Index). We also achieved an A-rating from CDP, the largest database on corporate practices related
to climate change, emissions, water, and forests.
Competition and Industry Transformation
Currently, there are five commercial financial
institutions at the forefront of the Brazilian financial services industry in terms of assets: Santander Brasil, Bradesco, Itaú
Unibanco, Banco do Brasil and Caixa Econômica Federal. Together, these financial institutions accounted for 66.9% of the credit
and 66.1% of the deposits available in Brazil as of September 30, 2025, according to the Brazilian Central Bank and the interim financial
statements of the aforementioned banks.
The following table shows the total loans
and deposits of the five leading financial institutions in Brazil as of September 30, 2025:
Santander Brasil Bradesco Itaú Unibanco Banco do Brasil Caixa Econômica Federal Financial System
(in billions of R$)
Total loans(1) 550.3 771.8 816.3 1,111.7 1,334.1 6,850.4
Total deposits(1) 487.3 660.6 1,008.8 615.8 639.6 5,164.7
(1) According to the Brazilian Central Bank, reported and presented in accordance with Brazilian GAAP (September 30, 2025). Data as of December 31, 2025 was not available as of the date of this annual report.
Insurance Coverage
We maintain insurance policies that are
renewed annually in order to protect our assets. Substantially all of our branches, affiliates and administrative buildings are insured
against losses caused by fire, lightning, explosions and other risks. Such coverage provides for the reimbursement of the costs of asset
replacement.
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In addition, we also maintain the following
insurance policies:
• policies against material and/or bodily damage caused to third parties for which we are held responsible;
• policies against financial losses due to fraud or employee misconduct, among others;
• directors’ and officers’ insurance policy for our management against third-party complaints regarding management acts. There are also insurance policies against crimes, employee dishonesty and damages arising out of public offerings; and
• policies against hacker attacks and cybercrimes.
Dependence on Patents, Licenses, Contracts
and Processes
The major trademarks we use, including,
among others, the “Santander” trademark, are owned by Santander Investment Bank. Santander Brasil has a license to use this
trademark. All trademarks of our business are registered or applied through the Brazilian Patent and Trademark Office (Instituto Nacional
de Propriedade Industrial, or “INPI”), the agency responsible for registering trademarks, patents and designs in Brazil.
After registration, the owner has exclusive rights to use of the trademark in Brazil for a 10-year period that can be successively renewed
for equal periods.
As of the date of this annual report,
we own or have a license to use a total of 454 trademarks in Brazil, with Santander Brasil owning over 87 of these trademarks, while the
remaining are owned by other companies of the Santander Group.
REGULATION AND SUPERVISION
The basic institutional framework of the
Brazilian financial system was established by Law No 4,595/64, as amended from time to time, or the “Banking Reform Law.”
The Banking Reform Law created the CMN, responsible for establishing the general guidelines of monetary, foreign currency and credit policies,
as well as regulating the institutions of the financial system.
Principal Regulatory Agencies
CMN
The CMN oversees the Brazilian monetary,
credit, budgetary, fiscal, and public debt policies. The board of the CMN is composed of the president of the Brazilian Central Bank,
the Minister of Planning, and the Minister of Finance, who also chairs the Board. Pursuant to the Banking Reform Law, the CMN is the highest
regulatory entity within the Brazilian financial system, and is authorized to regulate the credit operations of Brazilian financial institutions,
to regulate the Brazilian currency, to supervise Brazil’s gold reserves and foreign exchange, to determine Brazilian savings and
investment policies and to regulate the Brazilian capital markets with the purpose of promoting the economic and social development of
Brazil. In this regard, the CMN also oversees the activities of the Brazilian Central Bank and the CVM.
Brazilian Central Bank
The Brazilian Central Bank is an autonomous
authority responsible for the implementation of CMN policies related to foreign currency and credit, the regulation of Brazilian financial
institutions, particularly in regard to the minimum capital and compulsory deposit requirements, as well as the disclosure of the transactions
carried out by financial institutions and their financial information. The Brazilian Central Bank addresses specific issues through the
COPOM, a committee responsible for adopting measures to meet inflation targets defined by the CMN and establishing monetary policy guidelines.
In order to meet inflation targets, the COPOM must set the target for the SELIC rate (the average rate for daily financing, backed by
federal instruments, as assessed under the SELIC) and publish reports on the Brazilian economic and financial environment and projections
for the inflation rate.
CVM
The CVM is responsible for the implementation
of CMN policies related to securities, with the purpose of regulating, developing, controlling and inspecting the securities market and
its participants (companies with securities traded in the market, investment funds, investors, financial agents, such as custodians of
instruments and securities, asset managers, independent auditors, consultants, as well as instruments and securities analysts).
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Self-Regulating Entities
The Brazilian financial and capital markets
are also subject to the regulation of self-regulating entities that are divided by field of activity. These self-regulating entities include,
among others, the ANBIMA, the ABECS, the FEBRABAN, the Brazilian Association of Publicly-Held Companies (Associação Brasileira
das Companhias Abertas – ABRASCA) and the B3.
Principal Limitations and Obligations
of Financial Institutions
In line with leading international standards
of regulation, Brazilian financial institutions are subject to a series of limitations and obligations. In general, such limitations and
obligations concern the offering of credit, the concentration of risk, investments, operating procedures, loans and other transactions
in foreign currency, and the administration of third-party funds and microcredit. The restrictions and requirements for banking activities,
established by applicable legislation and regulations, include the following:
• No financial institution may operate in Brazil without the prior approval of the Brazilian Central Bank. In December 2017, the CMN enacted a new rule establishing that all such requests submitted to the Brazilian Central Bank must be approved within 12 months (subject to suspension of the term in some instances);
• A Brazilian financial institution may not hold direct or indirect equity interests in any company located in Brazil or abroad registered as permanent assets without prior approval of the Brazilian Central Bank. The corporate purpose of such company shall be complementary or subsidiary to the activities carried out by the financial institution;
• Brazilian financial institutions must submit for prior approval by the Brazilian Central Bank the corporate documents that govern their organization and operation, such as capital increases, transfer of headquarters, opening, transfer or closing of branches (whether in Brazil or abroad), election of the members of the statutory bodies and any corporate restructuring or alteration in the composition of their equity control. The requests for changes in control submitted to the Brazilian Central Bank must be approved within 12 months and requests for changes to organizational documents must be approved within three months (in both cases subject to suspension of the term in some instances);
• Brazilian financial institutions must fulfill minimum capital and compulsory deposit requirements and must comply with certain operational limits;
• A Brazilian financial institution may not own real estate, except for properties it occupies and subject to certain limitations imposed by the CMN. If a financial institution receives real estate, for example, in satisfaction of a debt, such property must be sold within one year, unless otherwise authorized by the Brazilian Central Bank;
• Brazilian financial institutions must comply with the principles of selectivity, guarantee, liquidity and risk diversification;
• A Brazilian financial institution belonging to the segment one, or “S1” (i.e., banks with an asset base equivalent to over 10% of Brazil’s GDP or that engage in relevant international activity), as is our case, cannot lend more than 25% of its Tier 1 regulatory capital (patrimônio de referência) to a single person or a group and the maximum exposure to concentrated individual customers or group of connected customers of such Segment 1 financial institution is 600% of its Tier 1 regulatory capital (a concentrated individual client would mean, for the purpose of the proposed rule, any one client to which exposure is equal to or higher than 10% of its Tier 1 regulatory capital);
• According to the Banking Reform Law, a Brazilian financial institution cannot carry out credit transactions with (i) its controlling shareholders, directors and members of other statutory bodies (fiscal, advisory and other) and their respective spouses and relatives up to second degree, (ii) the individuals or legal entities that hold a qualified interest (15% of the capital stock) in their capital, (iii) the legal entities in which they have qualified interest (direct or indirect), (iv) the legal entities in which they have effective operational control or preponderance in the deliberations, regardless of the equity interest, and (v) the legal entities with common directors or members of the board of directors. Such prohibition does not apply, subject to limits and conditions established by the CMN through the enactment of Resolution No. 4,693 in October 2018, to (i) transactions with a counterparty that has an officer or director in common with the financial institution providing credit, provided that the officer or director is considered an independent member in both entities, (ii) transactions carried out under market-compatible conditions, without additional benefits or different benefits when compared to the operations deferred to the institution to other customers with the same profile, (iii) credit operations that have as counterparty a financial institution that is part of the institution prudential conglomerate, provided that they contain contractual clauses of subordination, except in the case of overnight and loan transactions with other financial institutions specified by the law, (iv) the interbank deposits, according to the law, (v) the obligations assumed by related parties under the compensation and settlement services authorized by the Brazilian Central Bank or by the CVM and their respective counterparties and (vi) other cases authorized by the CMN;
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• The management of third-party assets must be segregated from other activities and must follow the regulations issued by the CVM;
• The total amount of funds applied in permanent assets of the financial institutions cannot exceed 50% of their adjusted stockholders’ equity;
• Brazilian financial institutions must comply with anti-money laundering, combating the financing of terrorism and anticorruption regulations;
• Brazilian financial institutions must implement policies and internal procedures to control their systems of financial, operating and management of information, as well as their conformity to all applicable regulations;
• Brazilian financial institutions must implement a policy for remuneration of board members and executive officers that is compatible with their risk management policies; and
• The Banking Reform Law and specific regulations enacted by the CMN impose penalties on financial institutions in certain situations where applicable requirements, controls and requisites have not been observed. In addition, the Brazilian Central Bank may cancel the financial institution’s authorization to operate in certain situations. The cancellation of an authorization for operation of a financial institution may only occur upon the establishment and processing of the appropriate administrative proceeding by the Brazilian Central Bank.
Additionally, as part of the Santander
Group and due to the global nature of our organization, we are subject to related international rules.
Capital Adequacy
and Leverage – Basel
Current Requirements
The Brazilian Central Bank supervises
the Brazilian banking system in accordance with the Basel Committee on Banking Supervision, or “Basel Committee,” guidelines
and other applicable regulations. For this purpose, banks provide the Brazilian Central Bank with any information that it deems useful
in performing its supervisory functions, which includes supervising changes in solvency and capital adequacy of banks.
The main principle that guides the directives
set forth in the Basel Committee is that a bank’s own resources must cover its principal risks, including credit risk, market risk
and operational risk.
Brazilian financial institutions are subject
to capital measurement and standards based on a risk weighted asset ratio. The parameters of this methodology resemble the international
framework for minimum capital measurements adopted by Basel III.
Basel III
In 2010, the Basel Committee issued its
Basel III framework, which was revised and republished in 2011. The Basel III framework increases minimum capital requirements, creates
new conservation and countercyclical buffers, changes risk-based capital measures, and introduces a new leverage limit and new liquidity
standards in comparison to the former framework. The rules were phased in gradually and were fully implemented by January 1, 2019. Regulatory
capital is composed of core capital and two additional tiers:
Tier I capital will have to reach a minimum
ratio of 6.0% (according to the schedule established by the Brazilian Central Bank), divided into two portions: (i) core capital consisting
mainly of corporate capital and profit reserves (shares, units of ownership, reserves and earned income) of at least 4.5%, and (ii) Additional
Tier I capital consisting mainly of perpetual hybrid securities and capital instruments authorized by the Brazilian Central Bank (but
excluding amounts relating to funding instruments issued by other local or foreign financial institutions) and any of our own shares
purchased by us and the integration of which into the Additional Tier I Capital is permitted. To improve the quality of the capital of
financial institutions, Basel III restricts the acceptance of financial instruments that fail to demonstrate effective capability of
absorbing losses and requires the reduction of assets that in certain situations could jeopardize the financial institution’s capital
value due to the instruments’ low liquidity, dependence on future profits for realization or difficulty of value measurement.
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There is also an additional 2% of Tier
II capital requirement, for a total of 8% of minimum capital ratio. Current hybrid subordinated debts approved by the Brazilian Central
Bank as additional capital requirements, or Tier II, are expected to be maintained if they also comply with requirements introduced by
Basel III, including the mandatory conversion clauses into equity or write-off upon the occurrence of triggering events provided for in
the regulations.
In accordance with the Basel III standards,
the Brazilian Central Bank created the additional core capital buffer (adicional de capital principal), which is composed of the sum of
three buffers:
• Core Capital Conservation buffer (Adicional de Capital Principal de Conservação), which was introduced to ensure that banks have an additional layer of usable capital that can be drawn down when losses are incurred. Whenever the buffer falls below 2.5%, automatic constraints on capital distribution (for example, dividends, share buybacks and discretionary bonus payments) will be imposed so that the buffer can be replenished.
• Countercyclical capital buffer (Adicional Contracíclico de Capital Principal), which aims to protect the banking sector from periods of excess aggregate credit growth that have often been associated with the buildup of system-wide risks. The countercyclical capital buffer is fixed by the Financial Stability Committee (Comitê de Estabilidade Financeira) based on discussions about the pace of credit expansion, and currently is set zero (Brazilian Central Bank Communication No. 44,254/25). Should the requirement increase, the new percentage takes effect twelve months after the announcement.
• Core Capital Systemic buffer (Adicional de Importância Sistêmica de Capital Principal), which is applicable to the S1 bank segment (banks with an asset base equivalent to over 10% of Brazil’s GDP or that engage in relevant international activity).
On March 16, 2020, due to the challenging
macroeconomic environment resulting from the COVID-19 pandemic, the CMN issued Resolution No. 4,783 which established a phase-in percentage
to be applied to the risk-weighted assets value for the purpose of calculating the capital conservation buffer. This percentage increased
gradually until April 2022, when it reached 2.5%. Resolution No. 4,783 was subsequently replaced by Resolution No. 4,958 of October 21,
2021, which maintained the risk weighted asset percentage for the purpose of calculating the capital conservation buffer at 2.5%.
The chart below shows the evolution of
our core capital:
Financial Institutions in Brazil are
subject to the capital rules set by CMN Resolutions No. 4,955/2021 and No. 4,958/2021. The Basel III rules also provide for the implementation
of a leverage ratio calculated by dividing the Tier I capital by the bank’s total exposure. In early 2015, the Brazilian Central
Bank issued a new regulation governing the calculation and reporting of the leverage ratio of Brazilian financial institutions in line
with the Basel III rules, which became effective in October 2015. S1 financial institutions, as is our case, or segment 2, or “S2,”
for purposes of the application of prudential rules, are required to maintain a minimum Leverage Ratio (Razão de Alavancagem,
or “RA”) of 3% as from January 1, 2018.
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In 2015, the CMN and the Brazilian Central
Bank also issued a set of rules for the implementation of the liquidity coverage ratio or “LCR,” a short-term liquidity index.
The purpose of the LCR is to demonstrate that financial institutions have sufficient liquid assets to make it through a stress scenario
lasting one month.
According to these rules, the largest
Brazilian banks were required to maintain an LCR of at least 60% since October 2015. This ratio increased 10% annually until it reached
100% in 2019.
As mentioned above, the LCR is a short-term
liquidity ratio for a 30-day stress scenario. It represents the ratio of high-quality liquidity assets to net outflows within the period.
High Quality Liquidity Assets are composed mainly of Brazilian federal government bonds and reserve requirements. Net Outflows are mainly
composed of losses on deposits, offset in part by Inflows, which are mainly credits.
In November 2017, the CMN also established
a minimum limit for the Net Stable Funding Ratio (Índice de Liquidez de Longo Prazo, or “NSFR”) and the RA with which
Brazilian financial institutions are required to comply. The NSFR corresponds to the ratio between the Available Stable Funds (Recursos
Estáveis Disponíveis, or “ASF”) and the Required Stable Funds (Recursos Estáveis Requeridos, or “RSF”)
of the financial institution. The current regulatory minimum is 100%.
Regulation Concerning Credit, Market, and Operational
Risk
On March 16, 2022, the Brazilian Central
Bank introduced Resolution No. 229, which took effect in July 2023. Aligned with the Basel III framework, this new directive enforces
the minimum standard set by the Basel Committee on Banking Supervision (BCBS) for computing the capital requirement associated with credit
risk under the standardized approach (RWACPAD). This regulation supersedes Brazilian Central Bank Circular No. 3,644, issued
on March 4, 2013, in line with the stipulations of the Basel III framework.
The directive introduces a finer granularity
to the weights applied to exposures, introducing refinements in the differentiation of credit risk within the prudential framework. It
specifically targets financial institutions categorized in Segments 1 (S1), such as us, to Segment 4 (S4) that presently adhere to the
standardized approach for credit risk assessment.
Recent Developments in Prudential
Regulation
On April 26, 2023, the Brazilian Central Bank
issued Resolution No. 313, which came into effect in July 2024 and addresses the second phase of the Brazilian Central Bank’s market
risk framework (FRTB). This resolution establishes the procedures for the daily calculation, using a standardized approach, of the portion
of RWA related to the calculation of the capital required for exposures to the credit risk of financial instruments classified in the
trading book (RWADRC). The changes provided by the resolution include the separation of the calculation of capital requirement for exposures
subject to credit risk in the trading book from those classified in the banking book. This separation enables the elimination of exposure
protected by credit derivatives and encourages institutions to incorporate hedging mechanisms into their portfolios to reduce effective
exposure to risk.
With respect to operational risk, the
Brazilian Central Bank issued Resolution No. 356, on November 28, 2023, which came into effect in January 2025 and will be implemented
gradually until 2028, softening its impact on the capital requirements of supervised entities. This resolution replaces the three calculation
methodologies for RWAOPAD currently in use (BIA, ASA and ASA2) with a single, more robust and risk-sensitive method, including an internal
loss component that modulates the capital required.
On December 23, 2024, the CMN and the
Brazilian Central Bank issued Resolution No. 5,199 to establish a transition schedule to incorporate the impacts on regulatory capital
due to the new provisioning model set forth under those rules and based on IFRS 9. This transition schedule aligns with the Basel Committee
recommendations, which allow jurisdictions to phase in the effects on regulatory capital resulting from increased provisions following
the adoption of IFRS 9. The approved regulation partially restores regulatory capital that may have been reduced due to the shift to the
new provisioning model. Details of the implementation will be communicated in due course, and the rules came into force on January 1,
2025.
On May 30, 2025, Resolution No. 5,221
was issued, which amends CMN Resolutions No. 4,950 and No. 4,911, regarding the preparation and reporting of accounting documentation
by the prudential conglomerate. The rule establishes that, as of July 2026, financial institutions may calculate the leverage ratio on
a standalone basis, referred to as the prudential sub-conglomerate (subconglomerado prudencial). The prudential sub-conglomerate is composed
of the lead institution of the conglomerate and other entities incorporated in Brazil that are part of the prudential conglomerate, provided
there are no restrictions on the transfer of assets among the institutions.
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Based on the introduction of the standalone
basis calculation structure, the CMN issued Resolution CMN No. 5,222 on May 14, 2025, enhancing the framework for risk and capital management
and the calculation of the liquidity coverage ratio (Liquidez de Curto Prazo), or LCR. As from September 2025, financial institutions
are required to implement policies, strategies and procedures to ensure the timely transfer of liquidity among the entities of the prudential
conglomerate in the event of liquidity or capital shortfalls. Additionally, the rule establishes that the LCR must be calculated on a
standalone basis, based on the prudential structure adopted by the institution.
On May 14, 2025, the CMN also issued Resolution
No. 5,223, which updated minimum leverage ratio requirements for financial institutions. The rules introduced an individualized leverage
ratio requirement, in addition to the existing consolidated requirement. The regulation also implements a phased compliance schedule,
with the requirements taking effect in full by 2028, and sets differentiated minimum ratios for individual and consolidated bases. These
changes aim to align Brazil’s prudential standards with international Basel III recommendations and address concerns regarding the
need for individual-level prudential oversight within financial conglomerates.
Moreover, in November 2025, the Brazilian
Central Bank released Public Consultation No. 128, proposing amendments to RWACPAD regulations to refine recognition of credit risk mitigation
instruments (financial collateral, bilateral netting, personal guarantees, credit derivatives, and credit insurance) and to revise the
CEM for derivatives by aligning key parameters with SA-CCR (including a 1.4 multiplier and PFE floor). By means of the proposed new rules,
the Brazilian Central Bank intends to allow single netting sets across derivatives and securities financing transactions. The draft rule
also introduces preferential risk weights for specified payroll-deducted retail exposures and clarifies eligibility and haircuts for recognized
collateral. The public consultation will be open for comments until February 3, 2026.
Other Applicable Laws and Regulations
Consolidated Enterprise Level (Conglomerado Prudencial)
Financial institutions must submit to
the Brazilian Central Bank, monthly and semiannually, consolidated financial statements based on the “consolidated enterprise level”
(conglomerado prudencial) of which the financial institution is a member. Such information serves as the basis for calculation
of the required regulatory capital of the Brazilian institutions. The “consolidated enterprise level” includes data relative
to the financial institutions and other institutions authorized to operate by the Brazilian Central Bank, consortium administrators, payment
institutions and credit factoring companies, including real estate credit, or of credit rights, such as mercantile foment companies, securitization
companies and specific purpose companies, located in Brazil or abroad, as well as other legal entities headquartered in Brazil that have
equity participation in the mentioned entities as their exclusive business purpose.
On January 29, 2020, the CMN published
Resolution No. 4,818, which requires S1, S2 or segment three, or “S3” financial institutions to publish IFRS financial statements.
The requirement is already in force for publicly held financial institutions and financial institutions which are leaders of a prudential
conglomerate and came into effect for all remaining financial institutions on January 1, 2022.
Compensation Rules for the Management
of Brazilian Regulated Institutions
In September and November 2024, the Brazilian
Central Bank and the CMN introduced new regulations addressing the compensation policies for officers of financial institutions, payment
institutions, and other entities under its authorization. These measures, outlined in CMN Resolution No. 5,177 and BCB Resolution No.
432, which came into force on January 1, 2025, replaced the previous CMN Resolution No. 3,921, in effect since 2010. The new framework
introduces enhancements aimed at aligning the current regulation with international standards for governance, risk management, and transparency,
while expanding the applicability of these rules to smaller institutions.
A cornerstone of the new framework is
the obligation for institutions to establish compensation policies that ensure variable compensation aligned with long-term performance
and effective risk management. Among the key provisions, at least 50% of variable compensation must be paid in shares or equivalent instruments,
and at least 40% of the total compensation must be deferred for a minimum period of three years. These deferred payments will be subject
to malus mechanisms, which allows for reductions or cancellations in cases of financial losses or other adverse outcomes. Moreover, extraordinary
payments to executives upon their departure are restricted unless they align with the institution’s risk and value creation frameworks.
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Governance requirements under the new
regulations are also enhanced. Larger institutions, particularly those listed as public companies or leaders within designated financial
segments, are required to establish statutory compensation committees, which must include independent members and have the task to oversee
the design and implementation of compensation policies. For smaller institutions, the responsibility for such functions may be assigned
to the company’s board of directors.
The regulations also impose heightened
transparency requirements. Institutions are now required to disclose annual reports detailing their compensation practices, which must
include comprehensive descriptions of the performance metrics used, the mechanisms for risk adjustment, and the allocation of various
compensation components.
By updating these rules, the CMN and Brazilian
Central Bank seek to strengthen the governance and sustainability of regulated institutions, ensuring that compensation practices support
prudent management and long-term stability across the sector.
Recent Developments on Banking as
a Service (BaaS)
On November 28, 2025, the Brazilian Central
Bank and the CMN issued Joint Resolution No. 16, which regulates the provision of Banking as a Service, or BaaS, by financial institutions,
payment institutions, and other entities authorized to operate by the Brazilian Central Bank. Joint Resolution 16/25 defines BaaS as the
contractual arrangement under which BaaS providers make specified financial and payment services available to clients through an integrating
entity that interfaces with clients, and it clarifies the definitions of the BaaS service, the BaaS provider institution, the BaaS service-taking
entity, and the client, while expressly excluding activities such as correspondent banking services, data processing/cloud services, Open
Finance partnerships, and activities of sub-acquirers and network service providers from the BaaS scope.
Joint Resolution 16/25 sets forth that
BaaS contracts may cover, exclusively, one or more of the following services: (i) opening, maintenance and closing of demand deposit,
savings deposit, and prepaid or postpaid payment accounts; (ii) payment services conducted through those accounts; (iii) merchant acquiring
services; (iv) credit operations (offer, contracting, administration, and collection); and (v) additional services that may be included
by the Brazilian Central Bank in the future. It requires that services be provided by authorized institutions within their permitted activities
and via electronic channels through system/platform/process integrations between the BaaS provider and the service-taking entity. It also
sets conditions on account ownership, payment transaction flows, and debtor identity for credit operations, and clarifies that services
outside the listed scope are not BaaS and cannot be offered as such.
BaaS contracts must specify the object,
roles and responsibilities, remuneration, security measures, Brazilian Central Bank access rights to information, client demand handling,
restrictions on fees charged in the name of the service-taking entity, declarations regarding the prohibition on unauthorized financial
activities, and restrictions on sub-contracting BaaS services, among other terms. They must also ensure transparency about the status
of the service-taking entity (including that it is not an institution authorized by the Brazilian Central Bank, as applicable), responsibilities
for client communications (including upon termination and for credit portability and post-cession rights), data sharing necessary to fulfill
responsibilities, and the provision of information for KYC, fraud prevention, and AML/CFT procedures. The contracts must address resolution
scenarios and termination, including access by the resolution authority, advance notice of service interruption, transparency to clients,
and client options regarding relationships with the provider and the service-taking entity.
The provider institution bears responsibility
for the reliability, integrity, availability, security, confidentiality, and regulatory compliance of services provided under BaaS, including
KYC, fraud prevention, and AML/CFT. While ancillary tasks may be performed by the service-taking entity, the provider must supply the
necessary tools and remains responsible, and SCR access/sharing with the service-taking entity is prohibited for ancillary tasks related
to credit operations. Institutions acting as BaaS providers or service-taking entities must designate a director responsible for compliance
with the resolution.
Naming Regulations for Authorized
Institutions in Brazil
On November 28, 2025, the Brazilian Central
Bank and the CMN issued Joint Resolution No. 17, which governs the nomenclature and public presentation of institutions authorized to
operate by the Brazilian Central Bank. The rule applies to the institution’s full nomenclature – comprising its corporate
name, trade name, brand, and internet domain – and to any medium used for communication or public presentation to clients and users.
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Joint Resolution 17/25 requires institutions
to include, in their corporate names, terms that clearly reference the scope of their authorization to operate granted by the Brazilian
Central Bank. It prohibits use, in any nomenclature, of terms — whether literally or by morphological or phonetic similarity —
that suggest activities or an institutional type for which the entity does not have specific authorization. Cooperatives may reference
their cooperative system in their nomenclature. Institutions that are part of a prudential conglomerate may incorporate the conglomerate’s
name, provided it is clear to clients which type of institution within the conglomerate they are interacting with and the conglomerate’s
name does not include terms identifying a type of institution not included in the conglomerate.
Private Payroll Deduction Loans
Law No. 10,820, of December 17, 2003,
as amended by Law No. 15,179, of July 24, 2025, modernizes the framework for private payroll-deduction loans by facilitating the use of
digital platforms for both the solicitation and management of these credit arrangements.
The reform is intended to enhance efficiency,
strengthen security, and improve accessibility for workers. Under the updated rules, formal employees — including rural workers,
domestic workers, and registered sole-proprietor micro-entrepreneurs (MEIs) — may apply for loans on more favorable terms directly
through Brazil’s official Digital Work Card application. Loan repayments are capped at 35% of the borrower’s gross salary,
with the option to pledge up to 10% of the FGTS (Severance Indemnity Fund) balance or up to 100% of the termination indemnity payable
upon dismissal without cause as collateral, and installments are deducted automatically from payroll via the national eSocial system.
The measure is expected to deliver tangible
benefits to workers by expanding access to lower-interest credit facilities and reducing administrative costs. For the first 120 days
following the launch of the systems or platform, funds from new payroll-deducted loan transactions with authorized institutions must be
used exclusively to repay either (i) non-payroll-deducted loans with outstanding installments without collateral, or (ii) payroll-deducted
loans with outstanding installments, provided the borrower has such active obligations on the date the new loan is granted.
These new credit operations may be offered
by any duly authorized payroll-deducting institution and must carry an interest rate lower than that of the original loan being refinanced.
In such cases, lending institutions are required to report the relevant loan data to the designated public operating agents. This priority
repayment structure is intended to encourage the replacement of higher-cost debt with cheaper, payroll-deducted alternatives, thereby
contributing to broader economic stimulus.
New Accounting Criteria Applicable to Financial
Instruments, Hedging, Leasing Agreements and Accounting Standards
On November 25, 2021 and December 16,
2021, the CMN issued Resolution No. 4,966/2021 and Resolution No. 4,975/2021. These rules establish, respectively, new accounting principles
and criteria applicable to financial instruments, as well as to hedging and financial leasing transactions contracted by financial institutions
and other institutions authorized to operate by the Brazilian Central Bank.
The rules intend to align the accounting
criteria applicable to financial instruments and leasing agreements contracted by financial institutions and other entities supervised
by the Brazilian Central Bank with best international practices, including the “IFRS 9 – Financial Instruments” and
“IFRS 16 – Leases” standards issued by the IASB.
CMN Resolution No. 4,966/2021 and Resolution
No. 4,975/2021 came into effect on January 1, 2025, ensuring a transition period for the institutions subject to the changes.
Furthermore, on March 28, 2023, the Brazilian
Central Bank issued Resolution No. 309 (superseded by Resolution No. 352 of November 23, 2023 which has substantially the same purpose
of Resolution No. 309 and includes consortium administrators, payment institutions, securities brokers, foreign exchange brokers and securities
distribution companies in its scope). Resolution No. 309 establishes accounting procedures to define the components of financial instruments,
which constitute payments of principal and interest on the principal value for the purposes of classification of financial assets. It
also establishes parameters to measure the expected loss associated with credit risk, including those for setting minimum levels of allowance
for expected losses associated with credit risk, among other changes.
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Meanwhile, on October 23, 2023, CVM issued
Resolution No. 193, which provides that publicly listed companies in Brazil, such as us, investment funds and securitization companies
must prepare and disclose, subject to certain requirements, financial information reports related to sustainability and climate in accordance
with international standards (IFRS S1 and IFRS S2) issued by the International Sustainability Standards Board, or ISSB. The compliance
with such standards became mandatory as of the fiscal year beginning on January 1, 2026.
Furthermore, on November 21, 2024, the
CMN issued Resolution No. 5,185, which established the obligation for financial institutions to disclose the financial information report
related to sustainability within their annual consolidated financial statement, in accordance with the International Accounting Standards
Board (IASB) and the Brazilian Sustainability Pronouncements Committee (CBPS).
Resolution No. 193 came into effect on
November 1, 2023, Resolution No. 5,185 on January 1, 2025, and Resolution No. 352 will come into effect on January 1, 2027 regarding Hedge
Accounting.
On December 23, 2024, the CMN and the
Brazilian Central Bank issued CMN Resolution No. 5,199 and Central Bank Resolution No. 448, which respectively amend CMN Resolution No.
4,996 and Brazilian Central Bank Resolution No. 352 to establish a transition schedule to incorporate the impacts on regulatory capital
due to the new provisioning model set forth under those rules and based on IFRS 9. This transition schedule aligns with the Basel Committee
on Banking Supervision (BCBS) recommendations, which allow jurisdictions to phase in the effects on regulatory capital resulting from
increased provisions following the adoption of IFRS 9. The rule partially restores regulatory capital that may have been reduced due to
the shift to the new provisioning model. The transition will take place from 2025 to 2028 and will apply to all institutions authorized
by the Brazilian Central Bank that calculate regulatory capital, including us. This adjustment aims to ensure that the metrics for risk
exposure are sensitively managed.
On November 4, 2025, the Brazilian Central
Bank launched Public Consultation No. 127, proposing amendments to BCB Resolution No. 139/2021 to expand and standardize the Social, Environmental
and Climate Risks and Opportunities Report (GRSAC). The proposal introduces a second phase of requirements focused on quantitative metrics
and targets, while refining the qualitative tables adopted in 2021, and aligns disclosures with international standards, including IFRS
S1 and S2 and the Basel Committee’s Pillar 3 framework for voluntary climate risk disclosures. The new framework structures the
GRSAC Report into standardized qualitative and quantitative tables covering governance, strategy, risk management and climate risk (transition
and physical), as well as sectoral exposures and emissions, agriculture by biome, power generation by source, physical risk metrics for
drought and heavy rain, transition plans, and social and environmental risk exposures. Disclosure of business opportunities remains voluntary;
disclosure of national and international voluntary commitments follows new standardized tables (COMP1 and COMP2). The consultation also
clarifies the use of climate scenario analysis, with parameters for narratives, time horizons and scientific bases.
Implementation is phased. For S1 and S2
institutions, the new GRSAC format would take effect in January 2027, with the first publication in 2028 using a December 2027 reference
date. S3 institutions become subject to all tables with the first required publication based on December 31, 2028; S4 institutions, previously
limited to a qualitative governance table, must disclose standardized information on social, environmental or climate commitments via
COMP1 and COMP2 on the same timeline as S3. S5 institutions remain exempt. The proposed rules preserve flexibility to add granularity
or justify omissions where immaterial and allow complementing tables to meet the sustainability financial reporting requirements aligned
with IFRS, subject to consolidation scope differences. The public consultation remains open for comments until February 13, 2026.
Segmentation for the Proportional Application
of Prudential Regulation
In 2017, the CMN enacted a resolution
establishing segmentation for financial institutions, financial institution groups, and other institutions authorized to operate by the
Brazilian Central Bank for the purposes of proportional application of the prudential regulation. The segmentation is based on the size,
international activity and risk profile of members of each segment. Pursuant to the resolution, the segments are as follows:
• Segment 1 comprises multiservice banks, commercial banks, investment banks, foreign exchange banks and savings banks with (a) an asset base equivalent or superior to 10% of Brazil’s GDP; or (b) which perform relevant international activities, irrespective of the size of the institution;
• Segment 2 comprises multiservice banks, commercial banks, investment banks, foreign exchange banks and savings banks with (a) an asset base lower than 10% of Brazil’s GDP; and (b) other institutions with an asset base equivalent to or greater than 1% of Brazil’s GDP;
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• Segment 3 comprises institutions with an asset base lower than 1% and equivalent to or greater than 0.1% of Brazil’s GDP;
• Segment 4 comprises institutions with an asset base lower than 0.1% of Brazil’s GDP; and
• Segment 5 comprises institutions with an asset base lower than 0.1% of Brazil’s GDP, that apply a simplified optional method for verifying the regulatory capital’s minimum requirements, except for multiservice banks, commercial banks, investment banks, foreign exchange banks and savings banks.
We have been categorized by the Brazilian
Central Bank in segment 1, the highest level for application of regulation for banks in Brazil.
Regulation of Risk and Capital Management Structure
The rules enacted by the CMN and the Brazilian
Central Bank provide that risk management must be conducted through an integrated effort by the relevant entity (i.e., not only must risks
be analyzed on an individual basis, but financial institutions must also control and mitigate the adverse effects caused by the interaction
between different risks). The rules set out different structures for risk and capital management, which are applicable for different risk
profiles. This means that a financial institution of limited systemic importance can have a simplified structure of management, while
institutions of larger complexity have to follow stricter protocols.
Furthermore, on June 29, 2023, the CMN
issued Resolution No. 5,089, which introduces changes to risk management requirements applicable to financial institutions, such as us.
Pursuant to the new rule, country and transfer risks will be considered autonomous risks. Under the new rule, country risk is defined
as the possibility of losses associated or incurred due to events related to foreign jurisdictions and transfer risk as the possibility
of occurrence of obstacles in the currency conversion of the funds required for the settlement of obligations towards the financial conglomerate
if these funds are held in a jurisdiction other than that where the respective settlement will take place. The amendments introduced by
Resolution No. 5,089 came into effect on January 1, 2024.
Compulsory Reserve Requirements
Currently, the Brazilian Central Bank
imposes a series of compulsory reserves requirements. Financial institutions must deposit these reserves with the Brazilian Central Bank.
The Brazilian Central Bank uses these reserve requirements as a mechanism to control the liquidity of the Brazilian financial system for
both monetary policy and risk mitigation purposes. Reserves imposed on time deposits, demand deposits and saving accounts represent almost
the entirety of the amount that must be deposited at the Brazilian Central Bank.
• Time Deposits (CDBs), The Brazilian Central Bank imposes a reserve requirement of 20% in relation to time deposits. Financial institutions must deposit an amount equivalent to the surplus of (i) R$3.6 billion for financial institutions with consolidated Tier 1 capital under R$3 billion; (ii) R$2.4 billion for financial institutions with consolidated Tier 1 capital between R$3 billion and R$10 billion; (iii) R$1.2 billion for financial institutions with consolidated Tier 1 capital between R$10 billion and R$15 billion; and (iv) zero for financial institutions with a regulatory capital greater than R$15 billion.
Additionally, as from the issuing of Brazilian
Central Bank Resolution No. 145 on September 24, 2021, collateral deposit for the new funding mechanism for financial institutions (called
Linhas Financeiras de Liquidez) can be used to deduct up to three percentage points of this type of reserve requirement.
• Demand Deposits. As a general rule, the Brazilian Central Bank imposes a reserve requirement of 21% in relation to demand deposits.
• Savings Deposits. The Brazilian Central Bank imposes a reserve requirement of 20% in relation to general savings deposits and to rural savings deposits.
New Rules Applicable to the Perfection and Enforcement
of In Rem Collateral
On October 30, 2023, the President of
Brazil enacted Bill of Law No. 4,188/2021, leading to the enactment of Law No. 14,711. This legislation brings about significant alterations
to the Brazilian legal landscape concerning collateral, with the objective of enhancing legal certainty, reducing interest rates on secured
loans, and expanding credit accessibility for borrowers. Its primary objective is to address the existing issue of immobilized capital
in the fiduciary sale of real estate, where, prior to this legislation, a property could not be utilized as collateral more than once.
Consequently, Law No. 14,711 implements adjustments to Brazilian civil law to tackle this issue, including: (i) permitting a new fiduciary
sale over the same property; (ii) extending an existing guarantee to a new debt; and (iii) introducing the figure of the collateral agent
into the Brazilian legal framework. Additionally, the new law incorporates various enhancements concerning the perfection and extrajudicial
enforcement of collateral, including the modification and repeal of outdated laws, alterations to collateral registration regulations,
among other measures.
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Asset Composition Requirements
Permanent assets (defined as property
and equipment other than commercial leasing operations, unconsolidated investments and deferred charges) of Brazilian financial institutions
may not exceed 50% of their adjusted net equity, calculated in accordance with the criteria established by the Brazilian Central Bank.
Brazilian financial institutions, as a
general rule, may not have more than 25% of their Tier 1 regulatory capital allocated to credit and leasing transactions and guarantees
extended to the same customer or group of customers acting jointly or representing the same economic interest. In addition, Brazilian
financial institutions must comply with an exposure limit of 25% of their regulatory capital in connection with underwriting for or investments
in securities of the same entity, its affiliates, or controlled or controlling companies. Repurchase transactions executed in Brazil are
subject to operational capital limits based on the financial institution’s regulatory capital, as adjusted in accordance with Brazilian
Central Bank regulations. A financial institution may carry out repurchase transactions in an amount of up to 30 times its regulatory
capital. Within that limit, repurchase transactions involving private securities may not exceed five times the regulatory capital. Limits
on repurchase transactions involving securities backed by Brazilian governmental authorities vary in accordance with the type of security
involved in the transaction and the perceived risk of the issuer as determined by the Brazilian Central Bank.
The regulation issued by the Brazilian
Central Bank with respect to the classification and valuation of securities and derivative financial instruments — including government
securities — owned by financial institutions, based on the investment strategy of the financial institution, determined that securities
and derivatives are to be classified into three categories: (i) trading; (ii) available for sale; and (iii) held to maturity.
“Trading” and “available
for sale” securities are to be marked-to-market with effects in income and stockholders’ equity, respectively. Securities
classified as “held to maturity” are recorded at amortized cost, Derivatives are marked-to-market and recorded as assets and
liabilities in the balance sheet. Changes in the market value of derivatives are generally recognized in income with certain modifications,
if these are designated as hedges and qualify for hedge accounting under the regulations issued by the Brazilian Central Bank. Securities
and derivatives in the “held to maturity” portfolio may be hedged for accounting purposes but their increase or decrease in
value as derived from the marked-to-market accounting method should not be taken into account.
On July 31, 2018, the CMN enacted a rule
providing that financial institutions categorized as “Segment 1” as per the Brazilian Central Bank’s classification
system established in 2017 (which is our case) (1) may not have more than 25.0% of their regulatory capital allocated to a single legal
or natural person, and (2) that the total exposure of such financial institutions to one individual customer may not exceed 600% of their
regulatory capital allocated to focused exposure, that is 10% of their Tier 1 regulatory capital. The rule also subjects financial institutions
categorized as segment 2, segment 3 or segment 4 to less restrictive rules.
Centralized Registration and Deposit of Financial
Assets and Securities
Law No. 13,476/17 consolidates the provisions
on creation of liens over financial assets and securities, CMN Resolution No. 4,593/2017, as amended, regulates the registration and deposit
of financial instruments and securities by financial institutions as well as the provision of custody services by such institutions.
Resolution No. 4,734/19 sets out the guidelines
applicable to the establishment of liens and encumbrances on credit and debit payment instruments due to credit operations with financial
institutions and regulates credit operations guaranteed by receivables from payment arrangements. The amount of receivables perfected
into guarantees for a certain credit transaction will be reduced, whenever applicable, so that they are limited to the outstanding balance
of the transaction or to the maximum limit extended, in the case of an extension of a non-dischargeable credit facility by a financial
institution on an absolute and unilateral basis.
Resolution No. 264/22 deals in particular
with the procedures for the registration of receivables and requires a convention between market infrastructures to guarantee the uniqueness
of the receivables as financial assets that can be registered, interoperability, exchange of information between registration systems
and participants in the structure. Resolution No. 264/22 came into effect on December 1, 2022.
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Furthermore, on August 24, 2023, the CMN
issued Resolution No. 5,094 and the Brazilian Central Bank issued Resolution No. 339, which establish changes related to the issuance,
registration, centralized deposit and negotiation of book trade acceptance bills (duplicatas escriturais), such as the establishment of
a new settlement system for book trade acceptance bills and the provision to establish a contestation procedure by the bookrunner companies,
which must be uniform, documented and with a response period of three days, when referring to the services of the bookrunner companies
themselves. In December 2024, a convention regarding the interoperability of the registration and bookkeeping systems applicable to book
trade acceptance bills was signed by market participants. The system is expected to begin operating by the end of 2026.
Resolutions No. 5,094 and 339 came into
effect on September 1, 2023.
Brazilian Payment and Settlement System
The rules for the settlement of payments
in Brazil are based on the guidelines adopted by the Bank of International Settlements, or “BIS,” and the current Brazilian
Payment and Settlement System (Sistema de Pagamentos Brasileiro or the “SPB”). The Brazilian Central Bank and CVM (in
relation to transactions with securities) have the power to regulate and supervise this system, SPB is composed of systems for the clearing
of checks, clearing and settlement of debit and credit electronic orders, transfer of funds and other financial assets, clearing and settlement
of transactions involving securities, clearing and settlement of transactions carried out in commodities and futures, and others, collectively
designated as Financial Market Infrastructures, as well as the payment arrangements and payment institutions.
Within the scope of SPB, the Brazilian
Central Bank operates the Reserves Transfer System, or “STR,” and the SELIC. STR is a system of transfer of funds with real-time
gross settlement, which means that transfers are made at the processing time, one by one, and are subject to the existence of outstanding
balance in the account. STR is composed of financial institutions, clearing and settlement houses and the National Treasury Office. SELIC
is the Brazilian Special Settlement and Custody System (Sistema Especial de Liquidação e Custódia), a system
intended for custody of book-entry securities issued by the National Treasury Office and for the registration and settlement of transactions
involving such securities.
Instant Payment System
The Brazilian Central Bank also implemented
an instant payment ecosystem in November 2020. The settlement of the system is centralized at the Brazilian Central Bank. In addition
to increasing the speed at which payments or transfers are made and received, available 24 hours a day, seven days a week in all days
of the year, the ecosystem has the potential to increase market competitiveness and efficiency; lower costs; and enhance customer experience.
On March 3, 2022, the Brazilian Central
Bank issued Resolution No. 195/22, which regulates the SPI. Resolution No. 195/22 also approved the regulation with which the direct and
indirect participants in the SPI must comply and Brazilian Central Bank Normative Ruling No. 243/22 established the procedures and timetable
for the tests necessary to register as a direct participant in the SPI.
According to the by-laws of the SPI, the
participation in the SPI is mandatory for the participants of the PIX arrangement, and optional for (i) the clearinghouses and other providers
of clearing services, and (ii) the National Treasury Department.
There are two types of participation in
the SPI: (i) direct, in which the participant holds an instant payment account and is directly connected to the SPI; and (ii) indirect,
in which the participant institution does not hold an instant payment account and its participation occurs via a direct participant to
the SPI, responsible for registering the indirect participant in the SPI and to act as its clearing agent in the SPI for instant payments.
Resolution No. 195/22 came into effect on April 1, 2022.
On August 12, 2020, the Brazilian Central
Bank issued Central Bank Resolution No. 1, or “Central Bank Resolution No. 1/2020,” establishing the PIX System payment arrangement
and approving the regulation governing it, or (the “PIX Regulations”).
Pursuant to Central Bank Resolution No.
1/2020, participation in the PIX System is mandatory for financial institutions and payment institutions authorized to operate by the
Brazilian Central Bank that have more than 500,000 active customer accounts, considering cash deposit accounts, savings deposit accounts
and prepaid payment accounts. Participation in the PIX System is optional for financial institutions and payment institutions that do
not meet this threshold, as well as for the National Treasury Secretariat.
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The PIX Regulation applies to all PIX
System participants. According to the PIX Regulations, there are three types of participation: (i) transactional account provider, which
is a financial institution or a payment institution that offers deposit accounts or payment accounts to end users; (ii) government entity,
which is the National Treasury Secretariat, with the exclusive purpose of making collections and payments related to its activities; and
(iii) special clearinghouses, that are the financial institutions and payment institutions that (a) within the scope of the PIX System,
have the exclusive purpose of providing settlement services to other participants, (b) meet the requirements to act as settlement participant
in the Brazilian Central Bank’s SPI, and (c) do not meet the criteria of mandatory participation in the PIX System.
Brazilian Central Bank Resolution No.
1/2020 came into effect on September 1, 2020. PIX System transactions started operating on a restricted basis through to November 3, 2020,
and was fully as of November 16, 2020.
Furthermore, on September 2, 2021, the
Brazilian Central Bank issued Resolutions No. 135 and 136, which regulate the offering of the PIX Withdrawal and PIX Change services by
regulated institutions that participate in the Brazilian Instant Payments System. Both rules came into effect on November 1, 2021. The
new services were established by the Brazilian Central Bank on August 24, 2021, in a meeting of its Collegiate Board, which approved changes
to the PIX Regulations.
PIX Withdrawal will allow all the customers
of any participating institution to make a withdrawal in kind at one of the points that offer the service. Merchants, shared ATM networks
and PIX participants, through their own ATMs, may offer the service. In order to withdraw funds in kind through PIX, the client simply
executes a PIX transaction to the withdrawal agent, in a similar dynamic to a normal PIX transaction, by reading a QR Code or through
the service provider’s API.
With the PIX Change, the dynamic is almost
identical. The difference is that the withdrawal of cash can be carried out during a purchase transaction with a merchant that offers
PIX as a means of payment. In this case, the PIX transaction is executed for the total amount (purchase + cash withdrawal). The customer’s
invoice will show the amount corresponding to the cash withdrawal and the purchase amount.
The offer of the two new products on PIX’s
evolving agenda to users is optional, and the final decision to implement PIX Withdrawal and PIX Change is up to the merchants that accept
PIX, the companies that own ATM networks, and the financial institutions that have their own ATMs.
Further, on September 23, 2021, the Brazilian
Central Bank issued Resolution No. 142, introducing security measures to be adopted by institutions under its regulation and supervision
to prevent frauds in the provision of payment services.
Resolution No. 142 establishes that financial
and payment institutions must limit the provision of payment services for the period from 8 p.m. to 6 a.m. to a maximum of R$1,000 per
deposit or prepaid payment account, as applicable. This limit may be increased at the client’s request, which must be submitted
formally through the relevant electronic service channels, but the institution must establish a minimum period of 24 hours for the change
to take effect. Resolution No. 142 required payment service providers to implement the new transaction limit by October 4, 2021.
Pursuant to Resolution No. 142, financial
and payment institutions should have implemented, by November 16, 2021: (i) procedures aimed at evaluating the customer prior to offering
the anticipation of the settlement of payment receivables on the same date of the execution of a payment transaction within the scope
of payment schemes in which the institutions participate; and (ii) daily registration of the occurrence of fraud or attempted fraud in
the rendering of payment services, including the corrective measures adopted by the institution. Based on these records, the institutions
must prepare a monthly report consolidating the occurrences and the preventive and corrective measures adopted. This report must be forwarded
to the entity’s audit and risk committees (if in place), internal audit unit, executive board and board of directors (if in place).
Furthermore, on September 28, 2021, the
Brazilian Central Bank issued Resolution No. 147, which established security mechanisms specific to PIX transactions. The rule also details,
within the scope of PIX, the measures established by Resolution No. 142, which applies to all electronic payment methods (including other
types of electronic transfers available in Brazil, such as Transferência Eletrônica Disponível – TED or Documento
de Ordem de Crédito – DOC). The security measures came into effect on November 16, 2021, with the exception of the new transaction
limits, which came into effect on October 4, 2021. On September 26, 2023, the Brazilian Central Bank issued Resolution No. 342, which
came into effect on September 28, 2023, and enhances rules mostly related to safety incidents involving PIX System. The rule mainly refers
to communication to data subjects when any incidents involving personal data occurs, as well as the penalties that the institution participating
in the PIX System are subject to in cases of noncompliance with technical and regulatory safety requirements.
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On December 7, 2023, the Brazilian Central
Bank issued Resolution Nos. 361, which amends the PIX sanctions manual to include provisions related to automatic PIX transactions, a
new solution within the PIX ecosystem that will permit PIX payments in automatic installments, which may be used, for instance, in online
subscription payments.
On July 22, 2024, the Brazilian Central
Bank issued Resolution Nos. 402 and 403, aimed at improving the overall security of the PIX payment system. Pursuant to Resolution No.
402, the Central Bank changed the launch date of the Automatic PIX to June 16, 2025. This rule introduced the paying customer’s
consent (instead of previous authorization), a PIX rejection obligation in certain circumstances, and different application to the special
mechanism for returning automatic PIX transactions. Furthermore, pursuant to Resolution No. 403, transactions can still be initiated from
unregistered devices for amounts up to R$200, with a daily limit of R$1,000; however, for transactions that exceed these amounts, the
device must be registered in advance by the customer. In addition, under the terms of Resolution No. 403, to further secure fund transactions,
the Brazilian Central Bank mandates that PIX participants (such as us) implement a fraud risk management solution that uses security information
from the Brazilian Central Bank to identify unusual transactions. In addition to the changes introduced by Resolution No. 403, PIX participants
must also provide easily accessible information to customers about fraud prevention measures. Additionally, PIX participants are required
to check every six months for fraud markings in the Brazilian Central Bank database, which will influence how they manage clients flagged
for fraud risks. Both resolutions came into effect on November 1, 2024.
On September 25, 2025, CMN issued Resolution
No. 5,251 and the Brazilian Central Bank issued Resolution No. 505, rules that imposed new requirements mandating that debit authorizations
involving corporate or non-regulated payees comply with automated PIX standards, and obligating depositary and recipient institutions
to revise their contracts and related operational procedures.
Open Finance Regulation in Brazil
On May 4, 2020, the Brazilian Central
Bank and the CMN enacted Joint Resolution No. 1, which regulates open finance. Open finance consists of the sharing of data and payment
initiation services and forwarding credit transaction proposals, by financial institutions and other authorized entities (with customers
permission) and the integration of information systems, through a phased-in approach and in a secure, prompt, accurate and convenient
manner.
Among other topics, the resolution sets
forth the mandatory and voluntary participating institutions, the data and services covered, the requirements for sharing, the responsibilities
for sharing, the implementation schedule and the form of agreement to be entered into by the participating institutions.
According to the resolution, (i) financial
institutions and prudential conglomerates belonging to the S1 or S2 segments, as is our case, are mandatorily required to fully participate
in open finance; and (ii) institutions offering current or payment accounts or payment initiation services are required to mandatorily
participate in open finance at least in regards to the sharing of data related to payment initiation services.
On October 29, 2020, the Brazilian Central
Bank issued Central Bank Resolution No. 32/2020, which sets forth the technical and operational requirements to be observed by institutions
which participate in the Brazilian Open Finance System.
The new rule lays out, among others, rules
relating to (i) the scope of the data and services to be shared by participating institutions within Open Finance, detailed in a specific
manual; (ii) the standards for the development of application programming interfaces (APIs) by participating institutions, detailed in
a specific manual, which deals with their design, data transmission protocols, data exchange formats, control accesses, version control
systems and specification parameters; among other things; (iii) criteria for registration and cancellation of registration in Open Finance;
(iv) services to be rendered by the Open Finance Governance Structure, which also is detailed in a specific manual, including the maintenance
of a repository of participating institutions and a website containing updated information about Open Finance and its implementation;
and (v) minimal security standards and certifications.
Additionally, on September 9, 2021, the
Brazilian Central Bank published Resolution No. 138, which disclosed the minimum scope of data to be available for sharing on Stage 4
of Open Finance, to be further detailed by the Open Finance Governance Body. The fourth stage of the ecosystem, which covers data on
foreign exchange, investment, insurance, and open-end private pension transactions, as well as merchant acquiring services, began on
December 15, 2021, when the participating institutions must make the information about the mentioned products and services available
to other financial institutions.
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Regarding investment transactions, the
main financial and capital market products offered in Brazil were included in the scope of Stage 4, such as: (i) Banking Time Deposit
Certificates (Certificados de Depósito Bancário or CDBs); (ii) Banking Time Deposit Receipts (Recibos de Depósito
Bancário or RDBs); (iii) Real Estate Credit Bills (Letras de Crédito Imobiliário or LCIs); (iv) Agribusiness
Credit Bills (Letras de Crédito do Agronegócio or LCAs); (v) investment fund quotas; (vi) direct treasury government
bonds (títulos do tesouro direto); (vii) stock; (viii) quotas of exchange-traded investment funds (ETFs); (ix) debentures;
(x) Certificates of Real Estate Receivables (Certificados de Recebíveis Imobiliários or CRIs); and (xi) Certificates
of Agribusiness Receivables (Certificados de Recebíveis do Agronegócio or CRAs).
With regard to foreign exchange transactions,
effective total value of transactions (VET) and commercial exchange rates will need to be made available. The data referring to merchant
acquiring services will cover applied service fees and rates.
Finally, the data referring to insurance
products and pension plans will follow the scope defined by the CNSP and the SUSEP in CNSP Resolution No. 415/2021 and SUSEP Circular
No. 635/2021, respectively, which establish a specific timeline for the implementation of Open Insurance, an exclusive governance body
responsible for Open Insurance, as well as specific implementation manuals.
Phase 4 of Open Finance introduced information
sharing beyond traditional banking products and services, marking the beginning of the migration from Open Banking to Open Finance in
Brazil.
On October 26, 2023, the CMN and the Brazilian
Central Bank issued Joint Resolution No. 7, which came into effect on October 30, 2023, and simplifies the process of renewing consents
for data sharing in Open Finance. In order to ease the process for clients, the new rule allows participating institutions, such as us,
to offer longer terms than the current 12-month limit for data sharing, while maintaining the provision permitting clients to revoke their
consent at any time.
On July 5, 2024, the Brazilian Central
Bank and the CMN introduced new open finance regulations aimed at enhancing payment transactions via the PIX system. The regulations (Joint
Resolution No. 10 and Brazilian Central Bank Resolutions Nos. 398, 399, and 400) simplify payment initiation processes and facilitate
contactless payments. Key changes include a new framework for governance and adjustments to mandatory participation requirements for institutions
in the open finance ecosystem. The significant changes include the following: (i) payment initiation service institutions may provide
services without redirecting users to different platforms, streamlining contactless payments and improving user experience; (ii) from
January 1st, 2025 on, only institutions with over five million customers will be required to participate in data sharing within
the open finance ecosystem, while smaller institutions will be able to opt in voluntarily; and (iii) for payment initiation services,
participation will no longer be mandatory for all account-holding institutions; only payment initiation service providers and mandatory
PIX participants (such as us) will need to be involved.
Regulatory Sandbox
On November 28, 2019, the Brazilian Central
Bank published Public Consultation No. 72/2019, which ended on January 31, 2020, regarding the Controlled Testing Environment for Financial
Innovations or “Sandbox” which is intended to enable institutions to test innovative financial and payment projects for a
specified period.
After receiving comments on such Public
Consultation, the CMN and the Brazilian Central Bank issued, on November 26, 2020, CMN Resolution No. 4,865/20 and BCB Resolution No.
29/20, to regulate the Sandbox. These rules set forth the applicable conditions for the implementation of the Sandbox, among which are
the specific rules for the first cycle of tests, such as duration and number of participants, required documentation, criteria for the
classification of institutions and the schedule for registration, selection and authorization processes of such entities. In November
2021, the Brazilian Central Bank selected developers’ projects for the first cycle, which lasted for one year and was extended for
a second year through November 2023. As of the date of this annual report, a second cycle still has not commenced.
Treatment of Overdue Debts
The Brazilian Central Bank requires financial
institutions to classify credit transactions in accordance with their level of credit risk and to make provisions according to the level
attributed to each transaction. Such credit classifications shall be determined in accordance with criteria set forth from time to time
by the Brazilian Central Bank, relating to the conditions of the debtor and the guarantor and the transaction terms. Pursuant to CMN
Resolution No. 4,966, there are several credit transactions involving the same customer, economic group or group of companies, the credit
risk must be determined by analyzing the particular credit transaction of such customer or group that represents the greatest credit
risk to the financial institution.
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In accordance with the CMN Resolution
No. 4,966, credit transactions may be classified either by the financial institution’s own evaluation method or according to the
number of days such transaction is past due, whichever is the more stringent. Credit classifications are required to be reviewed (i) monthly,
in the event of a delay in the payment of any installment of principal or interest, in accordance with the maximum risk classifications;
(ii) every six months, in the case of transactions involving the same customer, economic group or group of companies, the amount of which
exceeds 5% of the adjusted net worth of the financial institution in question; and (iii) once every 12 months, in all circumstances not
scheduled to be reviewed every six months.
The CMN and the Brazilian Central Bank
established a transition schedule to incorporate the impacts on regulatory capital due to the new provisioning model set forth under those
rules, based on IFRS 9. This transition schedule, expected to begin in December 2025 and end in January 2028, aligns with Basel III recommendations
which allow jurisdictions to phase in the effects on regulatory capital resulting from increased provisions following the adoption of
IFRS 9.
The provisions set forth above are not
applicable to our IFRS consolidated financial statements, which are based on the criteria described under “Item 5. Operating and
Financial Review and Prospects—A. Operating Results—Critical Accounting Policies—Impairment Losses on Financial Assets.”
Regulation of the Transfer of Customer Data by
Financial Institutions to Database Managers
Brazilian law regulates the formation
and consultation of databases with information regarding performance, individuals or legal entities, for the formation of credit history,
Resolution No. 4,737 determines that the history of the following operations should be provided: (i) credit operations; (ii) leasing operations;
(iii) self-financing operations executed upon consortium groups; and (iv) other operations with characteristics of credit granting; and
defines the criteria for the registration of database managers, such as the identification of the natural and legal persons that are part
of the control group of the database manager.
Collection of Bank Fees
Bank services to individuals are divided
into the following four groups: (i) essential services; (ii) priority services; (iii) special services; and (iv) specific or differentiated
services.
Banks are not able to collect fees in
exchange for supplying essential services to individuals with regard to checking accounts, such as (i) supplying a debit card; (ii) supplying
10 checks per month to account holders who meet the requirements to use checks, as per the applicable rules; (iii) supplying a second
debit card (except in cases of loss, theft, damage and other reasons not caused by the bank); (iv) up to four withdrawals per month, which
can be made at a branch of the bank, using checks or in ATM terminals; (v) supplying up to two statements describing the transactions
during the month, to be obtained through ATM terminals; (vi) inquiries over the internet; (vii) up to two transfers of funds between accounts
held by the same bank, per month, at a branch, through ATM terminals or over the internet; (viii) clearing checks; and (ix) supplying
a consolidated statement describing, on a month-by-month basis, the fees charged over the preceding year with regard to checking accounts
and savings accounts.
Certain services rendered to individuals
with regard to savings accounts also fall under the category of essential services and therefore are exempt from the payment of fees.
CMN prohibits banks from charging fees for supplying essential services in connection with deposit and savings accounts where customers
agree to access and use their accounts by electronic means only (being authorized to charge fees for supplying essential services only
when the customer voluntarily elects to obtain personal service at the banks’ branches or customer service locations).
Priority services are those rendered to
individuals with regard to checking accounts, transfers of funds, credit transactions, leasing, standard credit cards, over-the-counter
exchange transactions for the purchase or sale of foreign currency in respect of international travel, and records, and are subject to
the collection of fees by the financial institutions only if the service and its nomenclature are listed in its regulations. Commercial
banks must also offer to their individual customers a “standardized package” of priority services, whose content is defined,
as well as the customers’ option to acquire individual services instead of adhering to the package.
The collection of fees in exchange for
the supply of special services (including, among others, services relating to rural credit, currency exchange market and on lending of
funds from the real estate financial system) is governed by the specific provisions found in the laws and regulations relating to such
services. The regulation authorizes financial institutions to charge fees for the performance of specific services, provided either that
the account holder or user is informed of the conditions for use and payment or that the fee and charging method are defined in the contract.
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It is worth pointing out: (i) the prohibition
against charging fees in cases of adhesion contract amendments, except in the cases of asset replacement in leasing transactions, early
liquidation or amortization, cancellation or termination; (ii) the prohibition against including services related to credit cards and
other services not subject to fees in service packages that include priority, special and/or differentiated services; (iii) the requirement
that subscription to service packages must be through a separate contract; (iv) the requirement that information given to the customer
with respect to a service package must include the value of each service included in the package, the number of times that each service
may be utilized per month, and the total price of the package; (v) the requirement that a customer’s annual banking statement must
separately identify default interest, penalties and other costs charged on loans and leasing transactions; (vi) the requirement that registration
fees cannot be cumulatively charged; and (vii) the requirement that overdraft fees can be charged, at most, once over the course of 30
days.
In addition, CMN regulations establish
that all debits related to the collection of fees must be charged to a bank account only if there are sufficient funds to cover such debits
in such account and thus forbid overdrafts caused by the collection of banking fees. Furthermore, a minimum of 30 days’ notice must
precede any increase or creation of fees (except if related to credit card services, when a minimum of 45 days’ notice is required),
while fees related to priority services and the “standardized package” can be increased only after 180 days from the date
of the last increase (except if related to credit card services, when a minimum of 365 days’ notice is required) whereas reductions
can take place at any time.
Changes to Rules Applicable to Agribusiness Receivables
Certificates, Real Estate Receivables Certificates and Other Incentivized Instruments
On February 1, 2024, the CMN introduced
changes to the eligible collateral for the issuance of agribusiness receivables certificates (certificados de recebíveis do agronegócio,
or “CRA”) and real estate receivables certificates (certificados de recebíveis imobiliários, or “CRI”)
through Resolution No. 5,118, dated February 1st, 2024. Similarly, through Resolution No. 5,119, also dated February 1st, 2024, the CMN
made adjustments to eligible collateral and maturity periods for agribusiness credit letters (letras de crédito do agronegócio,
or “LCA”), real estate credit letters (letras de crédito imobiliárias, or “LCI”), and guaranteed
real estate letters (letras imobiliárias garantidas, or “LIG”).
In relation to CRIs and CRAs, Resolution
No. 5,118 prohibits that these certificates be backed by debt securities issued by (i) publicly held companies or related parties of such
companies, unless the company’s primary business activity is real estate (for CRI) or agribusiness (for CRA); and (ii) financial
institutions or other institutions authorized by the Brazilian Central Bank, such as us. The following credit rights are also no longer
eligible to back CRIs or CRAs: (i) transactions with related parties (e.g., lease agreements, sale & leaseback agreements within the
same group); and (ii) credit rights arising from financial transactions used for expense reimbursement. These adjustments will apply to
CRA and CRI issuances from the rule’s publication date onwards and will not affect existing contracts.
Regarding LCAs, starting from July 1,
2024, Resolution No. 5,119 prohibits the use of funds raised through this instrument for rural credit benefiting from Brazilian federal
subsidies. Additionally, the CMN now restricts the use of certain credit instruments as collateral, gradually limiting the use of controlled
rural credit transactions in LCA collateral until July 1, 2025. The minimum maturity period for LCAs has been extended from 90 days to
nine months to encourage longer-term funding.
In terms of LCIs, Resolution No. 5,119
also establishes acceptable real estate credit types as collateral, with a focus on actual real estate transactions, and extends the minimum
maturity period for these instruments from 90 days to 12 months, aligning the maturity period with eligible collateral transactions. Similarly,
rules applicable to LCIs are extended to LIGs to avoid double tax benefits without new real estate credit origination. These adjustments
will apply to LCI and LIG issuances from the CMN’s decision onwards, with existing contracts unaffected by the changes.
Both resolutions came into effect on February
2, 2024, with the exception of the prohibition of the use of proceeds from LCA issuances for rural credit benefiting from Brazilian federal
subsidies, which came into effect on July 1, 2024.
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Late Payment Fees
The default payment fees charged by financial
institutions, consumer credit companies (financeiras) and leasing companies are expressly limited to compensatory interest per
day on the amount that is overdue, interest on arrears and fines on arrears.
Credit Cards
The banking regulations also have specific
rules relative to the charging of credit card fees, the publication of information in the card invoices and the obligation to provide
a package of basic services upon offering credit cards to customers.
Revolving credit for financings of credit
card bills may only be extended to customers until the due date of the following credit card bill. After this term, financial institutions
offer customers another product with conditions more favorable than the ones typically found in the credit card market. Banks are prohibited
from offering this type of credit to customers who have already contracted one revolving credit for financing of credit card bills which
were not repaid in a timely manner.
Furthermore, Law No. 14,690 was promulgated
on October 3, 2023. This law limits the interest rates charged on revolving credit provided in connection with credit cards and other
post-paid instrument invoices and ratifies the emergency program for renegotiation of debts of individuals in default depending on the
debtor’s category, which in turn depends on the size of the debtor’s debt (Desenrola Brasil). In light of the changes
introduced by this rule, the CMN and the Brazilian Central Bank issued Resolution No. 5,112 and Resolution No. 365, respectively, on December
21, 2023, establishing: (i) that from January 3, 2024, interest and other financial fees charged over the financing of the outstanding
balance of credit card and other post-paid instrument invoices may not exceed the principal amount of the financed debt; (ii) rules related
to the portability of credit transactions granted in the context of post-paid payment instrument financings (such as credit cards); and
(iii) transparency and financial education measures to be adopted by financial and payment institutions.
Payment Agents and Payment Arrangements
The regulation issued by the Brazilian
Central Bank, determines, among other aspects: (i) consumer protection, anti-money laundering compliance and risk prevention systems that
should be observed by payment agents and payment arrangers; (ii) the procedures for incorporation, organization, authorization and operation
of payment agents, as well as transfer of shareholding control, subject to the Brazilian Central Bank’s prior approval; (iii) capital
requirements; (iv) definition of arrangements excluded from the SPB; and (v) rules related to payment accounts, which are divided into
prepaid and postpaid accounts and require the allocation of the totality of their balance to a special account at the Brazilian Central
Bank or investment in government bonds.
On September 2, 2024, the Brazilian Central
Bank launched Public Consultation No. 104 to develop regulations aimed at strengthening centralized risk management frameworks within
SPB. The consultation proposes amendments to Brazilian Central Bank Resolution No. 150, of October 2021, focusing on enhancing and standardizing
risk management practices across payment networks. In addition to risk management, the new regulations will address concerns related to
money laundering, terrorist financing, and the proliferation of weapons of mass destruction. Key proposals in the public consultation
include the implementation of centralized settlement systems for sub-acquirers by January 1, 2027, and mandatory risk management elements
such as periodic assessments and regular sharing of risk-related information among participants. The Brazilian Central Bank has outlined
measures for managing financial risks through stress tests and backtesting, as well as rules ensuring that authorized transactions are
fully paid to the end users. Additional responsibilities are placed on acquirers regarding the risk management of transactions processed
through sub-acquirers, and new regulations addressing fraud prevention, orderly exit plans, and chargeback liability will also be introduced.
According to the proposed rule, payment scheme arrangers (card networks) will have 180 days post-regulation publication to seek authorization
for necessary adjustments.
On November 10, 2025, the Brazilian Central
Bank issued BCB Resolution No. 522, which amends BCB Resolution No. 150/2021 and implements rules resulting from Public Consultation
No. 104. The new framework strengthens centralized risk management in payment schemes that are part of the SPB, expressly allocating
to the payment scheme settlor (networks) ultimate and non-derogable liability to ensure the settlement of all transactions to receiving
users, including with its own funds if adopted protection mechanisms are insufficient. Resolution No. 522 enhances transparency over
risk allocation and financial risk mitigation tools, and bars delegation of sub-acquirer oversight: the settlor (network) becomes solely
responsible for monitoring participants’ risks and may not delegate sub-acquirer risk management to acquirers. It also reinforces
“honor all cards,” prohibits the requirement of collaterals among participants, limits participants’ financial liability
in chargebacks to 180 days from the transaction authorization (after which, where rules permit, liability shifts to the network), and
strengthens controls on fraud, AML/CFT, as well as conduct standards with payers. The rule further advances interoperability, information
sharing, authorization/change/cancellation processes for arrangements, full participation of sub-acquirers in centralized clearing and
settlement, and transparency of fees charged within arrangements.
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Resolution No. 522 became effective upon
publication (November 12, 2025). In view of the structural changes to risk management, scheme settlors must, within 180 days of publication,
(i) submit to the Brazilian Central Bank requests for authorization to amend the regulations of their payment schemes to reflect the new
requirements and (ii) implement the full participation of all sub-acquirers in centralized settlement for schemes subject to centralized
settlement, along with related operational interfaces (including information exchange between settlement infrastructures and receivables
registries) and enhanced tariff and penalty disclosures.
Portability of Credit Transactions
Financial institutions’ customers
can transfer their credit transactions from one institution to another. Such transfers must comply with the specific rules established
by the Brazilian Central Bank, including, among others, the requirement that the amount and term of the transaction in the receiving financial
institution must not be higher than the amount due and term of the original transaction.
Digitalization of Documents and Record Keeping
Financial institutions and other institutions
authorized to operate by the Brazilian Central Bank may keep in their records digital documents instead of physical documents, provided
that certain requirements to ensure the documents’ authenticity and validity are met.
Anti-Money Laundering Regulations
Under the Brazilian Anti-Money Laundering
Law, it is a crime to conceal or dissimulate the nature, origin, location, availability, transaction or ownership of assets, rights or
amounts resulting, directly or indirectly, from any criminal offense, as well as their use in economic or financial activity and to participate
in a group, association or office while being aware that its principal or secondary activities are directed toward the practice of such
acts.
The Brazilian Anti-Money Laundering Law
also created the Financial Activities Control Council (Conselho de Controle de Atividades Financeiras or “COAF”), which
operates under the jurisdiction of the Ministry of Finance. The purpose of the COAF is to investigate, examine, identify and impose administrative
sanctions in respect of any suspicious occurrences of illicit activities related to money laundering in Brazil.
The COAF is composed of individuals with
recognized competence in this area, appointed by the Minister of Finance, all of whom are nominated by each of the following entities:
(i) the Brazilian Central Bank; (ii) the CVM; (iii) the SUSEP; (iv) the Brazilian Treasury Attorney General’s Office; (v) the Brazilian
Federal Revenue; (vi) the Federal Intelligence Agency; (vii) the Ministry of Foreign Affairs; (viii) the Ministry of Justice; (ix) the
Federal Police Department; (x) the Ministry of Social Security; and (xi) the General Comptroller’s Office, one of whom will be the
president, which shall be appointed by the President of Brazil on the basis of recommendations by the Minister of Finance.
Financial institutions must maintain specific
records of (i) the transactions in cash (deposit, withdrawal, withdrawal by means of a prepaid card or request of provision for withdrawal)
so as to enable the identification of a deposit in cash, withdrawal in cash, withdrawal in cash by means of a prepaid card, or request
of provision for withdrawal, of (a) an amount equal to or greater than R$100,000.00 or (b) that presents evidence of concealment or dissimulation
of the nature, of the origin, of the location, of the disposal, of the movement or of the ownership of assets, rights and valuables; and
(ii) the issuances of cashier’s checks, funds electronic transfers (TED) or of any other instrument of transfer of funds upon payment
in cash, for an amount equal to or greater than R$100,000.00.
Financial institutions must maintain records
of all transactions, products and services contracted, including withdrawals, deposits, contributions, payments, receipts and transfers
of funds. Additionally, the institutions must also keep specific records of (i) transactions in cash with an individual value greater
than R$2,000.00; (ii) deposit or cash transactions of an individual value equal to or greater than R$50,000.00; and (iii) withdrawal transactions,
including those carried out by check or money order, with an individual value equal to or greater than R$50,000.00.
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The regulations also impose an obligation
on financial institutions to request that both customers and non-customers are providing a withdrawal request at least three working days
in advance for withdrawals (including those carried out by check or money order) in an amount equal to or greater than R$50,000.00.
On January 23, 2020, the Brazilian Central
Bank published Circular No. 3,978, which improves the regulation applicable to financial institutions, by expanding the adoption of a
risk-based approach and came into effect on July 1, 2020. Regulated institutions must carry out specific internal risk assessments in
order to identify and measure the risk of using their products and services in the practice of money laundering and terrorist funding.
In connection with the aforementioned
change, the know-your-client, or “KYC” procedures were also improved and include the identification, qualification and classification
of the customer, compatible with the risk profile, the nature of the relationship with the AML policy and the institution’s internal
risk assessment, which must be permanently reassessed, according to the evolution of the business relationship and the risk profile of
the client. The procedures must also include the verification of the client’s (including their representatives’, family members’
or close collaborators) condition as a Politically Exposed Individual, as well as consider them in the monitoring, selection and analysis
of transactions and situations with indications of suspected money laundering or terrorist funding.
On July 27, 2021, the Brazilian Central
Bank published Resolution No. 119, which came into effect on September 1, 2021, and introduced certain changes to Circular No. 3,978/2020,
which establishes the regulations and procedures related to anti-money laundering and combating the financing of terrorism applicable
to entities subject to the Brazilian Central Bank’s regulation and supervision.
Among other changes brought by the new
rule, financial institutions (and other entities regulated by the Brazilian Central Bank) are now required to obtain information about
their customers’ place of residence, in the case of a natural person, or the location of the head office or branch, in the case
of a legal entity, as part of their mandatory KYC procedures. The CVM also issued CVM Resolution No. 50 on August 31, 2021, which establishes
the framework for the prevention of money laundering and the financing of terrorism in the Brazilian securities market. CVM Resolution
No. 50 is in line with the practices currently implemented in the principal global securities markets, including with regard to the recommendations
of the Financial Action Group against Money Laundering and the Financing of Terrorism (GAFI/FATF), as well as with the duties arising
from Brazilian anti-money laundering laws.
In 2023, the CMN and the Brazilian Central
Bank issued Joint Resolution No. 6 and Resolution No. 343, which established the obligation for financial institutions such as us and
other entities authorized by the Brazilian Central Bank to share among each other information about frauds occurred within the National
Financial System, and the SPB, subject to the customer’s prior contractual consent. The rule aims to reduce the asymmetry of data
and information faced by these institutions to support procedures and controls in their fraud prevention processes, as well as improve
their practices. Both resolutions came into effect on November 1, 2023.
The Brazilian Central Bank and the CMN
have also recently adopted new measures that intensify controls over fraud prevention and the integrity of banking and payment accounts.
These measures require institutions to reject certain payment transactions linked to suspected fraudulent accounts and to terminate accounts
used for unauthorized financial or payment services or where grave customer-information irregularities are identified.
On September 11, 2025, the Brazilian Central
Bank issued Resolution No. 501, establishing that Brazilian financial institutions and licensed payment institutions must reject payment
transactions destined to demand deposit, savings, or prepaid payment accounts where there is a well-founded suspicion of fraud, with the
receiving institution required to notify the account holder of the measure. Institutions may determine suspicion using their own factors
and data sources, including public or private databases.
In addition, Brazilian Central Bank Resolution
No. 518, of November 3, 2025, amends the framework for opening, maintaining, and closing payment accounts by mandating account closure
where there are grave irregularities in customer information or where the account is used by the holder to provide financial or payment
services within the Brazilian Financial System or Payments System without legal basis or in noncompliance with applicable regulations.
The rule provides a non-exhaustive example covering the use of payment account funds to make or receive payments, or to settle obligations,
on behalf of third parties in a manner that could conceal or substitute third-party obligations and prevent their identification. Institutions
must adopt and board-approve internal criteria for such determinations, may rely on public or private databases, and must retain related
documentation for at least 10 years.
Similarly, for deposit accounts, CMN
Resolution No. 5,261, of November 3, 2025, amends the core deposit account framework to require closure where there are grave irregularities
in customer information or where the holder uses the account to provide unauthorized financial or payment services within the Brazilian
systems referenced above. As with payment accounts, the rule identifies as an example the use of deposit account funds for payments,
receipts, or netting of obligations on behalf of third parties in a manner that may conceal or substitute third-party obligations and
impede identification. Institutions must establish internal criteria, obtain board approval, and maintain related documentation for at
least 10 years.
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Brazilian Anticorruption Law
Law No. 12,846/13 of August 1, 2013, or
the “Brazilian Anticorruption Law” establishes that legal entities will have strict liability regardless of fault or willful
misconduct for acts against the public administration carried out in their interest or for their benefit. The Law encompasses not only
performance of acts of corruption but also performance of other injurious acts contrary to the Brazilian or foreign public administration.
Corporations that violate the Brazilian
Anticorruption Law’s provisions will be subject to heavy penalties, some of which may be imposed through administrative proceedings
and others solely through judicial channels. The Brazilian Anticorruption Law also creates a leniency program under which self-disclosure
of violations and cooperation by corporations might result in the reduction of fines and other sanctions.
Politically Exposed Individuals
Financial institutions and other institutions
authorized by the Brazilian Central Bank to operate must take certain actions and have certain controls in order to establish business
relationships with and to follow up on the financial transactions of customers who are deemed to be politically exposed individuals (public
agents and their immediate family members, spouses, life partners and stepchildren who occupy or have occupied a relevant public office
or position over the past five years in Brazil or other countries, territories and foreign jurisdictions). The internal procedures developed
and implemented for this purpose by financial institutions must be structured in such a way as to enable the identification of politically
exposed individuals, as well as the origin of the funds involved in the transactions of such customers. One option is to verify the compatibility
between the customer’s transactions and the net worth stated in such customer’s file.
Bank Secrecy
Brazilian financial and payment institutions
shall also maintain the secrecy of their banking operations and services provided to their customers. The only circumstances in which
information about customers, services or transactions of Brazilian financial and payment institutions may be disclosed to third parties
are the following:
• the disclosure of information with the express consent of the interested parties;
• the exchange of information between financial institutions for record purposes;
• the supplying to credit reference agencies of information based on data from the records of issuers of bank checks drawn on accounts without sufficient funds and defaulting debtors; and
• the occurrence or suspicion that criminal or administrative illegal acts have been performed, in which case the financial institutions and the credit card companies may provide the pertinent authorities with information relating to such criminal acts when necessary for the investigation of such acts.
Complementary Law No. 105/01 also allows
the Brazilian Central Bank or the CVM to exchange information with foreign governmental authorities, provided that a specific treaty has
previously been executed.
The governments of Brazil and the United
States executed an agreement in 2007, by means of which these governments established rules for the exchange of information relating to
tax, or the “2007 Agreement.” Under the 2007 Agreement, the Brazilian tax authority would be able to send information it receives
by virtue of Section 5 of the Bank Secrecy Law to the U.S. tax authority.
Data Protection Requirements
Brazil
The LGPD (Lei Geral de Proteção
de Dados) was published in the Federal Official Gazette on August 15, 2018, and was amended by Law No. 13,853/19. The LGPD came into
effect in September 2020, except for its administrative sanctions, which came into effect on August 1, 2021, pursuant to Law No. 14,010/20,
which delayed the applicability of certain provisions of the LGPD.
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Before the LGPD, Brazil lacked regulations
specific to data privacy and a data protection authority. Despite this, privacy has been generally protected through the Brazilian Federal
Constitution, the Civil Code (Law No. 10,406/2002), the Consumer Protection Code (Law No. 8,078/1990) and the Civil Rights Framework for
the Internet (Law No. 12,965/2014 and the Decree No. 8,771/2016).
The LGPD brought about profound changes
in the rules and regulations applicable to the processing of personal data, with a set of rules to be complied with in activities such
as the collection, processing, storage, use, transfer, sharing and erasure of information concerning identified or identifiable natural
persons.
The LGPD has a wide range of applications
and extends to individuals as well as private and public entities, regardless of the country where they are headquartered or where data
are hosted, as long as (i) the data processing takes place in Brazil; (ii) the data processing activity is intended to offer or supply
goods or services to, or to process data of individuals located in Brazil; or (iii) the data subjects are located in Brazil at the time
their personal data are collected. The LGPD will apply irrespective of the industry or business when dealing with personal data and is
not restricted to data processing activities performed through digital media and/or on the internet.
The LGPD sets out several rules related
to data processing such as principles, requirements and duties imposed to data controllers and data processors; rights of data subjects;
requirements in connection with cross-border transfers of data; the obligation to appoint a data protection officer; data security and
data breach notification; corporate governance practices; and the regime for civil liabilities and penalties in case of a breach of the
provisions of the LGPD. Additionally, the ANPD has also issued additional regulation on several subjects, such as security incident reporting,
cross-border transfers and the data protection officer rule.
Violation of the LGPD or ANPD resolutions
may result in administrative penalties (in addition to civil liabilities), including among others (i) warnings; (ii) fines up to 2% of
the revenue of the company, group or conglomerate in Brazil in the last financial year, capped at R$50.0 million per offense, (iii) daily
fines; (iv) disclosure of the offense; (v) blocking of the personal database to which the offense refers, until the processing activity
is corrected; (vi) elimination of the personal data to which the offense refers; (vii) partial or total suspension of the operation of
the database to which the offense refers for a maximum period of six months, extendable for the same period; (viii) suspension of the
processing of personal data to which the infringement refers for a maximum period of six months, extendable for the same period; and (ix)
partial or total prohibition of the performance of any activities relating to data processing. Any administrative sanctions will be applied
in accordance with Resolution CD/ANPD No. 4/2023. Determining the applicable sanction will depend on: (i) the gravity of the infraction
being classified as “light,” “medium” or “high”; and (ii) the ANPD’s understanding of the proportionality
of the sanction in relation to the infraction committed.
In addition, other authorities in Brazil
can apply the LGPD through administrative procedures or lawsuits. The Department of Consumer Protection and Defense (PROCON) or the Brazilian
Public Federal Prosecutor’s Office (Ministério Público Federal) responsible for consumer rights, and individuals
and nongovernmental or private associations, for example, could file complaints or bring lawsuits based on violations of the LGPD that
have caused or may cause harm to individuals.
Moreover, Law No. 13,853/2019 created
the ANPD, which has powers and responsibilities analogous to the European data protection authorities, exercising a triple role of (i)
investigation, comprising the power to issue norms and procedures, deliberate on the interpretation of the LGPD and request information
of controllers and proceedings; (ii) enforcement, in cases of noncompliance with the law, through an administrative process; and (iii)
education, with the responsibility to disseminate information about and foster knowledge of the LGPD and security measures, fostering
standards for services and products that facilitate control of data, and elaborating studies on national and international practices for
the protection of personal data and privacy, among others.
The ANPD is a government agency subordinated
to the Brazilian Ministry of Justice and Public Safety. It is composed of five commissioners, appointed by the President of Brazil, and
advised by a National Council for the Protection of Personal Data and Privacy, composed of 23 unpaid members.
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Other
In addition, we are subject to Regulation
(EU) 2016/279 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data
(the “General Data Protection Regulation” or “GDPR”). The GDPR has also introduced new fines and penalties for
a breach of requirements, including fines for systematic breaches of up to the higher of 4% of annual worldwide turnover or €20
million, and fines of up to 2% of annual worldwide turnover or €10 million (whichever is highest) for other specific infringements.
Additionally, following the United Kingdom’s withdrawal from the EU, we also are subject to the UK General Data Protection Regulation
(“UK GDPR”) (i.e., a version of the GDPR as implemented into United Kingdom law). While the UK GDPR has previously imposed
substantially the same obligations as the GDPR, the UK GDPR will not automatically incorporate changes to the GDPR going forward (which
would need to be specifically incorporated by the United Kingdom government). Moreover, the UK Data (Use and Access) Act, which makes
several modifications to United Kingdom data protection law, received Royal Assent and came into being on June 19, 2025. These changes
deviate from the GDPR and permit further deviations in the form of regulatory guidance or secondary legislation, which creates a risk
of divergent parallel regimes and related uncertainty, along with the potential for increased compliance costs and risks for affected
businesses.
Regulations on Cybersecurity
Financial institutions must follow certain
cyber risk management and cloud outsourcing requirements which apply to the design and adaptation of internal controls, namely CMN Resolution
No. 4,893/2021, which requires financial institutions to institute a Cybersecurity Policy, as well as regulates the outsourcing of relevant
data processing and storage and cloud computing services and CVM Ruling No. 35/2021, which sets forth the standards and procedures to
be observed in security transactions carried out in regulated securities markets requiring the implementation of cybersecurity controls
and data protection. Policies and action plans to prevent and respond to cybersecurity incidents were fully compliant and in place by
December 2021. Data location and processing may occur inside or outside Brazil, but access to data stored abroad must be granted at all
times to the Brazilian Central Bank for inspection purposes. The contracting of relevant processing services must be communicated to the
Brazilian Central Bank within 10 days from the execution of the agreement. See “Item 3. Key Information—D. Risk Factors—
Risks Relating to the Brazilian Financial Services Industry and Our Business—Failure to adequately protect ourselves against risks
relating to cybersecurity could materially and adversely affect us. We are also subject to increasing scrutiny and regulation governing
cybersecurity risks” and “Item 16K. Cybersecurity.”
Auditing Requirements
The legislation and regulations issued
by the CMN, CVM and B3 determine that the periodic financial statements of financial institutions must be audited by independent auditors
(individuals or legal entities) that are registered with the CVM and who meet the minimum requirements set forth by the Brazilian Central
Bank, and that the financial statements must be presented together with an independent auditor’s report. Our financial statements
are audited in accordance with International Standards on Auditing with regard to Brazilian GAAP and also with the standards of the Public
Company Accounting Oversight Board with regard to IFRS as issued by the IASB, as required by the SEC. For purposes of the financial statements
prepared according to Brazilian GAAP, from 2017, all financial institutions and other institutions authorized to operate by the Brazilian
Central Bank are required to create provisions for all losses related to financial guarantees issued by them. As a result of the auditing
work, the independent auditor must prepare the following reports: (i) an audit report, issuing an opinion regarding the accounting statements
and the respective explanatory notes, including regarding the compliance with financial regulations issued by the CMN and the Brazilian
Central Bank; (ii) an internal control system quality and adequacy evaluation report, including regarding electronic data processing and
risk management systems, evidencing any identified deficiencies; (iii) a legal and regulatory provisions noncompliance report, regarding
those which have, or may have, material impacts on the financial statements or on the audited financial institution’s operations;
(iv) a limited assurance report, analyzing our Annual and Sustainability Report pursuant to the guidelines and requirements of the Global
Reporting Initiative, or “GRI”; and (v) any other reports required by the Brazilian Central Bank, CVM and B3. The reports
issued by independent auditors must be available for consultation upon request by the overseeing authorities.
As determined by CMN Resolution No. 4,910
of May 27, 2021, independent auditors and the audit committee, individually or jointly, must formally notify the Brazilian Central Bank
of the existence or evidence of error or fraud, within three business days of the identification of the respective occurrence, including:
• noncompliance with legal rules and regulations that place the continuity of the audited entity at risk;
• frauds of any amount perpetrated by the management of the institution;
• material frauds perpetrated by the institution’s employees or third parties; and
• errors that result in major incorrectness in the financial statements of the audited entity.
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The executive officers of the financial
institution must notify the independent auditor and the audit committee if any of the above situations occur. In addition, under the terms
of CMN Resolution No. 4,910, the audit committee, when installed, the independent auditor and the internal audit must maintain an immediate
communication routine with each other when the situations mentioned above are identified.
CMN Resolution No. 4,910 also requires
financial institutions and institutions authorized to operate by the Brazilian Central Bank, which: (i) are registered as publicly-held
companies (such as us); and/or (ii) are leaders of a prudential conglomerate or are classified in Segment 1 (S1), Segment 2 (S2) or Segment
3 (S3) (such as us) to create a corporate body designated as the “audit committee,” which we have created. For more information
on our audit committee, see “Item 6. Directors, Senior Management and Employees—C. Board Practices—Board Advisory Committees—Audit
Committee.”
Internal Auditing of Financial Institutions
Financial institutions are required to
establish and maintain internal audit activities compatible with their operational specifications, so that such internal bodies are able
to perform an independent, autonomous and impartial audit of the quality and effectiveness of the institution’s internal systems.
Such unit shall be directly controlled by the institution’s board of directors. Internal and external independent auditors are also
liable for failures of the financial institution’s internal control mechanisms.
Sustainability Requirements Applicable to Financial
Institutions
Financial institutions are currently required
by CMN Resolution No. 4,327/14 to have a responsibility policy, which must guide the social and environmental actions in conducting their
businesses, their relationship with their customers and other users of their products and services. The responsibility policy must also
guide the financial institution’s relationship with its personnel and with any others affected by the financial institution’s
activities. In addition, the responsibility policy must provide for the management of social and environmental risks (which, according
to the Brazilian Central Bank, represent one of the several categories of risk to which financial institutions are exposed).
Following Public Consultations Nos. 82,
85 and 86, initiated by the Brazilian Central Bank in 2021 under the “Sustainability” pillar of the “Agenda BC#”
(which consists of a list of goals to improve the Brazilian National Financial System), a new set of rules was published on September
15, 2021. These new rules aim to improve the disclosure of information, management and governance of social, environmental and climate
risks by financial institutions, as well as to bring changes to the rural credit regulations in effect.
Resolution No. 140 establishes new conditions
for the access to rural credit considering social, environmental and climatic aspects. Among them, it stands out the credit restriction
for a producer who is not registered, or whose registration is canceled, in the Rural Environmental Registry (Cadastro Ambiental Rural).
The new resolution also sets forth that rural credit shall not be granted to (i) an enterprise fully or partially inserted in a conservation
unit, indigenous land already approved, an area of embargo in force resulting from the economic use of illegally deforested areas in the
Amazon; nor (ii) an individual or legal entity registered in the official register of employers who have kept workers in conditions analogous
to slavery.
CMN issued Resolution No. 4,943, which
amended CMN Resolution No. 4,557/17 with the purpose of highlighting and distinguishing social, environmental and climate risks, as necessary
for the identification, measurement, evaluation, monitoring, reporting, control and mitigation in connection with the risk management
structure of financial institutions. The new rule provides for specific definitions to such risks, using new and modern concepts, such
as the inclusion of the two main components of climate risks – physical and of transition – already recognized by international
sustainability standards. The amended rule also deals with the identification and monitoring of social, environmental and climate risks
incurred by financial institutions, resulting not only from their products, services and activities, but also from the activities performed
by their counterparties, controlled entities, suppliers and outsourced service providers.
Similar provisions were also included
in the simplified structure of continuous risk management pertaining to the Simplified Reference Capital (Patrimônio de Referência
Simplificado) by the new CMN Resolution No. 4,944, which amends CMN Resolution No. 4,606.
The CMN issued Resolution No. 4,945,
replacing CMN Resolution No. 4,327 of April 25, 2014 on the Social and Environmental Responsibility Policy (Política de Responsabilidade
Socioambiental), or the “PRSA.” The new rule provides for the inclusion of a climate aspect to the PRSA, which we refer
to as the PRSAC. Such new policy to be implemented by financial institutions shall take into account the impacts, strategic goals and
business opportunities for the financial institutions in connection with social, environmental and climate aspects. There was also a
reduction in the period for reviewing the PRSA, from five to three years.
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The Brazilian Central Bank issued Resolution
No. 139, regulating the preparation of a Report on Social, Environmental and Climate Risks and Opportunities (Relatório de Riscos
e Oportunidades Sociais, Ambientais e Climáticas, or the “GRSAC Report”) by financial institutions classified in
S1 (such as us), S2, S3 or S4. Following the propositions of the Public Consultation, this new rule seeks to contemplate the recommendations
of the Task Force on Climate-related Financial Disclosures at the national regulatory level. The GRSAC Report must be published annually
with the base date of December 31, within a maximum period of 90 days from December 31, and must be made available on the financial institutions’
websites for a period of five years.
Finally, on October 6, 2021, the Brazilian
Central Bank published Resolution No. 151, which regulates the remittance information regarding social, environmental, and climate risks
addressed in CMN Resolution No. 4,557 and CMN Resolution No. 4,945 to the Brazilian Central Bank by authorized institutions. The rule
applies to institutions classified in segments S1 (such as us), S2, S3, or segment four, or “S4”; and the information that
must be sent to the Brazilian Central Bank is related to the assessment of social, environmental and climate risks related to their exposures
in credit and securities transactions, as well as those of the respective debtors under these transactions. The information to be remitted
includes identification, economic sector, risk aggravating and mitigating factors, appraisal of social, environmental and climate risks,
among others.
In order to allow financial institutions
to adapt their practices and policies to this new set of rules, CMN Resolution No. 4,943/21 and general provisions of CMN Resolution No.
4,945/21 came into effect on July 1, 2022, CMN Resolution No. 4,944/21, article 16 of CMN Resolution No. 4,945/21 (which revokes CMN Resolution
No. 4,327/14) and Central Bank Resolution No. 139/21 came into effect on December 1, 2022. Brazilian Central Bank Resolution No. 151 came
into effect on July 1, 2022 and Central Bank Resolution No. 140, which specifically provides for rural credit, came into effect on October
1, 2021.
On November 21, 2024, the CMN issued Resolution
No. 5,185, which requires larger financial institutions to prepare and disclose, along with their financial statements, a report of financial
information related to sustainability, in accordance with (i) the International Sustainability Standards Board’s IFRS S1 (General
Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) pronouncements
and (ii) the Brazilian Sustainability Pronouncements Committee’s (CBPS) Technical Pronouncement 01 and 02, on the same matters.
The preparation and disclosure of the report is mandatory for institutions that disclose consolidated annual financial statements following
the international accounting standard of the International Accounting Standards Board (IASB), including publicly traded companies and
leaders of prudential conglomerates in the S1, S2 or S3 segments, such as us. Thus, institutions that voluntarily publish consolidated
financial statements must also disclose the sustainability report, which must be ensured by an independent auditor. Resolution No. 5,185
came into force on January 1, 2025 and the disclosure obligation begins in 2026 for institutions registered as a publicly held company
or in the S1 or S2 segments, and in 2028 for institutions in the S3 segment and those that voluntarily publish consolidated financial
statements, with early voluntary adoption allowed.
A presidential decree issued on October
31, 2025 established the Brazilian Sustainable Taxonomy (Taxonomia Sustentável Brasileira or TSB), a classification system that
identifies economic activities, assets, and project categories that contribute to climate, environmental, and social objectives through
specific technical criteria. This system is governed and periodically updated by the Interinstitutional Committee for the TSB (Comitê
Interinstitucional da Taxonomia Sustentável Brasileira or CITSB) and is built on principles such as scientific grounding, fair
transition, consistency across sectors, technical objectivity, proportionality, and interoperability with foreign taxonomies.
Policy for Succession of Financial Institutions
Managers
Brazilian financial institutions and other
institutions authorized to operate by the Brazilian Central Bank shall implement and maintain internal policies for succession of managers,
applicable to higher levels of the institution’s management. The internal policy shall encompass the procedures related to recruitment,
promotion, appointment and retention of managers in accordance with the institution’s rules for identification, evaluation, training
and selection of the candidates to management offices.
Corporate Governance of Financial Institutions
Financial institutions must (i) remit
to the Brazilian Central Bank information on the financial institution’s management, controlling group and relevant shareholders,
including the obligation to communicate to the regulator any information that may affect the reputation of any such persons; (ii) make
available a communication channel allowing employees, contributors, customers, users, associates, or services providers to report anonymously
situations indicating illegalities of any nature related to the institution; and (iii) have an internal body responsible for receiving
the information and complying with the reporting obligations.
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Compliance Policy
Financial institutions must implement
and maintain a compliance policy compatible with the nature, size, complexity, structure, risk profile and business model of the institution,
which is intended to ensure an effective compliance risk management by the institution and may be established at the consolidated enterprise
level. The compliance policy must establish the scope and purpose of the compliance function in the institution, set forth the organizational
structure of the compliance function, specify which personnel is allocated to the compliance function, and establish a segregation of
roles among personnel in order to avoid conflicts of interest.
The compliance policy must be approved
by the board of directors and the regulation also assigns to the board the responsibility to ensure the following: adequate management
of the compliance policy throughout the institution, its effectiveness and continued application, its communication to all employees and
services providers, as well as the dissemination of the integrity and ethical standards as part of the institution’s culture. The
board of directors is also responsible for ensuring the application of measures in case of noncompliance, and for providing the necessary
means for the activities related to the compliance functions to be adequately conducted.
Consumer Protection
Relationships between consumers and financial
institutions are governed by Law No 8,078, dated September 11, 1990, or the “Brazilian Consumer Protection Code,” which grants
consumers certain rights and sets forth measures to be observed by suppliers, which must be complied with by financial institutions. The
Brazilian Consumer Protection Code sets forth as consumer rights, among others, the assistance/facilitation in the defense of consumers’
rights, including through reverse burden of proof in their favor, and the possibility of judicial review of contractual provisions deemed
abusive.
Furthermore, banking regulation establishes
procedures that financial institutions must observe when contracting any transactions, as well as when rendering services. We may highlight
the following as examples of said procedures:
• to timely provide the necessary information including rights, duties, responsibilities, costs or advantages, penalties and possible risks when carrying out a transaction or rendering a service to allow customers and users free choice and decision-making;
• to timely provide, to the customer or user, agreements, receipts, statements, advice and other documents related to the transactions and services, as well as the possibility of timely cancellation of the agreements;
• formalization of an adequate instrument setting forth the rights and obligations for opening, using and maintaining a postpaid payment account;
• to forward a payment instrument to the customers’ or users’ residence or to enable the respective instrument only upon express request or authorization; and
• identification of end users’ beneficiaries for payments or transfer in statements and bills of the payer, including in situations in which the payment service involves institutions participating in different payment arrangements.
Financial institutions operating exclusively
via digital means are excluded from the scope of certain aspects of the regulation.
Law No. 14,181, which amends the Brazilian
Consumer Protection Code and Senior Citizens’ Statute (Law No. 10,741 of October 1, 2003) to improve provisions related to the offering
of consumer credit and provide for the prevention and treatment of over-indebtedness, came into effect on July 2, 2021.
Regarding the prevention of over-indebtedness,
such rule created a chapter in the Brazilian Consumer Protection Code dedicated to responsible credit and financial education. The amendments
determine the presentation of specific information to the consumer in the granting of credit or installment sales, such as the effective
monthly interest rate, late payment interest and the total charges foreseen in the event of late payment.
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The new law also regulates informational
conduct to be observed by the credit supplier regarding the nature and modality of the credit offered, considering the age of the consumer.
The law also included a new chapter in
the Brazilian Consumer Protection Code dedicated to the conciliation between debtor and creditor with respect to over-indebtedness. According
to the new law, the over-indebted consumer may request the initiation of a debt renegotiation process, with the consumer being responsible
for submitting a payment plan proposal, preserving the existential minimum. The unjustified non-attendance of the creditor or his attorney
at the conciliation hearing may suspend the payment of the credit, with the interruption of the late payment charges. In the case of a
successful conciliation, the court decision that ratifies the agreement will describe the debt payment plan and will be enforceable. A
new debt renegotiation request may only be submitted after two years, counting from the settlement of the obligations provided for in
the payment plan. In the case of unsuccessful conciliation, the judge, at the consumer’s request, will institute proceedings for
over-indebtedness to review and integrate the contracts and renegotiate the remaining debts, through a compulsory judicial plan.
On July 27, 2022, the Brazilian federal
government adopted Decree No. 11,150/22, or Decree No. 11,150, which seeks to prevent and foster the repayment and settlement of consumer
over-indebtedness. The rule grants consumers certain basic rights, including the right to responsible credit practices, financial education
and relief from over-indebtedness situations through debt review and renegotiation. To preserve a consumer’s “existential
minimum,” Decree No. 11,150 creates an “existential minimum income” threshold for consumers, which is fixed at R$600.00,
or one-quarter of the federal minimum wage that was in effect at the time the decree was adopted. However, the annual adjustment of the
minimum wage will not lead to this amount being updated.
Further, on September 30, 2021, the CMN
published Resolution No. 4,949. The rule provides the principles and procedures to be adopted in the relationship with customers and users
of products and services of financial institutions and other institutions authorized to operate by the Brazilian Central Bank. On October
13, 2021, the Brazilian Central Bank published Resolution No. 155, which establishes almost identical principles and procedures to be
adopted by payment institutions and consortium administrators, which are regulated and supervised solely by the Brazilian Central Bank.
CMN Resolution No. 4,949/2021 and Central
Bank Resolution No. 155/2021 set forth new rules mainly with the goal of ensuring fair and equitable treatment at all stages of the relationship
with institutions providing financial and payments services, as well as a convergence of the interests of such institutions with those
of their consumers.
Under CMN Resolution No. 4,949/2021 and
Central Bank Resolution No. 155/2021, institutions authorized to operate by the Brazilian Central Bank shall prepare and implement an
institutional policy for the relation with consumers and users. Such new policy should consolidate guidelines, strategic objectives and
organizational values, so that the conduct of the institution’s activities is guided by the principles of ethics, responsibility,
transparency and diligence.
CMN Resolution No. 4,949/2021 and Central
Bank Resolution No. 155/2021 also provide that institutions authorized to operate by the Brazilian Central Bank and must indicate to such
regulatory agency the officer responsible for complying with the obligations provided under the new rules.
The rules also impose other obligations
to the regulated entities within their scope, such as the compliance with transparency and suitability rules. CMN Resolution No. 4,949
came into effect on March 1, 2022, and Central Bank Resolution No. 155 came into effect on October 10, 2022.
On October 3, 2023, the President of Brazil
enacted Law No. 14,690, which ratifies the emergency program for renegotiation of debts of individuals in default depending on debtor
category, which in turn depends on the amount of the debtor’s debt (Desenrola Brasil). Pursuant to this rule, the CMN and
Central Bank issued Resolution No. 5,112 and Resolution No. 365, respectively, establishing other measures to prevent debtor default and
consumer over-indebtedness, including rules related to the portability of credit transactions granted in the context of post-paid payment
instrument (such as credit cards) financings and rules relating to transparency and disclosure of the total amount of interest and fees
charged over post-paid payment instrument financing to consumers, among other matters. Resolution No. 5,112 came into effect on December
26, 2023. However, the provision relating to the limitation on interest rates are applied to financings from January 3, 2024 onward and
portability and transparency rules only came into force on July 1, 2024.
Furthermore, on December 26, 2023, the
CMN and the Brazilian Central Bank published Joint Resolution No. 8, which requires the institutions authorized to operate by the Brazilian
Central Bank to adopt financial literacy measures designed for their clients and natural person users, including individual entrepreneurs,
by means of the publication of a financial literacy policy and the provision of financial literacy content and tools in an appropriate
language, channel, and timing in order to suit them to the characteristics and needs of clients and users. This rule came into effect
on July 1, 2024.
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On September 17, 2025, the President of
Brazil enacted Law No. 15,211, establishing the Digital Children and Adolescents Statute, or “ECA Digital.” The implementation
of Law No. 15,211 is expected to impose governance, age assurance, parental supervision, transparency, reporting and accountability requirements
for companies whose products or services may be accessed by minors, such as applications, online games, social networks, operating systems
and digital stores. The rule introduces mandatory risk-prevention and mitigation measures, stricter privacy-by-default settings, limits
on data collection, effective age-assurance mechanisms, parental supervision tools, rapid response to illicit or harmful content,
and enhanced governance responsibilities for companies, parents, schools and public authorities. The new rule also prohibits exploitative
advertising practices, strengthens duties to prevent exposure to inappropriate content and interactions, and mandates technical and organizational
controls tailored to risks to minors, creating a new regulatory standard for the online protection of children and adolescents in Brazil.
Law No. 15,211/2025 will come into force in March 2026.
Policy for Relationship with Customers and Users
of Financial Products and Services
Financial institutions and other institutions
authorized to operate by the Brazilian Central Bank must have a policy governing the relationship with customers and users of financial
products and services. In addition, such entities shall comply with the principles of ethics, liability, transparency and diligence promoting
the convergence of interests and the consolidation of the institutional image of credibility, security and expertise.
Ombudsman
Financial institutions and other entities
that are authorized to operate by the Brazilian Central Bank must have an ombudsman office. An ombudsman office has the following attributes
according to the current regulation:
• to provide last resort assistance in connection with customer claims that have not been resolved through the conventional customer service channels (including the banking correspondents and the customer service assistance channel (Serviço de Atendimento ao Consumidor); and
• to act as a communication channel between the financial institutions and their customers, including for dispute resolution.
Institutions that are part of a financial
group are allowed to establish one ombudsman department to service the whole group. The officer in charge of the ombudsman office must
prepare a report every six months, which must be provided to the management and auditing bodies. The reports and recordings of interactions
of the ombudsman unit with consumers must be available to the Brazilian Central Bank for a period of at least five years.
Investment Funds Industry Regulation
Investment funds are subject to the regulation
and supervision of the CMN and the CVM and, in certain specific matters, the Brazilian Central Bank. Investment funds may be managed by
full-service banks, commercial banks, savings banks, investment banks, credit, financing and investment companies and brokerage and dealer
companies within certain operational limits.
Investment funds may invest in any type
of financial instrument available in the financial and capital markets, including, for example, fixed income instruments, stocks, debentures
and derivative products, provided that, in addition to the denomination of the fund, a reference to the relevant type of fund is included.
On July 24, 2025, the CMN issued Resolution
No. 5,237, which consolidates and modernizes the regulatory framework applicable to SCFIs. The rule consolidated previously disparate
principles across multiple and outdated normative acts, and also revoked outdated rules. Key regulatory implications include the requirement
for SCFIs to operate as joint-stock companies, maintain a minimum paid-in capital and net equity of R$7 million (with a 30% reduction
for those headquartered outside Rio de Janeiro or São Paulo), and restrict their activities to a defined set of financial operations.
Broker-Dealer Regulation
Broker and dealer firms are part of the
national financial system and are subject to CMN, Brazilian Central Bank and CVM regulation and supervision. Brokerage firms must be chartered
by the Brazilian Central Bank and authorized to trade on stock exchanges. Both brokers and dealers may act as underwriters in the public
placement of securities and engage in the brokerage of foreign currency in any exchange market.
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Since August 29, 2019, securities brokers
and dealers may loan their own securities to their customers as long as they use the funds as collateral for operations in which the institution
itself intermediates. The loan transaction consists of the transfer of assets from the institution: (i) to the customer, in conjunction
with the transfer of that asset to the clearinghouse or clearing and settlement service provider; or (ii) to the clearinghouse or clearing
and settlement service provider on behalf of the customer through powers established in a formal written power of attorney. In either
case, the assets or set of assets in question shall return to the positions originally held at the end of the period stipulated in the
contract. To offer this new service, securities brokers and dealers must appoint a director responsible for the loan operations under
consideration.
Since November 27, 2020, securities brokers
and dealers may issue electronic currency and maintain payment accounts.
Virtual Assets and Virtual Asset Service Providers
In Brazil, the virtual asset market is
governed by Law No. 14,478/2022, which set the guidelines for the provision of virtual asset services and for the regulation of virtual
asset service providers, or “VASPs.” Under Decree No. 11,563/2023, the Brazilian Central Bank is responsible for authorizing,
regulating and supervising the entities qualifying as VASPs under Law No. 14,478/2022 – which excludes virtual assets qualifying
as securities (among others).
On November 10, 2025, the Brazilian Central
Bank issued Resolutions Nos. 519, 520 and 521, respectively regulating the licensing process applicable to VASPs, the general rules related
to the organization and operations of VASPs, and the foreign exchange registrations related to cross-border virtual assets transactions.
Pursuant to Brazilian Central Bank Resolution
No. 520, VASPs must operate under one of three regulated modalities, each defined by the scope of services performed on behalf of clients:
(i) intermediary of virtual assets; (ii) custodian of virtual assets; and (iii) exchange (i.e., combining both intermediation and custody).
Resolution No. 520 classifies VASPs by modality and restricts cross-activity combinations, except where expressly authorized, thereby
structuring the market by function and corresponding controls, governance, and client-facing obligations.
Under Brazilian Central Bank Resolution
No. 520, an intermediary of virtual assets, has as its corporate purpose the intermediation of virtual assets and may, solely on behalf
of third parties, subscribe issuances, buy, sell and exchange virtual assets, administer portfolios comprising virtual assets and financial
instruments, act as fiduciary agent in virtual asset market operations, perform staking operations, and conduct foreign exchange-related
virtual asset services, among other activities authorized by the Brazilian Central Bank. Intermediaries may also, with prior notice or
authorization where applicable, act as e-money issuers, liquidity providers, market makers, or providers of financial services such as
issuer advisory and independent financial counseling, subject to applicable Brazilian Central Bank and CVM rules and any specific foreign
exchange regulations for activities related to foreign exchange, or FX.
On the other hand, a custodian of virtual
assets has as its corporate purpose the custody of virtual assets and is responsible for safeguarding and controlling instruments that
confer control over virtual assets (such as private keys); maintaining accurate, timely position records and reconciliations; carrying
out client instructions; handling events affecting the assets; and administering data and information necessary to exercise rights. Only
custodians authorized to perform the full set of core custody functions may offer staking for clients, and any technology service engaged
by a custodian must not enable the technology provider to interfere with core custody activities or clients’ exercise of rights.
Such arrangements are deemed relevant outsourcing and are subject to prudential outsourcing and cloud rules applicable to BCB-supervised
institutions. An exchange (corretora de ativos virtuais), in its turn, combines, as its corporate purpose, both intermediation and custody
of virtual assets, effectively operating as an integrated broker-custodian platform under a single license. By contrast, standalone intermediaries
and standalone custodians are prohibited from combining activities of other modalities, which prevents unlicensed commingling of functions
and reinforces the separation of roles unless the entity is formally licensed as an exchange.
Across modalities, Brazilian Central Bank
Resolution No. 520 sets forth baseline operational and prudential requirements, including: segregation of client funds and assets from
the VASP’s own; prohibitions on using client assets for proprietary transactions (with narrow, disclosure-based exceptions, such
as staking under specific safeguards or express consent from qualified/professional investors); robust governance, risk management, cybersecurity,
and AML/CFT frameworks; conflict-mitigation and transparency obligations; and enhanced disclosures regarding services, risks, safeguards,
and the absence of deposit-insurance coverage for virtual assets. These safeguards are designed to protect client rights, ensure orderly
operations, and harmonize VASPs with standards applicable to BCB-supervised financial institutions.
Resolution No. 520 also clarifies that,
in addition to licensed VASPs, the following Brazilian Central Bank-authorized institutions may provide virtual assets intermediation
and custody services: commercial, foreign exchange, investment and multi-purpose banks (such as us), Caixa Econômica Federal, securities
brokerage and dealership firms, and foreign-exchange brokers (limited to intermediation). These activities are subject to eligibility,
prior formal communication to the Brazilian Central Bank (with a 90-day stand-still for new entrants) and supervisory conditions, including
independent technical certification where applicable.
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Resolution No. 519 establishes the authorization
processes applicable to VASPs and certain broker-dealers, setting minimum requirements for authorization, including controlling shareholders’
financial capacity and lawful capital, business viability, IT and governance adequacy, and fit-and-proper and technical capacity of controlling
shareholders and managers. Transactions subject to prior Brazilian Central Bank approval include: authorization to operate, changes in
VASP modality, transfers of control and reorganizations (merger, spin-off, incorporation), corporate transformations, appointments to
management positions, and capital and corporate purpose changes. For VASPs already active prior to February 2, 2026, the licensing runs
in two phases: phase 1 (evidence of activity; assessment of controllers/qualified holders and basic prudential conditions) and phase 2
(full compliance with remaining requirements). If an application is denied or archived with final effect, incumbents must cease operations
and arrange the orderly return of clients’ virtual assets and funds.
Resolution No. 521 integrates specific
virtual-asset services into the FX framework, listing activities such as international payments or transfers with virtual assets, transfers
to/from self-hosted wallets, and buy/sell or swaps of fiat-referenced virtual assets. It imposes operational limits and conditions, including
maximum values when the counterparty is not an FX-authorized institution (e.g., US$ 100,000 for VASPs and US$ 500,000 for certain brokers/banks),
a prohibition on buying/selling virtual assets with payment in foreign currency, and enhanced data and monthly reporting duties, including
purpose codes, counterpart data, and self-custody wallet identification. It also provides a transitional rule allowing incumbents to continue
FX-related virtual asset services while they apply for authorization, which must include a request to operate in the FX market.
These rules will come into force on February
2, 2026. VASPs already operating as of that date benefit from a transitional “grandfathering” regime. Such entities must submit
a licensing application to the Brazilian Central Bank within 270 days from February 2, 2026, and evidence compliance with core risk, cybersecurity,
AML/CFT, sanctions, and accounting/audit requirements. If a timely application is filed, the VASP may continue providing its existing
services during the authorization process, but it may not assume a different modality until the process concludes. Entities that fail
to apply on time must cease operations within 30 days after the deadline. These transitional provisions align legacy operators with the
new framework while avoiding market disruption during the authorization period.
Foreign Exchange Market
Transactions involving the sale and purchase
of foreign currency in Brazil may be conducted only by institutions duly authorized by the Brazilian Central Bank to operate in the foreign
exchange market. There is no current limit to long or short positions in foreign currency for banks authorized to carry out transactions
on the foreign exchange market. Other institutions within the national financial system are not allowed to have short positions in foreign
currency, although there are no limits with respect to foreign exchange long positions.
The Brazilian Central Bank imposes a limit
on the total exposure in foreign currency transactions and transactions subject to foreign exchange fluctuation undertaken by Brazilian
financial institutions, including branches abroad, and their direct and indirect affiliates. The limit is currently equivalent to 30.0%
of the financial institution’s regulatory capital (patrimônio de referência), on a consolidated basis. The CMN,
the Brazilian Central Bank and the Brazilian government may change the regulation applicable to foreign currency and foreign exchange
transactions undertaken by Brazilian financial institutions in accordance with Brazil’s economic policy (including its foreign exchange
policy).
On December 20, 2021, the President of
Brazil sanctioned Law No. 14,286, approved by the Brazilian Senate on December 8, 2021, or the “New Foreign Exchange Law.”
The New Foreign Exchange Law, an initiative of the Brazilian Central Bank, overhauls the rules applicable to the Brazilian foreign exchange
market and contains provisions regarding Brazilian capital abroad and foreign capital within Brazil. The initiative aims to modernize,
simplify and reduce legal doubts associated with current Brazilian foreign exchange legislation.
The main aspects of the New Foreign Exchange
Law are: (i) ratification, at the legal level, that foreign exchange transactions may be carried out freely (provided such transactions
are carried out by entities authorized to operate in this market and subject to applicable rules); (ii) granting of broad powers to the
CMN and the Brazilian Central Bank to regulate the foreign exchange market and foreign exchange operations; (iii) expansion of international
correspondence activities by Brazilian banks; (iv) possibility of Brazilian financial institutions investing and lending abroad funds
that have been raised in Brazil or abroad; (v) the exclusion from its scope of foreign currency purchase and sale operations of up to
U.S.$500 carried out between individuals on an occasional and non-professional basis; and (vi) the granting of powers to the monetary
authorities to establish situations in which the prohibition of the private offset of credits between residents and nonresidents, as
well as payments in foreign currency in Brazil, would not apply.
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Law No. 14,286 came into effect on December
30, 2022.
In 2022, the CMN and the Brazilian Central
Bank established new guidelines for transactions performed in the foreign exchange market, through the issuance of Resolutions Nos. 277
and 280, of December 31, 2022.
Such rules aim to regulate the New Foreign
Exchange Law in respect to the inflow and outflow of Brazilian currency and foreign currency to and from Brazil, repealing and replacing
several rules that previously regulated the topic, including Circulars Nos. 3,691 and 3,690 of December 16, 2013. The main changes brought
forth by Resolution No. 277 include: (i) enabling authorized institutions, such as us, to carry out foreign exchange transactions in a
free format while observing the guidelines established by the Brazilian Central Bank (as opposed to the former rules, which required that
authorized institutions execute a standard agreement with clients); (ii) enabling authorized institutions to use their own criteria to
request or waive supporting documentation prior to the execution of a foreign exchange transaction, considering the client’s internal
risk profile within the institution and the characteristics of the transaction; and (iii) simplifying the process for the classification
of foreign exchange transactions, considering that the New Foreign Exchange Law establishes that the purpose shall be made clear by the
client (as opposed to the former rules, whereby the classification of the purpose of the transactions was the responsibility of the authorized
institutions, which were liable for any inaccuracy). Likewise, Resolution No. 280 establishes the definitions of “resident”
and “non-resident” to be applied to individuals and legal entities, which are now materially equivalent to that of a domestic
current or payment account.
On December 3, 2024, the Brazilian Central
Bank and the CVM issued Joint Resolution No. 13, which establishes a new regulatory framework for foreign investors in the financial and
securities markets. The new rule aims to simplify and modernize procedures for non-resident operations in Brazil, enhancing efficiency
and aligning with international best practices. The new regulation replaces previous resolutions, including CMN Resolution No. 4,373,
of September 29, 2014. The Joint Resolution’s main changes include equalizing minimum registration requirements for resident and
non-resident investors, eliminating the need for non-resident individual investors to appoint a representative in Brazil or register with
the CVM for certain operations, and expanding the use of non-resident checking or payment accounts for financial investments. Additionally,
it removes the requirement for mandatory simultaneous foreign exchange operations for investment conversions and the need to register
such investments in the RDE-Portfolio system. These measures aim to provide greater clarity and security for investors, particularly regarding
changes in residency. Joint Resolution No. 13 came into effect on January 1, 2025.
Foreign Investment in Brazilian Financial Institutions
According to the Brazilian federal constitution,
the acquisition of equity interests by foreign individuals or legal entities in the capital stock of Brazilian financial institutions
is forbidden, unless permitted by bilateral international treaties or by the Brazilian government by means of a presidential decree. A
presidential decree issued on November 13, 1997, issued in respect of Banco Meridional do Brasil S.A. (our legal predecessor) allows 100%
foreign participation in our capital stock. Foreign investors may acquire the shares issued by Santander Brasil as a result of this decree.
In addition, foreign investors may acquire publicly traded nonvoting shares of Brazilian financial institutions traded on a stock exchange
or securities depositary receipts offered abroad representing shares without specific authorization.
Following the enactment of Decree No.
10,029, the Brazilian Central Bank published, on January 22, 2020, Circular No. 3,977 recognizing as an interest of the Brazilian government
the foreign holding of equity or increase in equity interest of financial institutions headquartered in Brazil (which is still subject
to the same requirements and procedures applicable to the acquisition of equity in any Brazilian financial institution), as well as the
opening of local branches of foreign financial institutions. However, since Santander Brasil had already been granted a specific presidential
decree authorizing the foreign interest in its share capital, prior to Decree No. 10,029/19 being issued it does not affect its operations
in Brazil.
A foreign financial institution duly authorized
to operate in Brazil through a branch or a subsidiary is subject to the same rules, regulations and requirements that are applicable to
any Brazilian financial institution.
Bank Correspondents
Financial institutions are allowed to
provide specific services to customers, including customer services, through other entities. These entities are called “bank correspondents”
and the relationship between the financial institution and the bank correspondent is ruled by a specific regulation published by CMN and
is subject to the supervision of the Brazilian Central Bank.
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On July 29, 2021, the CMN published Resolution
No. 4,935, which revoked CMN Resolution No. 3,954, of February 24, 2011, changing the regulation of banking correspondents in Brazil.
Banking correspondents are companies contracted by financial institutions and other institutions authorized to operate by the Brazilian
Central Bank to provide services to their contracting institutions.
The new rule determines that these institutions
set forth a policy for the operation and hiring of their correspondents, and it should be formalized by a specific document and approved
by the institution’s board of officers or board of directors. This operation and contracting policy should provide for the criteria
required for contracting correspondents, internal controls related to the correspondent and remuneration rules for the provision of services.
The contracting institutions will continue
to be required to maintain adequate internal control systems in order to monitor the public service activities carried out by the contracted
correspondents and the contracting institution’s internal audit must annually assess the effectiveness of these quality control
mechanisms.
In addition, with the inclusion of the
express possibility of the correspondents acting in a digital setting, some provisions were improved, highlighting the need for the correspondent’s
digital platform itself to have a minimum technical qualification that allows the offering of products and services suited to the needs,
interests and goals of the contracting institution’s customers.
CMN Resolution No. 4,935 came into effect
on February 1, 2022.
Regulation of Branches
Authorization by the Brazilian Central
Bank is required for operations of branches or subsidiaries of Brazilian financial institutions, upon the compliance with certain term,
capital and equity requirements, as well as the submission of an economic and financial feasibility analysis.
The Brazilian Central Bank’s prior
authorization is also required in order to: (i) allocate new funds to branches or subsidiaries abroad; (ii) subscribe capital increases,
directly or indirectly, in subsidiaries abroad; (iii) increase equity participation, directly or indirectly, in subsidiaries abroad; and/or
(iv) merge or spin off, directly or indirectly, subsidiaries abroad.
The Brazilian Central Bank determines
that financial institutions can install the following establishments in Brazil: (i) branches, (ii) teller booths, (iii) automatic teller
machines, and (iv) segregated administrative units, provided that, for items (i) to (iii), conformity with requirements of minimum capital
and operating limits are necessary.
On January 3, 2023, the Brazilian Central
Bank published Normative Ruling No. 342, which amended Normative Ruling No. 299/22 and provides procedures, documents, terms and necessary
information for requests related to the participation of financial institutions, such as us, on other companies’ corporate capital;
and establishment of branches abroad. This new rule came into force on its publication date.
Cayman Islands Banking Regulation
We have a branch in the Cayman Islands
with its own staff and representative officers, Banco Santander (Brasil) S.A. – Grand Cayman Branch is licensed under The Banks
and Trust Companies Law (2013 Revision) of the Cayman Islands, or the “Banks and Trust Companies Law,” as a Category “B”
Bank and it is duly registered as a Foreign Company with the Registrar of Companies in the Cayman Islands. The branch, therefore, is duly
authorized to carry on banking business in the Cayman Islands. The branch was authorized by the local authorities to act as its own registered
office and it is located at the Waterfront Centre Building, 28, North Church Street – 2nd floor, George Town, Grand Cayman, Cayman
Islands, P.O. Box 10444 – KYI-1004, Phone: 1-345-769-4401 and Fax: 1-345-769-4601.
Our Grand Cayman Branch is currently engaged
in the business of sourcing funds in the international banking and capital markets to provide credit lines for us, which are then extended
to our customers for working capital and trade-related financings. It also takes deposits in foreign currency from corporate and individual
customers and extends credit to Brazilian and non-Brazilian customers, mainly to support trade transactions with Brazil. The results of
the operations of the Grand Cayman Branch are consolidated in our consolidated financial statements.
Banks and trust companies wishing to conduct
business from within the Cayman Islands must be licensed by the Cayman Islands Monetary Authority under the Banks and Trust Companies
Law, irrespective of whether the business is to be actually conducted in the Cayman Islands.
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Under the Banks and Trust Companies Law,
there are two main categories of banking license: a category “A” license, which permits unrestricted domestic and offshore
banking business, and a category “B” license, which permits principally offshore banking business. The holder of a category
“B” license may have an office in the Cayman Islands and conduct business with other licensees and offshore companies but,
except in limited circumstances, may not do banking business locally with the public or residents of the Cayman Islands. We have an unrestricted
category “B” license.
There are no specific ratio or liquidity
requirements under the Banks and Trust Companies Law, but the Cayman Islands Monetary Authority will expect observance of prudent banking
practices, and the Banks and Trust Companies Law imposes a minimum net worth requirement of an amount equal to CI$400,000 (or, in the
case of licensees holding a restricted category “B” or a restricted trust license, CI$20,000). As of December 31, 2025, CI$1
was equivalent to R$6.5890 according to the Brazilian Central Bank.
Luxembourg Banking Regulation
Branches of credit institutions from outside
the European Union (“non-EU credit institutions”) must be licensed by the Luxembourg Minister of Finance under the law of
April 5, 1993 on the financial sector, as amended, in order to operate in Luxembourg.
We have a branch in Luxembourg with its
own staff and representative officers. Our Luxembourg branch is licensed as a Luxembourg branch of a non-EU credit institution and is
duly registered with the Luxembourg Trade and Companies’ Registry. The branch, therefore, is duly authorized to carry on banking
business in Luxembourg. Its registered offices are at 35F, Avenue J. F. Kennedy, 2nd floor, L-1855 Luxembourg, Grand Duchy of Luxembourg.
Our Luxembourg branch is currently engaged
in the business of sourcing funds in the international banking and capital markets to provide credit lines for us, which are then extended
to our customers for working capital and trade-related financings. It also takes deposits in foreign currency from corporate and individual
customers and extends credit to Brazilian and non-Brazilian customers, mainly to support trade transactions involving Brazil. The results
of the operations of the Luxembourg branch are consolidated in our consolidated financial statements.
Luxembourg law requires the Luxembourg
branch to have a minimum endowment capital of €8,700,000 and the solvency, and liquidity requirements deriving, among others, from
EU Regulation No 575/2013 of the European Parliament and of the Council of June 26, 2013 on prudential requirements for credit institutions
and investment firms apply to it.
U.S. Financial Regulatory Reform
Santander Brasil is a subsidiary of Santander
Spain, a foreign banking organization, or “FBO,” with operations in the United States. As a subsidiary of Santander Spain,
Santander Brasil is subject to certain U.S. financial regulatory laws and rules. In addition to regulations, the U.S. financial regulatory
agencies may issue policy statements, interpretive letters and similar written guidance.
Financial regulatory statutes and rules
are continually under review by the U.S. Congress and U.S. financial regulatory agencies. Changes in key personnel at the U.S. financial
regulatory agencies may result in differing interpretations of existing rules and guidelines and potentially more stringent enforcement
and more severe penalties than previously. The full spectrum of risks that result from pending or future U.S. financial services legislation
or regulations cannot be fully known; however, such risks could be material and we could be materially and adversely affected by them.
Volcker Rule
Owing to its status as a subsidiary of
an FBO, Santander Brasil is subject to Section 13 of the U.S. Bank Holding Company Act and its implementing rules (collectively, the
“Volcker Rule”). The Volcker Rule prohibits “banking entities” from engaging in certain forms of proprietary
trading or from sponsoring or investing in “covered funds,” in each case subject to certain exceptions. The Volcker Rule
also limits the ability of banking entities and their affiliates to enter into certain transactions with covered funds with which they
or their affiliates have certain relationships. The Group has adopted processes to establish, maintain, enforce, review and test the
compliance program designed to achieve and maintain compliance with the Volcker Rule. The Volcker Rule contains exclusions and certain
exemptions for, among others, market-making, hedging, underwriting, trading in U.S. government and agency obligations and certain foreign
government obligations, and trading solely outside the United States, and also permits certain ownership interests in certain types of
funds to be retained. Santander Spain’s non-U.S. banking organization subsidiaries, including Santander Brasil, are largely able
to continue their activities outside the United States in reliance on the “solely outside the U.S.” exemptions from the Volcker
Rule. Those exemptions generally exempt proprietary trading, and sponsoring or investing in covered funds if, among other restrictions,
the essential actions take place outside the United States.
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Santander Spain will continue to monitor
Volcker Rule-related developments and assess their impact on its operations, including those of Santander Brasil, as necessary.
Other U.S. Financial Regulations
Santander Spain is subject to other U.S.
financial regulatory regimes that do not directly apply to Santander Brasil based on the current scope of its operations. For example,
Santander Spain, as a Category IV FBO, and Santander Holdings USA, Santander Spain’s U.S. intermediate holding company, or “IHC,”
as a Category IV IHC, are subject to enhanced prudential standards imposed by the Board of Governors of the Federal Reserve System, or
the “Federal Reserve Board,” on large banking organizations that exceed certain asset thresholds. Enhanced prudential standards
include risk-based and leverage capital requirements, liquidity requirements, risk management and governance requirements, capital planning
and stress testing requirements, resolution planning requirements, and risk management requirements. Category IV institutions are subject
to the least exacting level of enhanced prudential standards.
In addition, Santander Spain is registered
as a non-US swap dealer with the CFTC and is registered as a non-US security-based swap dealer with the SEC. As such, Santander Spain
is subject to certain clearing, exchange trading, uncleared swap margin, business conduct, reporting and other requirements.
Foreign Corrupt Practices Act Regulations
Santander Brasil, as a foreign private
issuer whose securities are registered under the Exchange Act, is subject to the U.S. Foreign Corrupt Practices Act, or the “FCPA.”
The FCPA generally prohibits such issuers and their directors, officers, employees and agents from using any means or instrumentality
of U.S. interstate commerce in furtherance of any offer or payment of money to any foreign official or political party for the purpose
of influencing a decision of such person in order to obtain or retain business. It also requires that the issuer maintain books and records
and a system of internal accounting controls sufficient to provide reasonable assurance that accountability of assets is maintained and
accurate financial statements can be prepared. Penalties, fines and imprisonment of Santander Brasil’s officers and/or directors
can be imposed for violations of the FCPA.
U.S. Sanctions
“Sanction(s)” means any international
economic sanction administered or enforced by the United States government (including without limitation, the Office of Foreign Assets
Control, or “OFAC”), the UN Security Council, the European Union or His Majesty’s Treasury. OFAC is responsible for
administering economic sanctions imposed against designated foreign countries, governments, individuals and entities pursuant to various
Executive Orders, statutes and regulations.
OFAC-administered sanctions take many
different forms. For example, sanctions may include: (1) restrictions on U.S. persons’ trade with or investment in a sanctioned
country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on U.S. persons
engaging in financial transactions relating to, making investments in, or providing investment-related advice or assistance to, a sanctioned
country; and (2) blocking of assets of targeted governments or “specially designated nationals,” by prohibiting transfers
of property subject to U.S. jurisdiction, including property in the possession or control of U.S. persons. Blocked assets, such as property
and bank deposits, cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. In addition, non-U.S.
persons can be liable for “causing” a sanctions violation by a U.S. person or can violate U.S. sanctions by exporting services
from the United States to a sanctions target, for example by engaging in transactions with targets of U.S. sanctions denominated in U.S.
dollars that clear through U.S. financial institutions (including through U.S. branches or subsidiaries of non-U.S. banks).
Failure to comply with applicable U.S.
sanctions could have serious legal and reputational consequences, including significant civil monetary penalties and, in the most severe
cases, criminal penalties.
In addition, the U.S. government has imposed
various sanctions that prevent non-U.S. persons, including non-U.S. financial institutions from engaging in certain activities undertaken
outside the United States and without the involvement of any U.S. persons (“secondary sanctions”). If a non-U.S. financial
institution were determined to have engaged in activities targeted by certain U.S. secondary sanctions or used proceeds produced by such
activities targeted, it could lose its ability to open or maintain correspondent or payable-through accounts with U.S. financial institutions,
among other potential consequences.
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Antitrust Regulation
According to the Brazilian antitrust law,
actions that concentrate market share must be previously submitted to CADE for approval if the following criteria are met: (i) at least
one of the groups involved in the deal has posted annual gross revenues or volume of business equal to or over R$750 million, in Brazil,
in the year prior to the transaction; and (ii) at least another group has posted annual gross revenues or volume of business equal to
or over R$75 million, in Brazil, in the year prior to the transaction. Closing of a transaction without CADE’s approval will subject
the parties to fines ranging from R$60,000 to R$60 million.
The Brazilian Central Bank will also examine
certain corporate reorganizations and other acts involving two or more financial institutions not only considering their potential effects
on the financial system and its stability but also any potential impacts regarding market concentration and competition. Upon approval
of the transaction, the Brazilian Central Bank may establish certain restrictions and require that the financial institutions execute
an agreement of market concentration control, pursuant to which the terms and conditions of the sharing of the efficiency gain resulting
from the act shall be set forth.
In December 2018, the Brazilian Central
Bank and CADE approved a joint normative act establishing procedures with the purpose of increasing efficiency for their respective actions
regarding antitrust matters. Pursuant to the joint normative act, the authorities are authorized to share information for the purposes
of their respective activities and carry out meetings with each other to discuss matters requiring the regulatory cooperation between
both authorities.
Insolvency Laws Concerning Financial Institutions
Financial institutions are subject to
the proceedings established by Law No. 6,024 of March 13, 1974, or “Law No. 6,024,” which establishes the applicable provisions
in the event of intervention or extrajudicial liquidation by the Brazilian Central Bank, as well as to bankruptcy proceedings.
Intervention and extrajudicial liquidation
occur when the Brazilian Central Bank has determined that the financial institution is in bad financial condition or upon the occurrence
of events that may impact the creditors’ situation. Such measures are imposed by the Brazilian Central Bank in order to avoid the
bankruptcy of the entity.
Intervention
An intervention can be carried out at
the discretion of the Brazilian Central Bank in the following cases:
• risk to the creditors due to mismanagement;
• consistent violation of Brazilian banking laws or regulations; or
• if the intervention is a feasible alternative to the liquidation of the financial institution.
As of the date on which it is ordered,
the intervention will automatically suspend the enforceability of the payable obligations; prevent early termination or maturity of any
previously contracted obligations; and freeze deposits existing on the date on which the intervention is decreed.
The intervention will cease if interested
parties undertake to continue the economic activities of the financial institution, by presenting the necessary guarantees, as determined
by the Brazilian Central Bank, when the situation of the entity is regularized as determined by the Brazilian Central Bank; or when extrajudicial
liquidation or bankruptcy of the entity is ordered.
Intervention may also be ordered upon
the request of a financial institution’s management.
Extrajudicial Liquidation
Extrajudicial liquidation is an administrative
proceeding decreed by the Brazilian Central Bank (except that it is not applicable to financial institutions controlled by the Brazilian
federal government) and conducted by a liquidator appointed by the Brazilian Central Bank. This extraordinary measure aims at terminating
the activities of the affected financial institution, liquidating its assets and paying its liabilities, as in a judicially decreed bankruptcy.
The Brazilian Central Bank will place a financial institution in extrajudicial liquidation if:
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• the institution’s economic or financial situation is at risk, particularly when the institution ceases to meet its obligations as they become due, or upon the occurrence of an event that could indicate a state of insolvency under the rules of the Bankruptcy Law;
• management seriously violates Brazilian banking laws, regulations or rulings;
• the institution suffers a loss which subjects its unprivileged and unsecured creditors to severe risk; and/or
• upon revocation of the authorization to operate, the institution does not initiate ordinary liquidation proceedings within 90 days or, if initiated, the Brazilian Central Bank determines that the pace of the liquidation may harm the institution’s creditors.
A request for liquidation procedures can
also be filed on reasonable grounds by the officers of the respective financial institution or by the receiver appointed by the Brazilian
Central Bank in the receivership procedure.
The decree of extrajudicial liquidation
will: (i) suspend the actions or foreclose on rights and interests relating to the estate of the entity being liquidated, while no other
actions or executions may be brought during the liquidation; (ii) accelerate the obligations of the entity; and (iii) interrupt the statute
of limitations with regard to the obligations assumed by the institution.
Extrajudicial liquidation procedures may
be terminated:
• by discretionary decision of the Brazilian Central Bank if the parties involved undertake the administration of the financial institution after having provided the necessary guarantees; or
• when the final accounts of the receiver are delivered and approved and subsequently registered in the relevant public records;
• when converted into ordinary liquidation; or
• when a financial institution is declared bankrupt.
Temporary Special Administration Regime (Regime
de Administração Especial Temporária or “RAET”)
In addition to the intervention procedures
described above, the Brazilian Central Bank may also establish a RAET, under Law 9,447, dated March 14, 1997 combined with Law No. 6,024/74,
which is a less severe form of the Brazilian Central Bank intervention in private and nonfederal public financial institutions that allows
institutions to continue to operate normally. The RAET may be ordered in the case of an institution that:
• continually enters into recurrent operations that are against economic or financial policies set forth in federal law;
• faces a shortage of assets;
• fails to comply with the compulsory reserves rules;
• reveals the existence of hidden liabilities;
• experiences the occurrence of situations that cause receivership pursuant to current legislation;
• has reckless or fraudulent management; or
• carries out activities which call for an intervention.
The main objective of a RAET is to assist
the recovery of the financial condition of the institution under special administration and thereby avoid intervention and/or liquidation.
Therefore, a RAET does not affect the day-to-day business, operations, liabilities or rights of the financial institution, which continues
to operate in the ordinary course of business. Measures which may be adopted by the institution include the transfer of assets, rights
and obligations to other entities, and corporate restructuring of these entities, with a view to the continuity of the institution’s
business or activities.
There is no minimum term for a RAET,
which ceases upon the occurrence of any of the following events: (i) acquisition by the Brazilian federal government of control of the
financial institution, (ii) corporate restructuring, merger, spinoff, amalgamation or transfer of the controlling interest of the financial
institution, (iii) decision by the Brazilian Central Bank, or (iv) declaration of extrajudicial liquidation of the financial institution.
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Bankruptcy Law
Law No. 11,101, of February 9, 2005, as
amended, or the “Bankruptcy Law,” regulates judicial reorganizations, out-of-court reorganizations and the bankruptcy of individuals
and corporations that have occurred since 2005 and applies to financial institutions only with respect to the matters not specifically
regulated by the intervention and extrajudicial liquidation regimes described above.
On December 24, 2020, Law No. 14,112,
or “Law No. 14,112/20,” was passed. Law No. 14,112/20 overhauls the current Bankruptcy Law in several material aspects. Law
No. 14,112/20 came into effect on January 23, 2021. Certain changes arising from this new legislation may affect enforcement and priority
matters, such as: (i) the possibility of creditors putting forward an alternative judicial reorganization plan; (ii) new rules on the
approval of post-petition loans in judicial reorganization and on priority claims in case of conversion to bankruptcy liquidation; (iii)
more flexible quorum and mechanics in the extrajudicial reorganization process; (iv) new rules to expedite the bankruptcy liquidation
process; (v) new methods for restructuring of the debtor’s tax liabilities and installment payments, as well as new taxation schemes;
and (vi) incorporation of rules on cross-border insolvency proceedings into the Brazilian framework.
Law No. 14,112/20 replicates, with some
adjustments, the provisions of the UNCITRAL Model Law on Cross-Border Insolvency. As a result, Law No. 14,112/20 sets out some rules on
access of foreign representatives to courts in Brazil, the method and requirements for recognition of foreign main and ancillary proceedings,
authorization for the debtor and his representatives to act in other countries, methods of communication and cooperation between foreign
authorities and representatives and the Brazilian jurisdiction, and the processing of concurrent proceedings.
Law No. 14,112/20 also sets forth, among
other measures, (i) a protection for creditors that agree on the conversion of debt into equity against potential transfer of liability
with regard to the debtor’s obligations; (ii) the stay period and constraints on the assets of the debtor under judicial reorganization;
(iii) conciliation and mediation measures before and during judicial reorganization proceedings; and (iv) the rules on procedural and
substantive consolidation. Law No. 14,112/20 also sets out that a bankruptcy decree does not reach beyond the bankrupt itself, save when
the disregard doctrine is to apply.
Repayment of Creditors in a Liquidation or Bankruptcy
In the event of extrajudicial liquidation
or bankruptcy of a financial institution, creditors are paid pursuant to their priorities and privileges. Prepetition claims are paid
on a ratable basis in the following order: labor credits; secured credits; tax credits; credits with special privileges; credits with
general privileges; unsecured credits; contractual fines and pecuniary penalties for breach of administrative or criminal laws, including
those of a tax nature; and subordinated credits.
The current law confers immunity from
attachment of compulsory deposits maintained by financial institutions with the Brazilian Central Bank. Such deposits may not be attached
in actions by a bank’s general creditors for the repayment of debts and require that the assets of any insolvent bank funded by
loans made by foreign banks under trade finance lines be used to repay amounts owing under such lines in preference to those amounts owing
to the general creditors of such insolvent bank.
Recovery Plans for Systematically Important Financial
Institutions
Systemically important Brazilian financial
institutions must implement a recovery plan (plano de recuperação), with the aim of reestablishing adequate levels
of capital and liquidity and to preserve the viability of such institutions. The recovery plans must identify their critical functions
for the National Financial System, adopt stress-testing scenarios, define clear and transparent governance procedures, assess possible
barriers to the entity’s recovery, as well as implement effective communication plans with key stakeholders.
Deposit Insurance – FGC
The purpose of the FGC is to guarantee
the payment of funds deposited with financial institutions in case of intervention, liquidation, bankruptcy or insolvency. The FGC is
funded by ordinary contributions made by the financial institutions in the amount of 0.01% of the total amount of outstanding balances
of the accounts corresponding to guaranteed obligations, and certain special contributions as determined. Delay in performing such contributions
is subject to a penalty of 2% over the amount of the contribution.
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The total amount of credit in the form
of demand deposits, savings deposits, time deposits, deposits maintained in accounts blocked for transactions with checks (for the registration
and control of funds relating to the rendering of services of payment of salaries, earnings, pensions), bills of exchange, real estate
bills, mortgage bills, real estate credit bills and repurchase and resale agreements whose objects are instruments issued after March
8, 2012 by a company of the same group due to each customer by a financial institution (or by financial institutions of the same financial
group) will be guaranteed by the FGC for up to a maximum of R$250,000 per customer. The FGC targets maintaining liquidity at 2.5% (with
a band between 2.3% and 2.7%) of covered balances, and reductions in contributions may be proposed when the FGC’s liquidity is at
or above the target and the Resolution Fund meets its target, subject to CMN authorization. Under the current rules, the ordinary guarantee
does not cover, among others, deposits, loans or funds raised abroad; deposits captured from residents abroad; judicial deposits; any
subordinated instruments; or credits held by financial institutions and other institutions authorized by the Brazilian Central Bank, complementary
pension entities (including RPPS), insurance companies, capitalization companies, investment clubs and investment funds, and institutional
investors resident or domiciled abroad. Since December 2017, a limit of R$1,000,000 per four-year period applies to the aggregate coverage
of a creditor’s credits against all associated institutions, applicable to operations contracted or repactuated from December 22,
2017.
Additionally, CMN Resolution No. 5,238,
of August 1, 2025, introduced new amendments to the FGC framework to: (i) introduce an additional monthly contribution whenever the Reference
Value exceeds four times the Adjusted Net Equity and 60% of the institution’s Reference Funding; (ii) require associated institutions
to allocate amounts exclusively in federal government securities when the Reference Value exceeds six times the Adjusted Net Equity and
80% of Reference Funding, or 10 times the Adjusted Net Equity, with the required allocation (MA) calculated per the methodologies specified
and, when both conditions are met, by adopting the higher resulting amount; and (iii) establish phased coefficients for the MA calculation
under the 10-times threshold from July 1, 2026 to July 1, 2028. These changes will come into effect on June 1, 2026.
Administrative Proceedings in the Brazilian National
Financial System, the Brazilian Payment System and Capital Markets
Law No. 13,506 of November 13, 2017 or
“Law No. 13,506/17” applies to entities authorized or supervised by the Brazilian Central Bank or by the CVM, as well as to
market participants. Some of the key aspects of Law No. 13,506 are that: (i) it increases the maximum fine applicable by the Brazilian
Central Bank from R$250,000 to R$2 billion or 0.5% of the revenues of the company arising from services and financial products in the
year prior to the violation; (ii) it increases the maximum fine applicable by the CVM from R$500,000 to R$50 million; (iii) it makes additional
types of violations subject to penalties; (iv) it provides that the penalty of “public admonition” may be cumulative to other
penalties applicable by the Brazilian Central Bank; (v) it provides that Brazilian Central Bank may enter into cease-and-desist commitments;
and (vi) it provides that the Brazilian Central Bank and the CVM may enter into administrative agreements similar to leniency agreements.
Opening, Maintenance and Closing of Deposit Accounts
CMN Resolution No. 4,753/19 provides criteria
for the opening, maintenance and closing of deposit accounts. The regulation determines that financial institutions must adopt procedures
and controls that allow the verification and validation of the identity and qualification of the account holders and, if applicable, their
representatives, as well as the authenticity of the information provided by the client. This information must be kept updated by the financial
institution.
The rule also requires financial institutions
to ensure, through the procedures and technology used for the opening, maintaining and closing of deposit accounts, the integrity authenticity
and confidentiality, as well as the protection against unauthorized access, use, alteration, reproduction and destruction, of the information
and the electronic documents used by them during the process.
Issuance of Credit Instruments Electronically
Law No. 13,986/2020, among other provisions,
(i) created a new credit instrument, the Rural Real Estate Note (Cédula Imobiliária Rural or “CIR”),
with the purpose of advancing rural real estate financing by the creation of an instrument specifically designed to that end; (ii) changed
the rules governing Bank Deposit Certificates (Certificado de Depósito Bancário or “CDB”), especially
regarding their issuance and the transfer of their ownership, by providing among other changes that CDB issued in book-entry form should
be transferred by electronic endorsement, exclusively by means of a specific notation in the issuing institution’s own electronic
system or, when deposited in central depositary, by means of specific notation in the corresponding electronic system; and (iii) authorized
that customary credit instruments such as the Agricultural Certificate of Deposit (Certificado de Depósito do Agronegócio
– CDA), the Agricultural Warrant (Warrant Agropecuário – WA), the Real Estate Credit Certificate (Certificado
de Crédito Imobiliário – CCI), the Bank Credit Note (Cédula de Crédito Bancário –
CCB), the Rural Credit Note (Cédula de Crédito Rural – CCR), the Rural Promissory Note (Nota Promissória
Rural – NPR), the Rural Trade Bill (Duplicata Rural – DR), may be issued in book-entry form through the electronic
bookkeeping system held at a financial institution or other entity authorized by the Brazilian Central Bank to perform electronic bookkeeping
activity.
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On July 15, 2020, the Brazilian Central
Bank regulated, through Circular No. 4,036/20, the electronic issuance of book-entry CCBs and CCRs by financial institutions. A financial
institution must render the following services in respect of the bookkeeping of CCBs and CCRs: (i) issue the instrument in book-entry
form at the request of the borrower; (ii) include all obligatory information related to CCBs and CCRs, as well as ancillary documents
and/or information for the purposes of verifying the outstanding balance of the underlying credit transaction; (iii) verify the effective
title or fiduciary title of the instruments; (iv) make the payment CCBs and CCRs for the settlement of obligations available to the debtor;
(v) control the financial flow related to the CCBs and CCRs, including prepayments; (vi) record security interests in an entity authorized
to perform centralized registration or deposit of financial assets; (vii) make information about the CCBs and CCRs available to debtors,
holders, collateral beneficiaries or any other legally qualified interested party; and (viii) carry out the issuance of certificates regarding
the instruments whenever required.
Limitation to the Fees and Interest Rates on Overdraft-Secured
Checks
On November 27, 2019, the CMN issued Resolution
No. 4,765 or “Resolution No. 4,765/2019,” providing for new rules on the overdraft granted by financial institutions in checking
accounts held by individuals and individual microentrepreneurs. The new rule limits the charging of fees on overdraft-secured checks to:
(i) 0% for the opening credit facilities of up to R$500.00; and (ii) 0.25% for the opening of credit facilities larger than R$500.00,
calculated with the amount of the facility that exceeds R$500.00. It also limits interest rates over the overdraft-secured check to up
to 8% per month, to which must be added a discount of the overdraft fees already charged monthly by the financial institution. If the
interest is less than or equal to the overdraft fees, such interest rates must be equal to zero. In addition, Resolution No. 4,765/2019
establishes that the overdraft-secured check must be compatible with the customer’s risk profile.
Resolution No. 4,765/2019 came into force
on January 6, 2020, for agreements executed after the referred date, came into force on June 1, 2020, for agreements executed prior to
such date. Regarding the 8% limitation above, the rule applies to all contracts from January 6, 2020, regardless of the date the applicable
contract was entered into.
Automatic Debit of Banking Accounts
On March 26, 2020, CMN issued Resolution
No. 4,790, which sets forth new rules for the automatic debit payments from checking account and accounts designated for the payment of
an individual’s wages. The new rule sets forth that financial institutions should only process automatic debit payments upon prior
and express authorization of the client, and provides for the procedures for the authorization and cancellation of automatic debit payments.
The new rule came into force on March 1, 2021, CMN Resolution No. 4,790 repealed CMN Resolution No. 4,771. Under recent updates, CMN Resolution
No. 5,251 and BCB Resolution No. 505, both issued on September 25, 2025, provided new requirements to require debit authorizations with
corporate or non-regulated payees to follow Automated Pix rules and require depositary and recipient institutions to update contracts
and related procedures.
Taxation
Corporate Income Tax and Social Contribution Tax
The IRPJ is calculated at a rate of 15.0%,
plus a surtax of 10.0% which is levied on profits exceeding the amount of R$240,000 per year and the CSLL is calculated at a rate of:
(i) 15% applicable to private insurance companies, securities distributors, foreign exchange and securities brokerage firms, real estate credit companies, credit card administrators, leasing companies, credit cooperatives, and savings and loan associations; and
(ii) 20% applicable to banks of any kind.
Payment institutions, organized over-the
counter market administrators, stock/commodities/futures exchanges, clearing and settlement entities and other entities regulated by the
CMN and are subject to a gradual increase of CSLL rate:
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• 12% until December 31, 2027; and
• 15% as of January 1, 2028.
Credit, financing and investment companies
and capitalization companies are also subject to a gradual increase of CSLL rate:
• 17.5% until December 31, 2027;
• 20% as of January 1, 2028.
Deferred tax assets and liabilities are
measured based on temporary differences between the book basis and tax basis of assets and liabilities, tax losses, and adjustments to
fair value of securities and derivatives. Pursuant to the current regulations, the expected realization of deferred tax assets is based
on projections of future results and a technical study approved by the board of directors of Santander Brasil.
IRPJ and CSLL on Foreign Exchange Variation of Hedges
for Investments Held Abroad
Pursuant to Law No. 14,031/2020, which
came in force in July 2020, exchange rate variations arising from hedges on investments held abroad are taxable starting in 2021. Accordingly,
in 2021, 50% of the exchange rate variation shall be taxable under the IRPJ and CSLL, while, as of 2022, 100% of the exchange rate variation
will be considered as taxable.
Tax on Services
Each of the Municipalities of Brazil and
the Federal District are responsible for establishing the applicable ISS rate, which is charged on the value of services provided by the
company, to the municipality where the service renderer is located. The rates vary from 2% to 5% and depend on the nature of the service.
In line with federal legislation (Complementary
Law No. 116/2003), ISS is due in the municipality where the service provider is headquartered, at rates ranging from 2% to 5%, depending
on the type of service and the applicable municipal legislation.
PIS and COFINS Tax Rates
PIS and COFINS (respectively, the profit
participation contribution and the social security financing contribution, both of which are social contributions due on certain revenues
net of certain expenses) payable by financial institutions and similar entities, as defined by law, are due at the rate of 0.65% and 4%,
respectively. They are levied cumulatively on gross revenue billed, which is defined as the total revenues earned by the legal entity,
net of certain expenses, such as funding costs.
Nonfinancial entities are taxed at the
rates of 1.65% and 7.6% of PIS and COFINS, respectively, and are subject to noncumulative incidence, which consists of deduction of certain
expenses from the tax base as allowed by law.
Financial income from nonfinancial companies
is taxed at the rate of 0.65% and 4%, respectively, pursuant Decree No 8,426/2015.
Tax on Financial Transactions
The IOF tax is a tax levied on credit, currency
exchange, insurance and securities transactions. It is imposed on the following transactions and at the following rates.
Transaction (1) Maximum Legal Rate Current Rate
Credit extended by financial institutions and nonfinancial entities 3.38% 0.0082% per day for individuals and legal entities capped at 365 days. An additional 0.38% rate is applicable in both cases.
Transactions relating to securities (2) 1.5% per day Gradual reduction according to the term (maturity) of the transaction. 0.38% on the amount of the primary acquisition of quotas of credit receivables investment funds (FIDCs).
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Transaction (1) Maximum Legal Rate Current Rate
0% on transactions with equity securities and certain debt securities, such as debentures and real estate receivables and agribusiness receivables (CRI/CRA).
1% per day on transactions with fixed income derived from federal, state, or municipal public and private bonds, and fixed income investment funds limited to certain percentages of the income raised from investment. This rate is reduced to zero from the 30th day following the acquisition date of the investment and on repurchase agreements carried out by financial institutions and other institutions authorized by the Brazilian Central Bank with debentures issued by institutions belonging to the same group (Decree No. 8,731/2016).
0% on the assignment of securities to permit the issuance of Depositary Receipts abroad.
Transactions relating to derivatives 25% Although the maximum rate is 25%, it has been reduced to zero at this moment.
Insurance transactions entered into by insurance companies 25% 2.38% for health insurance.
0.38% for life insurance.
7.38% for other types of insurance.
Foreign exchange transactions(2) 25% 0.38% for foreign exchange transactions involving the inflow of funds into Brazil (general rule) and 3.5% for foreign exchange transactions involving the outflow of funds from Brazil (general rule).
foreign exchange transactions for the inflow of funds connected to foreign loans, provided the average repayment term of the loan is above 364 days, for which the IOF/Exchange rate is 0%.
repayment of principal and interest abroad connected to foreign loans, irrespective of the average repayment term of the transaction, for which the IOF/Exchange rate is 0%.
foreign exchange transactions for the inflow of funds to cover expenses incurred in the country with credit cards issued abroad, for which the IOF/Exchange rate is 0%.
foreign exchange transactions made by international air transportation companies domiciled abroad, for the purposes of remitting resources derived from their local revenues, for which the IOF/Exchange rate is 0%.
foreign exchange transactions carried out due to Brazilian regulatory provisions, related to the acquisition of foreign currency by institutions authorized to operate in the exchange market, simultaneously contracted with a foreign currency sale transaction, for which the IOF/Exchange rate is 0%.
0% for interbank transactions.
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Transaction (1) Maximum Legal Rate Current Rate
0% for exchange transactions in connection with the outflow of proceeds from Brazil for the remittance of interest on net equity and dividends to be received by foreign investors.
0% for exchange transactions, including by means of simultaneous foreign exchange transactions, for the inflow of funds by foreign investors in the Brazilian financial and capital markets.
0% for exchange transactions, including by means of simultaneous foreign exchange transactions, for the inflow of funds by foreign investors for purposes of initial or additional margin requirements in connection with transactions in stock exchanges.
0% for exchange transactions for the outflow of funds invested by foreign investors in the Brazilian financial and capital markets.
0% for exchange transactions for the inflow and outflow of funds invested by foreign investors, including by means of simultaneous foreign exchange transactions, in certificates of deposit of securities, known as Brazilian Depositary Receipts (“BDRs”).
0% for simultaneous exchange transactions, for the inflow of funds by foreign investors derived from the conversion of direct investments in Brazil made pursuant to Law 4,131/62 into investments in stock tradable in stock exchanges, as from May 2, 2016.
0% for revenues related to the export of goods and services transactions.
1.1% on the settlement of foreign exchange transactions for the transfer of funds abroad, intended for the placement of funds of a resident in Brazil for investment purposes.
(1) The transactions mentioned in the table are for illustration purposes and do not reflect an exhaustive list of transactions subject to the IOF.
(2) There are some exemptions or specific cases in which the applicable rate is zero.
FATCA
The Foreign Account Tax Compliance Act,
or “FATCA” became law in the United States on March 18, 2010. The legislation requires foreign financial institutions, or
“FFIs,” (such as Santander Brasil) to enter into an FFI agreement under which they agree to identify and provide the U.S.
Internal Revenue Service, or “IRS,” with information on accounts held by U.S. persons and certain U.S.-owned foreign entities,
or otherwise face a 30% withholding tax on certain U.S. source withholdable payments.
In addition, FFIs that have entered into
an FFI agreement will be required to withhold on such payments made to FFIs that have not entered into an FFI agreement, account holders
who fail to provide sufficient information to classify an account as a U.S. or non-U.S. account, and U.S. account holders who do not agree
to the FFI reporting their accounts to the IRS.
On September 23, 2014, Brazil and the
United States announced that they entered into an intergovernmental agreement, or “IGA,” which became effective in Brazil
by virtue of Decree No. 8506 as of August 24, 2015. The aim of the IGA is to improve international tax compliance and implement FATCA.
The IGA establishes an automatic annual bilateral exchange of information with the U.S. tax authorities. Under this agreement, Brazilian
financial institutions will generally be required to provide certain information about their U.S. account holders to the Brazilian tax
authorities (Receita Federal do Brasil), which will share that information with the IRS.
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Complying with the required identification,
withholding, and reporting obligations requires significant investment in an FFI’s compliance and reporting framework. We are continuing
to follow developments regarding FATCA closely and are coordinating with all relevant authorities.
Common Reporting Standard
On December 28, 2016, Normative Ruling
No. 1,680 was enacted, introducing the Common Reporting Standard in Brazil. The Common Reporting Standard provides for certain account
reporting obligations similar to those existing under FATCA. It was created in the context of the Organization for Economic Cooperation
and Development’s Base Erosion and Profit Shifting project, which is aimed at reducing tax avoidance. Normative Ruling No. 1,680
applies to legal entities required to present the e-Financeira pursuant to Normative Ruling No. 1,571, dated July 2, 2016.
On the same date, the Normative Ruling
No. 1,681 was enacted providing for the obligation to annually deliver the “Country to Country Statement,” an ancillary obligation
also arising from the discussions under the BEPS Project, before the Brazilian Federal Revenue Service, or “RFB,” as a measure
to expand information exchange and improve the level of international tax transparency. This new regulation should not have any impact
on Santander Brasil, since, as it is controlled by a legal entity resident in Spain, it is not required by the Brazilian regulation to
present such statement.
Income Tax Levied on Capital Gains
Law No. 13,259, of March 16, 2016 or “Law
No. 13,259/16” introduced the application of progressive tax rates for income taxation over capital gains recognized by Brazilian
individuals and by holders that are not domiciled in Brazil for purposes of Brazilian taxation (“Non-Resident Holders”) on
the disposition of assets in general. Under Law No. 13,259/16, the income tax rates applicable to capital gains realized by these investors
would be: (i) 15% for the portion of the gains up to R$5 million, (ii) 17.5% for the portion of the gain that exceeds R$5 million but
does not exceed R$10 million, (iii) 20% for the portion of the gain that exceeds R$10 million but does not exceed R$30 million, and (iv)
22.5% for the portion of the gain that exceeds R$30 million.
The provisions of Law No. 13,259/16 may
apply to Non-Resident Holders pursuant to Joint Resolution No. 13, provided such Non-Resident Holders are not located in a Tax Haven.
However, Non-Resident Holders (whether they are considered to be Non-Resident Holders as a result of Joint Resolution No. 13 or otherwise)
located in a Tax Haven are subject to a specific tax regulation and will continue to be taxed at a rate of 25%.
Most transactions carried out by Non-Resident
Holders pursuant to Joint Resolution No. 13 and that result in capital gains are subject to taxation at a fixed 15% rate, provided they
are not located in a Tax Haven.
The tax must be withheld and paid by the
buyer or, in cases where the buyer and seller are domiciled abroad, a legal representative of buyer shall be designated for the payment
of the tax.
Deferred Tax Assets
Law No. 14,467/2022 (with amendments by Law No.
15,078/2024) established the tax treatment for the receipt of credits arising from the activities of financial institutions and others
authorized to operate by the Brazilian Central Bank. As of January 1, 2025, institutions will be able to deduct, when determining real
profit and the calculation basis for the CSLL, losses incurred in the receipt of credits arising from activities related to defaulted
transactions, regardless of the date of their contracting and transactions with a legal entity in bankruptcy proceedings or under judicial
recovery, as of the date of the bankruptcy decree or the granting of judicial recovery.
The tax deduction established must observe the
loss incurred according to the percentages established based on the period of default, losses incurred in an amount greater than the real
profit cannot be deducted in the year 2025. From January 2026 onwards, losses determined on credits that were in default on December 31,
2024, and not yet deducted for tax purposes up to that date, may be excluded from net income, when determining real income and the CSLL
calculation basis, at a rate of 1/84 (one eighty-fourth) for each month of the calculation period, and institutions may also opt, until
December 31, 2025, irrevocably and irreversibly, to make deductions at a rate of 1/120 per month. According to Law No. 14,467/2022, entities
had until December 31, 2025 which period would be used for the tax deduction of this balance.
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The permanent decision was made by the administration
in December 2025, and the study on the realization of tax credits considers 1/120 (10 years) for Banco Santander (Brasil) S.A., Santander
Sociedade de Crédito, Financiamento e Investimento S.A., and Santander Leasing S.A. Arrendamento Mercantil, and considers 1/84
(7 years) for Banco RCI Brasil S.A. and Banco Hyundai Capital Brasil S.A.
Disclosure Pursuant to Section 219 of the Iran
Threat Reduction and Syria Human Rights Act
Pursuant to Section 219 of the Iran Threat
Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates
knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant
to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance
with applicable law.
As we are part of the Santander Group,
we must also disclose the exposure of other entities of the Santander Group to Iran. The following activities are disclosed in response
to Section 13(r) with respect to the Santander Group and its affiliates. During the period covered by this report:
(a) Frozen accounts and transactions: A limited number of accounts for certain customers subsequently designated over time by the US under the Specially Designated Global Terrorist (SDGT) sanctions program,were or are maintained with certain non-U.S. affiliates of Santander. All such accounts have been frozen or cancelled to comply with applicable legal requirements.
(b) Legacy contractual obligations related to guarantees: The Santander Group also has certain legacy performance guarantees for the benefit of an Iranian bank that is currently designated by the US under the Specially Designated Global Terrorist (SDGT) sanctions program (stand-by letters of credit to guarantee the obligations – either under tender documents or under contracting agreements – of contractors who participated in public bids in Iran) that were in place prior to April 27, 2007. The Santander Group is not contractually permitted to cancel these arrangements without paying the guaranteed amount. As such, the Santander Group intends to continue to provide the guarantees in accordance with company policy and applicable laws.
In the aggregate, all of the transactions
described above resulted in gross revenues and net profits in the year ended December 31, 2025 which were negligible relative to the overall
revenues and profits of Banco Santander, S.A. The Santander Group has undertaken significant steps to withdraw from the Iranian market
such as closing its representative office in Iran and ceasing all banking activities therein, including correspondent relationships, deposit
taking from Iranian entities and issuing export letters of credit, except for the legacy transactions described above.
SELECTED STATISTICAL INFORMATION
The following information for Santander
Brasil is included for analytical purposes and should be read in conjunction with the consolidated financial statements and related notes
contained elsewhere herein, as well as “Item 5. Operating and Financial Review and Prospects.”
Average annual balance sheet data has
been calculated based upon the average of the monthly balances at 13 dates: as of December 31 of the prior year and each of the month-end
balances of the 12 subsequent months. Average income statement and balance sheet data and other related statistical information have been
prepared on a consolidated annual basis.
The selected statistical information set
forth below includes information as of and for the years ended December 31, 2025, 2024 and 2023 extracted from the audited financial statements
prepared in conformity with IFRS as issued by the IASB. See “Presentation of Financial and Other Information” and “Item
3. Key Information—A. Selected Financial Data.”
Average Balance Sheet and Interest
Rates
The following tables show our average balances
and interest rates for each of the periods presented. With respect to the tables below and the tables under “—Changes in Net
Interest Income—Volume and Rate Analysis” and “—Assets—Earning Assets—Net Interest Spread,”
(i) we have stated average balances on a gross basis, before netting impairment losses, except for the total average asset figures, which
include such netting, and (ii) all average data have been calculated using month-end balances, which is not significantly different from
having used daily averages. We stop accruing interest on loans once they are more than 90 days past due. All our non-accrual loans are
included in the table below under “—Other assets.”
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For the Year Ended December 31,
2025 2024 2023
Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Average Rate
(in millions of R$, except percentages)
Assets and Interest Income
Cash and balances with the Brazilian Central Bank 211,970 11,151 5.3 % 209,729 17,990 8.6 % 163,324 13,808 8.5 %
Domestic 186,795 9,827 5.3 % 187,298 16,066 8.6 % 150,737 12,744 8.5 %
International 25,175 1,324 5.3 % 22,431 1,924 8.6 % 18,724 1,583 8.5 %
Loans and amounts due from credit institutions 29,046 5,793 19.9 % 19,737 2,993 15.2 % 31,968 2,235 7.0 %
Domestic 27,330 5,451 19.9 % 17,941 2,720 15.2 % 31,560 2,206 7.0 %
International 1,716 342 19.9 % 1,796 272 15.2 % 2,046 143 7.0 %
Of which:
Reverse repurchase agreements 23,547 4,418 18.8 % 3,122 1,403 44.9 % 77,755 10,145 13.0 %
Domestic 23,547 4,418 18.8 % 3,122 1,403 44.9 % 77,755 10,145 13.0 %
International — — — — — — — — —
Loans and advances to customers 586,567 100,075 17.1 % 575,095 75,859 13.2 % 539,293 81,331 15.1 %
Domestic 586,567 100,075 17.1 % 575,095 75,859 13.2 % 539,293 81,331 15.1 %
International — — — — — — — — —
Debt instruments 282,793 35,148 12.4 % 259,262 29,501 11.4 % 225,184 24,195 10.7 %
Domestic 282,793 35,148 12.4 % 259,262 29,501 11.4 % 225,184 24,195 10.7 %
International — — — — — — — — —
Other interest–earning assets — 10,327 — — 10,840 — — 6,714 —
Total interest–earning assets 1,110,376 162,494 14.6 % 1,063,823 137,183 12.9 % 959,769 128,283 13.4 %
Equity instruments 4,374 38 0.9 % 4,131 38 0.9 % 7,319 22 0.3 %
Investments in associates 4,529 — — 6,452 — — 1,702 — —
Total earning assets 1,119,279 162,532 14.5 % 1,074,406 137,221 12.8 % 968,790 128,305 13.2 %
Cash and balances with the Brazilian Central Bank 3,859 — — 3,893 — — 4,243 — —
Loans and amounts due from credit institutions 5,661 — — 6,628 — — (5,904) — —
Impairment losses (37,569) — — (34,296) — — (33,759) — —
Other assets 121,410 — — 95,325 — — 86,861 — —
Tangible assets 5,395 — — 6,461 — — 7,678 — —
Intangible assets 32,906 — — 32,811 — — 31,897 — —
Average total assets 1,250,941 162,532 13.0 % 1,185,228 137,221 11.6 % 1,059,806 128,305 12.1 %
Liabilities and Interest Expense
Deposits from the Brazilian Central Bank and Deposits from credit institutions 159,207 6,900 4.3 % 144,018 8,905 6.2 % 119,347 9,828 8.2 %
Domestic 53,144 2,303 4.3 % 65,049 4,022 6.2 % 112,384 9,257 8.2 %
International 106,063 4,597 4.3 % 78,969 4,883 6.2 % 67,697 5,575 8.2 %
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For the Year Ended December 31,
2025 2024 2023
Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Average Rate
(in millions of R$, except percentages)
Of which:
Repurchase agreements 33,735 4,961 14.7 % 26,922 3,566 13.2 % 18,800 2,817 15.0 %
Domestic 33,735 4,961 14.7 % 26,922 3,566 13.2 % 18,800 2,817 15.0 %
International — — — — — — — — —
Customer deposits 556,943 53,594 9.6 % 550,902 58,470 10.6 % 491,140 48,544 9.9 %
Domestic 505,891 48,681 9.6 % 533,277 56,599 10.6 % 472,250 46,677 9.9 %
International 51,052 4,913 9.6 % 45,838 4,865 10.6 % 39,485 3,903 9.9 %
Of which:
Repurchase agreements 78,349 11,522 14.7 % 85,682 11,350 13.2 % 77,466 11,607 15.0 %
Marketable debt securities(1) 148,262 3,840 2.6 % 131,876 3,778 2.9 % 128,389 4,999 3.9 %
Domestic 148,262 3,840 2.6 % 131,876 3,778 2.9 % 128,389 4,999 3.9 %
International — — — — — — — — —
Subordinated debts 24,519 3,684 15.0 % 22,503 2,523 11.2 % 20,037 1,926 9.6 %
Domestic 24,519 3,684 15.0 % 16,754 2,027 12.1 % 8,259 1,146 13.9 %
International — — — % 5,749 496 8.6 % 11,778 780 6.6 %
Other interest-bearing liabilities — 36,842 — — 6,828 — — 16,102 —
Total interest-bearing liabilities 888,931 104,860 11.8 % 849,299 80,504 9.5 % 758,913 81,399 10.7 %
Noninterest bearing demand deposits 37,670 — — 32,575 — — 32,184 — —
Other liabilities 200,856 — — 182,885 — — 156,002 — —
Non-controlling interests 971 — — 607 — — 458 — —
Stockholders’ Equity 122,513 — — 119,862 — — 112,249 — —
Total average liabilities and equity 1,250,941 104,860 8.4 % 1,185,228 80,504 6.8 % 1,059,806 81,399 7.7 %
(1) In the year ended December 31, 2023, we revised the definition of marketable debt securities to include the line items “Financial liabilities measured at fair value in income held for trading” and “Financial liabilities at amortized cost,” instead of only including “Financial liabilities at amortized cost.” The amounts presented as of December 31, 2025, 2024 and 2023 reflect this change.
Changes in Net Interest Income –
Volume and Rate Analysis
The following tables present the changes
in our net interest income allocated between changes in average volume and changes in average rate for the year ended December 31, 2025,
compared to the year ended December 31, 2024, and for the year ended December 31, 2024 compared to the year ended December 31, 2023. We
have calculated volume variances based on movements in average balances over the period and rate variance based on changes in interest
rates on average interest-earning assets and average interest-bearing liabilities. We have allocated variances caused by changes in both
volume and rate to volume. You should read the following tables and the footnotes thereto in light of our observations noted in “—Average
Balance Sheet and Interest Rates.”
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For the Years Ended 2025/2024 For the Years Ended 2024/2023
Increase (decrease) due to changes in
Volume Rate Net change Volume Rate Net change
(in millions of R$)
Interest and Similar Income
Interest-earning assets
Cash and balances with the Brazilian Central Bank 192 (7,031) (6,839) 3,404 778 4,182
Domestic (43) (6,196) (6,239) 3,091 750 3,841
International 235 (835) (600) 313 28 341
Loans and amounts due from credit institutions 1,411 1,390 2,800 (969) 1,727 758
Domestic 1,424 1,307 2,730 (952) 1,580 628
International (13) 83 70 (17) 147 129
Loans and advances to customers 1,513 22,703 24,216 5,399 (10,871) (5,472)
Domestic 1,513 22,703 24,216 5,399 (10,871) (5,472)
International — — — — — —
Debt instruments 2,678 2,969 5,647 3,662 1,644 5,306
Domestic 2,678 2,969 5,647 3,662 1,644 5,306
International — — — — — —
Other interest-earning assets (513) — (513) 4,126 — 4,126
Total interest-earning assets 5,281 20,030 25,311 16,255 (7,355) 8,900
Equity Instruments 2 (2) — (10) 26 16
Total earning assets 5,284 20,028 25,311 16,245 (7,329) 8,916
Interest Expense and Similar Charges
Interest-bearing liabilities
Deposits from the Brazilian Central Bank and Deposits from credit institutions 939 (2,944) (2,005) (2,971) 2,048 (923)
Domestic (736) (983) (1,719) (3,899) 3,668 (231)
International 1,675 (1,961) (286) 928 (1,620) (692)
Customer deposits (2,353) (2,523) (4,876) 6,660 3,266 9,926
Domestic (2,907) (2,017) (4,924) 6,032 2,932 8,964
International 553 (506) 48 628 334 962
Marketable debt securities(1) 469 (407) 62 136 (1,357) (1,221)
Domestic 469 (407) 62 136 (1,357) (1,221)
International — — — — — —
Subordinated liabilities 443 718 1,161 783 (186) 597
Domestic 939 718 1,657 1,183 (302) 881
International (496) — (496) (399) 115 (284)
Other interest-bearing liabilities 30,014 — 30,014 (9,274) — (9,274)
Total interest-bearing liabilities 32,290 (7,934) 24,356 (963) 68 (895)
(1) In the year ended December 31, 2023, we revised the definition of marketable debt securities to include the line items “Financial liabilities measured at fair value in income held for trading” and “Financial liabilities at amortized cost,” instead of only including “Financial liabilities at amortized cost.” The amounts presented as of December 31, 2025, 2024 and 2023 reflect this change.
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Assets
Earning Assets – Net Interest Spread
The following table analyzes our average
earning assets, interest income and dividends on equity securities and net interest income and shows gross yields, net interest margin
and net interest spread for each of the periods indicated. You should read this table and the footnotes thereto in light of our observations
noted in “—Average Balance Sheet and Interest Rates.”
For the Year Ended December 31,
2025 2024 2023
(in millions of R$, except percentages)
Average earning assets 1,110,376 1,063,823 959,769
Domestic 1,083,485 1,039,596 938,999
International 26,891 24,227 20,770
Interest and dividends on equity securities(1) 162,532 137,221 128,305
Domestic 160,866 135,025 126,579
International 1,667 2,196 1,726
Net interest income(2) 57,672 56,717 46,906
Domestic 60,602 59,899 51,535
International (2,930) (3,182) (4,629)
Gross yield(3)(*) 14.6 % 12.9 % 13.4 %
Domestic 14.8 % 13.0 % 13.5 %
International 6.2 % 9.1 % 8.3 %
Net interest margin(4)(*) 5.2 % 5.3 % 4.9 %
Domestic 5.6 % 5.8 % 5.5 %
International (10.9) % (13.1) % (22.3) %
Net interest spread(5)(*) 2.7 % 3.3 % 2.5 %
Domestic 1.9 % 3.0 % 2.5 %
International 1.9 % 2.7 % 1.2 %
(*) Yield information does not give effect to changes in fair value that are reflected as a component of stockholder’s equity.
(1) Total earning assets plus dividends from companies accounted for by the equity method (equity instruments).
(2) Net interest income (Including equity instruments).
(3) Gross yield is the amount of “Interest and dividends on equity securities” divided by “Average earning assets.”
(4) Net interest margin is the amount of “Net interest income” divided by “Average earning assets.”
(5) Net interest spread is the difference between the average rate of “Total earning asset” and the average rate of “Total interest-bearing liabilities.”
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Return on Equity and Assets
The following table presents our selected
financial ratios for the periods indicated.
For the Year Ended December 31,
2025 2024 2023
ROA: Return on average total assets 1.0 % 1.1 % 0.9 %
ROE: Return on average stockholders’ equity 10.6 % 11.2 % 8.5 %
ROE (adjusted)(1) 13.7 % 14.6 % 11.3 %
Average stockholders’ equity as a percentage of average total assets 9.8 % 10.1 % 10.6 %
Payout(2) 58.8 % 44.7 % 65.3 %
(1) “Average stockholders’ equity excluding goodwill as a percentage of average total assets excluding goodwill” is a non-GAAP financial measure which adjusts “Return on average stockholders’ equity” to exclude the goodwill arising from the acquisition of Banco Real in 2008, Getnet and Super, both in 2014, and Banco Olé, 60%, and the remaining 40% in 2020. See “Item 3. Key Information—A. Selected Financial Data—Selected Consolidated Ratios” for a reconciliation of “Average stockholders’ equity excluding goodwill as a percentage of average total assets excluding goodwill” to “Return on average stockholders’ equity.”
(2) Dividend payout ratio (dividends declared per share divided by net income per share).
Interest-Earning Assets (other than Loans)
The following table shows the percentage
mix of our average interest-earning assets for the years indicated. You should read this table in light of our observations noted in “—Average
Balance Sheet and Interest Rates.”
For the Year Ended December 31,
2025 2024 2023
Cash and balances with the Brazilian Central Bank 19.1 % 19.7 % 17.0 %
Domestic 16.8 % 17.6 % 15.7 %
International 2.3 % 2.1 % 2.0 %
Loans and amounts due from credit institutions 2.6 % 1.9 % 3.3 %
Domestic 2.5 % 1.7 % 3.3 %
International 0.2 % 0.2 % 0.2 %
Loans and advances to customers 52.8 % 54.1 % 56.2 %
Domestic 52.8 % 54.1 % 56.2 %
International — — —
Debt instruments 25.5 % 24.4 % 23.5 %
Domestic 25.5 % 24.4 % 23.5 %
International — — —
Total interest-earning assets 100 % 100 % 100 %
Loans and Amounts Due from Credit Institutions
For further information about Loans and
Amounts Due from Credit Institutions, see note 5 to our audited consolidated financial statements included elsewhere in this annual report.
Investment Securities
As of December 31, 2025 and 2024, the
book value of investment securities was R$285 billion and R$287 billion, respectively (representing 22.4% and 23.2%, respectively, of
our total assets as of such dates). Brazilian government securities totaled R$182 billion, or 64.0%, and R$191 billion, or 66.4% of our
investment securities as of December 31, 2025 and 2024, respectively. For a discussion of how our investment securities are valued, see
notes 7 and 8 to our audited consolidated financial statements included elsewhere in this annual report.
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The following table shows the carrying amounts
of our investment securities by type and residence of the counterparty at each of the indicated dates:
As of December 31, 2025
2025 2024 2023
(in millions of R$)
Debt securities
Government securities—Brazil 182,218 190,643 148,750
Debentures and promissory notes 52,869 70,450 49,083
Other debt securities 44,522 23,080 46,581
Total domestic/debt securities 279,609 284,173 244,415
Equity securities
Shares of domestic companies 3,005 2,048 1,956
Shares of foreign companies 22 55 99
Investment fund units and shares 1,929 886 1,383
Total equity securities 4,955 2,988 3,438
Total investment securities 284,564 287,162 247,853
As of December 31, 2025 and 2024, we held
no securities of single issuers or related groups of companies whose aggregate book or market value exceeded 1% of our stockholders’
equity, other than the Brazilian government securities, which represented 144.0% and 159.1%, respectively, of our stockholders’
equity. As of December 31, 2025 and 2024, the total value of our debt securities was approximately 220.9% and 237.2%, respectively, of
stockholders’ equity.
The following table analyzes the maturities
and weighted average yields of our debt investment securities not carried at fair value (before impairment allowance) as of December 31,
2025. Yields on tax-exempt obligations have not been calculated on a tax equivalent basis because the effect on such calculation is not
significant.
Maturing within 1 year Maturing between 1 and 5 years Maturing between 5 and 10 years Maturing after 10 years Total
(in millions of R$)
Debt securities:
Government securities—Brazil (1) 9,875 17,050 6,398 1,340 34,663
Other debt securities(2) 25,093 35,104 13,269 6,580 80,046
Total debt investment securities 34,968 52,154 19,667 7,920 114,709
(1) Includes, substantially, National Treasury Bills (LTN), Treasury Bills (LFT) and National Treasury Notes (NTN-A, NTN-B, NTN-C and NTN-F).
(2) Includes balances of debentures and promissory notes.
The average rate for debt investment
securities is 11.54%.
Investment Portfolio – Yields
The following table shows the balances and
weighted-average yields for our debt securities not carried at fair value through earnings, for each range of maturities, as of December
31, 2025. We calculate weighted-average yield as the average yield of the open positions we have on balance as of December 31, 2025. Yields
on tax-exempt obligations have not been calculated on a tax equivalent basis because the effect on such calculation is not significant.
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Maturing within 1 year Yield within 1 year Maturing between 1 and 5 years Yield between 1 and 5 years Maturing between 5 and 10 years Yield between 5 and 10 years Maturing after 10 years
(in millions of R$, except percentages)
% % % %
Weighted-average yields
Domestic:
Brazilian Government 36,753 8.5 26,478 11.9 22,706 8.4 7,370 5.4
Other fixed-income securities 15,856 6.0 36,219 6.0 13,703 5.0 6,288 3.9
Impaired financial assets 769 6.0 1,396 6.0 522 5.0 107 3.9
Impairment losses — — — — — — — —
Total domestic 53,378 7.3 64,093 8.9 36,931 6.7 13,765 4.6
International:
Foreign government — — — — — — — —
Other fixed-income securities 10,006 8.2 — — — — — —
Impaired financial assets — — — — — — — —
Impairment losses — — — — — — — —
Total international 10,006 8.2 — — — — — —
Total weighted-average yields 7.7 8.9 6.7 4.6
Domestic and Foreign Currency
The following table shows our assets and
liabilities by domestic and foreign currency, as of the dates indicated.
As of December 31,
2025 2024 2023
Domestic Currency Foreign Currency Domestic Currency Foreign Currency Domestic Currency Foreign Currency
(in millions of R$)
Assets:
Cash and balances with the Brazilian Central Bank 5,452 14,780 14,584 22,500 8,959 14,164
Debt instruments 271,544 8,065 262,561 21,613 227,118 17,297
Loans and amounts due from credit institutions 34,750 1,199 27,300 2,879 23,885 1,839
Loans and advances to customers 481,275 83,273 482,117 83,973 444,022 73,955
Equity Instruments 4,933 22 2,934 55 3,339 99
Total assets 797,955 107,339 789,495 131,020 707,323 107,354
Liabilities:
Financial Liabilities at amortized cost:
Deposits from the Brazilian Central Bank and Deposits from credit institutions 44,745 102,122 46,181 112,384 43,196 75,316
Customer deposits 542,022 51,307 552,831 52,237 538,500 44,721
Marketable debt securities(1) 141,873 18,053 119,827 19,851 116,771 13,612
Debt instruments eligible to compose capital 28,114 — 23,138 — 19,627 —
Other financial liabilities 67,414 — 78,805 372 64,680 114
Total liabilities 824,168 171,481 820,783 184,844 782,774 133,763
(1) In the year ended December 31, 2023, we revised the definition of marketable debt securities to include the line items “Financial liabilities measured at fair value in income held for trading” and “Financial liabilities at amortized cost,” instead of only including “Financial liabilities at amortized cost.” The amounts presented as of December 31, 2025, 2024 and 2023 reflect this change.
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Loan Portfolio
As of December 31, 2025, our gross loans
and advances to customers totaled R$602.0 billion (47.4% of our total assets). Net impairment losses, loans and advances to customers
totaled R$564.5 billion as of December 31, 2025 (44.5% of our total assets). In addition to loans, we had outstanding loan commitments
drawable by third parties totaling R$235.5 billion, R$205.3 billion and R$177.5 billion, as of December 31, 2025, 2024 and 2023,
respectively.
Types of Loans by Type of Customer
The majority of the loans we have outstanding
are to borrowers domiciled in Brazil and are denominated in reais. For each loan category, we maintain specific risk management
policies that are in line with the standards of the Santander Group, which in turn, are managed and monitored by our board of officers
through the credit committee. The credit approval process for each loan category is structured primarily around our business segments.
See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Credit Risk” for details on our credit approval
policies for retail and wholesale lending.
Our
loan portfolio does not have any specific concentration exceeding 10% of our total loans. As of December 31, 2025, 1.0% of our loan
portfolio is allocated to our largest debtor and 3.3% to the next 10 largest debtors.
For further information about the breakdown
of our Loans and Maturity see sections “a – Breakdown” and “b – Detail” of note “9 – Loans
and advances to customers” to our audited consolidated financial statements included in this annual report.
Maturity
The following table sets forth an analysis
by maturity of our loans, by type and status, as of December 31, 2025.
As of December 31, 2025
Less than 1 year % of total Between 1 and 5 years % of total Between 5 and 15 years % of total More than 15 years % of total Total % of total
(in millions of R$)
Commercial and industrial 162,251 50.41 % 78,661 39.14 % 6,016 11.43 % — 0.00 % 246,928 41.02 %
Real estate 6,005 1.87 % 13,062 6.50 % 25,076 47.64 % 26,015 98.09 % 70,158 11.65 %
Installment loans to individuals 152,095 47.25 % 107,266 53.37 % 21,491 40.83 % 507 1.91 % 281,359 46.73 %
Lease financing 1,531 0.48 % 2,010 1.00 % 54 0.10 % — 0.00 % 3,595 0.60 %
Loans and advances to customers, gross 321,882 100.00 % 200,999 100.00 % 52,637 100.00 % 26,522 100.00 % 602,040 100.00 %
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Fixed and Variable Rate Loans
The following table sets forth a breakdown
of our fixed and variable rate loans by type and status as of December 31, 2025.
Fixed and Variable Rate Loans Maturing in
Less than One Year Between One and Five Years Between Five and 15 years Over 15 Years Sub-total More than One Year Total
(in millions of R$, except percentages)
Fixed rate
Commercial and industrial 102,926 49,893 2,906 — 52,799 155,725
Real estate 35 106 139 114 359 394
Installment loans to individuals 138,078 105,236 21,120 507 126,863 264,941
Lease financing 426 648 4 — 653 1,079
Total Fixed rate 241,465 155,884 24,169 621 180,674 422,139
Variable rate
Commercial and industrial 59,326 28,768 3,111 — 31,878 91,204
Real estate 5,969 12,956 24,937 25,901 63,794 69,764
Installment loans to individuals 14,017 2,030 371 — 2,401 16,418
Lease financing 1,105 1,362 49 — 1,411 2,516
Total Variable rate 80,417 45,115 28,468 25,901 99,484 179,901
Total 321,882 200,999 52,637 26,522 280,158 602,040
Non-Current Assets Held for Sale
For further information, see note 10 to
our audited consolidated financial statements included elsewhere in this annual report.
Liabilities
Deposits
The principal components of our deposits
are customer demand, time and notice deposits, and international and domestic interbank deposits. Our retail customers are the principal
source of our demand, time and notice deposits.
For further information, see notes 16
and 17 to our audited consolidated financial statements included elsewhere in this annual report.
The following table shows the maturity of
time deposits (excluding inter-bank deposits) at the dates indicated. Large denomination customer deposits may be a less stable source
of funds than demand and savings deposits.
As of December 31, 2025
Domestic International
(in millions of R$)
Under 3 months 392,287 57,784
3 to 6 months 33,361 25,671
6 to 12 months 76,659 41,406
Over 12 months 95,260 17,768
Total 597,567 142,629
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The following table presents the total amount
of uninsured deposits, and total uninsured deposits by time remaining until maturity as of December 31, 2025.
Maturing
As of December 31, 2025 Three Months or Less Over Three Months Through Six Months Over Six Months Through 12 Months Over 12 months
(in millions of R$)
Total uninsured deposits(1) 327,487 147,862 28,980 60,038 90,607
(1) We define uninsured deposits as securities from credit institutions and customers that do not have collateral attached to them.
Short-Term Borrowings
The following table shows our short-term
borrowings consisting of government securities that we sold under agreements to repurchase for purpose of funding our operations.
As of December 31, 2025
2025 2024 2023
Amount Average Rate Amount Average Rate Amount Average Rate
(in millions of R$, except percentages)
Securities sold under agreements to repurchase:
As of December 31 153,292 10.84 % 150,478 9.90 % 134,794 10.60 %
Average during the period (1) 160,736 14.71 % 140,721 13.25 % 118,433 14.98 %
Maximum month-end balance 169,488 160,034 135,858
Total short-term borrowings at year end 153,292 150,478 134,794
(1) The average annual balance sheet data has been calculated based upon the average of the monthly balances at 12 dates: for each of the month-end balances of the applicable year.
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Allowance for Loan Losses
Changes in Allowances for Impairment Losses on
the Balances of “Loans and receivables”
The following tables analyze changes in
our allowances for impairment losses for the periods indicated. For further information regarding these changes, see “Item 5. Operating
and Financial Review and Prospects—A. Operating Results—Results of Operations for the Years Ended December 31, 2025,
2024 and 2023—Results of Operations—Impairment Losses on Financial Assets (Net).”
As of December 31,
2025 2024 2023
(in millions of R$)
Balance at beginning of year 35,669 35,152 35,212
Impairment losses charged to income for the year 27,492 25,974 26,544
Write-off of impaired balances against recorded impairment allowance (22,503) (25,402) (26,627)
Exchange variation 36 (55) 24
Balance at end of year 40,694 35,669 35,153
Of which:
Loans and advances to customers 37,491 33,598 33,559
Loans and amounts due from credit institutions 1 1 8
Provision for debt instruments 3,202 2,070 1,586
Recoveries of loans previously written off(1) 1,415 994 1,382
(1) Impairment losses on financial assets, net, as reported in our consolidated financial statements, reflect net provisions for credit losses less recoveries of loans previously written off.
As
of December 31, 2025, our allowance for impairment losses for the periods indicated amounted to R$40,694 million, an increase of
R$5,025 million, or 14.1%, compared to R$35,669 million as of December 31, 2024. This increase reflects continued growth of our loan
portfolio—particularly in SMEs, Auto Finance and Real Estate—combined with a disciplined and forward-looking approach to risk
management, including prudent reserve strengthening among Individuals, especially in lower-income segments, and within Corporate &
SMEs, primarily smaller companies.
As of December 31, 2024, our allowance
for impairment losses for the periods indicated amounted to R$35,669 million, an increase of R$515.9 million, or 1.5%, compared to R$35,153
million as of December 31, 2023, which was primarily due to growth in our retail portfolio, offset by the decrease in provisioning
due to the restructuring of the indebtedness of a large customer in our wholesale segment.
For more information, see “Item
5. Operating and Financial Review and Prospects—A. Operating Results—Results of Operations.”
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Allowance by Type of Borrower
The table below shows a breakdown of recoveries,
net provisions and write-offs against credit loss allowance by type of borrower for the periods indicated.
For the Year Ended December 31,
2025 2024 2023
(in millions of R$)
Recoveries of loans previously charged off(1) 1,415 994 1,382
Commercial and industrial 520 396 946
Real estate – construction 91 50 96
Installment loans to individuals 802 543 338
Lease finance 2 5 2
Impairment losses recognized in profit or loss(1) 27,492 25,974 26,544
Commercial and industrial 7,558 6,030 6,809
Real estate – construction 290 248 344
Installment loans to individuals 19,632 19,681 19,389
Lease finance 13 15 2
Write-off of impaired balances against recorded impairment allowance (22,503) (25,402) (26,627)
Commercial and industrial (4,950) (7,448) (7,137)
Real estate – construction (121) (77) (209)
Installment loans to individuals (17,428) (17,875) (19,276)
Lease finance (4) (2) (4)
(1) Impairment losses on financial assets, net, as reported in our consolidated financial statements, reflect net provisions for credit losses less recoveries of loans previously written off.
The table below shows a breakdown of allowances
for credit losses by type of borrowers and the percentage of loans in each category as a share of total loans at the date indicated.
As of December 31,
2025 % of Total Loans 2024 % of Total Loans 2023 % of Total Loans
(in millions of R$, except percentages)
Borrowers
Commercial and industrial 13,121 32.2 10,513 29.5 11,931 33.9
Real estate 759 1.9 590 1.7 418 1.2
Installment loans to individuals 26,784 65.8 24,545 68.8 22,796 64.8
Lease financing 30 0.1 21 0.1 8 —
Total 40,694 100.0 35,669 100.0 35,153 100.0
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Internal Risk Rating
The following table presents a breakdown
of our portfolio by internal risk rating, at the dates indicated:
As of December 31,
2025 2024 2023
(in millions of R$)
Internal Risk Rating
Low 411,269 443,671 391,985
Medium-low 135,638 105,286 104,232
Medium 18,147 16,421 18,458
Medium-high 11,601 11,576 10,788
High 25,385 22,734 26,074
Loans and advances to customers, gross 602,040 599,688 551,536
Note: In the year ended
December 31, 2025, we changed the criteria applicable to the table above, which incorporates expected loss criteria for the classification
of risk levels. The amounts presented as of December 31, 2025, 2024 and 2023 reflect these changes.
For further information
on our internal risk rating levels and their corresponding probability of default, see “Item 11. Quantitative and Qualitative Disclosures
about Market Risk—Credit Risk—Credit Monitoring.”
Renegotiation Portfolio
The renegotiation portfolio for the year
ended on December 31, 2025 amounted to R$43,625 million, compared to R$41,858 million for the same period in 2024, an increase of R$1,767
million or 4.2%. These levels are considered appropriate for the characteristics of these loans and advances to customers.
The renegotiation portfolio for the year
ended on December 31, 2024 amounted to R$41,858 million, compared to R$46,914 million for the same period in 2023, a decrease of R$5,055
million or 10.8%. This portfolio includes loans and advances to customers and debt instruments that were extended and/or modified to facilitate
repayment under conditions agreed upon with customers.
The following table presents a breakdown
of our renegotiation portfolio by type of customer, allowances for impairment losses and our coverage ratio at the dates indicated:
As of December 31,
2025 2024 2023
(in millions of R$, except percentages)
Portfolio Provision Portfolio Provision Portfolio Provision
Real estate 93 13 85 8 189 24
Lease financing 16 1 20 9 — —
Installment loans to individuals 27,173 11,145 26,391 11,277 31,244 12,620
Commercial and industrial 16,344 7,065 15,362 6,412 15,481 6,354
Total 43,625 18,224 41,858 17,707 46,914 18,999
Balances are deemed to be impaired when
there are reasonable doubts as to their full recovery and/or the collection of the related interest for the amounts on the dates indicated
in the loan agreement, after taking into account the collateral guarantees received to secure (fully or partially) collection of the related
balances.
As established in our internal renegotiation
policy, in order for renegotiated products to be classified as performing, the customer must be in compliance with the terms of the relevant
product for at least 12 consecutive months. Loan modifications are considered renegotiations when are originated from financial difficulties.
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We increased our efforts regarding the
collection of loans that are less than 90 days past due and also in relation to written-off loans. We are also continuing with our strategy
of granting loans to persons with a low-risk profile and higher levels of collaterals and guarantees.
Impaired Assets
The following table shows our impaired assets,
excluding country risk.
As of December 31,
2025 2024 2023
(in millions of R$, except percentages)
Impaired assets
Past due and other impaired assets(1) 48,900 42,242 39,887
Impaired assets as a percentage of total loans 8.1 % 7.0 % 7.2 %
Net loan charge-offs as a percentage of total loans 3.7 % 4.2 % 4.8 %
Net loan charge-offs as a percentage of average total loans 3.8 % 4.4 % 5.0 %
(1) Includes as of December 31, 2025, R$18,548 million of doubtful loans (R$15,912 million in 2024 and R$15,753 million in 2023) that were not past-due. Through the year ended December 31, 2024, we calculated doubtful loans by reference to loans that were not past due but were subject to a default at some point during their term.
Evolution of Impaired Assets
Our impaired assets increased by 15.8%,
or R$6,657 million, to R$48,900 million as of December 31, 2025, compared to R$42,242 million as of December 31, 2024. Provisions for
impairment losses, including total recoveries of loans previously charged off, increased by 14.1%, or R$5,025 million, to R$40,694 million
as of December 31, 2025, compared to R$35,669 million as of December 31, 2024. Offsetting these effects were recoveries of R$1,415 million
on loans previously written off as of December 31, 2025, and R$994 million as of December 31, 2024.
We believe the provisions made were adequate
to cover all known or reasonably probable losses or incurred losses in the credit portfolio of loans and other assets as of December 31,
2025.
The following table shows the changes in
our impaired assets at the dates indicated:
As of December 31,
2025 2024 2023
(in millions of R$)
Balance at beginning of year 42,242 39,887 39,224
Net additions 30,132 30,069 30,394
Write-offs (23,475) (27,714) (29,731)
Balance at end of year 48,900 42,242 39,887
The amount of “net additions”
for any period is assets that became impaired in that period less assets that were impaired but became performing in that period. In 2025,
the debt restructuring options were improved to maintain consistent levels of “net additions” and “write-offs.”
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Impaired Assets by Type of Customer
The following table shows the amount of
our impaired assets by type of customers as of the dates indicated:
As of December 31,
2025 2024 2023 % Change 2025/2024 % Change 2024/2023
(in millions of R$, except percentages)
Commercial and industrial 17,291 13,175 16,292 31.2 (19.1)
Real estate 1,809 1,736 1,352 4.2 28.4
Installment loans to individuals 29,779 27,284 22,239 9.1 22.7
Lease financing 21 47 4 (56.2) 1191.4
Total 48,900 42,242 39,887 15.8 5.9
Commercial and Industrial
Impaired assets in the commercial and
industrial loans portfolio amounted to R$17,291 million as of December 31, 2025, an increase of R$4,116 million, or 31.2%, compared to
R$13,175 million as of December 31, 2024. This increase reflects continued growth in the SMEs portfolio, combined with a more challenging
credit environment—driven by higher-for-longer interest rates—affecting Corporate & SMEs, primarily smaller companies.
Impaired assets in the commercial and
industrial loans portfolio amounted to R$13,175 million as of December 31, 2024, a decrease of R$3,117 million, or 19.1% compared to R$16,292
million as of December 31, 2023. This decrease was mainly due to the restructuring of the indebtedness of a large customer in our wholesale
segment.
Real Estate
Impaired
assets in the real estate lending portfolio totaled R$1,809 million on December 31, 2025, an increase of R$73 million, or 4.2%, compared
to R$1,736 million as of December 31, 2024. This was primarily due to a higher growth in this portfolio.
Impaired
assets in the real estate lending portfolio totaled R$1,736 million on December 31, 2024, an increase of R$384 million, or 28.4%, compared
to R$1,352 million as of December 31, 2023. This increase in impaired assets in this portfolio was primarily due to the growth of this
portfolio and challenging macroeconomic conditions.
Installment Loans to Individuals
Impaired assets in the installment loans
to individuals lending portfolio totaled R$29,779 million as of December 31, 2025, with an increase of R$2,495 million, or 9.1%, compared
to 2024. This increase reflects continued growth in the Auto Finance and Real Estate portfolios, combined with a more challenging credit
environment affecting Individuals—particularly in lower-income segments.
Impaired assets in the installment loans
to individuals lending portfolio totaled R$27,284 million as of December 31, 2024, with an increase of R$5,045 million, or 22.7%, compared
to 2023. This increase in impaired assets in this portfolio was primarily due to the growth of this portfolio, changes in the methodology
applied to determine whether a loan is non-performing and challenging macroeconomic conditions affecting certain products such as our
financial products and services aimed at rural customers.
Lease Financing
Impaired
assets in the lease financing lending portfolio totaled R$21 million on December 31, 2025, a decrease of 56.2% or R$26 million, compared
to R$47 million as of December 31, 2024.
Impaired
assets in the lease financing lending portfolio totaled R$47 million on December 31, 2024, an increase of 1191.4%, or R$43 million, compared
to R$4 million as of December 31, 2023. This increase in impaired assets in this portfolio was concentrated in two specific clients.
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Methodology for Impairment Losses
We evaluate all loans regarding the provision
for impairment losses from credit risk. Loans are either individually evaluated for impairment, or collectively evaluated by grouping
similar risk characteristics. Loans that are individually evaluated for impairment losses are not evaluated collectively.
To measure the impairment loss on loans
individually evaluated for impairment, we consider the conditions of the borrowers, such as their economic and financial situation, level
of indebtedness, ability to generate income, cash flow, management, corporate governance and quality of internal controls, payment history,
industry expertise, contingencies and credit limits, as well as the characteristics of assets, such as their nature and purpose, type,
sufficiency and liquidity level guarantees and total amount of credit, as well as based on historical experience of impairment and other
circumstances known at the time of evaluation.
To measure the impairment loss on loans
collectively evaluated for impairment, we segregate financial assets into groups considering the characteristics and similarity of credit
risk. In other words, according to segment, the type of assets, guarantees and other factors associated such as the historical experience
of impairment and other circumstances known at the time of assessment.
The expected loss measurement is made
through the following factors:
• Exposure at Default (EAD): is the amount of a transaction exposed to credit risk including the ratio of current outstanding balance exposure that could be provided at default. Developed models incorporate hypotheses considering possible modifications to the payment schedule.
• Probability of Default (PD): is defined as the probability that the counterparty will be unable to meet its obligations to pay the principal and / or interest. For IFRS 9 purposes, two types of PD are considered:
◦ PD - 12 months (Stage 1): The probability that the financial instrument will default within the next 12 months.
◦ PD – lifetime (Stages 2 and 3): The probability that the transaction will default between the balance sheet date and the residual maturity date of the transaction.
The standard requires that relevant future
information be considered when estimating these parameters.
• Loss Given Default (LGD): is the loss produced in the event of default. In other words, this reflects the percentage of exposure that could not be recovered in the event of a default. It depends mainly on the collateral, which is considered as credit risk mitigating factors associated with each financial asset, and the future cash flows that are expected to be recovered. According to the standard, forward-looking information must be taken into account in the estimation.
• Discount rate: the rate applied to the future cash flows estimated during the expected life of the asset, and which is equal to the net present value of the financial instrument at its carrying value.
In order to estimate the above parameters,
the Bank has applied its experience in developing internal models for parameters calculation both for regulatory and management purposes.
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Loans Past Due for Less Than 90 Days but Not Classified
as Impaired
The following table shows the loans past
due for less than 90 days but not classified as impaired at the dates indicated:
As of December 31,
2025 % of total 2024 % of total
(in millions of R$, except percentages)
Commercial and industrial 7,239 24.7 7,440 26.0
Mortgage loans 6,694 22.8 6,047 21.1
Installment loans to individuals 15,331 52.3 15,124 52.8
Lease financing 30 0.1 37 0.1
Total (*) 29,294 100.0 28,648 100.0
(*) Refers only to loans past due between 1 and 90 days.
Impaired Asset Ratios
Our credit risk exposure portfolio totaled
R$778.9 billion as of December 31, 2025, an increase of R$28.5 billion compared to R$750.4 billion as of December 31, 2024. Our impaired
assets increased by R$6.7 billion in the same period, from R$42.2 billion to R$48.9 billion. The default rate increased by 0.6 p.p. in
2025 in comparison to 2024, reflecting a deterioration of credit in our individuals business, particularly among lower-income segments,
and among Corporates & SMEs, driven by smaller companies.
The following table shows the ratio of our
impaired assets to total credit risk exposure and our coverage ratio at the dates indicated.
As of December 31,
2025 2024 2023
(in millions of R$, except percentages)
Loans and advances to customers, gross 602,040 599,688 551,536
Impaired assets 48,900 42,242 39,887
Provisions for impairment losses 40,694 35,669 35,153
Credit risk exposure Non-GAAP – customers(1) 778,881 750,357 719,881
Ratios
Impaired assets to credit risk exposure 6.3 % 5.6 % 5.5 %
Coverage ratio(2) 83.2 % 84.4 % 88.1 %
Impairment losses (29,540) (28,484) (28,008)
Impairment losses on financial assets (net)(3) (29,540) (28,484) (28,008)
(1) Credit risk exposure is a non-GAAP financial measure. Credit risk exposure is the sum of the amortized cost amounts of loans and advances to customers (including impaired assets) amounting to R$778,881 million as of December 31, 2025, guarantees amounting to R$58,917 million as of December 31, 2025, and private securities (securities issued by nongovernmental entities) amounting to R$117,924 million as of December 31, 2025. We include off-balance sheet information in this measure to better demonstrate our total managed credit risk. For further information, see “Item 3. Key Information—A. Selected Financial Data—Reconciliation of Non-GAAP Measures and Ratios to Their Most Directly Comparable IFRS Financial Measures.”
(2) Provisions for impairment losses as a percentage of impaired assets.
(3) As of December 31, 2025, 2024 and 2023, our total of impairment losses on financial instruments included R$3,202 million, R$2,070 million and R$1,586 million, respectively, relating to debt instruments.
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The following chart shows our impaired
assets to credit risk ratio from 2023 through 2025:
Selected Credit Ratios
The following table presents our selected
credit ratios, along with each component of the ratio’s calculation, as of December 31, 2025, 2024 and 2023.
The following information for Santander
Brasil should be read in conjunction with, the consolidated financial statements and related notes contained elsewhere herein, as well
as “Item 3. Key Information—A. Selected Financial Data” and “Item 5. Operating and Financial Review and Prospects.”
As of December 31,
2025 2024 2023
(in millions of R$, except percentages)
Allowance for credit losses to total loans outstanding
Allowance for credit losses 40,694 35,669 35,153
Total loans outstanding 602,040 599,688 551,536
Credit ratio 6.8 % 5.9 % 6.4 %
Nonaccrual loans to total loans outstanding
Total nonaccrual loans outstanding 48,900 42,242 39,887
Total loans outstanding 602,040 599,688 551,536
Credit ratio 8.1 % 7.0 % 7.2 %
Allowance for credit losses to nonaccrual loans
Allowance for credit losses 40,694 35,669 35,153
Total nonaccrual loans outstanding 48,900 42,242 39,887
Credit ratio 83.2 % 84.4 % 88.1 %
Net charge-offs during the period to average loans outstanding
Net charge-offs during the period (22,503) (25,402) (26,627)
Average amount outstanding 584,963 572,454 533,650
Credit ratio 3.8 % 4.4 % 5.0 %
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As of December 31,
2025 2024 2023
(in millions of R$, except percentages)
Commercial and industrial:
Net charge-offs during the period (4,950) (7,448) (7,137)
Average amount outstanding 265,279 261,276 256,043
Credit ratio 1.9 % 2.9 % 2.8 %
Real estate:
Net charge-offs during the period (121) (77) (209)
Average amount outstanding 65,462 63,554 60,379
Credit ratio 0.2 % 0.1 % 0.3 %
Installment loans to individuals:
Net charge-offs during the period (17,428) (17,875) (19,276)
Average amount outstanding 251,125 244,644 214,236
Credit ratio 6.9 % 7.3 % 9.0 %
Lease financing:
Net charge-offs during the period (4) (2) (4)
Average amount outstanding 3,098 2,980 2,993
Credit ratio 0.1 % 0.1 % 0.1 %
Allowance for credit losses to total loans outstanding
In 2025, our allowance for credit losses
to total loans outstanding credit ratio increased by 0.8 percentage points, from 5.9% as of December 31, 2024 to 6.8% as of December 31,
2025. This increase was primarily driven by a 14.1% rise in the allowance for credit losses and a 0.4% increase in total loans outstanding.
The growth in the allowance reflects continued growth of our loan portfolio—particularly in SMEs, Auto Finance and Real Estate—combined
with a disciplined and forward-looking approach to risk management, including prudent reserve strengthening among Individuals, especially
in lower-income segments, and within Corporate & SMEs, primarily smaller companies.
In
2024, our allowance for credit losses to total loans outstanding credit ratio decreased by 0.4 percentage points, from 6.4% as of December
31, 2023 to 5.9% as of December 31, 2024. This was primarily due to the growth, and improvements in the composition, of our portfolio
and the restructuring of the indebtedness of a large customer in our wholesale segment.
Nonaccrual loans to total loans outstanding
In 2025, our nonaccrual loans to total
loans outstanding credit ratio increased by 1.1 percentage points, from 7.0% as of December 31, 2024 to 8.1% as of December 31, 2025.
This increase was primarily driven by a 15.8% rise in nonaccrual loans and a 0.4% increase in total loans outstanding. The growth in nonaccrual
loans reflects a more challenging credit environment affecting Individuals—particularly in lower-income segments—and Corporate
& SMEs, mainly smaller companies.
In
2024, our nonaccrual loans to total loans outstanding credit ratio decreased by 0.2 percentage points, from 7.2% as of December 31, 2023
to 7.0% as of December 31, 2024. This was primarily due to the growth of the retail portfolio and the restructuring of the indebtedness
of a large customer in our wholesale segment.
Allowance for credit losses to nonaccrual loans
In 2025, our allowance for credit losses
to nonaccrual loans credit ratio decreased by 1.2 percentage points, from 84.4% as of December 31, 2024 to 83.2% as of December 31, 2025.
The decrease primarily reflects a 15.8% increase in nonaccrual loans, which outpaced the 14.1% increase in the allowance for credit losses.
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In 2024, our allowance for credit losses
to nonaccrual loans credit ratio decreased by 3.7 percentage points, from 88.1% as of December 31, 2023 to 84.4% as of December 31, 2024.
This was primarily due to the growth of the retail portfolio and the restructuring of the indebtedness
of a large customer in our wholesale segment.
Net charge-offs during the period to average loans
outstanding
In 2025, our net charge-offs during
the period to average loans outstanding credit ratio decreased by 0.6 percentage points, from 4.4% as of December 31, 2024 to 3.8% as
of December 31, 2025. This decrease was primarily driven by a lower volume of loan charge-offs and higher post-charge-off recoveries.
In
2024, our net charge-offs during the period to average loans outstanding credit ratio decreased by 0.6 percentage points, from 5.0% as
of December 31, 2023 to 4.4% as of December 31, 2024. This was primarily due to the growth of the credit portfolio and a lower volume
of loan write-offs.
Commercial and Industrial Loans
In 2025, our net charge-offs during the period
to average loans outstanding credit ratio for commercial and industrial loans decreased by 1.0
percentage points, from 2.9% as of December 31, 2024 to 1.9% as of December 31, 2025. This
decrease was primarily driven by a lower volume of loan charge-offs and higher post-charge-off recoveries.
In
2024, our net charge-offs during the period to average loans outstanding credit ratio for commercial and industrial loans increased by
0.1 percentage points, from 2.8% as of December 31, 2023 to 2.9% as of December 31, 2024. This was primarily due to the restructuring
of the indebtedness of a large customer in our wholesale segment.
Real Estate Loans
In 2025, our net charge-offs during the
period to average loans outstanding credit ratio for real estate loans increased by 0.1 percentage points, from 0.1% as of December 31,
2024 to 0.2% as of December 31, 2025. This was primarily due to a higher volume of loan charge-offs in this segment.
In
2024, our net charge-offs during the period to average loans outstanding credit ratio for real estate loans decreased by 0.2 percentage
points, from 0.3% as of December 31, 2023 to 0.1% as of December 31, 2024. This was primarily due to the lower volume of loan write-offs.
Installment Loans to Individuals
In 2025, our net charge-offs during the
period to average loans outstanding credit ratio for installment loans to individual loans decreased by 0.4 percentage points, from 7.3%
as of December 31, 2024 to 6.9% as of December 31, 2025. This decrease was primarily driven by a slightly lower volume of net charge-offs,
as well as a higher volume of average loans outstanding, reflecting growth in the Auto Finance and Real Estate segments.
In
2024, our net charge-offs during the period to average loans outstanding credit ratio for installment loans to individual loans decreased
by 1.7 percentage points, from 9.0% as of December 31, 2023 to 7.3% as of December 31, 2024. This was primarily due to the growth of the
retail portfolio and a lower volume of loan write-offs.
Lease Financing Loans
In 2025, our net charge-offs during the
period to average loans outstanding credit ratio for lease financing loans remained virtually stable, from 0.1% as of December 31, 2024
to 0.1% as of December 31, 2025.
In
2024, our net charge-offs during the period to average loans outstanding credit ratio for lease financing loans decreased by 0.1 percentage
points, from 0.1% as of December 31, 2023 to 0.1% as of December 31, 2024. The net charge-offs of this portfolio remained stable.
4C. Organizational Structure
Santander Group controls Santander Brasil
directly and indirectly through Santander Spain, Sterrebeeck B.V., or “Sterrebeeck,” and Grupo Empresarial Santander, S.L.
which are controlled subsidiaries of the Santander Group. As of January 31, 2026, Santander Spain held, directly and indirectly, 89.53%
of our voting stock.
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The following table presents the name,
country of incorporation or residence and proportion of ownership interest of our main subsidiaries in accordance with the criteria for
consolidation pursuant to IFRS as of December 31, 2025:
Activity Country of Incorporation Ownership Interest
Controlled by Banco Santander
Santander Sociedade de Crédito, Financiamento e Investimento S.A. (new name of Aymoré Crédito, Financiamento e Investimento S.A.) Financial Brazil 100.00 %
Esfera Fidelidade S.A. Services Provision Brazil 100.00 %
EmDia Serviços Especializados em Cobrança Ltda. Debt Collection and Credit Recovery Management Brazil 100.00 %
Return Capital Gestão de Ativos e Participações S.A. Debt Collection and Credit Recovery Management Brazil 100.00 %
Rojo Entretenimento S.A. Services Provision Brazil 94.60 %
Sanb Promotora de Vendas e Cobrança Ltda. Provision of Digital Media Services Brazil 100.00 %
Sancap Investimentos e Participações S.A. (“Sancap”) Holding Brazil 100.00 %
Santander Brasil Administradora de Consórcio Ltda. Consortium Brazil 100.00 %
Santander Corretora de Câmbio e Valores Mobiliários S.A. Brokerage Brazil 99.99 %
Santander Corretora de Seguros, Investimentos e Serviços S.A. Brokerage Brazil 100.00 %
Santander Holding Imobiliária S.A. Holding Brazil 100.00 %
Santander Leasing S.A. Arrendamento Mercantil (“Santander Leasing”) Leasing Brazil 100.00 %
F1RST Tecnologia e Inovação Ltda. Provision of Technology Services Brazil 100.00 %
Pulse Client Expert Ltda. (new name of SX Negócios) Provision of Call Center Services Brazil 100.00 %
Tools Soluções e Serviços Compartilhados Ltda. Services Provision Brazil 100.00 %
Santander Sociedade de Crédito, Financiamento e Investimento S.A. (new name of Aymoré Crédito, Financiamento e Investimento S.A.)
Banco Hyundai Capital Brasil S.A. Bank Brazil 50.00 %
Solution 4Fleet Consultoria Empresarial S.A. Technology Brazil 100.00 %
Subsidiaries of Santander Leasing
Banco Bandepe S.A. Bank Brazil 100.00 %
Santander Distribuidora de Títulos e Valores Mobiliários S.A. Securities Dealer Brazil 100.00 %
Subsidiaries of Sancap
Santander Capitalização S.A. Capitalization Brazil 100.00 %
Evidence Previdência S.A. Pension Brazil 100.00 %
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Activity Country of Incorporation Ownership Interest
Subsidiary of Santander Corretora de Seguros
América Gestão Serviços em Energia S.A. Energy Brazil 70.00 %
Fit Economia de Energia S.A. Energy Trading Brazil 65.00 %
Subsidiaries of Santander Distribuidora de Títulos e Valores Mobiliários S.A.
Toro Corretora de Títulos e de Valores Mobiliários Ltda. Broker Brazil 48.00 %
Santander Investimentos Sociedade Prestadora de Serviços de Ativos Virtuais S.A. Investments Brazil 13.23 %
Subsidiary of Toro Corretora de Títulos e de Valores Mobiliários Ltda.
Santander Investimentos Sociedade Prestadora de Serviços de Ativos Virtuais S.A. Investments Brazil 86.77 %
Jointly Controlled by Sancap
Santander Auto S.A. Insurance Company Brazil 50.00 %
Consolidated Investment Funds
Santander Fundo de Investimento Amazonas Multimercado Crédito Privado de Investimento no Exterior Investment Fund Brazil (a)
Santander Fundo de Investimento Diamantina Multimercado Crédito Privado de Investimento no Exterior Investment Fund Brazil (a)
Santander Fundo de Investimento Guarujá Multimercado Crédito Privado de Investimento no Exterior Investment Fund Brazil (a)
Santander SBAC II Renda Fixa Curto Prazo Investment Fund Brazil (a)
Santander Paraty QIF PLC Investment Fund Brazil (a)
Venda de Veículos Fundo de Investimento em Direitos Creditórios (Venda de Veículos FIDC)
Prime 16 – Fundo de Investimento Imobiliário Investment Fund Brazil (a)
Santander FI Hedge Strategies Fund Real Estate Investment Fund Brazil (a)
Fundo de Investimento em Direitos Creditórios Multisegmentos NPL Ipanema VI Investment Fund Brazil (a)
Santander Hermes Multimercado Crédito Privado Infraestrutura Fundo de Investimentos Investment Fund Brazil (a)
Fundo de Investimentos em Direitos Creditórios Atacado Investment Fund Brazil (a)
Atual—Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior Investment Fund Brazil (a)
Getnet Fundo De Investimento Em Direitos Creditórios Investment Fund Brazil (a)
Santander Flex Fundo De Investimento Direitos Creditórios Investment Fund Brazil (a)
San Créditos Estruturado Investment Fund Brazil (a)
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Activity Country of Incorporation Ownership Interest
D365 – Fundo De Investimento em Direitos Creditórios Investment Fund Brazil (a)
Fundo de Investimento em Direitos Creditórios Tellus Investment Fund Brazil (a)
Fundo de Investimento em Direitos Creditórios Precato IV Investment Fund Brazil (a)
Santander Hera Renda Fixa Fundo Incentivado de Investimento em Infraestrutura Responsabilidade Limitada Investment Fund Brazil (a)
San Preca Federal I Fundo De Investimento Em Direitos Creditórios - Responsabilidade Limitada; Investment Fund Brazil (a)
Fundo De Investimento Em Direitos Creditórios Conretorno - Responsabilidade Limitada; Investment Fund Brazil (a)
Ararinha Fundo de Investimento em Renda Fixa Longo Prazo Investment Fund Brazil (a)
Hyundai Fundo de Investimento em Direitos Creditórios Investment Fund Brazil (a)
Santander Módulo MX III Renda Fixa Referenciado Investment Fund Brazil (a)
Santander Módulo SINQIA Renda Fixa Referenciado Investment Fund Brazil (a)
Santander Módulo SINQIA II Renda Fixa Referenciado Investment Fund Brazil (a)
Santander Módulo SINQIA III Renda Fixa Referenciado Investment Fund Brazil (a)
Terras Fundo de Investimento nas Cadeias Produtivas do Agronegocio Investment Fund Brazil (a)
(a) Company to which we are exposed or have rights to variable returns and have the ability to affect those returns by making certain decisions in accordance with IFRS 10 – Consolidated Financial Statements. We and/or our subsidiaries hold 100% of the quotas of these investment funds.
4D. Property, Plant and Equipment
We operate
four major administrative operational centers, all of which are owned properties. Additionally, as of December 31, 2025, we owned 236
properties for the activities of our banking network and leased 1,082 properties for the same purpose. For further information about the
location of our branches, see “—B. Business Overview—Customer Service Channels—Physical Network.” Our headquarters
are located at Avenida Presidente Juscelino Kubitschek, 2041, Suite 281, Block A, Condomínio WTORRE JK, Vila Nova Conceição,
04543-011, in the city of São Paulo, state of São Paulo, Federative Republic of Brazil.