board of directors’ letter

We have ended another year with results consistent with our goals in these 98 years of history. From each new cycle, we have learned lessons that have strengthened us and prepared us to continue our trajectory. We continue to value pragmatism and responsibility before our customers, stockholders, employees, and the society as a whole.

In 2022 we posted an 11% increase in net income, a return on annualized average equity of 19%, and a Tier I capital ratio of 13.5%. Additionally, we distributed R$8.4 billion in dividends and interest on own capital¹ during the year. It is worth highlighting our efficiency ratio, which stood at 41.2%² in 2022, reaching its lowest level in the historical series, with a year-on-year reduction of 280 bps.

We see a future in the financial industry with more intense competition and a change in the level of customer demand. Thus, we have reflected about our ambitions and proposed a new culture that has led us to a new corporate strategy guided by the following key elements: (i) to be increasingly more agile and always technologically updated; (ii) to have the passion for our clients as the driver of all our actions; and (iii) to maintain high levels of profitability to continue to grow in a sustainable way. Our teams have embraced these goals with a high level of enthusiasm and optimism about the bank’s future.

We have used a robust NPS ecosystem to manage and evolve customer satisfaction and engagement, through which we measure satisfaction across our products, channels and segments. We have received about 4 million NPS feedbacks and we had significant NPS increases in the individual and corporate clients, reaching 57% for businesses in the quality zone (NPS above 49 points) and 27% in the excellence zone (NPS above 75 points). 32% of the businesses closed the year at an all-time high.

We guide our investment decisions seeking to maintain consistency of sustainable profitability, based on a trade association agenda that offers us new technologies, an increase in scale, and complementary services for our clients. Illustrative examples of this agenda are: the Techfin Joint Venture (in partnership with Totvs), and acquisitions of strategic stakes in Orbia, Avenue, and Ideal. In April, the acquisition of an additional stake in the capital of XP Inc. was approved, equivalent to 11.36% in the original contract. In June, we reported the sale of part of our stake, maintaining a 9.96% stake in the total capital of XP Inc. Additionally, in July we reported the receipt of Banco Itaú Chile shares. As a result, we increased our stake in the total and voting capital of Banco Itaú Chile from 55.96% to 65.62%.

We continue with major developments in the ESG³ agendas. At COP27, we announced, together with Marfrig, Rabobank, Santander, Suzano, and Vale, the creation of Biomas, a company dedicated to forest restoration, conservation, and preservation activities in Brazil. Concurrently, we issued two green bonds, each of which raised R$1 billion, in line with promoting agenda of the transition to a low carbon economy.

Conscious of our role in society, we invested R$712 million in social projects focused on education, culture, mobility, diversity, and other areas, of which 75.3% were our own funds, not linked to the incentive laws.

Thank you very much and enjoy your reading,

Pedro Moreira Salles and Roberto Setúbal

Co-chairmen of the Board of Directors

1. In accordance with BRGAAP.

2.Efficiency ratio based on the managerial model in BRGAAP.

3. Environmental, Social and Corporate Governance.