Scenario and Strategy

Economic Scenario

2018 was marked by the increase of uncertainties and volatility in the international environment, mainly associated with prospects for the realignment of financial conditions connected to the evolution of economic activity in the main world economies and to the increase of commercial tensions. With effect, and despite having shown consistently expansion indicators derived by low signs of idleness in the labor market and controlled inflation the US economy started to present signs of moderation, especially in real estate investments, in a context of hiking interest rates. On the other hand, lower economic activity and absence of inflationary pressures in Europe drove the cautious stance of the monetary policy within the continent, without altering interest rates and with the gradual reduction of economic stimuli. The Chinese economy, although facing deceleration prospects, sustained growth trends compatible with that of the yearly growth target set for the country and with the ongoing rebalancing process.

In Brazil, regardless of the more challenger external environment and the domestic uncertainties, the Brazilian economic activity has sustained its gradual recovery trend, in an environment that mixes high idleness and current inflation rates, with inflationary expectations in levels compatible with inflation targets, despite the occurrence of adverse shocks throughout the year. Retail business and the industry increased in the period, in line with the gradual improvement of credit market, particularly within the segment of individuals due to the reduction of household indebtedness and the monetary policy measures, with the Selic interest rate down to 6.50% p.a. at the end of 2018.

In line with the national dynamics, the economy of Rio Grande do Sul continued on a moderate growth path throughout 2018. This movement combined, on one hand, the positive evolution of the trade, services and industry sectors and, on the other hand, the negative effects of adverse shocks, particularly the slowdowns in the logistics sector that too place in the middle of the year. In the same sense, the credit market has also contributed to the recovery of the state economy, with growth observed both in the individual and corporate portfolios. In turn, foreign trade in the State of Rio Grande do Sul performed positively in 2018, registering a surplus of US$9.5 billion in comparison to the positive balance of US$7.9 billion in the same period of 2017, resulting from increases of 16.7% and 13.7% in exports and imports, respectively.

Business Strategy

The year of 2018 was marked by the implementation of and improvements in the new business management model in use since 2017 by Banrisul. The institution continues to improve credit risk models for the retail segments of individual and companies and to reinforce processes of credit origination and recovery aimed at improving risk-adjusted net interest income and capturing new business opportunities, all supported by effective management of credit exposure and risk-based pricing models. Complementing the new management model, and focusing on commercial productivity, the Banrisul Mais program seeks to qualify service and commercial activities through the training of sales teams, the standardization of routines and the definition of commercial drivers.

The commercial activity remains centered on the individual segment, especially in payroll loans for public sector employee and retirees, as well as expanding service through the opening of new service areas and the formation of high-potential customer portfolios (the Afinidade segment), all seeking to improve business relationship. Drivers for the corporate segment d remained grounded on the special credit program for micro and small size enterprises (Banrisul Simple Credit), which include the use of entrepreneurial account and credit cards and the offering of Vero equipment, with solutions suitable according to the customer profile, credit operations with anticipation of receivables and credit with real collaterals for lower risk clients, in line with the new risk model. The strengthening of the Vero acquisition network is also a highlight for the Institution, a line of business for which new products and services were made available.

In the year of its 90Th anniversary, Banrisul remains focused on increasing its digital transformation process towards becoming a more modern, efficient and sustainable financial institution, ready for the future. In 2018, Banrisul created the Digital Transformation area, with end-to-end journeys with the use of agile processes. The prioritized initiatives aim to further accelerate the Bank‘s digital journey, which has being present into the greater offer of products and services via the Banrisul Digital application.

The interaction with its clients and the stakeholders occurs throughout the most diverse communication channels in use by the Bank. Marketing campaigns in 2018 focused on promoting products and services of the Bank, with the highlights being "Conta Universitária", "Banricompras", "Banrisul, o grande banco do sul" and "Banrisul Digital". Another important way of interacting with the community is through the sponsoring of projects utilizing tax benefit laws (Rouanet Law, Audiovisual, Sports Incentive Law) and the Banrisul Sponsorship Program, through which the Institution has helped promoting fairs and events in the cultural, sports, social, sustainability and health and education benefits arenas, throughout the state of Rio Grande do Sul.