CADERNO BALANÇO ENGLISH JUNHO 11 INTERNET · Net Income registered in the second quarter of 2011...

F i n a n c i a l

S t a t e m e n t s

June2 0 1 1

2 FINANCIAL STATEMENTSJUNE 2011

Message from the CEO

We are living in very peculiar economic times.In a context in which developing countries -China, India and Brazil - are driving growthworldwide, most European countries and theUSA face slowdowns in their activityeconomic and the depreciation of theircurrencies, the Euro from difficulties facedby peripheral economies and the US Dollarfrom excess liquidity, whi le Japan isrecovering from the effects of naturaldisasters and the nuclear accident.

In Brazil, after two years - 2009 and 2010 - whenthe credit expansion fostered the growingeconomy, the challenge is to match thecurrent level of activity with falling inflationexpectations. As credit growth is a tool toregulate the monetary policy, a watchful eyeon business strategies is required toovercome such context.

In the State of Rio Grande do Sul, programsaimed at promoting business, qualifyingprofessionals, attracting investment andimproving credit and funding policies tosmall, medium and large companies are inpractice. Imports increased in the first half of2011, supported by the overvalued exchangerate and the rhythm of the domestic market,while exports also maintained favorablegrowth. The agricultural sector wasresponsible in the first quarter of 2011 formuch of the growth of the productive activity,driven by the performance of rice, soybean,corn and tobacco crops. That said, prospectsare promising in the regional environment,

even though the State has followed suit thetrend of moderation in economic activity inthe wake of the Brazilian economy.

Since taking up the management of Banrisulin March 2011, we understand that themoment requires expansion of business scalewhich will come from increasing creditportfolio and branch network, themaintenance of investments in innovation,reinforcing controls over administrative costsand, especially, improving customerrelationship. Several fronts have been theobject of attention in the last three months,and we highlight two of them: debit andcredit cards and mortgages.

On national scale, credit cards increasedmarket share as a means of makingtransactions. In addition to being recognizedby consumers as one of the top cards issuersin recent nationwide survey, Banrisuladvances towards consolidating its own cardbrand, occupying a market hitherto absorbedby large international brands. Bank has aimedto expanding the Banricompras network sincethe deregulation of the card market, not onlyas a proprietary card network but also intothe acquiring business.

In a cycle of rising income and employmentlevel, mortgages are one of the leveragedrivers to business in the coming years. Inthe first half of 2011, Banrisul entered variousagreements with entities from federal, stateand local governments - and privatecompanies as well -, so that loans with

3

Túlio Luiz ZaminCEO

favorable conditions may be granted. Besidespromoting customer loyalty, mortgageexpansion favors a chain of businessresponsible for generating jobs in the civilconstruction, with repercussions on theeconomic and social development.

By Integrating commercial actions and socialinitiatives, we have maintained theconsistent trend of favorable results.Banrisul's net income in the first half of 2011was R$438.5 million, 43.8% higher than whatwas obtained in the same period last year.Net Income registered in the second quarterof 2011 totaled R$227.2 million, 24.1% higherthan that of 2Q10 and 7.5% higher than 1Q11's.

The Bank holds R$34.8 billion in assets, ofwhich R$18.8 billion in loans, which grew21.8% in the last twelve months. Funds raisedand managed totaled R$26.1 billion in June2011, an increase of 12.6% over the samemonth last year. Shareholders' equity totaledR$4.1 billion at the end of June and the returnon average equity (annualized) reached23.2%.

The relevance Banrisul's achieved in recentyears is attested not only by the numbers ofits currently performance. For the first timein history, in its 82 years, the bank makes upthe ranking of the 50 most valuable brands inBrazil. In the category of banks, Banrisul hasbecome the fourth most valuable financialinstitution in the country, according to aresearch carried out by the Dinheiromagazine.

In the capital market, Banrisul's shares werelisted in the Brazil Broad Index (IBRA),recently created by the BM&FBovespa. Thisindex is comprised of the shares of listedcompanies that meet the minimum criteriaof liquidity, trading volume and number oftrading.

The Bank's performance has been guided bythe principles of corporate responsibility,which guide our actions not only related toemployees, to the community and to theenvironment, but also with regard to theimpacts associated to our businesses policies,when dealing with customers, suppliers andshareholders. Banrisul has recently beencertified in Sustainable ManagementResearch and strengthens the commitmentsfrom its accession in 2009 to the GreenProtocol, besides making efforts towardsproducing sustainability reports incompliance to international standards.

The dynamic economic environment posesnew challenges every day. Although goodresults have been delivered so far, thestruggle is constant and excellence, not aplace where to go to, but our North, our aim.

As a public bank, we are committed toensuring financial return of our shareholders,as well as to promoting the economic andsocial development of the State, throughoutjoint actions with the government. And, as acompany, it is our responsibility to managethe business in a manner that does notcompromise the needs of future generations.


IndexMessage from the CEO........................................................................................... 2

Press Release ............................................................................................................. 9Management Report .................................................................................................. 15

Economic Scenario ................................................................................................. 16Consolidated Performance .................................................................................... 18

Net Income ............................................................................................................. 18Shareholders' Equity .............................................................................................. 18Total Assets ............................................................................................................. 19Taxes and Contributions ........................................................................................ 19

Operational Performance ...................................................................................... 20Funds Raised and Under Management .................................................................. 20Securities ................................................................................................................ 20

Loan Operations .................................................................................................... 22Products, Services and Channels ............................................................................ 25

Banricompras .......................................................................................................... 25Banrisul's Correspondent Banks ............................................................................ 25Virtual Branch - Home and Office Banking ........................................................... 26Banrifone and branch Call Center ......................................................................... 26Eletronic Bidding .................................................................................................... 26Credit Cards ............................................................................................................ 26Insurances, Private Pension and Capitalization .................................................... 27

Public Sector Activities .......................................................................................... 27Banrisul's Customer Service Network .................................................................... 28Subsidiaries ........................................................................................................... 29Corporate Governance........................................................................................... 30

Overview ................................................................................................................ 30Shareholding Structure .......................................................................................... 30Investor Relations and Communication Policy ..................................................... 31Interest on Equity and Dividends Payout Policy ................................................... 31

Internal Controls and Compliance .......................................................................... 33Risk Management .................................................................................................. 33Basel Ratio .............................................................................................................. 36

Technological Modernization ................................................................................. 37Marketing .............................................................................................................. 38Human Resources .................................................................................................. 39Corporate Responsibility ....................................................................................... 39

Awards .................................................................................................................... 40 Acknowledgements ................................................................................................. 41

5

Index of GraphsGraph 1: Net Income ................................................................................................... 18Graph 2: Shareholders' Equity Growth ....................................................................... 18Graph 3: Total Assets Growth ...................................................................................... 19Graph 4: Growth of Funds Raised and Under Management ....................................... 20Graph 5: Securities Growth ......................................................................................... 21Graph 6: Loan Operations Growth .............................................................................. 22Graph 7: Commercial Credit Growth - Individuals and Companies........................... 23Graph 8: Banricompras ................................................................................................ 25Graph 9: Shareholding Structure ................................................................................ 31Graph 10: Market Value X Shareholders' Equity......................................................... 31Graph 11: Pay Out - Quartely Payments - R$ Million ................................................. 32

Financial Statements .................................................................................................. 42Balance Sheet ........................................................................................................ 43Statement of Income ............................................................................................. 47Cash Flow ............................................................................................................... 48Statement of Value Added ..................................................................................... 49Statement of Changes on Shareholders' Equity ..................................................... 50Contents of the Notes to Financial Statements ...................................................... 51

Note 01 - Operations.............................................................................................. 52Note 02 - Presentation of the Financial Statements ............................................ 52Note 03 - Significant Accounting Practices ............................................................ 53Note 04 - Interbank Investments ........................................................................... 57Note 05 - Securities and Derivatives ..................................................................... 57Note 06 - Restricted Deposits ................................................................................ 59Note 07 - Loans, Lease Operations and Other Credit-like Receivables ............... 60Note 08 - Other Receivables .................................................................................. 62Note 09 - Permanent Assets .................................................................................. 63Note 10 - Deposits and Money Market Funding ................................................... 64Note 11 - Borrowings ............................................................................................. 64Note 12- Onlendings ............................................................................................. 65Note 13 - Other Payables ....................................................................................... 65Note 14 - Reserves, Contingent Assets and Liabilities ......................................... 66Note 15 - Income from Services Rendered ........................................................... 67Note 16 - Income from Bank Fees ......................................................................... 68Note 17 - Other Administrative Expenses ............................................................ 68Note 18 - Other Operating Income ....................................................................... 68Note 19 - Other Operating Expenses ..................................................................... 69Note 20 - Shareholders' Equity - Banrisul ............................................................. 69Note 21 - Commitments, Guarantees and Other .................................................. 71Note 22 - Income and Social Contribution Taxes .................................................. 72Note 23 - Fundação Banrisul de Seguridade Social and Cabergs - Caixa de

Assistência dos Empregados do Banco do Estado do Rio Grande do Sul ......... 73


Note 24 - Financial Instruments and Financial Risks Management ...................... 75Note 25 - Transactions With Related Parties ........................................................ 78Note 26 - Impact from the Adoption of the Internacional

Financial Reporting Standards ........................................................................... 83Note 27 - Authorization for Completion of the Financial Statements ................. 83

Reports ...................................................................................................................... 84Analysis of Performance ............................................................................................. 90

Banco do Estado do Rio Grande do Sul S.A. ............................................................ 91Banking Industry and Competitive Environment .................................................... 92Economic and Financial Indicators .......................................................................... 93

Assets and Earnings Structure ................................................................................. 94Financial Performance ........................................................................................... 94Capital Expenditure Policy .................................................................................... 95Margin Analysis ...................................................................................................... 96Variations in Interest Income and Expenses: Volumes and Rates ....................... 98

Banrisul's Stock Market Performance .................................................................... 99Evolution of Balance Sheet Accounts ..................................................................... 102

Total Assets ....................................................................................................... 102Securities ................................................................................................................ 103Interbank and Interbranch Transactions ............................................................... 104Credit Operation ............................................................................................... 104Breakdown of Credit by Company Size ................................................................. 105Breakdown of Credit by Sector .............................................................................. 105Breakdown of Credit by Portfolio ......................................................................... 106Breakdown of Credit Disbursement ...................................................................... 107Commercial Credit ............................................................................................ 108Breakdown of Credit by Rating .............................................................................. 109Allowance for Loan Losses ..................................................................................... 110Cover Ratio ............................................................................................................. 111Default Ratio .......................................................................................................... 111Funds Raised and Under Management .............................................................. 112Demand Deposits ................................................................................................... 112Savings Accounts .................................................................................................... 112Time Deposits ........................................................................................................ 113Assets under Management .................................................................................... 113Cost of Funding ...................................................................................................... 113Shareholders' Equity ......................................................................................... 114Return on Average Shareholders' Equity .............................................................. 115Basel Ratio .............................................................................................................. 115Pace of Growth ....................................................................................................... 116

Evolution of Income Statement Accounts .............................................................. 117Net Income ............................................................................................................. 117Financial Income .................................................................................................... 117Revenue from Treasury Operations ...................................................................... 118

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Revenues from Credit and Leasing Operations .................................................... 118Revenues from Commercial Credit - Individuals and Companies ....................... 119Financial Expenses ................................................................................................. 121Expenses with Market Funding Operations .......................................................... 122Allowance for Loan Losses ..................................................................................... 123Financial Margin ..................................................................................................... 123Revenue from Services Rendered ......................................................................... 124Administrative Expenses ....................................................................................... 124Other Operating Income ........................................................................................ 125Other Operating Expenses .................................................................................... 126

Economic Indicators ............................................................................................... 127Leverage Ratio ....................................................................................................... 127Operating Cost ....................................................................................................... 127Debt-Equity Ratio ................................................................................................... 127Employee Productivity .......................................................................................... 128Efficiency Ratio ...................................................................................................... 128

Consolidated Pro Forma Balance Sheet ................................................................. 129Pro Forma Income Statement ................................................................................ 130

Index of GraphsGraph 01: Banrisul PNB Performance vs. Brazilian Stock Market Indexes ................ 99Graph 02: Average Financial Volume, Number of Trades and Number of Shares .... 100Graph 03: Banrisul´s Shares - Geographic Distribution .............................................. 100Graph 04: Total Assets ................................................................................................. 102Graph 05: Composition of Assets ................................................................................ 103Graph 06: Securities and Liquid Interbank Transaction.............................................. 103Graph 07: Interbank and Interbranch Transactions .................................................... 104Graph 08: Credit Operations ....................................................................................... 104Graph 09: Commercial Credit Portfolio - Individuals and Companies ...................... 106Graph 10: Credit Portfolio by Risk Levels ................................................................... 109Graph 11: Breakdown of Allowance for Loan Losses ................................................. 110Graph 12: Cover Ratio.................................................................................................. 111Graph 13: Default Ratio ............................................................................................... 111Graph 14: Funds Raised and Under Management ...................................................... 112Graph 15: Cost of Funding as % of Selic Rate ............................................................. 114Graph 16: Shareholders' Equity................................................................................... 114Graph 17: Return on Average Shareholders' Equity ................................................... 115Graph 18: Basel Ratio .................................................................................................. 116Graph 19: Pace of Growth - Credit and Funding ......................................................... 116Graph 20: Net Income ................................................................................................. 117Graph 21: Financial Income ......................................................................................... 118Graph 22: Revenues from Credit and Leasing Operations ......................................... 119Graph 23: Financial Expenses ..................................................................................... 122Graph 24: Expenses with Market Funding Operations .............................................. 122


Graph 25: Allowance for Loan Losses ......................................................................... 123Graph 26: Financial Margin ......................................................................................... 123Graph 27: Revenue from Services Rendered ............................................................. 124Graph 28: Personnel and Other Administrative Expenses ........................................ 125Graph 29: Other Operating Income ............................................................................ 125Graph 30: Other Operating Expenses ......................................................................... 126Graph 31: Leverage Ratio ............................................................................................ 127Graph 32: Operating Cost ............................................................................................ 127Graph 33: Debt-Equity Ratio ....................................................................................... 127Graph 34: Employee Productivity ............................................................................... 128Graph 35: Efficiency Ratio ........................................................................................... 128

Index of TablesTable 01: Competitive Environment ........................................................................... 92Table 02: Economic and Financial Indicators .............................................................. 93Table 03: Margin Analysis ............................................................................................ 96Table 04: Variations in Interest Income and Expenses: Volumes and Rate .............. 98Table 05: Communication and Relationship Efforts ................................................... 99Table 06: Breakdown of Credit to Companies by Company Size ............................... 105Table 07: Breakdown of Credit by Sector ................................................................... 105Table 08: Breakdown of Credit by Portfolio ............................................................... 106Table 09: Breakdown of Credit Disbursement ........................................................... 108Table 10: Composition of General Credit - Individuals and Companies ................... 109Table 11: Balance of Allowance for Losses ................................................................. 111Table 12: Funding Composition .................................................................................. 113Table 13: Cost of Funding ............................................................................................ 114Table 14: Revenues from Commercial Credit - Individuals and Companies ............. 120Table 15: Monthly Average Commercial Credit Rates - Individuals

and Companies ............................................................................................. 121Table 16: Consolidated Pro Forma Balance Sheet...................................................... 129Table 17: Pro Forma Income Statement ..................................................................... 130

9

PressRelease


Thursday, August 11, 2011 - Earnings Results for the 1st Half of 2011

We report Banrisul's most relevant numbers for 1H11. The Analysis of Performance,Management Report, Financial Statements and the Accompanying Notes are available at theBank's site (www.banrisul.com.br/ir).

Bovespa: BRSR3, BRSR5 , BRSR6

This press release contains forward-looking statements, which not only relate to historicfacts but also reflect the targets and expectations of the Company management. The terms"anticipate", "desire", "expect", "project", "plan", "intend" and similar words are intended toidentify statements that necessarily involve known and unknown risks. Known risks includeuncertainties that are not limited to the price and service war impact, acceptance of servicesby the market, service transactions of either the Company or its competitors, regulatoryapproval, currency fluctuation, changes in the service mix and other risks described in theCompany's reports. This Press Release is updated until the present date and Banrisul is notobliged to update it upon new information and/or future events.

(¹) Including Personnel Expenses, Other Administrative Expenses and OtherOperating Expenses.

(²) Interest on own capital and dividends paid and/or distributed (before incometax witholding at source).

(³) Including interbank investments and excluding matched transactions.(4) Net income / average total assets.(5) Net income / average shareholders’ equity.

(6) Efficiency Ratio - 12-month accumulation.Personnel expenses + other administrative expenses /Net financialmargin + revenue from services rendered + (other operatingincome - other operating expenses)

(7) Fixed assets/ shareholders’ equity.(8) Default > 60 days / total loans.(9) Allowance for loan losses / default > 60 dias.

Main Income Statement Accounts - R$ Million 1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q102Q11/ 1H11/ 1Q11 1H10

Net Financial Margin 1,587.9 1,358.2 832.6 755.3 786.7 769.7 710.9 10.2% 16.9%Allowance for Loan Losses Expenses (281.5) (280.5) (143.1) (138.5) (126.6) (111.2) (127.1) 3.3% 0.4%Gross Profit from Financial Operations 1,306.4 1,077.7 689.5 616.8 660.1 658.5 583.9 11.8% 21.2%Financial Income 2,736.4 2,233.2 1,436.5 1,299.9 1,310.4 1,298.2 1,165.4 10.5% 22.5%Financial Expenses (1,430.0) (1,155.5) (747.0) (683.1) (650.3) (639.7) (581.5) 9.4% 23.8%Income from Services Rendered 345.0 307.3 173.4 171.6 173.5 160.9 157.4 1.1% 12.3%Administrative and Other Operational Expenses (¹) (968.5) (917.1) (499.5) (469.0) (499.2) (478.7) (457.2) 6.5% 5.6%Other Operation Income 113.1 88.8 46.6 66.5 81.1 39.0 43.1 -30.0% 27.4%Income from Operations 684.9 459.0 353.5 331.4 361.8 327.0 277.5 6.7% 49.2%Net Income 438.5 305.0 227.2 211.3 229.9 206.4 183.1 7.5% 43.8%

Used/Distributed Results - R$ Million 1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q102Q11/ 1H11/ 1Q11 1H10

Interest on Own Capital - Dividends (²) 173.9 121.2 117.1 56.8 120.4 51.6 71.0 106.4% 43.4%

Main Balance Sheet Accounts - R$ Million Jun11 Jun10 Jun11 Mar11 Dec10 Sep10 Jun10Jun11 / Jun11/

Mar11/ Jun10Total Assets 34,755.0 31,098.8 34,755.0 32,951.0 32,127.7 32,339.3 31,098.8 5.5% 11.8%Securities (³) 9,965.9 10,150.4 9,965.9 9,789.3 9,573.9 10,014.1 10,150.4 1.8% -1.8%Total Lending 18,809.3 15,442.0 18,809.3 17,939.6 17,033.2 16,237.1 15,442.0 4.8% 21.8%Allowance for Loan Losses (1,214.7) (1,117.5) (1,214.7) (1,156.0) (1,101.9) (1,122.7) (1,117.5) 5.1% 8.7%Past Due Loans > 60 days 498.9 493.6 498.9 478.2 418.0 487.9 493.6 4.3% 1.1%Funding and Assets under Management 26,092.7 23,163.7 26,092.7 25,289.8 25,090.8 24,095.2 23,163.7 3.2% 12.6%Shareholders' Equity 4,118.1 3,590.1 4,118.1 4,009.0 3,855.2 3,746.4 3,590.1 2.7% 14.7%Consolidated Reference Equity 4,170.7 3,603.1 4,170.7 4,000.6 3,873.3 3,738.0 3,603.1 4.3% 15.8%Average Shareholders' Equity 3,986.7 3,499.3 4,063.6 3,932.1 3,800.8 3,668.2 3,535.1 3.3% 13.9%Average Total Assets 33,441.3 30,091.4 33,853.0 32,539.3 32,233.5 31,719.1 30,481.7 4.0% 11.1%Financial Index 1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10Return on Total Assets 2.5% 2.0% 2.6% 2.6% 2.9% 2.6% 2.4%Return on Shareholders' Equity 22.4% 17.7% 24.0% 22.8% 26.1% 23.9% 22.0%ROAA (p.a.) (4) 2.6% 2.0% 2.7% 2.6% 2.9% 2.6% 2.4%ROAE (p.a.) (5) 23.2% 18.2% 24.3% 23.3% 26.5% 24.5% 22.4%Efficiency Ratio (6) 45.0% 50.5% 45.0% 45.8% 47.8% 48.5% 50.5%Consolidated Basel Ratio 15.6% 16.2% 15.6% 15.8% 16.1% 15.8% 16.2%Fixed Assets Ratio (7) 4.0% 4.8% 4.0% 4.3% 4.4% 4.6% 4.8%Default Rate (8) 2.7% 3.2% 2.7% 2.7% 2.5% 3.0% 3.2%Cover Rate (9) 243.5% 226.4% 243.5% 241.7% 263.6% 230.1% 226.4%Economic Indicators 1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10Effective Selic Rate (accrued) 5.54% 4.30% 2.82% 2.65% 2.57% 2.62% 2.23%Foreign Exchange Rate (R$/USD – end of period) 1.56 1.80 1.56 1.63 1.67 1.69 1.80Foreign Exchange (%) -6.31% 3.46% -4.15% -2.25% -1.67% -5.96% 1.15%IGP-M (General Market Price Index) 3.15% 5.69% 0.70% 2.43% 3.18% 2.09% 2.84%IPCA (Extended National Consumer Price Index) 3.87% 3.09% 4.02% 2.27% 2.23% 0.50% 1.00%

11

Financial Performance

Net income registered in 1H11 was R$438.5million, 43.8% or R$133.5 million above thenet income reached in the same period of2010. In 2Q11, net income was R$227.2 million,24.1% or R$44.0 million higher than in 2Q10and 7.5% or R$15.9 million higher than 1Q11.

From 1H10 to 1H11, the Bank's performancepositively reflects the increase of creditrevenues, treasury income and services fees.On the negative side, net income wasaffected by the increase in market fundingand loans and onlendings expenses.

From 2Q10 to 2Q11, the Bank's performancepositively reflects the increase of 24.4%(R$268.8 million) in credit and treasuryrevenues and the increase of 10.2% (R$16,0million) in services fees. On the negativeside, net income was affected by theincrease of 28.6% (R$166.2 mill ion) inmarket funding, loans and onlendingsexpenses.

From 1Q11 to 2Q11, the Bank's performancereflects the increase of credit and treasuryrevenues and negative affected by increases

in market funding and in administrativeexpenses.

Net interest income reached R$1,587.9million in 1H11, 16.9% (R$229.7 million) higherthan in 1H10. The net interest income ofR$832.6 million in 2Q11 is 17.1% (R$121.7million) higher than in 2Q10 and increased10.2% (R$77.3 million) from 1Q11.

From 1H10 to 1H11, net interest income waspositively impacted by the increase in creditrevenues and by the results from treasury andfrom restricted deposits. On the negativeside, it was affected by market funding costand expenses with loans and onlendings.

The margin increase from 2Q10 and 2Q11 islinked to higher credit and treasuryrevenues, which offset the growth ofexpenses with market funding, loans andonlendings. From 1Q11 to 2Q11, the balancedperformance of credit revenues and highertreasury gains compensated increases inmarket funding, loans and onlendingsexpenses, helping generate higher financialmargin.

Operational Highlights

In 1H11, Banrisul presented consistent creditgrowth trend, growing ahead of the averageof banking industry year-on-year, year-to-date and quarter-on-quarter. Defaultindicators and credit quality remained stable,in spite of the riskier environment due to highinterest rates and the effects of macro-prudential measures issued by the end of2010. The increase in lending has contributedto the increase of the net interest income.

The first half of 2011 marked a cycle ofManagement change in the Bank. However,no significant changes have occurred in

Banrisul's market-oriented businessstrategies, focused on returns to public andprivate shareholders.

A mature organization, Banrisul, by adoptingthe best practices of corporate governance,ensures that reshuffles in the Board ofAdministration and its Executive Body, anatural process within a state-controlledbank, reinforces the continuity of businessmanagement and operational processes. Thefocus on efficiency is also compatible withmaintaining the Company's guidancereleased in early 2011.


1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10

Financial Margin 1,587.9 1,358.2 832.6 755.3 786.7 769.7 710.9

Gross Profit from Financial Operations 1,306.4 1,077.7 689.5 616.8 660.1 658.5 583.9

Average Profitable Assets(1) 30,697.3 28,004.2 31,475.5 29,919.1 29,563.8 29,291.2 28,457.8

Net Financial Margin(2) 10.6% 9.9% 11.0% 10.5% 11.1% 10.9% 10.4%

Gross Profit from Financial Operations(3) 8.7% 7.8% 9.1% 8.5% 9.2% 9.3% 8.5%

(1) Average Interest-Earning Assets of the Period.(2) Net Financial Margin / Average Profitable Assets (Annualized).(3) Gross Profit from Financial Operations / Average Profitable Assets (Annualized).

Financial Margin R$ Million

In 1H11, expenses with loan losses allowancetotaled R$281.5 million practically stable incomparison to 1H10. From 2Q10 to 2Q11,provision expenses increased by 12.6%

(R$16.0 million); from 1Q11 to 2Q11,provisions expenses increased 3.3% (R$4.6million).

Evolution of Assets

Total assets at the end of June 2011 wereR$34,755.0 million, 11.8% or R$3,656.3 millionhigher than in June 2010. In comparison toDecember 2010, assets increased 8.2% orR$2,627.4 million. The quarter-on-quarterasset growth came from the expansion of 5.5%or R$1,804.1 million over the deposit base andthe increase in the escrow deposits.

The growth of R$2,656.2 million year-on-yearasset comes from the expansion of thefunding portfolio and the increase of R$344.8million in escrow deposits. In the last twelvemonths, credit growth (R$3,367.3 million),interbank transactions growth (R$771.6million) and treasury balance decrease(R$479.5 million, from lower matchedtransactions) are the main highlights.

Banrisul's credit portfolio totaled R$18,809.3million in June 2011, exceeding by 21.8% thebalance of June 2010, by 10.4% the amount ofDecember 2010 and by 4.8% the balance ofMarch 2011.

In June 2011, Commercial Credit to Individualstotaled R$8,211.4 million, 19.1% or R$1,316.2million over June 2010, an increase of 11.0%or R$813.0 million over December 2010 andincrease of 5.3% or R$415,0 million on 1Q11.Payroll loans constituted an importantmechanism for the expansion of operationsin the last twelve months. Credit to

companies totaled R$6,363.8 million at theend of June 2011, up 28.2% (R$1,398.0 million)in twelve months, 11.0% and R$631.6 millionin the first half and an increase of 5.3%(R$321.7 million) in the last quarter.

Non-performing loans over 60 days reducedfrom 3.2% in June 2010 to 2.7% of total loansin June 2011. NPL over 90 days was 2.3% inJune 2011. Total provisions remain at a levelsufficient to cover loans in arrears.

Securities totaled R$9,965.9 million at the endof June 2011, amount 1.8% below June 2010.Year-to-date, securities increased 4.1%(R$392.0 million) and rose 1.8% (R$176.6million) from 1Q11 to 2Q11. This amountincludes liquid interbank transactions butexcludes total liabilities from matchedtransactions. The lower securities balanceyear-on-year reflects the Bank's policy ofmigrating to higher yield assets.

Funds raised and under management totaledR$26,092.7 million in June 2011, growing 12.6%or R$2,929.0 over June 2010.

The Bank maintained its retail funding policy.Time deposits reached R$11,936.4 million, anincrease of 32.1% (R$2,901.9 million) fromJune 2010. Savings deposits decreased by14.6% (R$878.9 million), totaling R$5,158.8million. Demand deposits grew by 32.8%(R$666.2 million) in twelve months and

13

Jun/11 Mar/11 Dec/10 Sep/10 Jun/10

Total Assets 34,755.0 32,951.0 32,127.7 32,339.3 31,098.8

Total Credit Operations 18,809.3 17,939.6 17,033.2 16,237.1 15,442.0

Securities (1) 9,965.9 9,789.3 9,573.9 10,014.1 10,150.4

Funds raised and under management 26,092.7 25,289.8 25,090.8 24,095.2 23,163.7

Shareholders' Equity 4,118.1 4,009.0 3,855.2 3,746.4 3,590.1

(1) Securities + Interbank Investiments - Matched Transactions

Highlights R$ Million

Estimate Banrisul Year 2011 Not Altered

CREDIT PORTFOLIO 15% to 20%

Commercial Credit - Individuals 12% to 17%

Commercial Credit - Companies 16% to 21%

Real Estate Loans 18% to 23%

Provision Cost / Average Credit Portfolio 3% to 4%

Allowance for loan Losses / Average Credit Portfolio 6% to 8%

FUNDING 15% to 20%

Time Deposits 35% to 40%

Return on Average Shareholders' Equity 19% to 23%

Efficiency Ratio 44% to 48%

Net Financial Margin / Interest-Earning Assets 10% to 11%

Guidance

Based on the performance showed until June2011, it is possible to discern that 2011outlook, disclosed when 4Q10 was released,is aligned with business evolution. Creditmust develop at more moderate rates inresponse to steps taken by the Central Bank

of Brazil at the end of December 2010 toensure monetary stability and sustainablecredit growth. Other assumptions reflect thepreservation of credit quality and the effortstowards cost management, with a view toachieving the profitability expected for 2011.

The efficiency ratio reached 45.0% in the pasttwelve months ended in June 2011. Theconsistent reduction in efficiency ratioreflects the capacity of the financial margin,sustained by the growth in revenue fromcredit and favored by reduction of financialexpenses, to absorb the increase inadministrative and operating expenses.

The operating cost ended June 2011 at 5.0%.Asset expansion, leveraged by the growth incredit operations, helped to absorbadministrative expenses, reflecting in thereduction of costs in proportion to assets intwelve months.

reached R$2,695.1 million. Assets underManagement totaled R$6,291.8 million at theend of the first half of 2011, 4.5% (R$272.8million) above June 2010.

At the end of June 2011, Banrisul'sshareholders' equity was R$4,118.1 million.

The 14.7% increase in shareholders' equity isrelated to the incorporation of the net incomeby the payment of dividends and interest onequity. The annualized return on averageshareholders' equity reached 23.2% in 1H11.Banrisul's consolidated Basel Index reached15.6% in June 2011.


Awards

January 2011. Banrisul Brand is featured in world ranking.

January 2011. Banrisul is one of the best reputed companies in Rio Grande do Sul.

March 2011. Banrisul is highlighted in the study Brands of Who Decides.

April/2011. Banrisul's shares presented the best performance.

April/2011. Banrisul, one of the largest companies in the world.

May/2011. Banrisul's shares listed in Bovespa's new index.

May/2011. Banrisul, one of Brazil's most valuable brands, according to ranking prepared bythe magazine Dinheiro.

June/2011. Banrisul among Brazil's most valuable brands, according to ranking prepared byInterbrand, a consultancy firm.

June/2011. Banrisul is the most remembered brand of Rio Grande do Sul in the bank category.

June /2011. Banrisul receives Government and Society Sustainability Certificate.

Porto Alegre, August 11, 2011.

Business Strategy

The financial results for 2011 will be soughtthrough the expansion business scale whichwill come from increasing credit portfolio andbranch network, the maintenance ofinvestments in innovation, reinforcingcontrols over administrative costs and,especially, improving customer relationship.

In the first half of 2011, the Company steppedforward to integrate its marketing andcommercial areas, seeking greater synergy tocustomers' needs, as well as having theoffering of products and services focused onincreasing results. The repositioning of thebusiness model is being built andstrengthened by the potentialities of eachsegment: retail, corporate, individual, and

the customer profile within each segment.Banrisul's points of service are beingexpanded to business locations wherecustomer service will be the main catalyst forthe expansion of the client base.

The card segment is also focus of Banrisul'sbusiness strategy, given the expansion of thenumber or cards issued and their use in Brazil.A year after the deregulation of the creditcard market, Banrisul, by means of itsBanricompras Network, ranks among thetop four local players in the acquiringbusiness, competing equally with the threemajor networks and having as itsdifferential the largest debit cards networkof southern Brazil.

15

ManagementReport

WE PRESENT THE MANAGEMENT REPORT AND FINANCIAL STATEMENTS OF BANCO DOESTADO DO RIO GRANDE DO SUL S.A. FOR THE FIRST HALF OF 2011, PREPARED INACCORDANCE WITH THE RULES OF THE BRAZILIAN SECURITIES AND EXCHANGECOMMISSION (COMISSÃO DE VALORES MOBILIÁRIOS - CVM) AND THE CENTRAL BANKOF BRAZIL.


Economic Scenario

In the first half of 2011, the macroeconomicenvironment as a whole was marked by theconjunction of several sources of uncertainty,especially regarding the trajectory of the main worldeconomies, set against a background of low anduneven average growth, high unemployment andfiscal imbalances, resulting in increased risk levels

and volatility in the global markets. In addition, factors such as the prolongation of droughtsand bad weather that affected major grain-producing regions and the continuity of geopoliticalconflicts in the Middle East with direct impacts on world supply of oil, reflected in hikes ofcommodities prices which, in turn, intensified inflationary pressures, especially in emergingeconomies, given their greater growth rates.

Despite the uncertain scenario, Brazil showed strong economic growth, although less intensethan that of the same period last year, sustained by household consumption which, in turn,was supported by the stability of the labor market, with unemployment at historically lowlevels and high real income. It is also worth mentioning the favorable performance of Brazilianexports, which accumulated growth of 38.6% in the first half of this year, reflecting primarilythe appreciation of commodity prices, given the high share of these products in the country'stotal exports, ensuring significant increase in the trade balance, as imports remained at veryhigh level in the same period.

In this environment, inflation rates remained under pressure by the shocks arising from boththe external and the still warm domestic demand, especially impacting the prices of services.The continuance of these pressures, partially mitigated by the appreciation of the Braziliancurrency in the period, on a large extent due to the excessive liquidity in international marketsand the attractiveness of the Brazilian economy, kept market expectations pessimistic overthe period, indicative of further deterioration of the inflationary outlook, and forecast lowergrowth rates. In response, the monetary authority made adjustments in the economic policy,raising the Selic Rate by 150 basis points to 12.25% per year, besides other prudential measuressuch as higher reserve requirements, taxes upon financial transactions and capital requirementfor banks.

As for the economy of Rio Grande do Sul, main indicators show moderate growth pace in thefirst half of this year comparatively to 2010, following the dynamics of the rest of the country.This behavior is a consequence mainly of the clear accommodation process that has beenaffecting the State's industry, already observed in the last quarter of last year. According todata released by the Federation of Industries of Rio Grande do Sul - FIERGS -, the IndustrialPerformance Index - IDI recorded growth of just 1.4% in the first five months this year, withproduction-related components in the most severe downturns.

17

As to the agricultural sector, 2010/2011 forecasts for the grain harvest in the State alreadyexceeds by 12.8% the 2009/2010 harvest, representative of the largest growth in the southernregion south of Brazil and which, coupled with rising prices, guarantees the sector's goodlocal performance. According to the numbers for the month of June released by Conab(Companhia Nacional de Abastecimento - National Supply Company), grain production shouldexceed 20 million tons, driven by productivity increases and suitable climatic conditions.

With regards to the State's trade balance, there was a significant growth in the outcome offoreign sales, observed in the first six months of this year, supported mainly on risingcommodities prices. In the first half of 2011, exports totaled US$9.3 billion, 29.7% higher thanthe same period last year. With this result, the State reposition itself among the majorexporting Brazilian states, representing 7.8% of national exports. On the other hand, importsvolumes remain high, driven by the exchange rate and the expansion of the domestic market,increasing 20.4% from January to June this year. In this context, trade balance ended with asurplus of US$1.8 billion, almost twice the accumulated number in the first half of last year.

In the current scenario, it is worth noting also that the evolution of prices in the first half of2011 preserved dynamic similar to that observed at the national level, with greater pressureon food and housing. Based on the IPCA - Extended Consumer Price Index for the metropolitanregion of Porto Alegre, inflation totaled 3.8% from January to June.


Shareholders' Equity

At the end of June 2011, Banrisul's shareholders' equity totaled R$4,118.1 million, growing14.7% in twelve months as the result of the incorporation of net income net and the deductionof dividend and interest on equity payments and provisions. Return on average shareholders'equity in 1H11 reached 23.2% per annum.

Graph 2: Shareholders' Equity Growth - R$ Million

Consolidated Performance

Net Income

Banrisul's net income totaled R$438.5 million in 1H11, R$133.5 million or 43.8% abovethe result recorded in the same period in 2010, due to the growth of credit and treasuryrevenues and services fees, and lower administrative costs (except personnelexpenses).

Graph 1: Net Income - R$ Million

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Total Assets

Total assets amounted to R$34,755.0 million at the end of 1H11, an 11.8% increase in relationto the R$31,098.8 million recorded in the same period of 2010, coming from credit expansionleveraged by the growth of the commercial credit to individuals and companies.

Graph 3: Total Assets Growth - R$ Million

Taxes and Contributions

In 1H11, Banrisul collected and provisioned R$420.6 million in taxes and contributions. Thetaxes retained and passed through levied directly on financial intermediation and otherpayments amounted to R$268.0 million.


Operational Performance

Funds Raised and Under Management

Funds Raised and Under Management totaled R$26,092.7 million in June 2011, up 12.6% orR$2,929.0 million in twelve months. Banrisul has maintained its retail funding policy.

The balance of time deposits reached R$11,936.4 million, a 32.1% or R$2,901.9 million increaseover June 2010, and make up for 45.7% of total funding. Savings deposits reduced 14.6% orR$878.9 million, ending 1H11 with a balance of R$5,158.8 million, and account for 19.8% of thetotal funds raised and under management. Demand deposits, which account for 10.3% oftotal funding, increased 32.8% or R$666.2 million year-over-year and reached the balance ofR$2,695.1 million. Assets under management totaled R$6,291.8 million at the end of 1H11,R$272.8 million or 4.5% over June 2010.

Graph 4: Growth of Funds Raised and Under Management - R$ Million

Securities

The balance of securities stood at R$9,965.9 million in June 2011, a year-on-year reduction of1.8% or R$184.5 million. This balance includes interbank investments net of resale andrepurchase agreement liabilities.

As confirmed by internal technical studies, Banrisul has a strong financial capacity and intendsto hold securities classified as "held-to-maturity" pursuant to Article 8 of the Central Bank ofBrazil Circular Letter no. 3068 of November 8, 2001.

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Graph 5: Securities Growth* - R$ Million

*Net of Matched transactions


Loan Operations

In June, 2011, Banrisul's loan portfolio totaled R$18,809.3million, 21.8% or R$3,367.3 million above the R$15,442.0million recorded in the same month of 2010. Accounting for80.6% of such growth, the commercial credit portfolioincreased from R$11,861.1 million to R$14,575.2 million, rising22.9% or R$2,714.1 million in twelve months.

At the end of June 2011, credit operations of AA to C ratings,representative of normal risk according to Resolution no. 2682/99 of the Central Bank of Brazil, accounted for 89.1% of the

credit portfolio, with a balance of R$16,753.5 million. Credit operations rated D to G (risklevel 1), amounted to R$1,586.2 million, equivalent to 8.4% of the loan portfolio. Risk level2, composed solely by operations rated H that require provisions of 100%, represented2.5% or R$469.6 million of the total loan portfolio.

Graph 6: Loan Operations Growth - R$ Million

At the end of the first half of 2011 commercial loan operations (non ear-marked credit) toindividuals totaled R$8,211.4 million, accounting for 56.3% of the commercial portfolioand 43.7% of all loan operations. The 19.1% or R$1,316.2 million year-on-year increase isparticularly due to the growth of payroll loans.

Own payroll loan portfolio amounted to R$3,651.4 million in June 2011, 18.3% above thebalance recorded in the same month of 2010. Acquired payroll loan portfolio amounted toR$2,395.4 million in 1H11, a year-on-year increase of 17.0%.

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Commercial loan operations targeted to Companies increased R$1,398.0 million or 28.2%,totaling R$6.363.8 million at the end of June 2011, and accounted for 43.7% of the commercialcredit portfolio and for 33.8% of the loan book. Working capital lines increased 32.5% year-on-year, reaching a balance of R$4,627.0 million in 1H11.

Graph 7: Commercial Credit Growth - Individuals and Companies - R$ Million

The balance of real estate loans reached R$1,461.1 million in June 2011, an increase of R$301.1million or 26.0% in twelve months. In the first half of 2011, 2,500 operations were contracted,which corresponded to the grant of R$307.9 million in credit. Of this amount, R$109.9 millionwas invested to help finance the purchase of 975 used properties, R$51.9 million to theacquisition of 330 new homes and R$6.4 million to the purchase of 69 commercial properties.Directed to home and property builders, R$87.9 million in credit lines were granted to build702 new units, and R$22.7 million to finance the construction of 224 individual homes. Giventhe promising prospects for the sector, Banrisul has intensified commercial efforts by signingagreements with many agencies from federal, state and local governments, as well as withprivate companies, for the provision of loans with privileged conditions to employees.

At the end of June 2011, rural lending amounted to R$1,294.9 million, an increase of R$155.7million or 13.7% in twelve months. In the first half of 2011, in agreement with the StateGovernment, Banrisul approved R$18.5 million in credit proposals to farmers for theacquisition of 124,000 sheep matrices. 20,813 credit, investment and marketing operationstotaling R$496.9 million were financed with resources from mandatory allocation of demandand rural savings deposits, and 455 transactions amounting to R$32.9 million with the use ofagricultural promissory notes. R$48.3 million were financed to farmers in 834 new investmentoperations with BNDES' onlendings. It is part of the Bank's strategy to work together with


rural associations, unions and social movements to expand and diversify funding to theagricultural sector. 595 credit transactions were granted during the agricultural fairs in whichBanrisul was present in 1H11, totaling R$16.6 million.

The long-term finance portfolio totaled R$757.9 million in the end of 1H11, an increase ofR$140.6 million or 22.8% over the balance recorded in 1H10.

ACC and ACE (pre- and post-shipment export financing operations) totaled R$528.6 million atthe end June 2011. 11,900 F/X transactions were hired in 1H11, with a financial turnover ofUS$980.5 million, 36.1% higher than the same period last year. Export transactions totaledUS$519.5 million, and import transactions, US$461.0 million.

Actions to increase microcredit operations have advanced with program structured inpartnership with the State of Rio Grande do Sul scheduled for release in July 2011, which willoffer, jointly with other financial institutions, about R$500.0 million annually for familyfarmers, micro-entrepreneurs, micro-companies within the State and to ventures focused onsolidarity economy, with below-the-market interest rates.

25

Products, Services and Channels

Banricompras

Banricompras is an electronic payment system available to Banrisul's customers that allowspurchases to be paid at sight, in installments or on a fixed, and comprises today 94,100 affiliatedestablishments. At the end of 1H11, 36.6 million transactions were carried out within itsnetwork, with a financial turnover of R$2,536.6 million, a year-on-year increase of 10.9% and16.3%, respectively.

For the use of Banrisul's customers only, Banricompras Network provides services that helpthe salesperson to increase sales and makes purchases easier for the customers of the Bank.Banricompras POS Mobile captures card payments using a mobile phone linked via Bluetoothto a printer with a magnetic stripe card reader and, while providing further uses forBanricompras cards, is ideal for professionals and small shopkeepers. Another highlight isthe Banricompras.com solution for internet payments in accredited stores, preparing for theinternationalization of Banricompras operations.

Since March 2011, Banricompras network is operating as acquirer for MasterCard's debit andcredit cards, adding benefits to the affiliated merchand store. Visa's credit and debit cardsare expected to be accepted by Banricompras network by the second half of 2011.

Graph 8: Banricompras

Financial Transactions - R$ Million Transactions - Million

Banrisul's Correspondent Banks

At the end of 1H11, Banrisul had approximately 2,000 correspondent banks, a flexible,alternative customer banking service at extended business hours. In this quarter, 28.6 milliontransactions were recorded with a financial turnover of R$7,232.1 million, an increase of 8.5%over 1H10.


Virtual Branch - Home and Office Banking

In 1H11, 48.6 million operations totaling R$42,317.8 million were carried out through AgênciaVirtual Banrisul (Banrisul Virtual Branch). In relation to 1H10, the number of transactionsgrew 3.6% and the financial turnover, 12.7%.

Banrifone and Branch Call Center

Banrisul offers to customers Banrifone and Branch Call Center services, relationship channelsby telephone in which account balances can be checked and services and banking transactionsdemanded. During the first half of 2011, Banrifone electronic service had 2.5 million accesses,297.500 of them operator assisted, and presented a financial turnover of R$115.8 million,information services aside. Over the same period, 651.300 phone calls with a financial turnoverof R$12.5 million were made to the Branch Call Center, designed to capture calls from individualcustomers that are made to branches that are part of such service.

Electronic Bidding

The Electronic Bidding is an auction system that allows the purchase of common goods andservices, regardless of the value of the transaction, in which price competition betweenservice providers occurs in public sessions via the Internet, called virtual session. From Januaryto June 2011, Pregão On Line Banrisul (Banrisul Online Bidding website), a modern internetpurchase portal directed to public companies indirectly controlled by the State and to localmunicipal governments, hosted 18,700 bidding processes that totaled R$346.4 million onpurchases of goods and service procurement. Banrisul was user of the Bidding service in 223events that totaled R$22.5 million in purchases and service procurement, with savings ofR$11.3 million or 33.4% in relation to the R$33.8 million originally estimated for purchases.

Credit Cards

As a mean of payment, credit and debit cards are expanding their share in transactions inBrazil, increasingly replacing the use of checks. The representativeness of plastic money isincreasing, but there is still room for growth. In this scenario, Banrisul is constantly seeking toexpand its card base.

Through the company's own brand, Banricompras, a wide variety of products is offered -Banricompras debit cards, MasterCard transactions, meal, food, benefits, gift and fuel cardsand IPE (State of Rio Grande do Sul's Social Security Institute) Health Care programs. As aresult from the insertion strategy into the credit cards market, the use of BanricomprasNetwork as an acquiring facility to other brands, initiated with MasterCard, has just receiveda new boost with the license obtained from Visa, whose transactions will start being capturedin the second half of 2011. The technological advances offered by Banricompras networkinclude modern solutions that meet the all our customers' commercial needs.

27

As issuer of Visa and MasterCard cards, Banrisul has promoted internal campaigns to increasesales. Besides the reward program BanriClube Advantage released in late 2010, recent effortsstarted in June resulted in the immediate sale of more than 2,000 credit cards.

These actions to broaden and improve the card base and has brought in recognition. Recentsurvey conducted by the consulting company CVA Solutions demonstrated that Banrisul'scustomers are satisfied with the interest rates charged in the revolving credit facilities andwith the outreach of its network in the State. The survey indicated that the Bank is the secondbest institution according to how customers perceive the cost-benefit of plastic money.

At the end of 1H11, Banrisul had a base of 344,000 Visa and MasterCard credit card holders,28.3% higher than in 1H10, with a financial turnover of R$475.6 million in 6.4 milliontransactions, respectively 34.8% and 31.6% higher than June 2010.

Insurance, Private Pension and Capitalization

The favorable economic environment and the better income distribution has made possible,to increase the demand of insurance and capitalization products, especially by the C class. Insuch a context, the Bank's new business structure aims to boost the marketing of insuranceproducts by expanding distribution channels and developing new products and newpartnerships, leveraging the potential of the relevant customer base and the company'sfranchise.

Public Sector ActivitiesAs a state owned bank, Banrisul is concerned with beingprofitable, solid, competitive and closer to thecommunities. Based on these premises, the Bank haspartnered with the public sector, by means ofagreements and the provision of banking services tomunicipal, state and federal entities.

To the municipal public sector, Banrisul has offeredproducts and services aimed at reducing operating costs for municipalities, such as fleetmanagement solutions and electronic purchase management. By locally addressing customersand distributing promotional material, real state credit lines were made available withprivileged conditions for municipal civil servants. The Bank has intensified explanatory effortsto all municipalities for the perfect understanding of Central Bank of Brazil's Circular no. 3522of January 14, 2011, which, although prohibiting financial institutions of celebratingagreements, accords or contracts that prevent or restrict customer access to loans offered byother institutions, has no effect on prevailing contracts.

In the first half of 2011, the release of the Automated Permit at all Judicial Districts within theState came to completion, as a result of joint efforts between the Judiciary Branch and Banrisul.Available to attorneys and mitigating parties, this product simplifies the withdrawing of escrowdeposits, which can be carried out at any Banrisul's branch or transferred to other financialinstitution.


Eletronic Service Station - Brasília Passo da Areia Branch - Bourbon Shopping - Porto Alegre

Trindade Branch - Florianópolis

At the federal level, the Bank was licensed by the Ministry of Defense for the payment of civilservants, military personnel and pensioners of the Brazilian Army. This accreditation willmaintain the payroll of 1,570 public employees that currently receive their payment atBanrisul, while providing the Bank with the opportunity to obtain new customers and to offerits products and services to other employees whose payroll is deposited at other banks.

In May and June 2011, Banrisul was one of the financial institutions responsible for passingfunds from the INSS (the National Social Security Institute) onto the community of SãoLourenço do Sul, to help it deal with a public calamity situation. 1,275 INSS beneficiaries werebenefited, receiving advances equivalent to one monthly payment, to be paid back in 24installments without interest. In 1H11, Banrisul paid more than 165,000 new INSS beneficiaries,which now can have access to unique products like Banricompras debit card, for shopping inthousands of affiliated establishments in Rio Grande do Sul.

Banrisul´s Customer Service Network

By the end of June 2011, Banrisul servedits customers in 1,259 points, distributedin 441 branches (399 in Rio Grande do Sul,25 in Santa Catarina, 15 in other Brazilianstates, one in New York and one in GrandCayman), 279 banking service stationsand 539 electronic service stations. In RioGrande do Sul, the Bank is present in 414municipalities, covering 98% of thepopulation and the GDP of the state. TheCompany's strategies are focused onexpanding the branch network in RioGrande do Sul and in Santa Catarina; the search for new markets to support business growthand the increase of market share in the State of Rio Grande do Sul are also part of theseinitiatives.

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Subsidiaries

Banrisul S.A. Administradora de Consórcios -The Company ended 1H11 with 23,700 activegroups and with a loan portfolio of R$679.1 million. In the first six months of 2011, 2,185letters of credit were granted to customers, equivalent to R$52.4 million for the purchase ofgoods. Net income in the first half of 2011 totaled R$6.8 million.

Banrisul S.A. Corretora de Valores Mobiliários e Câmbio - In the first half of 2011, the Companybrokered R$471.2 million in the stock market, of which 62,8% through Home Broker. Netincome for 1H11 totaled R$2.5 million.

Banrisul Armazéns Gerais S.A. - The Company ended in the first half of 2011 with net incomeof R$465,000. To diversify the Company's business, projects are being made for investment inlease space for archiving documents, trucks and containers parking space using propertyacquired in 2010, adoption of integrated management systems and solutions for verticalstorage of goods in the warehouses.

Banrisul Serviços Ltda. - Responsible for Refeisul brand, Banrisul Serviços Ltda. operates inthe southern region of Brazil in the segments of meal and food vouchers, fuel, gifts, privatelabel and benefit cards. On a daily basis, more than 390,000 customers use Refeisul products,which is 30.0% higher than the same period last year. In the first six months of 2011, 6.4 milliontransactions were carried out. Net profit was R$8.7 million in 1H11.

99.6% ON70.5% PNA13.0% PNB57.0% Total

0.4% ON29.5% PNA87.0% PNB43.0% Total

State of RioGrande do Sul Market

Banco do Estadodo Rio Grande do Sul S.A.

Banrisul S.A.Adm. Consórcios

Banrisul S.A.CVMC

Banrisul ArmazénsGerais S.A

Banrisul ServiçosLtda.

99.6% Total 98.7% Total 99.5% Total 99.8% Total


Corporate Governance

Overview

Since July 2007 listed on BM&FBovespa SA's Corporate Governance Level 1, Banrisul meetsthe requirements of its level of listing and also requirements of other levels of corporategovernance, in line with best market practices, on behalf of greater transparency, fairnessand proper accountability, while enhancing credibility and the interest of investors andcustomers.

Corporate governance practices create incentives and monitoring mechanisms, ensuring thatthe Banrisul's behavior is market oriented. They also confirm the interest in improving andstrengthening relations with its controlling shareholders, the Board of Administration, FiscalCouncil, Board of executive Officers, independent auditors, oversight bodies and other relatedparties and stakeholders.

Such practices are important, especially in times of administrative changes such as occurredduring the first semester of this year, yet without significant changes in Banrisul's businessmanagement, reinforcing its role as a state-controlled, market-oriented publicly heldcompany.

The first half of 2011 also marks the termination of the contract with Deloitte Touche TohmatsuAuditores Independentes and its replacement by Ernst & Young Terco AuditoresIndependentes S/S. The hiring of the new independent auditor was based on Competition97/2010 bidding process, in compliance to the provisions of Law no. 8666 of June 21, 1993(Procurement Law), which sets forth the rules of bidding and public contracts involving thepublic administration, and to which Banrisul is subjected to by being a mixed-capital companydirectly controlled by the State of Rio Grande do Sul.

The participation of the Boards of Administration and Fiscal Council in the decision-makingstructure, the management model focused on profitability and quality of operations and theadoption of corporate governance policies give Banrisul strength and recognition, as reflectedin the proper performance within the banking industry.

Shareholding Structure

The Government of the State of Rio Grande do Sul, as the main shareholder, have control overthe election of the Board of Administration and, therefore, over Banrisul's management andoperations. However, the Bank's free float is above the minimum of 25% required by CorporateGovernance Level 1: 42.8% of its total shares are held by shareholders without any connectionwith the Institution. Banrisul's shareholding structure is presented in the following graph.

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Graph 9: Shareholding Structure

Investor Relations and Communication Policy

A transparent relationship with clients and investors is built through the disclosure of dataand information to the market, communication that allows broader and timely knowledge ofthe Bank's business.

Banrisul's Investor Relations website, available in Portuguese and English, provides clear,detailed and timely information for the Bank's shareholders, institutional investors,individuals, market analysts and other interested stakeholders.

The significance of these events is reflected on Banrisul's trading volume. At the end of June2011, the Bank's PNB stock (BRSR6) ranked 92nd among the 100 most-traded stocks on BM&FBovespa (73rd in twelve months).

Banrisul's market value in June 2011, represented by the total number of outstanding sharesmultiplied by the closing price of its PNB stock, was 78% higher than shareholders' equity inthe same period.

Graph 10: Market Value X Shareholders' Equity - R$ Million


The table below shows the geographic distribution of shareholders by number and number ofBanrisul's shares held.

REGION SHAREHOLDERS % SHARES %

BRAZIL 55,530 98.98% 241,915,905 59.15%

EUROPE 216 0.39% 90,488,648 22.13%

NORTH AMERICA 254 0.45% 54,166,613 13.24%

ASIA 61 0.11% 17,533,832 4.29%

OCEANIA 11 0.02% 1,829,619 0.45%

CENTRAL AMERICA 18 0.03% 1,620,445 0.40%

SOUTH AMERICA 12 0.02% 1,324,415 0.32%

AFRICA 1 0.00% 95,000 0.02%

TOTAL 56,103 100% 408,974,477 100%

Interest on Equity and Dividends Payout Policy

Since early 2008, Banrisul has maintained the policy of paying interest on equity on a quarterlybasis and, historically, has remunerated its shareholders by paying interest on capital anddividends above the minimum level required.

In the first half of 2011, R$166.6 million net of income taxes were paid/provisioned as intereston own equity and dividends.

Graph 11: Pay Out - Quarterly Payments - R$ Million

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Internal Controls and Compliance

To strengthen the system of internal controls, Banrisul has adoptedpolicies aimed at spreading the culture of internal controls, ensuringcompliance with rules, procedures and standards established by lawand enforcement agencies.

The internal controls policy establishes guidelines that seek toperiodically reinforce the alignment of internal controls with the goalsrelated to global business strategies and other institutional policiesset by the management.

The area in charge of internal control monitors activities in order to ensure compliance withregulations, the use and the effectiveness of controls in the many processes of the institution,to prevent and reduce risks inherent to business.

The spread of a controlling culture and the maintenance of an ethical environment areguaranteed by a set of rules, regulations and codes that guide employees in their activities toincorporate the values and ethical principles of the Organization.

Money Laundering Prevention - MLP

The Bank has established specific prevention processes and systems in order to ensure thatits activities are conducted in an environment of adequate controls to prevent risks related tothe crime of money laundering.

In this context, Banrisul maintains dedicated staff devoted to the execution of tasks focusedon the prevention of money laundering, which is responsible for reviewing legislation andprocedures and developing training programs for all employees.

The "Know Your Customer" process is continually reviewed and disseminated, emphasizingthe importance of timely, qualified customer information gathered at the beginning of eachand every business relationship, mitigating the risks of having the Bank's services and productsused to legitimize illicit activities.

Risk Management

To Banrisul, risk management is an essential, strategic tool. At the end of 2010, PWC -Consultores Associados won a bidding process, Competition no. 0000045/2010, to provideconsulting services specializing in the implementation of the framework for integratedmanagement of corporate risks. At the end of the first half of 2011, PWC presented a situationdiagnosis and action plans to adequate and improve the process, besides coaching employeesin the management of corporate risks.


Credit Risk

The credit risk assessment structure at Banrisul is based on the principle of joint technicaldecision. The Bank operates with different credit limits encompassing from the vast branchnetwork to the branch management and the credit and risk committees at the Head Office, aprocess that both ensures an offer of credit based on technically predefined credit limits andsets the maximum risk exposure that it is willing to operate with each customer, individual orcompany, considering the risk/benefit ratio.

Internal policies adopted by Banrisul to measure credit risk consider three basic componentswith respect to the counterparty: (i) the probability of default by the borrower or counterpartywith respect to their contractual obligations; (ii) current exposures to counterparty and itslikely future behavior, from which the exposure to default is identified; and (iii) the likelyrate of recovery of unfulfilled obligations (losses due to default). These assessments of creditrisk, which reflect the perspectives of losses ("expected losses model") required by the BaselCommittee, are monthly incorporated to the operational management of the Bank.

Simultaneously, Banrisul assesses individually the probability of counterparty default, usingclassification tools designed for different categories of counterparties. Such tools, whichwere developed internally and combine statistical analysis with the opinions of the creditteam, are validated, when deemed appropriate, by comparison with available external data.For the corporate segment, the Bank has adopted techniques that evaluate companies underthe financial, management, marketing and production prisms, with periodic reviews alsotake in consideration current and prospective economic and competitive environments, towhich companies are input.

Guidelines for managing credit risk exposure follow suit the selective, conservative profileof the Company, adherent to strategies set by Banrisul's management and technical areas.The efficient management of credit risk exposure at Banrisul contributes to the agile, safe,continued expansion of the loan portfolio, given the response of the applications used tomeasure risks inherent to each and every client. The internal classification tools are keptunder review and updated when needed. Regularly, Management validates the ratingperformance and its predictive power with respect to default events.

The continued and growing use of statistical methodologies for customers' risk assessment,the parameterization of credit policies and business rules, in conjunction with optimal controlsover system information utilizing a certification model, reinforce and strengthen the ratingson exposures derived from credit assets.

The use of credit and behavior score systems made possible, initially, the establishment ofpre-approved credit to individuals and, more recently, to companies, according to risk ratingsprovided for in statistical models that are conceptually more appealing to the managementof retail credit. For the following periods, the goal is to continue the consolidation ofproprietary models for risk classification, aiming at the continuation of high loan growthcombined with management standards committed to the best of credit quality indicators.

35

Market Risk

Market risk arises due to market fluctuations that may cause losses to the institution. Theseoscillations can occur in the prices of financial assets and liabilities or in determining variablessuch as, among others, interest rates, exchange rates, price indexes.

Banrisul monitors the market risk using statistical methodologies, Value at Risk (VaR) andSensitivity Tests among them, which seek to simulate and determine, with a degree ofreliability, the maximum levels of expected loss over a certain period of time, both in normalmarket conditions and in stress and volatility scenarios.

Market monitoring reports and the daily review of Banrisul's assets and liabilities portfolios,as well as other operational procedures, allow monitoring, preventing and correcting possibleimbalances, ensuring the soundness of the institution.

Liquidity Risk

Liquidity risk relates to the inability to meet cash requirements, i.e. the occurrence ofmismatches in financial flows between assets and liabilities and the resulting consequenceson the Bank's ability to raise funds when fulfilling its obligations.

Banrisul jointly monitors liquidity and market risk by observing cash flow projections andpossible changes in its structure resulting from alterations in the macroeconomic scenario,which may affect market funding and allocation.

Concerning to the asset side, different scenarios designed for the evolution of credit portfolioand settlement of financial instruments are considered. Moreover, as to the liabilities, theassumptions made include the possibility of early redemptions and difficulties in maintainingthe current funding structure.

Operational Risk

The main responsibilities of the operational risk management group are to identify, assess,monitor, control and mitigate operational risks at Banrisul, including those resulting fromoutsourced services. They group is composed by the Board of Administration and the Boardof Executive Officers, the Committee for the Management of Internal Controls, CorporateRisk Management Unit, the Comptroller, the branches and Head Offices areas, and the internalcontrols executive. More information about the structure of operational risk management isavailable at http://www.banrisul.com.br/Investor Relations /Corporate Governance/RiskManagement/Operational Risk Management Structure.

To facilitate the process of staff qualification, the Bank has developed internal communicationfor operational risk available on the Intranet, by means of forums, newsletters, and medianews, and promotes training modules for new employees and to the preparation of newbusiness managers.


For the monitoring and controlling of operational risk processes, the 7th Cycle of BusinessContinuity Plans Review and the 3rd Security Analysis of IT Assets forums were held. Processimprovement plans will also be implemented from diagnosis prepared by PWC - ConsultoresAssociados.

Basel Ratio

The Basel Ratio is the relation between the Base Equity (Reference Equity - RE) and weightedrisks (Required Reference Equity - RRE), according to current regulations, showing thecompany's solvency. The minimum required by the National Monetary Council (CMN) is 11%.CMN also determines that the minimum amount of the Reference Equity must be equal tothe sum of the parcels calculated for credit, market and operational risks.

In 1H11, Banrisul's Group Basel Ratio was 15.0%, 36.5% higher than the minimum required andallowing an increase of up to R$9,469.6 million in new business. The reduction from 1H10 wasprimarily driven by the growth of the loan book, resulting in an increase of capital allocationof almost 20% to cover the corresponding risk. The same behavior was observed In relation toBanrisul's financial and economic consolidated group, when the Basel ratio decreased from16.2% to 15.6%.

Referring to other parcels that comprise the RRE, the operational risk increased due toincreased revenue in the period and the evolution of the market risk was affected by themismatch of asset and liability positions.

The Risk Management Report is available at http://www.banrisul.com.br/Investor Relations/Corporate Governance/Operational Risk/Risk Management Report.

37

Technological Modernization

Investments in hardware, software and maintenance ofassets totaled R$94.9 million in 1H11. Technology-relatedinitiatives undertaken in the first quarter of 2011 focusedlargely on the implementation of actions aimed at ensuringa safer payment environment, Banrisul's accreditation asissuing authority for digital certificates, the promotion ofthe 4th IT Forum, training, culture dissemination andconsciousness.

With regards to the safety of payments, standards were set and processes to prevent andcombat fraud implemented, so that Banrisul meet acquiring requirements defined byMasterCard and its own Banricompras network, besides building fraud alerts solutions togetherwith product managers. Safety recommendations have been established, process revised,the room where cryptographic keys are generating adapted and training to professionalsprovided for, so that the VISA PIN Safety Program (new addition) complies with PCI securitystandards for card market.

In April 2011, the National Institute of Information Technology agreed to the accreditationrequest of Banrisul Registration Authority to issue digital certificates under the Public KeyInfrastructure in Brazil, ICP-Brazil. The Bank has invested in building its own RegistrationAuthority, aiming at ensuring security and flexibility in the use of Banrisul Multiple Card bycustomers.

Linked to SERPRO ACF and to AC SERPRO RFB, Banrisul Registration Authority is qualified toprovide issuing services of digital certificate, an electronic document which enables provingthe identity of an individual, a company, a website or server equipment, ensuring therealization of online transactions and the electronic exchange of documents, messages anddata. The technology makes possible to digitally sign any type of electronic document, givingit the same legal validity of the equivalent printout document signed with one's own hand.

In the first half of 2011, the corporative storage environment was restructured to the mainframeplatform (IBM Mainframes). Two sets of discs with synchronous data replication were installed,one at each Banrisul's site. Each of these sets is able to bear alone the burden of the Bank incase of contingency. The total installed capacity is 28 Terabytes at each site.

During two meeting days (May 31 and June 01, 2011), with record audience, Banrisul's 4th

International IT Forum, held in Porto Alegre, was attended by over 1,500 people. Featuringthe theme of Social Networks and Mobility, Business with Security, the event was attendedby national and international experts who debated the use of social networks and theirimpact on behavioral changes, safety issues and links with the corporate world, especially inthe banking industry. When opening the event, Banrisul's CEO launched the Company's Twitterofficial profile, @Banrisul.


Marketing

In the first half of 2011, the Company stepped forward to integrate its marketing andcommercial areas, seeking greater synergy to customers' needs, as well as having the offeringof products and services focused on increasing results. The marketing-and-sales processincludes market intelligence, prospection and identification of opportunities, customersegmentation, planning of relationship and sales support campaigns when deals are made.

The business plan and marketing activities are aligned with business strategy and marketingbudget with the aim to generating financial and institutional results that add value to thebrand Banrisul. The communication approach is geared to varying degrees of individual andcorporate customers using vehicles suitable for the specific target audience.

On the other hand, the repositioning of the business model is being built and strengthenedby the potentialities of each segment: retail, corporate, individual, and the customer profilewithin each segment. Banrisul's points of service are being expanded to locations wherecustomer service will be the main catalyst for the expansion of the client base.

In addition to monitoring products' life cycles, to creating new products and services, toconveniently, safely respond to customers' demands, the marketing result strategy requiresthe search for new markets to shelter the newcomers to the banking industry and the wealthgenerated by the economy. On this track, it has been under analysis the assessment ofpotential markets in the state of Rio Grande do Sul, Santa Catarina and Paraná to expandBanrisul's franchise, as well as to the repositioning of products such as credit cards, insuranceand pensions, investment funds, besides products and services to high wealthy individuals.

The increase in the base of cardholders and in the use of credit and debit cards gave Banrisulthe recognition as one of the five credit cards issuers best rated by customers, according to arecent survey by consulting firm CVA Solutions. It is noteworthy that after a year of deregulationin the card market, Banrisul, by means of Banricompras Network, ranks among the top fourplayers in the acquiring business, competing equally with Cielo, Redecard and GetNet, whilehaving as differential the largest network of debit cards in the southern region of Brazil.

In the ongoing process of knowing-your-customer and of extending relationship channels,social media have become marketing tools. Twitter is a reality at Banrisul, as it creates aconstant interaction with customers and market. In line with digital marketing, the creationof the official Twitter profile - @Banrisul -, released at the beginning of the 4th InternationalIT Forum, had immediate repercussions. The Bank's inclusion in the social network added,from right after the event until the end of June, about 1,200 followers.

In addition, sponsorship programs and marketing events in the social, cultural, sports,sustainability and business areas contribute as sources of business and favor the approach ofthe sales force within the communities.

The business expansion is focused on the pillars of management: customer service as acompetitive edge, economy of scale, innovation and technology with efficiency. Thecommercial guidance emphasizes products and services: real estate loans, credit and debitcards as means of payment, insurance, Banricompras Network in the acquiring business, fundingproducts and credit lines.

39

Human ResourcesBanrisul ended the first half of 2011 with 9,762 employees and 2,223 trainees. By the end ofJune 2011, 768 training courses were performed, with 5,643 attendants. In these qualificationprograms, the Bank invested R$6.3 million, of which R$232,500 were directed to collegeprograms, R$134,200 to post-graduation programs and R$171,200 to language courses.

.

Corporate ResponsibilityThe Bank recognizes the importance ofincorporating more and more in its activitiesthe commitment with preservation,sustainability and the spreading of a culture ofenvironmental responsibility. This awarenessis perceived through projects and programs andalso from raising awareness among partnersorganized into three areas: workforce,community, and social and environmental.

Among the community relationship highlights in the first half of 2011, the 8th edition of ProjetoPescar (Fishing Project) stands out, an initiative that offers professional training to help includesocially vulnerable youngsters in the labor market and to which Banrisul has been contributingsince 2003. The Company also attended the Solidarity Day of and the 3rd International Forumon Solid Waste, where several practices in favor of the public present at the events weregathered.

As to the socio-environmental axis, Banrisul participated during the month of June of the VIINational Week of Organic Food and of the Agrobiodiversity Guardians Project, distributingmore than two million native trees, native seeds and agroecological horticulture tocooperatives, associations, ecological farmers settlement, indigenous and marooncommunities, schools, agricultural extension university papers and also in fairs and events inover 40 cities within the State of Rio Grande do Sul.

During the State Environmental Week, workshops discussing the proper use and maintenanceof bicycles were offered, such as the BanriBike program, lectures and exhibitions like "Guaíba- River or Lake" and "Our Unknown Pampa" promoted, besides orientations and guidelinesfor developing community and home gardens and activities related to the Recycling andSeeds Programs.

When dealing with the internal audience, the inclusion of the sustainability issue in in-housetraining courses is the highlight, incorporating the idea of social responsibility in business.Under the Voluntary Program, meetings with Gerdau (steel group, leading producer of longsteel in the Americas), FASE RS (Social-Educational Care Foundation of the State of Rio Grandedo Sul) and REFAP RS (Alberto Pasqualini Refinery - Petrobras 5th largest refinery in Brazil)


were held, mediated by the NGO Partners Volunteers, to share social and environmentalpractices and possible partnerships.

Also noteworthy is the participation in the FEBRABAN (Brazilian Banks Federation)'sSustainability Report - GRI, a document that composes a picture of the sustainability of thefinancial sector. The methodology for the report is currently the main tool for communicatingthe social, environmental and economic performance of organizations. Reflecting its concernabout corporate responsibility, Banrisul was awarded the Government and SocietySustainability Certificate at the end of the first half of 2011.

Awards

January 2011. Banrisul Brand is featured in world ranking.

The value of the brand Banrisul in 2011 reached R$532 million, up 12.5% compared to last year.The outcome is part of a survey prepared by the British consultancy Brand Finance, whichexamined the 500 largest financial institutions in several countries. Banrisul's goodwill appearsin the 319th position in the ranking Global Banking 500 by Brand.

January 2011. Banrisul is one of the best reputed companies in Rio Grande do Sul.

The Bank was one of the winners of the Corporate Reputation award given by Tomorrowmagazine, which showed Rio Grande do Sul's most prestigious corporations, as the outcomeof a study by Trojan Brand Consultancy. Banrisul has reached the Prestige of Corporate Brandlevel equivalent to 32.41 points and was presented in all fields covered by the survey:"Confidence and Admiration", "Innovation Capacity", "Quality of Products and Services","Social and Environmental Responsibility" and "History and Evolution".

March 2011. Banrisul is highlighted in the study Brands of Who Decides.

Banrisul is highlighted in the study Marks of Who Decides, in the 13th edition of the surveyconducted by Jornal do Comércio and the company Qualidata, as one of the most rememberedbrand in the "Bank" and "Savings Deposits" categories.

April/2011. Banrisul's shares presented the best performance.

Banrisul's class B preferred shares (PNB -BRSR6) Banrisul had the best average performanceamong Brazilian banks, according to a survey made by the consulting firm Economática. Theprofitability of Banrisul's PNB shares reached 41.2% in the last twelve months.

April/2011. Banrisul, one of the largest companies in the world.

Banrisul appears in the new list of the world's largest two thousand companies published byForbes magazine. The Bank, one of 37 Brazilian companies listed in the ranking, appears inthe 1,438th place. The survey was prepared based on criteria that take into account sales, netincome, assets and market value.

41

May/2011. Banrisul's shares listed in Bovespa's new index.

Banrisul's shares were included in the Broad Brazil Index (IBRA), Bovespa's most recent index.As disclosed by Bovespa, the index includes all shares of the listed companies that meet theminimum criteria of liquidity, such as inclusion in a list whose trade index added represent99% of the total trading and the financial volume recorded, besides participating in no lessthan 95% of trading sessions in the 12 months prior to the calculation of the indicator.

May/2011. Banrisul, one of Brazil's most valuable brands.

For the first time, Banrisul is part of the "50 most valuable brands in Brazil" ranking and, in thecategory of Banks, is listed as the 4th largest Brazilian financial institution in value. In thisyear's edition, Banrisul brand reached USD344 million. The survey was prepared by theconsulting firm BrandAnalytics and the magazine Dinheiro.

June/2011. Banrisul among Brazil's most valuable brands.

The Bank is among the 25 most valuable brands in Brazil. The ranking was elaborated byInterbrand, an American brand consultancy company. Banrisul's brand value was set at R$501million.

June/2011. Banrisul is the most remembered brand of Rio Grande do Sul in the bank

category.

The Bank is listed among the most remembered local brands in the category "Large Companyin Rio Grande do Sul" of Top of Mind 2011 survey, published by the newspaper Tomorrow.With 26.4% of the citations, the Company also took the lead among banks in the State, andwas ranked first in the item "Electronic Payment Network," Banricompras especially. Banrisulstood out as an efficient public company that invests in culture and, in the "Savings Account"and "Credit Card" categories, with the Banricompras. In the same study, Banrisul Serviçoswon the category Meal Voucher.

June /2011. Banrisul receives Government and Society Sustainability Certificate.

The Bank received the Certificate of Sustainability as a function of the 7th SustainableManagement Research. The survey involved 112 medium and large companies that operatein the southern region of Brazil and are aware of corporate responsibility.

AcknowledgmentsThe Bank's strength, reputation and confidence achieved throughout its history are the resultof the respect that is preserved in the relationship with employees, customers, stakeholdersand shareholders. Banrisul thanks its competent and qualified staff for their commitmentand dedication, and the Government of the State of Rio Grande do Sul, shareholders andcustomers for their trust and support.

The Management


FinancialStatements

43

Balance SheetJune 30, 2011 and 2010(In Thousands of Reais)

Banrisul Banrisul ConsolidatedASSETS 2011 2010 2011 2010

CURRENT ........................................................................ 18,233,896 17,306,797 18,315,014 17,379,585CASH ................................................................................. 405,785 339,839 405,824 339,863INTERBANK INVESTMENTS (Note 04) ........................... 2,825,998 4,115,619 2,844,829 4,133,224

Money Market Investments ..................................... 2,545,858 3,985,837 2,564,689 4,003,442Interbank Deposits ................................................... 280,140 129,782 280,140 129,782

SECURITIES AND DERIVATIVES (Note 05) .................... 3,221,915 3,194,762 3,229,975 3,197,116Own Portfolio .............................................................. 2,119,108 1,266,720 2,127,162 1,269,069Linked to Repurchase Commitments ..................... 1,102,807 1,909,032 1,102,807 1,909,032Derivatives .................................................................. - 16,873 - 16,873Linked to Guarantees ............................................... - 2,137 - 2,137Privatization Certificates .......................................... - - 6 5

INTERBANK ACCOUNTS .................................................. 2,447,772 1,836,024 2,447,772 1,836,024Payments and Receipts Pending Settlement ....... 204,166 223,227 204,166 223,227Restricted Deposits (Note 06) .................................Central Bank of Brazil ............................................... 2,210,761 1,585,641 2,210,761 1,585,641Agreements ................................................................. 4,194 - 4,194 -Correspondents .......................................................... 28,651 27,156 28,651 27,156

INTERBRANCH ACCOUNTS ............................................. 52,934 47,261 52,934 47,261Third-party Funds in transit .................................... 2,379 2,383 2,379 2,383Internal Transfers of Funds ..................................... 50,555 44,878 50,555 44,878

LENDING OPERATIONS (Notes 07) ............................... 8,149,240 6,742,823 8,149,240 6,742,823Lending Operations

Public Sector ............................................................ 29,095 43,108 29,095 43,108Private Sector ........................................................... 8,559,003 7,086,598 8,559,003 7,086,598

Allowance for Loan Losses ...................................... (438,858) (386,883) (438,858) (386,883)LEASE OPERATIONS (Note 07) ....................................... 35,840 38,012 35,840 38,012

Lease ReceivablesPublic Sector ............................................................ 788 829 788 829Private Sector ........................................................... 37,526 39,961 37,526 39,961

Allowance for Doubtful Lease Receivables ......... (2,474) (2,778) (2,474) (2,778)OTHER RECEIVABLES (Note 08) ..................................... 1,080,782 973,876 1,134,679 1,026,457

Foreign Exchange Portfolio ...................................... 508,662 410,864 508,662 410,864Income Receivable .................................................... 42,120 35,057 39,621 32,815Trading Accounts ........................................................ - - 5,203 3,465Specific Credits ........................................................... - - 17 22Other ............................................................................. 563,937 549,075 615,902 600,879Allowance for Losses on Other Receivables ....... (33,937) (21,120) (34,726) (21,588)

OTHER ASSETS ................................................................. 13,630 18,581 13,921 18,805Temporary Investiments ........................................... - 232 - 232Other Assets ............................................................... 2,244 2,060 2,384 2,203Prepaid Expenses ...................................................... 11,386 16,289 11,537 16,370


Banrisul Banrisul ConsolidatedASSETS (cont´d) 2011 2010 2011 2010

LONG-TERM ASSETS .................................................... 16,105,259 13,325,752 16,123,536 13,339,975SECURITIES AND DERIVATIVES (Note 05) .................... 5,664,721 4,891,093 5,670,048 4,893,965

Own Portfolio .............................................................. 4,226,802 3,896,684 4,226,802 3,896,684Linked to Repurchase Commitments ..................... 743,701 227,029 743,701 227,029Derivatives .................................................................. - 136,275 - 136,275Linked to Central Bank of Brazil ............................. 626,243 563,818 626,243 563,818Linked to Guarantees ............................................... 67,975 67,287 73,302 70,159

INTERBANK ACCOUNTS .................................................. 630,024 470,172 630,024 470,172Restricted Deposits (Note 06)National Housing System ........................................ 630,024 470,172 630,024 470,172

LENDING OPERATIONS (Notes 07) ............................... 8,885,552 7,111,822 8,885,552 7,111,822Lending Operations

Public Sector ............................................................ 84,659 88,781 84,659 88,781Private Sector ........................................................... 9,529,968 7,690,906 9,529,968 7,690,906

Allowance for Loan Losses ...................................... (729,075) (667,865) (729,075) (667,865)LEASING OPERATIONS (Note 07) .................................. 35,091 40,663 35,091 40,663

Lease ReceivablesPublic Sector ............................................................ 2,182 2,328 2,182 2,328Private Sector ........................................................... 37,340 45,385 37,340 45,385

Allowance for Doubtful Lease Receivables ......... (4,431) (7,050) (4,431) (7,050)OTHER RECEIVABLES (Note 08) ..................................... 878,860 795,746 891,810 807,097

Foreing Exchange Portfolio ...................................... 8,360 35,770 8,360 35,770Other ............................................................................. 898,569 860,242 911,519 871,593Allowance for Losses on Other Receivables ....... (28,069) (100,266) (28,069) (100,266)

OTHER ASSETS ................................................................. 11,011 16,256 11,011 16,256Other Assets ............................................................... 22,698 21,428 22,698 21,428Allowance for Valuation .......................................... (12,299) (9,710) (12,299) (9,710)Prepaid Expenses ...................................................... 612 4,538 612 4,538

PERMANENT ASSETS ...................................................... 645,145 672,278 316,480 379,194INVESTIMENTS ................................................................ 344,183 308,727 7,660 7,758

Investments in Domestic Subsidiaries(Note 02 (c)) .............................................................. 337,377 301,822 - -

Other Investiments ................................................... 11,599 11,888 12,926 13,214Allowance for Losses ................................................ (4,793) (4,983) (5,266) (5,456)

PROPERTY AND EQUIPMENT IN USE (Note 09 (a)) ..... 159,076 163,506 165,974 170,861Real Estate .................................................................. 120,325 121,068 130,586 131,330Other ............................................................................. 483,745 449,624 489,162 454,857Accumulated Depreciation ...................................... (444,994) (407,186) (453,774) (415,326)

INTANGIBLE (Note 09 (b)) ............................................. 141,886 200,045 142,846 200,575Intangible Assets ...................................................... 366,894 357,297 368,777 357,827Accumulated Amortization ...................................... (225,008) (157,252) (225,931) (157,252)

TOTAL ASSETS ................................................................. 34,984,300 31,304,827 34,755,030 31,098,754

45

Banrisul Banrisul ConsolidatedLIABILITIES AND SHAREHOLDERS´ EQUITY 2011 2010 2011 2010

CURRENT ........................................................................ 23,783,068 23,265,731 23,551,761 23,121,917DEPOSITS (Note 10) ....................................................... 14,351,996 14,144,487 14,096,409 14,016,379

Demand Deposits ...................................................... 2,697,783 2,032,819 2,695,066 2,028,887Saving Deposits ......................................................... 5,158,770 6,037,629 5,158,770 6,037,629Interbank Deposits ................................................... 10,208 34,596 10,208 34,596T ime Deposits ............................................................ 6,484,701 6,030,269 6,231,831 5,906,093Other Deposits ........................................................... 534 9,174 534 9,174

MONEY MARKET FUNDING (Note 10) .......................... 1,846,508 2,136,062 1,778,916 2,073,866Own Portfolio .............................................................. 1,846,508 2,136,062 1,778,916 2,073,866

INTERBANK ACCOUNTS .................................................. 284,269 265,118 284,269 265,118Receipt and Payment Pending Settlement ........... 283,548 264,513 283,548 264,513Correspondents .......................................................... 721 605 721 605

INTERBRANCH ACCOUNT ............................................... 219,625 188,862 219,625 188,862Third-party Funds in Transit .................................... 219,027 188,597 219,027 188,597Internal Transfers of Funds ..................................... 598 265 598 265

BORROWINGS (Note 11) ............................................... 670,188 538,432 670,188 538,432Foreign Borrowings ................................................... 670,188 538,432 670,188 538,432

DOMESTIC ONLENDINGS - OFFICIAL INSTITUTIONS(Note 12) ...................................................................... 337,709 400,589 337,709 400,589National Treasury ...................................................... 63,691 56,647 63,691 56,647National Economic and Social Development Bank

(BNDES) ..................................................................... 151,745 228,102 151,745 228,102Federal Savings and Loan Bank (CEF) .................... 11,128 5,495 11,128 5,495National Equipment Financing Authority (FINAME) 111,145 110,345 111,145 110,345

FOREING ONLENDINGS (Note 12) ............................... 14,112 47,858 14,112 47,858Foreign Onlendings .................................................. 14,112 47,858 14,112 47,858

DERIVATIVES (Note 05 (d)) ........................................... - 16,419 - 16,419Derivatives .................................................................. - 16,419 - 16,419

OTHER PAYABLES (Note 13) ............................................ 6,058,661 5,527,904 6,150,533 5,574,394Collected Taxes and Other ....................................... 151,787 130,332 151,787 130,332Foreign Exchanges Portfolio .................................... 18,811 37,170 18,811 37,170Social and Statutory .................................................. 84,947 43,242 85,003 43,310Tax and Social Security ............................................. 294,243 190,877 307,510 199,440Trading Account and Intermediation ..................... - - 4,915 3,143Financial and Development Funds ....................... 4,792,887 4,448,060 4,792,887 4,448,060Other ............................................................................. 715,986 678,223 789,620 712,939


Banrisul Banrisul ConsolidatedLIABILITIES AND SHAREHOLDERS´ EQUITY (cont´d) 2011 2010 2011 2010

LONG-TERM LIABILITIES ................................................. 7,083,103 4,448,993 7,083,593 4,385,025DEPOSITS (Note 10) ....................................................... 5,704,524 3,192,749 5,704,524 3,128,318

Interbank Deposits ................................................... 5,704,524 3,192,749 5,704,524 3,128,318BORROWINGS ................................................................. 14,561 1,259 14,561 1,259

Foreign Borrowings (Note 11) ................................. 14,561 1,259 14,561 1,259DOMESTIC ONLENDINGS - OFFICIAL INSTITUTIONS

(Note 12) ...................................................................... 784,179 662,927 784,179 662,927National Treasury ...................................................... 10,047 11,958 10,047 11,958National Economic and Social Development

Bank (BNDES) ........................................................... 488,164 463,495 488,164 463,495Federal Savings and Loan Bank (CEF) .................... 36,076 26,560 36,076 26,560National Equipment Financing Authority (FINAME) 249,892 160,914 249,892 160,914

FOREING ONLENDINGS (Note 12) ............................... 16,311 4,069 16,311 4,069Foreign Onlendings .................................................. 16,311 4,069 16,311 4,069

DERIVATIVES (Note 5 (d)) .............................................. - 35,159 - 35,159Derivatives .................................................................. - 35,159 - 35,159

OTHER PAYABLES (Note 13) ............................................ 563,528 552,830 564,018 553,293Tax and Social Security ............................................. 403,233 393,824 403,233 393,824Other ............................................................................. 160,295 159,006 160,785 159,469

MINORITY INTEREST.................................................... - - 1,547 1,709SHAREHOLDERS' EQUITY (Note 20) ............................ 4,118,129 3,590,103 4,118,129 3,590,103

Capital ......................................................................... 3,200,000 2,900,000 3,200,000 2,900,000Capital Reserves ........................................................ 4,511 4,511 4,511 4,511Profit Reserves ........................................................... 920,802 691,914 920,802 691,914Assets valuation adjustment (Note 05 (b)) .......... (7,184) (6,322) (7,184) (6,322)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .......... 34,984,300 31,304,827 34,755,030 31,098,754

47

June 30, 2011 and 2010(In Thousands of Reais)

Statement of Income

Banrisul Banrisul Consolidated 2011 2010 2011 2010

FINANCIAL INCOME ........................................................ 2,728,350 2,229,445 2,736,390 2,233,231

Loan Operations ............................................................ 2,011,431 1,609,650 2,011,431 1,609,650

Lease Operations .......................................................... 7,362 8,815 7,362 8,815

Securities ........................................................................ 587,256 486,736 595,296 490,522

Foreign Exchange .......................................................... 17,357 35,524 17,357 35,524

Compulsory Investments ............................................. 104,944 88,720 104,944 88,720

FINANCIAL EXPENSES ..................................................... 1,440,234 1,163,211 1,430,036 1,155,537

Funding Operations ..................................................... 849,753 641,653 839,298 633,906

Borrowings, Assignments and Onlendings ............. 309,202 238,426 309,202 238,426

Derivatives ..................................................................... - 2660 - 2660

Allowance for Loan Losses (Note 07 (d)) ................. 281,279 280,472 281,536 280,545

GROSS PROFIT FROM FINANCIAL OPERATIONS.............. 1,288,116 1,066,234 1,306,354 1,077,694

OTHER OPERATING INCOME (EXPENSES) ....................... (614,076) (614,869) (621,489) (618,654)

Income from Services Rendered (Note 15) .............. 52,745 48,181 64,038 72,159

Bank Fees Income (Note 16) ....................................... 265,747 235,170 280,959 235,164

Equity in Subsidiaries (Note 02 (c)) ........................... 17,442 12,558 - -

Personnel Expenses ..................................................... (504,611) (438,259) (507,087) (441,994)

Other Administratives Expenses (Note 17) .............. (340,007) (389,783) (346,390) (395,276)

Tax Expenses .................................................................. (107,270) (94,399) (111,123) (97,632)

Other Operating Income (Note 18) ............................ 112,724 90,168 113,107 88,783

Other Operating Expenses (Note 19) ......................... (110,846) (78,505) (114,993) (79,858)

INCOME FROM OPERATIONS .......................................... 674,040 451,365 684,865 459,040

INCOME BEFORE TAXES ON INCOME AND EMPLOYEE

PROFIT SHARING ......................................................... 674,040 451,365 684,865 459,040

INCOME TAX AND SOCIAL CONTRIBUTION (Nota 22a) ... (210,816) (123,960) (221,573) (131,560)

EMPLOYEE PROFIT SHARING .......................................... (24,726) (22,406) (24,726) (22,406)

MINORITY INTEREST ....................................................... - - (68) (75)

NET INCOME ................................................................... 438,498 304,999 438,498 304,999

Number of Outstanding Shares (Thousands) ......... 408,974 408,974 - -

Earning per Thousand Shares (R$) ............................ 1,072.19 745,77 - -



Cash Flow


Adjustes to Net Income..................................................... 799,394 656,228 814,375 670,224Net Income ....................................................................... 438,498 304,999 438,498 304,999

Adjustment to Net Income:Depreciation and Amortization ................................... 54,792 52,903 55,107 53,257Equity in Subsidiaries.................................................... (17,442) (12,558) - -Dividends Received Fron Subsidiaires ...................... 5,597 - - -Provision for Loan Losses.............................................. 281,279 280,472 281,536 280,545Reserve for Securitization Losses ............................... (730) (2,780) (730) (2,780)Reserve for Contingencies ............................................ 62,185 50,350 65,421 51,351Deferred Income Tax and Social Contribution ......... (24,785) (17,158) (25,457) (17,148)

Changes in Assets and Liabilities ...................................... (297,262) (1,661,988) (311,583) (1,673,133)Valuation adjustment to Equity ................................... (1,735) (475) (1,735) (475)(Increase) Decrease in Interbank Deposits.............. 105,201 114,590 105,201 114,590(Increase) Decrease in Securities ............................... (376,206) (682,421) (374,277) (680,631)(Increase) Decrease in Derivatives ............................. - 2,677 - 2,677(Increase) Decrease in Interbank and InterbranchAccounts............................................................................ 349,379 (203,378) 349,379 (203,378)(Increase) Decrease in Lending Operations ............. (1,822,673) (2,255,367) (1,822,673) (2,255,367)(Increase) Decrease in Lease Operations ................. 2,795 9,143 2,795 9,143(Increase) Decrease in Other Receivables................ (255,520) (131,507) (261,474) (136,765)(Increase) Decrease in Other Assets .......................... 4,928 10,783 4,940 10,796Increase (Decrease) in Deposits ................................. 766,739 778,817 747,928 774,952Increase (Decrease) in Money Market Funding ....... 466,462 66,169 467,756 67,369Increase (Decrease) in Borrowing ............................... 214,621 173,454 214,621 173,454Increase (Decrease) in Other Liabilities ................... 248,747 455,527 255,956 450,502

NET CASH USED IN OPERATING ACTIVITIES ...................... 502,132 (1,005,760) 502,792 (1,002,909)CASH FLOW PROVIDED BY INVESTING ACTIVITIES

Disposal of Investiments.............................................. 1 52 - -Disposal of Property and Equipment in Use ............. 118 105 119 105Acquisition of Investiments ......................................... (1) (15) - (1,660)Acquisition of Property and Equipment in Use ........ (18,140) (14,132) (18,179) (17,477)Acquisition of Intangible Assets ................................. (5,673) (56,973) (5,673) (57,134)

NET CASH USED IN INVESTMENT ACTIVITIES ................... (23,695) (70,963) (23,733) (76,166)CASH FLOW FROM FINANCING ACTIVITIES

Interest on Capital Paid ................................................ 114,277 (101,064) 114,277 (101,064)Change in Minority Interest .......................................... - - (132) 54

NET CASH USED IN FINANCING ACTIVITIES ...................... 114,277 (101,064) 114,145 (101,010)NET INCREASE/DECREASE IN CASH AND CASH

EQUIVALENTS ................................................................ 592,714 (1,177,787) 593,204 (1,180,085)Cash and Cash Equivalents ........................................... 403,281 411,158 403,321 411,220Interbank Investments (Note 03(n))............................ 2,235,788 5,222,087 2,254,128 5,241,952

CASH AND CASH EQUIVALENT AT THE BEGINNING OFTHE PERIOD ................................................................... 2,639,069 5,633,245 2,657,449 5,653,172Cash ................................................................................... 405,785 339,839 405,824 339,863Interbank Investments (Note 03(n))............................ 2,825,998 4,115,619 2,844,829 4,133,224

CASH AND CASH EQUIVALENT AT THE END OFTHE PERIOD ................................................................... 3,231,783 4,455,458 3,250,653 4,473,087

49


Statement of Value Added


INCOME (a) .................................................................... 2,878,296 2,322,508 2,914,514 2,348,916

Financial Income .......................................................... 2,728,359 2,229,461 2,737,946 2,233,355

Services Rendered and Bank Fees Income ............. 318,492 283,351 344,997 307,323

Allowance for loan losses .......................................... (281,279) (280,472) (281,536) (280,545)

Other ................................................................................ 112,724 90,168 113,107 88,783

FINANCIAL INTERMEDIATION EXPENSES (b) ................... 1,158,958 882,739 1,148,503 874,992

INPUTS ACQUIRED FROM THIRD PARTIES (c) ................. 369,778 391,516 382,160 398,936

Materials, Energy and other ...................................... 301,752 329,289 311,080 335,269

Third-party Services ...................................................... 68,017 62,211 69,524 63,543

Assets Value Recovery (Loss) ..................................... 9 16 1,556 124

GROSS VALUE ADDED (d=a-b-c) ..................................... 1,349,560 1,048,253 1,383,851 1,074,988

DEPRECIATION AND AMORTIZATION (e) ......................... 54,792 52,903 55,108 53,257

NET VALUE ADDED PRODUCED BY THE BANK (f=d-e) .... 1,294,768 995,350 1,328,743 1,021,731

VALUE ADDED RECEIVED IN TRANSFER (g) .................... 17,442 12,558 - -

Equity in Subsidiaries ................................................. 17,442 12,558 - -

VALUE ADDED FOR DISTRIBUTION (h=f+g) .................... 1,312,210 1,007,908 1,328,743 1,021,731

DISTRIBUTION OF VALUE ADDED ................................... 1,312,210 1,007,908 1,328,743 1,021,731

Personnel ..................................................................... 454,629 394,352 456,979 397,907

Salary ............................................................................ 345,153 302,018 346,942 305,021

Benefits ....................................................................... 80,527 67,429 80,844 67,771

F,G,T,S, ........................................................................... 28,949 24,905 29,193 25,115

Tax Fees and contributions ........................................... 392,794 284,672 407,530 295,685

Federal ........................................................................ 374,418 267,643 387,897 277,590

State ............................................................................. 271 227 274 232

Municipality ................................................................ 18,105 16,802 19,359 17,863

Third-party capital compensation ................................ 26,289 23,885 25,668 23,065

Rentals ........................................................................ 26,289 23,885 25,668 23,065

Shareholders' equity compensation ............................. 438,498 304,999 438,566 305,074

Interest on Capital .................................................... 114,277 101,064 114,277 101,064

Dividends .................................................................... 59,596 20,159 59,596 20,159

Retained Earnings ..................................................... 264,625 183,776 264,625 183,776

Minority interest ........................................................ - - 68 75


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51

Contents of Notes toFinancial Statements


Contents of the Notes toFinancial Statements

Please find below the Notes to the Financial Statements, which are an integral part of theFinancial Statements of Banco do Estado do Rio Grande do Sul S.A. (Banrisul) and comprisethe following sections:

NOTE 01 OperationsBanco do Estado do Rio Grande do Sul S.A. (Banrisul' is a multiple-service bank, operatingcommercial, lending, financing and investment, mortgage loan, development, lease andinvestment portfolios, including exchange, securities brokerage, and credit card andconsortium management. Transactions are conducted within the context of a group of financialinstitutions that operate on an integrated basis in the financial market. Banrisul also operatesas an instrument for the execution of the economic and financial policy of the state of RioGrande do Sul, in conformity with the state government's plans and programs.

NOTE 02 Presentation of the Financial Statements

(a) The individual and consolidated financial statements have been prepared in accordancewith Brazilian accounting practices applicable to financial institutions, and standards andinstructions from the Central Bank of Brazil and from the Brazilian Securities and ExchangeCommission (CVM), include accounting practices and estimates concerning the recognitionof allowances and determination of assets that comprise its securities portfolio. Actual resultscould differ from those estimated.

(b) Banrisul's individual financial statements include operations conducted in Brazil as wellasthe incorporation of its foreign branches (New York and Grand Cayman). The assets, theliabilities and the income from foreign branches, before consolidation eliminations, aresummarized as follows:

In Thousands of Reais 2011 2010

ASSETSLending Operations ............................................................................ 137,740 157,797

Operations in Brazil ........................................................................ 78,239 88,244Other Lending Operations ............................................................... 59,501 69,553

Other Assets ...................................................................................... 34,562 20,760Total Assets ........................................................................................ 172,302 178,557LIABILITIES ..........................................................................................Deposits ............................................................................................. 64,674 57,772

Operations in Brazil ........................................................................ 22,099 9,046Other Deposits ................................................................................. 42,575 48,726

Other Liabilities ................................................................................. 354 514Shareholders' Equity .......................................................................... 107,274 120,271Total Liabilities and Shareholders' Equity............................................ 172.302 178.557STATEMENT OF INCOME

Financial Intermediation Income ................................................... 2,879 3,074Financial Intermediation Expenses ................................................ (519) (805)Other Expenses, Net ......................................................................... (797) (1,170)

Net Income for the period ................................................................. 1,563 1,099

53

In Thousands of ReaisBanrisul Banrisul S.A. Banrisul S.A. Banrisul

Armazéns Corretora de Val. Administradora ServiçosGerais S.A. Mob. e Câmbio de Consórcios Ltda. Total

Thousands of SharesCommon Shares ................................................ 696 10,000 89,216 - -Preferred Shares ............................................... - 19,608 - - -Shares ................................................................ - - - 2,780 -

Adjusted Ownership Interest (%) ........................ 99.498 98.957 99.683 99.785 -Capital .................................................................... 24,700 58,000 116,000 77,640 -Shareholders’ Equity ............................................ 25,300 73,126 136,170 104,327 -Net Income ............................................................ 465 2,454 6,799 8,687 -Net Amounts Eliminated on Consolidation (Note 25):Assets (Liabilities)

As of June 30, 2011 ........................................... 141 (66,785) (129,669) (132,130) (328,443)As of June 30, 2010 ........................................... 153 (61,327) (124,239) (102,803) (288,216)

Income (Expenses)As of June 30, 2011 ........................................... (720) (2,464) (5,303) 1,430 (7,057)As of June 30, 2010 ........................................... (749) (1,461) (3,914) 251 (5,873)

Book Value of the InvestmentAs of June 30, 2011 ........................................... 25,173 72,364 135,738 104,102 337,377As of June 30, 2010 ........................................... 24,405 63,917 125,729 87,771 301,822

Equity in SubsidiariesAs of June 30, 2011 ........................................... 453 2,538 6,778 7,673 17,442As of June 30, 2010 ........................................... 439 4,157 5,256 2,706 12,558

In the preparation of the consolidated financial statements, interests held among consolidatedcompanies were eliminated, as well as intercompany balance sheet and profit and lossaccounts. The portions of income for the half year and net equity referring to noncontrollinginterests are shown separately in the financial statements.

(d) Finance Lease Operations are stated at present value in the Balance Sheet, and relatedincome and expenses, which represent the financial result of said operations, are grouped inLease Operations in the Statement of Income.

The effects of the exchange variation over operations in foreign branches are distributed inthe statement of income according to the nature of corresponding assets and liabilities.

(c) The consolidated financial statements include the accounts of Banrisul, its foreign branchesand subsidiaries whose balance of investments, as of June 30, 2011, amounted to R$337,377thousand (2010 - R$301,822 thousand), and generated equity gains in subsidiaries on periodR$17,442 thousand (2010 - R$12,558 thousand), and are presented as follows:

MAIN INFORMATION ON INVESTMENTS IN SUBSIDIARIES:

NOTE 03 Significant Accounting Practices

(a) Results of operationsIncome and expenses are recorded on the accrual basis.

(b) Interbank InvestmentsThese represent funds invested in the interbank market, stated at present value, calculatedon "pro rata die" basis, according to the variation of both the agreed index and the interestrate.

(c) Securities and DerivativesAccording to Circular no. 3068, issued by the Central Bank of Brazil on November 8, 2001, andsupplementary regulation, these are classified and valued in three specific categories, inconformity with the following accounting criteria:


i) Trading Securities – these include securities acquired for purposes of being actively andfrequently traded, measured at fair value, with related gains or losses being recognized inthe statement of income.

ii) Available-for-Sale Securities – these include securities used as part of the strategy tomanage risk of changes in interest rates and may be traded as a result of these changes,changes in payment conditions or other factors. These securities are adjusted to fair value,and income earned is recorded in the statement of income, whereas unrealized gains andlosses from changes in fair value are recorded in a separate shareholders’ equity caption, netof taxes, where applicable, denominated “Valuation Adjustments to Equity” until they arerealized through sale.

Gains and losses, when realized, are recorded in the statement of income on the tradingdate, matched with a specific shareholders’ equity account, net of taxes, where applicable.

iii) Held-to-Maturity Securities – these include securities for which Management has theintention and financial capacity to hold to maturity. These securities are stated at cost plusincome earned on a “pro rata temporis” basis. Financial capacity is defined in cash flowprojections, disregarding any possible sale of these securities.

Derivatives - Derivatives acquired together with other investment operations are stated atfair value amounts. income earned and expenses incurred are recorded on the accrual basis,matched with a P&L account.

(d) Loans, Lease Transactions and Other Credit-Like ReceivablesAll loans and lease transactions are classified based on Management’s risk assessment, takinginto account the economic scenario, past experience and specific risks related to operations,debtors and guarantors, pursuant to National Monetary Council (CMN) Resolution no. 2682/99, which requires a periodic analysis of the portfolio and its classification into nine risklevels, from AA to H. A summary of this classification is presented in Note 07.

Loans and lease transactions are recorded at present value, calculated on a daily pro-ratabasis, based on the agreed index and interest rate, and are adjusted to the 60th day past-due.Thereafter, revenue is recognized only when the operations are actually received.

The risk of renegotiated asset operations is classified in accordance with the criteria establishedby National Monetary Council (CMN) Resolution no. 2682/99, i.e. the rating assigned beforethe renegotiation is maintained and renegotiated loans previously written-off against theallowance and controlled in memorandum accounts are rated level H. Any gains onrenegotiation are recognized as revenue only when actually received.

(e) Other Receivables - Operations with Credit CardsUnbilled amounts are represented by receivables from cardholders for transactions underVisa and MasterCard banners. These amounts are accounted for as non credit-like Notes andReceivables, and installment payment transactions where Banrisul is the issuer and theoutstanding balance of transactions after minimum payment of the bill is made (Revolvingcredit) are reclassified as Loans.

(f) Allowance for loan losses, for doubtful lease receivables and for losses on other receivablesThis is recorded in an amount considered sufficient to cover possible considering the risklevel classification of the customer based on periodic assessment of credit quality, and notonly on the minimum percentages required by the National Monetary Council (CMN)Resolution no. 2682/99 when a default event occurs.

As of June 30, 2011, the total amount related to the allowance for loan losses, allowance fordoubtful lease receivables and losses on other receivables, as stated in Note 07, exceeds the

55

minimum amount required if only the rating of transactions based on the number of past duedays is considered as set forth by National Monetary Resolution no. 2682/99. This procedurehas been adopted by Management since its publication to cover possible events not capturedby the credit-scoring model.

(g) Permanent AssetsPermanent assets are stated at acquisition cost, considering the following aspects:

· Investments in subsidiaries are accounted for under the equity method, based on thefinancial statements prepared in conformity with the accounting practices adopted by theparent company, i.e. the Brazilian accounting practices applicable to financial institutions.Other investments are stated at cost and adjusted for allowances for permanent losses, whenapplicable;

· Depreciation of property and equipment in use under the straight-line method is based onthe expected economic useful lives of assets considering the minimum rates set annually bythe Central Bank of Brazil, and disclosed in Note 09;

· Intangible Assets consist, basically, of investments whose benefits will occur in the future.This group of accounts is represented by bank services contracts and software acquisition.Amortization is calculated under the straight line method at the rates stated in Note 09; and

· Annually, Banrisul reviews intangible assets for impairment losses. When identified, lossesare charged to income.

(h) Assets and Liabilities Denominated in Foreign CurrencyThe assets and liabilities of foreign branches, as well as other assets and liabilities arisingfrom foreign currency transactions carried out by Banrisul and its subsidiaries were translatedat the exchange rate prevailing at the balance sheet date.

(i) Deposits, Money Market Funding, Borrowings and Onlendings and Financial andDevelopment FundThese are stated at liability amounts plus charges incurred through the balance sheet date,recognized on a pro rata die basis.

As prescribed by Laws No. 12069/04 and No. 12585/06, issued by the Rio Grande do Sul StateGovernment, up to 85% of the escrow deposits made by third parties at Banrisul should be, ifso requested, made available to the state of Rio Grande do Sul, and the remaining balance isretained at Banrisul for the creation of a fund. Escrow deposits transferred to the Rio Grandedo Sul Government are controlled in a memorandum account and the retained portion isclassified as “Other Payables”, as described in Note 21(a). Expenses on charges on the remainingbalance are recorded under “Expenses with Borrowings, Assignments and Onlendings”.

(j) Contingent Assets and Liabilities and Tax, Labor and Civil RisksContingent assets, contingent liabilities, and legal obligations are recognized, measured anddisclosed in accordance with the criteria set forth by Resolution no. 3823/09 and TechnicalPronouncement CPC 25, issued by the Brazilian FASB (CPC), recorded based on the legalcounsel’s opinion, using models and criteria which permit obtaining the most adequatemeasurement, despite the uncertainty about their period and the final outcome amount.The criteria used according to the nature of the contingency are as follows:

i) Contingent Assets - Not recognized in the financial statements, except when there isevidence of likely realization, and to which no further appeal can be made.


ii) Contingent Liabilities – Recognized in the financial statements when the risk of losing alawsuit or administrative claim is probable, based on the opinion of management and of legaladvisors, with a probable outflow of funds for the settlement of liabilities and when theamounts involved are measurable reliably, as follows:

Reserve for Labor Contingencies - Recognized upon court notification of judicial discussioninvolving Banrisul, the risk of loss of which is deemed as probable. Amounts are determinedaccording to disbursement estimates by Management, timely revised based on informationreceived from our legal counsels, adjusted based on the amount of the deposit related to theexecution, when required.

Reserve for Civil Risks – Recognized upon court notice, and monthly adjusted based on theamount of compensation sought, on the evidence presented, and on the legal counsel’sevaluation – which considers previous court decisions, factual support, evidence produced inthe records and legal decisions that might be rendered in the lawsuit, for the risk of loss onthe lawsuit.

Reserve for Tax and Social Security Contingencies – This refers basically to taxes whoselawfulness or constitutionality is being challenged at administrative or judicial levels andwhose likelihood of loss is – or has been in previous phases – deemed as probable, and isrecognized at the full amount under dispute. For lawsuits with respective escrow deposits,amounts are not updated except when Banrisul is authorized to withdraw the deposits onaccount of a favorable outcome of the lawsuit.

Contingent liabilities assessed as possible losses are reported in the financial statements;those liabilities that cannot be measured reliably and are assessed as remote losses areneither accrued nor disclosed.

(l) Other Current and Long-Term Assets and LiabilitiesThese are stated at realizable or settlement values, including earnings and charges incurredto the balance sheet date, calculated on a daily “pro rata” basis, and, where applicable, theeffect of adjustments to bring the asset cost to realizable or fair value. Amounts receivableand payable within twelve months are classified as current assets and liabilities, respectively.

(m) Income and Social Contribution TaxesSocial contribution tax (CSLL) is calculated at a rate of 15% and corporate income tax (IRPJ) iscalculated at 15% (plus a 10% surtax pursuant to legislation) on taxable profit for the period,adjusted for permanent differences. Deferred income and social contribution taxes werecalculated based on the rates in force on balance sheet date over the temporary differencesand recorded under Other Receivables, matched with Net Income for the Period.

(n) Post-Employment BenefitsBanrisul offers its employees “defined benefit” and “variable contribution” plans that havebeen valued in compliance with specific legislation. As required by Brazilian AccountingStandard Procedures (NPC) 26, issued by the Brazilian Institute of Independent Auditors(Ibracon), and based on an appraisal report issued by an independent actuary, Banrisul reviewsthe actuarial position of the plan annually, as discussed in Note 23.

(o) Cash and Cash EquivalentsFor purposes of the statements of cash flows (as defined in Resolution - CMN 3604/08), cashand cash equivalents correspond to the balances of cash and readily convertible, highly liquidfinancial investments, or with original maturity not exceeding ninety days.

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NOTE 04 Interbank Investments In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Money Market Investments ...................................................... 2,545,858 3,985,837 2,564,689 4,003,442Pending Setlement resales - Own Portfolio

Treasury Bills - LFT .................................................................. 2,545,858 3,885,837 2,545,858 3,885,837National Treasury Notes - NTN ............................................. - 100,000 - 100,000Other ...................................................................................... - - 18,831 17,605

Interbank Deposits .................................................................... 280,140 129,782 280,140 129,782 Interbank Deposits ...................................................................... 280,140 129,782 280,140 129,782Total .......................................................................................... 2,825,998 4,115,619 2,844,829 4,133,224

NOTE 05 Securities and Derivatives

Breakdown of the portfolio of Securities and Derivatives:

In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Trading Securities ........................................................................... 2,185,773 1,965,607 2,187,437 1,967,240Available-for-sale Securities ......................................................... 1,726,063 1,449,868 1,732,460 1,450,589Held-to-Maturity Securities .......................................................... 4,974,800 4,517,232 4,980,126 4,520,104Derivatives ..................................................................................... - 153,148 - 153,148

Total .......................................................................................... 8,886,636 8,085,855 8,900,023 8,091,081Current Assets ........................................................................... 3,221,915 3,194,762 3,229,975 3,197,116Long-Term Assets ....................................................................... 5,664,721 4,891,093 5,670,048 4,893,965

The fair value presented in the chart below was assessed as follows: actively traded TreasuryBills are determined based on prices published by the ANBIMA; equity shares of publicly-held companies are based on the average last day trade; investment fund shares are dailyupdated by the respective share price informed by the fund administrator; and for securitieswhere no prices are available (mainly Salary Variation Compensation Fund - CVS), Banrisulcalculates their fair value based on the figure derived from adopting an internal pricingmethod.

(a) Trading SecuritiesBreakdown of Trading Securities per Type, at Market Value:


Tresury Bills - LFT ............................................................................ 2,185,773 1,965,607 2,185,773 1,965,607Shares of Publicly-Held Companies .............................................. - - 1,664 1,633Total .......................................................................................... 2,185,773 1,965,607 2,187,437 1,967,240

Breakdown per maturity: In Thousands of Reais Banrisul Banrisul Consolidated

Acquisition Market Acquisition MarketMaturity Cost Value Cost Value

Without maturity ........................................................................... - - 1,703 1,6641 to 3 years ..................................................................................... 1,352,971 1,353,001 1,352,971 1,353,0013 to 5 years ..................................................................................... 310,648 310,658 310,648 310,6585 to 15 years ................................................................................... 522,114 522,114 522,114 522,114Total in 2011 .............................................................................. 2,185,733 2,185,773 2,187,436 2,187,437Total in 2010 .............................................................................. 1,965,552 1,965,607 1,967,264 1,967,240

According to the Central Bank of Brazil regulations, these securities are classified in currentassets at their fair value.


(b) Available-for-Sale SecuritiesBreakdown of Available-for-Sale Securities per Type, at Market Value:


Treasury Bills - LFT .......................................................................... 1,213,477 1,099,827 1,213,477 1,099,827Shares of Publicly-Held Companies .............................................. 10,756 12,193 10,758 12,195Privatization Certificates .............................................................. - - 6 5Fixed Income Fund Shares ............................................................. - 5,359 6,389 6,073Receivable Investment Funds Shares (*) ..................................... 501,830 332,489 501,830 332,489Total .......................................................................................... 1,726,063 1,449,868 1,732,460 1,450,589

(*) Refers to 100% of senior shares of the Matone Credit Receivable Investment Fund - Payroll Loans administered by BTGPactual Serviços Financeiros S.A., whose credit receivables are held in custody at Deutsche Bank S.A. As the resources ofthe Fund are invested in receivables, the redemption of shares owned by Banrisul depends on available funds, and Banrisulmay be required to wait until the maturity of such credits (up to 72 months). The expected yield of the senior shares is114% of the DI rate.


Acquisition Market Acquisition MarketMaturity Cost Value Cost Value

Without maturity ........................................................................... 524,583 512,587 530,978 518,9843 to 12 months ............................................................................... 134,335 134,336 134,335 134,3361 to 3 years ..................................................................................... 996,807 996,817 996,807 996,8173 to 5 years ..................................................................................... 82,314 82,323 82,314 82,323Total in 2011 .............................................................................. 1,738,039 1,726,063 1,744,434 1,732,460Total in 2010 .............................................................................. 1,460,407 1,449,868 1,461,128 1,450,589

Current Assets ........................................................................... 658,918 646,923 665,313 653,320Long-Term Assets ....................................................................... 1,079,121 1,079,140 1,079,121 1,079,140

The adjustment to fair value as of June 30, 2011, in the amount of R$11,976 thousand (2010 –R$10,539 thousand), was recorded under a specific Shareholders’ Equity account, net of taxesof R$4,792 thousand (2010 – R$4,217 thousand), recorded in “Other Receivables”.

(c) Held-to-Maturity SecuritiesBreakdown of Held-to-Maturity Securities per Type, at cost plus yield:

In Thousands of Reais Banrisul Banrisul Consolidated

Acquisition Market Acquisition Market Cost Value Cost Value

Federal Government Securities Treasury Bills - LFT ...................................................................... 4,796,233 4,796,349 4,801,559 4,801,675 Salary Variation Compensation - CVS ..................................... 149,952 109,682 149,952 109,682 Other ............................................................................................ 6 6 6 6Mortgage-Backed Securities - LH ................................................ 25,737 25,737 25,737 25,737Certificate of Real Estate Receivables - CRI ............................. 2,872 2,871 2,872 2,871Total in 2011 ............................................................................. 4,974,800 4,934,645 4,980,126 4,939,971Total in 2010 ............................................................................. 4,517,232 4,476,343 4,520,104 4,479,215


Maturity 2011 2010 2011 2010Up to 3 months ............................................................................ 6 6 6 63 to 12 months ............................................................................. 389,213 862,235 389,213 862,2351 to 3 years ................................................................................... 2,221,364 350,426 2,221,364 350,4263 to 5 years ................................................................................... 1,262,094 2,888,282 1,267,420 2,891,1545 to 15 years ................................................................................ 952,171 259,340 952,171 259,340Over 15 years ............................................................................... 149,952 156,943 149,952 156,943Total .......................................................................................... 4,974,800 4,517,232 4,980,126 4,520,104

Current Assets ........................................................................... 389,219 862,241 389,219 862,241Long-Term Assets ....................................................................... 4,585,581 3,654,991 4,590,907 3,657,863

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(d) DerivativesUntil November 2010, Banrisul conducted swap transactions in order to mitigate the effectsof changes in fixed rates, exchange rates and reference rates (TR) on certain assets, therebyexchanging these rates for the SELIC rate variation. On December 7, 2010, Banrisul amendedthe assignment agreement entered into with the State of Rio Grande do Sul, whereby itrevoked the rate equalization clauses in the swap contracts, and offset adjustments to bereceived calculated through that base date in the amount of R$102.909 thousand against thefair value of the Credits with National Housing System – Salary Variation Compensation Fund(FCVS), not affecting Banrisul’s income (loss).

As of June 30, 2010, the amounts were as follows:Banrisul and Banrisul Consolidated In Thousands of Reais

Notional Up to 3 3 to 12 1 to 3 3 to 5 5 to 15 OverValue months months years years years 15 years 2010

AssetsSELIC + Fixed Rate-FCVS 69,225 - - - 14 20,363 5,131 25,508SELIC + Fixed Rate 93,423 11,043 5,830 23,319 23,319 64,129 - 127,640

LiabilitiesTR + Fixed Rate (69,225) (8,339) (7,393) (13,336) (6,500) (9,783) (739) (46,090)USD+BID+Fixed Rate (93,423) (349) (338) (1,254) (1,110) (2,437) - (5,488)

Net Adjustment 2,355 (1,901) 8,729 15,723 72,272 4,392 101,570

The counterparty to the above mentioned swap transactions was the Rio Grande do Sul StateGovernment and these transactions were tied to the assignment of FCVS credits and borrowingsfrom municipal governmental entities, with the same maturity dates as the main operations.

These swap transactions were designed to adjust the prices of transactions linked to themand, along with these transactions, were subject to rates equivalent to those prevailing in themarket on the same date, since their maturity dates would be concurrent with those of theoriginal transactions and swap contracts not separately negotiated.

As of June 30, 2010, the amounts receivable and amounts payable were as follows:Banrisul and Banrisul Consolidated In Thousands of Reais

2010Derivatives

Adjustments Receivable - Short Term ...................................................................................................... 16,873Adjustments Receivable - Long Term ....................................................................................................... 136,275

Adjustments Payable - Short Term ........................................................................................................... (16,419)Adjustments Payable - Long Term ............................................................................................................ (35,159)

Net Adjustment ................................................................................................................................... 101,570

As of June 30, 2011, there were no outstanding operations involving derivatives.

NOTE 06 Restricted DepositsBanrisul and Banrisul Consolidated In Thousands of ReaisDescription Interest Rate 2011 2010

Compulsory Deposits - Brazilian Central Bank ............................................................... 2,210,761 1,585,641 Demand deposits and other funds ............. None ..................................................... 927,436 350,397 Additional Reserve ........................................ SELIC ..................................................... 221,286 - Savings deposits ............................................ Savings account ................................. 1,022,273 1,124,201 Other deposits ............................................... None ..................................................... 39,766 25,051 Other deposits ............................................... TR .......................................................... - 85,992Credits with the National Housing System .... ......................................................... 630,024 470,172 Acquired portfolio .......................................... (*) .......................................................... 436,172 306,752 Acquired portfolio .......................................... TR + Interest (**) ................................. 177,761 147,962 Own portfolio .................................................. TR + Interest (**) ................................. 16,091 15,458Correspondents ............................................. None ................................................ 28,651 27,156Agreements ................................................... SELIC ................................................. 4,194 -Total ................................................................................................................................ 2,873,630 2,082,969Current Assets ................................................................................................................ 2,243,606 1,612,797Long-term Assets ............................................................................................................ 630,024 470,172(*) Until November 2010, the yield on those credits was linked to a swap contract as detailed in Note 05 (d), resulting in a netyield equivalent to the Selic Rate close to a 1% p.a. on average. Beginning December 2010, the yield is fixed at 14.07% p.a.(**) Refers to credits with FCVS (Salary Variation Compensation Fund) that are restated according to the interest rates payableto the original resources, which are TR+6.17% for loans with the use of own resources and TR+3.12% for loans granted withresources from FGTS (Severance Pay Indemnity Fund).


National Housing System (SFH) - Acquired Portfolio – From October 2002 to March 2005,Banrisul acquired from the Rio Grande do Sul State Government receivables from the SalaryVariation Compensation Fund (FCVS). On December 7, 2010, pursuant to the cancellation ofthe equalization rate clause in swap contracts, as stated in note 05, these assets were pricedby adding the amount of R$102,909 thousand to the acquisition cost, thus offsettingadjustments receivable of swap contracts, as described in note 05 (d), with no impact on netincome (loss). As of June 30, 2011, receivables are stated at cost plus income earned throughthe balance sheet date, in the amount of R$613,933 thousand (2010 – R$454,714 thousand).Their face value is R$807,280 thousand (2010 – R$769,793 thousand). These receivables will beconverted into CVS securities, pursuant to ratification and novation processes, which havepassed the original deadline estimated by management, and the past due amounts are shownseparately and restated by the TR rate variation plus interest. While no maturity date hasbeen defined, the fair values of securities, upon their issue date, could significantly differfrom the carrying amounts.

National Housing System (SFH) - Own Portfolio – Refers to FCVS credits arising from Banrisul’sown mortgage loans portfolio that have already been approved by the FCVS’s regulatorybody.

NOTE 07 Loans, Lease Operations and Other Credit-like ReceivablesThe tables below show loans, lease and foreign exchange portfolio balances.

(a) Breakdown by Type of Operation and Risk Level:

Banrisul and Banrisul Consolidated In Thousands of ReaisAA A B C D E F G H 2011 2010

Loan and Discounted Receivables ........ 1,876,884 7,298,780 2,046,612 1,303,488 404,709 313,656 463,787 68,622 375,869 14,152,407 11,618,334Financing ................................................ 335,936 484,388 261,978 95,669 11,631 17,969 4,633 2,442 21,127 1,235,773 937,419Rural and Agro-Industrial Financing .... 174,428 446,809 336,101 163,633 54,900 32,592 25,742 12,556 48,338 1,295,099 1,139,930Real Estate Financing ............................ 488,198 511,381 251,938 117,687 30,640 20,055 22,748 1,823 16,597 1,461,067 1,159,956Infrastructure and Development

Financing .......................................... 16,847 41,532 - - - - - - - 58,379 53,754Total Loans ........................................... 2,892,293 8,782,890 2,896,629 1,680,477 501,880 384,272 516,910 85,443 461,931 18,202,725 14,909,393

Lease Operations ................................... 9,689 27,914 17,397 9,474 3,924 2,346 4,667 436 1,989 77,836 88,503Advances on Foreign Exchange

Contracts (1) ..................................... 31,418 156,043 199,137 44,114 49,863 14,037 5,097 14,664 5,490 519,863 408,845Other Receivables -Foreign Exchange (2) 196 1,843 3,317 682 1,182 44 1,169 247 208 8,888 35,282Total Banrisul in 2011 .......................... 2,933,596 8,968,690 3,116,480 1,734,747 556,849 400,699 527,843 100,790 469,618 18,809,312Total Banrisul in 2010 .......................... 5,034,263 5,409,464 2,286,740 1,045,873 212,504 171,927 745,492 77,100 458,660 15,442,023

(1) Advances on foreign exchange contracts are classified as a reduction of "Other payables - Foreign exchange portfolio"(Note 13).(2) Other Receivables - Foreign exchange include receivables from foreign exchange contracts and receivables from exportcontracts.

(b) Client Breakdown per Maturity and Risk Levels:Banrisul and Banrisul Consolidated In Thousands of Reais

AA A B C D E F G H 2011 2010

Falling due (*) .................................... 2,933,555 8,968,182 3,110,383 1,716,203 537,560 377,647 484,283 70,793 321,594 18,520,200 15,141,937 Up to 180 days ................................ 1,237,920 2,336,552 1,343,178 782,368 255,167 180,218 232,092 26,399 87,001 6,480,895 5,407,909 181 to 360 days ............................... 353,870 1,307,631 540,649 249,999 85,958 61,014 75,523 15,666 45,039 2,735,349 2,262,560 Over 360 days ................................. 1,341,765 5,323,999 1,226,556 683,836 196,435 136,415 176,668 28,728 189,554 9,303,956 7,471,468

Past-due .............................................. 41 508 6,097 18,544 19,289 23,052 43,560 29,997 148,024 289,112 300,086 Up to 180 days ................................ 41 508 6,097 18,544 19,289 23,004 43,146 29,464 90,290 230,383 201,455 181 to 360 days ............................... - - - - - 48 414 533 42,935 43,930 66,958 Over 360 days ................................. - - - - - - - - 14,799 14,799 31,673

Total Banrisul in 2011 .......................... 2,933,596 8,968,690 3,116,480 1,734,747 556,849 400,699 527,843 100,790 469,618 18,809,312Total Banrisul in 2010 .......................... 5,034,263 5,409,464 2,286,740 1,045,873 212,504 171,927 745,492 77,100 458,660 15,442,023

(*) Amounts up to 14 days past-due are classified as falling due.

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(c) Portfolio Breakdown by Business Sector:Banrisul and Banrisul Consolidated In Thousands of Reais

2011 2010Municipal Public Sector Government - direct and indirect administration ................................................... 99,877 112,961 Corporate activity - Other services ............................................................................ 16,847 22,085

Total Public Sector ................................................................................................... 116,724 135,046

Private sector Rural ................................................................................................................................ 1,295,099 1,139,930 Industry ........................................................................................................................... 3,833,092 3,093,740 Commerce ...................................................................................................................... 2,208,506 1,816,906 Services and other ........................................................................................................ 1,749,479 1,280,618 Individuals (*) ................................................................................................................. 8,145,345 6,815,827 Housing ........................................................................................................................... 1,461,067 1,159,956Total Private Sector .................................................................................................. 18,692,588 15,306,977Total .......................................................................................................................... 18,809,312 15,442,023

(*) Includes R$2,395,424 thousand (R$2,047,844 thousand in 2010) related to acquired payroll loan portfolio with co-obligation from other financial institutions.

(d) Changes in allowances for loan losses, doubtful lease receivables and other credit-likereceivables:The changes in allowances for losses on loans, on lease transactions and on other credit-likereceivables (exclusively) are as follows:

Banrisul and Banrisul Consolidated In Thousands of Reais 2011 2010

Opening balance ...................................................................................................... 1,101,923 1,016,754Allowance recorded in the period ................................................................................ 281,279 280,202Write-offs to memorandum accounts .......................................................................... (168,469) (179,449)Allowance for Loan Losses per risk level .................................................................. 1,214,733 1,117,507

Allowance for loan lossesCurrent Assets .................................................................................................................. 438,858 386,883Long-Term Assets ............................................................................................................. 729,075 667,865

Allowance for doubtful lease receivablesCurrent Assets .................................................................................................................. 2,474 2,778Long-Term Assets ............................................................................................................. 4,431 7,050

Allowance for Loan losses for Other Receivables with Loan CharacteristicsCurrent Assets .................................................................................................................. 33,937 21,120Long-Term Assets ............................................................................................................. 5,958 31,811

(e) Breakdown of allowances for loans losses, doubtful lease receivables and other credit-like receivables per risk level:Banrisul and Banrisul Consolidated In Thousands of Reais

Recorded AllowanceMinimum Minimum

Risk Loan allowance required by allowance Additional allowanceLevel Portfolio Resolution 2.682/99 required (Note 03(f)) TotalAA 2,933,596 0.0% - 5,749 5,749A 8,968,690 0.5% 44,844 17,937 62,781B 3,116,480 1.0% 31,165 15,582 46,747C 1,734,747 3.0% 52,042 34,695 86,737D 556,849 10.0% 55,685 11,137 66,822E 400,699 30.0% 120,210 8,014 128,224F 527,843 50.0% 263,921 10,557 274,478G 100,790 70.0% 70,553 3,024 73,577H 469,618 100.0% 469,618 - 469,618

Total in 2011 18,809,312 1,108,038 106,695 1,214,733Total in 2010 15,442,023 1,039,496 78,011 1,117,507

Loans written off as losses in the six-month period ended June 30, 2011, stated at the adjustedamount until actual write-off in a memorandum account, amounted to R$168,469 thousand(2010 – R$179,449 thousand).


Recoveries of loans previously written off as losses were recognized as income from lendingoperations and amounted to R$66,851 thousand (2010 – R$37,644 thousand) in the six-monthperiod ended June 30, 2011, net of losses generated from these recoveries.

NOTE 08 Other Receivables In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Foreign Exchange Portfolio ............................................................ 517,022 446,634 517,022 446,634Purchased foreign exchange, pending settlement ................... 500,005 419,212 500,005 419,212Term bills in foreign currency ....................................................... 2,621 - 2,621 -Rights on sale of foreign exchange .............................................. 16,124 28,871 16,124 28,871Advances in local currency ........................................................... (10,194) (10,692) (10,194) (10,692)Income receivable from advances .............................................. 8,466 9,243 8,466 9,243

Income receivable ......................................................................... 42,120 35,057 39,621 32,815Dividends and bonuses receivable ............................................. 2,499 2,247 - 5Receivables from services rendered .......................................... 37,506 31,591 37,506 31,591Other ................................................................................................. 2,115 1,219 2,115 1,219

Negociation and intermediation of amounts ................................. - - 5,203 3,465Negociation and intermediation of amounts ............................ - - 5,203 3,465

Specific Credits ............................................................................... - - 17 22Specific Credits ............................................................................... - - 17 22

Sundry ............................................................................................. 1,462,506 1,409,317 1,527,421 1,472,472 Advances to Loan Guarantee Fund ............................................... 47,538 67,209 47,538 67,209 Advances to employees .................................................................. 22,058 19,735 23,186 19,817 Advances for payment by our account .......................................... 489 490 6,566 6,711 Deferred income tax and social contribution (Note 22(b)) ....... 642,971 615,171 647,978 620,728 Escrow deposits (Note 14 (b)) ......................................................... 170,357 160,899 181,450 172,566 Recoverable taxes ........................................................................... 97,135 85,019 103,505 90,157 Reimbursable payments ................................................................ 87,345 85,968 87,562 86,500 Notes and credits receivable(*) .................................................... 232,438 249,530 233,443 250,287 Credit Cards ...................................................................................... 89,851 65,292 89,851 65,292 Other debtors – Domestic ............................................................... 72,324 60,004 106,342 93,205

Allowance for losses on other receivables .................................... (62,006) (121,386) (62,795) (121,854)With credit characteristic ................................................................ (39,895) (52,931) (39,895) (52,931)Without credit characteristic .......................................................... (22,111) (68,455) (22,900) (68,923)

Total other receivables ................................................................... 1,959,642 1,769,622 2,026,489 1,833,554

Current assets ................................................................................. 1,080,782 973,876 1,134,679 1,026,457Long-term assets ............................................................................ 878,860 795,746 891,810 807,097

(*)Notes and Credit Receivables are described mainly as follows:

(a) Securities issued to cover court-ordered debts (“precatórios”). In the first quarter of 2005, as part of receivablesrecovery policy, Banrisul received as payment in kind securities issued to pay court-ordered debts from companies in thesame Economic Group. The actual receipt of such securities depends on the outcome of litigation between the EconomicGroup and the Government of Brazil and the release of escrow deposits that have been made by the Federal Governmentas the flow of the original judiciary bonds. As of June 30, 2011, these securities amount to R$92,062 thousand (2010 -R$85,245 thousand). These bonds are subject to the variation of the Extended National Consumer Price Index (IPCA-E) andinterest.

(b) Other non-credit-like receivables from transactions with municipal governmental entities, in the amount of R$87,813thousand (R$93,208 thousand) related to receivables acquired from the State Government of Rio Grande do Sul or itscontrolled entities, with yield of 1% to 8.5% p.a. plus the TR or IGPM variation, maturing through 2036.

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NOTE 09 Permanent Assets

(a) Property and equipment

Banrisul In Thousands of ReaisNet Balance Net Balance

Rate Original Cost Depreciation in 2011 in 2010Property in UseLand and Buildings in Use ............................................ 4% 120,325 (98,071) 22,254 22,983Other ............................................................................. Furniture and Equipment in inventory ..................... - 7,620 - 7,620 7,759 Property and Equipment in Progress ........................ - 56 - 56 114 Facilities ........................................................................ 10% 89,998 (78,844) 11,154 10,742 Furniture and Equipment in Use ................................ 10% 72,789 (51,310) 21,479 21,263 Other .............................................................................

Communication System ....................................... 10% 4,423 (3,917) 506 477Data Processing System ....................................... 20% 297,328 (203,979) 93,349 97,101Security System ..................................................... 10% 9,283 (6,844) 2,439 2,699Transportation System ......................................... 20% 2,248 (2,029) 219 368

Total in 2011 ............................................................... 604,070 (444,994) 159,076Total in 2010 ............................................................... 570,692 (407,186) 163,506

Banrisul Consolidated In Thousands of ReaisNet Balance Net Balance

Rate Original Cost Depreciation in 2011 in 2010Property in UseLand and Buildings in Use ............................................ 4% 130,586 (102,919) 27,667 28,613Other .............................................................................

Furniture and Equipment in Inventory ................... - 7,620 - 7,620 7,759Property and Equipment in Progress ..................... - 56 - 56 114Facilities ..................................................................... 10% 91,196 (79,288) 11,908 11,596Furniture and Equipment in Use ............................. 10% 76,182 (54,128) 22,054 21,932Other ............................................................................

Communication System ....................................... 10% 4,424 (3,917) 507 477Data Processing System ....................................... 20% 298,087 (204,625) 93,462 97,249Security System ..................................................... 10% 9,283 (6,844) 2,439 2,699Transportation System ......................................... 20% 2,314 (2,053) 261 422

Total in 2011 ............................................................... 619,748 (453,774) 165,974Total in 2010 ............................................................... 586,187 (415,326) 170,861

(b) Intangible Assets In Thousands of Reais Banrisul Banrisul Consolidated

Original Net Balance Net Balance Net Balance Net BalanceIntangible Assets Rate Cost Amortization in 2010 in 2009 in 2011 in 2010

Right from Acquisition of Payrolloperations (*)

- Public Sector ............................................ 20% 298,285 (185,071) 113,214 170,871 113,214 170,871 - Private Sector .......................................... 20% 27,594 (9,192) 18,402 20,205 18,402 20,205Software Acquisition ................................... 20% 40,047 (30,130) 9,917 8,901 10,494 8,901Other .............................................................. - 968 (615) 353 68 736 598Total in 2011 ............................................. 366,894 (225,008) 141,886 142,846Total in 2010 .............................................. 357,297 (157,252) 200,045 200,575

(*) This refers to agreements entered into with public and private sector entities to ensure the exclusivity in bankingservices for payroll processing and priority offering of payroll loans to employees, bill collection portfolio, supplierpayment and other banking services. Such agreements are effective for five years and are amortized over theagreement period. No indications that these assets are impaired were identified.


NOTE 10 Deposits and Money Market Funding

Banrisul In Thousands of ReaisWithout Até 3 to Over

maturity 3 months 12 months 12 months 2011 2010Deposits

Demand deposits (a) ............................... 2,697,783 - - - 2,697,783 2,032,819Savings deposits (a) ................................. 5,158,770 - - - 5,158,770 6,037,629Interbank deposits .................................. - - 10,208 - 10,208 34,596Time deposits (b) ..................................... 8,229 1,979,846 4,496,626 5,704,524 12,189,225 9,223,018Other deposits .......................................... 534 - - - 534 9,174

Total .......................................................... 7,865,316 1,979,846 4,506,834 5,704,524 20,056,520 17,337,236

Current liabilities ...................................... 14,351,996 14,144,487Long-term liabilities .................................. 5,704,524 3,192,749

Money market funding ..............................Own Portfolio ............................................ - 1,846,508 - - 1,846,508 2,136,062

Total ........................................................... - 1,846,508 - - 1,846,508 2,136,062

Banrisul Consolidated In Thousands of ReaisWithout Até 3 to Over

maturity 3 months 12 months 12 months 2011 2010Deposits

Demand deposits (a) ............................... 2,695,066 - - - 2,695,066 2,028,887Savings deposits (a) ................................. 5,158,770 - - - 5,158,770 6,037,629Interbank deposits .................................. - - 10,208 - 10,208 34,596Time deposits (b) ..................................... 8,229 1,979,846 4,243,756 5,704,524 11,936,355 9,034,411Other deposits .......................................... 534 - - - 534 9,174

Total ........................................................... 7,862,599 1,979,846 4,253,964 5,704,524 19,800,933 17,144,697

Current liabilities ...................................... 14,096,409 14,016,379Long-term liabilities .................................. 5,704,524 3,128,318

Money market funding Own Portfolio ............................................. - 1,778,916 - - 1,778,916 2,073,866 Total .......................................................... - 1,778,916 - - 1,778,916 2,073,866

(a) Classified as without maturity since they can be redeemed immediately.(b) Consider the maturities set for each investment.

Time deposits are made by individuals and companies, with floating or fixed charges equivalentto 82% and 18% of the total portfolio, respectively. The average funding rate for floating-ratedeposits corresponds to 75.79% (2010 – 97.00%) of the CDI variation, and for fixed-rate deposits,to 8.96% (2010 – 8.40%) p.a.

Funding through money market purchase and sale commitments operations - own portfolio-, conducted with financial institutions, has an average funding rate of 100% of the CDI variation.

NOTE 11 Borrowings

Foreign Borrowings: represented by funds obtained from foreign banks to be used in foreignexchange commercial transactions subject to the variation of the corresponding currenciesplus annual interest at rates ranging from 2.0% to 5.39% (2010 – 2.00 % to 7.76%) with maximumterm of 1,826 days (2010 – 360 days).

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NOTE 12 OnlendingsBanrisul and Banrisul Consolidated In Thousands of Reais

Domestic Onlendings Official Instituitions Foreign Onlendings Total 2011 2010 2011 2010 2011 2010

Up to 90 days ................................................ 260,121 269,745 9,476 14,722 269,597 284,46791 to 360 days .............................................. 77,588 130,844 4,636 33,136 82,224 163,9801 to 3 years ................................................... 334,950 286,270 15,865 3,040 350,815 289,3103 to 5 years ................................................... 201,416 167,208 446 1,029 201,862 168,237Over 5 years .................................................. 247,813 209,449 - - 247,813 209,449Total ........................................................... 1,121,888 1,063,516 30,423 51,927 1,152,311 1,115,443

Current liabilities ...................................... 337,709 400,589 14,112 47,858 351,821 448,447Long-term liabilities .................................. 784,179 662,927 16,311 4,069 800,490 666,996

Internal funds for onlending refer basically to funds from Official Institutions (BNDES – National Bank for Economic andSocial Development, FINAME – National Equipment Financing Authority and Caixa Econômica Federal – Federal Savingsand Loan Bank). These liabilities mature on a monthly basis through September 2028, and are subject to interest of 0.90%to 8.00% (2010 – 0.90% to 3.00%) p.a., plus variation of the indexes (TJLP, U.S. dollar and Currency Basket) for floating-rateoperations and up to 11.00% (2010 – 11.00%) p.a. for fixed-rate operations. Funds are transferred to customers on thesame terms and with the same funding rates, plus commission on financial intermediation. These funds are collateralizedby the same guarantees received for the related loans.

NOTE 13 Other Payables In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Collected taxes and other ................................................................ 151,787 130,332 151,787 130,332Receipt of federal taxes ................................................................... 151,349 130,192 151,349 130,192Other .................................................................................................... 438 140 438 140

Foreign exchange portfolio .............................................................. 18,811 37,170 18,811 37,170Pending Setlement exchange sold ................................................. 15,971 28,699 15,971 28,699Foreign exchange purchased .......................................................... 522,703 417,316 522,703 417,316Advances on foreign exchange contracts (Note 07 (a)) ............... (519,863) (408,845) (519,863) (408,845)

Social and statutory .......................................................................... 84,947 43,242 85,003 43,310Dividends and bonuses payable ..................................................... 60,222 20,803 60,278 20,871Bonuses and profit sharing payable .............................................. 24,725 22,439 24,725 22,439

Taxes and social security ................................................................... 697,476 584,701 710,743 593,264Taxes and contributions payable .................................................... 46,881 40,641 47,927 41,468Reserve for taxes and social contribution .................................... 234,443 139,345 245,205 145,656Reserve for deferred taxes and contributions (Note 22 (b2)) .... 12,918 10,891 12,919 10,892Reserve for tax contingencies (Note 14 (b)) .................................. 403,234 393,824 404,692 395,248

Trading and intermediation of securities ......................................... - - 4,915 3,143Trading and intermediation of securities ...................................... - - 4,915 3,143

Financial and development funds .................................................... 4,792,887 4,448,060 4,792,887 4,448,060Payables for financial and development funds (Note 21 (a)) ..... 4,772,945 4,428,847 4,772,945 4,428,847Other .................................................................................................... 19,942 19,213 19,942 19,213

Sundry ............................................................................................... 876,281 837,229 950,405 872,408Cashier’s check .................................................................................. 1,677 1,288 1,677 1,288Creditors for unreleased funds ....................................................... 84,021 53,037 84,252 53,229Payables for acquisition of assets and rights ............................... 3,450 3,585 3,513 3,663Liabilities under government agreements ................................... 28,670 26,370 28,670 26,370Accrued vacation and related charges .......................................... 217,783 189,977 210,293 154,534Actuarial deficit of Fundação Banrisul (Note 23) ......................... 64,215 60,687 64,215 60,687Reserve for labor contingencies (Note 14(b)) ............................... 111,222 104,760 123,849 119,680Brazilian Central Bank fines on foreign exchange

transactions (Note 14 (f)(i)) ......................................................... 117,889 113,055 117,889 113,055Reserve for social security contingencies (Note 14 (f)(ii)) .......... 18,783 18,783 18,783 18,783Reserve for securitization losses (*) .............................................. 4,177 4,649 4,177 4,649Reserve for civil risk (Note 14 (b)) ................................................... 11,207 8,769 11,207 8,769Reserve for debts assumed with Grupo de Empresas

Seguradoras Brasileiras (GESB) arising from CompanhiaUnião de Seguros Gerais .............................................................. 6,758 7,799 6,758 7,799

FGTS (Severance Pay Fund) for amortization ................................ 3,062 2,888 3,062 2,888Sundry creditors – Domestic ........................................................... 72,177 86,521 139,463 141,050Card transactions payable .............................................................. 69,859 53,655 69,859 53,655Other .................................................................................................... 61,331 101,406 62,738 102,309

Total Other Payables ......................................................................... 6,622,189 6,080,734 6,714,551 6,127,687Current Liabilities ............................................................................ 6,058,661 5,527,904 6,150,533 5,574,394Long-Term Liabilities ........................................................................ 563,528 552,830 564,018 553,293

(*) Banrisul management recognizes a provision for co-obligation of securitized receivables with the National Treasury, inthe amount of R$39,895 thousand (2010 – R$43,060 thousand), controlled in a memorandum account, which are theresponsibility of agricultural borrowers.


NOTE 14 Reserves, Contingent Assets and LiabilitiesIn the normal course of their activities, Banrisul and its subsidiaries are parties to tax, laborand civil lawsuits at the judicial and administrative levels.

The provisions were calculated based on the opinion of the legal counselors, using the bestmeasurement models and benchmarks available, despite the inherent uncertainty as to theperiod and outcome of the suits. Banrisul records a reserve in the total amounts involved inlawsuits that have been assessed as probable losses.

Management believes that the reserves are sufficient to cover any losses arising from lawsuits.

(a) Contingent AssetsAs of June 30, 2011 no contingent assets were recorded.

(b) Changes in Provisions

Banrisul In Thousands of Reais Tax Labor Civil Other Total

Initial Balance at 12/31/2010 ....................... 393,470 111,894 9,575 134,164 649,103Recognition and Inflation Adjustment ......... 9,764 48,203 1,710 2,508 62,185Payment ............................................................ - (48,875) (78) - (48,953)Closing Balance at 06/30/2011 ...................... 403,234 111,222 11,207 136,672 662,335Guaranteed Deposits (Note 08) .................... - 92,979 58,821 18,557 170,357

Banrisul Consolidated In Thousands of Reais Tax Labor Civil Other Total

Initial Balance at 12/31/2010 ....................... 394,916 123,073 9,575 134,164 661,728Recognition and Inflation Adjustment ......... 9,776 51,499 1,710 2,508 65,493Reversão da Provisão ..................................... - (72) - - (72)Reversal of Reserves ....................................... - (50,651) (78) - (50,729)Closing Balance at 06/30/2011 ...................... 404,692 123,849 11,207 136,672 676,420Guaranteed Deposits (Note 08) .................... 1,577 101,060 60,256 18,557 181,450

(c) Tax ProvisionsProvisions for tax contingencies relate primarily to liabilities related to taxes whose legalityor constitutionality is being challenged at the administrative or judicial levels, whoselikelihood of loss is or has been considered, at earlier lawsuit stages, as probable and arerecognized at the full amount under dispute. For lawsuits collateralized by escrow deposits,the amounts involved are not adjusted for inflation. When legal permits are issued as a resultof a favorable outcome, the amounts are adjusted for inflation and withdrawn.

The main tax contingency refers to income and social contribution taxes on the deduction ofexpenses arising from the settlement of the actuarial deficit of Fundação Banrisul deSeguridade Social (Banrisul Social Security Foundation), challenged by the Federal RevenueService from 1998 to 2005 in the amount of R$403,234 thousand. Banrisul, through its legalcounsel, has been discussing the matter in court and, on recorded a reserve for contingenciesin the amount of the estimated loss.

There are also some tax contingencies whose likelihood of loss, based on their nature, isconsidered as possible, in the amount of R$38,850 thousand. A reserve for contingencies wasnot recognized, in accordance with applicable accounting practices.

(d) Labor ProvisionsThese refer to lawsuits filed by unions and former employees claiming labor rights, inparticular the payment of overtime and other labor rights.

This account records the provision for labor claims filed against Banrisul when a courtnotification is received and the likelihood of loss is considered as probable. The reserve is

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calculated according to the disbursement estimated by our management, timely reviewedbased on data received from our legal counsel, and adjusted to the escrow deposit whenrequired. Of the aforementioned reserve, R$75,806 thousand (consolidated - R$83,887thousand) has been deposited in an escrow account. Additionally, R$17,173 thousand wasrequired for appeals.

There are also some labor claims whose likelihood of loss, based on their nature, is consideredas possible, in the approximate amount of R$43,738 thousand. A reserve for contingencieswas not recognized, in accordance with applicable accounting practices.

(e) Civil ProvisionsLawsuits for damages refer to compensation for property damage and/or pain and suffering,referring to consumer relations, in particular, matters relating to credit cards, consumer credit,checking accounts, banking collection and loans.

This account records the provision for civil suits when a court notification is received, and isadjusted monthly based on the amount claimed, on evidence produced and on the assessmentof the related risk of loss made by the legal counsel, considering case law, factual informationgathered, evidence produced in the records and court decisions on the lawsuit.

There is also an amount of R$68,086 thousand included in the balance of escrow depositsrelated to claims filed by third parties against Banrisul, whose likelihood of loss is classifiedby our legal counsel as possible.

(f) Othersi) On September 29, 2000, Banrisul received an assessment notice from the Central Bank ofBrazil in connection with administrative proceedings filed by that authority related tosupposed irregularities in foreign exchange transactions between 1987 and 1989. In an appealdecision at the administrative level, Banrisul was required to pay a fine equivalent to 100% ofthe amount of the supposedly irregular transactions. This decision is being challenged incourt by Management, which, on a conservative basis and in compliance with BACENrequirements, recorded a reserve in the amount of R$117,889 thousand for this contingency.

ii) INSS tax assessment notice related to social security contribution on compensation otherthan salary and on education allowance, whose likelihood of loss is classified by our legalcounsel as probable. A reserve in the amount of R$18,783 thousand was recorded.

NOTE 15 Income from Services Rendered


Funds Management .............................................................................. 29,556 27,337 32,147 30,754Collection of Debt Instruments ........................................................... 22,668 20,384 22,668 20,496Income from Group Financing Management Fee ............................. - - 7,046 5,603Income from Brokerage of Operations ............................................... - - 1,591 2,199Other Income .......................................................................................... 521 460 586 13,107Total .................................................................................................. 52,745 48,181 64,038 72,159


NOTE 16 Income from Bank Fees In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Banricompras ......................................................................................... 48,105 39,784 48,105 39,784 Check Returns ........................................................................................ 9,296 9,053 9,296 9,053 Checking Account Debits ..................................................................... 11,239 10,333 11,239 10,333 Collection Services ............................................................................... 29,645 30,362 29,645 30,362 Transactions with Checks .................................................................... 6,788 7,058 6,788 7,058 Bank Fees from Checking Accounts .................................................... 139,742 118,066 139,742 118,066 Credit Card ............................................................................................. 4,601 6,256 4,601 6,256 Other Income from Fees ...................................................................... 16,331 14,258 31,543 14,252 Total ................................................................................................. 265,747 235,170 280,959 235,164

Of a total R$265,747 thousand in income received for the six-month period ended June 30,2011, R$131,328 thousand (2010 – R$115,139 thousand) arise from operations with individualsand R$134,419 thousand (2010 – R$120,031 thousand) from operations with legal entities.

NOTE 17 Other Administrative Expenses In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Data Processing and Telecommunication ......................................... 67,877 77,402 70,644 79,692Security and Money Transportation ................................................... 39,955 38,465 39,955 38,465Amortization and Depreciation .......................................................... 54,792 52,903 55,107 53,257Rentals .................................................................................................... 28,873 25,946 28,252 25,126Supplies ................................................................................................... 12,462 14,028 12,483 14,043Outside Services .................................................................................... 68,017 62,211 69,525 63,543Advertising, Promotions and Publicity (*) .......................................... 19,883 70,383 20,249 71,098Maintenance .......................................................................................... 10,698 11,828 10,786 11,948Water, Electricity and Gas ................................................................... 10,058 10,216 10,186 10,323Financial System Services .................................................................... 10,521 9,590 11,039 10,104Other ........................................................................................................ 16,871 16,811 18,164 17,677Total .................................................................................................. 340,007 389,783 346,390 395,276

(*) Comprises mainly institutional advertising of R$3,471 thousand (2010 - R$30,148 thousand) and sponsorship of sportevents and clubs of R$14,363 thousand (2010 - R$34,541 thousand).

NOTE 18 Other Operating Income In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Recovery of Charges and Expenses ..................................................... 27,887 24,143 27,654 21,837Reversal of Operating Reserves for:

Labor .................................................................................................... - - 72 -Other .................................................................................................... 18,455 946 18,455 946Reserve for Securitization Losses .................................................. 730 2,780 730 2,780

Other Taxes without Credit Characteristics ...................................... - 58 - 58Commission on Capitalization Cerficates ......................................... 2,636 1,092 2,636 1,092Interbank Fees ....................................................................................... 9,618 10,555 9,618 10,555Exchange Rate Adjustment .................................................................. - 3,989 - 3,989Credit Notes Receivable ....................................................................... 4,385 6,579 4,385 6,579Reserve Fund - Escrow Deposit - Law nº, 12069 ............................... 12,222 6,504 12,222 6,504Other Operating Income ....................................................................... 36,791 33,522 37,335 34,443Total .................................................................................................. 112,724 90,168 113,107 88,783

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NOTE 19 Other Operating Expense In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Discount Granted from Renegotiations ............................................. 5,480 2,272 5,480 2,272Reserves for Labor Provisions (Note 14 (b)) ...................................... 48,203 38,784 51,499 39,765Provision for Properties - Assets not in use ...................................... 2,402 772 2,402 772Provision for Civil Lawsuits (Note 14 (b)) ........................................... 1,710 1,798 1,710 1,798Collection of Federal Taxes .................................................................. 1,773 940 1,773 940Inflation Adjustment of Reserve for Tax Contingencies

(Social Contribution / Income Tax) - (Note 14 (b)) ......................... 9,764 7,818 9,776 7,838Lawsuits Indemnifications .................................................................. 66 3,921 66 3,921Inflation Adjustment of Brazilian Central Bank fines on Foreign

Exchange ............................................................................................. 2,508 1,950 2,508 1,950Inflation Adjustment of Actuarial Deficit of Fundação Banrisul ... 4,091 4,681 4,091 4,681Expenses with Overdraft Accounts and Banricompras

Prize Programs ................................................................................... 704 704Provision for Debts Assumed with GESB ............................................ 60 951 60 951Exchange Adjustment - Foreign Branches .......................................... 7,117 - 7,117 -Lawsuits .................................................................................................. 4,539 3,389 4,539 3,389Cards ........................................................................................................ 1,773 2,168 1,773 2,168Credit Card Membership Program ...................................................... 3,778 - 3,778 -Other Operating Expenses ................................................................... 17,582 8,357 18,421 8,709Total .................................................................................................. 110,846 78,505 114,993 79,858

NOTE 20 Shareholders’ Equity - Banrisul

(a) CapitalFully subscribed paid-up capital as of June 30, 2011 is R$3,200,000 thousand and it isrepresented by 408,974 thousand shares without par value as follows:

ON PNA PNB Total Amount % Amount % Amount % Amount %

Rio Grande do Sul State ................................. 204,199,859 99.59 2,721,484 75.01 26,086,957 13.02 233,008,300 56.97Fundação Banrisul de Seguridade Social

(pension plan) .......................................... 449,054 0.22 158,983 4.38 - 0.00 608,037 0.15ISocial Security Institute of Estado do Rio

Grande do Sul ........................................... 44,934 0.02 168,612 4.65 - 0.00 213,546 0.05Market ........................................................... 349,527 0.17 579,180 15.96 174,215,887 86.98 175,144,594 42.83Total ............................................................ 205,043,374 100.00 3,628,259 100.00 200,302,844 100.00 408,974,477 100.00

The Extraordinary Shareholders’ Meeting held on April 29, 2011 approved the capital increasethrough the use of revenue reserves in the amount of R$300,000 thousand without the issuanceof new shares. This capital increase has been approved by the Central Bank of Brazil.

Preferred shares do not carry voting rights and are entitled to the following payments:

Class A Preferred Shares:i) Priority to receive fixed non-cumulative dividends of six percent (6%) p.a. on the figureresulting from the division of capital by the related number of shares comprising it;

ii) Right to take part, after Class B Common and Preferred Shares have been paid dividendsequal to that paid to those shares, in the distribution of any other cash dividends or bonusespaid out by Banrisul, under the same conditions as Class B Common and Preferred Shares,plus an additional ten percent (10%) over the amount paid to those shares;

iii) Interest in capital increases deriving from the capitalization of reserves, under the sameconditions as Class B Common and Preferred Shares; and


iv) Priority in capital reimbursement, without premium.

Class B Preferred Shares:i) Interest in capital increases deriving from the capitalization of reserves, under the sameconditions as Class A Common and Preferred Shares; and

ii) Priority in capital reimbursement, without premium.

(b) Allocation of IncomeNet Income for the year, adjusted in accordance with Law no. 6404/76, shall be allocated asfollows: (i) 5% to the Legal Reserve, not to exceed 20% of total Capital, (ii) 25% to the StatutoryReserve, and (iii) mandatory minimum dividends limited to 25% of adjusted net income. Theremaining net income shall be allocated as decided in the Shareholders´ Meeting.

The Statutory Reserve is intended to ensure funds for investments in information technology,and is limited to 70% of paid-up capital.

The Ordinary and Extraordinary Shareholders’ Meeting held on April 29, 2011 approved theproposed distribution of additional dividends for 2011, equivalent to 15% of Adjusted NetIncome, totaling 40%.

The pay-out policy adopted by Banrisul aims to pay interest on capital for the maximum taxdeductible amount calculated in accordance with prevailing legislation, which is included,net of withholding income tax, in the calculation of mandatory dividends for the fiscal year,as stated in our by-Laws.

As permitted by Law no. 9249/95 and CVM Resolution no. 207/96, Banrisul’s management paidinterest on capital in the amount of R$107,033 thousand referring to the first half of 2011(2010 – R$95,741 thousand), to be credited to dividends, net of withholding income tax.

The payment of this interest on capital resulted in a tax benefit for Banrisul in the amount ofR$45,711 thousand (2010 – R$40,425 thousand) (Note 22 (a)).

The distribution of dividends and interest on capital is as follows: In Thousands of Reais 2011 2010

Net Income ..................................................................................................................... 438,498 304,999Adjustment

Legal Reserve ................................................................................................................... (21,925) (15,250)Calculation Basis of Dividends ....................................................................................... 416,573 289,749

Minimum Mandatory Dividend 25% ............................................................................. 104,143 72,437Complementary Dividend 15%...................................................................................... 62,486 43,463

Total Dividends ............................................................................................................... 166,629 115,900A) Interest on Capital ..................................................................................................... 107,033 95,741

Common Shares (R$279,42177 per thousand shares) .............................................. 57,294 50,670Preferred Shares Class A (R$279,42177 per thousand shares) ............................... 1,018 918Preferred Shares Class B (R$279,42177 per thousand shares) ............................... 55,965 49,476Income Tax Whithheld at Souce .................................................................................... (7,244) (5,323)

B) Dividends Provisioned ............................................................................................... 59,596 20,159Common Shares (R$145,72075 per thousand shares) .............................................. 29,879 10,107Preferred Shares Class A (R$145,72075 per thousand shares) ............................... 529 183Preferred Shares Class B (R$145,72075 per thousand shares) ............................... 29,188 9,869

Total Interest on Capital and Dividends (A+B) ................................................................ 166,629 115,900

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NOTE 21 Commitments, Guarantees and Other

(a) State Law no. 12069 was enacted on April 22, 2004, as amended by Law no. 12585, of August29, 2006, whereby Banrisul must transfer to Rio Grande do Sul State, upon its request, up to85% of the escrow deposits made by third parties at Banrisul (except for those in which thelitigant is a municipality). The remaining amount not transferred is to be recorded in a reservefund to ensure the refund of said escrow deposits. As of June 30, 2011, the amount of escrowdeposits made by third parties at Banrisul, adjusted through the balance sheet date by the TR(managed prime rate) variation plus interest of 6.17% p.a., totaled R$6,821,903 thousand(2010 – R$6,471,847 thousand), of which R$2,043,000 thousand (2010 – R$2,043,000 thousand)was transferred to the State upon its request and written off from the respective balancesheet accounts. The remaining balance, which makes up the aforementioned fund managedby Banrisul, is recorded in Other Payables - Financial and Development Funds (Note 13).

(b) Sureties and guarantees granted to customers amount to R$522,553 thousand (2010 -R$556,734 thousand), and are subject to financial charges and backed by the beneficiaries'sureties.

(c) Banrisul is responsible for the custody of 433,755 thousand securities owned by customers(2010 – 395,408 thousand).

(d) Banrisul has co-obligations in import credits in the amount of R$80,712 thousand (2010 -R$59,408 thousand).

(e) Banrisul manages various funds and portfolios, which have the following net assets: In Thousands of Reais Banrisul Banrisul Consolidated 2011 2010 2011 2010

Investment funds (*) ........................................................................ 5,508,376 5,275,271 5,508,376 5,291,884Investment funds in investment fund quotas ............................ 230,414 102,357 230,414 232,707Fund to Guarantee the Liquidity of Rio Grande do Sul

State Debt Securities .................................................................. 720,355 1,021,018 720,355 1,021,018Managed portfolios ......................................................................... 537,911 480,392 550,285 493,704Investment Clubs ............................................................................ - - 2,737 740Total ............................................................................................ 6,997,056 6,879,038 7,012,167 7,040,053

(*) The investments fund portfolios consist basically of fixed-rate and variable rate government bonds, and their carryingamounts already reflect mark-to-market adjustments at the balance sheet date.

(f) Subsidiary Banrisul S.A. Administradora de Consórcios is responsible for the managementof 123 buyers’ pools (114 in June 2010), including real estate, motorcycles, vehicles and tractors,gathering 23,734 active pool members (20,760 in 2010).

(g) Banrisul leases properties, manly used for branches, based on standard contracts whichmay be cancelled as its own discretion and include the right to opt for renewal and adjustmentclauses. Total future minimum payments under noncancellable lease agreements as of June30, 2011 total R$157,749 thousand, of which R$40,114 thousand matures in up to one year,R$101,643 thousand from one to five years and R$15,992 thousand over five years. Leasepayments recognized as expenses for the six-month period amounted to R$26,289 thousand.


NOTE 22 Income and Social Contribution Taxes

(a) Reconciliation of Income and Social Contribution Tax Expenses/Revenue


Income for the Period before Taxes and Profit Sharing ............. 674,040 451,365 684,865 459,040Income Tax on Profit - Rate 25% .................................................... (168,510) (112,841) (171,216) (114,760)Social Contribution on Profit - Rate 9% ........................................ - - (772) (618)Social Contribution on Profit - Rate 15% ...................................... (101,106) (67,705) (102,730) (67,827)Total Income Tax and Social Contribution calculated at Effective Rate .................................................... (269,616) (180,546) (274,718) (183,205)Adjustment of Fine on Foreign Exchange Operations ................ (1,003) (780) (1,003) (780)Profit Sharing .................................................................................... 9,890 8,963 9,890 8,963Interest on Capital .......................................................................... 45,711 40,425 45,711 40,425Equity in Subsidiaries and Foreing Exchange Adjustment

on Branches ................................................................................. 4,755 7,058 (2,847) 1,596Other Additions, Net of Exclusions ............................................... (553) 920 1,394 1,441Total Income Tax and Social Contribution .................................. (210,816) (123,960) (221,573) (131,560)Current .............................................................................................. 235,601 139,636 247,030 147,256Deferred ............................................................................................ (24,785) (15,676) (25,457) (15,696)

(b) Deferred income and social contribution taxesIn June 2011, Banrisul had deferred income and social contribution tax credits on temporarydifferences as follows:

(b1) Tax creditsTax credit balances, by origin and disbursements made, are as follows:

Banrisul In Thousands of ReaisBalance on Balance on

12/31/2010 Recognition Realization 06/30/2011

Allowance for loan losses .............................................................. 452,612 110,088 84,538 478,162 Reserve for labor contingencies ................................................... 44,758 19,281 19,550 44,489 Reserve for tax contingencies ...................................................... 76,892 3,936 31 80,797Other temporary provisions .......................................................... 42,664 891 4,009 39,546Total tax credits on temporary differences ................................ 616,926 134,196 108,128 642,994Unrecorded credits ......................................................................... (23) - - (23)Total tax credits recorded .......................................................... 616,903 134,196 108,128 642,971Deferred tax liabilities ................................................................... (11,635) (1,283) - (12,918)Tax credits, net of deferred liabilities ........................................ 605,268 132,913 108,128 630,053

Banrisul Consolidated In Thousands of ReaisBalance on Balance on

12/31/2010 Recognition Realization 06/30/2011

Allowance for loan losses .............................................................. 452,612 110,286 84,538 478,360 Reserve for labor contingencies ................................................... 48,559 30,805 30,582 48,782 Reserve for tax contingencies ...................................................... 77,384 3,944 31 81,297Other temporary provisions .......................................................... 42,706 907 4,051 39,562Total tax credits on temporary differences ................................ 621,261 145,942 119,202 648,001Unrecorded credits ......................................................................... (23) - - (23)Total tax credits recorded .......................................................... 621,238 145,942 119,202 647,978Deferred tax liabilities ................................................................... (11,636) (1,283) - (12,919)Tax credits, net of deferred liabilities ........................................ 609,602 144,659 119,202 635,059

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Expected realization of these receivables is as follows:

In Thousands of Reais Banrisul Banrisul Consolidated

Temporary Diferences Year Income Tax Social Contribution Total Total Recorded Total Recorded

2011 104,592 62,755 167,347 167,347 167,5972012 104,154 62,492 166,646 166,646 167,1152013 94,850 56,910 151,760 151,760 152,2292014 61,111 36,666 97,777 97,777 98,2462015 30,873 18,525 49,398 49,398 49,8672016 to 2018 5,755 3,453 9,208 9,208 10,5162019 to 2021 522 313 835 835 2,408After 2021 14 9 23 - -Total on 30/06/2011 401,871 241,123 642,994 642,971 647,978Total on 30/06/2010 384,497 230,697 615,194 615,171 620,728

The total present value of tax credits is R$536,178 thousand, calculated based on the expectedrealization of temporary differences at average funding rate projected for the correspondingperiods.

(b2) Deferred Tax LiabilitiesThe balance of the Reserve for Deferred Taxes and Contributions is represented by:


Excess Depreciation ........................................................................ (12,910) (10,882) (12,910) (10,882)Available for Sale Securities .......................................................... (8) (9) (8) (9)Adjustment to Fair Value of Trading Securities ........................... - - (1) (1)Total ............................................................................................ (12,918) (10,891) (12,919) (10,892)

NOTE 23 - Fundação Banrisul de Seguridade Social and Cabergs - Caixa de Assistência dosEmpregados do Banco do Estado do Rio Grande do Sul

Banrisul is the main sponsor of Fundação Banrisul de Seguridade Social (“Fundação Banrisul”),which is mainly engaged in supplementing the benefits covered and provided by the SocialSecurity to the employees of Banrisul, Banrisul Serviços, and Cabergs, as well as in carryingout social security programs promoted by its sponsors.

On July 6, 2009, new retirement benefit plan Banrisulprev was approved and has been offeredto non members of Benefit Plan I since then. This new variable contribution benefit planbecame effective in November 2009. Following implementation of this new plan, newmembers are no longer allowed to join Benefit Plan I.

To attain its objectives, Fundação Banrisul receives monthly contributions from its sponsorsand participants, which are calculated based on the monthly compensation of employeesand their beneficiaries. Banrisul’s contributions for the first half of 2011 amounted to R$6,090thousand (2010 - R$5,994 thousand), which, as of June 30, 2011, corresponds to 3.17% (2010 –3.51%) of employees’ monthly contribution salaries, and were recorded as operatingexpenses.

Benefit Plan I - Benefit Plan I provides defined benefits in the form of retirement andsurvivorship benefits, sick pay, inmate pension, funeral allowance and annual bonus.

The active participant’s regular contributions correspond to monthly amounts equivalent tothe result of applying the following rates:

a) An overall fixed rate of 3% applicable to the contribution salary;

b) A first additional rate of 2% applicable to the contribution salary surplus (if any) on half ofthe highest Social Security benefit salary; and


c) A second additional rate of 7% applicable to the contribution salary surplus (if any) on thehighest Social Security benefit salary.

Banrisul’s remaining portion of the contracted debt related to this plan in the amount ofR$64,215 thousand as of June 30, 2011 (2010 – R$60,687 thousand) is recorded in Other Payables(Note 13). In addition to this debt, Banrisul pays interest of 6% per year with final maturity in2028, which is monthly adjusted based on the General Price Index – Domestic Availability(IGP-DI).

Banrisulprev - Banrisulprev provides variable contribution benefits with defined contributioncharacteristics, such as regular retirement, early retirement and funeral allowance, and benefitswith defined benefit characteristics, such as disability retirement, proportional benefits, sickpays, annual bonus, minimum benefit and survivorship benefit.

The participant’s regular contributions comprise three portions:

a) Basic portion: 1% of the contribution salary;

b) Additional portion: may vary from 1% to 7.5% of the contribution salary in excess of 9reference units; and

c) Variable portion: percentage applied on the contribution salary annually established bythe actuary to cover 50% of the costs of risk benefits and the plan’s administrative expenses.

In addition to regular contributions, a participant may opt to make monthly contributions notlower than 1 reference unit and not matched by the sponsor.

Banrisul’s contributions match the participants’ regular contributions.

Medical and dental care - Banrisul offers medical and dental care benefits to its activeemployees and Fundação Banrisul’s retirees through Cabergs.

As of December 31, 2010, the actuarial appraisal of post-employment benefits related todefined benefits, Banrisulprev and health care granted to its employees was as follows:

In Thousands of ReaisBenefit Banrisulprev Medical and

Plan I Plan Dental Care Total

Present obligation of actuarial obligations ................................................ (2.787.358) (2.696) (129.621) (2.919.675)Fair value of Fundação Banrisul's assets ................................................... 2.636.530 1.977 110.322 2.748.829Gains /Losses and cost of unrecognized services. ..................................... 508.241 672 28.707 537.620Actuarial assets (liabilities) ................................................................... 357.413 (47) 9.408 366.774

The main actuarial assumptions used as December 31, 2010 are as follows:

Discount rate: 10.77% p.a.- Expected return rate of pension plans’ assets:

- Defined benefit plan: 13.28% p.a.- Variable contribution plan: 12.01% p.a.- Medical and dental care: 10.69% p.a.

- Future salary increase rate: 6.59% p.a.- Increase in medical costs: 7.64% p.a.- Inflation: 4.50% p.a.- Mortality table: AT – 2000.

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NOTE 24 Financial Instruments and Financial Risks Management

Risk management is an essential strategic tool for Banrisul. The inherent risks range fromthose easily identifiable, such as market, liquidity and credit risks, to those which are notdirectly identified as such, but also extremely important, such as operating and reputationalrisk, among others.

Banrisul seeks to align its activities with the standards set forth by the New Capital Accord -Basel II, by adopting best market practices to maximize profitability and to ensure the bestpossible combination of investments in assets and use of required capital. The systematicimprovement of risk policies, internal control systems and security standards aligned withBanrisul’s strategic and market objectives are ongoing processes within this structure.

Credit risk: it is the possibility of Banrisul incurring losses related to the nonperformance ofa loan or financial obligation by the counterparty under the agreed terms.

Banrisul’s risk assessment structure is based on the principle of joint technical decision.Banrisul defines different credit limits corresponding to the decision levels, from thewidespread branch network (with various categories) to the credit and risk committees at theHead Office. This process aims at expediting the concession of credit based on technicallypredefined limits, which establish Banrisul’s risk exposure for every customer, in conformitywith the risk/return ratio.

The continuous, increasing use of statistical methodologies for assessing customers’ risks,with the standardization of credit and business policies along with the optimization of thecontrols over registry information through a certification model, increased and strengthenedrisk assessments. The use of credit score and behavior score systems allowed establishingreapproved credit limits to individuals according to the risk ratings described in the statisticalmodels, conceptually considered more appealing when dealing with mass credit.

For the corporate segment, Banrisul evaluates companies from the financial, management,market and production standpoint, with periodic reviews that also take into account currentand future economic and competitive environments, adding companies to them. Themanagement of the credit risk exposure is based on a selective, conservative approach,pursuant the strategies set by Banrisul’s management and technical areas.

(a) Credit Risk AssessmentDirect Lending and Onlendings by Financial Agents - Banrisul assesses the potential defaultof each counterparty by using credit rating tools designed for different categories ofcounterparties. Such internally developed tools, which combine statistical analyses and theopinion of the credit area staff, are validated, when appropriate, by comparing externalavailable data. The rating tools are reviewed and updated when necessary. Frequently,Management validates the rating performance and its ability to forecast to default events.

Default exposure is based on the amounts that may be owed to Banrisul at the time of default,e.g. in the case of a loan, it corresponds to the nominal value. Loan commitments include allamounts withdrawn in excess of the amount that may be withdrawn at the time of default, ifany.

Default loss or loss extent represents Banrisul’s expectation regarding the amount of the lossresulting from a dispute, should the default occur. This amount is expressed as a percentageloss per unit of exposure and typically varies in accordance with the category of thecounterparty, the type and level of the suit and the availability of collaterals or credit mitigationinstruments.


(b) Risk Limit Control and Mitigation PoliciesBanrisul manages, limits and controls credit risk concentrations whenever they are identified- particularly in relation to counterparties and groups.

Management manages assumed risk levels by setting limits to the extent of acceptable risk inrelation to a specific borrower, or groups of borrowers and industry segments. These risks arecontinuously monitored and subject to annual or more frequent reviews when necessary.The limits on the level of credit risk by product and industry sector are approved by theExecutive Board and by the Board of Directors, if applicable.

In the case of a counterparty, the exposure to any borrower, including financial agents, isadditionally restricted by sublimits that cover exposures, whether recorded or not, in thefinancial statements. The actual exposures are monitored on a monthly basis in accordancewith the established limits.

The credit risk exposure is also managed through the regular analysis of actual or potentialborrowers, with respect to payments of principal and interest and change in limits whenappropriate.

c) Credit Related CommitmentsCredit related commitments represent unused portions of established limits by thecounterparty, normally attributed to working capital, overdraft accounts, credit cards, amongothers. They also refer to contracts whose funds will be released upon fulfillment of anycontractual condition, pursuant to the construction schedule, such as in some real estateagreements.

The contractual amount represents the maximum credit risk in such transactions, if thecounterparty actually uses the fund available. However, the exposure to losses resultingfrom these contracts is lower than the total funds to be released, since part of thesecommitments expires without being entirely used, either by customer's decision or atBanrisul's discretion which adopts criteria for the availability of these funds, as set forth incertain contractual clauses.

Market risk: Banrisul is exposed to market risks inherent in its trading activities, throughborrowings and loans / financing contracted based on various types of indexes. Banrisul hasan ongoing portfolio, management process, that encompasses the control over all positionsexposed to market risks, according to business objectives and better performanceachievement.

This process takes into consideration factors that could adversely affect and change assetsand liabilities, including changes in interest and exchange rates, loss of the capacity of receivingdeposits and loss of customers to competitors, as well as other restrictions on lending andinvesting activities that may affect the fair value of products and securities, as established byregulatory measures issued by the monetary authorities.

The main component of market risk measurement includes an estimate of potential lossesunder adverse market conditions, for which the Value at Risk (VaR) methodology is used. VaRis a measure of the maximum expected loss on monetary values under normal marketconditions, within a ten-day period, with a desired level of probability of 99% used to measuremarket risk exposures of portfolios.

Additionally, due to the limitation of the VaR methodology, scenario analyses and sensitivityand calibration measurements are performed, and stress tests are conducted on a quarterlybasis, based on specific scenarios for each risk factor in order to determine Banrisul’s financial

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soundness and its resilience in a potential crisis, in order to protect Banrisul’s equity and itsoperating results against such adverse conditions.

Liquidity risk: arises from the potential inability to finance financial assets and to meet therequired obligations on the respective maturity dates and from difficulties to settle positionsin the portfolio without incurring significant losses. Banrisul’s liquidity risk is managed byanalyzing cash flows projections, based on different market scenarios. For asset positions,the growth of the credit portfolio and the settlement of financial instruments are taken intoaccount. For liabilities, the assumptions adopted include the possibility of making earlyredemptions and also lower-than-expected funding rollover.

The Corporate Risk Unit is responsible for the consolidated management of Banrisul’s liquidityrisk, in order to monitor the availability of funds to meet Banrisul’s financial needs from thepoint of view of funding and allocation, business and performance and business references,to avoid significant mismatches which could jeopardize the Bank’s liquidity and budgetplanning. Banrisul’s controls are kept on a preventive standpoint, calculated according to therules of Resolution no. 2804/00 and Circular no. 3393/07, that establish monitoring consistentwith the positions assumed in financial markets, in order to emphasize the liquidity riskarising from such exposures. Daily Cash Flow, Portfolio Position Map, Maturity and CurrencyMismatch Map and Duration Maps, among other reports, are prepared to assist with themonitoring of these positions. This information is made available on a daily basis to the CFOand to the Market Risk Officer.

The Market and Liquidity Risk Report is monthly prepared, including the main events duringthe period to highlight the Bank’s current guidelines and policies and ensure compliance withexposure limits for market and liquidity risks, with the approval from the Banking Managementand Economic Committees, the Executive Board and the Board of Directors.

Derivatives: Banrisul has not entered into "target forward swap" transactions or any otherleveraged derivative since its policies do not provide for non-hedging transactions for itsassets and liability positions.

On December 7, 2010, Banrisul amended its contracts, thus canceling its positions in derivatives- swap transactions - in effect as of June 30, 2010, as described in note 05.

Sensitivity analysis: Banrisul has no derivatives transactions in its portfolio as of June 30,2011, therefore the sensitivity analysis table is not disclosed herein.

(d) Basel RatioThe Basel Ratio represents the ratio between the Shareholders’ Equity – Reference Equity, orPR -, and the risk weighted assets - Required Reference Equity - PRE, according to currentlegislation, demonstrating the Bank’s solvency. The minimum percentage established by theNational Monetary Council - CMN - is 11%. CMN also determines that the minimum value ofthe Reference Equity must be equal to the sum of credit, market and operating risk amounts.The Bank is in compliance with that operational limit as of 30 June 2011.


In Thousands of ReaisBanrisul Consolidated 2011

Reference Equity Level I .......................................................................................... 4,177,861Shareholders' Equity ................................................................................................... 3,856,285Income Accounts Receivable .................................................................................... 3,285,589Income Accounts Payable .......................................................................................... 2,960,404Deferred Permanent Assets ...................................................................................... 10,124Adjustment to Fair Value - Securities and Derivatives .......................................... (7,185)

Dividends and Bonuses ............................................................................................. 670Reference Equity Level II ......................................................................................... (7,185)

Adjustment to Fair Value - Securities and Derivatives .......................................... (7,185)Reference Equity (PR) ............................................................................................... 4,170,676Required Reference Equity (PRE) ............................................................................. 2,933,197

Amount related to:Credit Risks (PEPR) .................................................................................................. 2,159,944Market Risks (PJUR) ................................................................................................ 382,403Share Prices Risks (PACS) ....................................................................................... 1,988Operating Riss (POPR) ............................................................................................ 388,862

Portion of Trading Porfolio Risks (RBAN) ................................................................... 21,392Margin Value or insufficiency (PR-PRE-RBAN) .......................................................... 1,216,087Basel Ratio (Risk Agent/PRE) .......................................................................................... 15.64%Permanent Assets Ratio ................................................................................................. 4.47%

Permanent Assets Margin .......................................................................................... 1,898,482

NOTE 25 Transactions with Related Parties

Banrisul's commercial relations with the Rio Grande do Sul State Government and itssubsidiaries, Companhia Estadual de Energia Elétrica (CEEE), Companhia Rio-Grandense deSaneamento (CORSAN), Companhia de Gás do Rio Grande do Sul (SULGÁS), Centrais deAbastecimento do Rio Grande do Sul S.A. (CEASA), Companhia Estadual de Silos e Armazéns(CESA), Companhia Rio-Grandense de Artes Gráficas (CORAG), Companhia Rio-Grandense deMineração (CRM), Companhia de Indústrias Eletroquímicas - CIEL, Companhia deProcessamento de Dados do Estado do Rio Grande do Sul (PROCERGS) and Caixa Estadual S.A.- Agência de Fomento/RS are described below:

Rio Grande do Sul State Government - On June 29, 2007, Cooperation Agreement no. 1959/2007 was entered into between Banrisul and Rio Grande do Sul State Government, underwhich Banrisul will provide to the Government, on an exclusive basis and for a five-yearperiod, banking services related to the payment of active and inactive servants, lifetime andspecial pensioners of the Executive Branch (Direct Administration), and pension planpensioners (Social Security of the Rio Grande do Sul State – IPERGS) and the Governmentmaintains Banrisul’s right to offer payroll loans. In view of the reciprocity of services provided,under this Agreement Banrisul releases the Rio Grande do Sul State Government from costsrelated to the provision of banking services, such as the collection of revenue and state taxes,debt to bank account, FGTS (severance pay fund) statement and mortgage loan collectionservices.

Banrisul also provides services related to the financial transfers made by the governmentdepartments of amounts related to social programs and updates information related to inactiveservants and holders of special or lifetime pension plans of the Direct Administration. Theseservices are not paid.

Banrisul also pays the suppliers of the Public Finance System and processes changes relatedto the Cash Management Integrated System (SIAC), which is responsible for centralizing inone bank account the cash and cash equivalents of the Direct and Indirect State Administrationand its subsidiaries. These services are not paid.

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Banrisul provides other services to foundations and government agencies, such as paymentservices through payment forms and the supply of meal and fuel vouchers. For the half-yearended June 30, 2011, these services generated fees in the amount of R$4,909 thousand.Banrisul offers a solution for the management of e-commerce through the Online AuctionPortal (Portal de Compras Pregão On Line). This service is not paid.

Banrisul purchased FCVS credit rights, as described in note 06. At June 30, 2011, these creditsare stated at acquisition cost plus income earned to the balance sheet date, in the amount ofR$613,933 thousand. These credit rights were originally purchased at a discount andsimultaneously hedged through an exchange rate swap contract to the Selic index variation.On December 7, 2010, in order to simplify the structure of such transaction and the cash flowsgenerated at the settlement dates, the parties amended the contract, as defined in note 05.The changes did not affect Banrisul’s net income for the year.

For the six-month period ended June 30, 2011, Banrisul’s lease agreements on the StateGovernment’s properties generated expenses in the amount of R$497 thousand.

Also, Banrisul has an employee assignment agreement with the State Government wherebythe latter assigned 9 employees from the dissolved Caixa Econômica Estadual to Banrisul andreceived 9 employees to work in Government departments and foundations. These employee-related costs are refunded by the parties.

Companhia Estadual de Energia Elétrica (CEEE) - Banrisul is responsible for the provision ofpayroll banking services, including payroll loan operations. Banrisul is also responsible forcollecting payments of electricity bills issued by CEEE and for the supply of meal and fuelvouchers, which represented service revenue in the amount of R$1,786 thousand for the six-month period ended June 30, 2011. Banrisul offers an e-commerce management solutionthrough the Pregão On Line portal.

Companhia Riograndense de Saneamento (CORSAN) - Banrisul is responsible for the provisionof payroll banking services. Banrisul is also responsible for collecting payments of bills issuedby Corsan and for the supply of fuel vouchers, which represented service revenue in theamount of R$2,046 thousand for the six-month period ended June 30, 2011. Banrisul offers ane-commerce management solution through the Pregão On Line portal.

Banrisul serves as a go between in the implementation of the financial flow expected fromthe agreements entered into by this company and the National Bank for Economic and SocialDevelopment (BNDES). There are no guarantees pledged and/or compensation related tothese operations.

SULGÁS, CEASA, CESA, CIEL, CORAG, CRM and PROCERGS - Banrisul is responsible for theprovision of payroll banking services and has payroll loan agreements with SULGÁS, CEASAand CESA. Banrisul is also responsible for services related to e-payment issued by thesecompanies and the supply of meal and fuel vouchers, which represented service revenue inthe amount of R$138 thousand for the six-month period ended June 30, 2011. Banrisul offersan e-commerce management solution through the Pregão On Line portal.

SULGÁS has investments whose yield is indexed to the CDI variation. Banrisul serves as a gobetween in the implementation of the financial flow expected from the agreements enteredinto by this company and the National Bank for Economic and Social Development (BNDES).There are no guarantees pledged and/or compensation related to these operations.

Caixa Estadual S.A. - Agência de Fomento/RS - Banrisul is responsible for the provision ofpayroll banking services, including payroll loan operations. Banrisul is also responsible for e-


payment services and the supply of meal and fuel vouchers, which represented servicerevenue in the amount of R$27 thousand for the six-month period ended June 30, 2011.Banrisul offers an e-commerce management solution through the Pregão On Line portal.

Banrisul and Caixa Estadual have an employee assignment agreement, whereby the formerassigned 7 to the latter. These employee-related costs are refunded by the parties.

Banco Regional de Desenvolvimento do Extremo Sul (BRDE) - Banrisul is responsible for theprovision of payroll banking services, including payroll loan operations to employees allocatedin the Rio Grande do Sul State, and is responsible for e-payment services.

Fundação Banrisul de Seguridade Social - As described in Note 23, Banrisul’s remaining portionof the contracted debt related to this plan amounts to R$64,215 thousand. In addition to thisdebt, Banrisul pays interest of 6% per year with final maturity in 2028, which is monthlyadjusted based on the General Price Index – Domestic Availability (IGP-DI).

In order to supplement the benefits ensured and provided by the Social Security to itsemployees, Banrisul’s contributions to Fundação Banrisul for the six-month period endedJune, 30 2011 amounted to R$6,090 thousand as described in Note 23.

Banrisul is responsible for the provision of payroll banking services as well as the payment ofretirement and pension benefits to Fundação Banrisul’s beneficiaries. Fundação Banrisulalso has an exclusive investment fund managed by Banrisul, which represented service revenuein the amount of R$138 thousand for the six-month period ended June 30, 2011. Investmentsmade by Fundação Banrisul at Banrisul earn yield at rates indexed to the CDI variation.

For the six-month period ended June 30, 2011, Banrisul’s lease agreements on the FundaçãoBanrisul’s properties generated expenses in the amount of R$2,635 thousand.

Cabergs – Caixa de Assistência dos Empregados do Banco do Estado do Rio Grande do Sul -Banrisul provides medical and dental care benefits to its employees and Fundação Banrisul’sretirees, which generated expenses of R$10,698 thousand for the six-month period endedJune 30, 2011.

Banrisul is responsible for providing banking services related to the payment of staff andsuppliers. Cabergs also has an exclusive investment fund managed by Banrisul, whichrepresented service revenue in the amount of R$74 thousand for the six-month period endedJune 30, 2011. Investments made by Cabergs at Banrisul earn yields at rates indexed to theCDI variation.

Banrisul offers an e-commerce management solution through the Pregão On Line portal, andthis service is not paid.

All interest-bearing transactions were carried out on an arm’s length basis at rates prevailingon the transaction dates.

Transactions with parent companies and subsidiaries are as follows:

81

Banrisul In Thousands of Reais Assets (Liabilities) Income (Expenses) 2011 2010 2011 2010

Derivatives .................................................................................. - 101,570 - (2,660)State of Rio Grande do Sul Government .................................. - 101,570 - (2,660)

Collection Services ..................................................................... 5,072 5,072 - -State of Rio Grande do Sul Government .................................. 5,072 5,072 - -

Other Credits .............................................................................. 16,399 14,461 4,174 2,704State of Rio Grande do Sul Government .................................. 13,666 12,017 - -Subsidiaries .................................................................................. 2,733 2,444 4,174 2,704

Demand Deposits ....................................................................... (126,410) (193,058) - -State of Rio Grande do Sul Government .................................. (117,721) (173,517) - -Subsidiaries of State of Rio Grande do Sul Government ....... (5,972) (15,608) - -Subsidiaries .................................................................................. (2,717) (3,933) - -

Time Deposits ............................................................................. (252,870) (188,607) (6,754) (5,104)Subsidiaries .................................................................................. (252,870) (188,607) (6,754) (5,104)

Money Market Funding .............................................................. (787,946) (1,083,210) (48,364) (55,099)State of Rio Grande do Sul Government (*) ............................. (720,355) (1,021,015) (44,663) (52,455)Subsidiaries .................................................................................. (67,591) (62,195) (3,701) (2,644)

Other Payables ............................................................................ (116,411) (108,673) (6,838) (6,774)State of Rio Grande do Sul Government .................................. (43,730) (11,619) (497) (610)Banrisul foundation .................................................................... (64,683) (61,129) (5,565) (5,335)Subsidiaries .................................................................................. (7,998) (35,925) (776) (829)

Total ............................................................................................ (1,262,166) (1,452,445) (57,782) (66,933)

(*) These funds receive 100% of the Selic rate.

Banrisul Consolidated In Thousands of Reais Assets (Liabilities) Income (Expenses) 2011 2010 2011 2010

Derivatives .................................................................................. 18,831 17,605 1,002 785State of Rio Grande do Sul Government .................................. 18,831 17,605 1,002 785

Derivatives .................................................................................. - 101,570 - (2,660)State of Rio Grande do Sul Government .................................. - 101,570 - (2,660)

Collection Services ..................................................................... 5,072 5,072 - -State of Rio Grande do Sul Government .................................. 5,072 5,072 - -

Other Credits .............................................................................. 16,871 17,230 482 395State of Rio Grande do Sul Government .................................. 16,871 17,230 482 395

Demand Deposits ....................................................................... (123,693) (189,125) - -State of Rio Grande do Sul Government .................................. (117,721) (173,517) - -Entidades Controladas pelo Estado do Rio Grande do Sul ... (5,972) (15,608) - -

Money Market Funding .............................................................. (720,355) (1,021,015) (44,663) (52,455)State of Rio Grande do Sul Government(*) .............................. (720,355) (1,021,015) (44,663) (52,455)

Other Payables ............................................................................ (108,413) (72,748) (6,062) (5,945)State of Rio Grande do Sul Government .................................. (43,730) (11,619) (497) (610)Fundação Banrisul de Seguridade Social ................................ (64,683) (61,129) (5,565) (5,335)

Total ............................................................................................ (911,687) (1,141,411) (49,241) (59,880)

(*) These funds receive 100% of the Selic rate.

Compensation of key management personnel

Yearly, the General Shareholders’ Meeting resolves on:

a) The total annual compensation of the members of the Executive Board, the Board ofDirectors, the Supervisory Board and the Audit Committee, as stated in the Company’s Bylaws;and

b) The allowance to cover Supplementary Pension Plans Additional on behalf of the ExecutiveBoard, included in the Private Pension Plan for Banrisul and its subsidiaries’ managementand employees.


In 2011, the fixed maximum annual amount of R$403 thousand was defined as compensationand bonuses payable to individual members of the Executive Board, the Board of Directors,the Supervisory Board and the Audit Committee.

For the six-month period ended June 30, 2011, management compensation is as follows:

In Thousands of ReaisShort Term Benefits paid to Senior Management 2011 2010Salaries .................................................................................................................................... 1,665 1,808Bonuses .................................................................................................................................... 3 3Social Security ......................................................................................................................... 390 413Total ................................................................................................................................ 2,058 2,224

Banrisul pays in full defined benefit pension plans to officers who belong to the staff. For thesix-month period ended June 30, 2011, contributions to Fundação Banrisul de SeguridadeSocial (Banrisul Social Security Foundation) are summarized as follows:

In Thousands of Reais

Post-Employment Benefits 2011 2010Defined Contribution Pension Plan ..................................................................................... 9 10

Banrisul has a D&O liability insurance policy for its officers and members of the Boards, andpaid insurance premium in the amount of R$298 thousand.

Banrisul does not offer its key management personnel any long-term, termination or stock-based compensation benefits.

Additional information(1) According to existing legislation, financial institutions may not grant loans or advances to:

a) Officers, directors or members of the advisory, supervisory or similar boards, as well astheir spouses and relatives up to the 2nd degree of kinship;

b) Individuals or legal entities holding equity interest equal to or more than 10%; and

c) Legal entities having more than 10% of capital held by the financial institution itself, any ofits directors or officers as well as their spouses and relatives up to the 2nd degree of kinship.

Thus, Banrisul does not grant any loans or advances to any subsidiary, members of the Boardor the Executive Board and their relatives.

(2) ShareholdingAs of June 30, 2011, members of the Executive Board, the Board of Directors, the SupervisoryBoard and the Audit Committee jointly hold Banrisul’s shares as follows:

Shares AmountVoting Shares 9Common Shares 96Total de Shares 105

83

TÚLIO LUIZ ZAMINCEO

FLAVIO LUIZ LAMMELVice-President

WERNER KÖHLERAccountant CRCRS 38,534

GUILHERME CASSELIVANDRE DE JESUS MEDEIROS

JOÃO EMÍLIO GAZZANAJONE LUIZ HERMES PFEIFFJULIMAR ROBERTO ROTTA

LUIZ CARLOS MORLINOfficers

BOARD OF EXECUTIVE OFFICERS

NOTA 27 Authorization for Completion of the Financial Statements

Banrisul's Board of Executive Officers authorized the completion of these financial statementson August 04, 2011, which consider subsequent events occurred to this date that might affectthese financial statements

NOTA 26 Impact from the Adoption of the International Financial ReportingStandards

During the IFRS convergence process, some standards and their interpretations were issuedby the Brazilian FASB (CPC), which will be applicable to financial institutions only whenapproved by the National Monetary Committee (CMN). Currently, financial institutions andother institutions regulated by the Central Bank must adopt the following pronouncements:

Impairment of Assets (CPC 01);Statement of Cash Flows (CPC 03);Related Party Disclosures (CPC 05);Subsequent Events (CPC 24) andProvisions, Contingent Liabilities and Contingent Assets (CPC 25).

CMN Resolution no. 3786/09 and Official Letters no. 3472/09 and no. 3516/10, issued by theCentral Bank of Brazil (Bacen), established that financial institutions and other institutionsauthorized to operate by Bacen, either incorporated as a public company or required toestablish an Audit Committee, must, as of December 31, 2010, annually prepare and disclosein a period not exceeding 120 days after the December 31 reporting date, their consolidatedfinancial statements prepared in accordance with the international financial reportingstandards (IFRS), and following international pronouncements issued by the IASB –International Accounting Standards Board.

The financial statements for the year ended December 31, 2010, prepared in accordance withIFRS was disclosed by Banrisul on May 2, 2011, on its website www.banrisul.com.br/ir as wellas on the website of the Brazilian Securities Exchange Commission (Comissão de ValoresMobiliários – CVM -, www.cvm.gov.br). Management believes that the reconciliation betweennet income and shareholders’ equity as of June 30, 2011 is consistent with the amountspresented in the reconciliation as of December 31, 2010.


Reports

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Independent auditors' reporton the financial statementsTo the Management and Shareholders ofBanco do Estado do Rio Grande do Sul S.A.We have audited the individual financial statements of Banco do Estado do Rio Grande do Sul S.A. and theconsolidated financial statements of Banco do Estado do Rio Grande do Sul S.A. and its subsidiaries andinclude the balance sheet on June 30, 2011 and the statements of income, statements of changes in shareholders'equity and statements of cash flow for the six-month period then ended, as well as a summary of the mainaccounting practices and other notes to the financial statements.Management's responsibility regarding the financial statementsThe Banco do Estado do Rio Grande do Sul S.A. and its subsidiaries Management is responsible for thepreparation and fair presentation of these financial statements in accordance with the accounting practicesadopted in Brazil applicable to financial institutions authorized to operate by the Brazilian Central Bank -Bacen, and for internal accounting controls deemed as necessary to permit the preparation of these financialstatements free from material misstatement, whether due to fraud or error.Independent auditors' responsibilityOur responsibility is to express an opinion on these financial statements based on our audit, which wasconducted in conformity with Brazilian and international auditing standards. Those standards require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whetherthe financial statements are free from material misstatement.An audit involves performing selected procedures to obtain audit evidence about the amounts and disclosurespresented in the financial statements. The procedures selected depend on the auditor's judgment, includingthe assessment of the risk of material misstatement of the financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal controls relevant to the entity's preparationand fair presentation of the individual financial statements of Banco do Estado do Rio Grande do Sul S.A. andthe consolidated financial statements of Banco do Estado do Rio Grande do Sul S.A. and its subsidiaries inorder to design audit procedures that are appropriate in the circumstances, but not to express an opinion onthe effectiveness of internal controls of the Bank and its subsidiaries. An audit also includes evaluating theadequacy of the accounting policies used and the reasonableness of the accounting estimates made byManagement, as well as evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the individualequity and financial positions of Banco do Estado do Rio Grande do Sul S.A. and the consolidated equity andfinancial positions of Banco do Estado do Rio Grande do Sul S.A. and its subsidiaries as of June 30, 2011, theperformance of its operations and its cash flows for the six-month period then ended, in conformity with theaccounting practices adopted in Brazil applicable to financial institutions authorized to operate by theBrazilian Central Bank - Bacen.Other mattersValue-added statementsWe have also audited value-added statements (DVA) for the six-month period ended June 30, 2011, requiredby the Brazilian Corporation Law for publicly-held companies. These statements were submitted to the sameaudit procedures previously described and, in our opinion, they are properly presented in all materialrespects in relation to the overall financial statements.Auditing of amounts corresponding to the previous yearThe financial statements of Banco do Estado do Rio Grande do Sul S.A. for the six-month period ended June 30,2010, presented for comparison purposes, were audited by another auditor who expressed an unmodifiedopinion on those financial statements on August 4, 2010.


ERNST & YOUNG TERCOAuditores Independentes S.S.CRC 2SP-015.199/O-6/F-RS

Fernando Radaich de MedeirosAccountant CRC 1SP-217.532/O-6/S-RS


Summary of the Audit Committee Report1st Half of 2011I. Institutional and Statutory Provisions – The Internal Regulations of the Audit Committee,statutory body for Banco do Estado do Rio Grande do Sul S/A, are available on: http://www.banrisul.com.br/bob/data/RegimentoInterno.pdf.

II. Duties and Responsibilities – The Audit Committee has the responsibility of supervisingthe compliance with regulatory and legal requirements, the integrity and quality of thefinancial statements of the institution and its subsidiaries, the efficiency and effectiveness ofthe independent audit and internal audit performance. It is also responsible for the permanentfollow-up on the quality of the internal controls and risk management.

Management is responsible for the elaboration of the financial statements of the companiesthat make part of Grupo Banrisul (Banrisul Group), in compliance with the guidelines focusedon ensuring the quality of the processes related to the financial information, and to thecontrol and risk management activities.

It is incumbent upon Ernst & Young Terco, the external audit company responsible for thefinancial statements analysis since March 15, 2011, to ensure on whether they adequatelyrepresent the equity and financial situation of the group, pursuant to the fundamentalprinciples of accounting, the Brazilian corporate legislation and the rules of the Securities andExchange Commission of Brazil – CVM, the National Monetary Council and the Brazilian CentralBank.

III. Work Programming for the 1st Half of 2011 - Given that provides the Internal Rules, theCommittee prepared a work plan for the 1st half of 2011 at the meeting on January 05, 2011(Minutes of the Meeting no.292), with the following time schedule has been defined: a)systematic meetings with CEO and Executive Officers and with Risk Management and InvestorRelations Departments; b) monthly meetings with internal auditors, with the Legal Advisory,the Controllership, Accounting, Safety of Technology Information, Systems Development andInfrastructure Departments; c) quarterly meetings with the Fiscal Council, with independentauditors and with Fundação Banrisul de Seguridade Social and Caixa de Assistência dosFuncionários do Banrisul – Cabergs.

IV. Activities Schedule – During the 1st half of 2011, which comprise the period betweenJanuary 05 and June 30, 20110, the Audit Committee held 24 (twenty four) meetings: andanother 5 (five) until August 08, 20110, as of the Report of the Audit Committee, in which itdiscussed, in the scope of its authority, the most different subjects, as described in the minutesof the meetings. In these meetings, the Committee was supported by the analysis of theaccounting data, managerial reports, supplementary information and questions and meetingsheld with the presidency and executive officers of the institution, with executives fromdifferent levels of the organization, and with the executive officers from Fundação Banrisulde Seguridade Social (Banrisul Foundation). It has also obtained reports, documents,information and explanations from executive managers from several units of the Bank. It has,likewise, requested the attendance, when necessary, of the specific professionals of or theresponsible for the area of operation, as well as of the independent auditors. With a view to

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continuing explanation, the Committee has established routines for receiving reports, withinformation generated at intervals, from various areas of the Bank and independent auditors,such as reports of Banrisul’s largest debtors (from within the branch network), on the movelawsuits and labor proceedings; transfer to loans losses, special inspections, audits of directand indirect, of the activities, operational limits, the situation they are in the process ofcontrol of foreign legislation, the record system complaints and complaints from customersof National Financial System, and the letter of comment.

V. Internal Audit – The Internal Audit, linked to the CEO, has, among its objectives, to safeguardof the assets and to assure the compliance with the policies, plans, procedures and laws,being responsible for assisting the Audit Committee and the independent auditors. In thatrespect, tried to comply the planning approved for 2011, aiming to contemplate the systemicimplementations and process improvements recommended. Upon receipt of audit reportsby this Committee, the teams responsible for the execution of the tasks related to theoperational, administrative and systems areas have periodically discussed the conclusionsreported. The planning work for the year 2011 was reviewed and approved at the meeting ofthe Audit Committee (Minute No. 296) on February 07, 2011, on the grounds of the risks mapproduced by the Corporate Risk Management Unit.

VI. Independent Audit – The report on the evaluation of the accounting and internal controlsystems for the 2nd half of 2010, presented by the external audit company, Ernst Young Terco,along with the recommendations made, was discussed with the Committee, which hasfollowed together with the Internal Audit the implementation of the actions suggested foreach unit, throughout the half year. Due to the permanent supervision of several actions, theCommittee believes that the work developed was adequate to Banrisul’s needs.

They also believed that independent auditors performed, during the year, the tasks assignedto it in accordance with the contract.

The independent auditors work has been supervised throughout the year, and referred tothe quarterly information as of March 2011 and the half-year results as of June 30, 2011, withthe guarantee of unrestricted access to the institution’s data, with a view to ensure totalfreedom in the performance of the contract. There is no evidence of any fact or circumstancethat might have impaired the adoption of an independent posture, or the development ofthe auditors’ work.

VII. Risk Management – As in previous years, the Committee has followed the Market, Creditand Operational Risks. As of Operational Risks, followed the implementation of BusinessContinuity Plan, always recommending the segregation of risk management activities of itsoperating activities, which started to be implemented after being assigned to a specificExecutive Board the requirements needed to meet these recommendations. It also followedthe adequate practice for the dimensioning of the civil and labor contingencies, with a viewto establish the provisions necessary to their coverage in a correspondent level. In parallel,the analysis of the internal controls processes in relation to corresponded escrow depositscontinued. During this 1 st half of 2011, the Audit Committee also maintained theaccompaniment and the improvement of the activities related to IT security programs, systemsdevelopment and technology infrastructure, with a view to prevent electronic fraud practicestowards customers and to the Bank itself, and to protect the confidentiality of the operationsperformed by the Institution.


In respect of Credit and Market Risks, met on several occasions, with the credit and financialboards and with credit, financial and controllership units, and evaluated the progress andquality.

VIII. Error and Fraud Communication Chan- The Audit Committee did not any receivedenunciations regarding to the existence or the evidence of error or fraud, for the effects ofarticle 8 of its Internal Regulation. Any claims and quests received were addressed to theOmbudsman to adopt the necessary measures.

The Error and Fraud Communication Channel is available at http://www.banrisul.com.br/bob/link/BOBW01HW_com_erros_fraudes.asp?secao_id=1393.

IX. Capital Market –The Audit Committee has supervised, in the second half of 2009, theactivities of the Investor Relations area, recommending the adoption of measures deemedsuitable to its development.

X. Continued Education – As of previous years, the Audit Committee members wereconcerned with its technical development to better perform its functions. In that line, theyhave participated in this half year, at their own expenses, of events involving issues of riskmanagement and best practices for audit committees, such as: International AccountingRules; Corporate Management and Banking Law.

XI. Conclusion - Considering the existing internal control systems, the scope, thethoroughness, the quality and the extent of the work performed by the internal and externalaudits, as well as the issue of the independent auditors’ opinion, without remarks, onAugust 05, 2011, along with the set of recommendations of the Audit Committee, describedin the respective minutes of the meetings, was recommended, to the Board of Directors,the approval of the audited financial statements, related to the half-year ended on June 30,2011.


Ario ZimmermannBruno Nubens Barbosa Miragem

Leopoldo Henrique Krieger Schneider

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Opinion of the Fiscal Council

As members of the Fiscal Council of Banco do Estado do Rio Grande do Sul S.A. and in the

exercise of the responsibilities conferred to us by Article 163, items II and VII of Law 6,404

dated December 15, 1976, and by the provisions of the Company´s Bylaws, we have examined

the Management Report and the Financial Statements, which comprise the Balance Sheet,

Statements of Results for the semester, Changes on Shareholders’ Equity, Value Added, Notes

to the Financial Statements, Summary of the Audit Committee, and other statements for the

first half ended in June 30, 2011. Based on our examinations periodically adopted and on the

Opinion of the Independent Auditors, it is our opinion that the statements cited above should

be approved.


Cláudio Morais MachadoPresidente

André Luiz Barreto de Paiva FilhoVice-Chairman

MembersJoão Victor Oliveira Domingues

Rubens Lahude


Analysis ofPerformance 2Q11

FOLLOWING IS THE ANALYSIS OF THE PERFORMANCE OF BANCO DOESTADO DO RIO GRANDE DO SUL S.A. IN THE 1ST HALF AND IN THE 2ND

QUARTER OF 2011.

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Banco do Estado do Rio Grande do Sul S.A.

Founded in 1928, Banrisul is a multiple-service bankcontrolled by the State of Rio Grande do Sul. Banrisul is theofficial and main financial agent of the Government of theState. In 1934, Banrisul began its expansion with the openingof branches in various cities in the state, and continued itsgrowth and consolidation through the incorporation of publicfinancial institutions such as the Banco Real de Pernambuco(1969), Banco Sul do Brasil (1970), Banco de Desenvolvimentodo Estado do Rio Grande do Sul, BADESUL (Rio Grande doSul's Development Bank,) (1992) and DIVERGS - Distribuidorade Títulos e Valores Mobiliários do Estado do Rio Grande doSul (Securities Distributor of the State of Rio Grande do Sul)(1992).

In 2007 Banrisul held a primary and secondary public offering of shares, totaling approximatelyR$2.1 billion and enrolled to the Level 1 of Corporate Governance Practices of theBM&FBovespa. In 2008, Banrisul opened a new Superintendence in the State of Santa Catarina,expanding its inclusion in that State, in order to deepen customer relationships, strengthenpartnerships that promote the development of the State of Santa Catarina and expand itsbusiness scale.

2009 was marked by the consolidation of the strategy towards adding efficiency and qualityto the management, which took shape with the implementation of a management modelfocused on generating results, on technology modernization, on the review of internalprocesses, the development of a new credit model, the restructuring of business goals modelsand incentive compensation to employees. The Bank presented consistent growth of itsasset base in 2010, and ended the period with favorable solvency and profitability indicators.

In June 2011, Banrisul had R$34.8 billion in assets, of which R$18.8 billion in credit operations,and shareholders' equity of R$4.1 billion. As a retail bank, Banrisul focuses on meetingindividuals and companies demands, in addition to providing banking services to private andpublic sector entities.

Among its main products, payroll loans to individuals and working capital to companies standout as the most representative credit lines in Banrisul's commercial credit portfolio, with4.6% and 4.4% in the last three months and 17.8% and 32.5% growth in twelve months.

The geographic focus of the Bank is the Southern Region of Brazil, especially the state of RioGrande do Sul, with the 4th largest Gross Domestic Product (GDP) and where Banrisul'sheadquarters is located.

Banrisul group consists of Banco do Estado do Rio Grande do Sul S.A., Banrisul S.A.Administradora de Consórcios, Banrisul S.A. Corretora de Valores Mobiliários e Câmbio,Banrisul Armazéns Gerais S.A. and Banrisul Serviços Ltda.


Banking Industry and CompetitiveEnvironment

During 1H11, the banking environment was marked by the effect of macro-prudential measuresissued by the monetary authority in December 2010. The Central Bank of Brazil increasedcapital requirement for payroll operations with maturities over 36 months to 16.5% from 11%of the loan value. The measure applies to all credit operations contracted from December2010 on, but capital allocation begins in July 2011. Banks are seeking alternatives for capitalformation; however, small and medium institutions have felt its effects, especially thosefocused on payroll loans. The pace of loans granting of reduced in 1H11 when compared withthe same period of 2010.

In 1H11, the interest of public and private banks in the microfinance market stood out, whichthat could boost credit in Brazil through the inclusion of non-banked customers. The acquisitionof Postal Bank by Banco do Brasil and Santander's banking inclusion campaign have confirmedthat tendency, which counts on federal support. In accordance with new credit trends, Banrisuldevised access operations to micro-credit program to small and micro entrepreneurs inpartnership with the State Government of Rio Grande do Sul, ensuring the sustainability ofthe system.

Default in the financial market increased in 1H11. The expectation is that non performingloans stabilize during of the year due to salary renegotiations scheduled for the next monthsand to the flattish credit growth seen in recent months, when the credit/GDP ratio reached47.2% in June 2011, 2.6 pp higher than the 44.6% recorded in June 2010. The balance oftransactions in the National Financial System totaled R$1,834.0 billion in June 2011, a 20.0%year-on-year growth.

In relation to the competitive environment in March 2011, Banrisul ranked, among mid-sizedand large Brazilian banks, 11th position in total assets, 12th in equity, 8th in total deposits and 7th

in number of branches, according to rankings released by the Central Bank Brazil (BNDES notincluded). The Bank increased its time deposits market share in Brazil from 1.6697% in 1Q11to 1.7963% in 2Q11.

Table 01: Competitive Environment

In the State of Rio Grande do Sul, Banrisul’s market share in credit increased from December2010 to March 2011 by 0.64 pp. Market share reductions in demand and savings deposits areexplained by the migration of funding to time deposits that occurred in the quarter.

Brazil Rio Grande do Suljun/112 mar/11 mar/11¹ dez/10

Demand Deposits 1.8532% 1.9198% 27.0793% 31.1469%

Save Deposits 1.3272% 1.3884% 17.1849% 18.0788%

Time Deposits 1.7963% 1.6697% 29.4502% 30.0271%

Credit Operations 1.0256% 1.0237% 21.5458% 20.9076%

Number of Branches 2.2123% 2.2051% 25.7605% 25.7792%¹ Last information disclosed.² Last available information.

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(¹) Including Personnel Expenses, Other Administrative Expenses and Other Operating Expenses.(²) Interest on own capital and dividends paid and/or distributed (before income tax witholding at source),(³) Including interbank investments and excluding matched transactions.(4) Net income / average total assets.(5) Net income / average shareholders’ equity.(6) Efficiency Ratio - 12-month accumulation. Personnel expenses + other administrative expenses /Net financial margin + revenue from services rendered +

(other operating income - other operating expenses)(7) Fixed assets/ shareholders’ equity.(8) Default > 60 days / total loans.(9) Allowance for loan losses / default > 60 dias.

Economic and Financial IndicatorsTable 02: Economic and Financial IndicatorsMain Income Statement Accounts - R$ Million 1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10 2Q11/ 1H11/

1Q11 1H10Net Financial Margin 1,587.9 1,358.2 832.6 755.3 786.7 769.7 710.9 10.2% 16.9%Allowance for Loan Losses Expenses (281.5) (280.5) (143.1) (138.5) (126.6) (111.2) (127.1) 3.3% 0.4%Gross Profit from Financial Operations 1,306.4 1,077.7 689.5 616.8 660.1 658.5 583.9 11.8% 21.2%Financial Income 2,736.4 2,233.2 1,436.5 1,299.9 1,310.4 1,298.2 1,165.4 10.5% 22.5%Financial Expenses (1,430.0) (1,155.5) (747.0) (683.1) (650.3) (639.7) (581.5) 9.4% 23.8%Income from Services Rendered 345.0 307.3 173.4 171.6 173.5 160.9 157.4 1.1% 12.3%Administrative and Other Operational Expenses (¹) (968.5) (917.1) (499.5) (469.0) (499.2) (478.7) (457.2) 6.5% 5.6%Other Operation Income 113.1 88.8 46.6 66.5 81.1 39.0 43.1 -30.0% 27.4%Income from Operations 684.9 459.0 353.5 331.4 361.8 327.0 277.5 6.7% 49.2%Net Income 438.5 305.0 227.2 211.3 229.9 206.4 183.1 7.5% 43.8%Used/Distributed Results - R$ Million 1S11 1S10 2T11 1T11 4T10 3T10 2T10 2T11/ 1S11/

1T11 1S10Interest on Own Capital - Dividends (²) 173.9 121.2 117.1 56.8 120.4 51.6 71.0 106.4% 43.4%Main Balance Sheet Accounts - R$ Million Jun11 Jun10 Jun11 Mar11 Dec10 Sep10 Jun10 Jun11 / Jun11/

Mar11/ Jun10Total Assets 34,755.0 31,098.8 34,755.0 32,951.0 32,127.7 32,339.3 31,098.8 5.5% 11.8%Securities (³) 9,965.9 10,150.4 9,965.9 9,789.3 9,573.9 10,014.1 10,150.4 1.8% -1.8%Total Lending 18,809.3 15,442.0 18,809.3 17,939.6 17,033.2 16,237.1 15,442.0 4.8% 21.8%Allowance for Loan Losses (1,214.7) (1,117.5) (1,214.7) (1,156.0) (1,101.9) (1,122.7) (1,117.5) 5.1% 8.7%Past Due Loans > 60 days 498.9 493.6 498.9 478.2 418.0 487.9 493.6 4.3% 1.1%Funding and Assets under Management 26,092.7 23,163.7 26,092.7 25,289.8 25,090.8 24,095.2 23,163.7 3.2% 12.6%Shareholders' Equity 4,118.1 3,590.1 4,118.1 4,009.0 3,855.2 3,746.4 3,590.1 2.7% 14.7%Consolidated Reference Equity 4,170.7 3,603.1 4,170.7 4,000.6 3,873.3 3,738.0 3,603.1 4.3% 15.8%Average Shareholders' Equity 3,986.7 3,499.3 4,063.6 3,932.1 3,800.8 3,668.2 3,535.1 3.3% 13.9%Average Total Assets 33,441.3 30,091.4 33,853.0 32,539.3 32,233.5 31,719.1 30,481.7 4.0% 11.1%Financial Index 1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10Return on Total Assets 2.5% 2.0% 2.6% 2.6% 2.9% 2.6% 2.4%Return on Shareholders' Equity 22.4% 17.7% 24.0% 22.8% 26.1% 23.9% 22.0%ROAA (p.a.) (4) 2.6% 2.0% 2.7% 2.6% 2.9% 2.6% 2.4%ROAE (p.a.) (5) 23.2% 18.2% 24.3% 23.3% 26.5% 24.5% 22.4%Efficiency Ratio (6) 45.0% 50.5% 45.0% 45.8% 47.8% 48.5% 50.5%Consolidated Basel Ratio 15.6% 16.2% 15.6% 15.8% 16.1% 15.8% 16.2%Fixed Assets Ratio (7) 4.0% 4.8% 4.0% 4.3% 4.4% 4.6% 4.8%Default Rate (8) 2.7% 3.2% 2.7% 2.7% 2.5% 3.0% 3.2%Cover Rate (9) 243.5% 226.4% 243.5% 241.7% 263.6% 230.1% 226.4%Economic Indicators 1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10 Effective Selic Rate (accrued) 5.54% 4.30% 2.82% 2.65% 2.57% 2.62% 2.23% Foreign Exchange Rate (R$/USD – end of period) 1.56 1.80 1.56 1.63 1.67 1.69 1.80 Foreign Exchange (%) -6.31% 3.46% -4.15% -2.25% -1.67% -5.96% 1.15%IGP-M (General Market Price Index) 3.15% 5.69% 0.70% 2.43% 3.18% 2.09% 2.84%IPCA (Extended National Consumer Price Index) 3.87% 3.09% 4.02% 2.27% 2.23% 0.50% 1.00%


Assets and Earnings Structure

Financial Performance

Banrisul ended 1H11 with growth of assets and earnings structure. The Bank continued itsstrategy of growing in credit, encouraged by the prospects of the economic environment, andenjoyed its competitive advantages in relation to other institutions: comfortable cash athand, low exposure to treasury risks, adequate levels of default and cost of funding, and thefinancial capacity to sustain the growth of loan assets.

Banrisul's liquidity is favored by its market fundraising features, the cash and cash equivalentsare invested in federal bonds indexed to the Selic Rate, Treasury bills or in matchedtransactions, always backed by federal securities, without any exposure to foreign exchange,swaps or derivatives operations.

The policy of attracting small and medium depositors and savers, rather than institutionalinvestors, ensures the reduction of financial costs and the diversification of the fundingsources, a strategy suited to the needs of funding for new loans. Total deposits represented64.6% of the third parties liabilities at the end of June 2011.

Responsible for 54.1% of total assets, the credit portfolio is composed of non-concentratedoperations granted mainly to individuals and micro, small and medium companies. Payrollloans to individuals and working capital to companies absorbed 32.2% and 24.6%, respectively,of total credit at the end of June 2011.

Non-performing loans over 60 days reduced to 2.7% of total loans in June 2011 from 3.2% inJune 2010. NPL over 90 days was 2.3% in June 2011. Total provisions of 243.5% of overdueoperations over 60 days remain at an appropriated level in comparison to market practices,practices of the banking market, considering its risks.

Banrisul has conditions to support the credit growth, demonstrated by the Basel Ratio(consolidated) of 15.6% in June 2011. Indexes that demonstrate the effectiveness of theadministrative structure, remained at descending levels, as showed by operating costs/totalassets and cost/income ratios, which reached 5.0% and 45.0% in June 2011, respectively.

Net income reached R$438.5 million in 1H11, R$133.5 million or 43.8% above the net incomefor the same period of 2010. In 2Q11, net income was R$227.2 million, R$44.0 million or 24.1%above 2Q10. The performance reflects the increase in credit, treasury and services revenuesand the decrease of other administrative expenses. Net profit increase of 7.5% or R$15.9million from 1Q11 to 2Q11 is due to higher income from and treasury, partially offset byincrease of funding expenses.

Net profit in 1H11 represents an annualized return on average equity of 23.2%. In June 2011,shareholders' equity reached R$4,118.1 million, an increase of 14.7% over June 2010, and of2.7% over March 2011.

Gross interest income in 1H11 was R$1,306.4 million, 21.2% or R$228.7 million higher than1H10. In 2Q11, it reached R$689.5 million, 18.1% or R$105.6 million above 2Q10 and R$72.7million or 11.8% above than 1Q11

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Total assets reached R$34,755.0 million in June 2011, an increase of 11.8% over June 2010,8.2% over December 2010 and 5.5% above March 2011. The year-on-year, half-on-half andquarter-on-quarter asset growth was motivated by the increase in credit portfolio, especiallyin commercial credit.

Banrisul's credit operations totaled R$18,809.3 million at the end of June 2011, an increase of21.8% in twelve months, 10.4% in six months and 4.8% in the last quarter. The commercialcredit (non earmarked portfolio) totaled R$14,575.3 million, an increase of 22.9% in twelvemonths, 11.0% in the last six months and of 5.3% in the last quarter. Commercial credit toIndividuals totaled R$8,211.4 million in June 2011, an increase of 19.1% over June 2010, 11.0%over December 2010 and 5.3% over March 2011. Commercial credit to Companies totaledR$6,363.8 million in June 2011, an increase of 28.2% compared with June last year and of11.0% compared to December 2010 and of 5.3% from March 2011.

Funds raised and under management reached R$26,092.7 million in June 2011, growing 12.6%over June 2010, 4.0% over December 2010 and 3.2% from March 2011. Deposits reachedR$19,800.9 million in June 2011, growing 15.5% over June 2010 and 3.9% in relation to December2010 and to March 2011. Assets under management reached R$6,291.8 million, 4.5% aboveJune 2010, 4.2% over December 2010 and 1.0% above March 2011.

Banrisul collected and provisioned R$420.6 million in taxes and contributions in 1H11, Taxeswithheld and paid, which are levied directly on financial intermediation and other payments,amounted to R$268.0 million.

Capital Expenditure Policy

Investments in hardware, software and maintenance of assets focused mainly onimplementation of solutions for ensuring safety in the payments, to Banrisul accreditation asdigital certificate-issuing authority and the restructuring of the environment for enterprisestorage the large platform (IBM mainframes). In 1H11, investments totaled R$94.9 million.The investment policy of the Bank unfolds on three pillars: technology expansion andmodernization, renovations and expansions and expansion of the distribution network.

Technology Expansion/Modernization

Investments in information technology amounted to R$82.4 million in 1H11, reflecting thedevelopment strategy of mechanisms for security to prevent and combat fraud in bankingtransactions and improve the operational efficiency of its infrastructure of systems.

In the first half of 2011, in order to meet requirements for the acquisition of cards fromMasterCard, Visa and Banricompras, security processes were standardized and implemented,in order to comply with the PCI (Payment Card Industry) safety standards to card market. TheBank is the only institution in Latin America member to PCI board of advisors, directlyinfluencing the definition of rules to be applied worldwide.

Encryption and digital certification projects also add a higher level of security to the Bank'srelationships channels. Computer authentication features based on digital certificates havebeen incorporated to the current system used by Banrisul' correspondent banks. The Bank'sweb environment systems are now authenticated with digital identity smartcards, increasingsecurity and access validation to products. The digital identity certificates have incorporatedalerts of due date proximity to avoid problems from unavailability of access.


Service Network Renovation/Expansion

Increase operations in the banking industry, reform and expand the number of service pointsguide the restructuring of the Bank. Branches modernization is focused on revitalizingcustomer service model, setting new standards of configuration of the points, increasing theperformance of communication channels and improving contact with customers. With theview on expanding and remodeling, investments of R$12.6 million were made in 1H11, withR$6.9 million during 1Q11 and R$5.6 million in 2Q11.

Expansion of Distribution Network

In 1H11, Banrisul's customer service network totaled 1,259 points, distributed in 441 branches,279 banking services stations and 539 electronic service stations. In Rio Grande do Sul, theBank is present in 414 municipalities, covering 98% of the population and GDP of the state.

Margin Analysis

The Margin Analysis in the following chart was based on the average balances of assets andliabilities, calculated as of the closing monthly balances in each quarter.

The chart shows the revenue-generating assets and interest-bearing liabilities, thecorresponding financial incomes on assets and financial expenses on liabilities, as well as theeffective average rates practiced.

Table 03: Margin AnalysisR$ Million

1H11 1H10 2010 2009Average Income Average Average Income Average Average Income Average Average Income AverageBalance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate

Interest-Earning Assets 30,697.3 2,736.4 8.91% 28,004.0 2,230.6 7.97% 28,781.4 4,840.5 16.82% 25,996.9 4,262.1 16.39%Loan Portfolio 17,588.2 2,036.1 11.58% 14,207.9 1,654.0 11.64% 15,372.3 3,567.5 23.21% 11,954.9 2,948.1 24.66%Resales pending Settlement 2,552.4 142.4 5.58% 4,323.5 190.4 4.40% 3,476.9 368.9 10.61% 5,582.3 517.1 9.26%Money Market Investments 2,136.6 116.5 5.45% 1,931.7 77.9 4.04% 1,995.7 182.4 9.14% 1,761.2 166.4 9.45%Available-for-Sale Securities 1,706.1 93.0 5.45% 1,282.5 51.8 4.04% 1,516.9 138.7 9.14% 966.4 91.3 9.45%Held-to-Maturity Securities 4,274.9 233.0 5.45% 4,022.0 162.3 4.04% 4,129.2 377.5 9.14% 3,677.5 347.4 9.45%Interbank Deposits 305.5 10.3 3.36% 132.4 5.2 3.93% 123.7 10.7 8.68% 155.2 15.4 9.91%Other Interest-Earning Assets 2,133.6 105.0 4.92% 2,104.0 89.0 4.23% 2,166.8 194.8 8.99% 1,899.3 176.4 9.29%Compulsories 1,515.0 79.5 5.24% 1,645.6 59.4 3.61% 1,661.7 131.6 7.92% 1,479.8 117.6 7.95%Other 618.7 25.5 4.13% 458.4 29.6 6.46% 505.1 63.2 12.52% 419.5 58.8 14.01%Non Interest-Earning Assets 3,016.3 2,353.2 2,577.5 1,980.3Total Assets 33,713.6 2,736.4 8.12% 30,357.3 2,230.6 7.35% 31,359.0 4,840.5 15.44% 27,977.2 4,262.1 15.23%Interest - Bearing Liabilities 24,474.8 (1,148.5) 4.69% 22,752.4 (872.3) 3.83% 23,143.0 (1,925.8) 8.32% 21,097.3 (1.719.7) 8.15%Domestic Interbank Deposits 11.1 (0.6) 5.68% 79.4 (3.0) 3.76% 38.2 (3.9) 10.28% 59.3 (4.2) 7.10%Domestic Saving Deposits 5,316.0 (184.1) 3.46% 5,809.7 (162.1) 2.79% 5,901.4 (349.8) 5.93% 5,136.1 (292.9) 5.70%Domestic Time Deposits 11,051.6 (547.5) 4.95% 8,838.1 (372.7) 4.22% 9,268.2 (837.3) 9.03% 8,334.7 (782.3) 9.39%Money Market Funding 1,682.0 (107.1) 6.37% 2,031.9 (98.4) 4.84% 1,893.2 (214.4) 11.32% 2,485.5 (257.6) 10.36%Borrowings and Onlendings 1,757.3 (60.3) 3.43% 1,620.1 (53.5) 3.30% 1,627.7 (112.5) 6.91% 1,407.9 (57.1) 4.05%Domestic 1,104.2 (60.6) 5.49% 1,040.2 (25.1) 2.42% 1,038.2 (77.5) 7.46% 914.6 (42.0) 4.59%Foreing 653.1 0.3 -0.05% 579.9 (28.4) 4.89% 589.5 (35.1) 5.95% 493.4 (15.0) 3.05%Other 4,656.8 (248.9) 5.35% 4,373.1 (182.5) 4.17% 4,414.3 (407.9) 9.24% 3,673.8 (325.6) 8.86%Non Interest - Bearing Liabilities 5,181.4 4,076.5 4,534.1 3,609.0Shareholders' Equity 4,057.4 3,528.3 3,681.9 3,270.8Liabilities and Shareholders' Equity 33,713.6 (1,148.5) 3.41% 30,357.3 (872.3) 2.87% 31,359.0 (1,925.8) 6.14% 27,977.2 (1.719.7) 6.15%

Spread 4.71% 4.47% 9.29% 9.09%NIM 1,587.9 5.17% 1,358.2 4.85% 2,914.7 2,542.4NIM (Yearly) 10.61% 9.94% 10.13% 9.78%

97

Credit operations include advances on foreign exchange contracts and leasing agreements,which are shown at the current net value of the leasing agreements. Income from creditoperations overdue for more than 60 days, irrespective of their risk level, will only be bookedas revenues when they are received.

Average balances of interbank investments, funds invested or raised in the interbank marketcorrespond to the redemption amount deducted from the income or expenses correspondingto future periods.

Average balances of deposits, open-market funding, loans and onlendings include the feespayable till the date of closing of the financial statements, booked on a pro rata die basis. Asfor expenses related to these items, fees relating to deposits include contributions to theDeposit Guarantee Fund (FGC).

The interest-earning assets margin presented an upward trend from 1H10 to 1H11, when theeffective basic interest rate (Selic) increased to 5.54% from 4.30%. Average profitable assetsgrew 9.6% year-on-year, while interest-bearing liabilities increased by 7.6%. The absolutemargin increased 16.9%, and the relative margin surpassed by 0.32 percentage points thatrecorded in 1H10.

The hikes of the basic interest rate registered in the first half of the year resulted in increasingrates on interest-earning assets over interest-bearing liabilities. Besides the basic interestrates that index transactions in the financial sector, the assets and liabilities structure andalso the tenor of the transactions are determinant factors in the formation of the marginrecorded in each period.

The representativeness of credit assets in total average interest-earning assets expanded by6.6 percentage points last year, followed by treasury operations, with an increase of 0.6percentage points. The credit revenue from the higher volume of transactions and the effectsof the hikes of the Selic Rate over the balance of securities were the main drivers to increasemargin.

By the side of interest-bearing liabilities, besides the increase in basic interest rates, thehigher share of time deposits in the last twelve months increased the average total cost ofinterest-bearing liabilities, increasing its average cost to 4.69% in 1H11 from 3.83% in 1H10.

Changes in the structure of assets and liabilities improved the financial margin and increasedefficiency. The growth of the average interest-earning assets was influenced by the increaseof credit asset (R$3,380.3 million) and securities portfolio (R$881.4 million), helping increaserevenue-generating rates.

In relation to liabilities, the balances of savings and money market funding declined theirvolume, whi le time deposits and borrowings increased their average balance. However,interest-bearing liabilities showed an upward trend in average rates strongly influenced byeconomic measures to increase the Selic rate and the growth of reserve requirements. Theresults of these changes together produced higher spreads, which reached 4.71% in 1H11,0.24 pp. higher than in 1H10.


Table 04: Variations in Interest Income and Expenses: Volumes and Rates R$ Million

1H11 / 1H10 2010 / 2009 2009 / 2008Increase/Decrease Increase/Decrease Increase/Decrease

According to change in: According to change in: According to change in:Volume Rate Net Volume Rate Net Volume Rate Net

Interest Change Interest Change Interest ChangeInterest - Earning AssetsLending Operations, LeasingOperations and Other Receivables 391.3 (9.1) 382.2 780.1 (160.8) 619.3 484.1 (110.7) 373.4Resales pending Settlement (90.6) 42.7 (47.9) (215.4) 67.3 (148.1) 32.4 (24.5) 7.9Securities and Derivatives 38.8 111.7 150.5 112.2 (18.8) 93.4 202.5 (42.8) 159.7Interbank Deposits 5.7 (0.6) 5.1 (2.1) (2.5) (4.6) 96.3 (5.8) 90.5Other 1.3 14.7 16.0 23.8 (5.4) 18.4 (273.9) 38.0 (235.9)Total Interest-Earning Assets 346.4 159.4 505.8 698.6 (120.2) 578.4 541.4 (145.8) 395.6Interest -Bearing LiabilitiesInterbank Deposits 5.8 (3.4) 2.4 (1.1) 1.4 0.3 (3.9) 0.4 (3.5)Savings Deposits 14.6 (36.6) (22.0) (46.0) (10.9) (56.9) 256.2 (252.1) 4.1Time Deposits (147.1) (27.6) (174.7) (85.1) 30.2 (54.9) (120.8) 110.9 (9.9)Money Market Funding 18.8 (27.5) (8.7) 70.7 (27.5) 43.2 20.9 52.4 73.3Onlendings (4.9) (1.9) (6.8) (7.1) (48.4) (55.5) (63.3) 296.2 232.9Other Interest-Earning Assets (10.8) (55.6) (66.4) (69.2) (13.1) (82.3) (162.6) 33.6 (129.0)Total Interest -Bearing Liabilities (123.6) (152.6) (276.2) (137.8) (68.3) (206.1) (73.4) 241.3 167.9

Variations in Interest Income and Expenses: Volumes and Rates

The following chart shows the variations in the interest incomes and expenses by the changein average volume of interest-earning assets and interest-bearing liabilities (a) from 1H10 to1H11, (b) from 2009 to 2010 and (c) from 2008 to 2009.

The variations in the volume and interest rates were calculated based on the average balancesin the period and the variations in the average interest rates on interest-earning assets andinterest-bearing liabilities. Variation of interest rate was calculated by variation on interestrate in the period multiplied by the average interest-earning assets or average interest-bearing in the first period. The volume change was computed as the difference between theinterest amounts from the current period to the previous one.

The upward net variation of revenue on interest-earning assets of R$505.8 million is associatedwith increases the volumes of credit and securities, which added revenues of R$430.1 million,and also with oscillations over average rates, which were influenced (a) negatively, by creditoperations, with a decrease of R$9.1 million, and (b) positively, by securities portfolio,increasing revenues by R$111.7 million.

The growth of R$276.2 million in expenses from interest-earning liabilities is tied to evolutionof the average balances of time deposits that increased the cost of funding by R$147.1 million,and was not offset by decreases in other funding items, and to higher average interest rates,raising costs to R$152.6 million.

The positive result of changes in financial income and expenses was produced by higherasset revenues in relation to liabilities expenses in the amount of R$222.8 million, togetherwith higher average interest rates on assets in comparison to that on liabilities, addingrevenues of R$6.8 million and contributing to the expansion of R$229.6 million observed inthe analytic margin.

99

Banrisul's Stock Market Performance

On the eve of completing four years of its accession to the Level 1 of Corporate Governance ofthe BM&FBOVESPA SA - Brazilian Stock Exchange, Commodities and Futures, Banrisulstrengthens and consolidates its transparent relationship with clients and investors, built bythe dissemination of data and information to the market, providing better and timelyknowledge about the Bank's business. In the first half of 2011, Banrisul held meetings andconference calls, totaling 108 opportunities for approaching market analysts and investors, aswell as other stakeholders in Brazil and abroad.

In May 2011, the PNB share became part of the Broad Brazil Index (IBRA) of BM&FBovespa,with 153 shares currently listed and allowing a comprehensive view of the domestic stockmarket. The financial sector participates in the IBRA with eight banks, among them Banrisul,making up 21.4% of the total of shares listed on new index.

The performance of Banrisul's shares in the past twelve months is seen in the graph below.

Graph 01: Banrisul PNB Performance x Brazilian Stock Market Indexes

Table 05: Communication and Relationship Efforts2Q11 1Q11 4Q10 3Q10 2Q10

Meetings 39 15 16 39 3

Conference Calls 19 12 5 28 28

Events Abroad* 23 0 16 0 2

Expo Money 0 0 0 0 0

APIMEC Meetings 0 0 1 0 0

TOTAL 81 27 38 67 33

* 2010: London, New York and Stavanger. 2011: Amsterdam, The Hague, London, Paris, Rotterdam, Stavanger and Zurich.


Banrisul's share performed positively in the stock market. At the end of the first half of 2011,the PNB share (BRSR6) was ranked 92nd among the 100 most traded shares in Bovespa (73th intwelve months). In 2Q11, average daily financial trade was approximately 42% higher than in2Q10, while average daily trade increase by 29% in the same period.

Graph 02: Average Financial Volume, Number of Trades and Number of Shares (PNB Shares)

The following chart informs the geographic distribution and the number of shares held pershareholder.

Graph 03: Banrisul´s Shares - Geographic Distribution

During the first half of 2011, Itaú BBA and Goldman Sachs started covering Banrisul; expectedtarget-prices divulged by the now ten sell-side financial institutions currently covering theBank are available at the Investor Relations website (www.banrisul.com.br/ir).

101

Target-Prices (in R$) and Upside (in % - as of June 30, 2011)

Market Consensus


Evolution of Balance Sheet Accounts

Total Assets

Total assets at the end of June 2011 were R$34,755.0 million, 11.8% or R$3,656.3 million higherthan in June 2010, and increased 8.2% or R$2,627.4 million from December 2010 and 5.5% orR$1,804.1 million from March 2011.

The growth of R$2,656.2 million year-on-year asset comes from the expansion of the fundingportfolio and the increase of R$344.8 million in escrow deposits. In the last twelve months,when assets are broken down, credit growth of R$3,367.3 million, interbank transactionsgrowth of R$771.6 million and treasury balance decrease of R$479.5 million, from lowermatched transactions, are the main explanations for the performance of assets.

Year-to-date, the increase of assets comes from the R$747.9 million increase in deposits,from the R$467.8 million growth in matched transactions and from the R$348.3 million increasein escrow deposits. As to funding allocation, credit portfolio grew R$1,776.2 million andtreasury operations increased R$859.8 million.

Assets growth quarter-on-quarter originated from the positive performance of deposits(R$738.7 million increase), matched transactions (increase of R$345.1 million) and escrowdeposits (R$153.1 million). As to funding allocation, credit portfolio, treasury operations andinterbank transactions increased by R$869.7 million, R$521.7 million and R$368.3 million,respectively.

Graph 04: Total Assets - R$ Million

Total assets in June 2011 were comprised of credit operations (54.1%), interbank transactionsand securities (33.8%), interbank and interbranch accounts (9.0%) and other assets (3.1%).

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Graph 05: Composition of Assets

Securities

Securities totaled R$9,965.9 million at the end of June 2011, 1.8% or R$184.5 million belowJune 2010. However, in 1H11, securities increased 4.1% or R$392.0 million over the balance ofDecember 2010 and rose 1.8% or R$176.6 million from 1Q11 to 2Q11. This amount includesliquid interbank transactions but excludes total liabilities from matched transactions.

The year-on-year increase of R$3,367.3 million in the loan book and of R$777.3 million ofinterbank and interbranch transactions comes from funding growth of R$2,656.2 million, thegrowth of R$344.8 million in escrow deposits and also from part of the securities portfolio,helping explain the decrease of treasury portfolios.

In the first half of 2011, securities increased byR$392.0 million, mainly due to the growth of20.6% or R$485.5 million in interbank transactions. In the last quarter, the increase of R$738.7million in deposits and of R$109.1 million in shareholders' equity financed both the growth ofthe securities portfolio and of the loan book.

Graph 06: Securities and Liquid Interbank Transaction* - R$ Million

* Excluding Matched Transactions


Interbank and Interbranch Transactions

The balance of interbank and interbranch transactions was R$3,130.7 million at the end ofJune 2011, which is 33.0% (R$777.3 million) more than in June 2010, 0.8% (R$25.1 million)below than in December 2010 and 13.6% (R$373.8 million) above March 2011.

In twelve months, balance change refers to the increase in the reserve requirements fromthe expansion of R$666.2 million in demand deposits. From December 2010, the negativechanges are associated with lower amount of reserve requirements due to the decrease ofthe balances subject to deposit at the Central Bank of Brazil. As for the change in the lastquarter, it may be noted the expansion of time deposits in R$1,001.4 million, increasingreserve requirements even with the reduction of R$261.4 million in the balances of demandand savings deposits.

Graph 07: Interbank and Interbranch Transactions - R$ Million

Credit Operations

Banrisul's credit portfolio totaled R$18,809.3 million in June 2011, exceeding by 21.8% thebalance in June 2010, by 10.4% the amount in December 2010 and by 4.8% the amount inMarch 2011.

Graph 08: Credit Operations - R$ Million

105

Breakdown of Credit by Company Size

At the end of June 2011, credit to companies, with a balance of R$8,582.6 million, represented45.6% of the total credit portfolio.

The company's size is determined by average monthly revenue: Micro - up to R$20,000; Small - up to R$200,000; Mid-sized- up to R$25 million; and Large - above R$25 million.

Credit to companies grew 25.4% year-over-year, 11.0% year-to-date and 4.4% quarter-on-quarter. Balance of large companies operations increased 3.3% from 1H10 to 1H11, 37.4% from4Q10 to 2Q11 and 2.7% from 1Q11 to 2Q11.

Loans to mid-sized, small and micro companies increased year-on-year 36.7% in twelve months,helping expand the segment's share of total credit to companies to 72.2% at the end of June2011 from 66.3% in June 2010. Year-to-date, loans to SME increased by 3.4% (5.1% quarter-on-quarter), amounting to 33.0% of the credit.

Breakdown of Credit by Sector

The following table provides the breakdown of the credit portfolio by sector. Out of the creditassets at the end of June 2011, 99.4% were allocated to the private sector, with a 22.1% growthin twelve months. Leading sectors to the year-on-year growth were: individuals, with R$1,340.3million growth; industry, increasing loans to R$727.6 million; services and other, increase ofR$468.9 million; and commerce, which grew R$392.5 million.

Jun11 Mar11 Dec10 % %Size Balance % Co. % Total Balance % Co. % Total Balance % Co. % Total Jun11/ Jun11/

Portfolio Portfolio Portfolio Mar11 Dec10

Large Companies 2,383.2 27.8% 12.7% 2,321.0 28.2% 12.9% 1,734.5 22.4% 10.2% 2.7% 37.4%

Total Middle/Small/Micro 6,199.4 72.2% 33.0% 5,897.0 71.8% 32.9% 5,994.6 77.6% 35.2% 5.1% 3.4%

Middle Companies 4,648.4 54.2% 24.7% 4,381.7 53.3% 24.4% 4,570.2 59.1% 26.8% 6.1% 1.7%

Small Companies 1,210.3 14.1% 6.4% 1,164.0 14.2% 6.5% 1,096.1 14.2% 6.4% 4.0% 10.4%

Micro-companies 340.7 4.0% 1.8% 351.4 4.3% 2.0% 328.3 4.2% 1.9% -3.0% 3.8%

Total Companies 8,582.6 100.0% 45.6% 8,218.0 100.0% 45.8% 7,729.1 100.0% 45.4% 4.4% 11.0%

Table 06: Breakdown of Credit to Companies by Company Size R$ Million

Table 07: Breakdown of Credit by Sector R$ Million

Jun11 Mar11 Dec10 Sep10 Jun10 Jun11/ Jun11/Mar11 Jun10

Private Sector 18,692.6 17,815.8 16,907.1 16,107.3 15,307.0 4.9% 22.1%

Rural 1,295.1 1,338.3 1,284.7 1,181.1 1,139.9 -3.2% 13.6%

Industrial 3,821.3 3,531.8 3,504.6 3,376.9 3,093.7 8.2% 23.5%

Commercial 2,209.4 2,145.2 2,010.8 1,899.2 1,816.9 3.0% 21.6%

Other Services 1,749.5 1,709.4 1,476.5 1,312.2 1,280.6 2.3% 36.6%

Individuals 8,156.2 7,736.9 7,345.2 7,120.3 6,815.8 5.4% 19.7%

Housing 1,461.1 1,354.1 1,285.3 1,217.6 1,160.0 7.9% 26.0%

Public Sector 116.7 123.8 126.1 129.8 135.0 -5.7% -13.6%

Government - Direct and Indirect Management 99.9 106.6 107.1 110.9 113.0 -6.3% -11.6%

Corporate - Other Services 16.8 17.2 19.0 18.9 22.1 -2.0% -23.7%

Total 18,809.3 17,939.6 17,033.2 16,237.1 15,442.0 4.8% 21.8%


Table 08: Breakdown of Credit by PortfolioR$ Million

Credit Operations Jun11 Mar11 Dec10 Sep10 Jun10 Jun11/ Jun11/Mar11 Jun10

Private Sector 18,692.5 17,815.8 16,907.1 16,107.3 15,307.0 4.9% 22.1%

Foreign Exchange 528.6 450.8 411.7 470.0 443.9 17.3% 19.1%

Commercial Credit 14,575.2 13,838.5 13,130.6 12,514.6 11,861.1 5.3% 22.9%

Individuals 8,211.4 7,796.4 7,398.4 7,218.2 6,895.3 5.3% 19.1%

Credit Card 53.9 58.9 51.7 75.2 74.9 -8.4% -28.1%

Loan and Discounted Receivables - Individuals 7,906.8 7,480.0 7,099.0 6,912.6 6,656.1 5.7% 18.8%

Customer Financing - Individuals 250.8 257.6 247.8 230.4 164.3 -2.6% 52.7%

Companies 6,363.8 6,042.1 5,732.2 5,296.4 4,965.8 5.3% 28.2%

Foreign Credit 59.5 67.3 61.9 62.8 69.6 -11.6% -14.5%

Loan and Discounted Receivables - Companies 6,132.4 5,805.7 5,484.3 5,053.2 4,818.5 5.6% 27.3%

Customer Financing - Companies 171.9 169.1 186.1 180.4 77.8 1.7% 120.9%

Long-term Financing 757.9 755.9 714.3 644.3 617.4 0.3% 22.8%

Real Estate Financing 1,461.1 1,354.1 1,285.3 1,217.6 1,160.0 7.9% 26.0%

Leasing 74.9 78.6 80.8 80.2 85.3 -4.7% -12.3%

Agricultural Financing 1,294.9 1,337.9 1,284.2 1,180.5 1,139.3 -3.2% 13.7%

Public Sector 116.7 123.8 126.1 129.8 135.0 -5.7% -13.6%

Total 18,809.3 17,939.6 17,033.2 16,237.1 15,442.0 4.8% 21.8%

Breakdown of Credit by Portfolio

The portfolio breakdown shows unmarked and directed resources invested in loan assets.Allocations in the commercial (unmarked) portfolio, leasing and public sector, which accountfor 78.5% of the total portfolio, are funded from time deposits and equity. Development(long-term finance), agricultural, real estate and foreign exchange portfolios, which represent21.5% of the portfolio, are mostly from specific funding sources and are used for mandatorycredit allocation.

The commercial portfolio, consisting of revolving and installment loans to individuals andcompanies, totaled R$14,575.2 million at the end of June 2011, representing 77.5% of totalloan book. Commercial credit portfolio grew 22.9% or R$2,714.1 million year-on-year, makingup for 80.6% of the credit growth. Year-to-date, it increased 11.0% or R$1,444.6 million; from1Q11 to 2Q11, the growth was 5.3% or R$736.7 million.

Graph 09: Commercial Credit Portfolio - Individuals and Companies - R$ Million

107

In commercial (unmarked) credit, the individuals segment totaled R$8,211.4 million at theend of June 2011, representing 56.3% of the commercial portfolio balance and 43.7% of thetotal credit balance. The companies segment, which totaled R$6,363.8 million in June 2011,absorbed 43.7% of commercial credit and 33.8% of total loan book.

Long-term credit portfolio ended June 2011 with a balance of R$757.9 million, increasing22.8% or R$140.6 million year-on-year, 6.1% or R$43.6 million year-to-date and 0.3% or R$2million quarter-on-quarter.

Real estate credit totaled R$1,461.1 million at the end of June 2011, growing 26.0% (R$301.1million) in twelve months, 13.7% (R$175.7 million) since December 2010 and 7.9% (R$106.9million) since 1Q11. This performance can be explained by strong market demand and by theaddition of real estate financing into Banrisul's business goals.

Rural credit totaled R$1,294.9 million in June 2011, an increase of 13.7% (R$155.7 million)year-on-year, 0.8% growth (R$10.7 million) from 4Q10 to 2Q11 and decrease of 3.2% (R$43.0million) from 1Q11 to 2Q11. This decrease was influenced especially by the lower flow ofcredit concession winter crops in addition to the payment of outstanding summer crop loansgranted in 2010 as a direct consequence from the record agricultural production in the secondquarter of 2011.

The foreign exchange portfolio reached R$528.6 million in June 2011, an increase of 19.1% orR$84.6 million since June 2010, 28.4% or R$116.8 million higher than December 2010 and agrowth of 17.3% or R$77.8 million from 1Q11 to 2Q11.

Breakdown of Credit Disbursement

1H11 was marked by the grant of R$15,857.3 billion in credit assets, 10.8% or R$1,547.5 millionhigher than in 1H10. Credit granted as commercial credit increased 8.4% or R$1,069.4 billionyear-on-year, accounting for 69.1% of growth of the total credit grand, seconded by foreignexchange transactions (increase of 35.5% or R$230.3 million), real estate loans (increase of51.2% or R$104.3 million) and agricultural lending (increase of 23.5% or R$103.1 million).

During 2Q11, Banrisul provided funding for credit in the amount of R$8,512.6 million, R$1,212.8million above 2Q10's disbursement. Commercial credit stood out, participating with 87.0% orR$7,397.2 million of the total credit grant, mainly in credit to individuals, R$1,694.1 million(increase of 28.7% from 2Q10 to 2Q11), guaranteed account, R$1,504.1 million (increase of20.5% in the same period), and working capital, R$1,216.1 million (increase of 14.5%). Realestate loans experienced the largest relative increase (111.4% to R$ 169.3 million), reflectingtheir inclusion into the Bank's business goals.

Credit grant increased from 1Q11 to 2Q11 by R$1,167.9 million, driven especially by personalloans (increase of 42.5% or R$505.5 million in the period) and by working capital (11.3% orR$123.0 million growth), both from the commercial portfolio. Agricultural loans presentedthe higher relative increase, 107.4%, totaling R$365.2 million in credit disbursement.


R$ MillionTable 9: Breakdown of credit disbursement

2Q11 1Q11 4Q10 3Q10 2Q10 2Q11 / 2Q11 /1Q11 2Q10

Foreign Exchange 463.9 415.8 391.3 358.4 347.8 11.6% 33.4%

Commercial 7,397.2 6,463.9 7,046.3 6,689.5 6,413.1 14.4% 15.3%

Overdraft Account 1,715.1 1,662.8 1,660.3 1,624.4 1,575.4 3.1% 8.9%

Consumer Loans 1,694.1 1,188.6 1,466.0 1,346.0 1,315.9 42.5% 28.7%

Guaranteed Account 1,504.1 1,370.5 1,253.8 1,304.8 1,247.8 9.8% 20.5%

Working Capital 1,216.1 1,093.1 1,415.5 1,146.2 1,062.1 11.3% 14.5%

Receivable Discount 643.9 605.0 631.4 637.4 616.9 6.4% 4.4%

Other 623.9 543.9 619.4 630.7 594.9 14.7% 4.9%

Leasing 112.6 142.6 163.9 125.0 92.1 -21.1% 22.2%

Long-Term Finance 169.3 138.6 188.3 213.8 80.1 22.1% 111.4%

Mortgage 4.5 7.7 11.6 7.1 6.2 -41.9% -27.9%

Rural Loans 365.2 176.1 305.1 222.0 360.4 107.4% 1.3%

Total 8,512.6 7,344.7 8,106.5 7,615.8 7,299.8 15.9% 16.6%

Commercial Credit

In June 2011, commercial credit to Individuals totaled R$8,211.4 million, increases of 19.1%(R$1,316.2 million) over June 2010, of 11.0% (R$813.0 million) over December 2010 and of5.3% (R$415.0 million) over March 2011.

At the end of June 2011, payroll loans accounted for 73.6% of commercial credit to individuals,totaling R$6,046.8 million, up 17.8% (R$913.5 million) in the last twelve months, 6.9% (R$391.9million) in the last six months and 4.6% (R$267.7 million) in the last three months.

Among payroll lending lines, payroll loans of own origination reached R$3,651.4 million atthe end of 1H11, representing 60.4% of the payroll loan portfolio and 44.5% of the credit toindividuals. Acquired Payroll loans totaled R$2,395.4 million at the end of 1H11, constituting39.6% of the total payroll portfolio and 29.2% of commercial credit to individuals. Organicpayroll lending generation grew 18.3% (R$565.9 million) year-on-year, 5.4% (R$186.7 million)year-to-date and 2.3% (R$82.1 million) quarter-on-quarter. Acquired payroll loans increased17.0% (R$347.6 million) since 1H10, 9.4% (R$205.2 million) since 4Q10 and 8.4% (R$185.5million) since 1Q11.

Credit to companies totaled R$6,363.8 million at the end of June 2011, increases of 28.2%(R$1,398.0 million) in twelve months, of 11.0% (R$631.6 million) in the first half of 2011 and of5.3% (R$321.7 million) in the last quarter.

In twelve months, working capital loans grew 32.5% (R$1,135.7 million), while increasing10.4% (R$434.3 million) year-to-date and 4.4% (R$196.9 million) from 1Q11 to 2Q11. Workingcapital loans are the most relevant credit line within the companies segment, accounting for72.7% of total commercial credit to companies and 31.7% of total commercial credit portfolio.

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R$ Million

Table 10: Composition of General Credit - Individuals and Companies


Individuals 8,211.4 7,796.4 7,398.4 7,218.3 6,895.3 5.3% 19.1%

Payroll-deductible Loan 5,848.7 5,573.6 5,455.7 5,158.0 5,003.5 4.9% 16.9%

Payroll-deductible Purchase of Consumer Goods 198.1 205.6 199.3 189.4 129.9 -3.6% 52.5%

Purchase Goods - other 4.8 4.2 4.7 5.2 5.8 16.0% -16.6%

Vehicle Loan - Individuals 48.5 48.6 44.1 36.4 29.8 -0.1% 62.9%

Overdraft 673.8 670.5 560.3 610.4 588.2 0.5% 14.6%

One Minute Loan 291.5 283.0 262.4 259.2 241.0 3.0% 21.0%

Automatic Individual Loan 257.6 262.2 255.1 254.8 237.6 -1.8% 8.4%

Non Payroll-deductible Loan 448.6 364.9 278.7 378.1 349.8 22.9% 28.2%

Credit Card 53.9 58.9 51.7 75.2 74.9 -8.4% -28.1%

Other - Individuals 385.8 325.0 286.5 251.5 234.8 18.7% 64.3%

Companies 6,363.8 6,042.1 5,732.2 5,296.3 4,965.8 5.3% 28.2%

Purchase Goods - other 32.2 31.1 31.0 30.5 29.1 3.5% 10.7%

Vehicle Loan - Companies 29.9 26.7 23.0 22.4 20.1 12.0% 48.7%

Working Capital - Guarantee 3,377.6 3,171.9 3,024.5 2,780.4 2,671.5 6.5% 26.4%

Working Capital - Receivable 1,249.4 1,258.2 1,168.2 990.4 819.9 -0.7% 52.4%

Financing to Customers - Companies 25.0 20.9 23.3 25.7 29.1 19.7% -14.2%

Compror 87.3 91.9 109.7 102.1 104.4 -5.1% -16.5%

Indebted Security Account 195.3 194.5 165.8 171.7 165.1 0.4% 18.3%

Guaranted Account 601.0 510.5 437.2 470.5 458.6 17.7% 31.1%

Debt Instruments Discount 367.0 366.9 350.6 343.1 328.2 0.0% 11.8%

Vendor 101.9 83.6 132.1 121.0 88.2 21.9% 15.5%

Foreign Credit 59.5 67.3 61.9 62.8 69.6 -11.6% -14.5%

Other - Companies 237.9 218.6 204.9 175.7 182.1 8.8% 30.6%

Total 14,575.2 13,838.5 13,130.6 12,514.6 11,861.1 5.3% 22.9%

Breakdown of Credit by Rating

At the end of June 2011, credit operations rated between AA and C, normal risk according toResolution no. 2682/99 of the Central Bank of Brazil, accounted for 89.1% of the credit portfolio,0.1 pp lower than June 2010, 0.4 pp lower than December 2010 and flat from March 2011.

Graph 10: Credit Portfolio by Risk Levels


Allowance for Loan Losses

Allowance for loan losses totaled R$1,214.7 million in June 2011, equivalent to 6.5% of theconsolidated credit portfolio, in comparison to the 7.2% in June 2010, the 6.5% of December2010 and the 6.4% in March 2011.

The reduction in the ratio of provisions in relation to the total loan book observed from 1H10to 1H11 is due to three factors, mainly: (i) growth in the loan portfolio focused on lower riskoperations; (ii) adjustments in the allowance for loan losses; (iii) improvements in thecompliance procedures for loans to individuals, thanks to the maturation of the model forclassifying the portfolio by rating, which enabled a reduction in the allowance for loan lossesin the two period. However, the Bank's allowance ratio remains close to the average recordedby the major commercial banks in 2010.

Graph 11: Breakdown of Allowance for Loan Losses - R$ Million

The breakdown of the allowance for loan losses in June 2011, according to Resolution no.2682/99 of the Central Bank of Brazil, was as follows:

I. R$374.1 million for operations with installments overdue for more than 60 days;

II. R$733.9 million for contracts due or to be overdue for up to 60 days; and

III. R$106.7 million relating to the excess allowance to the minimum required by Resolutionno. 2682/99 of the Central Bank of Brazil, established based on periodic review carriedout by the administration of the quality of the customer, in order to cover possibleevents not identified by customer rating model.

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R$ MillionTable 11: Balance of Allowance for Loan Losses

Risk Required Consolidated Accumulated Past Due Receivable Minimun Provision Additional Total ProvisionProvision Relative Over

Level % Portfolio Status % Credits Credits Past Due Receivable Provision Provision Portfolio%

AA 0.0% 2,933.6 15.6% 0.0 2,933.6 0.0 0.0 5.7 5.7 0.2%

A 0.5% 8,968.7 63.3% 0.1 8,968.5 0.0 44.8 17.9 62.8 0.7%

B 1.0% 3,116.5 79.8% 0.0 3,116.4 0.0 31.2 15.6 46.7 1.5%

C 3.0% 1,734.7 89.1% 9.7 1,725.0 0.3 51.8 34.7 86.7 5.0%

D 10.0% 556.8 92.0% 28.0 528.8 2.8 52.9 11.1 66.8 12.0%

E 30.0% 400.7 94.2% 35.4 365.3 10.6 109.6 8.0 128.2 32.0%

F 50.0% 527.8 97.0% 100.4 427.4 50.2 213.7 10.6 274.5 52.0%

G 70.0% 100.8 97.5% 49.7 51.1 34.8 35.8 3.0 73.6 73.0%

H 100.0% 469.6 100.0% 275.4 194.2 275.4 194.2 0.0 469.6 100.0%

Total 18,809.3 498.9 18,310.4 374.1 733.9 106.7 1.214.7 6.5%

Cover Ratio

The cover ratio, the percentage betweenthe allowance for loan losses and thebalance of operations overdue for morethan 60 days that do not generate revenue,shows the capacity to cover defaults withprovisions remains at comfortable levels.The cover ratio of 243.5% in June 2011 isabove the 226.4% recorded in June 2010,below the 263.6% observed in December2010 and stays slightly above the 241.7%presented in March 2011. The cover ratiorecorded in 1H11 is, however, comfortable, attesting Banrisul's conservative approach tomanaging credit risk. Cover ratio for operations overdue for more than 90 days reached 281.1%in June 2011.

Default Ratio

The 2.65% default ratio over 60 days in June2011 decreased 0.55 pp from the default rateverified in June 2010, increased 0.20 pp. inrelation to December 2010 and slightlydecreased (0.02 pp) in relation to March2011.

The default ratio over 90 days in June 2011decreased 0.27 pp from the default rateverified in September 2010, increased 0.12%in relation to December 2010 and slightlyincreased (0.05 pp) in relation to March2011.

Focused on leveraging lower risk portfolios, the risk management policy adopted by Banrisulproved to be adequate, given the stable behavior of default loans over 60 days seen in thepast twelve months, period in which loan book increased 21.8%.

Graph 12: Cover Ratio - (%)

Graph 13: Default Ratio


Funds Raised and Under Management

Funds raised and under management totaled R$26,092.7 million at the end of June 2011,12.6% (R$2,929.0 million) higher than June 2010, 4.0% (R$1,001.9 million) higher than December2010 and 3.2% (R$802.9 million) above the balance of March 2011.

The growth in twelve months came mainly from increases in time and demand deposits.Year-to-date, the balance of time deposits surpassed the reduction in demand deposits,indicative of migration of balances. In the last quarter, time deposits presented the highestgrowth rate.

Graph 14: Funds Raised and Under Management - R$ Million

Demand Deposits

Demand deposits, which make up 10.3% of the total funding, reached R$2,695.1 million at theend of June 2011, 32.8% (R$666.2 million) over June 2010, 28.7% (R$1,084.9 million) belowDecember 2010 and 3.0% (R$83.5 million) under March 2011. The year-on-year growth seen indemand deposits is due to changes to the Poupança Integrada product (a savings accountlinked to the customer's checking account) introduced in October 2010 that provoked themigration of resources to demand deposits. The reduction observed in relation to December2010 is due to the base of comparison (year-end is a period of higher seasonal income). As tothe changes observed from March 2011, they demonstrate the strategy of migrating resourcesfrom savings deposits into time deposits.

Savings Accounts

Savings deposits totaled R$5,158.8 million at the end of June 2011, 14.6% (R$878.9 million)below June 2010, 7.5% (R$421.2 million) below December 2010 and 3.3% (R$177.9 million)below March 2011. The savings deposits account for 19.8% of funds raised and managed. Themigration of resources of savings deposits reflects the discontinuity of the automatic credittransfer from demand deposits into a savings account linked to the customer's checkingaccount, and also by the strategy of direction funding into time deposits.

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Deposits 19,800.9 19,062.2 19,053.0 17,954.1 17,144.7 3.9% 15.5%

Time Deposits 11,936.4 10,935.0 9,680.3 9,533.0 9,034.4 9.2% 32.1%

Demand Deposits 2,695.1 2,778.5 3,779.9 2,108.9 2,028.9 -3.0% 32.8%

Saving Account 5,158.8 5,336.7 5,580.0 6,295.7 6,037.6 -3.3% -14.6%

Other Deposits 10.7 12.0 12.8 16.5 43.8 -10.5% -75.5%

Assets under Management 6,291.8 6,227.6 6,037.8 6,141.1 6,019.0 1.0% 4.5%

Total 26,092.7 25,289.8 25,090.8 24,095.2 23,163.7 3.2% 12.6%

R$ MillionTable 12: Funding Composition

Time Deposits

Time deposits represent 45.8% of the total funds raised and under management. At the endof June 2011, time deposits totaled R$11,936.4 million, an increase of 32.1% (R$2,901.9 million)over June 2010, 23.3% (R$2,256.0) higher than December 2010 and 9.2% (R$1,001.4 million)over March 2011. The expansion observed in twelve months, year-to-date and in the lastquarter reflects particularly the start up of a specific time deposit product, improving itsattractiveness.

Assets under Management

Assets under management totaled R$6,291.8 million at the end of June 2011, 4.5% (R$272.8million) higher than in June 2010. Year-to-date, they grew 4.2% (R$254.0 million), addingR$64.2 million since March 2011, especially by the expansion of fixed income funds.

Cost of Funding

The upward trend of Banrisul's average funding cost reflects the raising movement of thebasic interest rate in 2Q11, which indexes a substantial portion of the remuneration paid tocustomers. The average cost of funding increased from 1.74% in 2Q10 to 1.91% in 1Q11, and upagain to 2.09% in 2Q11, following the behavior of the effective Selic rate.

The share of the average balance of time deposits in total funds reached 54.0%, up 2.6 pp inrelation to 1Q11 and 6.8 pp higher than in 2Q10, mainly due to the availability of new types ofTime Deposits at the end of 2010, and to the migration of new market funding obtained fromcustomers at Banrisul's branches to time deposits, with natural impacts on the average fundingcost, as well as reducing the share of demand deposits in the mix of funding (yet exempt frompaying interest rate to customers, demand deposits are included in the funding portfolio andalter its average cost).

As to time deposits, the quarterly accumulated interest rates (2.11% in 2Q10, 2.32% in 1Q11and 2.49% in 2Q11) demonstrate the trend of the Selic. The cost of funding for time deposits- as a proportion of the effective Selic rate - was volatile during the last twelve months onaccount of structural changes in Banrisul's funding portfolio: it was 94.74% in 2Q10, decreasingto 87.70% in 1Q11 and then up to the 88.52% in 2Q11.


R$ Million and %Table 13: Cost of Funding2Q11 1Q11 2Q10

Average Accumulated Average Average AccumulatedAverage Average Accumulated AverageBalance Expense Cost Balance Expense Cost Balance Expense Cost

Demand Deposits 2,703.3 3,079.3 2,017.2Saving Deposits 5,200.8 (92.0) 1.77% 5,431.1 (92.1) 1.70% 5,900.9 (84.5) 1.43%Time Deposits 11,578.0 (288.6) 2.49% 10,519.7 (244.4) 2.32% 8,946.1 (188.7) 2.11%Interbank Deposits 10.8 (0.3) 3.05% 11.5 (0.3) 2.64% 68.6 (0.3) 0.45%

Credit Guarantee Fund Expenses 0.0 (7.3) 0.0 (7.1) 0.0 (6.3)Matched Transactions 1,927.4 (59.5) 3.09% 1,436.7 (47.6) 3.31% 2,009.8 (50.1) 2.49%Payable for Financial and Development Funds 2.4 2.2 1.9Investment Deposits 0.5 0.4 10.5

Total Average Balance/Total Expenses 21,423.0 (447.8) 2.09% 20,481.0 (391.5) 1.91% 18,955.0 (329.9) 1.74%Selic 2.82% 2.65% 2.23%Average Cost / Selic 74.21% 72.17% 78.19%Cost of Time Deposits / Selic 88.52% 87.70% 94.74%

Graph 15: Cost of Funding as % of Selic Rate

Shareholders' Equity

At the end of June 2010, Banrisul's shareholders' equity was R$4,118.1 million, 14.7% (R$528.0million) over June 2010, 6.8% (R$262.9 million) over December 2010 and 2.7% (R$109.1 million)higher than in March 2011. The changes in shareholders' equity are related to the incorporationof the net income by the payment of dividends and interest on equity.

Graph 16: Shareholders' Equity - R$ Million

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Return on Average Shareholders' Equity

The annualized return on average shareholders' equity reached 23.2% in 1H11, in which theresults positively reflect the growth of services, credit and treasury operations and thereduction of other administrative costs.

Graph 17: Return on Average Shareholders' Equity

Basel Ratio

The Basel Ratio is the relation between the Base Equity (Reference Equity - PR) and weightedrisks (Required Reference Equity - PRE), according to current regulations, showing thecompany's solvency. The National Monetary Council (CMN) requires a minimum of 11% ascapital ratio, and also determines that the PR should be at least equal to the sum of theparcels calculated to credit, market and operational risks.

In June 2011, Banrisul Group's Basel Ratio was 15.0%, 36.5% higher than the minimum requiredby the Central Bank of Brazil, which allows an increase of up to R$9,469.6 million in loans. Thereduction of 4.15% from June 2010 to June 2011 was primarily driven by the growth of creditportfolio of the Bank, resulting in an increased capital allocation of almost 20% to coverpotential risks. The same behavior was observed In relation to Banrisul's financial andeconomic consolidated group, when the Basel ratio decreased from 16.2% to 15.6%.

Of the portions that compose the PRE, operational risk stands out with a variation resultingfrom the increase of revenues and from the market risk portion having suffered the mismatcheffects over assets and liabilities positions.

The Risk Management Report is available at http://www.banrisul.com.br/Investor Relations/Corporate Governance/Operational Risk/Risk Management Report.


Graph 18: Basel Ratio

Pace of Growth

The pace of growth in time deposits and commercial credit, measured by the relative growthin volumes, is shown in the following graph, and demonstrates the effects of economicmeasures and the strategies internally adopted to manage Banrisul's assets and liabilities.The 22.9% growth in commercial credit in the twelve months ended June 2011 reduced inrelation to the 32.1% year-on-year growth in time deposits. Credit has reduced speed,especially after the credit inhibiting macro-prudential measures at the end of 2010, while theincrease of time deposits demonstrates the changes made since October 2010 to productsoffered to customers.

Yet, Banrisul's credit growth has outperformed the year-on-year, year-to-date and quarter-on-quarter loan growth rates reported by the banking industry since June 2011. The loanbook grew 21.8% year-on-year until June 2010, 10.4% year-to-date and 4.8% quarter-on-quarter.The banking industry in Brazil grew 20.0%, 7.5% and 4.6% in those same periods, respectively,according to data from the Central Bank of Brazil.

Graph 19: Pace of Growth - Credit and Funding

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Evolution of Income Statement Accounts

Net Income

Banrisul's net income of R$438.5 million in 1H11 is 43.8% or R$133.5 million above June 2010.In 2Q11, net income was R$227.2 million, 24.1% or R$44.0 million higher than in 2Q10 and 7.5%or R$15.9 million higher than 1Q11.

From 1H10 to 1H11, the Bank's performance positively reflects the increase of 25.0% (R$401.8million) in credit revenues, the increase of 21.4% (R$104.8 million) in treasury income andthe increase of 12.3% (R$37.7 million) in services fees. On the negative side, net income wasaffected by the increase of 32.4% (R$205.4 million) in market funding expenses, the increaseof 29.7% (R$70.8 million) in onlendings and the increase of 1.9% (R$16.2 million) inadministrative expenses.

From 2Q10 to 2Q11, the Bank's performance positively reflects the increase of 24.4% (R$268.8million) in credit and treasury revenues and the increase of 10.2% (R$16.0 million) in servicesfees. On the negative side, net income was affected by the increase of 33.1% (R$150.2 million)in market funding and onlending expenses and the increase of 12.6% (R$16.0 million) inexpenses with provisions.

From 1Q11 to 2Q11, the Bank's performance positively reflects the increase of 9.9% (R$94.5million) in credit revenues and the increase of 12.4% (R$34.6 million) in treasury revenues.On the negative side, net income was affected by the increase of 14.4% (R$56.2 million) inmarket funding and the increase of 7.3% (R$30.2 million) in administrative expenses.

Graph 20: Net Income - R$ Million

Financial Income

Financial income totaled R$2,736.4 million in 1H11, 22.5% (R$503.2 million) above the amountregistered in 1H10. In 2Q11, financial income totaled R$1,436.5 million, 23.3% (R$271.1 million)higher than the amount of 2Q10, and 10.5% (R$136.6 million) higher than 1Q11.

The growth of financial income from 1H10 to 1H11 is related to the R$400.3 million growth incredit revenues, reflecting the increase in the volume of credit transactions, and to the increaseof R$104.8 million in treasury income, on account of differences in interest rates in bothperiods.


In 2Q11, financial income was directly influenced by the increase of credit revenues, treasuryresults and income on restricted deposits, in comparison to that of 2Q10 and 1Q11. The balanceincrease of the loan book and the hike of the Selic Rate favored the income growth.

Graph 21: Financial Income - R$ Million

Revenue from Treasury Operations

Revenues from securities and derivatives totaled R$595.3 million in 1H11, 22.0% (R$107.4million) above the amount recorded in 1H10. Revenues from securities and derivativesoperations totaled R$315.0 million, increasing 24.8% (R$62.6 million) from 2Q10 to 2Q11, andgrowing 12.4% (R$34.6 million) from 1Q11.

In 1H11, revenues from securities and derivatives reflect the increase of 1.24 pp. in theaccumulated Selic Rate in the period, which went to 5.54% in 1H11 from 4.30% in 1H10, as wellas to the renegotiation of the rates used to purchase credits with the National Housing System- Salary Variation Compensation Fund in December 2010.

From 2Q10 to 2Q11, the growth of treasury operations results is due to the increase of 0.59 ppin the rate of return on assets (Selic), which increased from 2.23% in 2Q10 to 2.82% in 2Q11,exceeding the reduction of 3.9% (R$479.5 million) in the balance of securities. The incomegrowth from 1Q11 to 2Q11 is due to the increase of 4.6% (R$521.7 million) in the securities'interest-earning assets, combined with the upward trend of 0.17 pp in the interest rates.

Revenues from Credit and Leasing Operations

Revenues from credit and leasing operations totaled R$2,018.8 million in 1H11, 24.7% (R$400.3million) above 1H10. From 2Q10 to 2Q11 revenues from credit and leasing operations totaledR$1,056.7 million, increasing 24.2% (R$206.2 million); from 1Q11 to 2Q11, credit revenuesincreased 9.8% (R$94.5 million).

The increase in credit revenues from 1H10 to 1H11 reflects the growth of R$3,367.3 million incredit assets. Credit revenues were positively impacted by revenues from commercial creditthat increased 26.4% (R$393.4 million), the growth of 26.6% (R$15.3 million) in revenues fromreal estate loans, the increase of 23.4% (R$8.1 million) in revenues from agricultural loans,and credit recovery income, which increased 77.6% (R$29.2 million). On the negative side,

119

credit revenues were affected by the reduction of R$32.8 million in revenues from long-termfinance, on account of foreign exchange on loans in foreign currencies, and by lower leasingincome, that decreased by 16.5%.

From 2Q10 to 2Q11, credit revenues increased on account of loan growth and higher interestrates. The 24.5% (R$191.1 million) increase in revenues credit was driven by the growth of78.7% (R$20.7 million) in credit recovery income, the growth of 28.7% (R$8.5 million) in incomefrom real estate loans, and the increase of 23.9% (R$4.2 million) in revenues from agriculturallending.

From 1Q11 to 2Q11, credit revenues trend especially reflected the positive variations inrevenues from commercial credit (6.4% - R$58.3 million - quarter-on-quarter) and from therecovery of loans previously charged off (136.6% - R$ 27.1 million - from March 2011 to June2011).

Graph 22: Revenues from Credit and Leasing Operations - R$ Million

Revenues from Commercial Credit - Individuals and Companies

Revenues from commercial credit to individuals totaled R$1,882.1 million in 1H11, 26.4%(R$393.4 million) higher than in 1H10. In 2Q11, revenues from commercial credit reachedR$970.2 million, 24.5% (R$191.1 million) higher than in 2Q10, and 6.4% (R$58.3 million) abovethe amount registered during 1Q11.

From 1H10 to 1H11, revenues from commercial credit were influenced by the 22.5% (R$220.5million) increase in revenues from Individuals, mainly from the growth of R$92.7 million inpayroll loans and of R$63.6 million in overdraft accounts. As for the commercial credit toCompanies, the increase of 34.0% (R$ 172.8 million) is due to the performance of workingcapital lines, which increased by R$ 111.3 million, and of guaranteed account (growth ofR$40.5 million). During 1H11, revenues from commercial credit to Individuals represented63.8% of total commercial credit revenues; Companies, 36.2%. The credit revenues fromcommercial credit to Individuals accounted for 59.5% of the total credit revenues, withcommercial credit revenues from Companies representing 33.8%.


Revenues from commercial credit to Individuals increased 19.9% (R$102.3 million) from 2Q10to 2Q11; in the same period, commercial credit revenues from Companies grew 33.7% (R$88.8million). The growth of the commercial credit is grounded in four main credit lines: payrollloans and overdraft accounts, which contributed with R$68.7 million of additional income inthe Individuals segment, and working capital and guaranteed accounts, which added R$76.2million in income in the Companies segment, all driven by the growth of credit.

From 1Q11 to 2Q11, commercial credit revenues from Individuals increased 5.9% (R$34.6million) on account of the growth of the loan portfolio in R$415.0 million, in spite of therelative stability of the interest rates. In the Companies segment, commercial credit revenuesincreased 7.2% (R$23.7 million) quarter-on-quarter, thanks to the growth R$321.7 million inthe balance of this credit portfolio and to the rise seen in average interest rates.

The average commercial credit interest rates increased from 2.20% in 1H10 to 2.25% in 1H11.The upward trend of the average interest rates is based mostly on the commercial credit toCompanies, whose fixed-rate transactions reflected the hike of the Selic Rate. Average interestrates charged to Individuals presented slight decreases.

From 2Q10 to 1Q11, the average interest rates on commercial credit increased to 2.26%influenced by adjustments in the interest rates charged to Companies in response to increasesin the Selic Rate.

R$ MillionTable 14: Revenues from Commercial Credit - Individuals and Companies

1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10 1H11/1H10

Individuals 1,200.8 980.2 617.7 583.1 563.9 545.6 515.3 22.5%

Payroll-deductible Loan 579.8 493.9 296.7 283.0 275.9 263.9 255.5 17.4%

Payroll-deductible Purchase of Consumer Goods 18.1 11.3 9.0 9.1 8.8 7.5 5.8 59.7%

Purchase Goods - other 0.2 0.2 0.1 0.1 0.1 0.1 0.1 -8.4%

Vehicle Loan - Individuals 5.1 3.0 2.6 2.5 2.2 1.9 1.6 69.6%

Overdraft 312.4 248.8 158.5 153.9 144.2 144.1 134.2 25.6%

One Minute Loan 92.1 68.8 47.7 44.3 42.5 40.4 36.4 33.8%

Automatic Individual Loan 76.2 60.7 38.4 37.8 37.2 35.9 32.7 25.4%

Non Payroll-deductible Loan 69.0 57.4 38.6 30.4 31.8 32.8 30.5 20.3%

Credit Card 23.9 23.7 12.4 11.6 12.6 11.4 11.9 0.9%

Other - Individuals 24.0 12.4 13.6 10.3 8.6 7.7 6.7 93.9%

Companies 681.4 508.5 352.6 328.8 307.3 291.4 263.7 34.0%

Purchase Goods - other 3.0 2.3 1.6 1.5 1.4 1.3 1.2 32.8%

Vehicle Loan - Companies 3.1 2.0 1.6 1.4 1.3 1.2 1.0 52.7%

Working Capital - Guarantee 294.9 234.5 151.3 143.6 138.2 131.2 121.6 25.7%

Working Capital - Receivable 113.7 62.8 57.4 56.4 48.4 40.7 33.7 81.1%

Financing to Customers - Companies 3.7 4.0 2.0 1.7 1.6 1.7 1.8 -8.6%

Compror 8.5 11.5 4.4 4.1 4.7 4.5 4.7 -26.2%

Indebted Security Account 18.8 14.9 9.8 8.9 8.1 8.0 7.7 25.6%

Guaranted Account 164.2 123.7 87.2 77.0 70.1 72.0 64.3 32.7%

Debt Instruments Discount 44.3 34.8 22.9 21.5 20.8 19.9 18.2 27.2%

Vendor 7.7 6.9 4.0 3.7 4.8 3.9 3.4 12.6%

Foreign Credit 1.3 0.9 0.6 0.7 0.6 0.6 0.5 39.3%

Other - Companies 18.2 10.1 9.8 8.5 7.4 6.4 5.5 80.0%

Total 1,882.1 1,488.7 970.2 911.9 871.2 837.1 779.1 26.4%

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Table 15: Monthly Average Commercial Credit Rates - Individuals and Companies1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10

Individuals 2.54% 2.55% 2.55% 2.54% 2.52% 2.56% 2.54%

Payroll-deductible Loan 1.71% 1.76% 1.72% 1.71% 1.71% 1.72% 1.73%

Payroll-deductible Purchase of Consumer Goods 1.48% 1.54% 1.48% 1.48% 1.49% 1.51% 1.52%

Purchase Goods - other 0.76% 0.59% 0.85% 0.66% 0.65% 0.63% 0.62%

Vehicle Loan - Individuals 1.78% 1.94% 1.78% 1.78% 1.81% 1.85% 1.90%

Overdraft 7.88% 7.71% 7.83% 7.92% 8.03% 7.95% 7.76%

One Minute Loan 5.43% 5.27% 5.47% 5.38% 5.36% 5.29% 5.25%

Automatic Individual Loan 4.87% 4.73% 4.90% 4.85% 4.82% 4.78% 4.75%

Non Payroll-deductible Loan 3.07% 3.01% 3.08% 3.05% 3.02% 2.96% 2.95%

Credit Card 7.15% 5.21% 7.33% 6.98% 6.16% 5.06% 5.25%

Other - Individuals 1.17% 0.97% 1.23% 1.10% 1.06% 1.04% 1.00%

Companies 1.87% 1.74% 1.88% 1.85% 1.85% 1.86% 1.79%

Purchase Goods - other 1.61% 1.37% 1.66% 1.56% 1.54% 1.52% 1.45%

Vehicle Loan - Companies 1.89% 1.76% 1.90% 1.87% 1.82% 1.79% 1.77%

Working Capital - Guarantee 1.54% 1.49% 1.54% 1.54% 1.59% 1.59% 1.54%

Working Capital - Receivable 1.52% 1.33% 1.52% 1.51% 1.49% 1.46% 1.39%

Financing to Customers - Companies 2.60% 2.22% 2.76% 2.44% 2.21% 2.10% 2.12%

Compror 1.51% 1.24% 1.56% 1.45% 1.40% 1.43% 1.38%

Indebted Security Account 1.63% 1.45% 1.67% 1.58% 1.56% 1.53% 1.45%

Guaranted Account 5.14% 4.67% 5.10% 5.19% 5.22% 4.97% 4.74%

Debt Instruments Discount 2.03% 1.85% 2.07% 2.00% 1.98% 1.92% 1.85%

Vendor 1.29% 1.30% 1.30% 1.28% 1.19% 1.27% 1.30%

Foreign Credit 0.32% 0.26% 0.33% 0.31% 0.33% 0.28% 0.26%

Other - Companies 1.36% 1.04% 1.40% 1.32% 1.32% 1.22% 1.06%

Total 2.25% 2.20% 2.26% 2.24% 2.24% 2.26% 2.23%

Financial Expenses

Financial expenses totaled R$1,430.0 million in 1H11, which is 23.8% (R$274.5 million) morethan 1H10. The financial expenses of R$747.0 million recorded in 2Q11 is 28.4% (R$165.4million) higher than in 2Q10 and 9.4% (R$63.9 million) higher than in 1Q11.

The increase in financial expenses from 1H10 to 1H11 resulted, especially, from higher marketfunding costs, 32.4% (R$205.4 million), from the R$2,901.9 million increase in the balance oftime deposits, and from the hikes of the effective Selic rate. Expenses from loans andonlendings, that increased by 29.7% (R$70.8 million) due to rising expenses with escrowdeposits on account of the R$344.8 million balance growth in twelve months, also affectedthe financial expenses.

From 2Q10 to 2Q11, the increase of the financial expenses is originated by higher marketfunding costs (increase of 35.7% (R$117.9 million) in the period), by the 26.2% (R$32.4 million)increase in expenses with loans and onlendings, and by the increase of 12.6% (R$16.0 million)in credit provisions, given the growth of the effective interest rates in twelve months withdirect effects on funding and loans; last, by the growth of the loan book and the consequentincrease of provision expenses.

The higher volume of expenses from 1Q11 to 2Q11 stems mainly from the increase of 14.4%(R$56.2 million) in marketing fund expenses, the increase of 3.3% (R$4.6 million) in creditprovisions, and the growth of expenses with loans and onlendings (R$3.1 million).


Graph 23: Financial Expenses - R$ Million

Expenses with Market Funding Operations

Market funding expenses totaled R$839.3 million in 1H11, 32.4% or R$205.4 million higherthan in 1H10. In comparison to 2Q10, fund raising expenses of R$447.8 million in 2Q11 increased35.7% (R$117.9 million). From 1Q11 to 2Q11, market funding expenses increased 14.4% (R$56.2million).

The increase of 47.9% (R$172.7 million) in fund raising expenses from 1H10 to 1H11 comesfrom increases in expenses from time deposits, in the effective Selic Rate and the growth to0.55% from 0.19% in the Reference Rate (TR), which helped increase by 13.5% (R$22.0 million)expenses with savings deposits, despite their balance reduced by 14.6% (R$878.9 million).

From 2Q10 to 2Q11, market fund expenses increased on account of the raising of 0.59 pp inthe Selic Rate, increasing expenses with time deposits in 53.0% (R$100.0 million) and withmatched transactions in 18.8% (R$9.4 million). Time deposits expenses were influenced bythe growth of R$2,901.9 million in time deposits balance in twelve months.

From 1Q11 and 2Q11, the higher amount of market fund expenses is due to the increase ofR$1,001.4 million in funding from time deposits, explaining the growth of 18.1% (R$44.3million) in time deposits expenses, and with the increase of R$345.1 million in market funding,justifying the increase of 25.0% (R$11.9 million) in matched transactions. It is worthy pointingout the Selic Rate reached 2.82% in 2Q11, a 0.17 pp increase over the 2.65% registered in 1Q11.

Graph 24: Expenses with Market Funding Operations - R$ Million

123

Allowance for Loan Losses

In 1H11, expenses with loan losses allowance totaled R$281.5 million, 0.4% or R$991,000above the amount recorded in 1H10. From 2Q10 to 2Q11, provision expenses totaled R$143.1million, increasing by 12.6% (R$16.0 million); from 1Q11 to 2Q11, provisions expensesincreased 3.3% (R$4.6 million).

From 1H10 to 1H11, provision expenses remained flat in response to credit qualityimprovements seen in the Risk 1 loan portfolio, given the growth of the loan book.

The upward trend observed in provision expenses from 2Q10 to 2Q11 is related to the growthof the loan book. From 1Q11 to 2Q11, past due loans over 60 days increased by R$20.7 million,demanding adjustments of provision expenses during the last quarter.

Graph 25: Allowance for Loan Losses - R$ Million

Financial Margin

Net interest income reached R$1,587.9 million in 1H11, 16.9% (R$229.7 million) higher than in1H10. The net interest income of R$832.6 million in 2Q11 is 17.1% (R$121.7 million) higherthan in 2Q10 and increased 10.2% (R$77.3 million) from 1Q11.

From 1H10 to 1H11, net interest income was positively impacted by the increase in creditrevenues and by the results from treasury and from restricted deposits. On the negative side,it was affected by market funding cost and expenses with loans and onlendings.

The margin increase from 2Q10 and 2Q11 is linked to higher credit and treasury revenues,which offset the growth of expenses with market funding, loans and onlendings.

From 1Q11 to 2Q11, the performance of credit revenues and higher treasury gains compensatedincreases in market funding, loans and onlendings expenses, helping generate higher financialmargin.

Graph 26: Financial Margin - R$ Million


Revenue from Services Rendered

Revenues from services totaled R$345.0 million in 1H11, 12.3% (R$37.7 million) more than in1H10. In 2Q11 fees from services reached R$173.4 million, 10.2% (R$16.0 million) higher thanin 2Q10 and 1.1% (R$1.8 million) above 1Q11.

The increase in revenues from services from 1H10 to 1H11 in twelve months reflects mainlythe growth of 18.4% (R$21.7 million) in fees on checking accounts and of 20.9% (R$8.3 million)in Banricompras fees.

The growth of checking account and Banricompras fees, that together increased 16.1% (R$12.9million), help explain fees expansions from 2Q10 to 2Q11. From 1Q11 to 2Q11, the growth ofcollection fees (R$1.9 million) and Banricompras fees (R$411,000) offset the decrease ofchecking account fees, contributing to the quarterly growth of revenues from services.

Graph 27: Revenue from Services Rendered - R$ Million

Administrative Expenses

In 1H11, administrative expenses totaled R$853.5 million, 1.9% (R$16.2 million) above theamount recorded in 1H10. In 2Q11, administrative expenses totaled R$441.9 million, increasing6.7% (R$27.6 million) from 2Q10 and 7.3% (30.2 million) from 1Q11.

Staff costs, which comprise 59.4% of total administrative costs between January and June2011, increased 14.7% (R$65.1 million) over the amount recorded in 1H10, while otheradministrative expenses decreased 12.4% (R$48.9 million) in the same period.

The increase of personnel expenses in twelve months comes from salary adjustments of7.5% in September 2010, with effects on the expenses of subsequent quarters. The reductionof other administrative expenses reflects the cost containment program, with the followingitems standing out: advertising, promotions and advertising (R$50.9 million), specializedtechnical services (R$8.0 million) and telecommunication and data processing (R$4.8 million).

From 2Q10 to 2Q11, personnel expenses increased 16.8% (R$38.3 million) due to salaryadjustments granted in 2010 related to collective bargaining agreements. Other administrativeexpenses decreased 5.7% (R$10.6 million), especially reflecting reductions of R$21.9 millionin marketing expenses, offsetting increases in outsourced services (R$7.4 million) andtransportation (R$2.1 million).

From 1Q11 to 2Q11, personnel expenses increased 10.5% (R$25.3 million). Other administrativeexpenses increased 2.9% (R$4.9 million) on account of higher office supplies and dataprocessing expenses (R$3.7 million and R$3.3 million, respectively), which were compensatedby the reduction of marketing expenses (R$2.7 million).

125

Graph 28: Personnel and Other Administrative Expenses - R$ Million

Other Operating Income

Other operating revenue totaled R$113.1 million in 1H11, 27.4% or R$24.3 million above theamount recorded in 1H10. The other operating income of R$46.6 million in 2Q11 is 8.0% (R$3.5million) higher than 2Q10 and 30.0% (R$20.0 million) lower than in 1Q11.

In 1H11, the growth of other operating income can be explained due to the reversal ofoperational provisions from renegotiation agreements that improved the quality of theportfolio of receivables without credit characteristics.

The increase of other operating income from 2Q10 to 2Q11 reflects higher income fromrecovery of charges and expenses (R$2.3 million) and from escrow deposits (R$2.7 million),which offset the reduction of exchange rate adjustments.

From 1Q11 to 2Q11, the reduction in other operating income come from the reduction in thereversal of operating reserves, due to the renegotiation of receivables without creditcharacteristics in the amount of R$17.2 million recorded only in 1Q11.

Graph 29: Other Operating Income - R$ Million


Other Operating Expenses

Other operating expenses totaled R$115.0 million in 1H11, 44.0% (R$35.1) million above theamount recorded in the same period last year. Other operating expenses of R$57.6 million in2Q11 is 34.1% (R$14.6 million) and 0.3% (R$197,000) higher than 2Q10 and 1Q11, respectively.

The growth of other operating expenses from 1H10 to 1H11 was impacted by higher reservesfor labor provision expenses (R$11.7 million) and foreign exchange adjustments (R$7.1million).

From 2Q10 to 2Q11, other operating expenses increased by the record of expenses withmembership programs for Banrisul's credit cards (R$3.8 million), higher labor provisionexpenses (R$3.2 million) and foreign exchange adjustments (R$4.6 million). There were nomaterial changes in other operating expenses from 1Q11 to 2Q11.

Graph 30: Other Operating Expenses - R$ Million

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Economic Indicators

Leverage Ratio

The leverage ratio is the ratio of thecredit operations portfolio toshareholders' equity. In June 2011,Banrisul's credit operations were 4.6xshareholders' equity, rising from tothe 4.3x registered in June 2010 andthe 4.4x in December 2010.

The significant growth of the loanportfolio in the twelve months reflected the variation of the Leverage Ratio. The Bank'scomfortable leverage shows its capacity for loan portfolio growth in the future.

Operating Cost

Operating cost measures total ofadministrative expenses in relation tototal assets. The ratio is calculatedbased on the expenses in the twelvemonths against the balance of assetsat the end of the period beinganalyzed.

The 11.8% growth in assets in thetwelve months, leveraged by thegrowth in credit operations, helped to absorb administrative expenses, reflecting in thereduction of costs in proportion to assets in twelve months.

Debt-Equity Ratio

The debt-equity ratio measures theratio of shareholders' equity to fundsraised from the public, includinginvestment funds. It evaluates thesecurity that the company's own fundsoffer to third-party capital.

In June 2011, the debt-equity ratio was15.8%, 0.3 pp above June 2010 and 0.4pp above that of December 2010. The increase in the capital ratio demonstrates the highershare of equity in relation to third-party funding.

Graph 32: Operating Cost

Graph 33: Debt-Equity Ratio

Graph 31: Leverage Ratio


Graph 34: Employee Productivity - R$ Thousand

Graph 35: Efficiency Ratio

Employee Productivity

The productivity indicator, measuredby total funding and lending amountsper employee, grew by 10.7% over thelast twelve months, reaching R$4,599.7thousand, explained by thecommercial performance, boosted byencouraging increased productivitythrough systematic incentive pay toemployees, already consolidated in theinstitution.

Banrisul's headcount in June 2011 was 9,762 employees, an increase of 473 employees overJune 2010.

Efficiency Ratio

The Efficiency Ratio measures thepercentage volume of revenues usedto cover administrative expenses. Thetwelve-month accumulated ratio inthe same period of the last yeardecreased, performance favorable tothe Bank.

The efficiency ratio reached 45.0% inJune 2011, 5.5 pp below the income-cost ratio in June 2010 and 0.8 pp lessthan the indicator for March 2011. The improvement of the efficiency index during last twelvemonths reflects the rising trends of the net interest income (18.4% year-on-year growth), offees from services (increase of 12.5% since June 2010) and operating income (expansion of34.9% from 1H10 to 1H11), which helped absorb the increases of 4.5% in administrativeexpenses and of 38.4% in other operating expenses during the same period.

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Assets Jun11 Mar11 Dec10 Sep10 Jun10 Jun11 / Mar11Jun11 / Jun10

Current and Long-Term Assets 34,438.6 32.615.3 31.779.8 31,972.6 30,719.6 5.6% 12.1%

Cash 405.8 382.7 403.3 396.4 339.9 6.0% 19.4%

Interbank Investments 2,844.8 2,534.6 2,359.3 3,822.6 4,133.2 12.2% -31.2%

Securities and Derivatives 8,900.0 8,688.5 8,525.7 8,477.4 8,091.1 2.4% 10.0%

Interbank and Interbranch Accounts 3,130.7 2,756.9 3,155.9 2,650.5 2,353.5 13.6% 33.0%

Lending Operations 18,202.7 17,407.4 16,537.6 15,683.7 14,909.4 4.6% 22.1%

Allowance for Losses on Other Receivables (1,167.9) (1,102.3) (1,058.7) (1,083.7) (1,054.7) 6.0% 10.7%

Leasing Operations 77.8 81.2 83.6 83.2 88.5 -4.2% -12.1%

Allowance for Doubtful Lease Receivables (6.9) (5.9) (8.9) (7.5) (9.8) 16.6% -29.7%

Other Receivables 2,089.3 1,916.8 1,826.0 2,025.6 1,955.4 9.0% 6.8%

Allowance for Losses on Other Receivables (62.8) (71.0) (73.9) (102.0) (121.9) -11.5% -48.5%

Other Assets 24.9 26.3 29.9 26.5 35.1 -5.0% -28.9%

Permanent 316.5 335.7 347.9 366.7 379.2 -5.7% -16.5%

Investments 7.7 7.7 7.7 7.8 7.8 0.0% -1.3%

Property in Use 166.0 172.4 168.9 171.3 170.9 -3.8% -2.9%

Intangible 142.8 155.6 171.3 187.6 200.6 -8.2% -28.8%

Total Assets 34,755.0 32,951.0 32,127.7 32.339.3 31,098.8 5.5% 11.8%

Liabilities Jun11 Mar11 Dec10 SeP10 Jun10 Jun11 / Mar11Jun11 / Jun10

Current and Long-Term Liabilities 30,635.4 28,940.2 28,270.7 28,591.2 27,506.9 5.9% 11.4%

Deposits 19,800.9 19,062.2 19,053.0 17,954.1 17,144.7 3.9% 15.5%

Demand Deposits 2,695.1 2,778.5 3,779.9 2,108.9 2,028.9 -3.0% 32.8%

Saving Deposits 5,158.8 5,336.7 5,580.0 6,295.7 6,037.6 -3.3% -14.6%

Intebank Deposits 10.2 11.6 12.3 14.7 34.6 -11.9% -70.5%

Time Deposits 11,936.4 10,935.0 9,680.3 9,533.0 9,034.4 9.2% 32.1%

Other Deposits 0.5 0.4 0.5 1.9 9.2 27.4% -94.2%

Money Market Funding 1,778.9 1,433.8 1,311.2 2,285.9 2,073.9 24.1% -14.2%

Intebank and Interbranch Accounts 503.9 415.2 179.7 475.0 454.0 21.4% 11.0%

Borrowings and Onlendings 1,837.1 1,754.9 1,622.4 1,611.9 1,655.1 4.7% 11.0%

Derivatives 0.0 0.0 0.0 56.5 51.6 0.0% 0.0%

Other Payables 6,714.6 6,274.1 6,104.5 6,207.8 6,127.7 7.0% 9.6%

Collected Taxes and Other 151.8 128.7 23.6 112.0 130.3 17.9% 16.5%

Foreign Exchange Portfolio 18.8 27.7 18.8 42.5 37.2 -32.2% -49.4%

Social and Statutory 85.0 36.5 27.9 55.7 43.3 132.6% 96.3%

Tax ans Social Securities 710.7 578.2 634.9 713.8 593.3 22.9% 19.8%

Trading Account 4.9 3.6 2.1 3.1 3.1 37.9% 56.4%

Financial and Development Funds 4,792.9 4,639.8 4,444.6 4,395.6 4,448.1 3.3% 7.8%

Other 950.4 859.5 952.7 885.2 872.4 10.6% 8.9%

Minority Interest 1.5 1.8 1.7 1.8 1.7 -12.2% -9.5%

Shareholders’ Equity 4,118.1 4,009.0 3,855.2 3,746.4 3,590.1 2.7% 14.7%

Total Liabilities and Shareholders’ Equity 34,755.0 32,951.0 32,127.7 32,339.3 31,098.8 5.5% 11.8%

R$ Million

Consolidated Pro Forma Balance Sheet

Table 16: Consolidated Pro Forma Balance Sheet


Pro Forma Income Statement

Table 17: Pro Forma Income Statement1H11 1H10 2Q11 1Q11 4Q10 3Q10 2Q10 1H11 2Q11/ 2Q11/

1H10 1Q11 2Q10FINANCIAL INCOME 2,736.4 2,233.2 1,436.5 1,299.9 1,310.4 1,298.2 1,165.4 22.5% 10.5% 23.3%

Lending Operations and Lease Operations 2,018.8 1,618.5 1,056.7 962.1 961.3 933.1 850.4 24.7% 9.8% 24.2%Securities 595.3 490.5 315.0 280.3 289.1 302.4 253.2 21.4% 12.4% 24.4%Foreign Exchange 17.4 35.5 9.3 8.0 7.8 11.2 16.0 -51.1% 16.3% -41.7%Compulsory Investments 104.9 88.7 55.5 49.4 52.2 51.5 45.8 18.3% 12.4% 21.3%

FINANCIAL EXPENSES (1,430.0) (1,155.5) (747.0) (683.1) (650.3) (639.7) (581.5) 23.8% 9.4% 28.4%Funding Operations (839.3) (633.9) (447.8) (391.5) (381.3) (387.5) (329.9) 32.4% 14.4% 35.7%Borrowings. Assignments and Onlendings (309.2) (238.4) (156.1) (153.1) (142.2) (142.5) (123.7) 29.7% 2.0% 26.2%Operations of Sale or Transfer of Financial Assets 0.0 (2.7) (0.0) 0.0 (0.2) 1.5 (0.8) - - -Allowance for Loan Losses (281.5) (280.5) (143.1) (138.5) (126.6) (111.2) (127.1) 0.4% 3.3% 12.6%

Gross Profit from Financial Income 1,306.4 1,077.7 689.5 616.8 660.1 658.5 583.9 21.2% 11.8% 18.1%Financial Margin 1,587.9 1,358.2 832.6 755.3 786.7 769.7 710.9 16.9% 10.2% 17.1%

Other Operations Income / Expenses (621.5) (618.7) (336.1) (285.4) (298.3) (331.6) (306.4) 0.5% 17.7% 9.7%Services / Bank Fees 345.0 307.3 173.4 171.6 173.5 160.9 157.4 12.3% 1.1% 10.2%Personnel Expenses (507.1) (442.0) (266.2) (240.9) (279.0) (245.5) (227.9) 14.7% 10.5% 16.8%Other Administrative Expenses (346.4) (395.3) (175.7) (170.7) (165.3) (182.6) (186.3) -12.4% 2.9% -5.7%Other Operation Income 113.1 88.8 46.6 66.5 81.1 39.0 43.1 27.4% -30.0% 8.0%Tax Expenses (111.1) (97.6) (56.6) (54.5) (53.7) (52.7) (49.7) 13.8% 3.7% 13.7%Other Operation Expenses (115.0) (79.9) (57.6) (57.4) (54.9) (50.6) (43.0) 44.0% 0.3% 34.1%

Income from Operations 684.9 459.0 353.5 331.4 361.8 327.0 277.5 49.2% 6.7% 27.4%Income Before Taxes on Income 684.9 459.0 353.5 331.4 361.8 327.0 277.5 49.2% 6.7% 27.4%Income Tax and Social Contribution (221.6) (131.6) (113.9) (107.6) (116.1) (109.4) (83.2) 68.4% 5.8% 36.9%Statutory Interest (24.7) (22.4) (12.3) (12.4) (15.8) (11.1) (11.1) 10.4% -0.7% 11.0%Minority Interest (0.1) (0.1) (0.0) (0.0) (0.1) -0.1 (0.0) -9.3% 6.1% -12.5%

Net Income 438.5 305.0 227.2 211.3 229.9 206.4 183.1 43.8% 7.5% 24.1%

R$ Million

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GOVERNO DO ESTADODO RIO GRANDE DO SUL

Secretaria da FazendaBanco do Estado do Rio Grande do Sul

BOARD OF EXECUTIVE OFFICERS

TÚLIO LUIZ ZAMINCEO

FLÁVIO LUIZ LAMMELVice-President

GUILHERME CASSELIVANDRE DE JESUS MEDEIROS

JOÃO EMILIO GAZZANAJOSE LUIZ HERMES PFEIFF

JULIMAR ROBERTO GARCIA ROTTALUIZ CARLOS MORLIN

Officers

BOARD OF ADMINISTRATION

ODIR ALBERTO PINHEIRO TONOLLIERChairman

TÚLIO LUIZ ZAMINVice Chairman

ALDO PINTO DA SILVAESTILAC MARTINS RODRIGUES XAVIER

ERINEU CLÓVIS XAVIERFLAVIO LUIZ LAMMEL

OLÍVIO DE OLIVEIRA DUTRABoard Members

WERNER KÖHLERAccountant CRCRS 38,534

CADERNO BALANÇO ENGLISH JUNHO 11 INTERNET · Net Income registered in the second quarter of 2011...

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