Banco Mercantil do Brasil S.A., currently branded commercially as Banco Mercantil, is a retail financial institution founded in 1940, with operations starting in 1943 in the city of Curvelo, in the state of Minas Gerais. Originally called Banco Mercantil de Minas Gerais S.A., it was acquired in 1953 by entrepreneurs Oswaldo and Vicente de Araújo, at which time its headquarters were moved to Belo Horizonte. From the mid-1950s onward, the bank began an intense cycle of acquisitions, incorporating institutions such as Banco Industrial Minas Gerais S.A., Banco Santa Cruz S.A., Banco Metrópole do Rio de Janeiro S.A. and, in 1972, Banco Industrial de Campina Grande S.A., which marked its national expansion, with a presence in several Brazilian states. In 1974, upon acquiring Banco Mercantil do Brasil S.A., it adopted its current name and consolidated its regional relevance, especially in Minas Gerais. Over the following decades, it built a track record of tradition and significant presence in the financial system, supported by a branch network and service to both corporate and retail clients.

From the 2000s onward, Banco Mercantil strengthened its operations mainly in Minas Gerais and the interior of São Paulo, initially focusing on small and medium-sized enterprises. This positioning began to change starting in 2009, when the institution started directing its strategy toward mass-market credit and retail customers, especially retirees and pensioners of the INSS. Participation in the first INSS auction in 2009, winning five lots in Minas Gerais and São Paulo, was a turning point: the bank became one of the main institutions paying social security benefits in these regions and began structuring specific products for this segment. Throughout the subsequent auctions, in 2014, 2019 and 2024, it maintained an active presence, being the only mid-sized private bank to participate in all of them, which guarantees it access to the beneficiary base throughout Brazil and reinforces its position as one of the largest INSS benefit payers in the country.

Today, Banco Mercantil is a retail bank with a clear focus on the population over 50 years of age, the so-called 50+ Public. The institution combines its own physical network, with 294 service points, with a rapidly expanding digital strategy. The bank operates on an omnichannel basis, integrating branches, its own app, WhatsApp service and the MeuMercantil platform, aimed at relationships with banking correspondents. On December 31, 2024, its base reached around 9 million clients, 51% of whom had contracted credit products. The credit portfolio totaled R$ 17.1 billion, made up mostly of payroll-deductible loans, personal loans and advance withdrawals of FGTS funds, with a small share of corporate operations. Banco Mercantil is a publicly traded company with BMEB3 and BMEB4 shares listed on B3, having migrated in 2020 to the Level 1 listing segment, which reflects the voluntary adoption of more advanced corporate governance practices.

Banco Mercantil’s business model is strongly anchored in the payroll-deductible credit segment aimed at INSS retirees and pensioners, as well as public-sector employees. On December 31, 2024, payroll-deductible loans accounted for 63% of the total credit portfolio, with 98% of that balance concentrated in operations with INSS beneficiaries. The bank also operates with loans backed by the FGTS birthday-withdrawal modality, personal loans (including those secured by FGTS), payroll-deductible credit cards, overdraft facilities, traditional credit cards and working capital for companies. The rebalancing strategy initiated in 2014 deliberately reduced exposure to corporate credit, leading the corporate portfolio to represent only 4% of the total portfolio in 2024. Funding is well diversified, based on customer deposits, resulting in a funding cost close to the CDI, which supports the profitability of the operation.

In addition to traditional financial intermediation, Banco Mercantil organizes its activities into four operating segments: Financial, Insurance, Marketplace and Other. The Financial segment, which brings together credit operations in their various forms, is by far the main revenue generator, accounting for more than 95% of net revenue in recent years. In the insurance field, through specialized subsidiaries and in partnership with an insurance company, it distributes products such as protected card insurance, home protection, credit life insurance and coverages aimed at financial protection for clients, with a focus on the 50+ public. In the Marketplace segment, led by the subsidiary Mercantil do Brasil Marketplace e Empreendimentos Imobiliários S.A., it offers products and services such as healthcare discounts, dental plans, partnerships with local retailers and e-commerce partnerships through the M+ portal. The Other segment groups together real estate, securitization and technology activities, including companies dedicated to creating, developing and licensing software.

Banco Mercantil’s commercial strategy combines physical presence with strong process digitalization. The Mercantil app, launched in 2014, has become a priority channel for transactions and contracting of credit, complemented by intensive use of WhatsApp and the MeuMercantil platform for relationships with correspondents. In 2024, approximately 70% of the credit contracts originated by the bank were already executed through digital channels. In 2019, the institution took another step in digitalization by launching the virtual assistant “Mel,” based on artificial intelligence, which handles millions of customer interactions per month and supports the provision of information on products such as loans, credit cards and benefits. In parallel, the bank has been expanding its “Bem Aqui” stores, an insurance brokerage and banking correspondent operation with a lean structure, focused on prospecting clients in different regions of the country.

From a regulatory standpoint, Banco Mercantil is supervised by the Central Bank of Brazil (BACEN) and the National Monetary Council (CMN), within the framework of the National Financial System. The institution obtained its operating license from BACEN in 1940 and later received authorization to operate as a multiple bank in 1989, since when it has maintained what is described as an appropriate relationship with the monetary authority, with no records of events threatening operational continuity. Its activities in payroll-deductible credit, payment of INSS benefits and other financial products are subject to specific rules issued by the CMN, BACEN, INSS and related legislation, which define limits for payroll-deductible margins, terms, maximum rates and requirements for authorizations and agreements. These rules directly shape the supply of credit to retirees, pensioners and public-sector employees, as well as the bank’s role as a benefits payer.

In terms of governance and ESG practices, Banco Mercantil emphasizes the adoption of what it considers to be a high standard of corporate governance and has, since 2009, also adhered to the Banking Self-Regulation System, which establishes principles of ethics and respect for consumers. The institution reports social and environmental responsibility projects and, in 2021, published a sustainability report following the GRI methodology. In the same year, it created Domo Digital Tecnologia S.A., an innovation hub dedicated to boosting the bank’s digital operations, and structured initiatives such as the MB+ loyalty program for clients. The company also reports awards and certifications related to organizational climate, service quality and quality management (including ISO 9001 certification for its Quality Management System). For investors analyzing BMEB3 and BMEB4 shares on B3, these elements highlight a mid-sized retail bank, with strong specialization in the 50+ public, high dependence on payroll-deductible credit and a growing emphasis on digital channels, operating in a highly regulated environment and with evolving governance practices.