Banco de Costa Rica and Subsidiaries Unaudited ......- 7 - BANCO DE COSTA RICA AND SUBSIDIARIES...

Banco de Costa Rica and Subsidiaries

Unaudited Consolidated Financial Statements

March 31, 2018 and 2017

Table of Contents

Consolidated Financial Statements Balance Sheet Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Table of Contents ............................................................................................................................ 1

(b) Accounting policies for the preparation of consolidated financial statements ......... - 9 -

(c) Investment in other companies ............................................................................... - 10 -

(d) Moneda extranjera .................................................................................................. - 11 -

(e) Basis for the recognition of the consolidated financial statements ......................... - 13 -

(f) Financial instruments .............................................................................................. - 13 -

(g) Cash and cash equivalents ...................................................................................... - 15 -

(h) Investments in financial instruments ...................................................................... - 16 -

(i) Loan portfolio ......................................................................................................... - 17 -

(j) Allowance for doubtful accounts ............................................................................ - 17 -

(k) Securities sold under repurchase agreements ......................................................... - 23 -

(l) Accounting for interest receivable .......................................................................... - 23 -

(m) Other receivables .................................................................................................... - 23 -

(n) Realizable assets ..................................................................................................... - 23 -

(o) Offsetting ................................................................................................................ - 24 -

(p) Inmuebles, mobiliario y equipo .............................................................................. - 25 -

(q) Deferred charges ..................................................................................................... - 26 -

(r) Intangible assets ...................................................................................................... - 27 -

(s) Impairment of assets ............................................................................................... - 27 -

(t) Obligations with the public ..................................................................................... - 28 -

(u) Accounts payable and other payables ..................................................................... - 28 -

(v) Provisions ............................................................................................................... - 28 -

(w) Legal reserve ........................................................................................................... - 30 -

(x) Revaluation surplus ................................................................................................ - 30 -

(y) Use of estimates ...................................................................................................... - 30 -

(z) Recognition of main types of income and expenses ............................................... - 31 -

(aa) Income tax .............................................................................................................. - 31 -

(bb) BICSA - Financial leases ........................................................................................ - 32 -

(cc) Pension and retirement plans for employees from Banco de Costa Rica ............... - 32 -

(dd) Profit sharing .......................................................................................................... - 33 -

(ff) Development Credit Fund ....................................................................................... - 34 -

(gg) BICSA - Trusts ....................................................................................................... - 35 -

(hh) Fiscal year ............................................................................................................... - 35 -

(2) Collateralized or restricted assets: .............................................................................. - 35 - (3) Balances and transactions with related parties ........................................................... - 36 - (4) Cash and cash equivalents .......................................................................................... - 37 - (5) Investments in financial instruments .......................................................................... - 38 - (6) Loan portfolio ............................................................................................................. - 42 - a) Loan portfolio by sector .......................................................................................... - 42 -

b) Current loans ........................................................................................................... - 43 -

c) Loan portfolio by arrears: ....................................................................................... - 44 -

d) Past due loans ......................................................................................................... - 44 -

e) Interest receivable on loan portfolio ....................................................................... - 45 -

f) Allowance for loan impairment .............................................................................. - 46 -

g) Syndicated loans .................................................................................................... - 47 -

(7) Realizable assets, net .................................................................................................. - 50 - (8) Interest in other companies' capital ............................................................................ - 50 - (9) Property, furniture, and equipment............................................................................. - 53 - (10) Intangible assets ......................................................................................................... - 56 - (11) Demand obligations with the public ........................................................................... - 57 - (12) Term and demand obligations with the public and entities ........................................ - 58 - (13) Other obligations with the public ............................................................................... - 59 - (14) Obligations with entities and the Central Bank of Costa Rica ................................... - 60 - (a) Maturities of loans payable ..................................................................................... - 61 -

(15) Income tax .................................................................................................................. - 63 - (16) Provisions ................................................................................................................... - 67 - (17) Other miscellaneous accounts payable ....................................................................... - 71 - (18) Equity ......................................................................................................................... - 72 - Technical reserves of BICSA's retained earnings .............................................................. - 73 - (19) Contingent accounts ................................................................................................... - 78 - (20) Trusts .......................................................................................................................... - 82 - (21) Other debit memoranda accounts ............................................................................... - 84 - (22) Current and term brokerage operations and portfolio management operations ......... - 86 - (23) Investment fund management agreements ................................................................. - 91 - (24) Pension fund management agreements ...................................................................... - 92 - (25) Financial income on investments in financial instruments ........................................ - 95 - (26) Financial income on loan portfolio ............................................................................ - 96 - (27) Expenses from obligations with the public ................................................................ - 96 - (28) Expenses from allowances for impairment of assets.................................................. - 97 - (29) Income from recovery of assets and decreases in allowances and provisions ........... - 97 - (30) Service fee and commission income .......................................................................... - 98 - (31) Income from interests in other companies ................................................................ - 98 - (32) Administrative expenses............................................................................................. - 99 - (33) Legal profit sharing .................................................................................................. - 100 -

(34) Components of other comprehensive income .......................................................... - 101 - (35) Operating leases ....................................................................................................... - 101 - (36) Fair value of financial instruments ........................................................................... - 102 - (37) Segments .................................................................................................................. - 103 - (38) Risk management ..................................................................................................... - 109 - (39) Financial information of the Development Financing Fund .................................... - 148 - (40) Situation of the Development Credit Fund............................................................... - 160 - (41) Transition to the International Financing Reporting Standards (IFRSs) .................. - 171 - (42) Figures for 2017 ....................................................................................................... - 192 - (43) Relevant and subsequent events ............................................................................... - 192 - (44) Date of authorization for issuance of the financial statements ................................. - 197 -

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BANCO DE COSTA RICA AND SUBSIDIARIES

Notes to the consolidated finantial statements

March 31, 2018

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(1) Summary of operations and significant accounting policies

(a) Operations Banco de Costa Rica (hereinafter, the Bank) is an autonomous, independently managed, public law institution organized in 1877. As a State-owned public bank, it is regulated by the Internal Regulations of the National Banking System (IRNBS), the Internal Regulations of the Central Bank of Costa Rica, and by the Political Constitution of the Republic of Costa Rica. It is also subject to oversight by the General Superintendence of Financial Entities (SUGEF) and the Comptroller General of the Republic (CGR). The Bank's registered office is located at Avenida Central and Avenida Segunda, Calle 4 and Calle 6, in San José, Costa Rica.

The Bank's website and its subsidiaries located in Costa Rica is www.bancobcr.com

The Bank is mainly dedicated to extending loans and granting bid and performance bonds; issuing deposit certificates; opening checking accounts in colones, U.S. dollars, and euros; issuing letters of credit; providing collection services; buying and selling foreign currency; managing trusts; providing custodial services for assets; and other banking operations. As of March 31, 2018, the Bank has a total 210 branches (211 and 215 in December and March 2017, respectively) distributed across the national territory and has in operation 617 automated teller machines (608 and 606 in December and March 2017, respectively), and has 3.654 employees (3.650 and 3.442 in December and March 2017, respectively). The consolidated financial statements and notes thereto are expressed in colones (¢), the legal tender of the Republic of Costa Rica and functional currency. The Bank fully owns 100% of the following subsidiaries: BCR Valores, S.A. - Puesto de Bolsa, was organized as a corporation in February, 1999 under the laws of the Republic of Costa Rica. Its main activity is securities trading. As of March 31, 2017, the brokerage house had 69 employees (68 and 64 in December and March 2017, respectively), and is regulated by the General Superintendence of Securities (SUGEVAL).

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BCR Sociedad Administradora de Fondos de Inversion, S.A. (investment fund manager) was organized as a corporation in July 1999 under the laws of the Republic of Costa Rica. Its main activity is investment fund management. As of March 31, 2018, it had 97 employees (94 and 93 in December and in March 2017, respectively), and is regulated by the General Superintendence of Securities (SUGEVAL).

BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. (pension fund operator) was organized as a corporation in September 1999 under the laws of the Republic of Costa Rica. Its main activity is managing supplemental pension plans and offering additional services related to disability and death plans to members. As of March 31, 2018, it had 106 employees (108 and 112 in December and March 2017, respectively), and is regulated by the Superintendence of Pensions (SUPEN).

BCR Sociedad Corredora de Seguros, S.A. (insurance broker) was organized as a corporation in February 2009 under the laws of the Republic of Costa Rica. Its main activity is insurance underwriting. As of March 31, 2018, it had 84 employees (82 in December and March, 2016) and it is regulated by the General Superintendence of Insurance (SUGESE).

BanProcesa, S.R.L. was organized as a corporation in August, 2009 under the laws of the Republic of Costa Rica. Its main activity will be to provide IT processing services and technical support, purchase, lease, and maintain hardware and software, including software development, and address the Bank's IT needs. This entity has not started operations. The Bank also holds a 51% ownership interest in the following subsidiary:

Banco Internacional de Costa Rica, S.A. and subsidiary (BICSA) was organized as a bank under the laws of the Republic of Panama in 1976. It operates under a general license granted by the Superintendence of Banks of Panama to engage in banking transactions in Panama or abroad; its office is located in the city of Panama, Republic of Panama, BICSA Financial Center, 50th floor, Avenida Balboa and Calle Aquilino de la Guardia, and its subsidiary in Miami, Florida, United States of America. The remaining 49% of BICSA's shares are owned by Banco Nacional de Costa Rica. As of March 31, 2018, BICSA has 232 employees (236 and 256 in December and March 2017, respectively).

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In the Republic of Panama, banks are regulated by the Superintendence of Banks of Panama through Executive Order No. 9 of February 26, 1998, and by the resolutions and directives issued by that entity. Among other aspects, that law regulates authorization of banking licenses, minimum capital and liquidity requirements, general oversight, and procedures for credit risk and market risk management, money laundering prevention, and bank takeover and liquidation. Banks are also subject to an audit at least every two (2) years by auditors from the Superintendence of Banks to verify compliance with Executive Order No. 9 and Law No. 42 on Money Laundering Prevention. BICSA wholly owns subsidiaries Arrendadora Internacional, S.A. and Bicsa Capital S.A., engaged in providing funding through financial leases and purchase of invoices and brokerage services, respectively. The Branch in Miami has been operating since September 1, 1983 under an international banking license granted by the office of the State Comptroller and Banking Commissioner of the State of Florida, United States of America. Regulatory Matters of Banco Internacional de Costa Rica, S.A. and Subsidiary Miami Branch

The Branch is subject to regulations and periodic oversight by certain federal and state agencies. For such purposes, the Branch has an agreement with federal and state regulatory authorities, which requires the Branch to continually maintain and report certain minimum capital ratios and maturity parameters, e.g. the Branch must maintain a minimum ratio of eligible assets to third party liabilities of 110%, on a daily basis. Panama Branch

Executive Order No. 9 of February 26, 1998 requires that banks operating under a general license maintain capital funds for an amount greater than or equal to 8% of risk-weighted assets, including off-balance sheet operations. This law also limits the amount that can be loaned to a single economic group to a maximum of 25% of capital funds. It also limits the amount that can be loaned to related parties to a maximum of 5% and 10% of capital funds, depending on the guarantee provided by the borrower, up to a cumulative maximum of 25% of BICSA's capital funds.

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(b) Accounting policies for the preparation of consolidated financial statements

The financial statements have been prepared in accordance with the legal provisions, rules, and accounting regulations issued by the National Financial System Supervisory Board (CONASSIF), the General Superintendence of Financial Entities (SUGEF) and the Central Bank of Costa Rica (BCCR), and in those matters that are not covered by those entities, according to the International Financial Reporting Standards as of January 1, 2011 (IFRS). Through communication C.N.S. 116-07 from December 18, 2007, the National Financial System Supervisory Board issued a reform to the regulations denominated "Accounting Standard Applicable to the Entities Supervised by SUGEF, SUGEVAL and SUPEN and to the non-financial issuers." The objective of such standard is to regulate the adoption and application of the International Financial Reporting Standards (IFRS) and the corresponding interpretations (SIC and IFRIC interpretations.")

Afterwards, through articles 8 and 5 of minutes corresponding to sessions 1034-2013 and 1035-2013, held on April 2, 2013, respectively, the National Financial System Supervisory Board made a change to the "Accounting standard applicable to the entities supervised by SUGEF, SUGEVAL, SUGEF and SUGESE and to the non-financial issuers." According to such document, the IFRS and its interpretations must be mandatorily applied by the supervised entities, in accordance with the texts in force as of January 1, 2011. This is for the audits as of December 31, 2015, except for the special treatments applicable to the supervised entities and non-financial issuers. The anticipated adoption of standards is not allowed.

Issuing new IFRSs or interpretation issued by the IASB, as well as any amendment to the adopted IFRSs to be applied by the entities under supervision will require a prior authorization by the National Financial System Supervisory Board (CONASSIF). The financial statements have been prepared based on historical costs as explained in the accounting policies below.

Historical costs are generally based on the fair value of the consideration for goods and services.

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Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date, regardless of whether price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Bank takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability on the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for the stock-based payment transactions within the scope of IFRS 2, the lease transactions within the scope of IAS 17, and the measurements that have certain similarities with the fair value but which are not fair value, such as the net realizable value in IAS 2 or the value in use in IAS 36. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirely, which are described as follows:

Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets

or liabilities that the entity can access at the measurement date; Level 2 - inputs, other than quoted prices included within Level 1, that are observable

for the asset or liability, either directly or indirectly; and Level 3 - unobservable inputs for asset or liability.

(c) Investment in other companies

Valuation of investments by the equity method

i. Subsidiaries

Subsidiaries are entities controlled by the Bank. Control exists when the Bank has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. As prescribed by regulations, the financial statements must present investments in subsidiaries by the equity method rather than on a consolidated basis. Transactions that affect the equity of those companies, such as translation adjustments and unrealized gain or loss on valuation of investments, are recognized in the same manner in the Bank's equity, the effects are recorded in the account "Adjustment for valuation of investments in other companies".

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The Bank and subsidiaries must analyze and assess the distribution of dividends in accordance with current internal and external regulations applicable to each entity. The distribution of dividends will be proposed by the Administration of each entity; it will transmit the proposal to the Board of Directors and subsequently send to the shareholders´meeting in the case of the subsidiaries. Once the amount to be distributed has been determined, the accumulated profits of previous periods and/or the capital stock will be reduced, if necessary. The consolidated financial statements include the financial figures of the Bank and of the following subsidiaries:

Name Ownership Percentage

BCR Valores, S.A. - Puesto de Bolsa 100% BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A 100% BCR Sociedad Administradora de Fondos de Inversión, S.A. 100% Banco Internacional de Costa Rica, S.A. and Subsidiary (Arrendadora Internacional, S.A., which is wholly-owned). 51% BCR Sociedad Corredora de Seguros, S.A. 100%

All significant intercompany balances and transactions have been eliminated on consolidation.

(d) Moneda extranjera

i. Foreign currency transactions

Assets and liabilities held in foreign currency are converted to colones at the exchange rate prevailing on the date of the consolidated balance sheet. Transactions in foreign currency during the year are converted at the foreign exchange rate prevailing on the date of the transaction. Conversion gains or losses are presented in the consolidated income statement.

ii. Monetary unit and foreign exchange regulations

As of January 30, 2015, the Board of Directors of the Central Bank of Costa Rica, in article 5 of the minutes of session 5677-2015, established a managed floating exchange rate regime starting February 2, 2015, whose main aspects are detailed below:

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In this regime, the Central Bank of Costa Rica will allow the exchange rate to be freely determined by the foreign exchange market, but may participate in the market in a discretionary manner, to meet its own requirements of currency and those of the non-banking Public Sector, in order to avoid sharp exchange fluctuations.

The Central Bank of Costa Rica may carry out direct operations or use forex held- for-trading instruments it deems appropriate in accordance with the current regulations.

In its stabilization transactions, the Central Bank of Costa Rica will continue to use in the Foreign Currency Market (MONEX), the rules of engagement with the amendments provided for in this agreement. The Financial Stability Committee must determine the intervention procedures consistent with the strategy approved by the Board.

As established in the Chart of Accounts, assets and liabilities held in foreign currency should be expressed in colones at the exchange rate disclosed by the Central Bank of Costa Rica. Thus, as of March 31, 2018, monetary assets and liabilities denominated in U.S. dollars were valued at the exchange rate of ¢562.40 for US$1.00 (¢566.42 and ¢554.43 for US$1.00 in December and March 2017, respectively).

Valuation in colones of monetary assets and liabilities in foreign currency for the period ended March 31, 2018 gave rise to foreign exchange losses of ¢113.606.528.382 (¢72.456.721.547in March 2017), and gains of ¢113.434.282.936 (¢72.219.187.070 in March 2016), which are presented net in the consolidated income statement. Additionally, valuation of other assets and other liabilities gave rise to gains and losses, respectively, which are booked in "Other operating income" and "Other operating expenses", respectively. For the period ended March 31, 2017, valuation of other assets gave rise to losses of ¢65.279.150 (gains of ¢203.148.339 March 2017), and valuation of other liabilities gave rise to losses of ¢172.245.461 (gains of ¢188.059.461 March 2017).

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iii. Financial statements of foreign subsidiaries (BICSA) The financial statements of BICSA are presented in U.S. dollars, which is its functional currency. The translation of the financial statements to colones was carried out as follows:

Assets and liabilities have been converted at the closing exchange rate.

Income and expenses have been converted at the average exchange rates in

effect during each year.

The equity is measured in terms of historical cost and has been converted using the exchange rate on the transaction date.

As result of BCR's interest in BICSA, net profits in the amount of ¢864.093.308 arose for the period ended March 31, 2018 (¢545.882.201 in March 2017), which are disclosed in the consolidated income statement. As result of the conversions for the period ended on March 31, 2018 and 2017, losses arose for exchange rate differences in the amount of ¢389.983.686 and icome for ¢716.351.584 respectively, shown in the equity section, in the account "Currency translation adjustment of the financial statements".

(e) Basis for the recognition of the consolidated financial statements

The consolidated financial statements have been prepared on the fair value basis for available-for-sale and held-for-trading assets. Other financial and nonfinancial assets and liabilities are recorded at amortized or historical cost. The accounting policies have been consistently applied.

(f) Financial instruments

A financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. The Bank's financial instruments include primary instruments: cash and due from banks, investments in financial instruments, loan portfolio, other receivables, obligations with the public, obligations with entities, and payables.

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(i) Classification

Held-for trading financial instruments are instruments held by the Bank for short-term profit taking. Originated instruments are loans and other accounts receivable created by the Bank providing money to a debtor rather than with the intention of short-term profit taking. Available-for-sale assets are financial assets that are not held for trading purposes, originated by the Bank, or held to maturity. Available-for-sale assets include certain debt securities. In accordance with accounting standards issued by CONASSIF, as of January 1, 2008, investments in financial instruments made by regulated entities are to be classified as available-for-sale. Own investments in open investment funds are to be classified as held-for training financial assets. Own investments in closed investment funds are to be classified as available-for-sale. Entities regulated by SUGEVAL, SUGEF, SUPEN, and SUGESE may classify other investments as held-for trading financial instruments, provided there is an express statement of intent to trade them within 90 days from the acquisition date.

(ii) Recognition

The Bank recognizes available-for-sale assets on the date on which the Bank becomes a party to the contractual provisions of the instrument. From this date, any gains or losses arising from changes in the fair value of the assets are recognized in equity. Held-to-maturity assets and originated loans and other accounts receivable are recognized using settlement date accounting, i.e. on the date they are transferred to the Bank. In 2018 and 2017, the Bank did not classify financial instruments as held to maturity, except for the securities received to capitalize the Bank. (See notes 5 and 18).

(iii) Measurement

Financial instruments are measured initially at fair value, including transaction costs. Subsequent to initial recognition, available-for-sale assets are measured at fair value, except for any instrument that does not have a quoted market price in an active market and whose fair value cannot be reliably measured is stated at cost, including transaction costs less impairment losses.

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All non-held-for-trading financial assets and liabilities, originated loans and other accounts receivable, and held-to-maturity investments are measured at amortized cost less impairment losses. Any premium or discount is included in the carrying amount of the underlying instrument and amortized to finance income or expense using the effective interest method. Article 17 of the Accounting Regulations applicable to entities regulated by SUGEF, SUGEVAL, SUPEN and SUGESE and to Non-financial Issuers prescribes available-for-sale classification for investments in financial instruments by regulated entities.

(iv) Fair value measurement principles

The fair value of financial instruments is based on their quoted market price on the consolidated financial statement date without any deduction for transaction costs.

(v) Profits and losses on subsequent measurement

Profits and losses arising from a change in the fair value of available-for-sale assets are recognized directly in equity until the investment is considered to be impaired, at which time the loss is recognized in the consolidated income statement.When the financial assets are sold, collected, or otherwise disposed of, the cumulative gain or loss recognized in equity is transferred to the consolidated income statement.

(vi) De-recognition

A financial asset is derecognized when the Bank loses control over the contractual rights that comprise the asset. This occurs when the rights are realized, expire, or are surrendered. A financial liability is derecognized when it is extinguished.

(g) Cash and cash equivalents

The Bank considers cash and due from banks, demand and term deposits, and investment securities that the Bank has the intent to convert into cash within two months or less, with the exception of BICSA whose period is ninety days or less.

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(h) Investments in financial instruments Investments in financial instruments that are classified as available-for-sale investments are valued at market prices using the price vector provided by Proveedor Integral de Precios de Centroamérica, S.A. (PIPCA). In accordance with accounting standards issued by CONASSIF, starting January 1, 2008, the Bank no longer classifies investments in financial instruments as held-to-maturity. However, pursuant to Law No. 8703 "Amendment to Law No. 8627 on the Ordinary and Extraordinary Budget of the Republic for Fiscal Year 2008," securities received to capitalize State-owned banks are to be classified as held-to-maturity and are not subject to market price valuation. The effect of market price valuation of available-for-sale investments and restricted financial instruments are included in the equity account with the caption "Adjustment for valuation of available-for-sale investments" until those investments are realized or sold. Regular purchases or sales of financial assets are recognized by the settlement date method, date of delivery in exchange for an asset. Investments in repurchase agreements (forward seller positions) and investment in securities with original maturities of less than 180 days are not valued at market prices.

Held-to-maturity investments are measured at amortized cost by the effective interest method. In accordance with Law No. 8703, the Bank no longer classifies investments as held to maturity, except investments in financial instruments received to capitalize the Bank.

Held-for-trading investments are measured at fair value through profit or loss and are acquired with the intention of selling the financial instrument in the short term.

When a financial asset is acquired with accrued interest, interests are booked in a separate account as interest receivable. Investments in securities of BICSA:

The fair value of BICSA's investment in securities that are quoted in active markets are based on recent purchase prices. If a security is not quoted in an active market, its fair value is determined by using a valuation technique, such as the use of recent transactions, the analysis of discounted cash flows, and other valuation techniques commonly used by market participants. Shares for which fair values cannot be reliably determined are measured at cost less impairment losses.

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(i) Loan portfolio

Banco de Costa Rica - Loan portfolio:

SUGEF defines credits as any operation formalized by a financial intermediary irrespective of the type of underlying instrument or document, whereby the intermediary assumes the risks of either directly providing funds or credit facilities or guaranteeing that their customer will honor its obligations with third parties. Credits include loans, factoring, purchase of securities, guarantees in general, advances, checking account overdrafts, bank acceptances, interest, open letters of credit, and preapproved lines of credit. The loan portfolio is presented at the value of outstanding principal. Interest on loans is calculated based on the outstanding principal and contractual interest rates, and is accounted for as income on the accrual basis of accounting. Further, the Bank follows the policy of suspending interest accruals on loans with principal or interest that are more than 180 days past due. BICSA -Loan portfolio: Loans receivable are non-derivate financial assets with fixed or determinable payments that are not quoted in an active market and usually originate in providing resources for a loan. Loans are reported at their outstanding principal pending collection, less not generated interest and commissions and allowance for loan losses. Not earned commissions and interest are recognized as income over the life of the loan using the effective interest method.

(j) Allowance for doubtful accounts Banco de Costa Rica - Loan portfolio

The loan portfolio is valued in accordance with provisions established in SUGEF Directive 1-05 "Regulations for Borrower Classification", which was approved by CONASSIF on November 24, 2005, published in the Official Journal "La Gaceta" No. 238 on Friday, March 9, 2005, and effective as of October 9, 2006. Loan operations approved for individuals or legal entities with a total outstanding balance exceeding ¢65.000.000 (Group 1 under SUGEF Directive 1-05) are classified by credit risk. This classification takes into account the following considerations:

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Creditworthiness, which includes an analysis of projected cash flows, an analysis of financial position, considers the experience in the line of business, quality of management, stress testing for critical variables, and an analysis of the creditworthiness of individuals, regulated financial intermediaries, and public institutions.

Historical payment behavior, which is determined by the borrower's payment history over the previous 48 months, considering servicing of direct loans, both current and settled, in the National Financial System as a whole. SUGEF is responsible of calculating the historical payment behavior level for borrowers reported by entities during the previous month.

Arrears

Pursuant to the aforementioned Directive, collateral may be used to mitigate risk for

purposes of calculating the allowance for loan impairment. The market value and its updates should be considered and adjusted at least once annually. Further, the percentage of acceptance of collateral is also a mitigating factor. Collateral must be depreciated six months after the most recent appraisal.

Risk categories are summarized as follows:

Risk Category

Arrears Historical Payment

Behavior Creditworthiness

A1 30 days or less Level 1 Level 1 A2 30 days or less Level 2 Level 1 B1 60 days or less Level 1 Level 1 or Level 2 B2 60 days or less Level 2 Level 1 or Level 2

C1 90 days or less Level 1 Level 1, Level 2 or

Level 3

C2 90 days or less Level 2 Level 1, Level 2 or

Level 3

D 120 days or less Level 1 or Level 2 Level 1, Level 2,

Level 3 or Level 4 Remaining loan operations, for which the total outstanding balance is lower than ¢65.000.000 (Group 2 under SUGEF Directive 1-05), are classified in the following categories based on historical payment behavior and arrears:

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Risk Category

Arrears Historical Payment Behavior

Creditworthiness

A1 30 days or less Level 1 Level 1 A2 30 days or less Level 2 Level 1 B1 60 days or less Level 1 Level 1 or Level 2 B2 60 days or less Level 2 Level 1 or Level 2 C1 90 days or less Level 1 Level 1, Level 2 or Level 3 C2 90 days or less Level 2 Level 1, Level 2 or Level 3 D 120 days or less Level 1 or Level 2 Level 1, Level 2, Level 3 or

Level 4

Borrowers are to be classified in risk category E if they fail to meet the conditions for classification in risk categories A through D mentioned above, are in bankruptcy, a meeting of creditors, court protected reorganization procedure, or takeover, or if the Bank considers classification in such category to be appropriate. Pursuant to SUGEF Directive 1-05: "Regulation for Rating Debtors", as of January 1, 2014, the Bank must maintain a minimum amount of allowance resulting from the sum of generic and specific allowances, calculated in accordance with Transitory XII. The generic allowance must be at least equal to 0.5% of the total due balance, corresponding to the loan portfolio classified in A1 and A2 risk categories, without reducing the effect of mitigators of loan operations which apply to contingent credits.

The specific allowance is calculated on the covered and uncovered portion of each loan. The allowance on the exposed portion is equal to the total outstanding balance of each loan transaction less the weighted adjusted value of the relevant security. The resulting amount is multiplied by the percentage that corresponds to the risk category. The allowance on the covered part of each credit operation is equal to the amount corresponding to the covered part of the operation, multiplied by the appropriate percentage. From July 2016, in the case of the loan portfolio of individuals whose coverage ratio of debt service is above the reasonable indicator, an additional generic allowance of 1% should be applied on the indicated basis of calculation. In the case of individuals who have a mortgage or another type of loan (except consumer loans) or are transacting a new loan with the Bank, they will have a reasonable indicator of 35%, and for consumer loans of individuals not secured by mortgage, a reasonable indicator of 30%. The bank must keep this indicator updated, semiannually. SUGEF will verify the compliance in their normal supervisory duties.

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In the case of loans denominated in foreign currency debtors placed among borrowers that don´t generate cash flows in foreign currency, an additional generic allowance of 1.5% must also be applied on the basis of calculation. The indicated generic allowance will be applied cumulatively, so that in the case of borrowers that don´t generate cash flows in foreign currency, with an indicator for service coverage greater than the reasonable indicator, the generic allowance applicable will be at least of 3% (0.5% + 1% + 1.5%).

Classification categories and specific allowance percentages for each risk category are as follows:

Risk category

Specific allowance percentage on the uncovered portion of the

loan

Specific allowance percentage on the covered

portion of the loan A1 0% 0% A2 0% 0% B1 5% 0,5% B2 10% 0,5% C1 25% 0,5% C2 50% 0,5% D 75% 0,5% E 100% 0,5%

As of January 1, 2014, as an exception in the case of risk category E, the minimum allowance for loans to a borrower whose historical payment behavior is rated as level 3 is to be calculated as follows:

Arrears

Specific allowance percentage on the uncovered portion

of the loan

Specific allowance percentage on the covered portion of

the loan

Crediworthiness (Brorrowers

Group 1)

Crediworthiness (Brorrowers

Group 2) 30 days or less

20% 0,5% Level 1 Level 1 60 days or less

50% 0,5% Level 2 Level 2 More than 61 days 100% 0,5%

Level 1, Level 2, Level 3 or Level 4

Level 1 or Level 2

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From July 2016, pursuant to SUGEF Directive 19-16, Agreement, "Regulation for the determination and recording of countercyclical allowance", a generic allowance is applied to that credit portfolio that shows no evidence of current impairment, as determined by the level of allowance expected in periods of economic recession and whose purpose is to mitigate the effects of the economic cycle on the financial results derived from the allowance for non-payment of loan portfolio. On a monthly basis, the Bank must record the expense per counter-cyclical component equivalent to a minimum of 7% of the positive result of the difference between income and expenses, before taxes and profit sharing of each month, until the balance of the account of the countercyclical component reaches the amount corresponding to the required balance of allowance for the entity. At the entry into force of this regulation, the required minimum percentage level of countercyclical allowance is 0.33%. As of March 31, 2018, the allowance disclosed in the accounting records amounts to ¢53.976.467.365 (¢51.661.659.043 y ¢50.120.131.982 a December and Marcha, 2017, respectively). As of March 31, 2018, December and March 2017, increases in the allowance for loan impairment resulting from the minimum allowance are included in the accounting records in compliance with article 17 of SUGEF Directive 1-05 "Regulation for Rating Debtors", prior authorization from SUGEF in compliance with article 10 of IRNBS.

As of March 31, 2018, December and March 2017, management considers the allowance to be sufficient to absorb any potential losses that could be incurred on recovery of the portfolio. Accounts and interest receivable - Banco de Costa Rica In order to qualify the risk of accounts and interest receivable unrelated to loan operations, the Bank considers the arrears based on ranges established for other assets in SUGEF Directive 1-05 "Regulations for Rating Debtors", approved by CONASSIF.

Arrears Allowance 30 days or less 2% 60 days or less 10% 90 days or less 50% 120 days or less 75%

More than 120 days 100%

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BICSA- Allowance for loan impairment BICSA assesses whether there is any objective evidence of impairment of a loan or loan portfolio. The amount of losses on certain loans during the period is recognized as provision expense in the operations result and increases a provision account for loan losses. When a loan is determined to be uncollectible, the unrecoverable amount is reduced of that provision account. Subsequent recoveries of previously written-off loans increase the provision account. Impairment losses are determined using two methods, which indicate whether there is objective evidence of impairment, i.e. individually for loans that are individually significant and collectively for loans that are not individually significant. Impairment losses on individually assessed loans are determined based on an exposure assessment on a case by case basis. If it is determined that there is no objective evidence of impairment for an individually significant loan, this loan is included in a group of loans with similar characteristics and is collectively assessed for impairment. The impairment loss is calculated by comparing the present value of expected future cash flows, discounted at the loans current interest rate or the fair value of the loans collateral less the selling costs, to its current carrying value. The amount of any loss is recognized as a provision for losses in the consolidated income statement. The carrying value of impaired loans is reduced through the use of an allowance account for losses on loans.

For the purposes of a collective assessment of impairment, BICSA uses statistical models of historical trends for probability of default, opportunity for recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that actual losses are higher or lower than those suggested by historical trends. Default and loss ratios as well as the expected term of future recoveries are regularly compared with actual outcomes to ensure they remain appropriate. If in a subsequent period the amount of the impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognized, the impairment loss is reversed through an adjustment to the provision account. The amount of the reversal is recognized in the consolidated income statement. Management considers the allowance for loan impairment to be sufficient. The regulatory authority periodically reviews the allowance for loan impairment as an integral part of its audits. The regulatory authority may require that additional allowances are recognized based on its evaluation of information available as of the date of the audits.

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As of March 31, 2018, the allowance disclosed in the accounting records amounts to ¢70.550.697.936 (¢63.398.877.209 and ¢59.320.447.080 in December and March, 2017, respectively). BICSA -Accounts and interest receivable

In order to assess the allowance for accounts and interest receivable, BICSA applies the criteria mentioned in the section on the allowance for loan impairment.

(k) Securities sold under repurchase agreements

The Bank carries out transactions of securities sales under repurchase agreements at future dates and agreed prices. The obligation to repurchase sold securities is reflected as a liability in the consolidated balance sheet and disclosed at the value of the original agreement. The underlying securities are held in asset accounts. Finance expense recognized is calculated by the effective interest method. Interest is presented as finance expense in the consolidated income statement, and accrued interest payable in the consolidated balance sheet.

(l) Accounting for interest receivable

Interest receivable is accounted for on the accrual basis. Under current regulations, interest accrual is suspended on loan operations that are more than 180 days past due. Interest receivable on those loans is recorded when collected. BICSA does not suspend the recognition.

(m) Other receivables

The recoverability of these accounts is assessed by applying criteria similar to those established by SUGEF for the loan portfolio. If an account is not recovered within 120 days from the due date or from the date of its accounting record, an allowance is created for 100% of the outstanding balance. Items with no specified due date are considered enforceable immediately. BICSA applies the criteria mentioned in the section on the allowance for loan impairment.

(n) Realizable assets

Realizable assets are assets owned by the Bank for realization or sale. Included in this account are assets acquired as payment in kind, assets adjudicated in judicial auctions, assets acquired to be leased under finance and operating leases, goods produced for sale, idle property and equipment, and other realizable assets.

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Realizable assets are valued at the lower of cost and fair value. If fair value is less than the cost booked in the accounting records, an impairment allowance must be recorded for the difference between both values. Cost is the historical acquisition or production value in local currency; these assets should not be revalued or depreciated for accounting purposes, and they are to be recorded in local currency. The cost registered in the accounting records for a realizable asset may only be increased by the amount of improvements or additions, up to the amount by which they increase the asset's realizable value. Other expenditures related to realizable assets are to be recognized in the period incurred. The net realizable value of an asset should be used as its market value, which should be determined by applying strictly conservative criteria and is calculated by subtracting expenses to be incurred on the sale of the asset from its estimated selling price. The estimated selling price of the asset is determined by an appraiser based on current market conditions. Future expectations for market improvements are not considered and it is assumed that the assets must be sold in the shortest period of time possible to enable the Bank to recover the resources invested and use them for its business activities. For all realizable assets, the Bank should have reports from the appraisers which are to be updated at least annually. If an asset recorded in this group is used by the Bank, it should be reclassified to the appropriate account in the corresponding group. Pursuant to article 20-b of SUGEF Directive 1-05, "Regulations for Rating Debtors", the Bank is required to record an allowance for disposed assets and for realizable assets that were not sold or leased under operating or finance leases within two years from the acquisition or production date, for an amount equivalent to the carrying amount of the assets. The allowance must be established gradually by recording one-twenty-fourth of the value of such assets each month until the allowance is equivalent to 100% of the carrying amount, without exception. The recording of the allowance shall begin at closing date of the month in which the asset was i) acquired, ii) produced for sale or lease, or iii) disposed of.

(o) Offsetting

Financial assets and liabilities are offset and the net amount presented in the consolidated financial statements when the Bank has a legal right to set off the recognized balances and intends to settle on a net basis.

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(p) Property, Furniture and Equiment

(i) Own assets

Property, furniture and equipment are depreciated on the straight-line method over the estimated useful lives of the assets for both tax and financial purposes. Leasehold improvements are amortized straight line over a period of sixty months, starting the month after the deferred charge is recorded. Leasehold improvements are amortized solely at the end of the term of the lease agreement. When the lessor or the Bank notifies the other party that it does not intend to renew the lease at the end of the original lease term or extension, the remaining balance is amortized over the remainder of the lease term.

Pursuant to requirements established by regulatory authorities, the Bank must have its real property appraised by an independent appraiser at least once every five years, in order to determine its net realizable value. If the realizable value is less than the carrying amount, he carrying amount must be adjusted to the appraisal value.

(ii) Leased assets Leases in terms of which the Bank assumes substantially all the risks and benefits of ownership are classified as financial leases.

At the beginning of the lease term, the financial leasing is recognized in the statement of financial position as an asset and a liability by the same amount, equal to the fair value of the leased assets or the present value of the minimum lease payments, if this were the lowest between the present value of the stipulated payments in the agreement discounted at the interest rate implicit in the operation, determined at the beginning of the lease. To calculate the present value of the minimum lease payments, the interest rate implicit in the lease is used as the discount factor, wherever practicable to determine; otherwise the incremental interest rate of the tenant loans is used. Any initial direct cost of the tenant will be added to the amount recognized as an asset.

(iii) Subsequent disbursements Costs incurred to replace a component of an item of property, furniture and equipment is capitalized and accounted for separately. Subsequent expenses are only capitalized when they increase the future economic benefits; otherwise, the will be recognized in the consolidated income statement when incurred.

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(iv) Depreciation and amortization Depreciation and amortization are charged to the operating results on the straight-line method, using the annual depreciation rates established for tax purposes. When appraisals made by independent appraisers determine that the technical useful life is less than the remaining useful life calculated using applicable rates for tax purposes, the technical useful life is to be used. Estimated useful lives are as follows: Useful lives of assets owned by the Bank and subsidiaries, except for BICSA:

Building 50 years Vehicles 10 years Furniture and equipment 10 years Computer hardware 5 years

Leasehold improvements 5 years

Useful lives of assets owned by BICSA:

Properties 40 years Improvements 5 years Furniture and equipment 5 years Computer hardware 3 years

Vehicles 3 years

(v) Revaluation

At least every five years financial entities should assess the real estate by appraisals, stating the net realizable value of the property. If the realizable value of the assets is different from the one disclosed in the accounting records, the Bank must adjust the book value to the resulting value of the appraisal. These assets are depreciated by the straight-line method for financial and tax purposes, based on the expected life of the respective assets. The last appraisal was made in 2015, and it was recorded on November 30, 2015.

(q) Deferred charges

Deferred charges are valued at cost and recorded in local currency. These charges are not subject to revaluations or adjustments.

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(r) Intangible assets Intangible assets acquired by the Bank are recorded at cost less accumulated amortization and impairment losses. Until May 2015, the Bank recognized amortization expense on goodwill acquired on shares, which will be amortized over a 5 years period, in compliance with the Accounting Regulations applicable to Entities Regulated by SUGEF, SUGEVAL, SUPEN, and SUGESE and to Non-financial Issuers.

Amortization of IT systems is charged to operation results on a straight-line basis over the estimated useful lives of the related assets. The estimated useful life is of five years.

Subsequent expenditures or disbursements are capitalized only when they increase the future economic benefits; otherwise they are recognized in the results as incurred.

(s) Impairment of assets

The carrying amount of an asset is reviewed on each consolidated balance sheet date, in order to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in the consolidated income statement for assets carried at cost, and treated as a decrease in revaluation surplus for assets recorded at revalued amounts, until the amount of the surplus of the specific asset is sufficient to absorb the impairment loss.

The recoverable amount of an asset is the greater of its net selling price and value in use. The net selling price is equal to the value obtained in free transaction between seller and buyer. Value in use is the present value of future cash flows and disbursements derived from the continuing use of an asset and from its disposal at the end of its useful life.

If in a subsequent period the amount of the impairment loss decreases and the decrease can be linked objectively to an event occurring after impairment loss was determined, the loss is reversed in the consolidated income statement or consolidated statement of changes in equity, as appropriate.

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For Banco de Costa Rica, SUGEF establishes the following: regardless of the previously expressed, at least once every five years, financial institutions must have its property appraised by an independent appraiser, in order to determine the net realizable value of property and buildings, whose net book value exceeds 5% of the entity's equity. If the net realizable value of the assets appraised, taken as a whole, is less than the corresponding net carrying amount, the carrying amount is to be reduced to the appraisal value by adjusting assets that are significantly overstated. The decrease in the value of real property for use is recorded against account "331 - Adjustments for revaluation of assets."

In cases where an entity is aware of a significant overstatement in the carrying amount of one or more assets, regardless of the cause of the reduction in their value and/or the useful life originally assigned, the entity must hire an appraiser to perform a technical appraisal, immediately notify SUGEF of the results, and register the applicable adjustments in the accounting records.

(t) Obligations with the public

These are current obligations of the resources available to the Bank for the realization of its purposes provided by external sources, which are virtually inescapable and are reasonably identifiable and quantifiable.

(u) Accounts payable and other payables

Accounts payable and other payables are recognized at cost.

(v) Provisions

A provision is recognized in the consolidated statement of financial position if, as a result of a past event, the Bank has a present legal or constructive obligation and it is probable that an outflow of economic benefits will be required to settle the obligation. The provision made approximates settlement value; however, final amounts may vary. The estimated value of provisions is adjusted at the consolidated statement of financial position date, directly affecting the consolidated income statement.

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Employees' legal benefits (severance pay)

Costa Rican legislation requires the Bank and its subsidiaries domiciled in Costa Rica to pay employees' legal benefits to employees dismissed without just cause, equivalent to a seven days' salary for employees with three to six months of service, 14 days salary for employees with between six months to one year of service, and compensation in accordance with the Workers Protection Law for those with more than one year of service. In the specific case of the Bank, this limit is increased to twenty months for personnel who have worked for more than twenty years and for those who have fewer years, it corresponds to seniority in the Employees' Association up to twenty months.

In February 2000, the Workers Protection Law was enacted and published. This law modifies the existing severance benefit system and establishes a mandatory supplemental pension plan, thereby amending several provisions of the Labor Code. Pursuant to the Workers Protection Law, all public and private employers must contribute 3% of monthly employee salaries during the entire term of employment. Contributions are collected through the Costa Rican Social Security Administration (CCSS) and are then transferred to pension fund operators selected by the employee. The Bank follows the practice of transferring to the Employee Association the severance benefits corresponding to each employee based on the employee's current salary. The amounts of severance benefits not transferred to the Employee Association are provisioned as indicated in the Collective Labor Agreement.

BICSA retirement savings plan for employees

BICSA offers its employees defined contribution pension plans in accordance with the conditions and practices in the jurisdictions where it operates. Under those plans, BICSA contributes specified amounts to a fund managed by a third party, and is under no legal obligation to make additional contributions in the event the fund has insufficient assets to pay employees their benefits.

BICSA has adopted a voluntary retirement savings plan in which BICSA contributes twice the amount contributed by employees, up to a maximum of 10% of the monthly salaries. The contribution made by BICSA and subsidiary under this plan as of March 31, 2017 amounted to ¢88.463.270, equivalent to US$157.296 (¢426.403.808, equivalent to US$752.805 and ¢92.918.032, equivalent to US$167.592 in December and March 2016, respectively).

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BICSA -Seniority premium and indemnity for employees Under Panamanian labor law, companies are required to establish a severance fund to guarantee payment of a seniority premium and indemnity to eligible employees upon resignation or dismissal without just cause. To create the fund, quarterly contributions of the relative portion to the employee seniority premium equivalent to 1.92% of salaries paid in the Republic of Panama are made to cover the seniority premium, while monthly contributions equivalent to 5% are made to cover the indemnity. Quarterly contributions are to be placed in a trust. As of March 31, 2018, the severance fund had a balance of ¢741.614.277, equivalent to US$1.318.162 (¢689.147.921, equivalent to US$1.216.673 and ¢490.794.188 equivalent to US$885.223 in December and March 2016, respectively), which is disclosed in the consolidated financial statements as prepaid expenses.

(w) Legal reserve According to Article 12 of the Organic Law of the National Banking System, the Bank yearly sets aside 50% of net earnings after income tax to increase its Legal Reserve. The Bank's subsidiaries, except for BICSA, allocate yearly 5% of their earnings after taxes to a legal reserve.

(x) Revaluation surplus Revaluation surplus included in equity may be transferred directly to accrued earnings of prior periods when the surplus is realized. The whole surplus is realized upon disposal or use of the asset. The transfer of revaluation surplus to prior period retained earnings should not be made through the consolidated income statement. Further, the Bank was authorized by SUGEF to capitalize revaluation surplus by increasing the capital stock.

(y) Use of estimates

Management has made a number of estimates and assumptions relating to the reporting of assets, liabilities, profit or loss, and the disclosure of contingent liabilities in preparing these consolidated financial statements. Actual results may differ from those estimates that are particularly susceptible to significant changes are related to the determination of the allowance for loan impairment.

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(z) Recognition of main types of income and expenses

(i) Interest Interest income and expense is recognized in the consolidated income statement on an accrual basis considering the effective yield or interest rate. Interest income and expense includes amortization of any premium or discount during the term of the instrument and until its maturity, and is calculated on an effective interest basis.

(ii) Income from fees and commissions

When loan origination fees are generated, they are taken against effective yield, and they are deferred over the loan term. Other service fees and commissions are recognized when the services are rendered.

(iii) Net income from held-for-trading securities

Net income on marketable securities includes gains and losses arising from sales and from changes in the fair value of held-for-trading assets and liabilities.

(iv) Operating lease expenses

Payments for operating lease agreements are recognized in the consolidated income statement over the term of the lease

(aa) Income tax Pursuant to the Income Tax Law, the Bank and its subsidiaries are required to file their income tax returns for the twelve months ending December 31 of each year.

(i) Current:

Current tax is the expected tax payable on taxable income for the year, using tax rates valid on the consolidated balance sheet date, and any adjustment to tax payable in respect of previous years.

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(ii) Deferred:

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for taxation purposes. In accordance with this method, temporary differences are identified as either taxable temporary differences (which result in future taxable amounts) or deductible temporary differences (which result in future deductible amounts). A deferred tax liability represents a taxable temporary difference, while a deferred tax asset represents a deductible temporary difference. Deferred tax assets are recognized only to the extent there is a reasonable probability that they will be realized. BICSA's Miami branch is subject to state and federal income taxes in the United States of America. Income tax expense is determined by using the separate currency pools method, as described in Section 1.882-5 of the U.S. Treasury Department Regulations.

(bb) BICSA - Financial leases

BICSA's financial lease operations mainly consist of leases for transportation, machinery, and equipment. Average lease terms are between 36 and 60 months. Lease receivables represent the present value of future lease payments. The difference between the gross receivable and the present value of the receivable is presented as unearned income, which is recognized in profit or loss over the life of the lease.

(cc) Pension and retirement plans for employees from Banco de Costa Rica

A fund was created by Law No. 16 as of November 5, 1936, which has been amended on a number of occasions. The most recent amendment was included in Law No. 7107 dated October 26, 1988. Pursuant to this Law, the fund was established as a special wage protection and retirement system for the Bank's employees. The fund is comprised of allotments established by the related laws and regulations, and monthly contributions made by the Bank and employees equivalent to 10% and 0.5% of total wages and salaries, respectively. Starting October 1, 2007, this fund is managed by BCR Pension Operadora de Planes de Pensiones Complementarias, S.A. (subsidiary) under a comprehensive management agreement. The Bank's contributions to the fund are considered to be defined contribution plans. Consequently, the Bank has no additional obligations.

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(dd) Profit sharing

Under article 12 of IRNBS, the net earnings of commercial State-owned banks are allocated as follows: 50% to a legal reserve; 10% to increase the capital of the National Institute for Cooperative Development (INFOCOOP); and the remainder to increase the Bank's capital, pursuant to article 20 of Law No. 6074. Transition provision III of Law No. 8634 "Development Banking System" establishes that for a five-year period starting in 2007, the contributions made by State-owned banks equivalent to 5% of their annual net earnings for the creation of the National Commission for Educational Loans (CONAPE) will be allocated as follows: two percent to CONAPE and three percent to the capital of the Development Financing Fund (FINADE). On January 2013 transitory III is removed and 5% will be allocated to CONAPE, in accordance with Law 9092, "Refund of Income of the National Commissions for Educational Loans." In accordance with article 46 of the "National Emergency and Risk Prevention Law", all institutions of the central administration and decentralized public administration, as well as State-owned companies, must contribute three percent (3%) of their reported earnings before taxes and profits and of their accumulated budget surplus to the National Emergency Commission (CNE). Such funds are deposited in the National Emergency Fund to finance the National Risk Management System. The expenditure for CNE is calculated as 3% of income before taxes and profit sharing. Pursuant to article 78 of the Employee Protection Law, State-owned public entities must contribute up to 15% of their earnings with the purpose of strengthening the funding base for the Disability, Old Age, and Death Benefit System of CCSS and to provide universal CCSS coverage for impoverished non-salaried workers. According to Executive Order number 37127-MTSS, starting in 2013 a progressive yearly contribution from net earnings must be set aside starting with 5% in 2013, up to 7% in 2015 and 15% as of 2017

(ee) Development Financing Fund

As of 2008, in accordance with article 32 of Law No. 8634 "Development Banking System", all State-owned banks, except for Banco Hipotecario para la Vivienda (BANHVI), shall allocate each year at least five percent (5%) of their net earnings after income taxes to creating and strengthening of its own development funds. The objective of that allocation is to provide financing to individuals and legal entities that present viable and feasible projects pursuant to the provisions of the aforementioned Law (See note 39).

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(ff) Development Credit Fund

The Development Credit Fund (DCF), comprised of the resources provided in Article 59 of the Organic Law of the National Banking System, No.1644, commonly called "Banking Toll," will be managed by the State Banks. In compliance with Law No. 9094 "Derogatory of Transitory VII-Law No. 8634," and in accordance with Article 35 of Law No. 8634 "Development Banking System", in meeting 119 of January 16, 2013, by agreement number AG 1015-119-2013, it is agreed to appoint Banco de Costa Rica and Banco Nacional de Costa Rica as managers for a five-year period from the signature of the respective management agreements. Each bank is responsible for managing fifty percent (50%) of the fund. The Technical Secretariat of the Governing Board through written communication CR/SBD-014-2013 informed all private banks to open up checking accounts with each of the managing banks (Banco Nacional and Banco de Costa Rica), both in colones and foreign currency with the obligation to distribute fifty percent of the resources to each bank. The powers granted by the Governing Board to the administrators are: a) Managing Banks can perform services with the beneficiaries of the Development

Banking System as recognized by Article 6 of Law 8634. b) In accordance with Article 35 of the Law 8634 with funds from the Development

Credit Fund, the Managing Banks can provide services to other financial entities, except for private banks, provided they meet the objectives and obligations under Law 8634 and that are duly approved by the Governing Board.

c) The Banks may allocate in accordance with Article, 35 Law 8634 the resources of the Development Credit Fund through: associations, cooperatives, foundations, NGOs, producer organizations or other entities if they have credit operations in programs that meet the objectives established in the Law 8634 and are duly approved by the Governing Board.

The contract signed for a five-year term will be renewable for equal and successive periods unless otherwise decided by the Governing Board, notified in writing at least three months in advance. It may be terminated as provided for in Article 12 paragraph j) of Law 8634 and its executive regulations, if the managing banks demonstrate proven lack of capacity and expertise. (See note 40).

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(gg) BICSA - Trusts

BICSA has a license to manage trusts in or from the Republic of Panama. Fee and commission income derived from trust management is recognized on an accrual basis. BICSA is required to manage trust funds in accordance with the contractual terms and independently of its own equity.

(hh) Fiscal year

The economic fiscal year corresponds to the period ended on December 31 of every year.

(2) Collateralized or restricted assets: Collateralized or restricted assets are as follows:

March December March

2018 2017 2017 Cash and cash equivalents deposited in the Central Bank

of Costa Rica(see note4) ¢ 568.766.974.391 562.974.982.252 522.904.905.191 Restricted cash and cash equivalents (see note 4) 313.865.583 110.221.454 376.563.780

Total cash and cash equivalents 569.080.839.974 563.085.203.76 523.281.468.971

Investments in financial

instruments (see note 5) 38.169.768.858 37.132.244.882 136.326.325.502

Other assets 648.981.480 637.548.154 515.608.257

¢ 607.899.590.312 600.854.996.742 660.13.402.730

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(3) Balances and transactions with related parties The consolidated financial statements include balances and transactions with related parties as follows:


2018 2017 2017

Assets:

Loan portfolio ¢ 844.423.527 1.100.149.660 1.255.041.649

Other accounts receivable 66.337.413 157.623.676 53.185.242

Interests in other entities 10.000.000 10.000.000 10.000.000

Total assets ¢ 920.760.940 1.267.773.336 1.325.007.891

Expenses: ¢ 0 0 0

Total Expenses ¢ 0 0 5.136.432

The amount paid for the compensation for key staff is as follows:


2018 2017 2017

Short-term benefits ¢ 643.559.318 2.709.896.528 683.839.156

Long-term benefits 1.934.824 13.526.786 2.529.843

Directors' seating fees 106.476.657 337.422.054 89.918.089

¢ 751.970.799 3.060.845.368 776.287.088

BCR Pensiones pays compensation to key personnel according to the approved budget for the period, which does not include benefits, incentives or in kind salaries.

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(4) Cash and cash equivalents

For purposes of reconciliation with the consolidated statement of cash flows, cash and cash equivalents are as follows:


2018 2017 2017 Cash ¢ 83.119.719.503 101.414.943.133 65.906.955.361

Demand deposits in BCCR 576.378.478.196 596.689.641.770 543.128.270.734

Checking accounts and demand

deposits in local financial entities 525.826.409 572.990.900 3.856.125.811

Checking accounts and demand

deposits in foreign financial entities 99.7333.440.287 84.971.238.839 99.401.852.933

Notes payable on demand 2.159.477.411 4.000.514.278 7.623.042.828

Restricted cash and cash equivalents 473.635.319 300.328.891 477.484.677

Total cash and cash equivalents 762.390.577.125 787.949.657.811 720.393.732.344 Investments in short-term financial instruments 383.881919.829 232.727.416.525 208.089.026.462

Total cash and cash equivalents ¢ 1.146.272.496.954 1.020.677.074.336 928.482.758.806

As of March 31, 2018, demand deposits in BCCR are restricted as a minimum legal reserve in the amount of ¢568.743.606.753 (¢562.946.475.784 and ¢522.891.933.272 in December and March 2017, respectively).

As of March 31, 2018, the Pension Fund Manager's deposits in BCCR are restricted as a minimum legal reserve in the amount of ¢2.119.638 (¢1.030.969 and ¢669.943 in December and March 2017, respectively). As of March 31, 2018, BCR Valores, S.A. - Puesto de Bolsa holds restricted deposits in the Central Bank of Costa Rica in the amount of ¢21.248.000 (¢27.475.499 and ¢12.301.976 in December and March 2017, respectively), for a total of ¢568.766.974.391 (¢562.974.982.252 and ¢522.904.905.191 in December and March 2017, respectively).

As of March 31, 2018, BCR Valores, S.A. - Puesto de Bolsa holds restricted assets as part of the guarantee fund in the amount of ¢313.865.583 (¢110.221.454 and ¢376.563.780 in December and March 2017, respectively) (See note 2).

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As of March 31, 2018, the Bank has a liability for outstanding checks in the amount of ¢1.708.531.077 (¢2.155.877.550 and 4.378.406.192 in December and March 2017, respectively), which is offset by notes payable on demand cashed the next day once cleared by the clearing house.

(5) Investments in financial instruments

Investments in financial instruments are as follows:


2018 2017 2017

Held for trading: ¢ 22.393.813.442 67.811.010.161 93.407.299.625 Available for sale 1.193.358.373.158 1.189.691.724.952 1.082.363.404.786 Held to maturity (See note 18) 18.762.397.734 18.562.619.678 27.517.571.949 Interest receivable on available-for-sale

Investments 9.725.955.258 11.180.786.870 9.494.484.567 Allowance for uncollectibility of securities (92.647.526) 0 0

¢ 1.244.147.892.066 1.287.246.141.661 1.212.782.760.927


2017

2017 2017

Held for trading:

Fair value

Fair value

Fair value

Local issuers:

State-owned Banks ¢ 0 0 326.869.412

Other (Open Investment Funds) 22.393.813.442 57.049.030.161 93.080.430.213

22.393.813.442 57.049.030.161 93.407.299.625

Foreign issuers: 0 10.761.980.000 0

Priate Banks ¢ 22.393.813.442 67.811.010.161 93.407.299.625

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2018 2017 2017

Available for sale: Fair value Fair value Fair value

Local issuers:

Government ¢ 954.613.023.195 889.162.973.754 754.793.845.461

State-owned banks 147.902.410.522 196.983.280.888 208.565.228.661

Private Banks 3.488.620.319 8.302.718.153 23.730.393.867

Private Issuers 6.463.926.129 11.183.601.261 8.776.770.072

Other 6.129.928.630 5.586.144.225 6.471.535.922

1.118.597.908.795 1.111.218.718.281 1.002.337.773.983

Foreign issuers:

Government 10.657.296.652 10.884.563.376 19.660.158.145

State-owned banks 41.610.798.008 52.104.049.941 32.424.742.641

Private Banks 18.555.572.183 6.970.933.523 6.423.034.570

Private Issuers 3.936.797.520 8.513.459.831 21.517.695.447

¢ 1.193.358.373.158 1.189.691.724.952 1.082.363.404.786


Fair value of held-to-maturity 2018 2017 2017

Investments

Fair value Fair value Fair value

Local Issuers

Government (See note 18) ¢ 18.762.397.734 18.562.619.678 27.517.571.949

¢ 18.762.397.734 18.562.619.678 27.517.571.949

As of March 31, 2018, the investment portfolio amounts to ¢112.490.765.342 (¢122.707.315.773 and ¢125.431.851.323 in December and March 2016, respectively) corresponding to the managed amounts of the Development Credit Fund (See note 40).

Maturities for investments in financial instruments are from April 01, 2018 to December 22, 2021.

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Purchased financial instruments earn annual yield rates as follows:


2018 2017 2017

Colones 3,7500% a 9,2000% 0,7500% a 9,5000% 0,7500% a 7,3500%

US Dollars 0,1000% a 3,8500% 0,0500% a 5,5200% 0,0500% a 4,0800%

Investments have been pledged as follows:

March December March 2018 2017 2017

Deposited in the Central Bank of Costa

Rica as guarantee of clearing house

(SINPE) ¢ 132.525.316 2.441.480.297 102.529.606.081

Deposited as bid bonds 33.942.870 34.098.645 33.468.510

Guarantee for deposits collected 2.044.158.655 2.712.818.179 3.775.434.330

Minimum restricted operating capital

of BCR Pension Fund Manager,

Operadora de Pensiones complementarias, S.A.

2.116.744.416 2.068.536.868 2.139.193.609

Guarantee for obligations for securities

repurchase agreements BCR Valores,

S.A.- Puesto de Bolsa 33.842.397.601 29.875.310.893 27.848.622.972

¢ 38.169.768.858 37.132.244.882 136.326.325.502

In accordance with Article 37 of the Workers Protection Law, the Pension Fund Manager must hold a minimum operating capital equivalent to a percentage of the net assets of the managed funds that as of March 31, 2018 amount to ¢2.116.744.416 (¢2.068.536.868 and ¢2.139.193.609 in December and March 2017, respectively). As of March 31, 2018, the Brokerage House holds restricted investments in securities in the amount of ¢37.377.620.473 (¢33.403.279.540 and ¢27.882.091.482 in December and March 2017, respectively).

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Repurchase Operations: The Bank purchases financial instruments through agreements in which it binds to sell the financial instruments at future dates at previously agreed upon price and yield. As of March 31, 2018, purchased financial instruments remain under resale agreements.

Issuer Asset Balance Fair value of

colateral Resale Date Resale Price

Local government 43.139.413.297 52.192.000.867 01-01-18 al 19-01-18 99.75%

Other 10.407.956.398 12.042.936.000 01-01-18 al 23-01-18 99.50% ¢ 53.547.369.695 64.234.936.867

As of December 31, 2017, purchased financial instruments remain under resale agreements as follows:

Issuer Asset Balance Fair value of

colateral Resale Date Resale Price

Local government ¢ 13.836.354.764 16.875.917.480 01-01-18 al 19-01-18 99.75%

Other 2.117.260.924 2.295.000.000 01-01-18 al 23-01-18 99.50%

¢ 15.953.615.688 19.170.917.480

As of March 31, 2017, purchased financial instruments remain under resale agreements as follows:

Issuer Asset Balance

Fair value of colateral

Resale Date Resale Price

Central Bank of

Costa Rica ¢ 1.471.487.043 1.476.081.223 01-04-17 al 18-05-17

100%

Local government 23.045.013.529 23.105.713.336 01-04-17 al 01-06-17 100%

Other 232.832.340 233.563.756 01-04-17 al 20-04-17 100%

¢ 24.749.332.912 24.815.358.315

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(6) Loan portfolio The total loans originated by the Bank by sector are as follows:

a) Loan portfolio by sector


Sector 2018 2017 2017 Agriculture. livestock. hunting and service activities ¢ 181.762.646.883 185.479.012.526 190.904.248.793

Fishing and aquaculture 3.839.041 14.047.668.903 19.839.223.893

Manufacturing 474.742.678.900 484.589.694.068 468.617.906.930 Telecommunications and public services 44.006.533.003 44.589.661.714 44.532.127.879

Mining and quarring 144.442.289 150.897.978 768.495.484

Retail 235.960.933.504 199.897.712.070 166.268.676.034

Services 1.373.322.135.540 1.392.478.108.459 1.254.742.921.343

Transportation 55.392.592.952 72.122.749.916 81.036.231.448 Real estate. business and leasing. Activities 2.235.506.407 2.256.739.493 1.993.804.094

Construction. purchase and repair

of real estate 876.656.955.399 875.348.809.697 856.877.955.393

Consumer 330.491.294.131 340.489.712.835 363.573.449.527

Hospitality 99.106.043.535 101.277.228.239 98.229.323.993

Education 2.283.578.397 1.898.909.766 681.697.212

3.676.109.179.981 3.714.626.905.664 3.548.066.062.023

Plus interest receivable 25.247.208.784 22.680.933.013 23.597.940.619

Less allowance for loan (70.416.232.567) (63.219.418.321) (59.022.557.094)

¢ 3.630.940.156.198 3.674.088.420.356 3.512.641.445.548

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b) Current loans The total current loans originated by the bank are detailed as follows:


2018 2017 2017

Current checking account overdrafts ¢ 3.434.324.181 2.969.983.329 14.651.759.967

Loans with other current funds 3.165.906.511.042 3.249.630.879.953 3.082.616.710.096

Current credit cards 37.570.188.623 40.291.322.243 38.927.201.954

Current factoring 57.158.142.317 50.256.284.602 51.017.526.053

Current financial leases 1.655.499.762 3.896.434.900 2.295.989.438 Current issued and negotiated letters of credit 38.107.622 54.206.682 60.687.198 Current confirmed and negociated letters of credit 7.933.862.481 10.066.227.888 5.327.543.324

¢ 3.273.696.636.028 3.357.165.339.597 3.194.897.418.030

BICSA - Financial lease receivables: The balance of financial lease receivable is as follows:


2018 2017 2017

Total minimum payments ¢ 5.644.913.406 5.068.665.446 3.619.328.465

¢ 5.644.913.406 5.068.665.446 3.619.328.465

The maturities of the financial leases are as follows:


2018 2017 2017

Less than a year ¢ 448.189.495 468.598.700 284.694.815

From 1 to 5 years 5.196.723.911 4.600.066.746 3.334.633.650

¢ 5.644.913.406 5.068.665.446 3.619.328.465

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c) Loan portfolio by arrears: The loan portfolio by arrears is detailed as follows:


Current ¢ 3.273.696.636.028 3.357.165.339.597 3.194.897.418.030

1 to 30 days 193.811.362.760 158.887.392.817 173.962.063.419

31 to 60 days 90.075.247.611 59.550.526.014 79.127.647.311

61 to 90 days 28.671.801.832 40.994.650.776 34.408.378.478

91 to 120 days 18.153.182.350 33.178.923.024 5.951.152.595

121 to 180 days 9.297.663.732 4.062.823.351 3.254.227.428

More than 180 days 18.912.604.661 17.476.762.839 17.972.420.649

Legal collection 43.490.681.007 43.310.487.247 38.492.754.112 ¢ 3.676.109.179.981 3.714.626.905.665 3.548.066.062.022

Loans with contractual non-compliance in the payments of the principal or interest are classified as past due.

d) Past due loans Past due loans, including loans in accrual status (for which interest is recognized on a cash basis) and unearned interest on past due loans, are as follows:


2018 2017 2017 Number of operations 1.598 1.771 2.196 Past due loans in non-accrual status ¢ 58,310,011,777 54.569.189.502 52.286.158.861

Past due loans bearing interest ¢ 344,102,532,176 302.892.376.566 300.882.485.132

Total of unearned interest ¢ 8.931.263.435 8.064.312.749 7.894.584.111

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Loans in legal collection as of March 31, 2018:

# operations Percentage Balance

1.282 1,18% ¢ 43.490.681.007

Loans in legal collection as of December 31, 2017:


1.286 1,17% ¢ 43.310.487.247

Loans in legal collection as of March 31, 2017:


1.351 1,08% ¢ 38.492.754.112

As of March 31, 2018, the average annual interest rate earned on loans is 10,16% in colones (9,88% and 9,92% in colones as of December and March 2017, respectively) and 7.33% in US dollars (6,92% and 6.83% in US dollars as of December and March 2016, respectively). As of March 31, 2018, for Banco Internacional de Costa Rica, S.A., the annual rate for operations in US dollars is 6.19% per annum (6,04% and 5,89% as of December and March 2017, respectively).

e) Interest receivable on loan portfolio Interest receivable is detailed as follows:


Current loans ¢ 18.183.961.748 15.797.485.327 16.863.470.000

Past due loans 4.977.951.329 4.845.583.214 4.792.652.760

Loans in legal collection 2.085.295.707 2.037.864.471 1.941.817.859

¢ 25.247.208.784 22.680.933.012 23.597.940.619

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f) Allowance for loan impairment Movement in the allowance for loan impairment is as follows:

2018 Opening balance ¢ 63.219.418.321 Currency translation effect (83.598.817) Plus:

Allowance charged to profit and loss (See note 28) 8.059.496.215 Provision for impairment of loan portfolio 4.130.804.379 Recoveries 2.149.492 Less: Adjustments for exchange differentials (139.983.169) Transfer to unpaid balances (2.539.938.681) Reversal of allowance against income (See note 29) (2.232.115.173) Balance as of March 31. 2018 70.416.232.567

2017 Opening Balance 52.603.316.592 Currency translation effect 303.409.015 Plus: Allowance charged to profit and loss (See note 28) 44.991.950.614 Recoveries 9.212.774 Adjustments for exchange differentials 507.335.567 Less:

Transfer to unpaid balances (21.951.198.263)

Reversal of allowance against income (See note 29) (13.244.607.978)

Balance as of December 31. 2017 63.219.418.321

2017 Opening Balance 52.603.316.592

Currency translation effect 97.565.261

Plus:

Allowance charged to profit and loss (See note 28) 7.193.425.059

Recoveries 4.102.813

Reversals 163.333.319 Less:

Reversal of allowance against income(See note 29) (7.164.899)

Transfer to unpaid balances (1.032.021.051) Balance as of March 31. 2017 ¢ 59.022.557.094

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g) Syndicated loans

As of March 31, 2018, the syndicated loan portfolio is detailed as follows:

Banco de Costa Rica syndicated loan portfolio: The Bank does not maintain a syndicated loan portfolio with other banks. BICSA - Syndicated loans:

No. of Operations

Syndicated Balance other

Syndicated Balance BICSA Total Balance

4 Banco Agromercantil de Guatemala ¢ 233.888.100.000 14.130.300.000 248.018.400.000 1 Banco Aliado 31.340.045.383 2.403.954.352 33.743.999.735

1 Banco Banistmo 9.663.459.934 2.851.892.354 12.515.352.288 1 Banco Financiera Comercial

Hondureña 14.397.440.000 2.474.560.000 16.872.000.000 6 Banco Latinoamericano de

Comercio Exterior 160.408.977.653 11.685.422.212 172.094.399.865 8 Banpro 33.955.300.429 6.537.499.234 40.492.799.663 1 Citibank NY 35.229.408.068 5.978.927.266 41.208.335.334 1 Corpbanca New York 33.275.333.521 468.666.704 33.744.000.225 9 Credicorp Bank 3.545.434.838 2.365.860.453 5.911.295.291 1 Credit Suisse Cayman 227.912.600.000 2.671.400.000 230.584.000.000

2 Credit Suisse Securities (USA) 1.485.298.400.000 5.061.600.000 1.490.360.000.000 1 FMO 59.989.333.521 1.874.666.659 61.864.000.180 5 Global Bank 55.866.786.861 12.652.185.068 68.518.971.929 1 Inter-American Development Bank 10.123.200.000 2.812.000.000 12.935.200.000

1 Inter-American Investment

Corporation 19.796.480.000 2.699.520.000 22.496.000.000 1 Lafise 10.603.699.938 2.893.900.062 13.497.600.000 1 MMG Bank Corporation 17.227.952.521 3.580.847.479 20.808.800.000 1 Multibank 45.222.621.118 6.108.913.653 51.331.534.771 1 Nederlandse Financierings-

Maatschappij voor Ontwikkelingslanden N. V. 26.920.213.521 749.866.654 27.670.080.175

4 Prival Bank 16.001.780.483 5.376.830.627 21.378.611.110 1 Terrabank. N. A. 302.742.170 1.426.637.605 1.729.379.775 1 US Exim 56.387.109.780 4.997.373.920 61.384.483.700 53 ¢ 2.587.356.419.739 101.802.824.302 2.689.159.244.041

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As of December 31, 2017 the syndicated loan portfolio is detailed as follows: Banco de Costa Rica syndicated loan portfolio: The Bank does not maintain a syndicated loan portfolio with other banks.

BICSA - Syndicated loans:

No. of

Operations Syndicated

Balance other Syndicated

Balance BICSA Total Balance 4 Banco Agromercantil de Guatemala ¢ 235.319.189.000 14.472.031.000 249.791.220.000 1 Banco Aliado 31.225.988.625 2.759.211.460 33.985.200.085 1 Banco Banistmo 10.197.993.907 2.406.817.154 12.604.811.061 1 Banco Financiera Comercial

Hondureña 14.500.352.000 2.492.248.000 16.992.600.000 8 Banco Latinoamericano

de Comercio Exterior 108.563.833.522 8.118.686.659 116.682.520.181 1 Banpro 15.677.443.563 4.430.466.154 20.107.909.717 1 Citiban NY 35.211.420.568 6.291.468.801 41.502.889.369 1 Corpbanca New York 33.041.166.478 944.033.352 33.985.199.830 6 Credicorp Bank 3.448.469.181 2.505.079.112 5.953.548.293 1 Credit Suisse Cayman 229.470.902.500 2.761.297.500 232.232.200.000 2 Credit Suisse Securities (USA) 1.495.915.220.000 5.097.780.000 1.501.013.000.000 2 FMO 60.040.520.000 2.265.680.000 62.306.200.000 4 Global Bank 56.001.649.162 13.007.092.146 69.008.741.308 3 Inter-American Development Bank 52.393.850.000 7.646.670.000 60.040.520.000 1 Inter-American Investment

Corporation 24.922.480.000 566.420.000 25.488.900.000 1 Lafise 2.414.260.462 1.833.889.538 4.248.150.000 1 MMG Bank Corporation 17.351.096.847 3.606.443.153 20.957.540.000 1 Multibank 45.340.699.232 6.357.750.137 51.698.449.369 1 Nederlandse Financierings-

Maatschappij voor Ontwikkelingslanden N. V. 27.112.637.522 755.226.653 27.867.864.175

4 Prival Bank 17.058.667.229 4.472.757.264 21.531.424.493 1 Terrabank. N. A. 295.333.654 1.446.407.790 1.741.741.444 1 US Exim 56.790.161.312 5.033.094.836 61.823.256.148

47 ¢ 2.572.293.334.764 99.270.550.709 2.671.563.885.473

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As of March 31, 2017 the syndicated loan portfolio is detailed as follows: Banco de Costa Rica's syndicated loan portfolio: The Bank does not maintain a syndicated loan portfolio with other banks. BICSA - Syndicated loan portfolio:

No. of Operations

Syndicated Balance other

Syndicated Balance BICSA Total Balance

2 BAC ¢ 47.503.356.152 8.645.038.484 ¢ 56.148.394.636 4 Banco Agromercantil de Guatemala 229.644.906.000 14.858.724.000 244.503.630.000 1 Banco Aliado 28.689.516.484 4.576.283.705 33.265.800.189 1 Banco Financiera Comercial

Hondureña" 14.983.883.246 1.649.016.588 16.632.899.834 6 Banco Latinoamericano de Comercio

Exterior 78.099.026.816 11.164.203.112 89.263.229.928 1 Banco Rabobank International Brasil 120.865.740.000 1.108.860.000 121.974.600.000 6 Citibank 19.751.568.750 2.702.846.250 22.454.415.000 1 Corpbanca New York 30.955.674.815 2.310.125.018 33.265.799.833 6 Credicorp Bank 4.816.563.498 1.010.959.859 5.827.523.357 1 Credit Suisse Cayman 224.544.150.000 2.772.150.000 227.316.300.000 1 Espiritú Santo Bank 6.889.271.223 402.129.798 7.291.401.021 1 FMO 56.958.441.815 4.028.858.018 60.987.299.833 5 Global Bank 55.793.235.649 11.754.725.612 67.547.961.261 3 Inter-American Development Bank 41.305.035.000 4.712.655.000 46.017.690.000 1 Lafise 2.022.900.506 2.135.324.494 4.158.225.000 1 MMG Bank Corporation 19.755.958.172 757.951.828 20.513.910.000 1 Multibank 44.412.412.229 6.191.682.962 50.604.095.191 1 Nederlandse Financierings-

Maatschappij voor Ontwikkelingslanden N. V. 25.799.475.815 1.478.479.991 27.277.955.806

2 Prival Bank 19.304.133.760 1.771.512.280 21.075.646.040 1 Terrabank. N. A. 262.344.079 1.442.528.116 1.704.872.195 2 Credit Suisse Securities (USA) 1.464.249.630.000 4.989.870.000 1.469.239.500.000 1 US Exim 55.217.222.243 5.297.356.878 60.514.579.121

49 ¢ 2.591.824.446.252 95.761.281.993 2.687.585.728.245

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(7) Realizable assets, net

Realizable assets are presented net of the allowance for impairment and per legal requirement, as follows:


2018 2017 2017

Real property ¢ 64.317.692.380 63.412.438.562 61.890.137.003

Other assets 277.072.938 312.779.716 349.282.357

Purchased for sale 873.003.997 682.983.599 638.677.182 Idle real property, furniture and equipment 583.886.150 0 39.374.724

66.051.655.465 64.408.201.877 62.917.471.266 Allowance for impairment and per legal requirement (47.741.998.262) (46.757.315.163) (46.610.925.024)

¢ 18.309.657.203 17.650.896.714 16.306.546.242

Movement in the allowance for impairment for realizable assets is as follows:


2018 2017 2018

Opening Balance ¢ 46.757.315.163 46.544.298.467 46.544.298.467

Currency translation effect (42.266) 191.776 65.713

Increase in the allowance 4.242.244.188 17.608.446.020 3.972.013.089

Reversal in the allowance (3.257.518.823) (17.395.621.100) (3.905.452.245)

Closing Balance ¢ 47.741.998.262 46.757.315.163 46.610.925.024

(8) Interest in other companies' capital Interest in other companies´capital is detailed as follows:


2018 2017 2017

Interest in Bolsa Nacional de Valores, S.A ¢ 29.057.201 29.057.201 29.057.201 Participación en Interclear Central de Valores S.A.

36.359.987 36.359.987 0

Interest in Banporcesa, S.R.L. 10.000.000 10.000.000 10.000.000 ¢ 75.417.188 75.417.188 39.057.201

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As of March 31, 2018 and December and March 2017, Banco de Costa Rica holds a 100% interest in Banprocesa, S.R.L., represented by 100 common registered shares of ¢100,000 par value each, subscribed and paid in full. As of March 31, 2018, December and March 2017, the interest in Bolsa Nacional de Valores, S.A., is of 1.514.974 common shares with a par value of ¢19,18 each, booked at cost since these shares are not subject to public offering. As of March 31, 2018, December 2017, the interest in Interclear Central de Valores, S.A., corresponds to 24,545,455 common shares with a par value of ¢1.48 each and are recorded at cost since these shares are not subject to public offering. Interest in the equity of the financial conglomerate:

As of March 31, 2018, December and March 2017, the capital stock of BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A., is represented by 1.279.450.000 common and registered shares, with a par value of ¢1 each, for a total of ¢1.279.450.000. As of March 31, 2018, the capital stock of BCR Sociedad Administradora de Fondos de Inversión. S.A. is represented by 106.784 common and registered shares with a par value of ¢50.000 each, for a total of ¢5.339.200.000 (106.784 and 71.784 common and registered shares with a par value of ¢50.000 each, for a total of ¢5.339.200.000 and ¢3.589.200.000 as of December and March 2017, respectively). As of March 31, 2018, December and March, 2017, the capital stock of BCR Valores. S.A. - Puesto de Bolsa. S.A., is represented by 7.626 common and registered shares, subscribed and paid in full, and with a par value of ¢1.000.000 each, for a total of ¢7.626.000.000.

As of March 31, 2018, December and March, 2017, the capital stock of BCR Sociedad Corredora de Seguros. S.A., is represented by 25.000 common and registered shares, subscribed and paid in full, and with a par value of ¢50.000 each, for a total of ¢1.250.000.000.

The Bank owns a 51% ownership interest in BICSA (domiciled in Panama). As of March 31, 2018, December and March 2017, ownership interest is represented by 6.772.137 common shares of US$10 par value each. The remaining 49% of shares is owned by Banco Nacional de Costa Rica. The Bank's income statement for the period ended March 31, 2018 and 2017, includes the amounts of ¢864.093.308 and ¢545.882.201, respectively, corresponding to the net operating income of BICSA.

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The Bank's statement of changes in equity for the period ended Marzo 31, 2018 and 2017 includes an equity decrease of ¢389.983.686 and a increase of ¢716.351.584 respectively, corresponding to the changes resulting from the currency translation effect of BICSA's financial statement. As of March 31, 2018, the accumulated balance of the minority interest of Banco Nacional de Costa Rica presented in the equity section of the consolidated balance sheet amounts to ¢59.976.825.745 (¢61.732.075.555 and ¢58.388.595.109 in December and March 2017, respectively) and the income of the period represents the minority interest in the consolidated income statement in the amounts of ¢830.207.725 and ¢524.474.817, respectively.

The composition of BICSA's common shares is as follows:


2018 2017 2017

Quantity Amount in US Dollars Quantity

Amount in US Dollars Quantity

Amount in US Dollars

Balance at the beginning of the period 13.278.700 132.787.000 13.278.700 132.787.000 13.278.700 132.787.000 Balance at the end of the period 13.278.700 132.787.000 13.278.700 132.787.000 13.278.700 132.787.000

The Bank follows the policy of adjusting the value of its investment in BICSA's equity by the equity method. In applying this policy, the Bank considers the entity's operating results, as well as the variation in equity (in colones) arising from adjustments by applying the year-end exchange rate, in addition to changes resulting from revaluations. Such variation results from the fact that BICSA's accounting records are kept in U.S. dollars.

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(9) Property, furniture, and equipment

As of March 31, 2018, property, furniture and equipment are detailed as follows:

Cost: Property Buildings Furniture and

equipment Computer hardware Vehicles

Financial Lease Total

Balance as of December 31, 2017 ¢ 28.350.013.416 69.278.662.327 31.865.219.381 35.553.079.356 5.863.967.226 3.131.826.402 174.042.768.108

Currency translation effect

(3.147.259) (50.095.289) (6.503.528) (19.095.294) (385.920) 0 (79.227.290)

Additions

0 50.948.460 724.004.502 991.046.622 55.809.729 0 1.821.809.313

Disposals

0 0 (29.613.086) (563.972) (732.577.225) 0 (762.754.283)

Transfers

0 0 (367.620.492) (121.413.017) 0 0 (489.033.509)

Balance as of March 31, 2018

28.346.866.157 69.279.515.498 32.185.486.777 36.403.053.695 5.186.813.810 3.131.826.402 174.533.562.339

Accumulated depreciation and impairment

Balance as of December 31, 2017

0 20.138.216.851 19.796.917.240 25.529.730.153 4.540.930.978 2.651.502.416 72.657.297.638

Currency trasnlation effect 0 (5.045.213) (5.816.217) (16.872.364) (346.644) 0 (28.080.438)

Depreciation expenses 0 318.833.738 548.373.562 1.052.186.511 97.695.695 207.483.150 2.224.572.656

Disposals 0 0 (148.388.420) (122.193) (684.910.022) 0 (833.420.635)

Transfers 0 0 (235.649.591) (121.280.259) 0 0 (356.929.850)

Balance as of March 31, 2018 ¢ 0 20.452.005.376 19.955.436.574 26.443.641.848 3.953.370.007 2.858.985.566 73.663.439.371

Net balance:

March 31, 2018 ¢ 28.346.866.157 48.827.510.122 12.230.050.203 9.959.411.847 1.233.443.803 272.840.836 100.870.122.968

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As of December 31, 2017, property, furniture and equipment are detailed as follows:






14.280.097 227.298.032 29.706.521 83.604.463 1.751.040 0 356.640.153

Additions

0 3.224.761.511 2.097.329.894 2.855.732.917 63.201.949 0 8.241.026.271

Disposals

0 (313.162.468) (191.748.362) (251.025.758) (16.982.738) 0 (772.919.326)

Transfers

0 0 (583.294.903) (268.882.631) 0 0 (852.177.534)

Balance as of December 31. 2017

28.350.013.416 69.278.662.327 31.865.219.381 35.553.079.356 5.863.967.226 3.131.826.402 174.042.768.108


Balance as of December 31. 2016

0 18.632.754.795 17.982.129.438 21.721.818.703 4.125.815.216 1.821.580.677 64.284.098.829

Currency trasnlation effect

0 19.532.828 22.197.410 71.311.135 1.422.033 0 114.463.406

Depreciation expenses

0 1.309.796.132 2.413.595.683 4.247.876.622 430.676.465 829.921.739 9.231.866.641

Disposals

0 0 (156.725.900) (244.329.641) (16.982.736) 0 (418.038.277)

Transfers

0 176.133.096 (464.279.391) (266.946.666) 0 0 (555.092.961)

Balance as of December 31. 2017 ¢ 0 20.138.216.851 19.796.917.240 25.529.730.153 4.540.930.978 2.651.502.416 72.657.297.638

Net balance:

December 31. 2017 ¢ 28.350.013.416 49.140.445.476 12.068.302.141 10.023.349.203 1.323.036.248 480.323.986 101.385.470.470

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As of March 31, 2017, property, furniture and equipment are detailed as follows:






4.893.125 77.884.468 10.179.045 28.647.362 600.000 0 122.204.000

Additions

0 2.541.414.671 686.616.295 883.197.245 0 0 4.111.228.211

Disposals

0 (1.632.617) (22.750.580) (65.616.464) (16.982.739) 0 (106.982.400)

Transfers

0 0 (180.499.532) (70.519.097) 0 0 (251.018.629)

Balance as of March 31, 2017

28.340.626.444 68.757.431.774 31.006.771.459 33.909.359.411 5.799.614.236 3.131.826.402 170.945.629.726


Balance as of December 31, 2016

0 18.632.754.795 17.982.129.438 21.721.818.703 4.125.815.216 1.821.580.677 64.284.098.829

Currency trasnlation effect

0 6.415.671 7.237.031 23.830.867 475.048 0 37.958.617

Depreciation expenses

0 354.853.931 607.306.930 1.070.995.358 113.808.362 207.472.286 2.354.436.867

Disposals

0 0 (14.007.877) (62.969.471) (16.982.736) 0 (93.960.084)

Transfers

0 0 (142.390.066) (70.519.097) 0 0 (212.909.163)

Balance as of March 31, 2017 ¢ 0 18.994.024.397 18.440.275.456 22.683.156.360 4.223.115.890 2.029.052.963 66.369.625.066

Net balance:

March 31, 2017 ¢ 28.340.626.444 49.763.407.377 12.566.496.003 11.226.203.051 1.576.498.346 1.102.773.439 104.576.004.660

Transfers are the property the entity is not using or that it is not using anymore and which value is transferred to another account.

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(10) Intangible assets

Intangible assets include software and goodwill acquired from the purchase of BICSA's shares.

The changes in the balance of the net intangible assets are detailed as follows:

Cost:

Balance as of December 31, 2017 ¢ 47.908.975.556 Currency translation effect (55,081,321) Additions to computer systems 346.804.398

Disposals (135,979)

Balance as of March 31, 2018 48.200.562.654

Accumulated depreciation and impairment:

Balance as of December 31. 2017 34.527.136.661 Currency translation effect (28.568.104) Amortization expense on computer systems 1.397.668.990

Disposals (43.059) Balance as of March 31. 2018 35.896.194.488

Net Balance:

Balance as of March 31. 2018 ¢ 12.304.368.166

Cost:

Balance as of December 31. 2016 ¢ 44.195.327.873


Additions to computer systems 7.014.841.675

Transfers 599.996.082

Disposals (4.110.509.761)





Amortization expense on computer systems 7.148.850.981

Disposals (1.215.515.505)


Net Balance:


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Cost:



Additions 1.493.151.611

Transfers (53.093.441)

Balance as of March 31. 2017 45.707.110.167




Amortization expense on computer systems 1.836.289.898

Disposals (8.022.048)

Balance as of March 31. 2017 30.351.378.894

Net Balance:

Balance as of March 31. 2017 ¢ 15.355.731.273

(11) Demand obligations with the public

Demand obligations with the public are as follows:


Checking accounts ¢ 1.287.261.518.106 1.319.701.657.081 1.254.434.528.896

Cashier´s Checks 540.474.275 267.067.231 574.837.303

Demand savings deposits 631.455.525.651 639.782.856.175 605.106.100.810

Overdue term borrowings 3.135.820.343 3.493.511.395 2.906.550.098

Overnight deposits 14.554.912.000 11.014.036.900 10.951.600.347

Other demand borrowings 16.660.642.206 39.320.420.998 26.128.527.802 Other demand obligations with the public

10.104.099.520 8.325.434.860 10.949.582.920

¢ 1.963.712.992.101 2.021.904.984.640 1.911.051.728.176

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(12) Term and demand obligations with the public and entities Term and demand obligations with the public and entities per number of customers and accumulated amount are detailed as follows:


2018 2017 2017

Obligations with the public Demand Demand Demand

Deposits form the public ¢ 1.953.608.892.583 2.013.579.549.781 1.900.102.145.256 Other obligations with the public (See note 11)

10.104.099.518 8.325.434.859 10.949.582.920

1.963.712.992.101 2.021.904.984.640 1.911.051.728.176

Obligations with entities

Deposits from state-owned entities 4.167.466.695 4.000.652.710 11.674.162.444

Deposits from other banks 143.135.070.990 149.039.156.106 148.008.340.056

Other obligations with entities 35.301.598.158 56.329.690.451 27.135.305.511 182.604.135.843 209.369.499.267 186.817.808.011

¢ 2.146.317.127.944 2.231.274.483.907 2.097.869.536.187


2018 2017 2017

Obligations with the public Term Term Term

Deposits form the public ¢ 1.872.481.959.328 1.888.215.595.606 1.737.806.033.642

Other obligations with the public 825.000 825.000 825.000 1.872.482.784.328 1.888.216.420.606 1.737.806.858.642

Obligations with entities

Deposits from state-owned entities 34.233.203.383 36.573.536.561 12.303.199.863

Deposits from other banks 3.074.507.496 2.850.148.437 751.207.150

Other obligations with entities 961.883.640.909 984.036.056.627 962.195.558.989 999.191.351.788 1.023.459.741.625 975.249.966.002

¢ 2.871.674.136.116 2.911.676.162.231 2.713.056.824.644

As of March 31, 2018, demand deposits with the public include court-ordered deposits for ¢185.527.572.033 (¢270.787.801.575 and ¢251.255.937.108 in December and March 2017, respectively), which are restricted because of their nature.

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As of March 31, 2018, the Bank has a total of 1.770.965 customers with demand deposits (1.709.996 and 1.633.038 in December and March 2017, respectively) and with term deposits 34.953 (33.673 and 33.465 with term deposits as of December and March 2017, respectively. The subsidiary BICSA has a total of 1.019 customers with demand deposits (1.003 and 1.074 in December and March 2017, respectively) and 988 customers with demand deposits (999 and 975 in December and March 2017, respectively).

(13) Other obligations with the public

Other obligations with the public are as follows:


Obligations for confirmed letters of credit ¢ 8.593.841.694 9.812.355.046 4.361.950.254 Obligations for security tripartite agreements forward buyer 33.862.220.722 31.016.428.920 28.833.471.848

¢ 42.456.062.416 40.828.783.966 33.195.422.102

Repurchase agreements:

The Bank raises funds through the sale of financial instruments under agreements in which the Bank undertakes to repurchase them at future dates and at a predetermined price and yield.

As of March 31, 2018, the Bank's repurchase agreements are as follows:

Fair value of the assets Liability balance

Repurchase date

Repurchase price

Investments ¢ 37.343.677.603 33.862.220.722

02/04/2018 al 25/06/2018 100%

As of December 31, 2017, the Bank´s repurchase agreements are as follows:

Fair value of the assets Liability balance

Repurchase date

Repurchase price

Investments ¢ 33.369.180.895 31.016.428.920

08/01/2018 al 08/02/2018 100%

As of March 31, 2017, the Bank´s repurchase agreements are as follows:

Fair value of the

assets Liability balance Repurchase

date Repurchase

price

Investments ¢ 33.847.320.152 28.833.471.848

01/07/2016 al 29/08/2016 100%

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(14) Obligations with entities and the Central Bank of Costa Rica Obligations with entities and with the Central Bank of Costa Rica are detailed as follows:


Demand obligations with the Central Bank of Costa Rica

Term obligations with the Central Bank of Costa Rica 0 0 71.900.000.000

Charges payable from obligations with the Central Bank of Costa Rica 0 0 5.492.361

0 473.353.490 71.905.492.361 Checking accounts of local financial

Entities

10.739.954.052 31.437.359.249 21.205.062.904 Checking accounts of foreign financial entities 1.608.567.482 631.717.464 435.521.398 Overdrafts on demand checking accounts of

foreign financial entities 7.259.292.600 15.368.127.316 5.510.235.959 Demand obligations by legal mandate 138.575.575.806 144.166.608.038 142.924.838.475

Obligations for check deposits 1.708.531.077 2.155.877.550 4.378.406.192 Overnight deposits 22.712.214.826 15.609.809.650 12.363.743.082 Other demand obligations with

local financial entities 65.178.609.860 47.669.103.419 31.421.317.073 Term deposits from foreign financial entities 322.374.433.862 339.050.482.281 301.532.288.711 Loans from foreign financial entities

(See note 14-a) 525.894.751.280 544.462.721.206 537.044.905.928 Obligations for financial leases (See note 14-a) 551,525,029 706.848.614 1.333.807.925 Obligations for resources taken

from the liquidity market 902.624.206 0 2.447.647.646 Charges payable for obligations with financial

and non-financial entities 7.454.262.302 11.091.242.525 5.588.996.483 1.104.960.342.382 1.152.349.897.312 1.066.186.771.776 Loans from local financial entities

(See note 14-a) 84.289.407.552 89.304.906.104 97.969.998.720 Obligations for deferred liquidity

operations (See note 14-a) 0 2.265.679.998 3.500.000.000 1.189.249.749.934 1.243.920.483.414 1.167.656.770.496

Subordinated loans 22.496.000.000 22.656.800.000 22.177.200.000 Charges payable for subordinated

Obligations 75.688.338 68.737.344 64.651.689 22.571.688.338 22.725.537.344 22.241.851.689 ¢ 1.211.821.438.272 1.267.119.374.248 1.261.804.114.546

The maturities of the term obligations with entities are from April 1, 2018 to Febrary 28, 2019.

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Annual interest rates for the new obligations with entities are as follows:


2017 2016 2016 US dollars 0,1000% a 4,5613% 1,6868% a 6,0500% 2,4866% a 5,1709%

As of March 31, 2018, term obligations with foreign financial entities include the international issuance for US$500.000.000 equivalent to ¢281.200.000.000, with an interest rate of 5.25% and a term of 5 years, maturing in August, 2018 (US$500.000.000 equivalent to ¢283.210.000.000 and ¢277.215.000.000 in December and March 2017, respectively). (a) Maturities of loans payable

As of March 31, 2018 the maturities of loans payable are detailed as follows:

Central Bank of Costa Rica

Local financial entities

Foreign financial entities

International organizations Total

Less than one year ¢ 0 42.197.773.489 230.347.913.099 81.266.800.000 353.812.486.588 From one to two years 0 4.237.936.405 45.927.960.335

56.025.194.436 106.191.091.176

From three to five years 0 38.756.321.864 95.519.503.169

16.872.000.000 151.147.825.033

More tha five years 0 - 16.807.380.241 5.624.000.000 22.431.380.241

Total ¢ 0 85.192.031.758 388.602.756.844 159.787.994.436 633.582.783.038

As of December 31, 2017, the maturities of loans payable are as follows:





Less than one year ¢ 0 48.278.406.456 270.938.387.774 45.653.452.000 364.870.246.230 From one to two years 0 4.267.302.462 49.059.455.306 65.295.638.884 118.622.396.652 From three to five years 0 35.629.145.783 93.774.277.706 16.992.600.000 146.396.023.489

More tha five years 0 3.395.731.401 19.741.509.536 5.664.200.000 28.801.440.937

Total ¢ 0 91.570.586.102 433.513.630.322 133.605.890.884 658.690.107.308

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As of March 31, 2017, the maturities of loans payable are as follows:





Less than one year ¢ 71.900.000.000 50.539.898.116 238.540.960.908 49.399.713.000 410.380.572.024 From one to two years 0 15.419.252.730 58.442.242.115 81.951.684.375 155.813.179.220 From three to five years 0 31.859.765.520 97.681.199.116 16.632.900.000 146.173.864.636

More tha five years 0 6.098.730.000 11.029.106.414 5.544.300.000 22.672.136.414

Total ¢ 71.900.000.000 103.917.646.366 405.693.508.553 153.528.597.375 735.039.752.294

As of March 31, 2018, the Bank has the following obligations from financial leases:

Fee Interest Maintenance Amortization

Less than one year ¢ 411.359.730 10.825.197 40.761.544 359.772.989

From one to five years 214.052.005 10.861.215 11.438.750 191.752.040

¢ 625.411.735 21.686.412 52.200.294 551.525.029

As of December 31, 2017, the Bank has the following obligations from financial leases:


Less than one year ¢ 674.063.686 21.580.509 66.962.181 585.520.996


¢ 809.415.110 32.160.431 70.406.065 706.848.614

As of March 31, 2017, the Bank has the following obligations from financial leases:


Less than one year ¢ 1.054.083.624 72.528.896 104.697.452 876.857.276


¢ 1.583.026.439 101.760.065 147.458.449 1.333.807.925

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(15) Income tax Pursuant to the Costa Rican Income Tax Law, the Bank and its subsidiaries are required to file income tax returns for the twelve months period ending December 31 of each year.

As of March 31, 2018, the consolidated balance of income tax payable amounts to ¢1.436.034.085 (¢2.708.453.870 and ¢5.184.535.571 as of December and March 2017, respectively) (See note 17) and the income tax advance payments amounted to ¢142.442.767 (¢11.295.757.274 and ¢110.279.399 as of December and March 2017, respectively), recorded as assets. The income tax expenses are detailed below:


2018 2017 2017

Current income tax ¢ 1.518.018.394 5.394.414.857 4.569.137.647

Decrease in income tax 0 (1.704.246.913) 0

Income tax of the previous period (81.984.309) 35.680.564 615.397.924

Income tax advance payments 0 0

1.436.034.085 2.708.453.870 5.184.535.571

Deferred income tax 127.409.203 513.913.812 274.564.494

Adjustment of deferred tax

of the previous period 0 0 (39.968.724)

Decrease in the deferred income tax (53.975.535) (248.578.520) (44.794.068) Decrease in the deferred income tax of the previous period 0 (346.833.600) (346.833.600)

Income tax ¢ 1.509.467.753 2.626.955.562 5.027.503.673

Realization of deferred

income tax ¢ (73.433.668) (265.335.292) (189.801.702)

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BICSA is subject to tax legislation in the following jurisdictions.

Panamá According to tax legislation in effect in Panama, BICSA is exempt from payment of income tax on foreign source income. BICSA is further exempt from payment of income tax on interest income earned on term deposits placed in local banks, on securities issued by the Panamanian and foreign governments and on investments in securities traded in the Panamanian Stock Exchange.

Miami Income tax is not levied on any income that is unrelated to transactions or business dealings in the United States of America. Finance expense is calculated based on the cost of liabilities denominated in U.S. dollars.

A deferred tax liability represents a taxable temporary difference and a deferred tax asset represents a deductible temporary difference. Deferred tax assets and liabilities are attributed to the following: As of March 31, 2018:

Assets Liabilities Net Valuation of investments ¢ 3.263.214.129 (314.341.791) 2.948.872.338

Revaluation of assets 0 (5.543.838.952) (5.543.838.952)

Provisions 89.224.624 0 89.224.624

Losses and unused tax credits 830.555.132 0 830.555.132

Allowance for doubtful accounts 126.078.254 0 126.078.254 ¢ 4.309.072.139 (5.858.180.743) (1.549.108.604)

As of December 31, 2017:

Assets Liabilities Net Valuation of investments ¢ 3.219.414.748 (327.039.298) 2.892.375.450

Revaluation of assets 0 (5.581.948.865) (5.581.948.865)

Provisions 74.801.755 0 74.801.755

Losses and unused tax credits 911.555.565 0 911.555.565

Allowance for doubtful accounts 124.635.502 0 124.635.502 ¢ 4.330.407.570 (5.908.988.163) (1.578.580.593)

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As of March 31, 2017:

Assets Liabilities Net Valuation of investments ¢ 1.018.545.988 (928.523.729) 90.022.259 Revaluation of assets 0 (5.697.173.112) (5.697.173.112)

Provisions 34.557.129 0 34.557.129 Losses and unused tax credits 1.171.172.388 0 1.171.172.388 Allowance for doubtful accounts 121.279.828 0 121.279.828

¢ 2.345.555.333 (6.625.696.841) (4.280.141.508)

Movement in temporary differences is as follows: As of March 31, 2018:

December 31. 2017

Effects on income

statement Effects on

equity Marzo 31.

2017

On liabilities account

Valuation of investments ¢ (327.039.298) 0 12.697.507 (314.341.791)

Revaluation of assets (5.581.948.865) 38.109.913 0 (5.543.838.952)

On assets account

Valuation of investments 3.219.414.748 0 43.799.381 3.263.214.129

Losses and unused tax credits 911.555.565 (127.409.203) 46.408.770 830.555.132 Provisions 74.801.755 14.422.869 0 89.224.624 Allowance for doubtful accounts 124.635.501 1.442.753 0 126.078.254

¢ (1.578.580.594) (73.433.668) 102.905.658 (1.549.108.604)


December 31. 2016

Effects on income


equity December 31.

2017 On liabilities account Valuation of investments ¢ (1.320.728.535) 0 993.689.237 (327.039.298) Revaluation of assets (5.774.795.972) 192.847.107 0 (5.581.948.865) On assets account

Valuation of investments 1.058.405.409 0 2.161.009.339 3.219.414.748 Losses and unused tax credits 1.427.519.923 (506.442.400) (9.521.958) 911.555.565 Provisions 34.731.866 40.069.889 0 74.801.755 Allowance for doubtful accounts 116.445.390 8.190.112 0 124.635.502

¢ (4.458.421.919) (265.335.292) 3.145.176.618 (1.578.580.593)

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December 31, 2016

Effects on income


equity Marzo 31,

2017 On liabilities account Valuation of investments ¢ (1.320.728.535) 0 392.204.806 (928.523.729)

Revaluation of assets (5.774.795.972) 77.622.860 0 (5.697.173.112)

On assets account

Valuation of investments 1.058.405.409 0 (39.859.421) 1.018.545.988

Losses and unused tax credits 1.427.519.923 (272.084.263) 15.736.728 1.171.172.388

Provisions 34.731.866 (174.737) 0 34.557.129

Allowance for doubtful accounts 116.445.390 4.834.438 0 121.279.828 ¢ (4.458.421.919) (189.801.702) 368.082.113 (4.280.141.508)

The tax receivable balance originated by an excess of advanced payments for the returns on investments of the Development Credit Fund which are exempt from the obligation, are detailed as follows:

March December March 2018 2017 2017 Income tax Receivable ¢ 9.725.901.517 45.887.828 45.887.828 ¢ 9.725.901.517 45.887.828 45.887.828

As of March 31, 2018, the subsidiary BICSA recognized a deferred tax asset on unused tax credits and losses in the amount of ¢830.555.132 equivalent to US$1.476.805 (¢911.555.565 equivalent to US$1.609.328 and ¢1.171.172.328 equivalent to US$2.112.390 in December and March 2017, respectively) related to evidence that future taxable profit will be available.

In conducting the analysis of the deferred tax BICSA's management considers whether it is probable that some or all portion of the deferred tax asset is not realizable. Performing or not the deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences become deductible. BICSA's management considers the detail of reversals of deferred tax assets and liabilities. Project future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income for the periods in which the deferred tax assets will be deductible. BICSA's management considers it may be able to realize the benefits of this deductible temporary difference.

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(16) Provisions

The movement in provisions is detailed as follows:

Legal benefits Lawsuits Other Total

Balance as of December 31, 2017 ¢ 20.806.708.729 3.871.334.255 0 24.678.042.984

Currency translation effect (4.934.529) (1.143.340) 0 (6.077.869)

Provision made 130.975.462 155.839.220 0 286.814.682

Provision used (171.921.909) (82.243.788) 0 (254.165.697)

Adjustment for exchange rate differentials 0 (1.402.841) 0 (1.402.841)

Provisions reversed 0 (64.581.00) 0 (64.581.000)

Balance as of March 31, 2018 ¢ 20.760.827.753 3.877.802.506 0 24.648.630.259



Currency translation effect 20.789.630 13.616.670 0 34.406.300

Provision made 5.907.794.875 1.250.444.727 0 7.158.239.602

Provision used (9.711.315.538) (270.100.015) 0 (9.981.415.553)

Adjustment for exchange rate differentials

0 6.336.526 0 6.336.526

Provisions reversed

(6.301.413) (16.102.379) 0 (22.403.792)


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Balance as of December 31, 2016 24.595.741.175 2.887.138.726 0 27.482.879.901

Currency translation effect 5.808.814 4.665.800 0 10.474.614 Provision made 2.013.936.953 0 0 2.013.936.953

Provision used (4.822.414.014) (136.302.664) 0 (4.958.716.678)

Adjustment for exchange rate differentials 0 2.151.380 0 2.151.380

Provisions reversed 0 (2.695.333) 0 (2.695.333)

Balance as of March 31, 2017 ¢ 21.793.072.928 2.754.957.909 0 24.548.030.837

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As of March 31, 2018, the Bank is a defendant in litigation, for which the following provisions have been established:

Ordinary suits filed against the Bank have been estimated at ¢11.033.052.779 and

US$45.280.864, for which the Bank has provisioned ¢988.623.292 and US$78.435, respectively.

Labor suits are difficult to estimate due to their nature. However, they have been estimated

at ¢2.763.873.961 and US$825.000, for which the Bank has provisioned ¢1.299.424.117, corresponding to cases where a provisional judgment has been handed down.

The arbitration proceedings against the Bank are estimated in the amount of $12.569.617,

los cuales no se recomiendan provisionar. There are administrative proceedings at different stages, it has been estimated in

¢25.642.631 y US$200, for which the Bank has provisioned ¢19.034.804. For tax proceedings, and due to the possible future confirmations of payments of taxes, plus

corresponding interest and penalties, the Bank has provisioned the amount of ¢364.819.396.

As of December 31, 2017, the Bank is a defendant in litigation, for which the following provisions have been established:




at ¢2.843.873.961 and US$825.000, for which the Bank has provisioned ¢1.253.828.685, corresponding to cases where a provisional judgment has been handed down.


of which the amount of US$40.000 has been provisioned.

There are administrative proceedings at different stages, it has been estimated in ¢23.364.494, for which the Bank has provisioned ¢19.034.804.

For tax proceedings, and due to the possible future confirmations of payments of taxes, plus


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As of March 31, 2017, the Bank is a defendant in litigation, for which the following provisions have been established:




at ¢1.702.860.799 and US$825.000, for which the Bank has provisioned ¢258.008.835, corresponding to cases where a provisional judgment has been handed down.


of which the amount of US$40.000 has been provisioned.

There are administrative proceedings at different stages, it has been estimated in ¢23.230.554 y US$1.034, for which the Bank has provisioned ¢21.294.804 y $885, respectively.

For tax proceedings, and due to the possible future confirmations of payments of taxes, plus


As of March 31, 2018, December and March 2017, BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A., has pending litigation where it is estimated the withdrawal of economic benefits for ¢ 261,153,751 for alleged infringement of article 11, subsection a) of the Ley de Promoción de la Competencia y Defensa Efectiva al Consumidor.

As of March 31, 2018, December and March 31, 2017, there are no provisions for ligation at BCR Sociedad Administradora de Fondos de Inversion S.A. As of March 31, 2018, BCR Valores Puesto de Bolsa, S.A. is a defendant in a lawsuit filed by a customer, under file number 08-001181-1027-CA. which was admitted during a vote of the First Chamber of the Supreme Court of Justice, and BCR Valores Puesto de Bolsa, S.A. was ordered to pay damages, which existence and estimate must be proven in the enforcement of the judgment. The amount claimed by the customer is of US$202.737. The Brokerage House has provisioned ¢114.019.289 (¢114.834.099 and ¢112.403.286 in December and March 2016, respectively).

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As of March 31, 2018, December and March 31, 2017 BCR Valores Puesto de Bolsa, S.A. is undergoing an administrative proceeding from a complaint filed by several investors who alleged the lack of advice of the broker in the case of Altara; therefore, a provision was made for 440 base salaries amounting to ¢177.648.000 (¢177.648.000 and ¢80.680.000 as of December and March 2017).

As of March 31, 2018, December and March 31, 2017, BCR Valores Puesto de Bolsa, S.A. is undergoing an administrative proceeding filed before the General Superintendence of Securities, under file number J60/0/152, for which resolution number SGV-R-3073 was issued regarding the non-compliance of BCR Valores regarding services and was ordered to pay a penalty of 200 base salaries as set out in Law No. 7337; therefore, the amount of ¢42.120.000.00, was provisioned.

As of March 31, 2018, BICSA has a provision for litigations amounting to ¢159.953.871, equivalent to US$284.414 (¢161.097.211, equivalent to US$284.414 and ¢279.465.986, equivalent to US$504.061 in December and March 2017, respectively).

(17) Other miscellaneous accounts payable

Other miscellaneous accounts payable are detailed as follows:

March 2018 December 2017 March 2017 Due for goods and services ¢ 309.204.146 260.241.669 176.893.664 Tax liability owed by the entity 1.436.034.085 2.708.453.870 5.184.535.571 Tax on DU propts 318.304.859 308.608.550 298.056.059 Employer contributions 3.484.429.606 3.554.703.229 2.745.929.516 Court-ordered withholdings 4.130.615.269 727.796.418 818.177.461 Tax withholdings payable 1.193.026.363 860.763.493 1.834.877.337 Withheld employer contributions payable 1.361.016.039 1.211.784.401 811.382.596 Other third-party withholdings payable 8.955.711.159 9.055.324.445 8.954.753.701 Compemsations and salaries payable 2.049.812.859 7.108.746.769 1.952.206.214 Interests (distributions) payable on results of the period 3.838.555.176 11.646.596.462 3.907.930.687 Obligations with the National Development Trust 280.312.874 324.583.742 339.961.314 Accrued vacations 6.299.834.421 6.233.186.921 6.155.354.451 Accrued statutory Christmas bonus 1.865.973.951 505.035.227 1.788.481.660 Commissions payable from insurance placement 94.355.609 47.922.832 203.270.175 Contributions to Superintendences´ budgets 64.037.924 11.346.732 47.257.290

Miscellaneous creditors 19.588.984.836 22.651.406.131 26.883.431.338 ¢ 55.270.209.176 67.216.500.891 62.102.499.034

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(18) Equity

a) Capital Stock

The Bank's capital stock is as follows:

March 2018 December 2017 March 2017

Capital under Law No. 1644 ¢ 30.000.000 30.000.000 30.000.000

Bank capitalization bonds 1.288.059.486 1.288.059.486 1.288.059.486

Capital increase per Law No. 7107 118.737.742.219 109.023.875.655 109.023.875.655

Capital increase per Law No. 8703 27.619.000.002 27.619.000.002 27.619.000.002

Increase for revaluation of assets 14.130.125.230 13.854.625.836 13.854.526.836

Other 697.630.970 697.630.970 697.630.970

¢ 162.502.557.907 152.513.191.949 152.513.092.949

On December 23, 2008, the Executive Branch of the Costa Rican Government authorized a capital contribution funded under Law No. 8703 "Amendment to the Law on Ordinary and Extraordinary Budget of the Republic for Tax Year 2008 (Law No. 8627)." Such law grants funds to capitalize three State-owned banks, including Banco de Costa Rica, in order to stimulate productive sectors and particularly small and medium-sized enterprises. For such purposes, the Bank received four securities for a total of US$50,000,000 equivalent to ¢27,619,000,002 and denominated in DU maturing in 2013, 2017, 2018, and 2019 (No. 4191. No.4180. No. 4181, and No. 4182 for DU10,541,265.09 each, at a reference exchange rate of ¢655.021 to DU1.00). As of March 31, 2018, according to the exchange rate at the closing date, these investments show a balance of ¢18.762.397.734 (¢18.562.619.678 and ¢ 27.517.571.949 on December and March 2017, respectively). (See note 5). As of December 26, 2017, there are maturities of securities in Development Units (UDES) in the amount of ¢9.279.541.974. On February 13, 2018, the National Financial System Supervisory Board (CONASSIF) authorized the Bank to increase its capital stock by ¢9.713.866.564 for accumulated profits and the surplus from the revaluation of realized assets amounting ¢275.499.394 for a total of ¢9.989.365.958. As of March 31, 2018, the amount for the constitution of the Development Financing Fund's equity is ¢25.016.898.449 (¢22.100.921.217 a in December and March 2017).

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b) Surplus from revaluation of property, furniture and equipment

This includes the increase in fair value of real property (land and buildings) owned by the Bank. As of March, 31, 2018, the revaluation surplus amounts to ¢37.774.830.067 (¢38.050.329.461 in December and March 2017)

c) Adjustments for revaluation of available-for-sale investments They include variations in the fair value of available-for-sale investments. As of March 31, 2018, the balance of the adjustment for valuation of available-for-sale investments corresponds to unrealized net losses in the amount of ¢15.639.964.554 (¢12.892.534.612 and ¢6.078.092.239 in December and March 2016, respectively).

d) Adjustments for valuations of interest in other companies

This mainly corresponds to foreign exchange differences arising from translation of BICSA's consolidated financial statements and the unrealized gain or loss on valuation of investments in subsidiaries.

As of March 31, 2018, changes in equity include foreign exchange differences corresponding to investments in other companies in the amount of ¢13.684.665.347 (¢14.074.649.033 and ¢12.665.971.262 in December and March 2016, respectively).

Technical reserves of BICSA's retained earnings

As of March 31, 2018, from Banco de Costa Rica's retained earnings resulting from the investment in other companies, it should be considered for any purpose, that there are amounts related to special reserves applied to equity accounts of BICSA for US$24.420.001 (51% of US$47.882.354) due to changes made to policies concerning the subsidiary (US$28.197.914 y US$27.233.989 in December and March 2017, respectively). Laws and regulations applicable in the Republic of Panama establish that, for purposes of compliance with standards issued by the Superintendence of Banks of Panama, from the year 2014 on, an estimated of credits reserves should be prepared based on regulatory guidelines.

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The General Board of Directors resolution SBP-GJD-003-2013 dated July 9, 2013 establishes the accounting for the differences that may arise between the regulations issued by the Superintendence of Banks and the IFRS, so that: 1) the accounting records and the financial statements are prepared in accordance with IFRS as required by agreement No.006-2012 dated December 18, 2012; 2) according to standards applicable to banks and presenting additional specific accounting aspects than those required by IFRS, in the event that an estimate of provision or reserve is greater than the correspondent calculation under IFRS, the excess of provision or reserve will be recognized in the equity. This general resolution came into effect for the accounting periods ending on or after December 31, 2014. Subject to prior authorization of the Superintendence of Banks, banks can reverse the established provision, partially or totally, based on justification duly evidenced and presented to the Superintendence of Banks. Agreement No.004-2013 indicates that specific provisions originate from concrete and objective evidence of impairment. These provisions should be constituted for credit facilities classified in the risk category known as special, subnormal, doubtful or irrecoverable, both for individual credit facilities or a group of them. At least from December 31, 2014, banks must calculate and maintain at all times the amount of specific provision determined by the methodology specified in this agreement, which considers the balance due from each credit facility in any of the categories subject to provision, the present value of each available collateral as mitigation of risk, as established by type of guarantee in this agreement, and a table of weightings applied to the net amount exposed to loss of such credit facilities. In case of an excess of a specific provision calculated in accordance with this agreement over the estimate calculated in accordance with IFRS, this excess will be recorded as a regulatory reserve in the equity, that increases or decreases towards undistributed earnings. The balance of the regulatory reserves will not be considered as capital funds for purposes of calculating certain ratios or prudential ratios mentioned in the agreement. The Bank determines its country risk reserve in compliance with provisions established in general resolutions No.7-2000 and No.1- 2001 issued by the Superintendence of Banks of Panama. Agreement No.004-2013 indicates that the dynamic provision is a reserve constituted to meet possible future needs of specific provisions ruled by prudential banking regulations criteria. It is constituted with quarterly periodicity on credit facilities that do not have a specific provision assigned. i.e., credit facilities classified in normal category. This agreement regulates the methodology to calculate the amount of the dynamic provision, considering a minimum or maximum restriction applicable to the provision's amount determined on credit facilities classified in normal category. The dynamic provision is an equity account that increases or decreases with assignments to or from undistributed earnings. The credit balance of the dynamic provision is part of the regulatory capital but does not replace or compensates the net worth equity requirements set forth by the Superintendence.

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Regulatory capital As of March 31, 2018, the net worth equity for the BCR Financial Conglomerate is detailed as follows:

Companies of the Financial Conglomerate Base capital

Minimum individual capital

requirement Individual

surplus or deficit Non-transferable

items

Transferable surplus and

individual deficit

Banco de Costa Rica ¢ 425.127.925.892 344.491.097.744 80.636.828.148 0 80.636.828.148 425.127.925.892 344.491.097.744 80.636.828.148 0 80.636.828.148

Regulated entities Banco Internacional de Costa Rica, S.A and Subsidary 122.401.685.331 97.456.388.237 24.945.297.094 12.223.195.576 12.722.101.518 BCR Valores. S. A.- Puesto de Bolsa 16.250.879.310 2.514.083.540 13.736.795.770 0 13.736.795.770 BCR Sociedad Administradora de Fondos de Inversión, S.A. 8.465.388.730 2.979.152.510 5.486.236.220 0 5.486.236.220 BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. 6.055.149.615 2.683.518.918 3.371.630.697 0 3.371.630.697

¢ 153.173.102.986 105.633.143.205 47.539.959.781 12.223.195.576 35.316.764.205 Non regulated entities

BCR Corredora de Seguros, S.A. 2.462.166.228 1.680.698.971 781.467.257 0 781.467.257 ¢ 2.462.166.228 1.680.698.971 781.467.257 0 781.467.257

Global surplus or deficit of the Financial Conglomerate ¢ 116.735.059.610

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As of December 31, 2017, the net worth equity for the BCR Financial Conglomerate is detailed as follows:


Minimum individual capital

requirement Individual

surplus or deficit Non-transferable

items

Transferable surplus and

individual deficit

Banco de Costa Rica ¢ 421.195.173.421 356.045.702.397 65.149.471.024 0 65.149.471.024 421.195.173.421 356.045.702.397 65.149.471.024 0 65.149.471.024

Regulated entities Banco Internacional de Costa Rica, S.A and Subsidary 125.983.826.866 98.330.308.356 27.653.518.510 13.550.224.070 14.103.294.440 BCR Valores. S. A.- Puesto de Bolsa 15.797.989.350 2.400.747.040 13.397.242.310 0 13.397.242.310 BCR Sociedad Administradora de Fondos de Inversión, S.A. 7.296.008.950 2.921.071.990 4.374.936.960 0 4.374.936.960 BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. 5.892.345.181 2.680.455.420 3.211.889.761 0 3.211.889.761

¢ 154.970.170.347 106.332.582.806 48.637.587.541 13.550.224.070 35.087.363.471 Non regulated entities

BCR Corredora de Seguros, S.A. 2.413.281.550 1.686.696.460 726.585.090 0 726.585.090 ¢ 2.413.281.550 1.686.696.460 726.585.090 0 726.585.090


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As of March 31, 2017, the net worth equity for the BCR Financial Conglomerate is detailed as follows:


Minimum individual

capital requirement

Individual surplus or

deficit

Non-transferable

items

Transferable surplus and individual

deficit Parent Company

Banco de Costa Rica ¢ 405.005.020.574 343.040.423.552 61.964.597.022 0 61.964.597.022

405.005.020.574 343.040.423.552 61.964.597.022 0 61.964.597.022

Regulated entities

Banco Internacional de Costa Rica, S. A and subsidary 119.160.398.148 92.903.288.695 26.257.109.453 12.865.983.632 13.391.125.821

BCR Valores, S. A.- Puesto de Bolsa 15.066.257.530 2.010.307.070 13.055.950.460 0 13.055.950.460

BCR Sociedad Administradora de

Fondos de inversión, S.A. 8.404.495.020 2.755.334.020 5.649.161.000 0 5.649.161.000

BCR Pensión Operadora de Planes de

Pensiones Complementarias, S.A. 5.412.996.370 2.415.905.159 2.997.091.211 0 2.997.091.211

¢ 148.044.147.068 100.084.834.944 47.959.312.124 12.865.983.632 35.093.328.492

Non regulated entities BCR Corredora de Seguros, S.A. 3.000.000.000 1.466.719.587 1.533.280.413 1.533.280.413

¢ 3.000.000.000 1.466.719.587 1.533.280.413 0 1.533.280.413


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(19) Contingent accounts

The Bank has consolidated off-balance sheet commitments and contingencies that arise in the ordinary course of business and involve elements of credit and liquidity risk. Off-balance financial instruments with risk are as follows:


Guarantees granted:

Performance bonds ¢ 131.643.428.200 123.706.205.596 130.574.261.403 Bid bonds 4.437.508.374 2.708.964.295 1.523.986.980 Other guarantees 77.883.465.714 81.444.289.641 83.657.483.078 Issued non-negotiated letters of credit

16.829.536.803

13.239.511.400

13.697.061.207

Confirmed non-negotiated letters of credit

4.131.720.079 6.978.135.531

7.081.701.679

Credit lines to be used automatically

130.894.887.994 128.105.244.236

116.853.195.887

Other contingencies 61.932.550.988 62.057.859.935 46.097.502.404 Credits pending disbursement 5.066.790.778 5.117.982.367 5.679.489.283

¢ 432.819.888.930 423.358.193.001 405.164.681.921

Off-balance financial instruments involving risk by type of deposit are as follows:

March 2018 December 2017 March 2017 With prior deposit ¢ 9.230.794.458 8.886.714.970 9.148.006.842

Without prior deposit 361.656.543.484 352.413.618.096 349.919.172.674

Pending lawsuites and claims 61.932.550.988 62.057.859.935 46.097.502.405 ¢ 432.819.888.930 423.358.193.001 405.164.681.921

These commitments and contingent liabilities expose the Bank to credit risk since commissions and losses are recognized in the consolidated balance sheet until the obligations are fulfilled or expire. As of March 31, 2018, December and March 2017, letters of credit are backed 100% by guarantee deposits or credit facilities. As of March 31, 2018, floating guarantees in custody are for ¢140.406.443.386 (¢153.621.607.535 and ¢127.617.866.711 in December and March 2016, respectively).

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The Bank has off-balance financial instruments with risk that arise in the ordinary course of business to meet the financial needs of its customers. These financial instruments include letters of credit and guarantees that involve varying levels of credit risk. Other contingencies

As of March 31, 2018, the Bank's Legal Division reported the following contingencies and commitments: Administrative suits against the Bank estimated ¢10.044.429.487 and US$45.202.429. In

addition other contentious processes are filed for preliminary injunction with no estimate In labor matters there are active ordinary processes estimated in the amounts of

¢1.464.449.844 and US$825.000. Criminal proceedings in which the Bank is a third-party defendant are estimated at

¢261.134.141 and US$8.102. Arbitration proceedings against the Bank are estimated in the amount of US$12.549.617. Administrative proceedings against the Bank have been estimated in the amounts of

¢6.607.827 and US$200. In tax matters, for taxes plus interest and proportional penalties, the amount of

¢17.207.529.946 was estimated. As of December 31, 2017, the Bank's Legal Division reported the following contingencies and commitments: Administrative suits against the Bank estimated ¢9.837.291.884 and US$45.195.929. In

addition other contentious processes are filed for preliminary injunction with no estimate In labor matters there are active ordinary processes estimated in the amounts of

¢1.590.045.275 and US$825.000. Criminal proceedings in which the Bank is a third-party defendant are estimated at

¢261.134.141 and US$8.102.. Arbitration proceedings against the Bank are estimated in the amount of US$12.509.617.

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Administrative proceedings against the Bank have been estimated in the amounts of ¢4.329.690.

In tax matters, for taxes plus interest and proportional penalties, the amount of ¢17.207.529.946 was estimated.

As of March 31, 2017, the Bank's Legal Division reported the following contingencies and commitments:

Administrative suits against the Bank estimated ¢7.694.071.775 and US$43.545.929. In addition other contentious processes are filed for preliminary injunction with no estimate

In labor matters there are active ordinary processes estimated in the amounts of ¢1.444.851.964 and US$825.000.

Criminal proceedings in which the Bank is a third-party defendant are estimated at ¢167.345.338 and US$203.882.

Arbitration proceedings against the Bank are estimated in the amount of US$12.529.617.

Administrative proceedings against the Bank have been estimated in the amounts of ¢1.935.750 and US$149.

In tax matters, for taxes plus interest and proportional penalties, the amount of ¢5.128.807.128 was estimated.

Income tax - BICSA Costa Rica

BICSA SERVICIOS, S.A., as a surviving entity of the group of companies that formed BICSA Corporación Financiera, .S.A, was condemned by the Administrative Tax Court to the payment of income tax for the fiscal periods from 1999 to 2004. In strict compliance with the deadline for cancellation, the sum of ¢1.243.985 adduced in the announcement was paid by BICSA on November 29, 2013, charged to the provision that was maintained for the case.

Notwithstanding that the payment was made in order to avoid other sanctions, given the nonconformity that the institution maintained to the scope, a judicial contentious administrative proceeding had already been filed, in order to declare the absolute nullity and inefficiency of the determinative resolution No.DT10R-11-08 of the Large Taxpayers' Division, the resolution No.AU-10-4-135-08, the ruling of the Administrative Court No. 035-2012 and the resolution No. SFGCN-AL-075-12, all arising from the transfer of charges No. 2752000016446 of income taxes for the years 1999-2004. Together with the repayment of the sums objected, interest added, damages and losses are also claimed for a figure currently undetermined, but that would be determined in execution of an eventual favorable judgment.

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In response to this action, in January 28, 2014 the Costa Rican State started a contentious administrative process against the bank (Harmfulness Process), referring to the party won by BICSA in administrative proceedings. In order to better manage both actions, the accumulation of the processes was proposed, and in March 2015, the Contentious Administrative Court decreed to accumulate them. On June 19, 2015, a preliminary hearing was convened, in which the controversial facts of the complaint were indicated and, in turn, the application of the expert opinions requested by BICSA was approved. On December 23, 2016, the memorial presented by one of the experts was notified, granting a period of 3 working days to the parties to refer to it. BICSA referred to it on January 9, 2017.

Subsequently, by resolution of February 17, 2017 of the Contentious Administrative Court, a period of 30 working days was granted to another of the experts, so that they could submit their report, which was provided to the Court on February 19, 2017. On April 21, 2017, BICSA referred to this expert opinion, within the period granted by the resolution of April 17, 2017. Refering to the references and consultations made by BICSA, the expert answered incompletely BICSA´s objections, so that on September 12, 2017, assessments were presented again regarding this expert´s opinion. The next step will be to determine a date for an oral hearing and later, the issuance of the sentence. As of March 31, 2018, December and March 2017, due to the merger between INS Pensiones Operadora de Pensiones Complementarias, S.A. and BCR Pensión Operadora de Planes de Pensiones Complementarias. S.A., a series of contingencies arose that have been reasonably covered with pledged securities from the seller. As of March 31, 2018, December and March 2017, BCR Valores Puesto de Bolsa, S.A. has an administrative proceeding filed by the Large Taxpayer Division of the Costa Rican Tax Administration against BCR Valores, S.A. relating to the Preliminary Adjustment Proposal for the Income Tax for the 2012 and 2013 fiscal years, by the Costa Rican Tax Administration (hereinafter DGT), which might be classified in the tax contingency item against such a subsidiary and which current status is as follows: on September 9, 2015, the DGT provided BCR Valores with the results of the reports on the allegations timely submitted by such an entity against the Provisional Tax Adjustment Proposal and the Sanctioning Resolution Proposal, notified to BCR Valores in July 2015. All this was related to the Income Tax Adjustments for 2012 and 2013, plus interest and the penalization, which as of that date amounted to ¢621,189,153 (as of September 09, 2015, such an amount had a small increase because it has continued to bear interest).

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According to such reports, the DGT totally accepted the allegations of BCR-Valores regarding Adjustments A.3 Expenses from Legal Profit Sharing, and the partially Adjustment A-2 Expenses from Allowances and Provisions, and A-4 Non Deductible Expenses Associated with Non Taxable Income because such items were derogated totally and partially as indicated; consequently, they generated an decrease in taxes, plus the corresponding proportion from interest and the penalization, thereby generating in favor of BCR Valores a decrease in the total initial adjustment of taxes, interest, and penalization in the amount of ¢203.559.377. Regarding the other adjusted items, especially Adjustments A.1 for Returns on investments in foreign financial instruments, A.1.2 Increase in the taxable income from amortized discounts from investments in securities, all of which were confirmed by the DGT and for a total estimate of taxes plus interest and proportional penalties as of September 9, 2015 of ¢406.894.334. From that date to December 31, 2017 the amount of ¢32,114,170 has been generated as a result of current interests that are not included in the provisioned amount. During the hearing, a proposal was made to BCR Valores for the regularization of the adjustments confirmed during this first instance pursuant to the provisions contained in Articles 144 and 171, subparagraph 12 of the Tax Code of Standards and Procedures (CNPT) and 157 of the Tax Procedure Regulations, or there was an option to accept a 5 business day term, after which it might express its approval, disapproval, or partial disapproval of the proposal. BCR Valores accepted the second option by pointing out that it would issue its opinion within the granted term. As of March 31, 2018, December and March, 2017, BCR Valores Puesto de Bolsa, S.A, was against a lawsuit filed by Avicola La Aurora S. A., which is processed under the file 08-001181-1027-CA. As of March 31, 2018, December and March, 2017, BCR Valores Puesto de Bolsa, S.A. has a legal proceeding with file number 14-007525-1027 CA. As of March 31, 2018 and December, 2017, a lawsuite against BCR Valores Puesto de Bolsa, S.A. was filed by Dan Hoglund, which is rocessed under file 16-000208-1027-CA-2. As of March 31, 2018, December and March 2017, there are no contingencies and commitments for BCR Sociedad Administradora de Fondos de Inversión, S.A. that should be disclosed.

(20) Trusts The Bank provides trust services, whereby it manages assets at the direction of the customer. The Bank receives a fee for providing those services. The underlying assets and liabilities are not recognized in the Bank's consolidate financial statements. The Bank is not exposed to any credit risk and does not guarantee these assets or liabilities.

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The types of trusts managed by the Bank are as follows: Management and investment trusts Management trusts with a testamentary clause Guarantee trusts Housing trusts Management and investment public trusts

The assets in which capital trust is invested are detailed as follows:

March

December

March

2018 2017 2017

Cash and due from banks ¢ 54.231.156.921

54.499.525.810 53.827.341.270

Investments in financial instruments 130.038.289.430 126.053.750.583 164.008.904.526

Loan portfolio 255.761.233.431 245.681.870.410 203.612.717.706

Allowance for doubtful accounts (14.391.915.090) (14.528.031.525) (16.884.993.840)

Realizable assets 17.301.705.864 19.853.355.379 15.050.753.404

Investments in other companies 31.430.530.261 32.565.145.086 56.768.441.536

Other accounts receivable 68.380.460.199 60.641.201.514 63.687.240.806

Property, furniture and equipment 222.668.485.406 241.506.426.780 256.175.448.762

Other assets 80.966.123.274 73.338.684.092 31.992.192.399

¢ 846.386.069.696

839.611.928.129 828.238.046.569

Trust capital held by subsidiaries and invested in assets is detailed as follows:

March

December

March

2018 2017 2017

Banco de Costa Rica ¢ 729.074.194.620

725.409.705.620

719.028.966.011 Banco Internacional de Costa Rica, S.A. 115.688.029.144

112.466.178.448

107.551.950.719

BCR Valores, S.A.- Puesto de Bolsa (See note 22) 1.623.845.932

1.736.044.061

1.657.129.839

¢ 846.386.069.696

839.611.928.129

828.238.046.569

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(21) Other debit memoranda accounts

Other debit memoranda accounts are detailed as follows:

March

December

March

2018 2017 2017 Own assets and securities held in custody ¢ 7.855.940.190 8.039.787.329 6.512.496.784 Guarantees received and held in custody 700.204.040.256 707.009.524.494 691.440.787.513 Guarantees received and held by third parties 423.826.757 605.087.652 585.927.647 Granted and unused credit lines 556.639.958.881 598.753.852.194 614.902.826.056 Write-offs 100.561.613.897 98.321.650.922 73.760.796.599 Suspense interest receivable 14.355.963.697 13.150.139.126 13.652.814.049 Other memoranda accounts 2.215.725.888.320 3.036.448.967.078 2.595.524.173.857 Assets and securities held in custody for third

Parties 100.139.948.471 74.010.584.673 119.089.447.770 Managed funds assets 1.523.938.031.385 1.459.565.420.150 1.392.575.011.371 Management of individual portfolios by

Puesto de Bolsa 117.021.804.161 102.032.773.051 377.788.036.370 Own held-for-trading securities held in custody 642.538.207.691 691.622.787.217 614.640.833.790 Held-for-trading securities received as

guarantee (guarantee trust) 64.187.269.550 19.509.449.721 28.516.122.140 Held-for-trading securities given as

guarantee (guarantee trust) 0 19.102.939.999 6.000.000.000 Confimed spot agreements pending

Settlement 0 0 487.000.000 Futures pending settlement 0 17.983.285.238 24.544.782.001 Cash and accounts receivable for custodial

Activities 56.735.371.746 60.666.407.369 42.907.639.959 Held-for-trading securities held in custody for third parties 4.091.278.843.192 5.806.749.718.791 6.051.882.720.051 Held-for-trading securities held in custody for third parties as guarantee (guarantee trust) 64.441.499.479 83.477.029.966 79.734.516.149 Held-for-trading securities given as guarantee for third

parties (guarantee trust) 135.559.718.799 118.933.341.731 91.664.445.265 Held-for-trading receivables 1.062.925.734 0 0 Confirmed spot agreements pending settlement 3.654.891 0 16.452.785.049 Futures pending settlement 2.094.699.757 222.876.848 155.507.013.730

¢ 10.394.769.206.854 12.916.205.623.549 12.998.170.176.150

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Other memoranda accounts by subsidiaries are detailed as follows:


2018 2017 2017 Banco de Costa Rica ¢ 6.912.700.581.524 9.532.179.834.605

9.044.765.847.390

Banco Internacional de Costa Rica, S.A. 1.802.129.624.309 1.764.944.837.529

1.979.491.506.873 BCR Valores, S.A.- Puesto de Bolsa (See note 22) 148.089.671.371 151.418.274.832

574.779.690.696

BCR Sociedad Administradora de Fondos de Inversión, S.A. (See note 23) 582.409.462.539 539.963.721.922

536.897.567.846

BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. (See note 24) 949.439.867.111 927.698.954.661

862.235.563.345

¢ 10.394.769.206.854 12.916.205.623.549

12.998.170.176.150

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(22) Current and term brokerage operations and portfolio management operations

Memoranda accounts of BCR Valores. S.A. - Puesto de Bolsa are detailed as follows:


Managed funds (See note 20) ¢ 1.623.845.932

1.736.044.060 1.657.129.839

Other own memoranda accounts

Other memoranda accounts 10.436.874.600 10.465.015.128 73.545 Total own other memoranda accounts ¢ 10.436.874.600

10.465.015.128 73.545

Other own memoranda accounts

Held-for-trading securities in custody ¢

0

0

Held-for-trading securities given in guarantee (margin)

0

19.102.940.000

0

Held-for-trading securities pending receipt 0

0

0

Unsettled confirmed spot accounts 0 0 487.000.000

Futures pending settlement-forward buyers

(See note 22-a) 0 17.983.285.238 24.544.782.001 Total own memoranda accounts ¢ 0

37.086.225.238 25.031.782.001

Memoranda accounts for third parties

Portfolio management 117.021.804.161

102.032.773.051 377.788.036.370

Cash and accounts receivable by custodial activity 24.902.893 81.399.202 0 Held-for-trading securitues in custody (see note 22-d)

15.107.168.387

1.279.985.365 0

Held-for-trading securities given in guarantee 2.337.640.949

250.000.000 0 Held-for-trading pending receipt

1062925734

4 0

Confirmed spot contracts pending settlement 3.654.891 0 16.452.785.049 Futures pending settlement-forward buyer

(See note 22-a)

2.094.699.756 222.876.848 59.556.167.107

Futures pending settlement-forward seller

(See note 22-a)

0 0 95.950.846.624

Total memoranda accounts for third parties 137.652.796.771 103.867.034.470 549.747.835.150 Total memoranda accounts (See note 21)

148.089.671.371 151.418.274.836 574.779.690.696

Total memoranda accounts and trusts ¢ 149.713.517.303

153.154.318.896 576.436.820.535

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In repurchase and term operations, the Brokerage House is contingently liable for the short balance that arises when a security is settled for an amount that is less than the amount payable to the respective buyer. In accordance with the Regulations for Repurchase Operations and the Regulations for Term Operations, all such transactions have collaterals to cover those contingencies.

Securities backing repurchase agreements are held in custody at Central de Valores de la Bolsa Nacional de Valores. S.A. (CEVAL) or foreign depositories with which CEVAL has custody agreements.

a) Repurchase

The Brokerage House enters into agreements to buy or sell securities at certain future dates (repurchase agreements). Those agreements are comprised of securities that the parties undertake to sell or buy on an agreed upon date and at a stated price. The difference between the contractual value and the value of the security represents additional collateral for the operation, and corresponds to a portion of the security held in custody.

As of March 31, 2018, forward buyer and seller positions in repurchase and reverse repurchase agreements in which BCR Valores, S.A. Puesto de Bolsa (Brokerage House) participates, are as follows:

Forward buyer Forward seller

Third parties Colones US Dólares Total Colones US Dólares Total

1 to 30 days ¢ 459.791.193 1.207.026.063 1.666.817.256 0 0 0

31 to 60 days 217.194.553 210.687.947 427.882.500 0 0 0

61 to 90 days 0 0 0 0 0 0

More than 91 days 0 0 0 0 0 0

Total third parties ¢ 676.985.746 1.417.714.010 2.094.699.756 0 0 0

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As of December 31, 2017, forward buyer and seller positions in repurchase and reverse repurchase agreements in which BCR Valores, S.A. - Puesto de Bolsa (Brokerage House) participates, are as follows:

Forward buyer Forward seller Third parties Colones US Dólares Total Colones US Dólares Total 1 to 30 days ¢ 222.876.848 0 222.876.848 0 0 0 Total third parties ¢ 222.876.848 0 222.876.848 0 0 0

Own 1 to 30 days ¢ 14.309.890.663 3.673.394.575 17.983.285.238 0 0 0 Total own 14.309.890.663 3.673.394.575 17.983.285.238 0 0 0 Total ¢ 14.532.767.511 3.673.394.575 18.206.162.086 0 0 0

As of March 31, 2017, forward buyer and seller positions in repurchase agreements in which BCR Valores, S.A. - Puesto de Bolsa (Brokerage House) participates are as follows:

Forward buyer Forward seller Third parties Colones US Dólares Total Colones US Dólares Total 1 to 30 days ¢ 24.335.681.550 14.377.479.664 38.713.161.214 26.040.742.984 30.143.577.825 56.184.320.809 31 to 60 days 7.915.392.721 10.734.306.412 18.649.699.133 18.560.678.040 17.016.475.382 35.577.153.422 61 to 90 days 341.793.098 1.697.258.002 2.039.051.100 341.793.098 3.693.323.636 4.035.116.734 More than 91 days 0 154.255.660 154.255.660 0 154.255.659 154.255.659 Total third parties ¢ 32.592.867.369 26.963.299.738 59.556.167.107 44.943.214.122 51.007.632.502 95.950.846.624

Own 1 to 30 days ¢ 12.682.264.124 3.167.389.647 15.849.653.771 0 0 0 31 to 60 days 8.695.128.230 0 8.695.128.230 0 0 0 Total own 21.377.392.354 3.167.389.647 24.544.782.001 0 0 0 Total ¢ 53.970.259.723 30.130.689.385 84.100.949.108 44.943.214.122 51.007.632.502 95.950.846.624

b) Guarantees granted

In order to comply with Bolsa Nacional de Valores, S.A., requirement for a system of guarantees to secure operations executed by the Brokerage House on behalf of third parties, the Brokerage Firm may either hold a performance bond in colones issued by a private Costa Rican bank or make a contribution to the Guarantee Fund as described below. In order to establish a risk management system, SUGEVAL set up a guarantee fund comprised of contributions from brokerage firms. Contributions are made proportionally based on the net buyer positions during the last six months. As of S March 31, 2018, the Brokerage House had made contributions for a total of ¢230.061.328 (¢28.326.930 and ¢128.651.939 in December and March 2017, respectively). These contributions are registered in the subaccount "Guarantee fund - National Stock Exchange".

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c) Agreements entered with customers of BCR Valores, S.A. - Puesto de Bolsa

Starting 2012, a multiple agreement was implemented, which includes all the products offered by the Brokerage House, except for individual portfolio management services. Accordingly, as of December 31, 2017 the Brokerage House has two types of agreements available: • Commission agreement to perform brokerage operations, foreign exchange operations, and

operations with foreign exchange and financial derivatives. • Individual portfolio management agreement.

d) Customer securities and own securities in custody As of March 31, 2018, BCR Valores, S.A. - Puesto de Bolsa have securities in custody.

Third parties custody

Place of custody Type of custody Balance

Colones Local

Free custody ¢ 799.120.000 Local

Repurchase agreements 750.000.000

¢ 1.549.120.000

US Dólares Local

Free custody ¢ 14.308.048.387 Local

Repurchase agreements 1.587.640.949

¢ 15.895.689.336

Total custody of third parties

US dolars and others

¢ 17.444.809.336

As of December 31, 2017, BCR Valores, S.A. - Puesto de Bolsa have securities in custody.

Custody of own securities

Place of custody Type of custody Balance

Colones Local

Repurchase agreements ¢ 15.138.000.000

15.138.000.000

US Dólares

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Local

Repurchase agreements ¢ 3.964.940.000

3.964.940.000

Total custody of third parties in colones and in US dolars ¢ 19.102.940.000

Third parties custody

Place of custody Type of custody Balance Colones Local

Free custody ¢ 107.850.000

Local

Repurchase agreements 250.000.000 ¢ 357.850.000

US Dólares

Local

Free custody ¢ 1.172.135.365 ¢ 1.172.135.365

Total own custodies in colones, US dolars and other currencies ¢ 1.529.985.365 Total custody of third parties US dolars and others ¢ 20.632.925.365

As of March 31, 2017, BCR Valores, S.A. - Puesto de Bolsa does not have securities in custody.

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(23) Investment fund management agreements

The value of net assets in each investment fund managed by the BCR Sociedad Administradora de Fondos de Inversion. S.A. (Investment Fund Manager) is as follows:


2018 2017 2017

Investment Funds Type of fund

In Colones

BCR Short-term colones, undiversified Financial, open ¢ 59.580.095.177

52.353.602.900

69.499.239.182

BCR mixed colones, undiversified Open, medium-term 49.932.123.063

36.996.610.850

37.332.543.622

BCR Portfolio Fund Colones Open, medium-term 51.282.075.701

40.973.206.808

48.816.619.645

BCR Real Estate, Colones Closed, non-financial

Undiversified and mixed portfolio 12.150.414.467

11.622.489.438

8.731.310.507

¢ 172.944.708.408

141.945.909.996

164.379.712.956

In US Dollars

Investment Funds in US Dollars, equivalent in colones 409.464.754.131

398.017.811.926

372.517.853.947

(See note 21) ¢ 582.409.462.539

539.963.721.922

536.897.566.903

Investment Funds in US Dollars

BCR Liquidity Dollars, undiversified Open US$ 57.786.922 57.544.347 70.421.328

BCR Real Estate Dollars, undiversified Real estate, closed, long-term

272.780.127 258.871.391 232.304.431

BCR Real Estate Trade and Industry, undiversified

Real estate, closed, long-term

207.328.138 195.379.926 176.773.344

BCR Liquidity Fund Dollars, international, undiversified

Open, money market

69.214.121 71.176.687 85.475.575

BCR Portfolio Fund Dollars Open, medium-term 56.142.370 58.016.998 57.579.355

BCR Evolución Open, medium-term

760.072 0 0 BCR Real Estate Progress Fund, undiversified

Real estate, closed

64.055.024 61.700.902 49.339.361 US$ 728.066.774 702.690.251 671.893.394

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(24) Pension fund management agreements

The value of assets for each investment fund managed by BCR Pensión Operadora de Planes de Pensiones Complementarias, S.A. (Pension Fund Manager) is as follows:

March

December

March 2018 2017 2017

Own assets and securities held in custody

¢ 7.855.940.190 8.039.787.329 6.512.496.784

Assets and securities held in custody by

third parties 55.358.075 57.469.104 45.623.035

Mandatory pension fund 771.589.635.239 741.199.464.245 690.729.884.376

Voluntary pension fund 22.487.796.325 22.036.658.424 21.795.932.786 Labor capitalization fund 52.620.334.938 64.178.624.471 49.474.686.180 Supplementary pension funds

created by special laws 94.830.802.344 92.186.951.088 93.676.940.184

(See note 21) ¢ 949.439.867.111 927.698.954.661 862.235.563.345

The detail of assets for each pension fund in the separately issued reports is detailed as follows.

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Funds received by the Pension Fund Manager are invested in the following securities and other investments:

March

December

March

2018 2017 2017

Voluntary Pension Fun (in colones) ¢ 17.308.161.750 16.669.812.854 16.879.255.600

Securities issued by the Central Bank 1.172.235.084 2.003.571.483 2.157.987.577

Securities issued by the Government 6.781.201.350 6.147.620.772 4.652.388.252

Non-financial public entities 337.011.116 337.350.666 396.593.342 Securities issued by the State-owned commercial banks 1.217.061.097 682.307.293 1.485.623.419

Public banks created by law 1.062.412.885 1.114.367.758 406.009.137

Security issued by private banks 4.173.915.714 3.704.728.731 4.090.625.608 Securities issued by private financial entities 1.125.557.348 1.456.618.883 1.757.605.165 Securities issued by private non-financial entities 908.775.613 897.650.729 1.121.275.916 Securities issued by closed Investment Funds 456.477.303 167.719.029 158.612.837 Securities issued by open Investment Funds 73.514.240 157.877.510 652.534.347

Voluntary Pension Fund (US$) US$ 8.506.179 8.592.683 8.246.266

Securities issued by the Government 2.568.498 3.058.288 2.054.071

Non-financial public entities 175.916 186.297 184.959 Securities issued by the State-owned commercial banks 299.788 250.599 995.776

Public banks created by law 370.252 461.595 462.720

Security issued by private banks 3.027.762 2.848.124 3.017.024 Securities issued by private financial entities 1.051.774 1.129.157 831.867 Securities issued by private non-financial entities 454.387 164.096 215.918 Securities issued by closed Investment Funds 500.586 401.410 393.856 Securities issued by open Investment Funds 57.216 93.117 90.075

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2018 2017 2017 Mandatory Regime of Supplementary Pensions (in colones) ¢ 850.365.791.745 813.766.005.178 773.853.556.824



Non-financial public entities 40.728.960.965 41.002.347.505 42.784.616.878 Securities issued by the State-owned commercial banks 33.269.236.469 41.726.553.080 25.916.836.059

Public banks created by law 67.298.332.291 51.401.013.296 46.528.970.124

Security issued by private banks 158.714.668.007 143.676.095.409 113.092.304.326 Securities issued by private financial entities 40.649.657.136 41.272.236.013 51.966.119.246 Securities issued by private non-financial entities 18.116.253.715 18.374.653.696 22.817.082.381 Securities issued by closed Investment Funds 19.704.569.521 20.361.592.311 19.287.209.169 Securities issued by open Investment Funds 3.695.211.561 5.450.469.364 21.521.337.807

Repos and repurchase agreements 1.092.387.506 1.622.470.318 0 Equity securities issued by financial entities 24.437.405 24.612.082 24.091.092

Labor Capitalization Fund (in colones) ¢ 51.316.748.571 60.397.305.615 48.547.441.247



Non-financial public entities 1.178.216.009 1.180.250.307 1.217.090.690 Securities issued by the State-owned commercial banks 2.392.628.503 3.646.568.847 2.815.545.729

Public banks created by law 1.673.261.296 4.745.532.035 2.257.537.898

Security issued by private banks 12.797.061.680 14.112.319.136 12.605.934.989 Securities issued by private financial entities 5.311.473.188 3.894.681.394 4.837.532.376 Securities issued by private non-financial entities 2.600.580.536 2.605.033.947 3.023.449.707 Title deeds of closed Investmen Funds 774.473.026 788.222.992 718.257.828 Securities issued by open Investment Funds 2.656.897.251 955.153.375 2.557.480.190

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The agreements entered into by the Pension Fund Manager are found in chapter II of the Labor Protection Law, articles 14, 15, and thereafter. The applicable agreement is known as "Voluntary Supplemental Pension Plan Affiliation Agreement." Following is a general description of the nature of the agreements entered into: The Labor Protection Law seeks to establish mechanisms to expand coverage and strengthen the funding base for the Disability, Old Age, and Death System of the CCSS through supplemental pension funds. The aforementioned Law establishes a voluntary personal savings system, whereby contributions are recorded and controlled by the Centralized Collection System of the CCSS, or directly by the pension fund operators. A close relationship exists between the funds, plans, and agreements, the latter being a formal requirement for eligibility to access pension funds. The agreements define and stipulate the rights and obligations of both parties. The funds are separate equity funds administered by pension fund operators for a stated purpose, i.e. long-term savings to be used by the member as a supplemental pension fund. The funds are comprised of voluntary contributions from members and third-party contributors. The plans are a set of complementary conditions and benefits offered to the plan's beneficiaries.Financial income on investments in financial instruments

(25) Financial income on investments in financial instruments

Financial income on investments in financial instruments is as follows:

March

2018 2017

Productos por inversiones en instrumentos

financieros mantenidos para negociar 66

0

Income from available-for sale financial instruments ¢ 16.649.451.926 13.173.077.072

Income from investments in due and

restricted financial instruments 549.072.855 497.782.765

¢ 17.198.524.847 13.670.859.837

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(26) Financial income on loan portfolio

Financial income on loan portfolio is detailed as follows:

March

2018 2017

Checking account overdrafts ¢ 444.311.037 546.938.574

Loans with other funds 73.646.447.626 66.405.171.052

Income from credit cards 2.593.681.658 2.840.427.899

Factoring 57.612.527 38.353.275

Confirmed and trades letters of credit 784.053 1.382.819

Loan to state-owned Banks 9.490.146 0

For loans to state-owned banks 12.255.948 9.438.771

76.764.582.995 69.841.712.390

Income from financial leases 1.174.735.802 874.455.773

¢ 77.939.318.797 70.716.168.163

(27) Expenses from obligations with the public

Financial expenses from obligations with the public are as follows:

March 2018 2017

Expenses from demand deposits ¢ 8.830.069.477 8.709.482.124

Expenses from term deposits 29.719.778.013 18.562.226.942

Expenses from securities in

repurchase agreements 404.713.704 280.723.689

¢ 38.954.561.194 27.552.432.755

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(28) Expenses from allowances for impairment of assets Expenses from allowances for impairment of assets are as follows:

March 2018 2017

Expenses from specific allowance for loan portfolio (See note 6-f)

¢ 6.473.047.960 3.938.049.486

Expenses for allowance for impairment and other doubtful receivables 821.923.347 427.819.982

Expenses for allowance for impairment and doubtful contingent loans 5.574.533 22.527.611

Expenses for generic allowance and counter cycle for loan portfolio (See note 6-e) 1.586.448.255 3.255.375.573

Expenses for generic allowance and counter cycle for contingent loans 48.003.661 2.928.871

¢ 8.934.997.756 7.646.701.523

(29) Income from recovery of assets and decreases in allowances and provisions

Income from recovery of assets and decreases in allowances and provisions is detailed as follows:

March 2018 2016

Recovery of written-down loans ¢ 340.093.545 315.430.944

Decrease in specific allowance for loan portfolio (See note 6-f) 1.614.595.835 655.139.350

Decrease in allowance for uncollectibility of other receivables 113.715.029 92.499.469

Decrease in allowance for uncollectibility of contingent loans 47.966.517 1.171.007

Decrease in generic allowance and counter cycle for loan portfolio 617.519.338 376.881.701

Decrease in generic allowance and counter cycle for contingent loans 50.333.905 8.972.138

¢ 2.784.224.169 1.450.094.609

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(30) Service fee and commission income Service fee and commission income are detailed as follows:

March

2018 2017

Drafts and transfers ¢ 682.968.258 652.833.282

Foreign trade 69.913.309 69.059.287

Certified checks 19.722.289 2.128.884

Trust management 1.190.700.553 1.079.428.850

Custodial services 67.535.834 56.686.271

Ranking mandates 153.087 148.538

Collections 124.889.910 125.336.267

Credit Cards 10.809.289.585 10.135.758.298

Investment Fund management 1.889.731.112 1.839.600.400

Pension Fund management 1.397.745.258 1.277.839.459

Insurance undewriting 1.288.028.123 1.209.745.996

Brokerage fees (by third parties

in local market) 497.955.647 502.751.829 Brokerage fees (by third parties

in other markets) 7.661.661 18.338.666

Commission from arbitration and currency exchange 120.494.891 72.689.816

Commission from custodial services of authorized securities 38.297.175 38.931.120

Other commissions 6.475.849.199 6.300.022.626

¢ 24.680.935.891 23.381.299.589

(31) Income from interests in other companies

Income for interest in other companies is detailed as follows:

March 2018 2017

Local entities: Interest in Bolsa Nacional de Valores, S.A. ¢ 2.764.988 7.563.715

¢ 2.764.988 7.563.715

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(32) Administrative expenses Administrative expenses are detailed as follows:

March

2018 2017

Salaries and bonuses, permanent staff ¢ 14.348.645.356 13.842.357.905

Salaries and bonuses, contractors 530.199.861 511.475.754

Compensation for directors and auditors 75.719.226 57.900.312

Overtime 247.036.571 246.292.912

Per diem 137.766.473 134.192.330

Statutory Christmas Bonus 1308713900 1,320,496,891

Vacation 1.414.324.172 1.578.562.355

Fixed representation expenses 187.688.057 173.370.593

Other compensation 393.196.575 453.359.873

Contribution to severance payment 605.276.569 584.691.663

Social security charges 4.797.326.982 4.657.588.365

Refreshments 54.343.582 60.645.132

Uniforms 32.832.799 193.996

Training 94.035.262 62.289.897

Employee insurance 110.751.156 100.086.118

Assets for personal use 239.833 798.488

School bonus 1.811.083.426 1.732.589.696

Labor Capitalization Fund 421.988.837 406.962.808

Other personnel expenses 141.596.161 157.126.946

Outsourcing expenses 3.093.608.027 3.137.389.990

Trasnportation and communication expenses 1.449.795.041 1.451.168.191

Property insurance 29.182.008 37.276.870

Property maintenance and repair 1.022.810.130 1.076.545.041

Public utilities 732.607.815 707.444.408

Leasing od real properties 1.816.651.625 1.727.883.157

Leasing of furniture and equipment 216.998.887 300.029.635

Depreciation of property, plant and equipment 2128304887 2,240,629,036

Amortization of leasehold property 122.110.186 108.284.834

Impairment loss 0 4.098.266

Other infrastructure expenses 40.402.481 424.341.574

Overhead 4.140.767.648 4.420.815.028

¢ 41.506.003.533 41.716.888.064

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(33) Legal profit sharing Legal profit sharing (statutory allocations) of the period is detailed as follows:

March

2018 2017

Profit sharing of CONAPE ¢ 598.768.873 651.403.534 Profit sharing Instituto Nacional de

Fomento Cooperativo 843.760.019 646.445.612 Profit sharing of National

Emergency Commission 434.961.946 488.400.257 Profit sharing Public Pension Fund

Operators 164.757.718 167.470.683 Profit sharing of Invalidity, Old Age and Death Regime

1.796.306.620 1.954.210.601

¢ 3.838.555.176 3.907.930.687

As of March 31, 2018, there are no decreases in the participation on the period´s profits, corresponding to the National Loan Commission for Education (¢493.067.884 as of March, 2017). As of March 31, 2018 there are no decreases in the particiation on the period´s profits corresponding to the Instituto Nacional de Fomento Cooperativo (¢1.402.276.413 as of March, 2017) As of March 2018 there are no decreases on the period´s profits corresponding to the Comisión Nacional de Emergencias (¢295.840.731 as of March, 2017).

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(34) Components of other comprehensive income The components of other comprehensive income are detailed as follows:

March

2018 2017

Amount before taxes

Tax benefit (expense)

Net taxes Amount

before taxes Tax benefit (expense)

Net taxes

Surplus from revaluation of buildings

0 0 0 4.098.265 0 4.098.265

Adjustment for valuation of available-for-sale investments

¢ (5.061.101.599) 102.905.658 (4.958.195.941) (1.009.368.642) 368.082.113 (641.286.529)

Exchange differences from translation effect of financial statements of foreign entities

(764.675.222) 0 (764.675.222) 1.404.611.232 0 1.404.611.232

¢ (5.825.776.821) 102.905.658 (5.722.871.163) 399.340.855 368.082.113 767.422.968

(35) Operating leases

Lessee

Non-cancellable operating leases are payable as follows:


2018 2017 2017

Less than one year ¢ 1.100.592.098 790.838.626 798.407.876

From one to five years 2.470.956.750 2.928.787.060 1.342.170.834

More then five years 1.235.714.841 1.248.789.573 1.597.815.144

¢ 4.807.263.689 4.968.415.259 3.738.393.854

These leases correspond to furniture and equipment.

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(36) Fair value of financial instruments The fair values of the Bank's main financial assets and liabilities are as follows:

March

December

March

2018

2017 2017

Carrying amount Fair value

Carrying amount Fair value Carrying amount Fair value

Cash and due from banks ¢ 762.390.577.125

762.390.577.125

787.949.657.812

787.949.657.812 720.393.732.344

720.393.732.344 Investments 1.244.147.892.065

1.234.514.584.334

1.287.246.141.661

1.276.065.354.791 1.212.782.760.927

1.203.288.276.360

Loan portfolio 3.701.356.388.766

3.464.331.370.992

3.737.307.838.678

3.519.089.695.255 3.571.664.002.641

3.302.172.964.170

5.707.894.857.956

5.461.236.532.451

5.812.503.638.151

5.583.104.707.858 5.504.840.495.912

5.225.854.972.874

Demand deposits 2.024.671.220.883

2.024.671.220.883

2.082.159.954.460

2.082.159.954.460 1.958.579.108.100

1.958.579.108.100 Term deposits 1.872.482.784.328

1.868.319.802.412

1.888.215.595.606

1.886.319.830.774 1.737.806.033.642

1.729.766.630.153

Financial obligations 1.211.835.201.987

1.253.237.297.003

1.267.131.054.215

1.277.322.875.300 1.261.815.749.167

1.303.058.431.809

¢ 5.108.989.207.198

5.146.228.320.298

5.237.506.604.281

5.245.802.660.534 4.958.200.890.909

4.991.404.170.062

As of March 31, 2018 financial obligations include ¢22.571.688.338 for subordinated credits (¢22.725.537.344 and ¢22.241.851.689 in December and March 2017, respectively). Where practicable, the following assumptions were used by management to estimate the fair value of each class of financial instruments both on and off the consolidated balance sheet: a) Cash and cash equivalents, interest receivable, accounts receivable, demand deposits and

customer savings deposits, interest payable, and other liabilities.

The carrying amounts approximate fair value because of the short maturity of these instruments.

b) Investments in financial instruments

The fair value of available-for-sale financial instruments is based on quoted market prices or prices quoted by brokers.

c) Securities sold under repurchase agreements

The carrying amount of funds owed under repurchase agreements maturing in one year or less approximates their fair value because of the short maturity of these instruments.

d) Loan portfolio Management determined the fair value of the loan portfolio by the discounted cash flow method.

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e) Term deposits and loans payable Management determined the fair value of term deposits and loans payable by the discounted cash flow method.

Fair value estimates are made at a specific date, based on relevant market information and information concerning the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale of a particular financial instrument at a given date. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and. Therefore, cannot be determined with precision. Estimates could vary significantly if changes are made to those assumptions.

(37) Segments

The Bank has defined its business segments based on the administrative and reporting structure, and on the structure of banking, stock brokerage, investment and pension fund management, and insurance brokerage services it provides.

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As of March 31, 2018, assets and liabilities of each segment are as follows:

Bank Pension Fund

Operator Investment Fund

Manager Brokerage House Foreing Bank Insurance

Broker Total Eliminations Consolidated ASSETS Cash and due from Banks ¢ 681.955.491.901 103.078.198 646.649.203 1.101.713.997 84.880.441.586 453.668.281 769.141.043.166 (6.750.466.041) 762.390.577.125 Investment in financial instruments 1.131.983.347.531 5.774.280.683 8.449.808.056 51.317.168.440 60.298.656.895 6.861.880.097 1.264.685.141.702 (20.537.249.636) 1.244.147.892.066 Loan portfolio 2.796.341.241.659 0 0 0 834.598.914.540 0 3.630.940.156.199 (1) 3.630.940.156.198 Accounts and fees receivable 15.090.204.989 497.953.621 743.084.735 547.351.497 3.390.349.664 663.877.310 20.932.821.816 (338.926.100) 20.593.895.716 Foreclosed assets 16.617.501.335 0 0 0 1.692.155.869 0 18.309.657.204 (1) 18.309.657.203 Interest in other companies (net) 102.531.421.331 0 0 65.417.188 0 0 102.596.838.519 (102.521.421.331) 75.417.188 Property, furniture and equipment, net 93.695.939.951 40.086.201 37.257.534 3.362.788 7.078.105.446 15.371.047 100.870.122.967 1 100.870.122.968 Investment properties 6.441.924.521 0 0 0 0 0 6.441.924.521 0 6.441.924.521 Other assets 30.306.125.807 638.589.023 116.123.976 249.225.525 12.866.654.688 408.698.122 44.585.417.141 (1) 44.585.417.140 TOTAL ASSETS ¢ 4.874.963.199.025 7.053.987.726 9.992.923.504 53.284.239.435 1.004.805.278.688 8.403.494.857 5.958.503.123.235 (130.148.063.110) 5.828.355.060.125

LIABILITIES AND EQUITY LIABILITIES Obligations with the public ¢ 3.492.414.547.823 0 0 33.862.220.722 378.162.170.341 825.001 3.904.439.763.887 (7.285.758.676) 3.897.154.005.211

Obligations with the Central Bank of Costa Rica 0 0 0 0 0 0 0 0 0 Obligations with entities 712.191.840.621 0 0 1.014.851.338 496.045.014.977 0 1.209.251.706.936 (20.001.957.002) 1.189.249.749.934 Accounts payable and provisions 78.794.123.823 888.971.303 649.686.993 1.051.526.627 3.687.517.325 1.049.361.459 86.121.187.530 (338.926.102) 85.782.261.428 Other liabilities 47.635.113.888 0 0 0 4.508.890.714 120.640.337 52.264.644.939 (1) 52.264.644.938 Subordinated obligations 22.571.688.338 0 0 0 0 0 22.571.688.338 0 22.571.688.338

TOTAL LIEABILITIES ¢ 4.353.607.314.493 888.971.303 649.686.993 35.928.598.687 882.403.593.357 1.170.826.797 5.274.648.991.630 (27.626.641.781) 5.247.022.349.849

EQUITY Capital 162.502.557.907 3.396.194.416 5.339.200.000 7.626.000.000 38.609.421.071 1.250.000.000 218.723.373.394 (56.220.815.487) 162.502.557.907 Unfunded capital contributions 0 624.592.111 0 0 0 0 624.592.111 (624.592.111) 0 Equity adjustments 35.819.530.861 (20.413.992) (179.281.495) (532.285.726) 42.548.786.668 (94.312.298) 77.542.024.018 (41.722.493.158) 35.819.530.860 Capital reserves 253.327.207.494 255.890.000 835.038.930 1.041.850.801 22.099.421.002 250.000.000 277.809.408.227 (24.482.200.733) 253.327.207.494 Prior periods retained earnings 34.427.953.825 1.743.996.172 2.768.180.025 8.768.165.210 17.449.755.557 5.258.054.984 70.416.105.773 (35.988.151.948) 34.427.953.825 Profit for the period 10.261.735.996 164.757.716 580.099.051 451.910.463 1.694.301.033 568.925.374 13.721.729.633 (3.459.993.637) 10.261.735.996 Development Financing Fund 25.016.898.449 0 0 0 0 0 25.016.898.449 0 25.016.898.449 Minority interest 0 0 0 0 0 0 0 59.976.825.745 59.976.825.745

TOTAL EQUITY 521.355.884.532 6.165.016.423 9.343.236.511 17.355.640.748 122.401.685.331 7.232.668.060 683.854.131.605 (102.521.421.329) 581.332.710.276 TOTAL LIABILITIES AND EQUITY ¢ 4.874.963.199.025 7.053.987.726 9.992.923.504 53.284.239.435 1.004.805.278.688 8.403.494.857 5.958.503.123.235 (130.148.063.110) 5.828.355.060.125

DEBIT CONTINGENT ACCOUNTS ¢ 343.211.005.051 0 0 0 89.608.883.879 0 432.819.888.930 0 432.819.888.930 TRUST ASSETS ¢ 729.074.194.620 0 0 1.623.845.932 115.688.029.144 0 846.386.069.696 0 846.386.069.696 TRUST LIABILITIES ¢ 351.070.340.589 0 0 20.304.724 0 0 351.090.645.313 0 351.090.645.313 TRUST EQUITY ¢ 378.003.854.031 0 0 1.603.541.208 115.688.029.145 0 495.295.424.384 0 495.295.424.384 OTHER DEBIT MEMORANDA ACCOUNTS ¢ 6.912.700.581.524 949.439.867.111 582.409.462.539 148.089.671.371 1.802.129.624.309 0 10.394.769.206.854 0 10.394.769.206.854

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As of December 31, 2017, assets and liabilities of each segment are as follows:

Banco Operadora de

pensiones

Administradora Fondos de Inversión Puesto de Bolsa Banco del Exterior

Corredora de Seguros Total Eliminaciones Consolidado

ASSETS Cash and due from banks ¢ 724.955.086.214 58.652.491 432.032.918 767.407.841 67.059.655.547 765.193.559 794.038.028.570 (6.088.370.759) 787.949.657.811 Investment in financial instruments 1.145.833.369.144 6.147.276.117 8.433.393.022 47.728.636.162 78.058.970.625 6.554.326.657 1.292.755.971.727 (5.509.830.066) 1.287.246.141.661 Loan portfolio 2.825.748.115.649 0 0 0 848.340.304.708 0 3.674.088.420.357 (1) 3.674.088.420.356 Accounts and fees receivable 5.814.208.053 517.263.550 717.161.227 531.183.243 3.368.372.862 607.322.130 11.555.511.065 (348.510.960) 11.207.000.105 Foreclosed assets 15.946.635.422 0 0 0 1.704.251.293 0 17.650.886.715 (1) 17.650.886.714 Interest in other companies (net) 102.782.086.376 0 0 65.417.188 0 0 102.847.503.564 (102.772.086.376) 75.417.188 Property, furniture and equipment, net 94.072.352.459 41.329.967 39.286.183 3.523.033 7.211.633.385 17.345.444 101.385.470.471 (1) 101.385.470.470 Other assets 51.376.429.848 678.438.686 749.859.077 584.621.523 12.921.282.359 489.294.506 66.799.925.999 1 66.799.926.000

TOTAL ASSETS ¢ 4.966.528.283.165 7.442.960.811 10.371.732.427 49.680.788.990 1.018.664.470.779 8.433.482.296 6.061.121.718.468 (114.718.798.163) 5.946.402.920.305

LIABILITIES AND EQUITY LIABILITIES Obligations with the public ¢ 3.538.584.625.263 0 0 31.016.428.920 406.959.953.048 825.000 3.976.561.832.231 (6.185.457.167) 3.970.376.375.064 Obligations with the Central Bank of Costa Rica 473.353.490 0 0 0 0 0 473.353.490 0 473.353.490 Obligations with entities 770.307.553.626 0 0 117.037.808 478.908.635.638 0 1.249.333.227.072 (5.412.743.658) 1.243.920.483.414 Accounts payable and provisions 88.139.260.412 1.432.070.929 1.588.597.636 1.525.759.453 3.966.396.265 1.544.957.648 98.197.042.343 (348.510.958) 97.848.531.385 Other liabilities 32.066.390.867 0 0 0 2.845.658.962 182.952.064 35.095.001.893 (2) 35.095.001.891 Subordinated obligations 22.725.537.344 0 0 0 0 0 22.725.537.344 0 22.725.537.344

TOTAL LIEABILITIES ¢ 4.452.296.721.002 1.432.070.929 1.588.597.636 32.659.226.181 892.680.643.913 1.728.734.712 5.382.385.994.373 (11.946.711.785) 5.370.439.282.588

EQUITY Capital 152.513.191.949 3.347.986.868 5.339.200.000 7.626.000.000 38.609.421.071 1.250.000.000 208.685.799.888 (56.172.607.939) 152.513.191.949 Unfunded capital contributions 0 672.799.660 0 0 0 0 672.799.660 (672.799.660) 0 Equity adjustments 39.232.443.883 (9.782.818) (159.284.165) (414.453.202) 43.481.819.432 (53.307.400) 82.077.435.730 (42.844.991.848) 39.232.443.882 Capital reserves 233.662.151.966 255.890.000 835.038.930 1.041.850.801 26.350.807.966 250.000.000 262.395.739.663 (28.733.587.697) 233.662.151.966 Prior periods retained earnings 29.368.399.683 1.031.691.179 211.167.132 5.987.858.085 12.209.842.677 2.800.511.062 51.609.469.818 (22.241.070.135) 29.368.399.683 Profit for the period 37.354.453.465 712.304.993 2.557.012.894 2.780.307.125 5.331.935.720 2.457.543.922 51.193.558.119 (13.839.104.654) 37.354.453.465 Development Financing Fund 22.100.921.217 0 0 0 0 0 22.100.921.217 0 22.100.921.217 Minority interest 0 0 0 0 0 0 0 61.732.075.555 61.732.075.555 TOTAL EQUITY 514.231.562.163 6.010.889.882 8.783.134.791 17.021.562.809 125.983.826.866 6.704.747.584 678.735.724.095 (102.772.086.378) 575.963.637.717

TOTAL LIABILITIES AND EQUITY ¢ 4.966.528.283.165 7.442.960.811 10.371.732.427 49.680.788.990 1.018.664.470.779 8.433.482.296 6.061.121.718.468 (114.718.798.163) 5.946.402.920.305

DEBIT CONTINGENT ACCOUNTS ¢ 329.375.968.291 0 0 0 93.982.224.710 0 423.358.193.001 0 423.358.193.001 TRUST ASSETS ¢ 725.409.705.620 0 0 1.736.044.060 112.466.178.449 0 839.611.928.129 0 839.611.928.129 TRUST LIABILITIES ¢ 339.109.008.289 0 0 40.123.538 0 0 339.149.131.827 0 339.149.131.827 TRUST EQUITY ¢ 386.300.697.331 0 0 1.695.920.522 112.466.178.448 0 500.462.796.301 0 500.462.796.301 OTHER DEBIT MEMORANDA ACCOUNTS ¢ 9.532.179.834.605 927.698.954.661 539.963.721.922 151.418.274.836 1.764.944.837.525 0 12.916.205.623.549 0 12.916.205.623.549

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As of March 31, 2017, assets and liabilities of each segment are as follows:

Bank Pension Fund

Operator Investment

Fund Manager Brokerage House Foreign Bank

Insurance Broker

Total Eliminations Consolidated

ACTIVOS Cash and due from banks ¢ 629.704.749.627 57.930.665 333.730.454 552.113.739 93.380.460.446 391.787.400 724.420.772.331 (4.027.039.987) 720.393.732.344

Investment in financial instruments 1.103.592.264.129 5.291.947.173 8.736.219.577 41.970.778.282 63.913.367.530 6.056.395.566 1.229.560.972.257 (16.778.211.330) 1.212.782.760.927 Loan portfolio 2.718.354.768.928 0 0 0 794.286.676.618 0 3.512.641.445.546 2 3.512.641.445.548 Accounts and fees receivable 3.113.528.274 464.567.269 714.377.618 243.179.984 3.612.726.313 500.044.677 8.648.424.135 (369.064.985) 8.279.359.150 Foreclosed assets 15.766.370.083 0 0 0 540.176.159 0 16.306.546.242 0 16.306.546.242 Interest in other companies (net) 97.805.239.899 0 0 29.057.201 0 0 97.834.297.100 (97.795.239.899) 39.057.201 Property, furniture and equipment, net 97.060.517.849 45.061.264 10.611.466 4.003.766 7.432.158.545 23.651.770 104.576.004.660 0 104.576.004.660 Other assets 36.916.859.675 518.695.068 38.963.055 369.304.480 14.436.475.102 361.718.522 52.642.015.902 0 52.642.015.902 TOTAL ASSETS ¢ 4.702.314.298.464 6.378.201.439 9.833.902.170 43.168.437.452 977.602.040.713 7.333.597.935 5.746.630.478.173 (118.969.556.199) 5.627.660.921.974

LIABILITIES AND EQUITY LIABILITIES Obligations with the public ¢ 3.254.369.968.571 0 0 23.284.870.938 419.815.880.209 825.000 3.697.471.544.718 (1.085.577.977) 3.696.385.966.741 Obligations with the Central Banl of Costa Rica 71.905.492.361 0 0 0 0 0 71.905.492.361 0 71.905.492.361 Obligations with entities 752.305.131.270 0 0 2.490.125.151 432.581.187.416 0 1.187.376.443.837 (19.719.673.341) 1.167.656.770.496 Accounts payable and provisions 85.534.551.155 894.282.447 677.425.396 1.435.536.178 4.393.798.980 804.677.613 93.740.271.769 (369.064.986) 93.371.206.783 Other liabilities 22.469.553.320 0 0 0 1.650.775.960 102.959.415 24.223.288.695 1 24.223.288.696 Subordinated obligations 22.241.851.689 0 0 0 0 0 22.241.851.689 0 22.241.851.689 TOTAL LIEABILITIES ¢ 4.208.826.548.366 894.282.447 677.425.396 27.210.532.267 858.441.642.565 908.462.028 5.096.958.893.069 (21.174.316.303) 5.075.784.576.766

EQUITY Capital 152.513.191.949 3.418.643.609 5.339.200.000 7.626.000.000 38.609.421.071 1.250.000.000 208.756.456.629 (56.243.264.680) 152.513.191.949 Unfunded capital contributions 0 602.142.919 0 0 0 0 602.142.919 (602.142.919) 0 Equity adjustments 44.638.208.483 8.080.605 (93.191.891) 430.020.056 40.602.110.071 13.228.595 85.598.455.919 (40.960.247.435) 44.638.208.484 Capital reserves 233.662.151.966 255.890.000 707.188.285 902.835.445 25.369.813.060 250.000.000 261.147.878.756 (27.485.726.790) 233.662.151.966 Prior periods retained earnings 29.368.399.683 1.031.691.178 2.589.017.776 6.126.873.443 13.508.696.928 4.300.511.062 56.925.190.070 (27.556.790.387) 29.368.399.683 Profit for the period 11.204.876.800 167.470.681 614.262.604 872.176.241 1.070.357.018 611.396.250 14.540.539.594 (3.335.662.794) 11.204.876.800 Development Financing Fund 22.100.921.217 0 0 0 0 0 22.100.921.217 0 22.100.921.217 Minority interest 0 0 0 0 0 0 0 58.388.595.109 58.388.595.109 TOTAL EQUITY 493.487.750.098 5.483.918.992 9.156.476.774 15.957.905.185 119.160.398.148 6.425.135.907 649.671.585.104 (97.795.239.896) 551.876.345.208 TOTAL LIABILITIES AND EQUITY ¢ 4.702.314.298.464 6.378.201.439 9.833.902.170 43.168.437.452 977.602.040.713 7.333.597.935 5.746.630.478.173 (118.969.556.199) 5.627.660.921.974

DEBIT CONTINGENT ACCOUNTS ¢ 308.666.355.540 0 0 0 96.498.326.381 0 405.164.681.921 0 405.164.681.921 TRUST ASSETS ¢ 719.028.966.011 0 0 1.657.129.839 107.551.950.719 0 828.238.046.569 0 828.238.046.569 TRUST LIABILITIES ¢ 342.348.321.328 0 0 18.924.259 0 0 342.367.245.587 0 342.367.245.587 TRUST EQUITY ¢ 376.680.644.683 0 0 1.638.205.580 107.551.950.719 0 485.870.800.982 0 485.870.800.982 OTHER DEBIT MEMORANDA ACCOUNTS ¢ 9.044.765.847.390 862.235.563.345 536.897.567.846 574.779.690.696

1.979.491.506.873 0 12.998.170.176.150 0 12.998.170.176.150

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As of Mach 31, 2018, results of each segment are as follows:

Bank

Pension Fund

Operator

Investment Fund

Manager Brokerage

House Foreing Bank Insurance

Broker Total Eliminations Consolidated

Financial Income ¢ 81.282.975.360 104.446.299 108.778.846 817.423.420 14.286.275.280 102.861.630 96.702.760.835 (89.737.444) 96.613.023.391 Financial Expenses 42.295.715.718 10.285.127 31.693.924 424.735.576 7.697.982.325 27.210.350 50.487.623.020 (89.737.444) 50.397.885.576 Expenses from allowance for assets impairment 8.098.839.643 424.534 0 0 787.657.350 48.076.230 8.934.997.757 0 8.934.997.757 Income from recovery of assets and decrease in allowance 2.742.602.104 0 0 0 41.622.065 0 2.784.224.169 0 2.784.224.169 GROSS OPERATING INCOME 33.631.022.103 93.736.638 77.084.922 392.687.844 5.842.257.670 27.575.050 40.064.364.227 0 40.064.364.227 Other operating income 32.385.536.061 1.479.729.279 1.896.768.531 911.939.150 499.912.617 1.401.354.121 38.575.239.759 (3.697.692.805) 34.877.546.954 Other operating expenses 15.735.925.071 416.658.026 528.761.430 155.785.592 1.019.349.573 125.383.890 17.981.863.582 (1.067.906.893) 16.913.956.689 GROSS OPERATING INCOME 50.280.633.093 1.156.807.891 1.445.092.023 1.148.841.402 5.322.820.714 1.303.545.281 60.657.740.404 (2.629.785.912) 58.027.954.492 Personnel expenses 22.543.962.275 507.744.582 595.549.102 587.509.942 2.013.759.663 464.239.232 26.712.764.796 0 26.712.764.796 Other administrative expenses 13.131.507.436 204.114.243 31.391.174 96.931.759 1.285.841.622 43.452.502 14.793.238.736 0 14.793.238.736 Administrative Expesnes 35.675.469.711 711.858.825 626.940.276 684.441.701 3.299.601.285 507.691.734 41.506.003.532 0 41.506.003.532

NET OPERATING INCOME BEFORE TAXES AND PROFIT SHARING 14.605.163.382 444.949.066 818.151.747 464.399.701 2.023.219.429 795.853.547 19.151.736.872 (2.629.785.912) 16.521.950.960 Income tax 783.440.462 102.085.160 213.508.144 0 201.509.193 217.475.436 1.518.018.395 0 1.518.018.395 Deferred income tax 0 0 0 0 127.409.203 0 127.409.203 0 127.409.203 Decrease in income tax 38.109.913 0 0 1.442.753 0 14.422.869 53.975.535 0 53.975.535 Profit sharing 3.598.096.837 178.106.190 24.544.552 13.931.991 0 23.875.606 3.838.555.176 0 3.838.555.176 NET PROFIT FOR THE YEAR 10.261.735.996 164.757.716 580.099.051 451.910.463 1.694.301.033 568.925.374 13.721.729.633 (2.629.785.912) 11.091.943.721 Results for the period atributable to minority interests 0 0 0 0 0 0 0 (830.207.725) 830.207.725 Results for the period atributable to the controlling company 10.261.735.996 164.757.716 580.099.051 451.910.463 1.694.301.033 568.925.374 13.721.729.633 (3.459.993.637) 10.261.735.996 NET INCOME FOR THE PERIODS ¢ 10.261.735.996 164.757.716 580.099.051 451.910.463 1.694.301.033 568.925.374 13.721.729.633 (3.459.993.637) 10.261.735.996

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As of Mach 31, 2017, results of each segment are as follows:

Bank

Pension Fund Operator

Investment Fund Manager

Brokerage House Foreign Bank

Insurance Broker Total Eliminations Consolidated

Financial Income 72.718.447.527 148.608.593 177.325.182 1.167.775.904 12.463.314.341 117.636.264 86.793.107.811 (167.531.417) 86.625.576.394

Financial Expenses 30.817.772.472 65.475 0 293.962.254 6.952.553.642 0 38.064.353.843 (167.531.417) 37.896.822.426

Expenses from allowance for assets impairment 6,975,729,285 327.801 0 0 664.000.739 6.643.698 7.646.701.523 1 7.646.701.524

Income from recovery of assets and decrease in allowance 1,402,128,135 0 0 0 40.740.319 7.226.156 1.450.094.610 0 1.450.094.610

FINANCIAL INCOME 36,327,073,905 148.215.317 177.325.182 873.813.650 4.887.500.279 118.218.722 42.532.147.055 (1) 42.532.147.054

Other operating income 33.979.666.858 1.374.563.784 1.845.868.893 916.201.458 933.935.299 1.326.149.804 40.376.386.096 (3.981.843.163) 36.394.542.933

Other operating expenses 18,453,791,590 422.770.306 543.346.813 164.384.487 775.096.916 122.895.246 20.482.285.358 (1.170.655.186) 19.311.630.172

GROSS OPERATING INCOME 51,852,949,173 1.100.008.795 1.479.847.262 1.625.630.621 5.046.338.662 1.321.473.280 62.426.247.793 (2.811.187.978) 59.615.059.815

Personnel expenses 21.966.785.215 494.361.540 585.752.149 504.040.900 2.102.359.138 427.683.089 26.080.982.031 2 26.080.982.033

Other administrative expenses 14,046,899,750 152.888.490 21.072.802 71.192.521 1.325.821.895 18.030.573 15.635.906.031 2 15.635.906.033

Administrative Expenses 36,013,684,965 647.250.030 606.824.951 575.233.421 3.428.181.033 445.713.662 41.716.888.062 4 41.716.888.066

NET OPERATING INCOME BEFORE TAXES AND PROFIT SHARING 15.839.264.208 452.758.765 873.022.311 1.050.397.200 1.618.157.629 875.759.618 20.709.359.731 (2.811.187.982) 17.898.171.750

Income tax 3.567.158.304 104.234.638 232.569.038 151.543.480 275.716.347 237.915.842 4.569.137.649 (2) 4.569.137.647

Deferred income tax - 0 0 0 272.084.264 2.480.231 274.564.495 (1) 274.564.494

Decrease in income tax 384,487,735 0 0 4.834.438 0 2.305.494 391.627.667 1 391.627.668

Profit sharing 3,642,901,867 181.053.446 26.190.669 31.511.916 0 26.272.789 3.907.930.687 1 3.907.930.688

Decrease in Profit Sharing 2.191.185.028 0 0 0 0 0 2.191.185.028 0 2.191.185.028

NET PROFIT FOR THE YEAR 11.204.876.800 167.470.681 614.262.604 872.176.242 1.070.357.018 611.396.250 14.540.539.595 (2.811.187.979) 11.729.351.616

Results for the period atributable to minority interests 0 0 0 0 0 0 0 (524.474.817) 524.474.817 Results for the period atributable to the controlling company 11.204.876.800 167.470.681 614.262.604 872.176.242 1.070.357.018 611.396.250 14.540.539.595 (3.335.662.796) 11.204.876.799 NET INCOME FOR THE PERIODS ¢ 11.204.876.800 167.470.681 614.262.604 872.176.242 1.070.357.018 611.396.250 14.540.539.595 (3.335.662.796) 11.204.876.799

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(38) Risk management

Comprehensive risk management Sophistication and uncertainty of financial markets involve managing risks that may impair the value of entities and of third party resources it manages. Given this reality, the Bank implemented a System of Comprehensive Risk management, (Hereinafter Sigir or Sistema), enabling it to achieve a proper balance between the expected benefits of the business strategy and the acceptance of a certain level of risk, through an effective risk-based management. Corporate governance of the risk management area Boards of Directors, committees and senior managers of member institutions of the Financial Conglomerate strengthen and ensure the above mentioned system, aware that it contributes to the improvement of institutional processes, and hence to the achievement of objectives and goals. Corporate risk management is led by the Risk Management and the Regulatory Control Area, depending on the General Board of Directors which has various administrative units responsible for the specific and comprehensive management of relevant risk to which the entity is exposed while in the subsidiaries there are risk managing areas responsible for this work. Objective of the Comprehensive Risk Management System The System aims to generate information that will support the decision making to locate the entity at a risk level consistent with its profile and risk appetite as well as it business flows, complexity, operations volume and economic environment, and thus lead to the achievement of institutional objective and goals. General Risk Principles and Policies The Conglomerate has policies, strategies and other corporate regulations for an effective comprehensive risk management, thus providing administrative, legal and technical certainty to the System, supporting the decision making: A robust regulatory framework to provide legal, technical and administrative

certainty for the functioning, evaluation and improvement of the System. Strategies that seek to strengthen the system's maturity level. The risk management culture is promoted at all levels of the organization, thereby

raising awareness of the importance of effective risk-based management.

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Methodologies and measurement models are available for the valuation of the different types of risk, which are periodically subjected to retrospective and stress tests, to adjust the variables and factors that influence the exposure to risks.

Updated tools and systems are available to meet the needs of managing each type of risk.

Risk and contingency management plans are in place to deal with situations that prevent the fulfillment of the stated objectives, as well as for materialized events whose consequences may generate negative impacts on the entities.

Classification of significant risks

The relevant risks to the Bank are classified as follows: Financial Credit • Loan portfolio • Investment portfolio (counterparty) Market • Liquidity • Inflation • Exchange rates • Interest rates • Prices of assets and liabilities Operational • Operating • Legal • Technological Other • Strategic • Reputational • Trust management • Securitization management • Conglomerate (intragroup) • Money laundering and terrorism financing

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Risk profile and limit structure

The members of the Conglomerate define a risk profile for each entity, which is reviewed and updated periodically by the risk taker and risk managing areas, and is approved by its board of directors. According to this profile, parameters of acceptability, appetite, tolerance limits and risk indicators defining the exposure levels to assume, are established, thereby generating alerts to deviations from normal behavior, enabling timely decision making.

Process of comprehensive risk management The process in risk assessments includes identification, analysis, evaluation, Management, review, documentation and risk communication. Types of risk assessments The process in risk assessments includes qualitative and quantitative assessments. The first correspond to specific analysis of the objectives of activities and substantial processes of the BCR Financial Conglomerate. The second refers to global analysis with quantitative risk measurements using mathematical and statistical methods and models.

In addition, during the period under study, the management generated reports about risk on new services and products or modification to existing ones, which are issued prior to its release to the market or the contracting of services.

Risk control framework Risk Control arises as result of the operation of the Internal Control System established in each of the Conglomerate Financiero BCR members, incorporating flow of processes and internal control activities to minimize risk exposure. The established risk assessments generate various alerts, recommendations and risk management plans, contributing to its overall and specific mitigation. In addition, there are contingency plans for unexpected events that may affect compliance with the risk tolerance limits. In addition, there is a continuous monitoring of tolerance limits and risk indicators, in order to reflect the degree of exposure in which each of its relevant risk types is found. Contingency plans are available to deal with unexpected events that affect compliance.

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Mitigation coverage In accordance with the regulations, estimates and provisions are maintained. Implemented risk assessment models seek to establish additional capital requirements to cover non-expected losses. Likewise, BCR net worth equity indicator is evaluated to analyze its ability to respond to different types of risk, which, during the period under study, was higher than the 10% limit established by the General Superintendence of Financial Institutions. Evaluation of the effectiveness and maturity of the System Risk managing areas apply critical judgment on the effectiveness and maturity of the System using self-assessment tools for continuous improvement. Annually, a Model of Corporate Maturity is applied to evaluate the progress in management by type of risk. The results of this assessment are used to define strategies and work plans. Information generated by the Comprehensive Risk Management System During the period under analysis, the system generated timely and periodic reports for the Boards of Directors, Committees and other risk-taking areas of the BCR Financial Conglomerate, as a result of the Comprehensive Risk Management, or by the occurrence of significant events that should be known of for suitable decision making based on risk exposure and risk based business management. (a) Credit risk management

Definition Credit risk is the possibility of economic losses due to non-compliance with the conditions agreed upon by the debtor. Management of this risk contributes to the strength of BCR's equity in the long term by providing both tools and information to improve decision making, minimize losses and maintain risk exposure of the loan portfolio within established parameters. The General Board of Directors of the BCR has defined management strategies to control credit risk from portfolios to individual debtors, using tools and methodologies framed within the existing regulations developed internally.

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Management methodology In general, models and systems measuring credit risk that accurately reflect the value of the positions and their sensitivity to various risk factors are applied in corporative information from reliable sources. The statistical support is complemented with expert criteria to analyze the borrower's ability to pay, as well a stress analysis on exposures to macroeconomic variables that are related to microeconomic and Bank's internal variables. For the quantitative analysis of the consolidated loan portfolio, by activity and currency, there is a model to quantify the average probability of payment, expected loss and Value at Risk (VaR), from which the margin of expected loss are derived. Moreover, the risk inherent to the activities and products of the Bank is identified and analyzed, as well as its feedback to the organization through the Executive Committee Finally, there are limits to exposure to credit risk, to control exposure levels. Exposure and risk management

As of march 2018, the percentage of arrears greater than 90 days was 2.43% (2.90% and 1.87% as of December and March 2017, respectively). The latter indicator is 0,57 percentage points below the regulatory limit to be in the normal range, with retail banking activities showing the highest delinquency. The dollar portfolio accounts for 37.12% (37.29% and 42.00% as of December and March 2017, respectively) of the total portfolio. It is important to mention that the loan portfolio has been managed strategically in order to attract customers with an acceptable risk profile. In addition, regular monitoring of the loans in foreign currency is given, and in particular, the portfolio of clients not generating income in foreign currency. While there is relative concentration in activities such as trade, housing, services and consumption, as shown in note 6ª of the financial statements (Loan Portfolio by Sector), limits by activity as well as by economic interest groups for the housing portfolio are defined, to achieve a loan structure in the medium and long term that is consistent with the risk appetite established by the Senior Management.

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In addition, appropriate and timely communication mechanisms on exposure of the Bank to credit risk are implemented at all levels of the organizational structure, thus allowing a prospective view of the impact on the credit estimates and equity. The reports consider both the exposure resulting from position taking and possible deviations arising regarding the limits and defined tolerance levels. Also, the commercial area is kept informed on the inherent risks of the economic activities associated with credit underwriting, through specific studies and analysis of the credit underwriting goals previously approved by the General Board of Directors, as well as new credit instruments the Bank is planning to offer.

The Bank's financial instruments exposed to credit risk are detailed as follows:


Banco de Costa Rica Loan portfolio, gross ¢ 2.829.120.795.343 2.858.503.052.166 2.747.816.940.308 Plus, interest receivable 21.062.448.312 18.727.263.638 20.360.070.616 Less, allowance for impairment (53.842.001.996) (51.482.200.155) (49.822.241.996) Loan portfolio, net 2.796.341.241.659 2.825.748.115.649 2.718.354.768.928

Banco Internacional de Costa Rica, S.A. and subsidiaries Loan portfolio, gross 846.988.384.638 856.123.853.499 800.249.121.715 Plus, interest receivable 4.184.760.473 3.953.669.375 3.237.870.002 Less, allowance for impairment (16.574.230.571) (11.737.218.166) (9.200.315.098) Loan portfolio, net ¢ 834.598.914.540 848.340.304.708 794.286.676.619

Total Net Consolidated Loan Portfolio ¢ 3.630.940.159.199 3.674.088.420.357 3.512.641.445.547

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The Bank's financial instruments exposed to credit risk are as follows:

Direct Loan Portfolio Contingent Loan Portfolio March December March March December March Nota 2018 2017 2017 Nota 2018 2017 2017

Principal 6a ¢ 2.829.120.795.343 2.858.503.052.166 2.747.816.940.308 272.047.659.605 258.431.393.386 253.420.846.293 Interest 21.062.448.312 18.727.263.638 20.360.070.616 0 0 0 2.850.183.243.655 2.877.230.315.804 2.768.177.010.924 272.047.659.605 258.431.393.386 253.420.846.293 Allowance for bad loans (53.842.001.996) (51.482.200.155) (49.822.241.996) (134.465.369) (179.458.888) (297.889.986) Carrying amount ¢ 2.796.341.241.659 2.825.748.115.649 2.718.354.768.928 19 271.913.194.236 258.251.934.498 253.122.956.307

Loan portfolio Total balance

A1 ¢ 2.374.879.339.356 2.431.562.290.227 2.281.447.983.023 260.668.696.606 249.368.507.192 241.829.220.614 A2 23.618.752.220 28.273.479.804 21.898.905.810 657.030.964 646.663.422 565.212.785 B1 165.617.412.947 138.981.308.371 201.236.229.963 4.958.377.770 2.288.632.379 2.545.515.672 B2 28.996.239.624 23.146.167.745 11.598.454.710 92.490.625 74.210.519 159.104.553 C1 61.626.759.670 55.505.591.108 36.450.916.046 3.301.544.097 3.451.254.213 4.736.271.045 C2 22.575.099.289 22.200.079.830 27.047.794.692 73.952.095 87.653.715 68.142.834 D 25.592.468.432 30.061.027.171 58.701.935.359 599.496.243 549.574.542 846.496.586 E 147.277.172.117 147.500.371.548 129.794.791.321 1.696.071.205 1.964.897.404 2.670.882.204 2.850.183.243.655 2.877.230.315.804 2.768.177.010.924 272.047.659.605 258.431.393.386 253.420.846.293

Allowance for bad loans (42.898.017.395) (41.726.751.095) (43.447.168.623) (134.465.373) (179.458.888) (297.888.876) Carrying amount, net 2.807.285.226.260 2.835.503.564.709 2.724.729.842.301 271.913.194.232 258.251.934.498 253.122.957.417

Carrying amount 2.850.183.243.655 2.877.230.315.804 2.768.177.010.924 272.047.659.605 258.431.393.386 253.420.846.293 Allowance for bad loans (42.898.017.395) (41.726.751.095) (43.447.168.623) (134.465.373) (179.458.888) (297.888.876) (Excess) inadequacy of allowance over structural estimate

(10.943.984.601) (9.755.449.060) (6.375.073.373) 4 0 (1.110)

Carrying amount, net 6a ¢ 2.796.341.241.659 2.825.748.115.649 2.718.354.768.928 271.913.194.236 258.251.934.498 253.122.956.307

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The assessed loan portfolio with allowance is detailed as follows:

As of March 31, 2018

Loan portfolio Direct Loan Portfolio Contigent Loan Portfolio

Direct generic allowance Principal Covered balance Overdraft Allowance Principal Allowance

A1 ¢ 2.374.879.339.356 1.406.620.338.452 968.259.000.904 12.026.827.394 260.668.696.606 89.198.950 A2 23.618.752.220 19.767.617.084 3.851.135.136 118.106.769 657.030.964 225.000 2.398.498.091.576 1.426.387.955.536 972.110.136.040 12.144.934.163 261.325.727.570 89.423.950

Direct generic allowance B1 165.617.412.947 136.450.975.040 29.166.437.907 2.166.559.146 4.958.377.769 5.735.913 B2 28.996.239.624 26.930.407.385 2.065.832.239 341.235.261 92.490.625 27.446 C1 61.626.759.670 57.726.949.150 3.899.810.519 1.268.956.414 3.301.544.097 8.969.008 C2 22.575.099.289 21.500.462.241 1.074.637.048 644.820.836 73.952.095 0 D 25.592.468.432 22.248.733.941 3.343.734.497 2.639.441.175 599.496.244 1.875.000 E 147.277.172.117 119.251.352.498 28.025.819.619 23.692.070.400 1.696.071.205 28.434.056 451.685.152.079 384.108.880.255 67.576.271.829 30.753.083.232 10.721.932.035 45.041.423 2.850.183.243.655 1.810.496.835.791 1.039.686.407.869 42.898.017.395 272.047.659.605 134.465.373 Loan portfolio Aging loan portfolio Direct Loan Portfolio Contigent Loan Portfolio


Up to date 2.301.734.765.441 1.348.122.901.026 953.611.864.415 11.661.117.531 261.325.727.570 89.423.950 Equal or less than 30 days 95.895.148.876 77.649.506.006 18.245.642.870 479.475.745 0 0 Equal or less than 60 days 868.177.259 615.548.504 252.628.756 4.340.886 0 0 2.398.498.091.576 1.426.387.955.536 972.110.136.041 12.144.934.162 261.325.727.570 89.423.950

Direct generic allowance Up to date 218.880.968.411 187.490.852.630 31.390.115.781 7.620.705.511 10.721.932.034 45.041.423 Equal or less than 30 days 48.241.835.800 42.178.250.603 6.063.585.197 1.483.520.846 0 0 Equal or less than 60 days 83.684.124.335 74.301.748.733 9.382.375.602 2.573.043.380 0 0 Equal or less than 90 days 28.887.896.008 25.067.425.403 3.820.470.609 2.416.454.236 0 0 Equal or less than 180 days 25.960.301.411 20.576.630.907 5.383.670.504 4.950.835.265 0 0 More than 180 days 46.030.026.114 34.493.971.979 11.536.054.135 11.708.523.995 0 0

451.685.152.079 384.108.880.255 67.576.271.828 30.753.083.233 10.721.932.034 45.041.423 ¢ 2.850.183.243.655 1.810.496.835.791 1.039.686.407.869 42.898.017.395 272.047.659.605 134.465.373

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As of December 31, 2017

Loan portfolio Direct Loan Portfolio Contigent Loan Portfolio


A1 ¢ 2.431.562.290.227 1.607.663.533.318 823.898.756.909 12.302.571.501 249.368.507.192 91.781.388 A2 28.273.479.805 25.517.664.906 2.755.814.898 141.380.495 646.663.422 242.150 2.459.835.770.032 1.633.181.198.224 826.654.571.807 12.443.951.996 250.015.170.614 92.023.538

Direct generic allowance B1 138.981.308.371 118.965.773.795 20.015.534.575 1.598.835.890 2.288.632.379 6.153.335 B2 23.146.167.745 21.952.078.389 1.194.089.356 229.169.328 74.210.519 0 C1 55.505.591.108 53.416.048.280 2.089.542.828 790.539.140 3.451.254.213 5.000.000 C2 22.200.079.830 21.226.818.351 973.261.479 592.764.832 87.653.715 0 D 30.061.027.171 26.626.892.185 3.434.134.986 2.729.273.805 549.574.542 22.696.097 E 147.500.371.547 121.216.299.844 26.284.071.711 23.342.216.104 1.964.897.404 53.585.918 417.394.545.772 363.403.910.844 53.990.634.935 29.282.799.099 8.416.222.772 87.435.350 2.877.230.315.804 1.996.585.109.068 880.645.206.742 41.726.751.095 258.431.393.386 179.458.888 Loan portfolio Aging loan portfolio Direct Loan Portfolio Contigent Loan Portfolio Direct generic allowance Principal Covered balance Overdraft Allowance Principal Allowance

Up to date 2.371.444.577.270 1.553.383.002.595 818.061.574.675 12.001.996.032 250.015.170.615 92.023.538 Equal or less than 30 days 87.628.705.074 79.121.617.244 8.507.087.830 438.143.525 0 0 Equal or less than 60 days 762.487.687 676.578.385 85.909.302 3.812.438 0 0 2.459.835.770.031 1.633.181.198.224 826.654.571.807 12.443.951.995 250.015.170.615 92.023.538

Direct generic allowance Up to date 197.739.924.568 171.404.036.882 26.335.887.686 8.374.841.954 8.416.222.771 87.435.350 Equal or less than 30 days 34.767.555.167 32.873.304.738 1.894.250.429 808.341.224 0 0 Equal or less than 60 days 59.723.075.064 53.747.549.756 5.975.525.308 2.067.501.828 0 0 Equal or less than 90 days 39.808.497.171 35.405.772.285 4.402.724.886 2.921.624.396 0 0 Equal or less than 180 days 40.587.426.067 36.306.900.566 4.280.525.501 3.840.436.838 0 0 More than 180 days 44.768.067.736 33.666.346.617 11.101.721.125 11.270.052.860 0 0

417.394.545.773 363.403.910.844 53.990.634.935 29.282.799.100 8.416.222.771 87.435.350 ¢ 2.877.230.315.804 1.996.585.109.068 880.645.206.742 41.726.751.095 258.431.393.386 179.458.888

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Loan portfolio Direct Loan Portfolio Contigent Loan Portfolio Direct generic allowance Principal Covered balance Overdraft Allowance Principal Allowance

A1 ¢ 2.281.447.983.023 1.584.537.983.948 696.909.999.075 8.093.087.240 241.829.220.614 203.409.169 A2 21.898.905.817 18.892.912.930 3.005.992.886 76.646.171 565.212.782 1.055.441 2.303.346.888.840 1.603.430.896.878 699.915.991.961 8.169.733.411 242.394.433.396 204.464.610

Direct generic allowance B1 201.236.229.956 183.488.956.469 17.747.273.494 1.529.767.377 2.545.515.673 2.337.567 B2 11.598.454.710 10.530.431.083 1.068.023.627 143.658.872 159.104.553 1.214.746 C1 36.450.916.046 33.955.654.980 2.495.261.066 744.251.915 4.736.271.047 25.741.212 C2 27.047.794.692 26.416.045.497 631.749.195 408.330.757 68.142.834 0 D 58.701.935.359 52.854.255.116 5.847.680.244 4.570.750.078 846.496.586 0 E 129.794.791.321 96.992.358.478 32.802.432.843 27.880.676.213 2.670.882.204 64.130.741 464.830.122.084 404.237.701.623 60.592.420.469 35.277.435.212 11.026.412.897 93.424.266 2.768.177.010.924 2.007.668.598.501 760.508.412.430 43.447.168.623 253.420.846.293 297.888.876 Loan portfolio Aging loan portfolio Direct Loan Portfolio Contigent Loan Portfolio Direct generic allowance Principal Covered balance Overdraft Allowance Principal Allowance

Up to date 2.204.608.963.748 1.516.757.761.647 687.851.202.101 7.824.150.673 242.394.433.396 204.464.610 Equal or less than 30 days 91.959.834.195 80.874.401.375 11.085.432.821 321.859.420 0 0 Equal or less than 60 days 6.778.090.896 5.798.733.857 979.357.039 23.723.318 0 0 2.303.346.888.839 1.603.430.896.879 699.915.991.961 8.169.733.411 242.394.433.396 204.464.610

Direct generic allowance Up to date 260.573.952.188 234.119.806.578 26.454.145.610 10.015.290.959 11.026.034.897 93.348.666 Equal or less than 30 days 37.601.645.048 33.843.212.117 3.758.432.939 1.570.066.572 378.000 75.600 Equal or less than 60 days 73.356.664.179 64.274.599.684 9.082.064.495 3.356.034.744 0 0 Equal or less than 90 days 39.703.282.113 34.972.794.538 4.730.487.574 3.779.164.766 0 0 Equal or less than 180 days 13.274.518.053 10.277.551.900 2.996.966.152 2.892.930.393 0 0 More than 180 days 40.320.060.504 26.749.736.805 13.570.323.699 13.663.947.778 0 0

464.830.122.085 404.237.701.622 60.592.420.469 35.277.435.212 11.026.412.897 93.424.266 ¢ 2.768.177.010.924 2.007.668.598.501 760.508.412.430 43.447.168.623 253.420.846.293 297.888.876

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Following is an analysis of' the balance of the loan portfolio of Banco de Costa Rica, assessed individually with allowance, according to gross and net amounts, after deducting the allowance for loan losses, by risk classification in accordance with the applicable regulations:

Loans receivable As of march 31, 2018 Gross Net Risk category A1 ¢ 2.374.879.339.356 2.362.852.511.962 A2 23.618.752.220 23.500.645.451 B1 165.617.412.947 163.450.853.801 B2 28.996.239.624 28.655.004.362 C1 61.626.759.670 60.357.803.255 C2 22.575.099.289 21.930.278.453 D 25.592.468.432 22.953.027.259 E 147.277.172.117 123.585.101.717

¢ 2.850.183.243.655 2.807.285.226.260

Loans receivable As of december 31, 2017 Gross Net Risk category A1 ¢ 2.431.562.290.227 2.419.259.718.726 A2 28.273.479.804 28.132.099.310 B1 138.981.308.371 137.382.472.481 B2 23.146.167.745 22.916.998.417 C1 55.505.591.108 54.715.051.968 C2 22.200.079.830 21.607.314.998 D 30.061.027.171 27.331.753.366 E 147.500.371.548 124.158.155.443

¢ 2.877.230.315.804 2.835.503.564.709

Loans receivable As of march 31, 2017 Gross Net Risk category A1 ¢ 2.281.447.983.023 2.273.354.895.782 A2 21.898.905.810 21.822.259.641 B1 201.236.229.963 199.706.462.585 B2 11.598.454.710 11.454.795.838 C1 36.450.916.046 35.706.664.131 C2 27.047.794.692 26.639.463.934 D 58.701.935.359 54.131.185.282 E 129.794.791.321 101.914.115.108

¢ 2.768.177.010.924 2.724.729.842.301

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In compliance with SUGEF Directive 1-05, as of March 31, 2018, the Bank must maintain a minimum allowance in the amount of ¢43.032.482.768 of which ¢42.898.017.395 is allocated to the valuation of the direct loan portfolio and ¢134.465.373 to the contingent loan portfolio. Additionally, the countercyclical allowance is of ¢8.604.759.313 (¢7.505.330.641.and ¢5.117.629.944 as of December and March 2017, respectivily). As of December and March 31 de 2017, the Bank must maintain a structural allowance in the amount of ¢41.906.209.983 corresponding to the direct loan portfolio for ¢41.726.751.095 and contingent loans for ¢179.458.888) and ¢43.745.057.499 (corresponding to the direct loan portfolio for ¢43.447.168.623 and contingent loans for ¢297.888.876), respectively. SUGEF External Communication 021-2008 dated May 30, 2008 establishes that the expense for allowance for impairment and bad loans corresponds to the amount necessary to achieve the minimum structural allowance. Furthermore, there must be a duly documented technical justification for any excess above the minimum structural allowance, which is to be sent to SUGEF with the authorization request. The excess may not surpass 15% of the minimum required allowance for the loan portfolio. This notwithstanding, if any additional allowances are required above the 15%, they must be taken from net earnings for the period pursuant to article 10 of IRNBS. Following is an analysis of the balances of BICSA's loan portfolio, individually evaluated with an allowance according to the gross amount and the net amount after deducting the allowance for doubtful accounts resulting from the risk assessment in accordance with the applicable regulations:

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March

December

March

2018

2017

2017

Banco Internacional de Costa Rica, S.A.

and subsidiaries

Principal ¢ 846.988.384.638

856.123.853.499

800.024.912.715 Interest

4.184.790.473

3.953.669.375

3.237.870.002

851.173.175.111

860.077.522.874

803.262.782.717

Allowance for doubtful accounts

(16.574.230.571)

(11.737.218.166)

(9.200.315.098)

Carrying amount

834.598.944.540

848.340.304.708

794.062.467.619

Loan portfolio, net of allowance

825.997.836.642

840.290.906.689

786.924.555.979

At amortized cost

Level 1: Normal or low risk

776.133.757.006

784.466.041.174

743.313.278.377 Level 2: Special mention

41.714.934.495

42.221.795.297

24.157.479.254

Level 3: Subnormal

14.804.343.413

14.998.198.363

18.251.571.137 Level 4: Doubtful

1.345.287.064

1.354.903.262

250.173.786

Level 5: Uncollectable

12.990.062.660

13.082.915.404

14.276.619.627

846.988.384.638

856.123.853.500

800.249.122.181

Allowance for impairment

(16.574.230.571)

(11.737.218.166)

(9.200.315.098)

Carrying amount

830.414.154.067

844.386.635.334

791.048.807.083

Impaired renegociated loans

Gross amount

19.730.881.664

20.240.201.922

23.538.491.979

Impaired amount

19.730.881.664

20.240.201.922

23.538.491.979 Allowance for impairment

6.216.526.643

6.063.864.819

11.103.131.610

Total, net

13.514.355.021

14.176.337.103

12.435.360.369

Not in arrears or impaired

Level 1: Normal or low risk

776.133.757.006

784.466.041.174

743.313.278.377 Level 2: Special mention

41.714.934.495

42.221.795.297

24.157.479.254

Sub-total

817.848.691.501

826.687.836.471

767.470.757.631

Individually impaired

Level 3: Subnormal

14.804.343.413

14.998.198.363

18.251.571.137 Level 4: Doubtful

1.345.287.064

1.354.903.262

250.173.786

Level 5: Uncollectable

12.990.062.660

13.082.915.403

14.276.619.627

Sub-total

29.139.693.137

29.436.017.028

32.778.364.550

Allowance for impairment

Specific

15.694.288.846

9.595.977.242

8.704.259.924 Collective

879.941.726

2.141.240.925

496.055.174

Total allowance for impairment

16.574.230.572

11.737.218.167

9.200.315.098

Clients´obligations for acceptances

Carrying amount ¢ 4.416.317.425

4.095.728.644

4.124.250.638

Interest receivable ¢ 4.184.760.473

3.953.669.375

3.237.870.002

Net loan portfolio (carrying amount) ¢ 834.598.914.540

848.340.304.708

794.286.676.619

As of March 31, 2018, the allowance for impairment of BICSA's loan portfolio is of ¢16.574.230.571 (¢11.737.218.166 and ¢9.200.315.098 a December and March de 2017, respectively).

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The concentration of the portfolio of direct loans and contingent loans by sector (economic activity) is as follows:

2018

2017

2017

Direct Contingent

Contingent Contingent

Direct Contingent

Loan Portfolio Loan Portfolio



Trade ¢ 235.960.933.504

41.659.408.023

199.897.712.070

38.896.179.375

166.268.676.034

29.331.715.803

Manufacturing

474.742.678.900

7.009.180.634

484.589.694.068

4.052.380.832

468.617.906.930

6.792.300.160

Construction, purchase and repair

of real estate

876.656.955.399

8.588.391.708

875.348.809.697

9.137.292.909

856.877.955.393

10.084.100.049

Agriculture, livestock, hunting and

related services

181.762.646.883

290.683.491

185.479.012.526

111.093.390

190.904.248.793

388.126.626

Fishing and aquaculture

3.839.041

0

14.047.668.903

0

19.839.223.893

0

Consumption

330.491.294.131

129.571.569.332

340.489.712.835

125.791.017.451

363.573.449.527

116.029.691.637

Education

2.283.578.397

0

1.898.909.766

0

681.697.212

0

Transporte

55.392.592.952

669.912.056

72.122.749.917

1.176.165.709

81.036.231.448

1.299.018.835

Electricity, telecom, gas and water

44.006.533.003

0

44.589.661.714

0

44.532.127.879

0

Services

1.373.322.135.540

180.865.017.332

1.392.478.108.459

178.687.511.414

1.254.742.921.343

190.262.422.531

Hospitality

99.106.043.535

0

101.277.228.239

0

98.229.323.993

0

Mining and quarries

144.442.289

0

150.897.978

0

768.495.484

0

Real estate, business and

leasing activities

2.235.506.407

0

2.256.739.493

0

1.993.804.094

0

Goverment financial

0

2.233.175.366

0

3.448.691.986

0

4.879.803.876

See notes 6 and 19 ¢ 3.676.109.179.981

370.887.337.942

3.714.626.905.665

361.300.333.066

3.548.066.062.023

359.067.179.517

Other contingencies

0

61.932.550.988

0

62.057.859.935

0

46.097.502.404

3.676.109.179.981

432.819.888.930

3.714.626.905.665

423.358.193.001

3.548.066.062.023

405.164.681.921

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The concentration by geographical region of the loan portfolio of Banco Internacional de Costa Rica S.A. is as follows:


2018 2017 2017

Germany ¢ 0 0 3.694.182.847

Brasil 5.601.504.000 7.114.235.200 11.010.204.984

Chile 0 0 404.733.900

China 0 0 69.488.930

Colombia 2.482.415.941 2.504.407.338 5.973.141.054

Costa Rica 338.291.599.763 350.647.038.537 334.318.889.584

Denmark 0 0 903.781.848

Ecuador 57.737.389.966 61.806.845.261 23.453.526.241

El Salvador 49.095.295.033 46.034.905.850 44.796.613.379

Spain 0 0 3.635.207.008

United States of America 18.021.307.935 18.925.636.261 23.702.807.882

Guatemala 37.804.471.979 37.371.507.985 37.899.197.624

Holanda 0 0 138.607.500

Honduras 6.536.020.021 7.046.221.186 5.924.065.095

England 0 0 2.696.000.198

Caribbean Islands or Countries 0 0 247.683.519

British Virgin Islands 10.086.422.533 10.585.665.915 5.417.027.017

México 19.772.112.445 19.413.509.100 18.905.308.332

Nicaragua 34.768.508.485 36.596.659.019 31.847.355.924

Panamá 250.313.999.725 240.257.501.945 224.002.926.739

Paraguay 0 896.291.113 3.382.023.000

Perú 9.764.327.701 9.669.556.333 7.800.830.100

Rusia 0 0 77.346.478

Switzerland 0 0 138.607.500

Uruguay 531.649.959 815.921.213 1.626.842.243

Others 6.181.359.152 6.437.951.243 8.182.722.789

¢ 846.988.384.638 856.123.853.499 800.249.121.715

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The concentration by geographical region of the loan portfolio of Banco de Costa Rica is as follows:


2018 2017 2017

Costa Rica ¢ 2.829.120.795.343 2.858.503.052.166 2.747.816.940.308

¢ 2.829.120.795.343 2.858.503.052.166 2.747.816.940.308

As of March 31, 2018, the Bank keeps trust commissions in the amount of ¢3.519.075 (¢434.800 and ¢503.438 a December and March 2017, respectively). The balance of foreclosed assets is as follows (See note 7):

March December March 2018 2017 2017 Properties ¢ 64.317.692.380 63.412.438.562 61.890.137.003 Other 277.072.938 312.779.716 349.282.357

¢ 64.594.765.318 63.725.218.278 62.239.419.360

BICSA, has a five (5) year term to transfer the real property acquired as payment of unpaid loans as of the registration date of the property; if after such a term the property has not been sold, there must be an independent appraisal to estimate its value. On the other hand, a reserve is made in the equity account through the following allocation: a) non-distributed profits and b) profits of the year. The aforementioned reserve will be kept until an effective transfer of the acquired property has taken place. The direct loan portfolio by type of guarantee is detailed below (See notes 6 and 19):


2018 2017 2017

Guarantee

Pledged assets ¢ 24.298.225.422 23.075.767.280

18.212.518.751

Collections 79.484.867.094 70.810.594.142

65.792.664.567

Fiduciary 475.622.086.142 511.196.625.562

477.409.118.598

Mortgage 1.517.407.245.109 1.491.814.783.889

1.413.056.043.979

Chattel 484.856.242.476 504.417.694.444

448.946.981.577

Others 1.094.440.513.738 1.113.311.440.348

1.124.648.734.551

¢ 3.676.109.179.981 3.714.626.905.665

3.548.066.062.023

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As of March 31, 2017, the 54% of the loan portfolio is secured by mortgage or chattel collaterals (54% and 52% in Decembre and March 2017, respectively). Pursuant to SUGEF Directive 5-04, "Regulations on Credit Limits to Individual Persons and Economic Interest Groups”, the Bank debugs information on reported data of economic interest groups as part of their responsibility to identify significant administrative and equity relationships among debtors with total active operations. As of March 31, 2018, groups of borrowers (members) having operations that add 2% or more of adjusted capital and in groups report 5% or more of adjusted capital, are reported. The concentration of the loan portfolio by economic interest group is as follows:


No. Percentage Band Total amount Nº of

customers

1 0-4.99% 20.791.488.270 ¢ 33.796.972.214 302

2 5-9.99% 41.582.976.540

116.527.430.383 93

3 10-14.99% 62.374.464.810

0 0

4 15-20% 83.165.953.080

992.179.426.192 279

Total ¢ 1.142.503.828.789 674



customers

1 0-4.99% 19.308.767.196 ¢ 35.712.208.894 302

2 5-9.99% 38.617.534.392 141.650.274.442 84

3 10-14.99% 57.926.301.587 0 0

4 15-20% 77.235.068.783 1.001.108.403.490 289

Total ¢ 1.178.470.886.826 675



customers

1 0-4.99% 19.308.767.196 ¢ 13.758.974.948 328

2 5-9.99% 38.617.534.392 168.848.630.287 81

3 10-14.99% 57.926.301.587 0 0

4 15-20% 77.235.068.783 902.894.413.261 256 Total ¢ 1.085.502.018.496 665

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(b) Market risk management

Definitions Market risk refers to potential losses that may occur in the value of assets and liabilities in the balance sheet due to adverse movements in the factors that determine their price, also known as risk factors, such as liquidity, interest rates, exchange rate and inflation, including the portfolios under management.

The liquidity risk is generated when the financial entity cannot meet the requirements or obligations with third parties due to insufficient cash flow, resulting from the outcome between term recoveries (asset operations) and term obligations (liability operations), or to improper price formation mechanism that disables the price to transform an asset and/or liability into cash.

Price of assets and inflations risk measures the potential losses that may occur in financial assets included in the Investment portfolios, and a decline in the purchasing power of the money flows received by the Bank.

The risk of interest rates measures the possibility that the entity incurs in losses as a result of changes in the present value of assets and liabilities in which the Bank holds positions on or off balance.

The exchange rate risk is the possibility of economic loss due to variations in the exchange rate. This risk also arises when the net result of the exchange rate adjustments does not compensate proportionally the adjustment in the value of assets in foreign currency, causing a reduction in the equity indicator or in any model affected negatively in the determination of the exchange rate risk by variations in this macro price, as in Camel's indicators or own statisticians. Risk management methodology Regarding the management of market risk for the BCR's investments portfolio, daily monitoring of risk factors (interests rates and exchange rate) impact is given through the Value at Risk methodology (VaR). In addition, the risk derived from the Price quotations of financial instruments in the market is monitored through the methodology of historical simulation of VaR calculations established in SUGEF's agreement 3-06; this allows the entity to manage the impact of this risk on the net worth adequacy.

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Thus the institution also applies models (stop-loss) that help to limit, to a certain degree, losses by negative changes in securities prices. In terms of interest rates, the Bank is sensitive to this type of risk due to the mix of rates and terms, both in assets and liabilities. This sensibility is mitigated through the management of variable rates and the combination of terms monitored by internal models. Counterparty risk management is carried out through the fulfillment of the investments profile established by the Bank in its internal policies, and the reporting of issuers, which analyzes the financial statements and the default risk by issuers, according to internal studies and risk rating. These limits are monitored weekly as established in the policies for managing the BCR's investment in securities. The management of the liquidity risk is periodically assessed by daily updating of the BCR projected cash flows to six months through an automated application, for the preparation of the gap report to one and three months both in colones and in US dollars, as well as the implementation of the Coverage of Liquidity Index (ICL), established by SUGEF 17-13 from January 1, 2015 on, which seeks to strengthen the banks with a backup of high quality liquid assets, for the fulfillment of their commitments in a stress scenario of 30 days. In order to decrease the liquidity risk, following variables are taken into consideration: deposits volatility, debt levels, liability structure, and liquidity degree of assets, availability of funding and the overall effectiveness of the gap of timelines. Tolerance limits and risk indicators The main indicators for controlling the market risk limits are the following:

• Liquidity risk: VaR by currency both in colones and US dollars, term matching to one and

three month both in colones and in US dollars and coverage of Liquidity Index (ICL). • Price risk: VaR of the Investment portfolio through internal models. • Inflation risk: Variation of real financial income (ViR). • Exchange risk: VaR of the equity position through internal models and the daily

management of the equity positions.

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Exposure and risk management (c) Liquidity risk

The Bank continues with the liquidity strategy that seeks to increase deposits with the public and reduce their volatility, as well as diversify sources of wholesale funding. The foregoing in order to achieve a consistent growth of deposits with their placements, which not only allows compliance with regulatory indicators but also strengthens the Bank and promotes the fulfillment of the commercial goals given by its budget. These efforts have not only been carried out at the Bank level, but have also permeated the BCR Financial Conglomerate; mainly in the topic of concentration of liabilities.

Cash and cash equivalents show a growing year-on-year trend in mainly all accounts except for current accounts and demand deposits, as an effect of the liquidity strategy for complying with regulatory liquidity indicators (see note 2 of cash and cash equivalents).

All the interests of demand deposits present an year-on-year increase of 3% due to an increase in the balances of current accounts and savings deposits. (See table of demand obligations with the public in note 4 of this document). Wholesale funding decreases by 13% as a total if compared to March 2017, mainly due to the payment of obligations with the Central Bank loans with foreign financial institutions abroad. (See note 5, obligations with financial institutions and the Central Bank). As of March 31, 2018, regarding regulatory indicators, the liquidity coverage indicator (ICL) was of 1.05 times in local currency and 1.06 times in dollars, complying with the satisfactory values for the limits defined by SUGEF 0.90 and according to the Entity's risk profile. In the following table at the end of March 2018, a decline in both currencies is observed, corresponding to the gradual increase of the regulatory limits established for this indicator, from 0.80 to 0.90:


2018 2017 2017 Liquidity coverage indicator (colones) 1.05 1.10 1.08 Liquidity coverage indicator (US Dollars) 1.06 1.13 1.11 Regulatory limit 0.90 0.80 0.80

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On the other hand, as of March 31, 2018, the results of term matches, another regulatory indicator, are shown as follows:

Regulatory liquidity matches by currency and term

Indicator Interpretation Observation Approved levels 1 month term matching US Dollars Razón entre el activo

y el pasivo asociado a la volatilidad de las

cuentas

2.09 Limite 1.10

1 month term matching colones 2.23 Limite 1.00

3 month term matching US Dollars 1.48 Limite 0.94

3 month term matching colones 1.47 Limite 0.85

As of December 31, 2017, the results of term matches are shown as follows:


Indicator Interpretation Observation Approved levels

1 month term matching US Dollars Razón entre el activo y el pasivo asociado a la volatilidad de las

cuentas

2.08 Limite: 1.10

1 month term matching colones 2.17 Limite: 1.00

3 month term matching US Dollars 1.58 Limite: 0.94


As of March 31, 2017, the results of term matches are shown as follows:


Indicator Interpretation Observation Approved levels 1 month term matching US Dollars Razón entre el activo

y el pasivo asociado a la volatilidad de la

cuentas

2.00 Limite: 1.10


3 month term matching US Dollars 1.36 Limite: 0.94


The term matches show a constant and significant loose with respect to regulatory limits, which is a direct effect of the measures taken in the liquidity strategy for compliance with the Liquidity Coverage Indicator.

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The maturity dates of the Bank's assets and liabilities are as follows: As of March 31, 2018

Assets Demand 1 to a 30 days

31 to 60 days

61 to 90 days

91 to 180 days

181 to 365 days

More than 365 days

More than 30 days past due

Total

Cash and due form banks ¢ 208.917.302.847 233.573.991 0 0 0 0 80.291.592 0 209.231.168.430 Legal reserve account-BCCR 300.186.377.337 41.329.015.061 32.502.576.366 30.591.856.994 66.730.083.305 57.218.280.327 24.601.219.305 0 553.159.408.695 Investment in securities 328.348.574 285.152.019.950 108.865.868.566 48.531.220.119 213.917.517.125 137.163.833.936 440.555.776.063 0 1.234.514.584.333 Interest on investments (1) 1.230.542.001 4.251.624.318 3.304.872.535 570.941.182 25.594.463 342.380.760 0 9.725.955.258 Loan portfolio 3.432.325.563 127.122.849.751 88.772.975.488 107.733.180.751 267.951.713.377 318.136.083.456 2.558.855.089.403 204.104.962.192 3.676.109.179.981 Interest on loans 0 9.666.455.645 384.620.451 356.960.254 406.987.997 622.390.299 5.195.061.655 8.614.732.483 25.247.208.784

¢ 512.864.354.320 464.734.456.399 234.777.665.189 190.518.090.653 549.577.242.986 513.166.182.481 3.029.629.818.778 212.719.694.675 5.707.987.505.481 Liabilities Obligations with the public ¢ 1.963.713.310.846 291.261.164.470 222.073.269.439 207.564.723.517 455.802.859.899 425.695.113.630 312.541.397.044 0 3.878.651.838.845 Obligations with financial entities 182.604.136.153 94.437.638.226 66.701.538.974 59.457.146.154 373.264.010.571 148.056.721.048 257.274.296.505 0 1.181.795.487.631 Charges payable on obligations 774.158.585 7.425.213.446 4.243.264.378 3.319.517.374 4.818.001.647 2.436.956.164 2.953.080.791 0 25.970.192.385

2.147.091.605.584 393.124.016.142 293.018.072.791 270.341.387.045 833.884.872.117 576.188.790.842 572.768.774.340 0 5.086.417.518.861 Asset and liability gaps ¢ (1.634.227.251.264) 71.610.440.257 (58.240.407.602) (79.823.296.392) (284.307.629.131) (63.022.608.361) 2.456.861.044.438 212.719.694.675 621.569.986.620

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The maturity dates of the Bank's assets and liabilities are as follows:


Assets Demand 1 to a 30 days

31 to 60 days

61 to 90 days

91 to 180 days

181 to 365 days

More than 365 days


Total

Cash and due form banks ¢ 226.730.913.645 71.894.524 0 0 0 0 38.326.930 0 226.841.135.099 Legal reserve account-BCCR 306.806.595.619 33.109.883.022 29.314.455.743 37.744.704.857 76.594.577.841 47.703.733.485 29.834.572.145 0 561.108.522.712 Investment in securities 195.463.521 278.624.816.693 24.464.463.511 68.849.187.292 184.138.118.688 262.143.515.169 457.649.789.917 0 1.276.065.354.791 Interest on investments 0 2.577.955.714 1.166.292.785 5.702.565.931 1.512.498.339 60.287.583 161.186.518 0 11.180.786.870 Loan portfolio 2.912.788.630 109.430.398.033 81.832.686.902 122.633.878.947 258.541.161.527 323.601.423.966 2.616.511.688.586 199.162.879.074 3.714.626.905.665 Interest on loans 0 9.458.204.571 317.036.255 584.058.067 599.293.439 410.303.825 4.923.139.184 6.388.897.672 22.680.933.013

¢ 536.645.761.415 433.273.152.557 137.094.935.196 235.514.395.094 521.385.649.834 633.919.264.028 3.109.118.703.280 205.551.776.746 5.812.503.638.150

Liabilities

Obligations with the public ¢ 2.021.905.809.464 266.370.837.513 195.269.762.040 274.913.853.375 508.996.925.489 339.053.829.099 344.439.172.232 0 3.950.950.189.212 Obligations with BCCR 473.353.490 0 0 0 0 0 0 0 473.353.490 Obligations with financial entities 209.369.499.454 89.968.574.696 40.170.040.525 75.518.388.831 144.892.674.896 401.747.001.721 271.163.060.769 0 1.232.829.240.892 Charges payable on obligations 1.178.169.426 6.578.881.774 9.465.585.450 4.880.194.841 4.197.200.047 1.802.140.189 2.426.936.616 0 30.529.108.343

2.232.926.831.834 362.918.293.983 244.905.388.015 355.312.437.047 658.086.800.432 742.602.971.009 618.029.169.617 0 5.214.781.891.937 Asset and liability gaps ¢ (1.696.281.070.419) 70.354.858.574 (107.810.452.819) (119.798.041.953) (136.701.150.598) (108.683.706.981) 2.491.089.533.663 205.551.776.746 597.721.746.213

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The maturity dates of the Bank's assets and liabilities are as follows:


Assets Demand 1 to a 30 days 31 to 60 days 61 to 90 days 91 to 180 days 181 to 365 days More than 365

days More than 30 days past due Total

Cash and due form banks ¢ 204.924.204.483 173.749.543 165.083.196 0 0 0 37.731.042 0 205.300.768.264 Legal reserve account-BCCR 289.698.586.315 33.390.057.732 31.000.057.673 30.535.680.135 61.784.995.616 49.787.713.452 18.895.873.157 0 515.092.964.080 Investment in securities 326.869.413 203.287.136.480 25.553.627.839 34.899.540.092 89.663.277.024 256.213.329.817 593.344.495.696 0 1.203.288.276.361 Interest on investments 0 1.100.302.625 3.210.113.754 3.172.523.580 1.508.690.378 38.075.420 464.778.810 0 9.494.484.567 Loan portfolio 14.649.070.221 85.061.496.806 82.940.920.717 86.002.631.314 225.024.110.648 291.956.829.941 2.687.071.564.386 75.359.437.989 3.548.066.062.022 Interest on loans 0 11.994.907.327 281.298.937 264.508.656 290.941.848 423.161.489 4.746.828.524 5.596.293.838 23.597.940.619

¢ 509.598.730.432 335.007.650.513 143.151.102.116 154.874.883.777 378.272.015.514 598.419.110.119 3.304.561.271.615 80.955.731.827 5.504.840.495.913 Liabilities Obligations with the public ¢ 1.910.913.923.616 241.050.759.717 212.837.994.516 210.997.078.981 448.928.942.673 378.636.751.035 278.688.558.383 0 3.682.054.008.921 Obligations with BCCR 0 71.900.000.000 0 0 0 0 0 0 71.900.000.000 Obligations with financial entities 186.956.438.742 95.232.786.980 21.963.813.706 54.323.268.814 123.269.111.949 100.169.968.648 580.152.385.174 0 1.162.067.774.013 Charges payable on obligations 1.226.725.108 4.323.775.940 2.417.178.393 2.468.511.842 5.041.211.775 2.715.722.898 1.744.955.330 0 19.938.081.286

2.099.097.087.466 412.507.322.637 237.218.986.615 267.788.859.637 577.239.266.397 481.522.442.581 860.585.898.887 0 4.935.959.864.220 Asset and liability gaps ¢ (1.589.498.357.034) (77.499.672.124) (94.067.884.499) (112.913.975.860) (198.967.250.883) 116.896.667.538 2.443.975.372.728 80.955.731.827 568.880.631.693

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(d) Price risk of the portfolio The Bank of Costa Rica administers two investment portfolios: own Funds and Development Credit Funds. In the case of own funds, a concentration of 59.42% is observed in instruments issued by the Ministry of Finance. In this sense and with the purpose of mitigating the price risk of these instruments, a strategy was defined in the investment position of this issuer. As part of this strategy, the Bank holds regular meetings with the National Treasury, to learn about their development regarding the attention of its obligations and the process of placing the issuance of internal debt to international investors. As for the result of the 21-day VaR indicator for the Own Funds portfolio in colones, it stands at 0.86% while in dollars it is around 2.26%. In the case of the CDF portfolio, the VaR is 0.52% in colones and 3.30% in foreign currency. This risk has shown a downward behavior compared to the previous quarter, as a result of the diversification of the investment portfolio Below are the results of the VaR methodology-SUGEF 03-06:


2018 2017 2017 VaR ¢ 2.517.822.852 3.358.845.949 2.555.954.710

Capital requirement ¢ 15.106.937.113 20.153.075.695 15.335.728.257

Price Risk 151.069 201.531 153.357

Observation 25 (0.0036771174) (0.0047037559) (0.0038004415)

Exchange rate UDES ¢ 889.77000 880.06000 870.15000

Exchange rate UDS ¢ 563.17000 565.01000 554.43000

Par value of investment portfolio ¢ 692.963.948.084 718.274.251.676 666.489.614.778 Market value of investment portfolio ¢ 684.727.340.511 714.077.831.690 672.541.522.680

As part of the mitigation actions to contain the price risk, the Bank has a policy of having investment concentrations subject to price assessment not greater than 6% per instrument. At the end of March 2018, there was an excess of the limit in three positions, for which the mitigating measures are being applied in order to recover compliance with the established amounts.

In general terms, exposure to risk is conservative, according to the current investment profile.

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(e) Counterparty risk Counterparty risk management is based on weekly monitoring compliance with the internal limits of investment by issuer. Additionally, from May 2016 a counterparty VaR is calculated that represents the maximum impact on the total of the portfolio that can be generated by variations in the risk ratings. Results as of March 31, 2018 are as follows:

Counterparty VaR

Local 99% Internacional

99% Expected loss ¢ 361.135.190.429 US$ 41.306.433 % of the portfolio 38.67% 25.23%

Results as of December 31, 2017 are as follows:

Counterparty VaR



Results as of March 31, 2017 are as follows:

Counterparty VaR



As a mitigator of this risk, counterparty studies of local issuers are carried out every six months; with respect to international issuers the study is annual.

(f) Interest rate risk

The Bank has a credit portfolio, investments and obligations with the public and with entities subject to variable interest rates and therefore sensitive to fluctuations in interest rates and cash flow risk. As of march 31, 2018, has developed a sensitivity analysis on possible variations in interest rates.

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Sensitivity to an increase in the interest rate of investments

March

December March 2018

2017 2017

Investments in financial instruments

¢ 1.010.846.379.444 1.003.402.941.581 969.702.190.660

Increase in rates by 1% 145.279.698 127.459.867 67.742.862

Increase in rates by 2% ¢ 290.559.396 254.919.734 135.485.723

Sensitivity to a decrease in the interest rate of investments


Investments in financial instruments

¢ 1.010.846.379.444 1.003.402.941.581 969.702.190.660

Increase in rates by 1%

145.279.698 127.459.867 67.742.862 Increase in rates by 2% ¢ 290.559.396 254.919.734 135.485.723

Sensitivity to an increase in the interest rate of loan portfolio

March

December March 2018

2017 2017

Loan portfolio ¢ 2.829.120.795.334 2.858.503.052.157 2.747.816.940.327 Increase in rates by 1%

1.301.528.655 1.235.490.912 1.049.711.868

Increase in rates by 2% ¢ 2.738.624.792 2.615.621.808 2.229.863.832

Sensitivity to an increase in the interest rate of loan portfolio


2018 2017 2017 Loan portfolio ¢ 2.829.120.795.334 2.858.503.052.157 2.747.816.940.327 Increase in rates by 1%

1.119.795.114 1.057.888.890 820.428.938


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Sensitivity to an increase in the interest rate of obligations with the public

March

December March

2018

2017 2017 Obligations with the public ¢ 3.467.457.215.036 3.504.905.803.674 3.223.351.443.601 Increase in rates by 1%

2.287.830.894 1.842.585.122 1.846.849.018


Sensitivity of a decrease in the interest rate of obligations with the public


2018 2017 2017 Obligations with the public ¢ 3.467.457.215.036 3.504.905.803.674 3.223.351.443.601 Decrease in rates by 1%

2.287.830.894 1.842.585.122 1.846.849.018

Decrease in rates by 2% ¢ 4.575.661.787 3.685.170.244 3.693.698.037

Sensitivity to an increase in the interest rate of term financial obligations

March

December March

2018

2017 2017 Financial term obligations ¢ 255.395.994.435 270.509.604.884 304.998.873.375 Increase in rates by 1%

212.829.995 225.424.671 254.165.727 Increase in rates by 2% ¢ 425.659.991 450.849.341 508.331.457

Sensitivity of a decrease in the interest rate of term financial obligations

March

December March

2018 2017 2017 Financial term obligations ¢ 255.395.994.435 270.509.604.884 304.998.873.375 Decrease in rates by 1%

212.829.995 225.424.671 254.165.727

Decrease in rates by 2% ¢ 425.659.991 450.849.341 508.331.457

The sensitivity to variations in the interest rates is applied to the amounts exposed to these possible fluctuations.

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As of March 31, 2018, interest rate terms for assets and liabilities are matched as follows:

Effective interest

rate 1 to 30 days 31 to 90 days 91 to 180 days 181 to 360 days 361 to 720 days More than 721 days Total

Colones Assets Investment in securities 7.20% ¢ 186.931.478.623 70.562.321.185 91.037.247.548 67.404.187.264 105.951.116.915 183.339.104.281 705.225.455.816 Loan portfolio 10.16% 980.769.414.530 78.982.456.457 25.645.093.516 40.705.581.087 81.169.852.512 326.351.173.649 1.533.623.571.751

Total recovery of assets (*) 1.167.700.893.153 149.544.777.642 116.682.341.064 108.109.768.351 187.120.969.427 509.690.277.930 2.238.849.027.567

Liabilities

Obligations with the public

23.900.070.151 9.237.292.373 3.940.775.566 2.815.571.727 134.567.789 218.225.766 40.246.503.372

Demand 2.51% 0 0 0 0 0 0 0

Term 7.59% 0 0 0 0 0 0 0

Obligations with financial entities 3.67% 205.898.992.752 270.077.310.133 238.879.750.286 187.360.997.912 37.042.355.903 10.236.423.006 949.495.829.992

Total matured liabilities (*) 229,799,062,903 279.314.602.506 242.820.525.852 190.176.569.639 37.176.923.692 10.454.648.772 989.742.333.364

Asset and liability gap ¢ 937,901,830,250 (129.769.824.864) (126.138.184.788) (82.066.801.288) 149.944.045.735 499.235.629.158 1.249.106.694.203

USDólares:

Assets

Investment in securities 3.31% ¢ 103.169.013.595 119.049.274.758 153.228.373.127 51.428.542.720 49.618.332.815 83.187.270.322 559.680.807.337

Loan portfolio 6.75% 782.574.057.851 350.403.439.865 218.937.484.157 103.215.260.317 59.699.633.654 131.494.502.511 1.646.324.378.355

Total recovery of assets (*) 885.743.071.446 469.452.714.623 372.165.857.284 154.643.803.037 109.317.966.469 214.681.772.833 2.206.005.185.692

Liabilities

Obligations with the public

200.588.419.065 95.667.452.803 41.682.637.530 71.210.528.936 94.625.050.958 60.177.749.801 563.951.839.093 Demand 1.07% 0 0 0 0 0 0 0 Term 1.74% 0 0 0 0 0 0 0

Obligations with financial entities 3.36% 470.868.554 112.856.797.437 504.039.076.101 222.510.539.163 74.930.157.567 217.942.884.791 1.132.750.323.613

Total matured liabilities (*) 201.059.287.619 208.524.250.240 545.721.713.631 293.721.068.099 169.555.208.525 278.120.634.592 1.696.702.162.706 Asset and liability gap ¢ 684.683.783.827 260.928.464.383 (173.555.856.347) (139.077.265.062) (60.237.242.056) (63.438.861.759) 509.303.022.986

(*) Sensitive to rates

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As of December 31, 2017, interest rate terms for assets and liabilities are matched as follows:

Effective interest rate

1 to 30 days 31 to 90 days 91 to 180 days 181 to 360 days 360 to 720 days More than 720

days Total

Colones: Assets Investment in securities

7.00% ¢ 135.813.569.050 102.071.174.496 88.984.284.062 88.663.579.430 99.951.424.433 187.428.181.605 702.912.213.076

Loan portfolio 9.88% 1.001.686.662.567 80.433.170.638 35.986.149.967 46.445.831.271 72.044.741.514 345.069.804.798 1.581.666.360.755

Total recovery of assets (*) 1.137.500.231.617 182.504.345.134 124.970.434.029 135.109.410.701 171.996.165.947 532.497.986.403 2.284.578.573.831

Liabilities

Obligations with the public 31.643.080.169 5.715.995.215 46.464.179 3.080.896.118 164.306.306 216.924.708 40.867.666.695 Demand 2.38% Term 6.41% Obligations with financial entities

4.66% 162.990.446.286 304.838.921.942 338.699.484.598 141.517.045.175 15.429.971.799 11.610.998.218 975.086.868.018

Total matured liabilities (*) 194.633.526.455 310.554.917.157 338.745.948.777 144.597.941.293 15.594.278.105 11.827.922.926 1.015.954.534.713

Asset and liability gap ¢ 942.866.705.162 (128.050.572.023) (213.775.514.748) (9.488.530.592) 156.401.887.842 520.670.063.477 1.268.624.039.118

US Dólares: Assets Investment in securities

3.07% ¢ 147.087.383.521 23.549.671.601 129.133.479.137 174.223.943.343 49.243.409.566 78.931.593.559 602.169.480.727

Loan portfolio 6.47% 770.035.620.404 373.629.276.893 220.211.389.448 116.181.286.184 69.474.896.433 125.069.721.678 1.674.602.191.040

Total recovery of assets (*) 917.123.003.925 397.178.948.494 349.344.868.585 290.405.229.527 118.718.305.999 204.001.315.237 2.276.771.671.767 Liabilities Obligations with the public 202.114.457.901 98.642.021.082 36.001.130.254 50.947.919.905 96.724.498.417 63.328.094.520 547.758.122.079 Demand 0.66% Term 1.69%

Obligations with financial entities

0.17% 25.107.086.816 112.982.549.335 274.223.387.209 491.247.034.104 74.713.224.782 228.241.244.840 1.206.514.527.086

Total matured liabilities (*) 227.221.544.717 211.624.570.417 310.224.517.463 542.194.954.009 171.437.723.199 291.569.339.360 1.754.272.649.165

Asset and liability gap ¢ 689.901.459.208 185.554.378.077 39.120.351.122 (251.789.724.482) (52.719.417.200) (87.568.024.123) 522.499.022.602


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As of March 31, 2017, interest rate terms for assets and liabilities are matched as follows:

Effective interest

rate 1 to 30 days 31 to 90 days 91 to 180 days 181 to 360 days 360 to 720 days More than 720

days Total Colones Assets Investment in securities 7.22% ¢ 66.793.337.381 64.015.868.673 70.873.540.545 160.392.092.926 156.065.454.291 200.934.296.463 719.074.590.279 Loan portfolio 9.90% 687.848.182.210 45.329.993.639 41.955.015.460 59.671.453.701 111.633.163.317 606.703.896.558 1.553.141.704.885 Total recovery of assets (*) 754.641.519.591 109.345.862.312 112.828.556.005 220.063.546.627 267.698.617.608 807.638.193.021 2.272.216.295.164

Liabilities Obligations with the public 18.153.040.778 12.601.226.689 5.540.203.820 2.456.724.182 177.009.437 187.936.783 39.116.141.689 Demand 2.01% Term 5.62% Obligations with the Central Bank of Costa Rica 71.900.000.000 0 0 0 0 0 71.900.000.000 Obligations with financial entities 2.77% 118.585.354.697 238.684.217.213 242.814.497.794 137.419.250.917 90.768.340.884 12.089.045.069 840.360.706.574 Total matured liabilities (*) 208.638.395.475 251.285.443.902 248.354.701.614 139.875.975.099 90.945.350.321 12.276.981.852 951.376.848.263 Asset and liability gap ¢ 546.003.124.116 (141.939.581.590) (135.526.145.609) 80.187.571.528 176.753.267.287 795.361.211.169 1.320.839.446.901

USDólares: Assets Investment in securities 2.74% ¢ 141.326.559.993 27.752.829.194 27.959.442.617 74.756.575.576 188.998.535.443 40.206.099.230 501.000.042.053 Loan portfolio 6.35% 653.627.135.756 309.700.663.304 235.079.101.918 155.493.337.861 148.984.833.495 238.286.408.426 1.741.171.480.760 Total recovery of assets (*) 794.953.695.749 337.453.492.498 263.038.544.535 230.249.913.437 337.983.368.938 278.492.507.656 2.242.171.522.813

Liabilities 174.178.869.255 85.603.271.283 62.430.393.592 69.729.336.605 56.491.038.631 97.062.600.858 545.495.510.224

Demand 0.51% Term 1.64% Obligations with financial entities 0.09% 38.217.868.039 71.638.270.735 250.346.237.506 189.990.411.412 86.829.516.119 521.214.055.832 1.158.236.359.643 Total matured liabilities (*) 212.396.737.294 157.241.542.018 312.776.631.098 259.719.748.017 143.320.554.750 618.276.656.690 1.703.731.869.867 Asset and liability gap ¢ 582.556.958.455 180.211.950.480 (49.738.086.563) (29.469.834.580) 194.662.814.188 (339.784.149.034) 538.439.652.946


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Within the gap report (rate-sensitive assets and liabilities) in local currency, a total difference of asset recovery less maturity of liabilities as of march 31, 2018, for ¢1.249.106.694.203 (¢1.268.624.039.118 and ¢1.320.839.446.901 as of December and March 2017, respectively) while in foreign currency the same difference is of ¢509.303.0222.986 (¢522.499.022.602 and ¢538.439.652.946 as of december and marchde 2017, respectively), being an improved inference in the balance sheet due to positive changes in interest rates, since the entity presents more assets than liabilities in both currencies. Regarding to term matching (sum of liquidity of assets and liabilities), as of march, 2018 the total amount in local currency was of ¢376.894.259.949 (¢379.770.945.163 and ¢370.733.566.517 as of december and march 2017, respectively), while in foreign currency, the collected data for the compliance of obligations was of ¢244.675.726.671 (¢217.950.801.050 and ¢198.147.065.176 as of December and March 2017, respectively), which shows the necessary solvency to meet the liquid liabilities of the Organization.

(g) Foreign exchange risk

The Bank incurs in transactions denominated in US dollars and Euros. This currency experiences periodic fluctuations with respect to the Costa Rican colon, in accordance with the monetary and exchange policies of the Central Bank of Costa Rica (BCCR). Therefore, any fluctuation in the value of the US Dollar affects the results, financial position and cash flows of the entity, which constantly monitors its net foreign currency exposure in order to minimize this risk. The sensitivity analysis carried out on the net exposure in this currency as of September 30, 2016 indicates that variations of up to 5% in the Costa Rican colon exchange rate would result in exchange losses or gains, depending on whether a devaluation or revaluation of the colon occurs.

The Bank uses two indicators to manage the foreign exchange risk: matching assets and liabilities denominated in foreign currency and value at risk (VaR). The upper limit to the net foreign currency position of the dollarized daily assets was eliminated by the General Board of Directors in January 2017, in response to changes in the new Foreign Exchange Transaction Regulations. Instead, a proposal to completely mitigate the foreign exchange risk of equity sufficiency, raising the net position in foreign currency by around 40% of the total equity, was developed. In order to improve the dollar term match and the Liquidity Coverage Index in this same currency, Treasury Management had to keep a long position in foreign currency, reching US$161 million (US$1.585 million and US$147.55 million as of December and March 2017, respectively). This position could increase gradually according to the authorized plan to comply with the Central Bank Regulation.

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The Bank has established a risk limit of 1.5% for the VaR to the open position in foreign currency. In the first quarter of 2018, the volatility of the exchange rate had a stable behavior, causing the daily VaR to fall from 0.39%, which is very loose as compared to the established limit. Assets and liabilities in US dollars are detailed as follows:


Assets: Cash and due from banks US$ 535.123.073 528.231.876 558.408.619 Investment in financial instruments 989.110.054 1.054.700.462 898.015.686

Loan portfolio 3.324.998.435 3.350.847.455 3.481.740.825

Accounts and interest receivable 6.803.698 6.252.042 6,092,274 Other assets 13.044.965 12.470.730 15.361.577 Total assets 4.869.080.225 4.952.502.565 4.959.618.981

Liabilities:

Obligations with the public 2.519.243.833 2.605.352.160 2.666.564.886

Obligations with the Central Bank of Costa Rica 0 835.693 0

Other financial obligations 1.960.404.811 2.001.384.389 1.961.495.739 Other accounts payable and provisions 32.631.568 25.897.814 33.296.164

Other liabilities 59.331.360 16.888.830 15.099.728

Subordinated obligations 40.134.581 40.121.354 40.116.609

Total liabilities 4.611.746.153 4.690.480.240 4.716.573.126 Net position US$ 257.334.072 262.022.325 243.045.855

The valuation of monetary assets and liabilities in foreign currency is carried out with reference to the purchase exchange rate set by the BCCR the last business day of each month. As of March, 2018, it was ¢562.40 per US$1.00 (¢566.42 and ¢554.43 per US$1.00 December and March 2017, r respectively).

The net position is not covered with any instrument; however, the Bank considers it remains at an acceptable level for buying and selling US dollars in the market at the time it is considered as necessary.

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The following table shows the possible annual profit (loss) if there are variations of 5 percentage points in the exchange rates, respectively:


2018 2017 2017

Net position US$ 257.334.072 262.022.325 243.045.855

Closing exchange rate 562.40 566.42 554.43

5% increase in the exchange rate 28.12 28.32 26.48 Profit ¢ 7.236.234.105 7.420.472.244 6.737.231.101

Sensitivity to a decrease in the exchange rate


2018 2017 2017 Net position US$ 257.334.072 262.022.325 243.045.855 Closing exchange rate 562.40 566.42 554.43 5% increase in the exchange rate 28.12 (28.32) (26.48)

Loss ¢ (7.236.234.105) (7.420.472.244) (6.737.231.101)

Assets and liabilities in Euros are detailed as follows:


2018 2017 2017

Assets:

Cash and due from banks EUR€ 6.584.879 4.967.082 5.912.771

Other assets 690 805 657 Total assets 6.585.569 4.967.887 5.913.428

Liabilities:

Obligations with the public 4.335.830 4.212.989 4.251.259

Other financial obligations 621.736 614.736 622.740

Other accounts payable and provisions 7.674 13.657 272.354

Other liabilities 0 488 18.110

Total liabilities 4.965.240 4.841.870 5.164.463

Net position (surplus assets on

monetary liabilities) EUR€ 1.620.329 126.017 748.965

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As of march 31, 2018, in compliance with SUGEF's regulations, the term matching of the most important US dollars (US$) accounts are as follows:

Assets Demand 1 to 30 days

31 to 60 days

61 to 90 days

91 to 180 days

181 to 365 days

More than 365 days

More than 30 days past

due Total

Cash and due form banks US$ 211.000.836 0 0 0 0 0 124.985 0 211.125.821

Legal reserve account-BCCR 169.438.478 21.430.098 22.185.874 21.336.491 43.281.759 26.626.770 19.697.783 0 323.997.253

Investment in securities 223.827 182.206.864 173.217.422 29.813.731 271.200.080 91.484.866 233.495.211 0 981.642.001

Interest on investments 0 748.721 5.939.609 355.692 21.810 27.214 460.006 0 7.553.052

Loan portfolio 6.102.997 166.011.625 108.449.370 132.738.920 350.256.752 384.500.790 2.065.536.499 159.969.840 3.373.566.793

Interest on loans 0 4.935.023 544.691 603.325 609.095 1.094.827 4.840.726 4.432.568 17.060.255

US$ 386.766.138 375.332.331 310.336.966 184.848.159 665.369.496 503.734.467 2.324.155.210 164.402.408 4.914.945.175

Liabilities

Obligations with the public US$ 1.088.918.296 141.294.472 152.078.936 150.855.342 316.337.623 262.982.420 397.008.201 0 2.509.475.290

Obligations with financial entities

238.082.432 150.811.946 106.073.185 84.049.293 655.355.936 257.447.241 457.457.853 0 1.949.277.886

Charges payable on obligations 221.664 2.492.057 3.215.892 2.045.460 5.755.145 2.354.501 5.050.867 0 21.135.586

1.327.222.392 294.598.475 261.368.013 236.950.095 977.448.704 522.784.162 859.516.921 0 4.479.888.762

Asset and liability gaps US$ (940.456.254) 80.733.856 48.968.953 (52.101.936) (312.079.208) (19.049.695) 1.464.638.289 164.402.408 435.056.413

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As of December 31, 2017, in compliance with SUGEF's regulations, the term matching of the most important US dollar (US$) accounts are as follows:


31 to 60 days

61 to 90 days

91 to 180 days

181 to 365 days

More than 365 days


Total

Cash and due form banks US$ 177.031.521 0 0 0 0 0 50.01 0 177.081.531 Legal reserve account-BCCR 184.101.946 21.118.247 19.777.086 19.766.200 51.807.199 32.768.602 21.811.066 0 351.150.346 Investment in securities 223.078 257.157.251 9.998.333 31.472.648 217.561.193 306.493.556 228.738.024 0 1.051.644.083 Interest on investments 0 450.506 381.148 223.611 1.797.828 64.181 139.107 0 3.056.381 Loan portfolio 5.142.454 118.885.408 96.570.111 161.801.452 343.985.227 395.024.467 2.102.083.116 169.755.093 3.393.247.328 Interest on loans 0 4.875.898 411.664 998.88 714.659 704.575 4.453.768 4.200.206 16.359.650

366.498.999 402.487.310 127.138.342 214.262.791 615.866.106 735.055.381 2.357.275.091 173.955.299 4.992.539.319

Liabilities Obligations with the public 1.142.398.114 173.008.680 126.076.330 166.864.081 335.492.925 252.328.701 398.397.251 0 2.594.566.082 Obligaciones con BCCR 835.693 0 0 0 0 0 0 0 835.693 Obligations with financial

Entities 246.367.902 149.040.848 59.917.845 120.773.863 225.001.426 704.230.760 478.731.437 0 1.984.064.081 Charges payable on obligations 114.101 3.280.339 13.177.112 3.039.722 2.806.679 1.788.574 4.080.380 0 28.286.907

1.389.715.810 325.329.867 199.171.287 290.677.666 563.301.030 958.348.035 881.209.068 0 4.607.752.763

Asset and liability gaps US$ (1.023.216.811) 77.157.443 (72.032.945) (76.414.875) 52.565.076 (223.292.654) 1.476.066.023 173.955.299 384.786.556

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As of March 31, 2017, in compliance with SUGEF's regulations, the term matching of the most important US dollar (US$) accounts are as follows:


31 to 60 days

61 to 90 days

91 to 180 days

181 to 365 days

More than 365 days

More than 30 days past

due Total

Cash and due form banks US$ 227.793.489 0 0 0 0 0 50.017 0 227.843.506

Legal reserve account-BCCR 168.441.854 28.671.917 31.016.913 15.918.191 45.544.105 30.308.046 10.664.087 0 330.565.113

Investment in securities 589.559 253.540.461 39.774.621 4.647.455 49.677.290 137.190.389 407.492.454 0 892.912.229

Interest on investments 0 351.756 3.709.950 108.022 198.520 24.124 711.083 0 5.103.455

Loan portfolio 26.421.857 112.677.352 113.451.840 125.964.504 303.387.158 393.018.859 2.386.109.587 52.745.281 3.513.776.438

Interest on loans 0 7.298.809 462.240 467.431 518.702 757.656 3.571.777 2.270.742 15.347.357

423.246.759 402.540.295 188.415.564 147.105.603 399.325.775 561.299.074 2.808.599.005 55.016.023 4.985.548.098

Liabilities:

Obligations with the public 1.112.214.528 202.989.918 204.956.019 122.274.698 375.058.873 290.510.743 348.191.291 0 2.656.196.070

Obligations with BCCR 0 0 0 0 0 0 0 0 0 Obligations with financial entities 225.628.712 160.179.802 36.007.817 87.417.210 216.431.422 179.907.389 1.046.394.288 0 1.951.966.640

Charges payable on obligations 241.529 3.121.887 2.176.690 2.116.309 6.573.142 2.814.374 2.952.670 0 19.996.601

1.338.084.769 366.291.607 243.140.526 211.808.217 598.063.437 473.232.506 1.397.538.249 0 4.628.159.311

Asset and liability gaps US$ (914.838.010) 36.248.688 (54.724.962) (64.702.614) (198.737.662) 88.066.568 1.411.060.756 55.016.023 357.388.787

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The Bank faces this kind of risk when the value of its dollar-denominated assets and liabilities is affected by exchange rate variations, which is recognized in the income statement.

As of March 31, 2018 and 2017, the financial statements show a net foreign exchange loss of ¢172.245.477 and ¢237.534.477, respectively.

(h) Operational risk management

According to previous statements in compliance with the guidelines developed in the agreements of the Basel Committee and the intentions of the Supervisor, operating or operational risk is defined as the risk of loss resulting from inadequate use or unforeseen failure of processes, personnel and internal and even automated systems or due to external events. This definition includes technological and legal risks, according to the generalized definition and the previous committee, but excludes the strategic and reputational risk.

The objective of BCR Financial Conglomerate in operational risk management is to minimize the financial losses, as well as achieving efficiency and effectiveness in the execution of processes and optimize its Internal Control System

Essentially, the model of management and control of operational risk in the Conglomerate comprises a set of qualitative and quantitative techniques and tools that allow determining the risk level in the substantive processes; this from the estimate of the probability of occurrence of identified relevant events and their impact. It also includes the assessment of effectiveness of existing management measures, as well as the implementation of risk management plans.

Regarding the calculation of regulatory capital, the BCR uses the basic method; however, it has been proposed to soon start the project to evolve to the standard method proposed by the Basel Committee. However, the priority in the operational risk management continues to focus on prevention and mitigation in the relevant processes.

Moreover, there is a monitoring of the risk indicators related to the most relevant or critical activities of the Bank resulting in mitigating actions that prevent from materializing the events and contingency plans for those events that present for deviations from the acceptability of the established parameters.

Given the nature of the entity and the risks inherent to its activities, the risk of internal and external fraud is considered as relevant, for which periodic training programs are implemented on elements that collaborate in the early detection of cases, as well as prevention announcements that warn of the different types of fraud and their evolution in our environment. Likewise, there are contingency plans that will be activated in case of non-compliance with the tolerance limit.

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Regarding the IT risk management, there is an availability and implementation of an annual risk assessment plan in accordance with provisions established by SUGEF 14-17 “Regulation on the management of information technology”. These exercises identify and analyze the main risk events that might affect the smooth operation of the technological platform to develop management plans for a proper control. In addition, the most relevant risks are considered, starting with the interruption of software applications (programs) that support the critical functions of the Entity.

As an improvement derived from the monitoring of this risk, the goal of program availability was increased. On the other hand, the risk of failed changes, which could lead to interruptions of critical business functions, has had an acceptable behavior in the last quarter, being above the tolerance defined for this risk. Finally, regarding the risk of vulnerabilities in the technological platform exposed to the Internet, the behavior has been within the parameters of acceptability, and risk appetite. It should be noted that for each of the aforementioned risks there are contingency plans that would be activated in case of breach of the tolerance or their limit. Comprehensive test of Business Continuity Related to the topic of going concern and as requested by the SUGEF 18-16 agreement, the Bank of Costa Rica recently updated the Business Impact Analysis (BIA) as part of the methodology used, taking into consideration the business activities and the related aspects, such as: regulations, laws, among others. Likewise the assets that support these services identified as critical are: resources, people, infrastructure, technology, among others. The commercial offices are the physical channel through which the bank offers its products and services to the clients and it is of great importance to have a plan, in case of an interruption of the priority services offered by the Bank. The Contingency Plan of the Commercial Offices contains the customer service protocols and the steps to be developed for the attention of the critical products identified in the Business Impact Analysis (BIA). The common scenario of interruption is mainly based on the non-availability of services, which is the effect on communication between a commercial office and the Bank's data center. The application of the contingency plan allows the personnel to exercise themselves in the event of a real affectation, in addition to identifying weaknesses, proposing improvements and adjusting the existing procedures.

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The Business Continuity Unit manages the necessary adjustments for the correct functioning of the contingency plan with the commercial and technology areas, based on the identified errors and results obtained from the application of tests, as well as preparing programs for staff training to strengthen the culture in business continuity issues. It is through tests that the effectiveness and efficiency of the business continuity plans can be measured and evaluated; in addition, the results of these tests, allow the organization to acquire the capacity to support, respond and resume the normal operation of its functions within a prudential period of time, so that business is not compromised and thus minimize the negative impacts that an interruption has on the organization. Last, regarding the management of the risks of money laundering, terrorism financing and proliferation of weapons of mass destruction, the permanent reinforcement of the culture in the business areas is maintained with respect to the approach and risk based management, which is directed to prevent operations of concealment and mobilization of capital of doubtful origin, money laundering, financing terrorist activities or the proliferation of weapons of mass destruction through the Bank. This management integrates evaluation factors normatively defined as: clients, products, services, channels and geographical areas.

(39) Financial information of the Development Financing Fund

The Bank presents the following financial information as manager of the Development Financing Fund (DFF):

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DEVELOPMENT FINANCING FUND BALANCE SHEET

As of March 31, 2018, december and march, 2017 Financial Information

(In colones without cents)


2018 2017 2017

ASSETS

Cash and due from banks ¢ 3.298.509.371 456.220.221 0 Cash 3.298.509.371 456.220.221 0

Investment in financial instruments 6.028.634.042 6.457.767.798 9.058.329.565

Held for trading 6.028.634.042 6.457.767.798 4.004.767.771 Available-for-sale 0 0 4.998.042.350 Interest receivable 0 0 55.519.444 Loan portfolio 16.148.009.924 16.009.738.064 13.453.713.524 Current loans 13.863.345.979 13.939.161.489 11.258.814.698 Past due loans 2.150.453.647 2.041.149.926 2.068.369.936

Loans on legal collection 221.878.677 160.450.795 194.445.654 Interest receivable 89.289.968 83.950.890 83.517.646 (Allowance for impairment) (176.958.347) (214.975.036) (151.434.410) Accounts and comissions receivable 0 22.814 0 Other accounts receivable 185.592 185.592 117.511 (Allowance for impairment) (185.592) (162.778) (117.511) Other assets 0 0 62 Other assets 0 0 62

TOTAL ASSETS

25.475.153.337 22.923.748.897 22.512.105.078

LIABILITIES Obligations with entities

0 0 52.100.404

Obligations with entities 0 0 52.100.404 Accounts payable and provisions

12.446.371 10.566.090 10.114.257

Other miscellaneous accounts payable 12.446.371 10.566.090 10.114.257 Other liabilities 161.527.171 149.700.939 100.648.467 Diferred income 161.527.171 149.700.939 100.648.467

TOTAL LIABILITIES

173.973.542 160.267.029 162.863.128

EQUITY Contributions from Banco Central de Costa Rica 18.706.830.097 16.453.413.516 16.453.413.516 Accumulated results from previous years 6.310.068.352 5.647.507.701 5.647.507.701 Result of the current period 284.281.346 662.560.651 248.320.733

TOTAL EQUITY

25.301.179.795 22.763.481.868 22.349.241.950

TOTAL LIABILITIES AND EQUITY ¢ 25.475.153.337 22.923.748.897 22.512.105.078

DEBIT CONTINGENT ACCOUNTS ¢ 31.411.000 7.261.835 24.395.315

OTHER DEBIT MEMORANDA ACCOUNTS

Own debit memoranda accounts 5.597.969.015 5.700.590.923 5.712.128.454

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DEVELOPMENT FINANCING FUND

Income Statement

Fort he periods ended March 31, 2018 and 2017

Financial Information

(In colones without cents)

March March

2018 2017

Financial income

For investments in financial instruments 1 68.750.000

For loan portfolio ¢ 293.460.072 235.956.758 For exchange differences 0 4.803.190

Gain on available for-sale financial instruments 73.380.082

4.935.163

Total financial income 366.840.155 314.445.111 Financial expenses For losses on exchange differences 1.670.266 0

Total financial expenses 1.670.266 0

For allowance on loan portfolio 38.551.191 7.578.357

For recovery of assets and decrease in allowance

76.536.390

23.563.206

Financial income 403.155.088 330.429.960

Other operating income

For other operating income 6.989.640 3.026

For currency exchange and arbitraje 70.685 186

For commissions for services 223 7.892.515

Total other operating income 7.060.548 7.895.727

Other operating expenses

For currency exchange and arbitraje 900 6

For other opersating expenses 125.933.390 89.963.980

Total other operating expenses 125.934.290 89.963.986 Operating income,net 284.281.346 248.361.701 Administrative expenses

For other administrative expenses 0 40.968

Total administrative expenses 0 40.968

Income of the period ¢ 284.281.346 248.320.733

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Loan Portfolio of the Development Financing Fund The information contained in notes a) through f) below corresponds to financial information.



2018 2017 2017

Sector

Agriculture, livestock, hunting and

related services ¢ 4.400.050.125 4.117.253.382 3.170.542.800

Fishing and aquaculture 3.839.041 3.918.827 25.552.884

Manufacturing 2.112.573.933 2.164.218.133 2.608.702.781

Mining and quarrying 56.602.809 56.995.832 60.282.817

Trade 38.438.207 42.303.681 80.175.436

Services 8.881.047.952 8.965.153.672 6.660.134.865

Trasnportation 324.136.953 361.847.410 420.785.994

Real estate, business activities

and rental 13.535.833 13.535.834 39.297.842

Construction, purchase and

repair of real estate 80.291.510 82.952.322 95.592.335

Consumption

Hotels and restaurants 284.633.315 291.555.515 310.436.490

Education 40.528.625 41.027.602 50.126.044

16.235.678.303 16.140.762.210 13.521.630.288

Plus: interest receivable 89.289.968 83.950.890 83.517.646

Less: allowance for impairment (176.958.347) (214.975.036) (151.434.410)

¢ 16.148.009.924 16.009.738.064 13.453.713.524

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b) Loan portfolio by arrears:

The loan portfolio by arrears is detailed as follows: March December March 2018 2017 2017

Up to date ¢ 13.863.345.979 13.939.161.489 11.258.814.698 1 to 30 days 1.345.853.299 1.121.928.700 1.210.978.698 31 to 60 days 446.008.454 505.542.996 600.506.896 61 to 90 days 165.418.735 298.469.195 122.107.766 91 to 120 days 153.088.524 47.130.891 58.898.817 121 to 180 days 46.825.452 58.008.530 0 More than 180 days 215.137.860 170.520.409 270.323.413

¢ 16.235.678.303 16.140.762.210 13.521.630.288

c) Past due loans

Past due loans, including loans in accrual status, for which interest are recognized on a cash basis, and unearned interest on past due loans, are as follows:


2018 2017 2017

Number of operations 13 13 17

Past due loans in non- accrual status of interest ¢ 215.137.860 170.520.409 270,323,413

Past due loans for which

interest is recognized ¢ 2.157.194.464 2.031.080.312 1,992,492,177

Total unearned interest ¢ 31,659,398 29.151.313 29.713.415

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As of March 31, 2018, loans on legal collection are as follows:

# operations

Percentage

Balance

11 1.37% ¢ 221.878.677

As of December 31, 2017, loans on legal collection are as follows:

# operations

Percentage

Balance

12 0.99% ¢ 160.450.795

As of March 31, 2017, loans on legal collection are as follows:

# operations

Percentage

Balance 14 1.44% ¢ 194.445.654

d) Interest receivable on loan portfolio

Interest receivable is as follows:


2018 2017 2017

Current loans ¢ 44.915.996 44.911.801 42.143.548 Past due loans 34.066.371 31.445.754 31.474.300 Loans on legal collection 10.307.601 7.593.335 9.899.798

¢ 89.289.968 83.950.890 83.517.646

e) Allowance for bad loans

The movement in the allowance for bad loans is as follows:

Opening balance 2018 ¢ 213.689.820

Plus:

Allowance charged to profit or loss 38.528.376

Adjustments for exchange rate differences 1.285.215

Less:

Adjustment for Exchange differences (8.674)

Reversal of allowance against income (76.536.390)

Balance as of March 31, 2018 ¢ 176.958.347

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Plus:


Adjustments for exchange rate differences 125.856

Less:


Balance as of December 31, 2017 ¢ 213.689.820


Plus:


Adjustments for exchange rate differences 16.183

Less:


Balance as of March 31, 2017 ¢ 151.434.410

f) Loan portfolio by type of guarantee:

The loan portfolio by type of guarantee is as follows:


2018 2017 2017

Guarantee

Fiduciary ¢ 35.743.796 38.928.088 48.282.511 Mortgage 5.758.973.922 5.755.713.581 3.461.317.913 Chattel 4.807.343.994 4.918.189.946 4.474.504.278 Others 5.633.616.591 5.427.930.595 5.537.525.586 ¢ 16.235.678.303 16.140.762.210 13.521.630.288

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g) Financial instruments of the Development Financing Fund with credit risk exposure are detailed as follows:

Cartera de Crédito Directa March December March

2018 2017 2017

Principal ¢ 16.235.678.303 16.140.762.210 13.521.630.288

Interest receivable 89.289.968 83.950.890 83.517.646

16.324.968.271 16.224.713.100 13.605.147.934 Allowance for bad loans (176.958.347) (214.975.036) (151.434.410)

Carrying amount ¢ 16.148.009.924 16.009.738.064 13.453.713.524

Loan portfolio

Total balances

A1 ¢ 13.463.574.302 13.336.488.134 10.954.008.792

A2 577.485.587 644.171.623 316.860.234

B1 547.640.639 557.101.934 764.206.333

B2 45.446.483 230.036.040 77.693.849

C1 660.238.454 705.807.935 310.213.100

C2 0 102.867.427 0

D 195.052.224 108.479.802 128.215.112

E 835.530.582 539.760.205 1.053.950.514 16.324.968.271 16.224.713.100 13.605.147.934

Minimum allowance (156.881.434) (199.598.074) (151.434.401)

Carrying amount, net ¢ 16.168.086.837 16.025.115.026 13.453.713.533

Carrying amount 16.324.968.271 16.224.713.100 13.605.147.934 Allowance for bad loans (156.881.434) (199.598.074) (151.434.401) Allowance (surplus) deficit

on minimum allowance (20.076.913) (15.376.962) (9)

Carrying amount, net 6a ¢ 16.148.009.924 16.009.738.064 13.453.713.524

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h) The assessed loan portfolio including allowance is detailed as follows:

As of march 31, 2018 Loan portfolio Direct Loan Portfolio

Direct generic allowance Principal Covered

balance Overdraft Allowance

A1 ¢ 13.463.574.302 7.784.581.368 5.678.992.934 67.357.135

A2 577.485.588 563.214.911 14.270.677 2.887.428

14.041.059.890 8.347.796.279 5.693.263.611 70.244.563 Direct specific allowance

B1 547.640.639 433.891.392 113.749.247 7.856.919

B2 45.446.482 45.446.483 0 227.233

C1 660.238.454 660.238.454 0 3.301.192

D 195.052.224 183.336.513 11.715.710 9.703.466

E 835.530.582 742.191.060 93.339.522 65.548.061 2.283.908.381 2.065.103.902 218.804.479 86.636.871 16.324.968.271 10.412.900.181 5.912.068.090 156.881.434 Loan portfolio

Aging of loan portfolio Direct Loan Portfolio Direct generic allowance Principal Covered


Up to date 13.378.059.752 7.799.755.353 5.578.304.399 66.929.563

Equal or less than 30 days 663.000.138 548.040.926 114.959.212 3.315.001

14.041.059.890 8.347.796.279 5.693.263.611 70.244.564

Direct specific allowance

Up to date 530.202.224 442.352.122 87.850.102 10.606.598




Equal or less than 180 days 206.913.712 206.913.712 0 1.034.568

More than 180 days 225.665.581 184.319.077 41.346.504 42.268.099

2.283.908.381 2.065.103.902 218.804.479 86.636.870

16.324.968.271 10.412.900.181 5.912.068.090 156.881.434

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As of December 31, 2017 Loan portfolio Direct Loan Portfolio

Direct generic allowance

Principal Covered balance

Overdraft Allowance

A1 ¢ 13.336.488.134 8.121.330.176 5.215.157.958 66.691.518 A2 644.171.623 581.346.726 62.824.897 3.220.858 13.980.659.757 8.702.676.902 5.277.982.855 69.912.376

Direct specific allowance B1 557.101.934 551.329.612 5.772.322 3.045.264 B2 230.036.040 230.036.040 0 1.150.180 C1 705.807.935 651.343.915 54.464.020 16.872.725 C2 102.867.427 92.135.310 10.732.117 5.826.735 D 108.479.802 108.479.802 0 542.399 E 539.760.205 419.351.803 120.408.402 102.248.395 2.244.053.343 2.052.676.482 191.376.861 129.685.698 16.224.713.100 10.755.353.384 5.469.359.716 199.598.074

Loan portfolio

Aging of loan portfolio Direct Loan Portfolio


Principal Covered balance

Overdraft Allowance

Up to date 13.302.483.869 8.089.656.864 5.212.827.005 66.521.497 Equal or less than 30 days 657.819.959 592.664.108 65.155.851 3.289.100 Equal or less than 60 days 20.355.929 20.355.929 0 101.780 13.980.659.757 8.702.676.901 5.277.982.856 69.912.377


Up to date 681.589.421 610.136.180 71.453.241 19.187.362 Equal or less than 30 days 454.955.408 437.220.018 17.735.390 8.819.357 Equal or less than 60 days 512.818.035 512.818.035 0 2.564.090 Equal or less than 90 days 306.625.335 290.291.655 16.333.681 12.249.286 Equal or less than 180 days 109.526.209 75.489.527 34.036.682 34.414.130 More than 180 days 178.538.935 126.721.068 51.817.867 52.451.472

2.244.053.344 2.052.676.483 191.376.861 129.685.697 16.224.713.101 10.755.353.384 5.469.359.717 199.598.074

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As of march 31, 2017 Loan Portfolio Direct Loan Portfolio

Direct generic allowance Principal Covered balance Overdraft Allowance

A1 ¢ 10.954.008.792 7.835.899.361 3.118.109.431 38.351.599

A2 316.860.234 128.220.637 188.639.596 1.109.011

11.270.869.026 7.964.119.998 3.306.749.027 39.460.610


B1 764.206.333 659.171.223 105.035.110 7.558.855

B2 77.693.849 67.480.689 10.213.160 1.257.498

C1 310.213.100 296.886.411 13.326.689 4.370.775

C2 0 0 0 0

D 128.215.112 128.215.112 0 448.753

E 1.053.950.514 917.484.517 136.465.998 98.337.910

2.334.278.908 2.069.237.952 265.040.957 111.973.791

13.605.147.934 10.033.357.950 3.571.789.984 151.434.401

Loan portfolio


Direct generic allowance Principal Covered balance Overdraft Allowance

Up to date 10.325.726.880 7.059.653.304 3.266.073.577 36.152.612


Equal or less than 60 days 93.408.512 84.611.065 8.797.447 326.930

11.270.869.025 7.964.119.999 3.306.749.027 39.460.610


Up to date 975.231.365 893.266.404 81.964.962 15.266.281





More than 180 days 283.213.666 227.654.604 55.559.060 56.355.851

2.334.278.909 2.069.237.951 265.040.957 111.973.791

13.605.147.934 10.033.357.950 3.571.789.984 151.434.401

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Loans receivable from clients

As of March 31, 2018 Gross Net

Risk category: A1 ¢ 13.463.574.302 13.396.217.167 A2 577.485.588 574.598.160 B1 547.640.639 539.783.719 B2 45.446.482 45.219.250 C1 660.238.454 656.937.262 D 195.052.224 185.348.759 E 835.530.582 769.982.520

¢ 16.324.968.271 16.168.086.837


As of December 31, 2017 Gross Net

Risk category A1 ¢ 13.336.488.134 13.269.796.616 A2 644.171.623 640.950.764 B1 557.101.934 554.056.670 B2 230.036.040 228.885.860 C1 705.807.935 688.935.210 C2 102.867.427 97.040.692 D 108.479.802 107.937.403 E 539.760.205 437.511.811

¢ 16.224.713.100 16.025.115.026

Loans receivable from clients As of March 31, 2017 Gross Net Risk category A1 ¢ 10.954.008.792 10.915.657.193 A2 316.860.234 315.751.223 B1 764.206.333 756.647.478 B2 77.693.849 76.436.351 C1 310.213.100 305.842.325 D 128.215.112 127.766.359 E 1.053.950.514 955.612.604

¢ 13.605.147.934 13.453.713.533

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(40) Situation of the Development Credit Fund

The Bank presents the following financial information as manager of the Development Credit Fund (DCF):

FONDO DE CRÉDITO PARA EL DESARROLLO

BALANCE SHEET As of March 31, 2018, december and march, 2017

Financial Information (In colones without cents)


ASSETS Cash and due from banks ¢ 1.070.071.847 1.431.188.931 1.868.978.250 Central Bank of Costa Rica 1.070.071.847 1.431.188.931 1.868.978.250 Investments in financial instruments 113.563.821.763 123.501.470.732 126.344.631.811 Held-for-trading 152.809.710 150.912.439 0 Available-for-sale 112.337.955.632 122.556.403.334 125.431.851.323 Interest receivable 1.073.056.421 794.154.959 912.780.488 Loan portfolio 23.979.028.059 20.348.252.313 15.441.456.664 Current loans 23.683.718.379 20.303.648.955 15.384.080.910 Past due loans 470.352.648 107.366.934 0

Interest receivable 104.356.688 72.940.816 57.375.754 (Allowance for impairment) (279.399.656) (135.704.392) 0 Accounts and commissions receivable 45.887.828 45.887.828 45.887.828 Deferred income tax and income tax Receivable 45.887.828 45.887.828 45.887.828 TOTAL ASSETS ¢ 138.658.809.497 145.326.799.804 143.700.954.553

LIABILITIES Obligations with entities ¢ 138.575.575.806 144.166.608.038 142.924.838.475 Demand 138.575.575.806 144.166.608.038 142.924.838.475 Accounts payable and provisions 280.312.874 324.583.742 339.961.314 Other miscellaneous accounts payable 280.312.874 324.583.742 339.961.314 Other liabilities 273.386.511 223.218.581 145.745.898 Deferred income 273.386.511 223.218.581 145.745.898

TOTAL LIABILITIES ¢ 139,129,275,191 144.714.410.361 143.410.545.687

EQUITY Equity adjustments ¢ (422.593.639) (107.992.785) 64.764.406 Adjustment for valuation of available-for sale investments (422.593.639) (107.992.785) 64.764.406 Income of the current period (47.872.055) 720.382.228 225.644.460

TOTAL EQUITY ¢ (470,465,694) 612.389.443 290.408.866 TOTAL LIABILITIES AND EQUITY ¢ 138,658,809,497 145.326.799.804 143.700.954.553

OTHER DEBIT MEMORANDA ACCOUNTS OTHER DEBIT MEMORANDA ACCOUNTS 8.166.890.664 14.673.629.889 10.342.656.064 Own debit memoranda accounts 13.006.498 4.343.107 7.878.592

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FONDO DE CRÉDITO PARA EL DESARROLLO Income Statement

For the period ended March 31 2018 and 2017 Financial Information

(In colones without cents) March March

2018 2017 Financial income For investments in financial instruments ¢ 1.318.261.237 1.436.949.563 For loan portfolio 204.497.912 157.905.884 For exchange rate differences 0 65.469.076 For profit from available-for-sale financial instruments 14.877.290 20.464.908 Total financial income 1.537.636.439 1.680.789.431 Financial expenses For obligations with the public 506.251.345 365.785.622 For losses in exchange rate differences 82.230.768 0 Other financial expenses 1.285.555 192.010 Total financial expenses 589.767.668 365.977.632 Por estimación de deterioro de activos 235.667.745 0 Por recuperación de activos y disminución de estimaciones 91.535.892 0 FINANCIAL INCOME 803.736.918 1.314.811.799 Other operating income For service commissions and fees 16.926 161.189 For exchange and arbitration, foreign currency 15.006.684 14.434.840 For other operating expenses 4.599.760 1.212.387 Total other operating income 19.623.370 15.808.416 Other operting expenses For exchange and arbitration, foreign currency 3.366.617 9.776.311 For other operating expenses 776.762 247.900 Total other operating expenses 4.143.379 10.024.211

Operating income,net 819.216.909 1.320.596.004 Profit trasnferred to the National Development Trsut 867.088.964 1.094.951.544

INCOME OF THE PERIOD ¢ (47.872.055) 225.644.460

PROFIT SHARING Profit transfer to the National Development Trust ¢ 867.088.964 1.094.951.544 Commission for management of the National Development Trust (47.872.055) 225.644.460 ¢ 819.216.909 1.320.596.004

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Investments in financial instruments of the Development Credit Fund (DCF) are detailed as follows:


2018 2017 2017

Held to negociate ¢ 152.809.710 150.912.439

Available-for-sale 112.337.955.632 122.556.403.334 125.431.851.323

Interest receivable on available-

for-sale investments 1.073.056.421 794.154.959 912.780.488

¢ 113.563.821.763 123.501.470.732 126.344.631.811


2018 2017 2017

Available-for-trading Fair value Fair value Fair value

Local issuers:

State-owned Banks ¢ 152.809.710 150.912.439 0

¢ 152.809.710 150.912.439 0


2018 2017 2017

Available-for-sale: Fair value Fair value Fair value

Local issuers:

Government ¢ 49.604.210.847 44.518.927.614 31.445.727.187

State-owned Banks 62.733.744.785 78.037.475.720 93.986.124.136

¢ 112.337.955.632 122.556.403.334 125.431.851.323

As of November 27, 2014, after Law No. 9274 was reformed (Comprehensive Reform of the Development Banking System,), as per article 36, the managing bank will receive a commission of maximum 10% or the earnings, set by the Governing Board, to cover operation costs, services and any other cost arising from managing the investments.

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Loan Portfolio of the Development Credit Fund

The information contained in notes a) through f) below corresponds to financial information.



2018 2017 2017

Sector Agriculture, livestock, hunting

and related services ¢ 12.544.499.645 7.314.311.170 6.369.239.656

Manufacturing 6.769.217.628 7.899.767.643 4.797.582.432

Services 4.840.353.754 5.196.937.076 4.217.258.822

24.154.071.027 20.411.015.889 15.384.080.910

Plus: Interest receivabale 104.356.688 72.940.816 57.375.754 Less Allowance for impairment (279.399.656) (135.704.392) 0

¢ 23.979.028.059 20.348.252.313 15.441.456.664

b) Loan portfolio by arrears:

The loan portfolio by arrears is detailed as follows: March December March 2018 2017 2017

Up to date ¢ 23.683.718.379 20.303.648.955 15.384.080.910

1 to 30 days 398.266.805 33.820.211 0

31 to 60 days 72.085.843 73.546.723 0 ¢ 24.154.071.027 20.411.015.889 15.384.080.910

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c) Delinquent and past due loans

Delinquent and past due loans, including loans with interest recognition on cash basis and interest not received on these loans, are summarized as follows:


2018 2017 2017 Delinquent and past due loans with interest recognition ¢ 470.352.648 107.366.934 0

Total of not received interest ¢ 13.006.498 4.343.107 0

d) Interest receivable on loan portfolio

Interest receivable is detailed as follows:


Current loans ¢ 100.785.796 71.946.038 57.375.754 Past due loans 3.570.892 994.778 0

¢ 104.356.688 72.940.816 57.375.754

e) Allowance for bad loans

Balance at the beginning of 2018 ¢ 135.704.392

Plus:

Allowance to profit or loss 235.667.745

Less:

Adjustment for exchange differences (436.589)

Reversion of allowance againts income (91.535.892) Balance as of March 31, 2018 ¢ 279.399.656

Balance at the beginning of 2017 ¢ 0

Plus:

Allowance to profit or loss 136.738.694

Adjustment for Exchange differences 46.510

Less:

Reversion of allowance against income (1.080.812) Balance as of December 31, 2107 ¢ 135.704.392

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As of March 31, 2017, there were no balances due to allowance of loan impairments.

f) Loan portfolio by type of guarantee:

The loan portfolio by type of guarantee is as follows:


2018 2017 2017

Guarantee

Mortgage 3.936.253.321 4.235.120.728 3.781.636.552 Chattel 8.085.514.972 4.570.725.000 5.535.440.000 Other 12.132.302.734 11.605.170.161 6.067.004.358

¢ 24.154.071.027 20.411.015.889 15.384.080.910

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g) Financial instruments of the Development Credit Fund with credit risk exposure are

detailed as follows:

Direct Loan Portfolio March December March 2018 2017 2017

Principal ¢ 24.154.071.027 20.411.015.889 15.384.080.910

Interest receivable 104.356.688 72.940.816 57.375.754 24.258.427.715 20.483.956.705 15.441.456.664

Allowance for bad loans (279.399.656) (135.704.392) 0

Carrying amount ¢ 23.979.028.059 20.348.252.313 15.441.456.664

Loan portfolio

Total balances:

A1 ¢ 23.150.825.140 19.467.476.063 14.285.166.725 A2 33.123.231 33.974.707 112.977.017 B1 0 678.420.368 813.766.117 C1 627.876.345 0 0 D 230.771.055 229.698.561 229.546.805 E 215.831.944 74.387.006 0 24.258.427.715 20.483.956.705 15.441.456.664

Minimum allowance (279.068.416) (135.364.640) (93.413.811) Carrying amount, net ¢ 23.979.359.299 20.348.592.065 15.348.042.853

Carrying amount 24.258.427.715 20.483.956.705 15.441.456.664 Allowance for bad loans (279.068.416) (135.364.640) (93.413.811)

Allowance (surplus) deficit on minimum allowance

(331.240) (339.752) 93.413.811 Carrying amount, net 6ª ¢ 23.979.028.059 20.348.252.313 15.441.456.664

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The assessed loan portfolio including allowance is detailed as follows: As of March 31, 2018

Loan portfolio Direct Loan Portfolio


Principal Covered

balance

Overdraft

Allowance

A1 ¢ 23.150.825.140 2.401.823.476 20.749.001.664 115.754.126

A2 33.123.231 30.080.000 3.043.231 165.616

23.183.948.371 2.431.903.476 20.752.044.895 115.919.742


C1 627.876.345 0 627.876.346 156.969.086

D 230.771.055 225.473.641 5.297.413 5.100.428

E 215.831.944 215.831.944 0 1.079.160

1.074.479.344 441.305.585 633.173.759 163.148.674

¢ 24.258.427.715 2.873.209.061 21.385.218.654 279.068.416

Loan portfolio Aging of loan portfolio Direct Loan Portfolio Dirrect generic allowance

Principal Covered

balance

Overdraft

Allowance

Up to date ¢ 23.013.709.891 2.431.903.476 20.581.806.415 115.068.549

Equal to or less than 30 days 170.238.480 0 170.238.480 851.192

23.183.948.371 2.431.903.476 20.752.044.895 115.919.741


Up to date 770.794.284 142.917.939 627.876.346 157.683.677

Equal to or less than 30 days 230.771.055 225.473.641 5.297.413 5.100.428

Equal to or less than 60 days 72.914.005 72.914.005 0 364.570

1.074.479.344 441.305.585 633.173.759 163.148.675

¢ 24.258.427.715 2.873.209.061 21.385.218.654 279.068.416

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Loan portfolio Direct Loan Portfolio

Direct generic allowance Principal Covered


A1 ¢ 19.467.476.063 2.268.370.388 17.199.105.675 97.337.380 A2 33.974.707 33.974.707 0 169.874 19.501.450.770 2.302.345.095 17.199.105.675 97.507.254


B1 678.420.368 0 678.420.368 33.921.018 D 229.698.561 226.455.688 3.242.873 3.564.433 E 74.387.006 74.387.006 0 371.935 982.505.935 300.842.694 681.663.241 37.857.386 ¢ 20.483.956.705 2.603.187.789 17.880.768.916 135.364.640

Loan portfolio


Dirrect generic allowance Principal Covered


Up to date ¢ 19.467.476.063 2.268.370.388 17.199.105.675 97.337.380 Equal to or less than 30 days 33.974.707 33.974.707 0 169.874 19.501.450.770 2.302.345.095 17.199.105.675 97.507.254


Up to date 908.118.929 226.455.688 681.663.241 37.485.451 Equal or less than 30 days 74.387.006 74.387.006 0 371.935

982.505.935 300.842.694 681.663.241 37.857.386 ¢ 20.483.956.705 2.603.187.789 17.880.768.916 135.364.640

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Loan portfolio Direct Loan Portfolio Direct generic allowance Principal Covered balance Overdraft Allowance

A1 ¢ 14.285.166.725 2.776.493.055 11.508.673.669 49.998.084

A2 112.977.017 112.977.017 0 395.420

14.398.143.742 2.889.470.072 11.508.673.669 50.393.504


B1 813.766.117 0 813.766.117 40.688.306

D 229.546.805 227.499.132 2.047.674 2.332.001

1.043.312.922 227.499.132 815.813.791 43.020.307

¢ 15.441.456.664 3.116.969.204 12.324.487.460 93.413.811

Loan portfolio

Aging of loan portfolio Direct Loan Portfolio Direct generic allowance Principal Covered balance Overdraft Allowance Up to date ¢ 14.398.143.742 2.889.470.072 11.508.673.669 50.393.504

14.398.143.742 2.889.470.072 11.508.673.669 50.393.504


Up to date 1.043.312.922 227.499.132 815.813.791 43.020.307

1.043.312.922 227.499.132 815.813.791 43.020.307

¢ 15.441.456.664 3.116.969.204 12.324.487.460 93.413.811

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As of Macrh 31, 2018 Gross Net

Risk category:: A1 ¢ 23.150.825.140 23.035.071.014 A2 33.123.231 32.957.615 C1 627.876.345 470.907.259 D 230.771.055 225.670.626 E 215.831.944 214.752.784

¢ 24.258.427.715 23.979.359.299


As of December 31, 2017 Gross Net Risk category: A1 ¢ 19.467.476.063 19.370.138.682 A2 33.974.707 33.804.833 B1 678.420.368 644.499.350 D 229.698.561 226.134.128 E 74.387.006 74.015.072

¢ 20.483.956.705 20.348.592.065


As of Macrh 31, 2017 Gross Net

Risk category: A1 ¢ 14.285.166.725 14.235.168.641 A2 112.977.017 112.581.598 B1 813.766.117 773.077.811 D 229.546.805 227.214.803

¢ 15.441.456.664 15.348.042.853

Upon request by the private banks for a change as to operate in accordance with provisions contained in subparagraph ii) of N.1644, Organic Law of the National Financial System, the Governing Body of Development Banking, it authorizes the managing banks to transfer the funds of the Development Credit Fund, whose refund would be done in monthly installments during a maximum period of six months. The detail of the amounts transferred is as follows:

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2018 2017 2017

BAC San José ¢ 3.263.044.800 13.099.730.916 4.650.000.000

Banco BCT 319.360.000 0 0

Banco Improsa 251.232.000 985.027.661 333.327.856

¢ 3.833.636.800 14.084.758.577 4.983.327.856

(41) Transition to the International Financing Reporting Standards (IFRSs)

Through various resolutions, CONASSIF (the Board) agreed to partial adoption, starting January 1, 2004, of IFRSs promulgated by the International Accounting Standards Board (IASB). In order to regulate application of those Standards, the Board issued the Terms of the Accounting Regulations Applicable to Entities Regulated by SUGEF, SUGEVAL, SUPEN, and SUGESE and to Non-financial Issuers and approved a comprehensive revision of those regulations. On March 17, 2007 the Board adopted a comprehensive reform of the "Accounting standards applicable to supervised entities by SUGEF, SUGEVAL, SUPEN and SUGESE and nonfinancial issuers." On May 11, 2010, the Board issued private letter ruling CNS 413-10 to revise the Accounting Regulations Applicable to Entities Regulated by SUGEF, SUGEVAL, SUPEN, and SUGESE and to Non-financial Issuers (the Regulations), which mandate application by regulated entities of IFRSs and the corresponding interpretations issued by the IASB in effect as of January 1, 2008, except for the special treatment indicated in Chapter II of the aforementioned Regulations. Pursuant to the Regulations and in applying IFRSs in effect as of January 1, 2008, any new IFRSs or interpretations issued by the IASB, as well as any other revisions of IFRSs adopted that will be applied by regulated entities, will require the prior authorization of CONASSIF. On April 4, 2013 C.N.S. 1034/08 was issued, stating that, for the period starting January 1, 2014. IFRS 2011 shall be applied with exception of special treatments referred to in Chapter II of the rules for regulated financial entities. BICSA does not have exceptions in the application of the IFRS, therefore specific information of this subsidiary is disclosed in the notes to the financial statements, when it is necessary to reveal differences It should be noted that superintendencies as a whole have begun to review the accounting base applicable in Costa Rica for financial institutions, and further convergence is expected with existing IFRS.

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Following are some of the main differences between the accounting standards issued by the Board and IFRSs, as well as the IFRSs or interpretations of the International Financial Reporting Interpretations Committee (IFRICs) yet to be adopted: a) IAS 1: Presentation of Financial Statements

New IAS I is effective as from the periods beginning on or after January 1, 2009. The presentation of financial statements required by the Board differs in some respects from presentation under IAS 1. Following are some of the most significant differences: SUGEF Standards do not allow certain transactions, such as clearing house balances, gains or losses on the sale of financial instruments, income taxes, among others, to be presented on a net basis. Given their nature, IFRSs require those balances to be presented net to prevent assets and liabilities or profit or loss from being overstated. Accounts receivable and payable are presented as part of the principal account of both assets and liabilities and not as other assets or liabilities.

b) IAS 1: Presentation of Financial Statements (revised)

IAS 1 requires an entity to disclose reclassification adjustments and income tax relating to each component of other comprehensive income. Reclassification adjustments are amounts reclassified to profit or loss in the current period that were previously recognized in other comprehensive income.

Revised IAS I changes the name of some financial statements, using "statement of financial position" instead of balance sheet.

IAS I require an entity to present a statement of financial position as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes retrospective restatement. The financial statements presentation format is determined by the Board and can be different from the options permitted on certain IFRS and IAS.

c) IAS 7: Statements of Cash Flows

The Board has only authorized preparation of the cash flow statement using the indirect method. The direct method is also acceptable under IAS 7.

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d) IAS 12: Income Tax The SUGEF Chart of Accounts presents the items of assets, liabilities and income and expenses by deferred income tax, separately. IAS 12 allows the net presentation of assets and liabilities when they arise from the same tax entity. Income or expenses under IAS 12 must be presented as part of the total income tax, net.

e) IAS 8: Accounting Policies. Changes in Accounting Estimates. and Errors

In some cases, SUGEF has authorized the reporting of notices of deficiencies received from Tax Authorities against prior period retained earnings.

f) IAS 16: Property, Plant and Equipment The Standard issued by the Board requires the revaluation of property through appraisals made by independent appraisers at least once every five years, eliminating the option to carry these assets at cost or to revalue other types of assets. Furthermore, SUGEF permits the conversion (capitalize) of the surplus revaluation directly in equity (only for state banks), without having to relocate previously to retained earnings, as required by IAS 16. Moreover, under IAS 16, depreciation continues on property, plant and equipment, even if the asset is idle. The Standard issued by the Board allows entities to suspend the depreciation of idle assets and reclassify them as realizable assets.

g) IAS 18: Revenue

The Board has allowed regulated financial entities to recognize loan fees and commissions collected prior to January 1, 2003 as revenue. Additionally, the Board has permitted the deferral of the credit fee formalization of 25%, 50%, and 100% of loan fees and commissions for transactions completed in 2003, 2004, and 2005, respectively. IAS 18 prescribes deferral of 100% of those fees and commissions over the loan term.

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The Board has also allowed deferral of the net excess of loan fee income minus expenses incurred for activities such as assessment of the borrower's financial position, evaluation and recognition of guarantees, sureties, or other collateral instruments, negotiation of the terms of the instrument, preparation and processing of documents, and settlement of the operation. IAS 18 does not allow deferral on a net basis of loan fee income. Instead, it prescribes deferral of 100% of loan fee income, and permits the deferral of only certain incremental transaction costs, rather than all direct costs. Accordingly, when costs exceed income, loan fee income is not deferred, since the Board only allows the net excess of income over expenses to be deferred. This treatment does not conform to IAS 18 and IAS 39, which prescribe separate treatment for income and expenses (see comments on IAS 39). Starting as of January 1, 2014 the treatment of loan commissions was implemented as directed in IAS 18.

h) Revised IAS 19: Employee Benefits

This standard is modified to recognize that the discount rate to be used must correspond to bonds in local currency. The transition date is for periods beginning on or after Juanuary 1, 2016 and may be applied in advance, disclosing that fact. Any adjustment for its application must be made against retained earnings at the beginning of the period.

This standard is for application in the periods that begin in or after January, 1, 2013. It includes changes referring to the benefit plans defined for which it previously required that the measurements of the actuarial appraisals were recognized in the income statement or in the other comprehensive income. The new IAS 19 will require the changes in measurements to be included in other comprehensive income and the cost of services and net interest to be included in the income statement.

i) IAS 21: The Effects of Changes in Foreign Exchange Rates The Board requires that the financial statements of regulated entities to be presented in colones as the functional currency.

j) IAS 23: Borrowing Costs

A company treats as part of general financing any financing originally made to develop an asset, when this asset is ready for use or sale.

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k) IAS 24: Related Party Disclosures The International Accounting Standards Board revised IAS 24 in 2009 in order to: (a) simplify the definition of "related parties", clarify the meaning to be given to this term and eliminate the incoherencies of the definition; (b) Provide a partial exemption from the requirement of information disclosed by entities related to the government. This standard will be applied retroactively for the annual periods starting as from January 1, 2011.

l) IAS 27: Consolidated and Separate Financial Statements

The Board requires that the financial statements of a parent entity to be presented separately, measuring its investments by the equity method. Under IAS 27, a parent is required to present consolidated financial statements. A parent company needs not to present consolidated financial statements when the ultimate or any intermediate parent of the parent produces consolidated financial statements available for public use, provided certain other requirements are also met. However, in this case. IAS 27 requires that investments be accounted for at cost. With the modifications to IAS 27 effective as of 2014, in the preparation of separate financial statements, investments in subsidiaries and associates may be accounted for at cost, in accordance with IFRS 9 or using the equity method described in the IAS 28. However, the Council have not yet been adopted the modifications to IAS 27. In the case of financial groups, the holding company must consolidate the financial statements of all of the companies of the group in which it holds an ownership interest of twenty-five percent (25%) or more, irrespective of control. For such purposes, proportionate consolidation should not be used, except in the consolidation of investments in joint ventures. Amended IAS 27 (2008) requires accounting for changes in ownership interests by the Bank in a subsidiary, while maintaining control, to be recognized as an equity transaction. When the Bank loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognized in profit or loss. The amendments to IAS 27 became mandatory for the Bank's 2010 consolidated financial statements. These amendments have not been adopted by the Board. The objective of this standard is to describe accounting treatment and disclosures required by subsidiaries, joint ventures and associates when the entity presents separate financial statements.

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m) IAS 28: Investments in Associates and Joint Ventures The Board requires consolidation of investments in companies in which an entity holds twenty-five percent (25%) or more equity interest, irrespective of any considerations of control. Such treatment does not conform to IAS 27 and IAS 28. The objective of this standard is to describe the accounting treatment for Investments in partners and it determines the requirements for the application of the method of equity participation when recording investments in associates and joint ventures.

n) Revised IAS 32: Financial Instruments: Presentation Revised IAS 32 provides new guidelines clarifying the classification of financial instruments as liabilities or equity (e.g. preferred shares), SUGEVAL determines whether those shares fulfill the requirements of capital stock.

o) Amendments to IAS 32: Financial Instruments - Presentation and IAS 1: Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation The amendments to the standards require puttable instruments and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation to be classified as equity if certain conditions are met. These changes have not been adopted by the Board.

p) IAS 37: Provisions, Contingent Liabilities and Contingent Assets SUGEF requires that a provision for possible losses must be booked for contingent assets. IAS 37 does not allow this type of provision.

q) IAS 38: Intangible Assets The commercial banks listed in article 1 of Internal Regulations National Banking System (Law No. 1644) may present organization and installation expenses as an asset in the balance sheet, however, those expenses must be fully amortized on the straight-line method over a maximum of five years. Similar procedure and term must be used for the amortization of goodwill acquired. Automatic applications should be amortized systematically by the straight line method during the term which produces economic benefits; such term could not exceed five years. Similar proceeding applies to obtained goodwill.

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IAS 38 allows different methods to distribute an asset amortizable amount during useful life. Useful life of automatic applications could be longer than five years as stated by CONASIF standards. On the other hand, IFRS do not require annual goodwill amortization, only yearly assessment for impairment is required.

r) IAS 39: Financial Instruments: Recognition and Measurement The Board requires that the loan portfolio be classified pursuant to SUGEF Directive 1-05 and that the allowance for loan impairment be determined based on that classification. It also allows excess allowances to be booked. IAS 39 requires that the allowance for loan impairment be determined based on a financial analysis of actual losses. IAS 39 also prohibits the recording of provisions for contingent accounts. Any excess allowances must be reversed in the income statement. Revised IAS 39 introduced changes with respect to classification of financial instruments, which have not been adopted by the Board. The revised version includes the following changes:

The option of classifying loans and receivables as available for sale was established.

Securities quoted in an active market may be classified as available for sale, held-for-

trading, or held to maturity. The "fair value option" was established to designate any financial instrument to be

measured at fair value through profit or loss, provided a series of requirements are met (e.g. the instrument has been measured at fair value since the original acquisition date.)

The category of loans and receivables was expanded to include purchased loans and receivables that are not quoted in an active market.

The Board has also allowed capitalization of direct costs incurred for assessment of the borrower's financial position, evaluation and recognition of guarantees, sureties, or other collateral instruments, negotiation of the terms of the instrument, and preparation and processing of documents, net of income from loan fees. However, IAS 39 only permits capitalization of incremental transaction costs, which are to be presented as part of the financial instrument and may not be netted against loan fee income (see comments on IAS 18).

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Regular purchases and sales of securities are to be recognized using the settlement date accounting only. Depending on the type of entity, financial assets are to be classified as follows: a) Pooled portfolios.

Investments in pooled investment funds, pension and retirement savings accounts, and similar trusts are to be classified as available for sale.

b) Own investments of regulated entities.

Investments in financial instruments of regulated entities are to be classified as available for sale.

Own investments in open investment funds are to be classified as held-for-trade financial assets. Own investments in closed investment funds are to be classified as available for sale.

Entities regulated by SUGEVAL and SUGEF may classify other investments in financial instruments as held-for-trading investments, provided there is an express statement of intent to trade them within 90 days from the acquisition date.

Banks regulated by SUGEF may not classify investments in financial instruments as held to maturity. The above classifications do not necessarily adhere to the provisions of IAS 39.

The amendment to IAS 39 clarifies the existing principles that determine whether specific risks or portions of cash flows are eligible for designation in a hedging relationship. The amendments to IAS 39 became mandatory for 2010 financial statements, with retrospective application. This amendment has not been adopted by the Board.

s) IAS 40: Investment Property

IAS 40 allows entities to choose between the fair value model and the cost model to measure their investment property. The Standard issued by the Board only allows entities to use the fair value model to measure this type of assets, unless clear evidence for determining the fair value of the assets is unavailable.

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t) Revised IFRS 3: Business Combinations (revised) IFRS 3 establishes that the business combination between entities under common control may be carried out at cost or at fair value. The Board only allows the accounting of these transactions by taking the assets and liabilities at their fair value. IFRS 3 includes following changes: The definition of “business” was enlarged, which will probably cause that more acquisitions will receive the treatment of “Business Combinations”. The contingent considerations will be measured at fair value and subsequent changes will be recorded in the results of the period. The transaction costs, except the costs for issuance of shares and debt instruments, will be recognized as expenses when they occur. Any prior participation in an acquired business will be measured at fair value with changes in results. Any uncontrolled interest (minority interest) will be measured either at fair value or at the proportional participation in the identifiable assets and liabilities of the acquiree, by transaction. The revised IFRS 3 will become mandatory for the financial statements for 2010 and will be applied prospectively. This standard has not been adopted by the Board.

u) IFRS 5: Non-current Assets Held for Sale and Discontinued Operations

The Board requires that an allowance be booked for 100% of the carrying amount of assets that have not been sold within two years. IFRS 5 requires that such assets be recorded and measured at the lower of cost or fair value, discounting the future cash flows of assets to be sold in more than one year. Accordingly, assets could be understated, with excess allowances.

v) Amendments to IFRS 7: Financial Instruments – Disclosures In March 2009, the IASB issued certain amendments to IFRS 7, Financial Instruments: Disclosure, which requires enhanced disclosures about fair value measurements and liquidity risk in respect of financial instruments.

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The amendments require that fair value measurement disclosures use a three-level fair value hierarchy that reflects the significance of the inputs used in measuring fair values of financial instruments. Specific disclosures are required when fair value measurements are categorized as Level 3 (significant unobservable inputs) in the fair value hierarchy. The amendments require that any significant transfers between Level 1 and Level 2 of the fair value hierarchy be disclosed separately, distinguishing between transfers into and out of each level. Furthermore, changes in valuation techniques from one period to another, including the reasons therefor, are required to be disclosed for each class of financial asset. Furthermore, the definition of liquidity risk has been amended and it is now defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The amendments require disclosure of a maturity analysis for non-derivative and derivative financial liabilities, but contractual maturities are required to be disclosed for derivative financial liabilities only when contractual maturities are essential for an understanding of the timing of cash flows. For issued financial guarantee contracts, the amendments require the maximum amount of the guarantee to be disclosed in the earliest period in which the guarantee could be called. These amendments have not been adopted by the Board.

w) IFRS 9: Financial Instruments IFRS 9 deals with classification and measurement of financial assets. The requirements of this Standard represent a significant change from the existing requirements in IAS 39 in respect of financial assets. The Standard contains two primary measurement categories for financial assets: amortized cost and fair value. The Standard eliminates the existing IAS 39 categories of held to maturity, available for sale, and loans and receivables. For an investment in an equity instrument which is not held for trading, the Standard permits an irrevocable election, at initial recognition, on an individual share-by-share basis, to present all fair value changes in other comprehensive income. No amount recognized in other comprehensive income would ever be reclassified to profit or loss at a later date. The standard requires that derivatives embedded in contracts with a host contract that is a financial asset within the scope of the standard not to be separated; instead the hybrid financial instrument is assessed in its entirety as to whether it should be measured at amortized cost or fair value. This standard requires entities to determine whether presenting the effects of changes in the credit risk of a liability designated at fair value through profit or loss would create an accounting mismatch based on facts and circumstances at the date on which the financial liability is initially recognized.

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The objective of this IFRS is to establish the principles for the financial information about financial assets so that it will present useful and relevant information for the users of the financial statements facing the evaluation of the amounts, schedule and uncertainty of the future cash flows of the entity. The standard includes three chapters on recognition, impairment of financial assets and heading instruments. This standard supersedes IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013). However, for annual periods beginning in or before January 1, 2018, and entity may elect to apply previous versions of IFRS 9 if, and only if the corresponding date of the entity initial application is prior to February 1, 2015.

x) IFRS 10: Consolidated Financial Statements This Standard provides a revised control definition and application guidance. Therefore, this IFRS supersedes IAS 27 (2008) and SIC 12, Consolidation - Special Purpose Entities, and is applicable to all investees. Early application is permitted. Entities that apply this IFRS earlier must disclose that fact and apply IFRS 11, IFRS 12, IAS 27 (as amended in 2011), and IAS 28 (as amended in 2011) simultaneously. An entity is not required to make adjustments to the accounting for its involvement with an investee when entities are previously consolidated or unconsolidated in accordance with IAS 27 (2008), SIC 12, and this IFRS, continue to be consolidated or continue not to be consolidated. When application of this IFRS results in an investor consolidating an investee that is a business not previously consolidated, the investor: 1) must determine the date when the investor obtained control of that investee on the basis

of the requirements of this IFRS; and

2) will assess the assets, liabilities, and no-controlling interests as if acquisition accounting had been applied from that date.

If (2) is impracticable, then the deemed acquisition date must be the beginning of the earliest period for which retroactive application is practicable, which may be the current period. The standard is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. This standard has not been adopted by the Board.

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y) IFRS 11: Joint Arrangements This standard was issued in May 2011 with an effective date of January 1, 2013. The Standard addresses the inconsistencies in the accounting for joint arrangements and requires a single accounting treatment for interests in jointly controlled entities. This standard has not been adopted by the Board. This IFRS has not yet been adopted by CONASSIF. The objective of this IFRS is to establish principles for joint arrangements disclosures. It supersedes IAS 31, Interest in Joint Ventures and SIC 13, Jointly Controlled Entities, nonmonetary contributions by ventures.

z) IFRS 12: Disclosure of Interests in Other Entities This Standard was issued in May 2011 with an effective date of January 1, 2013. This Standard requires an entity to disclose information that enables users of financial statements to evaluate the nature and financial effects of its investments in other entities, including joint arrangements, associates, structured entities, and "off balance" activities. This Standard has not been adopted by the Board

aa) IFRS 13: Fair Value Measurement This Standard was issued in May 2011 and clarifies the definition of fair value, establishes a single procedure for measuring fair value, and defines the measurements and applications required or permitted by IFRSs. This Standard is to be applied for annual periods beginning on or after January 1, 2013. Earlier application is permitted. This Standard has not been adopted by CONASSIF. This standard defines “fair value”. It establishes a single conceptual framework in IFRS to measure fair value and requires disclosures about the measurement of fair value. This IFRS applies to other IFRSs that allow measurement at fair value.

bb) IFRS 15: Revenue from Contracts with Customers

International Financial Reporting standard IFRS 15, Revenue derived from contracts and clients established principles for presentation of useful information to users of the financial statements about the nature, amount, schedule and uncertainty of revenue and cash flows arising from an entity's contracts with their customers. IFRS 15 applies to annual periods that begin in or after January 1, 2017. Earlier application is permitted.

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IFRS 15 supersedes: a. IAS 11: Construction Contracts; b. IAS 18: Revenue; c. IFRIC 13: Customer loyalty programs; d. IFRIC 15: Agreements for the construction of real estate; e. IFRIC 18: Transfer of assets from customers; and f. SIC-31 Revenue —Barter transactions involving advertising services.

Revenue is important information for users of financial statements, assessing the situation and financial performance of an entity. However, the above requirements for the recognition of revenue on International Financial Reporting Standards (IFRS) differ from accounting principles generally accepted in the United States of America (US GAAP) and both requirements sets needed improvement. The requirements for recognition of revenue from previous IFRS provided limited guidance and, therefore, the two main standards for the recognition of revenue, IAS 18 and IAS 11, could be difficult to apply to complex transactions. Furthermore, IAS 18 provided limited guidance on many important issues of revenue, such as accounting of agreements with multiple elements. Instead, US GAAP comprised broader aspects in the recognition of revenue, along with numerous requirements for industries or specific transactions, which resulted in a different accounting of similar transactions. Therefore, the International Accounting Standards Board (IASB) and the issuer of national standards in the United States, the Financial Accounting Standards Board (FASB), initiated a joint project to clarify the principles for recognition of revenue and to develop a common standard for revenue to IFRS and US GAAP that: a. Eliminates inconsistencies and weaknesses of the above requirements on revenue; b. Provides a solid framework to address the problems of revenue; c. Improves comparability of recognition practices of revenue between entities,

industries, jurisdictions and capital market; d. Provides more useful information to users of the financial statements through

disclosure requirements improved; and e. Simplify the preparation of the financial statements, reducing the number of

requirements that and entity must refer. The basic principle of IFRS 15 is that an entity recognizes revenue to represent transfer of goods or services committed to customers in exchange for an amount that reflects the consideration to which the entity expects to be entitled to exchange of such goods or services. An entity recognizes revenue in accordance with the basic principle by applying the following steps:

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a. Step 1: Identify the contract (contracts) with the client - a contract is an agreement between two or more parties that creates enforceable rights and obligations. The requirements of IFRS 15 apply to each contract which has been agreed with a client and meets the specified criteria. In some cases, IFRS 15, requires an entity to combine contracts and accounted for as one. IFRS 15 also provides requirements for the posting contracts changes.

b. Step 2: Identify performance obligations in the contract - a contract includes commitments to transfer goods or services to a customer. If goods or services are different, commitments and performance obligation are accounted for separately. A good or service different if the client can take advantage of the good or service itself or with other resource that are available to the customer and commitment of the institution to transfer the good or service to the customer is separately recognizable from other contract commitments.

c. Step 3: To determine the transaction Price - the Price of transaction is the amount of

consideration in a contract to which an entity expects to be entitled in exchange for the transfer of goods or services involved with the client. The transaction price can be a fixed amount of the consideration for the client, but may sometimes include a variable compensation in cash or other form. The transaction price is also adjusted by the value of money over time if the contract includes a significant financing component, as well as any consideration payable to the customer. If the consideration is variable, an entity shall estimate the amount of the consideration to which it shall be entitled to the exchange for goods or services involved. The estimated variable compensation amount is included in the price of transaction only to the extended that is highly likely that a significant reversal of the amount of income recognized accumulated to not occur when the uncertainty associated with the variable compensation was subsequently resolved.

d. Step 4: Allocate the transaction price between performance obligations of the contract -

an entity usually allocate the transaction price to each performance obligation based on the relative independent selling prices of each good or service involved in the contract. If a selling price is not observable independently, an entity shall estimate. Sometimes, the transaction price includes a discount or a variable amount of the consideration that relates entirely to a part of the contact. The requirements specify when an entity assigns the discount or variable consideration to one or more, but not all the performance obligations (different goods or services) of the contract.

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e. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation -an entity recognizes the revenue when (or as) it satisfies a performance obligation by transferring goods or services committed to the client (which is when the customer obtains control of that good or service). The amount of income recognized is the amount allocated to the performance obligation satisfied. A performance obligation can be met at any given time (usually for commitments to serve the customer). For performance obligations that are satisfied overtime, an entity recognizes revenue over time by selecting an appropriate method to measure the progress of the entity toward complete satisfaction of that performance obligation.

cc) IFRIC 10: Interim Financial Reporting and Impairment

This statement prohibits the reversal of an impairment loss recognized in a previous interim period, regarding to surplus value, investment in an equity instrument or a financial asset booked at cost, IFRIC 10 applies to surplus value, investment in equity instruments and financial assets booked at cost starting from the date the first time the criteria of measurement of NIC 36 and NIC 39 was applied (i.e. January 1, 2004). The Board allows reversal of estimates.

dd) IFRIC 12: Services Concession Arrangements

This interpretation provides guidelines for the posting of public service concession arrangements to a private operator. This interpretation applies both to: The infrastructure that the operator builds or purchases from a third party. to be used for

the provision of services agreements; and Existing infrastructure to which the operator has access in order to provide the services

established in the agreement. IFRIC 12 is mandatory for financial statements as of July 1. 2009. This IFRIC has not been adopted by the Board.

ee) IFRIC 13: Customer Loyalty Programs This interpretation provides guidance to the entity that grants credits -awards to its customers for loyalty as part of sales transaction which, subject to compliance with any additional condition established as a requirement, the customer can redeem in the future in form of goods, free services or discounts. IFRIC 13 is mandatory for financial statements starting from January 1, 2011. This IFRIC has not been adopted by the Board.

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ff) IFRIC 14, IAS 19: Limit on Defined Benefit Asset, Minimum Finding Requirement and their Interaction This interpretation applies to benefits defined for former employees and other long term benefits for employees. It also considers requirements to maintain a minimum level of funding to any requirement to fund a benefits plan for former employees or other long term benefits plans. It also covers the situation where a minimum level of funding may result in a liability. The IFRIC 14 is mandatory for financial statements starting from January 1, 2011, which retrospective application. This IFRIC has not been adopted by the Board.

gg) IFRIC 16: Hedges of a Net Investment in a Foreign Operation

This interpretation allows an entity using step considerations to choose an accounting policy that covers the risk of exchange rate, in order to determine the accumulative adjustment of currency conversion that is reclassified in results for the disposal of net investments in abroad business, as if the direct method has been used. The IFRIC 16 is mandatory for financial statements as of July, 1, 2009. The Board has not adopted his standard.

hh) IFRIC 17: Distribution of Non-Cash Assets to Owners This interpretation provides guidance for accounting dividends payable distributed using non- cash assets, at the beginning and the end of the period. If an entity declares dividends to be distributed through non- cash assets, after the closing of a reported period but before the financial statements are authorized to be issued, it will disclose: a) The nature of the asset to be distributed;

b) The carrying amount of the asset at the closing date; and

c) If the fair values are determined, wholly or partially, by reference to price quotes

published in an active market or are estimated using a valuation method, as well as the method used to determine the fair value and the assumptions applied when using a valuation method.

IFRIC 17 is mandatory for financial statements starting from July 1, 2009. This standard has not been adopted by the Board, Its application is prospective; a retrospective application is not permitted.

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ii) IFRIC 18: Transfer of Assets from Customers This interpretation offers guidance for accounting of transfers of property, plant and equipment for entities receiving such transfer from customers, as well as those agreements in which an entity receives cash from customers and must use the cash amount only for construction or purchasing property, plant and equipment. This IFRIC is mandatory for financial statements from July 1, 2009. This IFRIC has not been adopted by the Board.

jj) IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments This interpretation provides guidance for accounting renegotiated terms of financial liability and give rise to the entity that issues the equity instruments to extinguish the financial liability totally or in part, IFRIC 19 is mandatory for financial statements starting from July 1, 2010. This IFRIC has not been adopted by the Board.

kk) IFRIC 17: Distributions of Non- Cash Assets to Owners

This IFRIC is mandatory for financial statements from July 1, 2009. Its application is prospective; a retrospective application is not permitted.

ll) IFRIC 18: Transfer of Assets from Customers

This interpretation is mandatory for financial statements form July 1, 2009. This interpretation is applicable to entities that transfer assets to other entities for goods or services of different nature, for which an income has to be recognized due to the difference in value.

mm) IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments

IFRIC 19 is mandatory for financial statements starting from July 1, 2010.

nn) IFRIC 21: Levies

This interpretation addresses the accounting of a liability to pay a levy if that liability is within IAS 37. It also addresses the accounting of a liability to pay a levy where the amount and maturity are true. This interpretation does not address the accounting of cost arising from the recognition of a liability to pay a levy. Entities should apply other standards to decide whether the recognition of a liability to pay a tax results in an asset or an expense.

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The event that triggers the obligation and results in a liability to pay a levy is the activity that produces the levy payment, as established by law. For example, if the activity that results in the levy payment is to generate an income from ordinary activities in this period, and the calculation of this tax is based on income from ordinary activities that took place in an earlier period, the event that results in the obligation of the levy is the income generation in the current period. Generating revenue in the previous periods is necessary, but not sufficient to create a present obligation. An entity does not have an implied obligation to pay a levy to be generated by future period operation; as a result, the entity is economically compelled to continue operating in that future period. The preparation of financial statements under the going concern assumption does not imply that an entity has a present obligation to pay a levy to be generated by operations in future periods. The liability to pay a levy is recognized progressively if the event results in the obligation over a period (for example, if the activity that generates the payment of the tax occurs as established by law, over a period). For example, if the event that results in the obligation is the generation of a regular income for activities over a period, the corresponding liability is recognized as the entity produces that income. An entity shall apply this interpretation for annual periods beginning on or after January 1, 2014.

oo) Amendments to Existing Standards:

Employee Benefits (Amendment to IAS19) This standard is modified to recognized the discount rate to be used corresponding with local currency bonds. The transition date is for annual periods that begin in or after January 1, 2016; it may be applied in advance and disclose that fact. Any application adjustment must be made against retained earnings at the beginning of the period.

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This standard is for application in the periods that begin in or after January 1, 2013. It includes changes referring to the benefit plans defined for which it previously required that the re measurement of the actuarial appraisals were recognized in the income statement or in other integral results. The new IAS 19 will require changes in the measurements to be included in other integral results and the cost of services and net interest to be included in the income statement. Sales or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) Loss of Control When a controlling company loses control of a subsidiary, the controlling company:

a) Will derecognize assets and liabilities of former subsidiary of the consolidated statement of financial position.

b) Recognizes an investment retained in the former subsidiary at fair value and subsequently accounted for this investment and the amount owed by or to the former subsidiary thereof, in accordance with relevant IFRS's. This retained interest at fair value is measured again, as described in paragraph B98 (b) (iii) and B99(a). The value measured again, if applicable, at the date when control is lost, is regarded as the fair value on initial recognition of financial assets, in accordance with IFRS 9 or cost on initial recognition of an investment in an associate or joint venture.

c) Will recognize gain or loss associated with the loss of control of previous controlling company as specified in paragraphs B98 to B99A.

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28).

Issued in September 2014, it amended paragraphs 25 and 26 and added paragraph B99A. An entity will apply such amendments in a prospective manner to transactions that take places in annual periods starting as of January 1, 2016. An early application is allowed. If an entity applied the amendments earlier, this must be disclosed.

Accounting for Acquisition of Interests in Joint Operations (Amendments to IFRS11)

This IFRS requires the acquirer of an interest in a joint venture whose activity is a business, as defined in IFRS Business Combinations, to apply all the principles on accounting for business combinations of IFRS 3 and other IFRS, except those in conflict with the guidelines of this IFRS. In addition, the acquirer shall disclose the information required by IFRS 3 and other IFRS for business combinations.

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Accounting for Acquisition of Interests in Joint Operations (Amendments to IFRS 11), issued in May 2014, amended the heading after paragraph B33 and added paragraphs. If an entity applies these amendments but doesn't apply IFRS 9, the reference in these amendments to IFRS 9 shall be read as a reference to IAS 39, Financial Instruments: Recognition and Measurement. Amendments to IFRS 11, May, 2014. An entity shall apply those amendments prospectively for annual periods that begin in or after January 1, 2016. Earlier application is permitted. If an entity applies these amendments for a period beginning before, it will disclose that fact. Equity Method in Separate Financial Statements (Amendments to IAS 27)

Separate financial statements are those presented by a controller (inverter with control on a subsidiary) or an investor with joint control in an investee or significant influence over it. Subject to the requirements of this standard, an entity may choose to account for its investment in subsidiaries, joint ventures and associates at cost, in accordance with IFRS 9, Financial Instruments, or using the equity method as described in IAS 28, Investments in associates and joint ventures.

When an entity prepares separate financial statements, it shall account for investments in subsidiaries, joint ventures and associates:

a. at cost, or; b. in accordance with IFRS 9; or c. Using the equity method as described in IAS 28.

An entity shall apply the same accounting for each category of investment. The accounted investments are registered at cost or using the equity method in accordance with IFRS 5, non- current assets held for sale and discontinued operations, in cases where they are classified as held for sale or for distribution (or included in a group of assets for disposal that are classified as held for sale or for distribution). Under these circumstances, the measurement of investments accounted is not amended in accordance with IFRS 9. The equity method in separate financial statements (Amendments to IAS 27), issued in August, 2014, amended paragraphs 4 to 7, 10, 11 B and 12. An entity shall apply those amendments for annual periods beginning on or after January 1, 2016, retrospectively, in accordance with IAS 8, Accounting Policies, changes in Accounting Estimates and Errors. Earlier application is permitted. If an entity applies these amendments for a period beginning before, it will disclose that fact.

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This document established amendments to IAS 39, Financial Instruments: Recognition and Measurement. These amendments result from proposals of the standard project 2013/2: Novation of Derivatives and Continuation of Hedge Accounting, and the corresponding responses received (Proposed Amendments to IAS 39 and IFRS 9) was published in February 2013. IASB has amended IAS 39 to discontinue exempting the hedge accounting when the novation of a derivative designed as a hedging instrument meets certain conditions. A similar exception will be included in IFRS 9, Financial Instruments. It is effective from annual periods beginning on or after January 1, 2014. Disclosure of the recoverable amount of non- financial assets This document establishes the amendments to IAS 36, Impairment of Assets, The amendments result from proposal of the standard project 2013/1, Disclosure of the recoverable amount of non- financial assets and corresponding response received (Proposed Amendments to IAS 36) that was published in January 2013. The changes made in this document along the disclose requirements to IAS 36 with the original intention of the IASB. For the same reason, the IASB also amended IAS 36 to require amount of assets that present impairment is based on fair value less cost of disposal, consistent with the disclosure requirements for impairment assets presented in U.S. GAAP.

pp) Amendments to Standards Established by CONASSIF

The following amendments to the accounting standards applicable to entities supervised by SUGEF, SUGEVAL, SUGESE, SUPEN and non- financial issuers established by CONASSIF shall apply from January 1, 2014: 1. Delete the last paragraph of article 8. Therefore, not allowed to commercial state banks

to capitalize total revaluation surplus, but may continue to capitalize revaluation surplus as permitted by IAS 16, i.e., the part already used of that surplus (or realized by selling the asset), since on that subject no exception is included by SUGEF.

2. Delete paragraph two of article 19, IAS 40, Investment Property for rent or goodwill, Therefore, the adjustments to fair value of investment properties are recognized in the income statement.

3. Modify paragraph four of the concept of Group 130, Loan portfolio, so the commissions representing an adjustment to the effective yield should be recorded as a deferred credit.

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4. Add the account of deferred direct cost associated with credit, recognizing the direct cost incurred by the entity in the formalization of credit and must be repaid by means of effective interest method.

5. Another important change is that the formats and the scope of the information to be disclosed in the financial statements will be made mostly based on IAS 1, including the concept of other comprehensive income, adjusting the statement of changes in equity, and requiring the presentation criteria, for the intermediate financial information in accordance with IAS 34.

(42) Figures for 2017

As of March 31, financial statement figures have not been reclassified for comparison with those of 2017 per modifications to the Chart of Accounts and SUGEF Directive 31-04: "Regulation on the financial information of entities, groups and financial conglomerates" approved by CONASSIF.

(43) Relevant and subsequent events As of March 2018, there are relevant and subsequent events to disclose as follows: Transfer of charges and observations On November 21, 2014, Provisional Regularization Proposal No. 1-10-017-14-124-031-03 was notified, which informs the Bank of the differences found in tax bases and tax assessments, as well as the Legal facts and basis. The total tax debt is of ¢3.003.887.889 and interest of ¢1.079.849.565 corresponding to fiscal periods 2010-2011-2012 and 2013. On January 14, 2015, according to the latest regulation proposal notified to the Bank by the Tax Authorities, regarding the items representing a tax contingency from a legal risk point of view that would mean an eventual confirmation of the payment obligation or future dismissal, and in order to make the corresponding provision considering the legal risk involved, it is indicated that the total amount for tax adjustments, interests and penalties as of January 8, 2015 is of ¢5.116.774.222. On August 30, 2016, Provisional Regularization Proposal No. 1-10-071-16-085-041-03 was notified, which informs the Bank of the differences found in tax bases and tax assessments, as well as the Legal facts and basis. The total tax debt is of ¢9.932.739.485 and interest of ¢2.145.983.333 corresponding to fiscal period 2014.

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The Bank expressed partial disagreement with the proposed regulation and is expecting the administrative liquidation to be notified, containing concrete facts and legal principles motivating the differences in the tax bases and tax fees. Negotiations of the IV Collective Labor Agreement As of July 2015, during the negotiations of the IV Labor Collective Agreement, several agreements were reached, among them: Introduce a transitional article III that provides the following: 1. Institutional interest: For the institutional interest of strengthening and modernizing the Bank

and as part of the actions that must be carried out to rationalize the operational expenditure corresponding to payroll payment, it is considered necessary to manage a voluntary change of the working force who work under the scheme of base salary and pluses, so that, if they agree, they move to the nominal wage scheme.

2. Voluntary modification of the salary scheme: During the period of six months counted from

the day following the homologation of the present reform of the Fourth Collective Labor Convention, the person remunerated under the scheme of base salary and pluses added, is entitled, if expressly requested, voluntarily and according to their particular interest, to avail any of the following options:

Option one: Voluntary variation of common agreement, keeping the worker his position: In this case the employee, upon his request, has the right to change from the basic salary scheme to the nominal salary scheme, remaining in his position and without any modification of any of the current working conditions established, except, of course, with regard to the salary compensation scheme that would become the nominal wage scheme.

In this case the employee will be compensated for the damage caused, which is the monthly decrease in his current salary in relation to the nominal salary that corresponds to the same position he occupies, difference that will be multiplied by the number of years of continuous service in the Bank or fraction of six months or more.

The mutual agreement in which the corresponding compensation is established will be established by means of an alternative dispute resolution agreement (RCA), signed before the Ministry of Labor and Social Security.

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Option two: Voluntary termination of the employment relationship with employer's liability: In this option, the Bank assumes that the employee will not accept a voluntary change of his salary scheme base and pluses, reason for which he has the right to terminate his employment contract, in a strictly voluntary way and the Bank accepting employer liability.

For this reason, the Bank will recognize in favor of the worker, the payment of a severance payment at a rate of one month's salary for each year worked continuously in the Bank or a fraction of six months or more, in accordance with the established in article 37 subsection3 of the Civil Service Statute.

The average salary will be calculated as established in article 30, subsection b) of the Labor Code.

The amount to be paid will consider the total accumulated monthly contribution made by the Bank and recorded in the individual accounts held by the employee in the Asosiación Solidarista, if affiliated, and in the Labor Capitalization Fund and Mandatory Pension Regime (3% in total). If, with the aforementioned contribution, it is not enough to cancel the severance of the periods that correspond to the employee, the Bank will make the corresponding adjustment.

In this case and before the termination of the employment relationship, the worker will be entitled to the payment of the other corresponding labor rights at the time of termination of his employment contract, which are: proportional vacations, proportional school salary and proportional Christmas bonus, among others.

The employee also will be entitled – if he started to work for the Bank before February 18, 2000 - to receive the total amount that is in his individual account of the Retirement Fund that is administered by BCR Pensiones. The mutual agreement documenting the termination of working relationship as well as the corresponding compensation will be reflected by an alternative dispute resolution agreement of (RAC) signed before the Ministry of Labor and Social Security.

3. Application of no options: The employee paid under the scheme of base salary and pluses

who has no interest whatsoever in availing himself of any of the above two options will maintain during his employment relationship in an unharmed manner all the conditions that he currently enjoys and consequently will fully maintain his stability and will not have any variation in his current working conditions or any labor impairment.

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The Bank undertakes to refrain from exercising any kind of influence or pressure against the employees that are paid under the base salary scheme and pluses, so that they modify the scheme.

4. Right of the former employee to rejoin the Bank: The former employee who, under option

two, terminated the employment relationship with the Bank and who decides to return to the Bank´s service has the right to be hired in the same position which he occupied prior to the termination of the employment relationship. However, such recruitment will generate a new employment relationship that will be governed by the following terms and conditions:

a. The right to be recruited shall be maintained for a period of six months from the day

following the termination of the employment relationship.

b. Within this period, when the former employee performs the corresponding admission request, the Bank will carry out the formalities to formalize its definitive contracting, which must be carried out within a term not exceeding three weeks, counted from the receipt of the admission request.

c. The Bank will keep the position occupied by the former employee active during the

indicated period, however, such position will be governed by the employment and salary system in force for the date of recruitment, in particular vacations, remuneration system and working day.

d. The position will be remunerated under the nominal wage scheme.

e. The working conditions of the previous employment relationship already expired, nor the

base salary scheme and pluses will be applied to the former employee.

f. The time worked previously at the Bank or any entity of the public sector will be recognized as time labored but solely for the purposes of the recording vacations in application of the nominal wage scheme.

g. At the time of starting the new employment relationship an obligation of the employee

arises to reimburse the Bank the amount corresponding to the employer's adjustment that the Bank canceled as part of the economic compensation for the termination of the employment relationship. There will be no refund of the amount of the employer's contribution canceled by the Asosiación Solidarista of the of the Banks employers, in the event of having been affiliated to this Association.

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h. The reimbursement of this amount will be proportional to the months that were canceled by the employer's adjustment, less the amount corresponding to the months that the worker was actually unemployed, not working for the Bank.

i. The former employee, in its entirety and for the purpose of guaranteeing the eventual

reinstatement of the adjustment of the corresponding employer contribution, will be able to keep the money to be reintegrated, under an investment scheme of trust commission, in order to assume such a return when the new recruitment is effective, at which time the investment will be settled by the employee and will proceed with the corresponding refund.

j. When a new employment relationship arises, the employee will be entitled to belong to the Employee Retirement Fund of the Bank of Costa Rica, which will be governed by what is established in article 7S of the Worker Protection Law.

k. Immediately after the six-month period, established in the above subsection a, without the

former employee having exercised his right to be hired through reentry recruitment, the Bank will dispose of the respective position, according to its institutional interests and without the person may subsequently claim any right over the position occupied.

5. Institutional interest for the gradual application of voluntary termination of employment

contracts. Taking into consideration the number of people who receive the termination of the employment relationship under option 2), the Bank may define the date on which each agreement will be applied, in order not to affect the provision of services, avoiding that the termination of the contracts can be given in a single moment, but always respecting the term of six months, which is specified in section ii.2 of this transitory.

6. Employees who are currently appointed temporarily in management positions under the

system of remuneration of nominal salary but whose position in property is remunerated under the scheme of base salary and pluses, will have the right to avail themselves of what is established in this transitory for which the calculation gives the corresponding compensation, according to the option that the employee voluntarily chooses, will be made in any case, under the scheme of base salary and pluses that governs the position in property.

Accordingly, the maximum date for submitting the application to avail itself of the transitory mentioned, is due on March 8, 2017 as a non-extendable date. As of March 8, 2017, 391 employees were taken to the Transitory of the Present Collective Convection.

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Refund of capital and distribution of dividends As of February 12, 2017, BCR Sociedad Administradora de Fondos de Inversiones S.A, distributes dividends in the amount of ¢2.250.000.000, according to the resolution of the Extraordinary General Shareholders' Meeting No. 01-17 of April 26, 2017. As of July 31, 2016, BCR Corredora de Seguros, S.A., distributes dividends in the amount of ¢1.500.000.000, according to the resolution of the Extraordinary General Shareholders' Meeting No. 01-17 of setember,2017. Preventive agreement: On January 12, 2017, the client Land Business, S.A. filed an application to initiate a preventive agreement for the payment of debts, at the Bankruptcy Court of the First Judicial Circuit of San José. On January 17, 2017, the court prevented to submit additional documentation, however, on January 23, 2017, since not complying with the foregoing, the Court decided to reject the request for the opening of a preventive agreement, without prejudice to the fact that such request may be re-filed. On January 30, 2017 Land Business, S.A. filed an appeal for revocation and nullity to the dictated on January 23, 2017, so that on February 2, 2017, the Court declared the preventive agreement open, which proceeds under file No. 17-000001-CI. The SUGEF Agreement 1-05 establishes with respect to the direct rating in risk category E, that the entity must qualify in risk category E the debtor that does not meet the conditions to be qualified in any of the risk categories defined in the previous article, has been declared bankrupt or is already processing a bankruptcy proceeding. Purchase of loan portfolio from Banco Crédito Agrícola de Cartago On July 20, 2017, the purchase of the loan portfolio from Banco Crédito Agrícola de Cartago was authorized for up to ¢100.000 million distributed in the areas of housing, mortgage consumption, SMEs and credit cards. As of December 31, 2017, operations for the purchase of the portfolio to Banco Crédito Agrícola de Cartago in the amount of ¢5.090.560.459 were processed.

(44) Date of authorization for issuance of the financial statements

The General Management of the Bank authorized the issuance of the consolidated Financial Statements on April 30, 2018. SUGEF might require amendments to the Financial Statements after the date of authorization for issuance.

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