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Contact: Investor Relations. Phone: 58-212-503.1335. e-mail: [email protected]. website: www.msf.com.

Mercantil Servicios Financieros (Mercantil). Financial Report Third Quarter 2014 Caracas Stock Exchange (MVZ.A & MVZ.B); Level 1 ADR: MSFZY & MSFJY

Caracas, October 30, 2014. Mercantil reports its earnings for the quarter ended September 30, 2014.

Summary

Net Income: Mercantil posted Bs 2,335 million (US$ 372 million)1 in net income in 3Q 2014, 30.9% up from Bs 1,784 million (US$ 284

million)1registered in 3Q 2013. In cumulative terms, net income reached Bs 6,309 million (US$ 1,004 million)

1, reflecting Bs 1,054 million (20.0%)

year-on-year growth from Bs 5,255 million (US$ 867 million) 1.

Net earnings per share in 3Q 2014 were Bs 23.55, US$ 3.751 (Bs 17.98, US$ 2.861 in 3Q 2013). In cumulative terms, net earnings per share for the nine months ended September 30, 2014 was Bs 63.63, US$ 10.12 (Bs 52.99 at September 30, 2013, US$8.74

1).

ROE and ROA in 3Q 2014 reached 35.7% and 3.4%, respectively (38.0% and 4.0% in 3Q 2013). For the nine months ended September 30, 2014, these ratios were 33.1% and 3.2%, respectively (37.4% and 4.0% at September 2013, respectively).

Class "A" and "B" shares prices closed at Bs 900 and Bs 905 respectively, compared to Bs 650 each at June 30, 2014, and Bs. 560 each at the end of September 2013.

The main variations in net quarterly income are:

Net Interest Income reached Bs 5,658 million (US$ 900 million)1, Bs 2,149 million (61.2%) more than the Bs 3,509 million (US$ 558 million)1 reached in 3Q 2013, mainly due to increase in financial assets and liabilities. The financial intermediation ratio (loans-to-deposits) was 70.1% at the close of 3Q 2014 (67.0% at the end of 3Q 2013).

Loan Portfolio Provision registered an expense of Bs 710 million (US$ 113 million)1, reflecting Bs 387 million (119.8%) growth compared to Bs 323 million (US$ 51 million)

1 in 3Q 2013. This provision represents 3.0% of the gross loan portfolio at September 30, 2014 and 2013, and

covers 721.4% of past-due and non-performing loans (434.0% at September, 30, 2013).

Commissions and other income reached Bs 2,157 million (US$ 343 million)1, up Bs 827 million (62.2%) from Bs 1,330 million (US$ 212 million)

1 registered in 3Q 2013, due to a Bs 787 million income increase from commission on the use of credit and debit cards, income from

financing insurance policies, as well as other commissions on clients transactions, among others, in addition to Bs 40 million growth of earnings from securities trading activities.

Insurance premiums, net of claims reached Bs 443 million (US$ 70 million)1, Bs 74 million (20.1%) up from Bs 369 million (US$ 59 million)1 in 3Q 2013. Net earned premiums during the quarter reached Bs 4,455 million and reflected Bs 1,942 million (77.3%) year-on-year growth.

Personnel and Operating Expenses reached Bs 4,848 million (US$ 772 million)1, Bs 1,917 million (65.4%) up from Bs 2,931 million (US$ 446 million)

1 in 3Q 2013, due to increases of Bs 625 million (58.4%) in personnel expenses, Bs 394 million (79.3%) in expenses for

contributions to regulatory entities, and Bs 898 million (65.9%) in expenses for commissions on the use of the point-of-sale and ATM network of other banks, among others.

Personnel and Operating Expenses have been affected by the high level of inflation in Venezuela which was 63.4% over the last twelve month at August 31, 2014. The efficiency ratio measured by calculating operating expenses as a percentage of average assets, was 5.2% in September 2014 similar to 5.1% in September 2013.

Summary of Financial Statements and Ratios 2

(In Million Bolivars, except percentages)

September

2014 June 2014

September 2013

∆ Sep. 14 vs. Jun. 14

∆ Sep. 14 vs. Sep. 13

QUARTERLY RESULTS % %

Net Interest Income 5,658 4,728 3,509 19.7 61.2 Allowance for losses on loan portfolio 710 719 323 (1.3) 119.8 Commissions and other income 2,157 1,766 1,330 22.1 62.2 Insurance premiums, net of claims 443 411 369 7.8 20.1 Salaries and Operating Expenses 4,848 3,917 2,931 23.8 65.4 Net Income – Quarter 2,335 2,143 1,784 9.0 30.9

Net Income – 9 months 6,309 5,255 20.0

KEY FINANCIAL INDICATORS

Income per share – Quarter Bs / share 23.55 21.61 17.98 9.0 30.9

Income per share – 9 months Bs / share 63.63 52.99 20.1

Market price A share 900.00 650.00 560.00 38.5 60.7

Market price B share 905.00 650.00 560.00 39.2 61.6

Book value per share 275.29 262.22 208.46 5.0 32.1

Net Income (quarter) / Average Assets (ROA) 3.4% 3.3% 4.0% 3.0 (15.0)

Net Income (quarter) / Average Equity (ROE) 35.7% 33.5% 38.0% 6.6 (6.1)

Net Income (9 months) / Average Assets (ROA) 3.2% 4.0% (20.0)

Net Income (9 months) / Average Equity (ROE) 33.1% 37.4% (11.5)

1 Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and income statement figures at the average exchange rate for the period. See exchange rates in Appendix VI. Exchange control in place in Venezuela since February 2003.

2 See Appendix III Summary of the Financial Statements and Ratios (in Dollars).

Mercantil Servicios Financieros, C.A. Financial Report Third Quarter 2014

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Assets: In 3Q 2014, total assets registered Bs 20,823 million (7.2%) quarter-over-quarter growth to Bs 308,340 million (US$ 49,065 million)1, and

Bs 102,159 million (49,5%) year-on-year growth.

The variations for this item, seen individually by subsidiary, are as follows:

Mercantil Banco Universal registered Bs 18,944 million (8.3%) growth in 3Q 2014 and Bs 93,469 million (61.3%) year-on-year growth. Mercantil Commercebank registered Bs 307 million (4.1%) growth in 3Q 2014 and Bs 911 million (13.3%) year-on-year growth. Mercantil Seguros registered Bs 557 million (4.5%) growth in 3Q 2014 and Bs 3,595 million (38.5%) year-on-year growth.

Net Loan Portfolio: In 3Q 2014, net loan portfolio registered Bs 15,715 million (10.0%) quarter-over-quarter growth to Bs 172,555 million (US$ 27,458 million)

1, and Bs 63,703 million (58.5%) year-on-year growth.

The variations for this item, taken individually by subsidiary, are as follows:

Mercantil Banco Universal registered Bs 15,906 million (12.9%) growth in 3Q 2014 and Bs 61,085 million (78.2%) year-on-year growth. Mercantil Commercebank remained at similar levels compared to the previous quarter, reaching US$ 5,017 million and US$ 476 million

(10.5%) year-on-year growth.

Deposits: In 3Q 2014, deposits registered Bs 17,861 million (7.6%) quarter-over-quarter growth to Bs 253,942 million (US$ 40,410 million)1, and

Bs 86,497 million (51.7%) year-on-year growth.


Mercantil Banco Universal registered Bs 15,490 million (7.8%) growth in 3Q 2014 and Bs 82,010 million (62.3%) year-on-year growth. Mercantil Commercebank registered US$ 390 million (6.7%) growth in 3Q 2014 and US$ 724 million (13.2%) year-on-year growth.

Shareholders’ Equity: Totaled Bs 28,139 million (US$ 4,477 million)1, representing a Bs 1,336 million (5.0%) increase from Bs 26,803 million (US$

4,265 million)1 in the previous quarter and Bs 6,831 million (32.1%) year-on-year growth. The quarterly variation is primarily attributable to Bs 2,335

million in net income for the period and Bs 961 million from adjusting available-for-sale investments to their market value, among others.

Capital Ratios: Mercantil’s equity-to-assets ratio at September 30, 2014 is 9.1% and its equity to risk-weighted assets ratio is 15.8%, based on the standards of the National Securities Superintendency (SNV for its abbreviation in Spanish) versus 10.3% and 18.8% at September 30, 2013.

Mercantil Banco Universal, in accordance with the requirements of the Superintendency of Banking Sector Institutions (SUDEBAN for its abbreviation in Spanish), has an equity-to-assets ratio of 9.5% and an equity to risk-weighted assets ratio of 16.4% at September 30, 2014 (11.0% and 19.1% at September 30, 2013).

Mercantil Commercebank, N.A., based on the standards of the U.S. Office of the Comptroller of the Currency (OCC), at September 30, 2014 the equity-to-assets ratio is 9.6% and the equity to risk-weighted assets ratio is 13.9% (10.1% and 16.5% at September 30, 2013).

The equity ratios of Mercantil and its subsidiaries exceed the regulatory minimums.

Summary of Financial Statements (In Million Bolivars, except percentages)

September

2014 June 2014

September 2013

∆ Sep. 14 vs. Jun. 14

∆ Sep. 14 vs. Sep. 13

% %

Cash and due from banks 57,865 51,994 34,198 11.3 69.2

Investment Portfolio 67,459 69,666 56,221 (3.2) 20.0

Loan Portfolio, Net 172,555 156,840 108,852 10.0 58.5

Other assets 10,461 9,017 6,910 16.0 51.4

TOTAL ASSETS 308,340 287,517 206,181 7.2 49.5

ASSETS UNDER MANAGEMENT 61,223 54,245 45,997 12.9 33.1

Deposits 253,942 236,081 167,444 7.6 51.7

Financial Liabilities 4,455 5,818 4,075 (23.4) 9.3

Other Liabilities 21,804 18,815 13,354 15.9 63.3

Shareholders’ Equity 28,139 26,803 21,308 5.0 32.1 TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY

308,340 287,517 206,181 7.2 49.5


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Table of contents Págs.

Contribution of subsidiaries 4

Market share 5

Credit Ratings 5

Management discussion and analysis 6

Operating Income

Net Interest Income 6

Loan Portfolio Provision 7

Total Commissions and Other Income 8

Insurance Premiums, Net of Claims 8

Total Operating Expenses 9

Efficiency Ratios 10

Balance Sheet 10

Liquidity 10

Investment Portfolio 11

Financial Intermediation Activity

Loan Portfolio 13

Deposits 14

Total Assets 15

Financial Obligations 16

Shareholders’ Equity 16

Capital Ratios 16

Assets and Liabilities in Foreign Currency 17

Performance of Subsidiaries in accordance to its Local Accounting Standards 18

Wealth Management 21 Corporate Events Awards and Acknowledgements

22 22

Global Economic Climate 22

U.S. Economic Climate 22

Venezuelan Economic Climate 23

Appendix I: Summary of the accounting principles used to prepare the financial statements 25

Appendix II: Financial statements of Mercantil Servicios Financieros 26

Appendix III: Summary of the Financial Statements and Ratios (in US$) 31

Appendix IV: Consolidated Loan Portfolio by Classification 32

Appendix V: Statutory percentage of Mercantil Banco Universal loans by economic sector and interest rates 33

Appendix VI: Summary of Financial Indicators of Mercantil Servicios Financieros 34

Appendix VII: Financial statements of Mercantil Banco Universal 36

Appendix VIII: Financial statements of Mercantil Commercebank Holding Corporation 38

Appendix IX: Financial statements of Mercantil Seguros 40

Appendix X: Key Macroeconomic Indicators 42

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Contribution of Subsidiaries

Shareholders’ Equity

In millions of Bs(1) Total

Total Assets 242,415 48,654 4,393 12,312 186 379 308,340 % Assets 78.6% 15.8% 1.4% 4.0% 0.1% 0.1% 100.0%

Investments 42,217 14,990 1,902 8,119 136 94 67,459

Loans (Net) 139,186 31,530 1,839 - - - 172,555

Deposits 212,965 37,772 3,205 - - - 253,942

Contribution

Income net: Quarter 2,359 9 (10) 186 11 (220) 2,335 9 months 6,016 84 (65) 621 29 (377) 6,309

Assets under Management 32,150 12,571 3,381 64 13,056 - 61,223

In millions of US$(2)

Total Assets 38,575 7,742 699 1,959 30 60 49,065

Investments 6,718 2,385 303 1,292 22 15 10,735

Loans (Net) 22,148 5,017 293 - - - 27,458

Deposits 33,889 6,011 510 - - - 40,410

Contribution

Income net: Quarter 375 1 (2) 30 2 (35) 372 9 months 957 13 (10) 99 5 (60) 1,004

Assets under Management 5,116 2,000 538 10 2,078 - 9,742

Number of Employees 7,279 834 114 1,566 48 23 9,864

1 Financial data presented in accordance with SNV standards (see Appendix I). Figures net of elimination of inter-company transactions.

2 Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and income statement figures at the average exchange rate for the period. See exchange rates in Appendix VI. Exchange control has been in place in Venezuela since February 2003.

3 See Summary of Subsidiaries’ performance according to their Regulatory Accounting Standards (page 18).

Mercantil Banco Universal

Bs. 22,822 US$ 3,632

Mercantil

Commercebank Bs. 4,046 US$ 644

Banks Overseas Bs. 1,781 US$ 283

Others Bs. 184

US$ 29

Mercantil Merinvest

Bs. 222 US$ 35

Mercantil Seguros Bs. 3,862 US$ 615

Venezuelan

Universal Bank

Insurance In Venezuela and Abroad

Other Minor Investment

Shareholders’ Equity: Bs. 28,139 (US$ 4,477)

MERCANTIL SERVICIOS FINANCIEROS (1) (In Million Bolivars and US$

(2), except percentages

U.S. Domestic Bank & Brokerage

International Banking

Investment banking, mutual funds, trading

& brokerage

Main Activity

Mercantil Bank (Schweiz) AG.

Mercantil Bank and Trust Limited (Cayman Island)

Mercantil Bank (Curacao) NV

Mercantil Bank (Panamá) S.A.

Mercantil Commercebank N.A.

Mercantil Commercebank Investment Services (MCIS)

Mercantil Commercebank Trust Company (MCTC)

Main Subsidiaries

September 30, 2014

(3) (3) (3)

Mercantil Merinvest, Casa de Bolsa, C.A.

Mercantil Servicios de Inversión, C.A.

Mercantil Sociedad Administradora de Entidades de Inversión Colectiva, C.A.

Mercantil Capital Markets (Panamá)

Mercantil Seguros Panamá S.A.

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Commercial

and Universal

Bank's

Private

Tourism Loans 3 2 12.7%

Manufacturing Loans 2 1 14.7%

Agricultural Loans 2 1 15.9%

Morgtgage Loans under the mortgage Debtor Law (Ley Especial del

Deudor Hipotecario)6 3 6.8%

Microcredits Loans 5 4 8.8%

Gross Loans 3 2 14.5%

Savings Deposits 1 1 20.9%

Total Deposits 3 2 12.5%

Total Deposits + Other Demand Liabilities 3 2 12.0%

Total Assets 4 3 11.8%

Trust 5 2 7.4%

Net Premiums 2 12.0%

U.S. (3)

Florida (4)

Total Deposits 122 15

Mercantil Seguros (2)

Venezuela

Mercantil Commercebank (3)

Mercantil Banco (1)

Positioning

Market Share

Fitch Ratings Clave (*)

Long-term AA(Ven)

Short-term F1+(Ven)A2 A2

A1 A1

Long-term AA+(Ven)Short-term F1+(Ven)

Long-term (Foreign and local currency) B

Short-term (Foreign and local currency) B

Viability b

Long-term Deposit (Mercantil Commercebank ,N.A. only) BB+

Long-term BB

Short-term BViability bb

Mecantil Commercebank Florida Bancorp y

Mercantil Commercebank N.A.

Rating for Unsecured Bonds ( Long-term in local currency)

Rating for Commercial Paper (Short-term in local currency)

Mercantil Banco Universal

National Ratings

International Ratings

National Ratings

Mercantil Servicios Financieros

Market Share

(1) Source: Summary of Unconsolidated Financial Statements Published in National newspapers. (2) Source: Venezuelan Superintendency of Insurance. (3) Source: Federal Deposit Insurance Corporation (FDIC), to the Florida Stated U.S. at June 30, 2014, total number of institutions: 267 in Florida (4) Source: American Bankers based on 200 Bank Holdings, Commercial Banks and Saving Institutions with more Deposits in U.S. at 03/31/14

(*) A credit rating agency in Venezuela

Credit Ratings

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3,509 4,103 3,872 4,728 5,658

9.0%8.8%

8.1%

8.5%

9.3%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

-

1,000

2,000

3,000

4,000

5,000

6,000

3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014

(Mill

ion

of

Bs)

Evolution of Net Interest Income

Net Interest Income Net Interest Income / Average Financial Assets

Management Discussion and Analysis

Operating Income Quarter 9 months

Ended on ∆ Ended on

(In Million Bolivars and US$, except percentages)

US$ 1 September September September September

Sep.2014 2014 2013 Bolivars % 2014 2013 Bolivars %

Net Interest Income 900 5,658 3,509 2,149 61.2 14,259 9,165 5,094 55.6 Allowance for Losses on Loan Portfolio 113 710 323 387 119.8 1,645 908 737 81.2

Net Financial Margin 787 4,947 3,186 1,761 55.3 12,614 8,256 4,357 52.8

Commissions and Other Income 343 2,157 1,330 827 62.2 5,474 4,450 1,024 23.0

Insurance Premiums, Net of Claims 70 443 369 74 20.1 1,369 902 467 51.8

Operating Income 1,201 7,546 4,885 2,661 54.5 19,457 13,608 5,848 43.0

Net Interest Income In 3Q 2014, net interest income was Bs 5,658 million (US$ 900 million)

1, up 61.2% from Bs 3,509 million (US$ 558 million) registered in 3Q 2013

1,

due to an increase in the volume of financial assets and liabilities. Interest income was Bs 7,997 million, which reflects a 65.1% year-on-year increase. This increase is reflected in the behavior of income from the loan portfolio which grew 79.5%. Interest expenses totaled Bs 2,339 million, up 74.9% compared to 3Q 2013. The financial intermediation ratio (loans-to-deposits) was 70.1% at the close of 3Q 2014 (67.0% at the close of September 2013).

Mercantil Banco Universal, reached Bs 5,225 million, up 69.3% from Bs 3,087 million in interest income registered in 3Q 2013, mainly due to a higher volume of financial assets and liabilities. The financial intermediation ratio was 66.1% in September 2014 and 60.5% in September 2013.

Mercantil Commercebank, N.A., totaled US$ 40 million, up 10.2% from US$ 36 million registered in 3Q 2013. The Bank continues to hold a significant portion of its assets, US$ 2,542 million, more than 32%, in short-term investments and securities issued by the U.S. government or U.S. government-backed agencies. This high level of liquidity has continued to allow the Bank ample flexibility to increase its credit operations.

The accumulated allowance amounted to Bs 5,332 million (US$ 848 million)1 at September 30, 2014 which represents 3.0% of gross loans (3.0% at

September 30, 2013). This provision covers 721.4% of past-due and non-performing loans (434.0% at September 30, 2013).


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Gross Loans Past Due and Non-Performing Loans

3.0%3.3% 3.3%

3.0% 3.0%

0.0%

0.4%

0.8%

1.2%

1.6%

2.0%

2.4%

2.8%

3.2%

3.6%

4.0%

4.4%

2009 2010 2011 2012 2013

Allowance for Losses on Loan Portfolio / Gross Loans

0.7%0.5%

0.6%0.4% 0.4%

0.0%

0.4%

0.8%

1.2%

1.6%

2.0%

2.4%

2.8%

3.2%

3.6%

4.0%

4.4%

0

15,000

30,000

45,000

60,000

75,000

90,000

105,000

120,000

135,000

150,000

165,000

180,000

Sep. 2013 Dec. 2013 Mar. 2014 Jun.2014 Sep.2014

Past Due and Non-Performing Loans / Gross Loans

Loan Portfolio Provision In 3Q 2014, expenses totaled Bs 710 million (US$ 113 million)

1, up Bs 387 million (119.8%) from Bs 323 million (US$ 51 million) in 3Q 2013

1.

Mercantil Banco Universal registered Bs 695 million in loan portfolio provisions in 3Q 2014 (Bs 320 million in 3Q 2013), aimed mainly at provisions related to the construction, services and industrial sectors, as a result of loan portfolio growth during the quarter.

Mercantil Commercebank, N.A. registered US$ 2 million in loan portfolio provisions, mainly for credits related to the commercial sector. The accumulated allowance amounted to Bs 5,332 million (US$ 848 million)

1 at September 30, 2014 which represents 3.0% of gross loans (3.0% at

September 30, 2013). This provision covers 721.4% of past-due and nonperforming loans (434.0% at September 30, 2013).


(Bs. Millions)

Evolution of Loan Portfolio and Asset Quality Ratios

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88.9%

10.0%

1.1%

3Q 2014

Banking Insurance Wealth Management

85.5%

13.1%

1.4%

3Q 2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014

Earned Premiums(12 months change)

Insurance Market Mercantil

Total Commissions and Other Income

In 3Q 2014, commissions and other income totaled Bs 2,157 million (US$ 343 million)

1, Bs 827 million (62.2%) up from Bs 1,330 million (US$ 212

million)1 registered in 3Q 2013, primarily due to:

Bs 787 million (65.4%) increase in earnings from commissions on the use of debit and credit cards, insurance policy financing, other commissions on client transactions, among others.

Bs 40 million (31.5%) increase in earnings from securities trading activities.

Insurance Premiums, net of Claims

In 3Q 2014, insurance premiums, net of commissions, reinsurance and claims, totaled Bs 443 million (US$ 70 million)

1, reflecting 20.1% year-on-

year growth from Bs 369 million (US$ 59 million)1. This improvement is

attributed to the Automobile business. Earned premiums in 3Q 2014 amounted to Bs 4,455 million (US$ 709 million)

1, reflecting Bs 1,942 million (77.3%) year-on-year growth. The main

contributors to this variation were the Health (82.2%) and Automobile (75.7%) businesses. At September 30, 2014, Mercantil Seguros was the country’s second largest insurance company in terms of net collected premiums, with 12.0% of the insurance market.

Claims and administrative expenses during 3Q 2014 totaled Bs 3,045 million (US$ 485 million)

1, up Bs 1,143 million (60.1%) compared to Bs 1,902 million

(US$ 303 million) in 3Q 2013. This growth was mainly attributable to the Health business. The claims ratio was 65.9% in 3Q 2014 (65.5% in 3Q 2013). The technical result was Bs 55 million (US$ 9 million)

1, down Bs 92

million (62.5%) compared to Bs 147 million (US$ 23 million) in 3Q 20131.

The variation is mainly due to increases in contributions to regulatory entities.


Composition of Total Income

Bs 5,208 millions US$ 829 millions

1

September 2013

Bs 8,258 millions US$ 1,313 millions

1

September 2014

67% 69%

24% 24%

7%5%

2% 2%

3Q 2013 3Q 2014

Net Interest Income

Commissions on Transactions, Insurance Premiums net and Other

Other Income

Income on Sales Investment Securities

Composition of Total Income by Business Line

9


Total Operating Expenses

Quarter 9 months

Ended on ∆ Ended on ∆

(In Million Bolivars and US$, except percentages)

US$ 1 September September September September

Sep.2014 2014 2013 Bolivars % 2014 2013 Bolivars %

Operating Income 1,201 7,546 4,885 2,661 54.5 19,457 13,608 5,848 43.0

Operating Expenses

Salaries and Employee Benefits 270 1,695 1,070 625 58.4 4,477 3,061 1,416 46.3

Other Operating expenses 502 3,153 1,861 1,292 69.4 8,134 4,841 3,293 68.0

Taxes Current and Deferred 58 362 169 193 114.2 533 448 85 19.0

Minority interest 0 (2) (1) (1) 100.0 (4) (3) (1) 33.3

Net Income 372 2,335 1,784 551 30.9 6,309 5,255 1,054 20.0

In 3Q 2014, operating expenses totaled Bs 4,848 million (US$ 772 million)1, a 65.4% year-on-year increase from Bs 2,931 million (US$ 466

million)1. This increase is mainly due to:

Bs 625 million in personnel expenses, reflecting a year-on-year rise of 58.4%. This increase in expenses is due to the application of wage increases. At Mercantil Banco Universal, assets per employee rose from Bs 20.7 million in 2013 to Bs 33.4 million in 2014. At Mercantil Seguros, net earned premiums per employee rose from Bs 1.6 million in 2013 to Bs 2.9 million in 2014. In the case of the overseas business, the assets per employee indicator went from US$ 8.5 million in 2013 to US$ 9.3 million 2014.

Bs 813 million (66.3%) rise in expenses for commissions on using the point-of-sale and ATM network of other banks, among others.

Bs 394 million (79.3%) increase in expenses for contributions to regulatory agencies.

Bs 86 million (62.8%) growth of expenses for taxes and contributions.

295 397 465 497

767 891

1,069

1,320

1,798 1,070

1,433

1,695

3Q 2013 2Q 2014 3Q 2014

Total Operating Expenses Quarters(In millions of Bolivars)

Salaries and employee benefits

Other operating expenses

Fees paid to regulatory agencies

Depreciation, Property and equipment, Amortization of intangibles and others expenses

2,931

Δ +65.4%

Δ +23.8%

3,917

4,848

90.0%8.0%

2.0%

3Q 2014

Banking Insurance Wealth Management

78.4%

19.6%

2.0%

3Q 2013


Composition of Net Income by Business Line

10


Efficiency Ratios The efficiency ratio measured by calculating operating expenses as a percentage of average assets was 5.2% in September 2014 similar to 5.1% in September 2013. The ratio of operating expenses to total income was 48.5% in September 2014 (45.9% in September 2013), with the number of employees at the same level for the last 5 semesters. Personnel and Operating Expenses have been affected by the high level of inflation in Venezuela which was 63.4% over the last twelve month at August 31, 2014.

Balance Sheet The principal balance sheet variations during 3Q 2014 are reviewed below and commented on with respect to the previous quarter. The main year-on-year variations are also indicated for comparison purposes.

Summary of Balance Sheet and Private Banking and Assets under Management

(In Million Bolivars and US Dollars, except percentages)

∆ ∆ US$ 1 September June September Sep. 14 vs. Jun 14 Sep. 14 vs. Sep. 13

Sep.2014 2014 2014 2013 Bolivars % Bolivars %

Cash and due from banks 9,208 57,865 51,994 34,198 5,871 11.3 23,667 69.2

Investment Portfolio 10,735 67,459 69,666 56,221 (2,208) (3.2) 11,239 20.0

Loan Portfolio, Net 27,458 172,555 156,840 108,852 15,715 10.0 63,703 58.5

Total Assets 49,065 308,340 287,517 206,181 20,823 7.2 102,159 49.5

Deposits 40,410 253,942 236,081 167,444 17,861 7.6 86,497 51.7

Shareholders´ Equity 4,477 28,139 26,803 21,308 1,336 5.0 6,831 32.1

Assets under Management 9,742 61,223 54,245 45,997 6,978 12.9 15,226 33.1

Liquidity At the close of 3Q 2014, total cash and due from banks (cash and the reserve requirement in Venezuela) plus investments in time deposits and placements which are included in the investment portfolio increased 5.3% to Bs 64,585 million (US$ 10,277 million)

1, exceeding the Bs

61,328 million (US$ 9,759 million)1 recorded in the previous quarter by

Bs 3,257 million. This growth is observed mainly in the accounts held at the Venezuelan Central Bank, net of investments decline in time deposits and placements. Compared to September 30, 2013, cash and due from banks plus investments in time deposits and placements rose Bs 26,006 million (67.4%), from 38,579 million to Bs 64,585 million.

4,381 9,334 6,720

13,845

37,119 42,610

20,353

14,875 15,255

Sep. 2013 Jun. 2014 Sep. 2014

Liquidity (In millions of Bolivars)

Cash and Due from Banks - Legal Reserves

Legal Reserves

Investments in Time Deposits and Placements

Δ +67.4%

64,58561,328

38,579

Δ +5.3%

The liquidity ratio calculated by dividing total cash and due from banks by deposits was 22.8%; and the ratio calculated by dividing total cash and investments by deposits was 49.4%, compared with 22.0% and 51.5%, respectively in June 2014 and 20.4% and 54.0%, respectively at the close of 3Q 2013.


39.6%

49.4%

56.1%59.4%

62.1%

44.9%

45.9%

47.4%53.3%

49.2%

5.0%

5.1%

5.3%

5.0%

4.8%

4.5%

4.7%

4.9%

5.1%

5.3%

5.5%

5.7%

5.9%

6.1%

11.0%

21.0%

31.0%

41.0%

51.0%

61.0%

71.0%

Jun.2013 Sep.2013 Dec.2013 Mar.2014 Jun.2014

Inflation in Venezuela Operating Expenses / Total Income Operating Expenses / Average Assets

11


Investment Portfolio

At the close of 3Q 2014, the investment portfolio totaled Bs 67.459 million (US$ 10,735 million)

1, reflecting Bs 2,208 million (3.2%) quarter-over-quarter decline

from Bs 69,666 million (US$ 11,086 million)1.

Compared to September 30, 2013, the investment portfolio grew Bs 11,239 million (20.0%), from Bs 56,221 million to Bs 67,459 million, mainly due to investments issued by the Venezuelan government, state-owned companies and decentralized entities. The variations for this item, taken individually by subsidiary, are as follows:

56,221

69,666 67,459

Sep. 2013 Jun. 2014 Sep. 2014

Investments Portfolio(In million of Bolivars)

Δ +20.0%

Δ - 3.2%

(In Million,

except percentages) September June ∆

2014 2014 ABs %

Mercantil Banco Universal Bs 44,944 48,849 (3,905) (8.0)

Mercantil Seguros Bs 8,410 7,464 946 12.7

Mercantil Commercebank US$ 2,385 2,101 284 13.5

Investments by maturity and yield at the close of 3Q 2014 are broken down as follows:

Investments by Maturity and Yield

(In Million Bolivars, except percentages)

Trading Available for Sale

Held to Maturity Shares

Time Deposits and Placements

Trust Fund and Restricted

Investments

Years Bs 2 Bs

2 %

4 Bs

3 %

4 Bs

2 Bs

2 % Bs

2 %

4 TOTAL

Bs Less Than 1 557 9.9 1,195 4.4 6,7185 9.1 13 10.0 8,483

From 1 to 5 6,577 13.0 5,879 4.8 4 11.6 12,460

Over 5 11,814 13.7 16,293 4.6 263 28,369

US$ Less Than 1 1 913 7.7 122 4.0 2 0.3 360 3.9 1,397

From 1 to 5 2 2,216 5.0 311 3.4 7 2.7 2,535

Over 5 12 14,113 4.6 32 2.7 17 41 2.5 14,215

15 36,189 23,831 280 6,720 425 67,459


2 Registered at Market Value

3 Amortized cost

4 The yield of securities is based on amortized cost at the end of the period. Yield is calculated by dividing income investments (including premium amortization or discounts) by the amortized cost or market value.

5 Bs 3,226 million are Central Bank placements with maturity greater than 30 days.

12


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

Venezuelan Central Bank US Government & US Gov.Guaranteed Agencies

Private Venezuelan Governmentand Public Entities

Breakdown of Investments by IssuerSeptember 2013

June 2014

September 2014

Investments at the close of 3Q 2014, by company, issuer and currency, are broken down as follows:

Breakdown of Investments by Issuer and Currency


Venezuelan

Venezuelan

Central US US Gov.

Guaranteed Int’I Government and Public Venezuelan Total

Bank Government Agencies Private Entities Private Bs

Bolivars Venezuelan

Mercantil Banco Universal & Agencies 3,226 38,429 222 41,877

Mercantil Seguros and Others 4,557 3,372 7,929

Total Bs. 3,226 - - - 42,9862 3,594 49,806

Totales

US Dollars en US$1

Mercantil Banco Universal & Agencies 4 13 10 28 55

Mercantil Commercebank Florida Bancorp 1,079 566 720 20 2,385

Mercantil Seguros and Others 105 17 106 139 2 370

Total US$ - 1,189 596 836 187 2 2,810

Breakdown % 4.8% 11.1% 5.6% 7.8% 65.4% 5.3% 100.0%

1 Dollar figures given for reference purposes only and are translated at the closing exchange rate. See Exchange rates in Appendix VI. Exchange control has been in place in Venezuela since February 2003.

2 Bs 746 million include US$ indexation clause

Government bonds issued by the Venezuelan State account for 0.73 times Mercantil's equity and 6.7% of its assets (0.90 and 8.4%, respectively in June 2014). At Mercantil Banco Universal, these securities represent 0.66 times its equity and 6.1% of its assets (0.89 and 8.0%, respectively in June 2014). At September 30, 2014 the Mercantil, C.A. Banco Universal subsidiary, in line with a regulation issued by the Executive branch, purchased Bs 23,570 million in Mortgage Bonds, CDs, Agricultural Bonds and stocks. These represent 55.9% % of the bank's investment portfolio and 1.2 times its equity (Bs 20,916 million representing 44.7% of its investment portfolio and 1.1 times its equity at June 30, 2014).

13


47% 43% 42%44% 46%

23%27% 28%

25%21%30%

30% 30%

31%33%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Sep. 2013 Dec. 2013 Mar. 2014 Jun. 2014 Sep. 2014

Loan Portfolioby Business Segment(In millions of bolivars)

Individuals

Large Corporation

SME's

Financial Intermediation Activity

Loan Portfolio

At the close of 3Q 2014, the net loan portfolio totaled Bs 172,555 million (US$ 27,458 million)

1, reflecting 10.0% growth from Bs 156,840 million (US$ 24,958

million)1 in 2Q 2014.

Compared to September 30, 2013, the loan portfolio expanded Bs 63,703 million (58.5%), from Bs 108,852 million to Bs 172,555 million. At September 30, 2014, consumer and commercial loans account for 60.3% of the total loan portfolio, reaching Bs 107,213 million, and reflecting 10.0% quarter-over-quarter growth and 59.4% year-on-year growth.


108,852

156,840 172,555

Sep. 2013 Jun. 2014 Sep. 2014

Loan Portfolio(In million of Bolivars)

Δ + 58,5%

Δ + 10.0%

(In Million,


2014 2014 ABs %

Mercantil Banco Universal Bs 139,16 123,280 15,906 12.9

Mercantil Commercebank US$ 5,017 5,021 (4) (0.1)

The ratio of past-due and non-performing loans to gross loans remained similar to June 2014 in 0.4%. The ratio by subsidiary is as follows:

Mercantil Banco Universal 0.3% compared with 0.5% for the Venezuelan financial system.

Mercantil Commercebank, N.A. 0.5%, up from 0.3% in the previous quarter. Non-accrual loans remained at 1.0% of the total loan portfolio at the close of September 2014.

At September 30, 2014, 99.3% of Mercantil’s loan portfolio is outstanding. The allowance for losses on loan portfolio covers 721.4% of past-due and non-performing loans (784.8% in June 2014); this ratio is 1,008.1% at Mercantil Banco Universal (931.3% in June 2014) and 244.4% at Mercantil Commercebank (359.4% at the close of June 2014). The analysis of Mercantil's main subsidiaries and their positioning in the market are shown on pages 5 and 18.

Annex IV shows the distribution of the loan portfolio, broken down by economic activity, maturity, country and type of risk.

The statutory percentage of Mercantil Banco Universal loans by economic sector and interest rates is shown in Annex V.


14


25% 26% 25%26% 25%

24%24% 25%

26% 27%

51%

50%50%

48%48%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000


Breakdown Depositsby Business Segment(In millions of bolivars)

Individuals

Large Corporation

SME's

Deposits

At the close of 3Q 2014 deposits were Bs 253,942 million (US$ 40,410 million)

1, representing a quarter-over quarter increase of Bs 17,861 million

(7.6%) from Bs 236,081 million (US$ 37,567 million)1.

Compared to September 30, 2013, deposits grew Bs 86,497 million (51.7%), from Bs 167,444 million to Bs 253,941 million.

Demand deposits were the main component of total deposits, which reached Bs 170,836 million, up 8.1% from the previous quarter and representing 67.3% of total deposits. Savings deposits rose Bs 4,903 million (6.9%) and time deposits Bs 196 million (2.8%) compared to the previous quarter.


167,444

236,081253,942

Sep. 2013 Jun. 2014 Sep. 2014

Deposits(In million of Bolivars)

Δ + 51.7%

Δ +7.6%

(In Million,


2014 2014 ABs %



The financial intermediation (loan-to-deposit) ratio is 70.1%, compared to 68.5% in June 2014. The analysis of Mercantil's main subsidiaries and their positioning in the market can be found on pages 5 and 18.


15


Total Assets At the close of 3Q 2014 total assets registered 7.2% growth to Bs 308,340 million (US$ 49,065 million)

1, up Bs 20,823 million compared to Bs 287,517

million (US$ 45,752 million)1 in the previous quarter. This is the result of the

combined behavior of the total cash and due from banks and the loan portfolio, which grew Bs 5,871 million and Bs 15,715 million respectively. The ratio of performing assets to total assets was 79.8%, up Bs 14,001 million (6.0%) from the previous quarter. Compared to September 30, 2013, assets grew Bs 102,159 million (49.5%) from Bs 206,181 million to Bs 308,340 million. The variations for this item, taken individually by subsidiary, are as follows:

206,181

287,517308,340

Sep. 2013 Jun. 2014 Sep. 2014

Consolidated Total Assets(In million of Bolivars)

Δ +49.5%

Δ +7.2%

(In Million,


2014 2014 ABs %


Mercantil Seguros Bs 12,927 12,369 557 4.5


The loan portfolio remained the principal component (56.0%) of total assets, and the investment portfolio accounts for 21.9%, while total cash and due from banks at the end of the quarter accounted for 18.8%. The analysis of Mercantil's main subsidiaries and their positioning in the market are shown on pages 5 and 18.

Assets Distribution Total Bs 308,340 millions

(US$ 49,065 millions)1

September 2014

Composition of Assets

Cash and Due from Banks 18.8%

Loan Portfolio, Net 56.0%

Venezuelan Central Bank 1.0%

Venezuelan Govermment 14.3%

US Govermment. 2.4%

Private Sector 2.9%

US Govermment Guaranteed Agencies 1.2%

Other Assets 3.4%

Investment Portfolio 21.9%

Composition of Assets by Sudsidiary

Mercantil Banco Universal 78.6%

Mercantil Commercebank 15.8%

Mercantil Seguros 4.0%

Other Subsidiaries (Abroad) 1.4%

Other Subsidiaries (Venezuela) 0.2%


16


Financial Obligations At the close of 3Q 2014, total financial obligations were 5,751 million (US$ 915 million)

1, down 13.9% compared to Bs 6,680 million (US$ 1,063

million)1 in the previous quarter while, compared to September 30, 2013, obligations rose 17.5%.

September 2014

June 2014

September 2013

(In Million Bolivars) Bs Bs Bs

Publicly Traded Debt Securities Issued by Mercantil 600 166 118

Subordinated debt 696 696 701

1,296 862 819

Other Financial Liabilities * 4,455 5,818 4,075

5,751 6,680 4,894

* Includes, funds received for special financing programs, liabilities with credit cards, letters of credit and securities loan agreements.

Shareholders’ Equity At the close of 3Q 2014, shareholder's equity reached Bs 28,139 million (US$ 4,477 million)

1, a Bs 1,336 million (5.0%) increase from Bs 26,803

million (US$ 4,265 million)1

in the previous quarter and 32.1% up from Bs 21,308 million (US$ 3,391 million)

1 in 3Q 2013.

The 3Q 2014 variation is mainly due to Bs 2,335 million in net income for the period, and Bs 961 million from adjusting available-for-sale investments to their market value, among others.

21,308

26,803 28,139

Sep. 2013 Jun. 2014 Sep. 2014

Evolution of Shareholders´Equity(In million of Bolivars)

Δ +32.1%

Δ +5.0%

Capital Ratios Mercantil’s equity-to-assets ratio at September 30, 2014 is 9.1% and its equity to risk-weighted assets ratio is 15.8%, based on the standards of the National Securities Superintendency (SNV) versus 10.3% and 18.8% at September 30, 2013.

Mercantil Banco Universal, in accordance with the requirements of the Superintendency of Banking Sector Institutions (SUDEBAN) has an equity-to-assets ratio of 9.5% at September 30, 2014, and an equity to risk-weighted assets ratio of 16.4% (11.0% and 19.1% at September 30, 2013).

Mercantil Commercebank, N.A., based on the standards of the U.S. Office of the Comptroller of the Currency (OCC), has an equity-to-assets ratio of 9.6% at September 30, 2014 and an equity to risk-weighted assets ratio of 13.9% (10.1% and 16.5% at September 30, 2013).

The equity ratios of Mercantil and its subsidiaries exceed the regulatory minimums.

Capital StructureSeptember 2014

Capital stock 3%

Capital reserve 1%

Traslation adjustments of net assets of subsidiaries abroad 11%

Retained earnings 83%

Unrealized gain fron adjustments of investments to market value 2%

1 Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and income statement figures at the average exchange rate for the period. See exchange rates in Appendix VI. Exchange control has been in place in Venezuela since February 2003

17


0%

20%

40%

60%

80%

100%

Mercantil Commercebank FloridaBancorp and Subsidiaries (47%)

Other Subsidiaries Abroad (21%)

Subsidiaries in Venezuelan (24%)

Mercantil Banco's Overseas Branchand Agency (8%)

Cash and Due from Banks (Banks

Abroad), 36.1%

US Treasuries, 0.9%

US$ denominated bonds issued by the Venezuelan

government, 25.5%

Principal and Interest Covered Bonds (Ticc) (*),

35.8%

Other Assets, net, 1.7%

Assets and Liabilities in Foreign Currency

Mercantil’s assets and liabilities in foreign currency amounted to US$ 8,949 million and US$ 7,569 million, respectively at September 30, 2014.

The estimated effect of each Bs 0.10/US$1 increase on the exchange rate of Bs 6.2842/US$ at September 30, 2014 would be an increase of Bs 895 million in assets and Bs 138 million in equity, Bs 23 million of which would be recorded as income for the period.

81.8%

18.2%

75.4%

24.6%

Bolivars US$

At September 30, 2014 Mercantil’s shareholders’ equity was Bs 28,139 million, equivalent to US$ 4,477 million1, which is partially covered in US$

by the following net assets:

Allocation by Company:


US$ 1,380 millions

Assets

Assets by subsidiaries in Venezuela (24%)

Bs. 206,181 millions (US$ 32,809 millions

1)

September 2013

Bs. 308,340 millions (US$ 49,065 millions

1)

September 2014

Assets by Currency

* Issued in US$ or under indexation clause (see Investment Portfolio, page 11)

Assets

18


Performance of Subsidiaries in accordance to its local accounting standards Mercantil Banco Universal Mercantil Banco Universal’s total assets grew by Bs 18,202 million (8.1%) compared with June 2014. During 3Q 2014 net loans portfolio grew Bs 15,906 million (12.9%) and total deposits rose Bs 15,840 million (7.9%) compared with 2Q 2014, to Bs 139,186 million and Bs 217,885 million, respectively. Loan portfolio quality remains very favorable, with a 0.3% ratio of past-due and non-performing loans to gross loans compared to 0.5% for the Venezuelan financial system as a whole. The loan portfolio provision covers 1,008.1% of past-due and non-performing loans (931.3% at June 30, 2014). At September 30, 2014 the Mercantil Banco Universal subsidiary ranks fourth in the Venezuelan financial system in terms of total assets with 11.8% of the market. The leading institution has 18.4% share and Venezuela’s four main banks account for 56.3% of the financial system. In addition, it is the leading institution in the private financial system in terms of manufacturing and agriculture loans with 14.7% and 15.9% of the market, respectively. It ranks second in terms of gross loan and tourism loans with market shares of 14.5% and 12.7%, respectively. It also ranks third in terms of mortgages with 6.8% of the market. Mercantil is Venezuela's leading bank in terms of savings deposits with 20.9% of the market. Shareholders’ equity grew Bs 1,675 million (9.2%) to reach Bs 19,939 million (US$ 3,173 million)

1 compared to the previous quarter. This growth is

mainly due to Bs 2,434 million in net quarterly income, and a decline of Bs 758 million from adjusting available-for-sale investments to their market value. The equity-to-assets ratio as of September 30, 2014 is 9.5% (minimum requirement 9%) and the equity to risk-weighted assets ratio, according to the standards of the SUDEBAN, is 16.4% (minimum requirement 12%). In 3Q 2014, net earnings of Bs 2,434 million represented a Bs 873 million (55.9%) year-on-year growth, mainly due to a Bs 2,203 million rise in net interest income as a result of an increase in financial assets and liabilities; Bs 740 million in net income from commissions on the use of credit and debit cards as well as on client transactions; Bs 378 million in expenses for loan portfolio provisions; rises of Bs 1,513 million in personnel and operating expenses; Bs 152 million in contributions to regulatory agencies; and Bs 27 million in corporate income tax.

Mercantil C.A., Banco Universal Consolidated (In Million Bolivars and US Dollars)

US$ Sep. 2014

Sep. 2014

Jun. 2014

Sep. 2013

Total Assets 38,694 243,162 224,959 150,709 Investments Portfolio 6,723 42,251 46,894 36,613 Loan Portfolio 22,149 139,186 123,280 78,102 Deposits 34,672 217,885 202,015 133,962 Shareholders´ Equity 3,173 19,939 18,263 13,406 Income net Quarter 388 2,434 1,914 1,561 Income net 9 Months 945 5,938 3,906 Historic figures in accordance with the standards of the Venezuelan Superintendency of Banking Sector Institutions (SUDEBAN).

3,028 3,749 3,392 4,245 5,231

10.4%10.8%

9.6%

10.9%

12.9%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014

Net Interest Income

Net Interest Margin

3.8%3.5% 3.3% 3.5%

4.0%

Evolution of Net Interest Income

Operating Expenses / Average Total Assets

15.3%16.7%

9.5%

16.4% 16.9%

14.6% 15.2%

4.3%

31.1%

13.2%

14.2% 14.0%

13.3%

15.0%14.5%

9.0%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

24.0%

28.0%

32.0%

36.0%

40.0%

3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014

Evolution of Gross Loans PortfolioVenezuela

Venezuelan Financial System Mercantil Market Share

19


Mercantil Commercebank, N.A. At September 30, 2014, total assets reached US$ 7,784 million, up US$ 317 million (4.2%) compared to US$ 7,467 million at the close of the previous quarter and 13.3% compared to 3Q 2013. The net loan portfolio was US$ 5,007 million, the same as the previous quarter and 10.2% higher than in 3Q 2013. Real estate (RE) loans grew 7.5% from the previous quarter, and 25.6% over the last twelve months. Commercial and Industrial (C&I) loans decreased 2.4% during the quarter, and have grown 8.4% over the last twelve months. This performance was attributed to a marked recovery in the South Florida real estate sector, as well as expansion on lending activity in the New York and Houston markets. At September 30, 2014 the Bank holds US$ 2,542 million (32.7% of total assets) mainly in short-term investments and bonds issued or guaranteed by the U.S. government or U.S. government-backed agencies. The Bank's deposits reached US$ 6,229 million at the close of September 2014, which reflects a 6.7% quarter-over-quarter growth and a 13.2% year-on-year growth.

Non-performing assets (non-accrual loans and assets received in lieu of payment) fell US$ 13 million compared to September 2013. Non-performing assets accounted for 0.7% of total assets, down 0.3% from September 2013. The ratio of non-performing loans to total loans remained in 0.97% as the ratio registered at the close of September 2013. At September 30, 2014, the Bank’s equity totaled US$ 739 million, similar to US$ 740 million registered in the previous quarter, mainly due to US$ 7 million in quarterly income and US$ 8 million decline from adjusting available-for-sale investments to their market value. At September 30, 2014 the equity-to-assets ratio is 9.6% and the equity to risk-weighted assets ratio is 13.9% (10.1% and 16.5% at September 30, 2013), based on the standards of the Office of the Comptroller of the Currency (OCC).

In 3Q 2014, net earnings totaled US$ 7 million, similar to the previous quarter. This variation is mainly attributable to US$ 4 million increase in net interest income, US$ 2 million rise in the requirement for loan portfolio provisioning, US$ 3 million increase in commissions and other income and US$ 4 million rise in operative expenses.

Mercantil Commercebank N.A. Consolidated (In Million US Dollars)

Sep. 2014

Jun. 2014

Sep. 2013

Total Assets 7,784 7,467 6,868 Investments Portfolio 2,542 2,228 2,103 Loan Portfolio 5,007 5,007 4,544 Deposits 6,229 5,840 5,501 Shareholders´ Equity 739 740 717 Income net Quarter 7 7 7 Income net 9 Months 20 27 Figures presented according to accounting principles generally accepted in the United States (USGAAP )

0.9%0.7% 0.7% 0.8%

1.0%

1.7%

1.2% 1.3%1.4% 1.3%

12.7%

9.3%9.8% 9.5%

9.0%

0%

6%

12%

18%

0%

2%

4%


Assets Quality Ratios

NA(w/o Commitments) /Total Lns.

Total Class Lns /Total Lns.

Total Class+OREO /Tier 1+ALLL

20


Mercantil Seguros In 3Q 2014 net collected premiums registered 77.3% growth to Bs 4,455 million from Bs 2,513 million at the close of 3Q 2013. At the close of September 30, 2014, this subsidiary was the country’s second insurance company in terms of net collected premiums, with a market share of 12.0% Total assets stood at Bs 13,716 million at September 30, 2014 reflecting 12.9% quarter-over-quarter growth. The Company registered Bs 4,170 million in shareholders’ equity, which complies with the statutory solvency requirements. The figures presented include all the mandatory and voluntary reserves required to guarantee the company’s operations, including outstanding claims reserves and end-of-period payments.

At the close of September, 2014 the company’s investment portfolio was Bs 11,139 million, 10.9% up on the previous quarter. Total investments representing technical reserves reached Bs 9,132 million (6.0% higher than the figure for the previous quarter and 46.6% more than at the close of September 2013), while liquidity levels amply meet all the statutory requirements on commitments towards policyholders, insurance brokers and reinsurers. In 3Q 2014, the technical result closed at Bs 55 million, with a combined operating ratio

2 of 98.5%. Net income for 3Q 2014 totaled Bs

264 million, which compares to Bs 332 in 3Q 2014. The claims ratio was 65.9% (65.5% in 2013).


3 Combined ratio = (incurred claims + commissions + operating expenses)/ earned premiums

Mercantil Seguros C.A. Consolidated (In Million Bolivars and US Dollars)

US$ Sep. 2014

Sep. 2014

Jun. 2014

Sep. 2013

Total Assets 2,182 13,716 12,152 8,659 Investments suitable for representing Technical Reserves 1,453 9,132 8,618 6,228 Investments not-suitable for representing Technical Reserves 319 2,007 1,430 1,238 Shareholders´ Equity 664 4,170 3,915 2,857 Income net Quarter 42 264 270 332 Income net 9 Months 138 869 847 Premiums Received Quarter 709 4,455 3,493 2,513 Premiums Received 9 months 1,802 11,321 6,985

Historic figures in accordance with the standards of the Venezuelan Superintendency of Insurance Activity (Sudeseg)

2,513

3,394 3,373 3,493

4,455

3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014

Evolution of Net Collected Premiums and Combined Ratio2

Net Collected Premiums

93.6%

94.6%94.1%

97.6%

98.5%

90%

92%

94%

96%

98%

100%

Combined Ratio

21


Wealth Management The Wealth Management business comprises: trust services, securities brokerage, mutual funds and portfolio management services. Net assets under management recorded off the balance sheet at September 30, 2014 were Bs 61,223 million (US$ 9,742 million)

1, representing a 12.9%

quarter-over-quarter increase and 33.1% year-on-year growth. They are broken down as follows:


During 3Q 2014, the Trust Fund managed Bs 22,859 million in assets, which reflects 9.1% quarter-over-quarter growth and 32.8% year-on-year growth. At September 30, 2014 Mercantil's trust fund ranked second in the private banking sector and fifth in the fiduciary market in Venezuela. At the close of September 2014, Mercantil maintained its position as Venezuela's mutual fund industry leader. Mutual Fund assets under management grew 0.8% and 21.7% compared to June 2014 and September 2013 respectively, reaching Bs 2,005 million Mercantil offers its clients investment products and services (as broker-dealers and investment advisers) in global financial markets. At the close of September 2014, the total value of client assets was Bs 22,957 million, 16% more that at the close of June 2014 (up 50.6% year-on-year).

TOTAL ASSETS UNDER MANAGEMENT


September

2014 June 2014

September 2013

∆ Sep. 14 vs. Jun.14

%

∆ Sep. 14 vs. Sep. 13

%

Trust Funds

22,859

20,953

17,218

9.1

32.8

Mutual Fund

2,005

1,988

1,647

0.8

21.7

Brokerage

19,017 16,041

12,146

18.6

56.6

Financial Advisory

3,940

3,743

3,100

5.2

27.1

Custody of Securities Trading 13,402

11,520

11,886

16.3

12.8

Total Private Banking and Wealth Management Bs

61,223

54,245

45,997

12.9

33.1

Total Private Banking and Wealth Management US$ 9,7421 8,6321 7,3191 12.9 33.1

22


Corporate Events Shareholders’ Meetings

The Meetings of the shareholders of Mercantil Servicios Financieros and its subsidiaries were held during the third quarter of 2014, approving the reports presented by the Board of Directors for consideration of the shareholders, as well as the audited financial statements and the statutory auditors' report for 1H 2014. Share Repurchase Program

The Shareholders’ Meeting authorized the Thirtieth Phase of Mercantil Servicios Financieros’ Shares Repurchase Program, to be in place for six months from October 14, 2014, thereby continuing with the program initiated in May 2000 to add value to the company. Hence, the Shareholders’ Meeting authorized the Board of Directors to allow the company to purchase up to fifteen percent (15%) of Common Class “A” and/or “B” shares representing its subscribed and paid-in capital, including in this percentage the treasury stocks.

Awards and Acknowledgements Mercantil Banco Universal acknowledged as the best provider of consumer banking services in Venezuela, and for the best information security initiatives in Latin America.

Global Finance magazine announced the winners of the “World’s Best Internet Banks”, having selected Mercantil in the category per country as “Best Consumer Internet Banks in Venezuela” and also in the regional category as “Best Information Security Initiatives in Latin America”. Global Finance considered the strategy for attracting and servicing online customers, growth of online customers, breadth of products offerings, benefits gained from Internet initiatives and web site design and functionality.

World economy, with the support of China and the United States’ growth, struggles to maintain a stable rate of growth, although some risks remain still regarding the stability of exchange rates and deflation in the Euro Zone. In a context where Latin America and the OECD countries are forecasting reduced growth rates for their economies, a perception prevails that the global rate of growth is weak. Various circumstances may be influencing this perception, but the main element is the variability of the countries and regions.

The latest activity indicators in the U.S. continue to improve and, although no growth figures are yet available for 3Q 2014, it is known that the GDP rate of growth during 2Q 2014 (4.6%), was higher than the previously announced by the Commerce Department (4.2%). The unemployment rate in the U.S. was 5.9% in September; therefore, from the end of the recession, the U.S. economy has generated over 9 million jobs, thereby the jobs lost during the crisis have recovered. In this environment of increased production and employment, with no inflationary pressures, the President of the Federal Reserve renewed their commitment to maintain low interest rates for some time, even after the period of massive purchases of securities foreseen for the end of October.

China’s growth in 3Q 2014 was 7.3%, in spite of the rate declines of some activity indicators. The deceleration of China’s growth coincides with a 6.9% year-on-year increase of industrial production (slowing down from 9.0% in July’s) and with retail sales and investments growing less than in the previous month (11.9% and 16.5% year-on-year, respectively). The external monthly surplus in August was close to US$ 50,000 million, as a result of both strong exports, which grew 9.4% year-on-year, and reduced imports (-2.4%). The trade balance, however, somewhat marred, due to the contraction of imports, which reflects some weakness in domestic consumption and, therefore, the difficulty of turning into an economic model with a larger activity of domestic spending.

Among the emerging economies, the 0.6% quarter-over-quarter GDP growth rate of Brazil for 2Q 2014 shows a technical recession. The feeling of stagnation has continued during 3Q 2014 in the Euro Zone. Unemployment in Spain is 24.5%. The average unemployment rate of the Euro Zone is 11.5%, in contrast with 5.9% in the U.S., and this difference has become recurrent. The signs given of consumer prices are also of risk. Inflation in the Euro Zone decelerated again to 0.3% in September, raising new concerns regarding a possible deflation. Expectations of new stimulus from the European Central Bank have failed, given that its President has not defined the overall size of its quantitative flexibility program.

Global Economic Climate

23


U.S. Economic Climate The U.S. economy has continued to improve in 3Q 2014. According to the Federal Reserve’s Beige Book (periodic economic report), the economic activity continues to grow at a reasonable rate although the appreciation of the dollar and its effect on exports is an added risk to the usual ones. The Institute of Supply Management manufacturing index reached 59.0 points in August, approaching the post-recession peak (of 59.3 points in February 2011); the ISM services index rose to 59.6 points from 58.7 points in July. In addition, retail sales increased during the quarter, despite the 0.3% decline reported in September, having shown a 5.0% year-on-year growth in August. On the other hand, industrial production increased during September (4.3% year-on-year vs. 4.0% in August).

Improvements continue in the labor market, 248,000 net jobs were created in September, bringing the unemployment rate in the U.S. to 5.9%. The unemployment rate has fallen from 10% (in late 2009) to levels seen in September. Thus, since the end of the recession, the U.S. economy has created over nine million jobs, recovering those lost during the crisis. On the other hand, salaries showed increases of 0% month-on-month and 2.0% year-on-year in September, which favors keeping prices in a scenario of greater economic growth.

Price stability is a given, in this environment of progress with no pressures of costs. Therefore, inflation in August was 1.7% year-on-year, three decimal points below the inflation of July, mostly due to the decline of the price of gasoline. On the other hand, the underlying Consumer Prices Index (CPI) (excluding energy or food) also increased 1.7% year-on-year (1.9% in July). This prices stability reinforces the gradual monetary normalization promoted by the President of the Federal Reserve. In the September meeting of the Federal Open Market Committee, the commitment of keeping interest rates low for a period of time was reiterated, even beyond the massive purchase of securities to take place at the end of October.

The real estate market has experienced a partial recovery during 3Q 2014, although it has failed to show the strong levels expected for the year. Although, the real estate sector continues to recover, it is not fulfilling the forecasts of becoming one of the pillars for economic growth during 2014. By the close of September, the indicator of houses under construction showed a month-on-month recovery of 6.3% and 17% year-on-year. Thus, the 12.8% decline of houses under construction in August has been overcome. Sales of housing show contrasting figures during 3Q 2014. Existing home sales declined in August by almost 5.3% year-on-year, although sales of new homes increased notably by 33.0% year-on-year. However, the market for new homes is smaller than the existing ones. The Case-Shiller price index for 20 metropolitan areas showed 6.7% year-on-year increase in July.

Venezuelan Economic Climate

Economic Activity

During 3Q 2014, the performance of the oil market continues to be characterized by a tight balance between global supply and demand, as a result of the unplanned outages in supply, both within OPEC and outside of it, although prevailing higher expansion of supply over demand, which translates into oil prices decline (but still high). The Central Government finances during the third quarter have been marked by an acceleration in public spending, however lower than in the previous quarter. On the monetary side, an increase in money in circulation in the economy was recorded, but still below the level of the same period of last year, partly due to the net contractive effect of Open Market Operations on the means of payment. In this context, there was an acceleration in the growth rate of domestic prices.

Oil Sector, Reserves

The Venezuelan oil basket averaged US$/b 92.4 during 3Q 2014, reflecting a 5.4% quarter-over-quarter decline and a 9.8% year-on-year decline, the largest inter-annual decline since 3Q 2009 (-41.6%). On the other hand, Venezuelan oil production, according to secondary sources, reached an average of 2.328 mbd in 3Q 2014, representing a 24 mbd decline in comparison with the same period of the previous year. In this context, international reserves showed a quarter-over-quarter contraction of a little over US$ 260 million, and a year-on-year decline of US$ 1,704 million to close at US$ 21,340 million in September of this year.

1.0%

1.3%

1.6%

1.9%

2.2%

2.5%

2.8%

3.1%

3.4%

3.7%

4.0%

4.3%

4.6%

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

Source: Bloomberg

Treasury Rate 10 Years

24


Monetary Liquidity On the fiscal side, primary spending executed according to the National Treasury amounted to Bs 226,9 billion in 3Q 2014, reflecting 1.2% quarter-over-quarter increase, although an almost 43% increase compared to July-September 2013, however 950 basis points (bp) below the increase of the same period in 2013 (51.8%). Regarding the internal public debt, allocations of DPN Bonds and Treasury Bills amounted to Bs 9.4 billion, down 73.4% over July-September 2013. This decline can be explained by the suspension of allocations of DPN Bonds from the end of May 2014. This suspension, together with the larger maturities, caused a negative net internal indebtedness of Bs 3 billion, in clear contrast with the Bs 24.6 billion positive indebtedness of 3Q 2013. In the money market, money in the hands of the public (M2) showed a cumulative 27.6% increase in 3Q 2014, almost 590 bp below the 33.3% increase in 3Q 2013. During 3Q 2014, the Venezuela Central Bank maintained a more active participation in the issuance of OMAs than in the same period of last year, particularly through the allocation of Certificates of Deposit (CDs) during the last weeks of August and the first weeks of September which, in spite of longer maturities, caused a net contractive effect of OMAs on the means of payment by Bs 27.5 billion, in contrast with the Bs 3.8 billion expansion recorded in 3Q 2013.

Inflation

In terms of domestic prices, the national inflation rate reached a cumulative 8.2% between July-September, 190 bp over the variation of the same period of 2013 (6.3%). Broken down by groups, the highest above-average price increases were in: Food and non-Alcoholic Beverages (12.2%), Alcoholic Beverages and Tobacco (12%), Restaurants and Hotels (10.6%) and Communications (10.2%). According to the eleven geographical locations comprising the National Consumer Price Index, the cities that underwent higher-than-the-national-average price adjustments (8.2%) were: Maracay (9.3%), San Cristóbal (8.8%) and Rest of the Country (8.5%).

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

Monetary Liquidity Monetary Base

Source: Central Bank of Venezuela and Own Calculation

Monetary Liquidity (M2) and Monetary Base (BM) (Annual Var.)

BMM2

25


APPENDIX I

Summary of the Accounting Principles used to prepare the Financial Statements

Financial statements are presented in accordance with the accounting standards of the National Securities Superintendency (SNV), in bolivars. A summary of some of the main accounting principles applied is given below:

Investment Portfolio Securities Held for Trading - Unrealized gains or losses resulting from differences in market value due to market fluctuations are included in the results for the period. Available-for-Sale Securities – Recorded at their market value. Unrealized gains or losses resulting from differences in market value and exchange rate fluctuations are included in shareholders’ equity. Held-to-Maturity Securities – Recorded at their acquisition cost, adjusted for amortization of premiums or discounts. For all portfolio investments, permanent losses in market value are recorded as a charge to income in the period in which they occur. Permanent investments – are investments that represent 20% to 50% stock ownership. Those greater than 50% are recorded as an equity interest and consolidated, except when control is likely to be temporary.

Loan Portfolio Loans are classified as overdue 30 days after their maturity. Allowances for loan portfolio losses are determined through a collectability assessment that quantifies the amount that must be set aside for each loan. These assessments take into account such aspects as economic conditions, credit risk by customer, credit history and the collateral received. When assessing loans for small amounts of the same nature, these are grouped together to determine the provisions required. Recognition of income and expenditure Income, costs and expenses are recorded as they are earned or incurred. Interest earned on past-due loan portfolios is recorded as income when collected. Fluctuations in the market value of derivatives are recognized as income in the period in which they occur. Insurance premiums are recorded as income when earned. Consolidation The consolidated financial statements include the accounts of Mercantil and its more than 50%-owned subsidiaries and other institutions in which Mercantil has a controlling interest. See the principal subsidiaries on page 4 and the conciliation of its accounting standards with SNV regulations on pages 36, 38, 40. Inflation Adjustment According to SNV standards, Mercantil’s financial statements, as of December 31, 1999 must be presented in historic figures. Since then Mercantil has ceased to adjust for inflation in its primary financial statements. As a result, fixed and other assets are shown at their inflation-adjusted value up to December 31, 1999. The market value determined by independent assessments is higher than the inflation cost adjusted for inflation indicated above. New additions are being recorded at their acquisition value. Differences between the accounting standards of the Superintendency of Banking Sector Institutions in Venezuela (SUDEBAN, for its abbreviation in Spanish) and US GAAP The main accounting differences for the reconciliation of items under SNV and SUDEBAN for Mercantil Servicios Financieros are:

Amortization of premiums or discounts of securities carried out on a straight-line basis under SUDEBAN standards and in accordance with the constant amortization rate under SNV standards.

Under SNV standards, the effects of exchange fluctuations are included in the results for the period, with the exception of exchange fluctuations from available-for-sale investments and the stock trading portfolio which are included in shareholders' equity. Under SUDEBAN standards, all fluctuations are recorded in the results, with the exception of exchange fluctuations from the stock trading portfolio and the fluctuations which, as provided by the SUDEBAN exception, must subsequently be included in income when authorized by SUDEBAN.

The main accounting differences for Mercantil Servicios Financieros between the SNV standards indicated above and US GAAP are:

Deferred Income Tax: US GAAP allows deferred tax to be recognized for the total amount of loan portfolio loss allowances, while SNV standards only allow recognition of allowances for loans classified as high risk and unrecoverable.

Provision for assets received in lieu of payment: SNV standards stipulate a 100% allowance for real property received in lieu of payment after one year from the date of incorporation; under US GAAP no amortization deadlines are established. (See SNV - USGAAP earnings reconciliation, page 38).

26


APPENDIX II

MERCANTIL SERVICIOS FINANCIEROS, C.A. CONSOLIDATED BALANCE SHEET

UNAUDITED FIGURES


∆ ∆

US$ 1 September June September Sep. 14 vs. Jun. 14 Sep. 14 vs. Sep. 13

Sep. 2014 2014 2014 2013 Bolivars % Bolivars %

CASH AND DUE FROM BANKS

Cash 442 2,779 2,776 1,943 3 0.1 836 43

Venezuelan Central Bank 7,887 49,564 43,118 28,104 6,446 14.9 21,460 76.4 Venezuelan Banks and Other Financial Institutions 44 279 517 237 (238) (46.0) 42 17.7

Foreign and Correspondent Banks 264 1,662 1,563 1,589 99 6.3 73 4.6

Allowance for Cash and Due from Banks 570 3,581 4,020 2,325 (439) (10.9) 1,256 54.0

9,208 57,865 51,994 34,198 5,871 11.3 23,667 69.2

INVESTMENT PORTFOLIO

Investments in Trading Securities 2 15 67 8 (52) (77.6) 7 87.5

Investments in Securities Available for Sale 5,759 36,189 37,899 36,202 (1,710) (4.5) (13) (0.0)

Investments in Securities Held to Maturity 3,792 23,831 21,164 14,676 2,667 12.6 9,155 62.4

Share Trading Portfolio 45 280 302 26 (22) (7.3) 254 976.9

Investments in Time Deposits and Placements 1,069 6.720 9.334 4.381 (2,614) (28.0) 2,339 53.4

Restricted Investments 68 425 901 927 (476) (52.8) (502) (54.2)

10,735 67,459 69,666 56,221 (2,208) (3.2) 11,239 20.0

LOAN PORTFOLIO

Current 28,110 176,651 160,524 110,871 16,127 10.0 65,780 59.3

Rescheduled 79 497 541 559 (44) (8.1) (62) (11.1)

Past Due 116 730 589 666 141 23.9 64 9.6

Litigation 1 9 28 105 (19) (67.9) (96) (91.4)

28,306 177,887 161,682 112,201 16,205 10.0 65,686 58.5

Allowance for Losses on Loan Portfolio (848) (5,332) (4,842) (3,349) (490) 10.1 (1,983) 59.2

27,458 172,555 156,840 108,852 15,715 10.0 63,703 58.5

INTEREST AND COMMISSIONS RECEIVABLE 386 2,428 2,078 1,525 350 16.8 903 59.2

LONG-TERM INVESTMENTS 35 221 169 185 53 31.5 36 19.5

ASSETS AVAILABLE FOR SALE 6 36 43 164 (7) (16.3) (128) (78.0)

PROPERTY AND EQUIPMENT 217 1,365 1,292 1,121 73 5.7 244 21.8

OTHER ASSETS 1,020 6,412 5,435 3,915 976 18.0 2,496 63.8

TOTAL ASSETS 49,065 308,340 287,517 206,181 20,823 7.2 102,159 49.5

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