ANNUAL REPORT 2010

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The Stock Repurchase Program initiated in May 2000 is currently in its Twenty-second Phase and was approved at the September 16, 2010 Shareholders’ Meeting. Between July 1 and December 31, 2010 a total of 262,031 shares were acquired through the Program, of which 170,781 are common Class A shares and 91,250 common Class B shares. At the close of 2010, the treasury stock was made up of 580,752 shares of which 351,046 were common Class A shares and 229,706 common Class B shares. Credit Ratings Fitch Ratings, in its annual review conducted in July, ratified the A1 national risk rating for commercial paper issues and the A2 rating for unsecured bonds, the highest an issuer in Venezuela can obtain. It also ratified its national rating for Mercantil Servicios Financieros at AA (VEN) for the long term. Fitch’s most recent (2009) long-term national rating for Mercantil, C.A., Banco Universal was AA+(ven) and its short-term rating was F1+(ven); its international ratings were B+ long term and B short term, with an individual D rating. These are the best ratings obtained by a private financial institution in Venezuela. The international ratings are largely subject to Venezuela’s country risk. The ratings of Mercantil Commercebank Florida BanCorp and Mercantil Commercebank, N.A. have already been affected by the economic situation in the United States, particularly in Florida; however they reflect financial flexibility in terms of their ability to meet their commitments. Fitch Ratings indicates in its report the bank’s high level of liquidity of Mercantil Commercebank, N.A. with a high-quality and short-term investment portfolio. New Legislation On August 17, 2010, the new Securities Market Law (Ley de Mercado de Valores), substituting the Capital Markets Law (Ley de Mercado de Capitales) of October 22, 1998, was published in Official Gazette No. 39,489 of the Bolivarian Republic of Venezuela. The Act introduces various changes, the main ones being the creation of the National Securities Superintendency which replaces the Venezuelan Securities Commission (CNV) as the new regulatory entity with broad discretionary powers such as the authority to: prescribe the technical rules governing the securities market; set criteria on the composition of Boards of Directors, representation and participation of shareholders, and election of the authorities of the entities under its control; determine minimum liquidity and equity levels; set limits on commissions and rates; issue the accounting standards applicable to those subject to regulation, standards on publication of financial statements, and rules to ensure the transparency and effectiveness of public securities offerings or purchases. This new Act eliminates the obligation under the old one to distribute dividends on at least 50% of the net earnings obtained in each fiscal year after amounts for corporate income tax have been set aside and statutory reserves deducted. Mercantil Servicios Financieros 11
* Dollar figures are given for reference only. The balance sheet is converted at the exchange rate at the end of the period (Bs 4.2893/US$1) and the income statement at the average exchange rate for the period (Bs 3.5827/US$1). Exchange control has been in place in Venezuela since February 2003. Mercantil Servicios Financieros’ Total Assets grew 49.6% to Bs. 79,383 million (US$ 18,507 million*) compared to December 2009 and Shareholders’ Equity increased 74.5% to Bs 8,513 million (US$ 1,985 million*) over the same period. The net loan portfolio grew 58.2% to Bs 42.928 million (US$ 10,008 million*) compared with Bs. 27,138 million at the close of 2009. Loan portfolio quality remained at acceptable levels. The ratio of past-due and nonperforming loans to gross loans was 2.9%, considering the overall loan portfolio of Mercantil Servicios Financieros which consolidates the portfolios of Mercantil, C.A., Banco Universal, Mercantil Commercebank Florida BanCorp, Mercantil Bank (Schweiz) AG, Mercantil Bank Curaçao N.V. and Mercantil Bank (Panama) S.A. This ratio was 3.3% at the close of 2009. The ratio of allowances for loan losses over past-due and nonperforming loans was 110.8%, compared to 96.5% at the close of 2009. The efficiency ratio measured by calculating operating expenses as a percentage of average assets, was 5.2%, compared to 5.4% in 2009; while the efficiency ratio, measured by calculating operating expenses as a percentage of total net income was 46.7%, compared to 58.4% in 2009. The Equity/Risk-Weighted Assets ratio was 20.4% (regulatory minimum 8%). This ratio was 18.3% in 2009. It is determined according to the guidelines of the National Securities Superintendency (SNV - for its abbreviation in Spanish) which are based on the standards of the Basel Committee on Banking Supervision of the Bank for International Settlements. Net income per share in 2010 was Bs 21.82 (US$ 6.09*). This was 174.5 % higher than the Bs 7.95 obtained in 2009. The third portion of the ordinary cash dividend for Bs 30,763,083.90 (Bs 0.30 per share) was paid in the second half of 2010. This amount, in addition to the amounts paid out in the first half of the year which corresponded to the first and second portions of the ordinary cash dividend totaling Bs 30,801,041.40 (Bs 0.15 per share) and to the extraordinary cash dividend totaling Bs 92,378,043.00 (Bs 0.90 per share), totaled Bs 153,942,168.30; this is more than sufficient to meet the statutory requirements of the repealed Capital Market Law on this matter. With the payment of the first and second portions of the ordinary cash dividend and the extraordinary cash dividend, the requirements of the repealed Capital Market Law on the payment of cash dividends were satisfied in 2010. At the close of 2010 Mercantil had no outstanding commercial paper and did not issue any new unsecured bonds. At the close of 2010, Mercantil had only Bs 80 million outstanding unsecured bonds, Bs 60 million less than in the first half of 2010. Annual Report 2010 10
Page 1 and 2: ANNUAL REPORT 2010
Page 3 and 4: ANNUAL REPORT 2010 CONTENTS Mercant
Page 5 and 6: Mercantil is Venezuela’s leading
Page 7 and 8: Earnings Consolidated Balance Sheet
Page 9 and 10: Notice of Ordinary General Sharehol
Page 11: * Dollar figures are given for refe
Page 15 and 16: Adjustments to Reporting Lines At a
Page 17 and 18: Venezuela The Venezuelan economy co
Page 19 and 20: 85th Anniversary During the second
Page 21 and 22: Special mention should be made of M
Page 23 and 24: Statutory Auditors’ Report To the
Page 25 and 26: Financial Statements (In accordance
Page 27 and 28: Consolidated Balance Sheet (In thou
Page 29 and 30: César PRIETO Calle caraqueña, aro
Page 31 and 32: Economic Climate Mercantil Servicio
Page 33 and 34: Summary of Economic Performance 200
Page 35 and 36: Mission To fulfill the needs of ind
Page 37 and 38: Management Discussion and Analysis
Page 39 and 40: Loan Portfolio by Business Segment
Page 41 and 42: Financial Margin Year Ended (In tho
Page 43 and 44: Distribution of Total Income Bs 7,4
Page 45 and 46: Summary of the Accounting Principle
Page 47 and 48: Business Management Report Commerci
Page 49 and 50: Commercial Banking Deposits Year 20
Page 51 and 52: Corporate Banking During 2010, the
Page 53 and 54: This made the team more consolidate
Page 55 and 56: In Venezuela, Mercantil Servicios d
Page 57 and 58: Excess Liquidity and Interbank Mark
Page 59 and 60: Available for Sale and Held to matu
Page 61 and 62: Quality of Service and Operating Ef
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Manuel CABRÉ Ávila desde San Bern
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Human Resources Many of the activit
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Risk Management Good risk managemen
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Distribution of Mercantil's loan po
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Trading in fixed-income securities
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Operational risk management in non-
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Performance of Subsidiaries Equity
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(1) Obtained from dividing sharehol
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Mercantil Commercebank Florida Banc
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Mercantil Merinvest, C.A. Consolida
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Credit Ratings Mercantil Servicios
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Prevention and Control of Money Lau
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* Prevention and Control of Money L
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Mercantil’s Social Contributions
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Pedro Ángel GONZÁLEZ Paisaje de G
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Corporate Governance Mercantil Serv
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Board of Directors The Board of Dir
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Executive Committee Mercantil has a
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Pedro Ángel GONZÁLEZ Comenzando l
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Report of the Board of Directors of
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Mercantil Commercebank • In March
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Mercantil Banco Universal: 85 years
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In 1996 the Bank changed its status
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Mercantil’s principles and values
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Board of Directors Directors Gustav
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Gustavo Galdo C. President of Inver
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Executive Committee Gustavo Antonio
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MERCANTIL, C.A., BANCO UNIVERSAL Av
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T h e F i n e A r t s S o c i e t y
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Alberto EGEA LÓPEZ Ávila, hacia 1
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ANNUAL REPORT 2010

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