Deutsche Bank Annual Report 2003 - [32] Concentrations of Credit Risk

The Group distinguishes its credit exposures among the following categories: loans, contingent liabilities, over-the-counter (“OTC”) derivatives and tradable assets.

Loans exclude interest-earning deposits with banks, other claims (mostly unsettled balances from securities transactions) and accrued interest and include unearned (deferred) income net of origination costs.

Contingent liabilities include liabilities from guarantees, indemnity agreements and letters of credit. They exclude other commitments such as irrevocable loan commitments and placement and underwriting commitments. They also exclude other quantifiable indemnities and commitments.

OTC derivatives are the Group's credit exposures arising from OTC, derivative transactions. Credit exposure in OTC derivatives is measured by the cost to replace the contract if the counterparty defaults on its obligation, after netting. The costs of replacement amount to only a small portion of the notional amount of a derivative transaction. The Group calculates its credit exposure under OTC derivative transactions at any time as the replacement costs of the transactions based on marking them to market at that time.

Tradable assets, as defined for this purpose, include bonds, other fixed-income products and traded loans.
The following tables represent an overview of the Group's total credit exposure (other than credit exposure arising from repurchase and reverse repurchase agreements, securities lending and borrowing, interest-earning deposits with banks and irrevocable loan commitments) according to the industrial sectors and the geographical regions of the Group's counterparties. Credit exposure for these purposes consists of all transactions where losses might occur due to the fact that counterparties will not fulfill their contractual payment obligations. The gross amount of the exposure has been calculated without taking any collateral into account.


Credit Risk Profile by Industry Sector	Loans		Contingent Liabilities		OTC Derivatives		Tradable Assets		Total
in € m.	2003	2002	2003	2002	2003	2002	2003	2002	2003	2002
Banks and insurance	10,521	10,720	4,990	8,189	46,597	44,970	62,480	47,686	124,588	111,565
Manufacturing	16,155	22,545	7,834	10,211	1,997	2,389	18,241	17,142	44,227	52,287
Households	54,937	53,207	862	473	357	281	–	–	56,156	53,961
Public sector	2,309	4,584	377	241	3,984	1,792	104,648	95,356	111,318	101,973
Wholesale and retail trade	11,824	14,467	2,454	2,876	691	688	3,589	2,583	18,558	20,614
Commercial real estate activities	13,606	18,360	722	1,014	300	688	1,447	2,657	16,075	22,719
Other	38,875¹	477,371	9,298	11,200	6,545	9,487	38,064	31,157	92,782	99,581
Total	148,227	171,620	26,537	34,204	60,471	60,295	228,469	196,581	463,704	462,700


¹	Includes lease financing.

In the following table, exposures have been allocated to regions based on the domicile of the Group's counterparties, irrespective of any affiliations the counterparties may have with corporate groups domiciled elsewhere.


Credit Risk Profile by Region	Loans		Contingent Liabilities		OTC Derivatives		Tradable Assets		Total
in € m.	2003	2002	2003	2002	2003	2002	2003	2002	2003	2002
Eastern Europe	1,372	1,679	491	730	588	678	2,840	4,186	5,291	7,273
Western Europe	120,136	133,732	16,283	23,618	35,428	35,094	87,969	76,971	259,816	269,415
Africa	395	618	192	177	224	451	1,086	951	1,897	2,197
Asia/Pacific	7,176	8,517	2,624	3,561	7,072	4,515	36,019	30,493	52,891	47,086
North America	17,038	24,643	6,752	5,814	15,495	17,698	94,632	78,464	133,917	126,619
Central and South America	2,075	2,373	195	296	571	597	3,850	2,984	6,691	6,250
Other¹	35	58	–	8	1,093	1,262	2,073	2,532	3,201	3,860
Total	148,227	171,620	26,537	34,204	60,471	60,295	228,469	196,581	463,704	462,700


¹	Includes supranational organizations and other exposures that have not been allocated to a single region.