Part of the Consolidated Financial Statements as of 31 December 2007, which were audited by KPMG Deutsche Treuhand AG.

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[16] Allowance for Credit Losses

The allowance for credit losses consists of an allowance for loan losses and an allowance for off-balance sheet positions.

The following table provides a breakdown of the movements in the Group’s allowance for loan losses for the periods specified.

in € m.	Individually assessed	Collectively assessed	Total	Individually assessed	Collectively assessed	Total
	2007			2006
Allowance, beginning of year	985	684	1,670	1,124	708	1,832
Provision for loan losses	146	505	651	16	336	352
Net charge-offs:	(149)	(378)	(527)	(116)	(328)	(444)
Charge-offs	(244)	(508)	(752)	(272)	(460)	(732)
Recoveries	95	130	225	156	132	288
Changes in the group of consolidated companies	–	–	–	–	–	–
Exchange rate changes	(52)	(36)	(88)	(39)	(32)	(70)
Allowance, end of year	930	775	1,705	985	684	1,670

The following table shows the activity in the Group’s allowance for off-balance sheet positions, which consists of contingent liabilities and lending-related commitments.

in € m.	Individually assessed	Collectively assessed	Total	Individually assessed	Collectively assessed	Total
	2007			2006
Allowance, beginning of year	127	129	256	184	132	316
Provision for off-balance sheet positions	(32)	(6)	(38)	(56)	2	(53)
Changes in the group of consolidated companies	7	3	10	1	–	1
Exchange rate changes	(1)	(8)	(8)	(2)	(5)	(7)
Allowance, end of year	101	118	219	127	129	256

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