Credit Exposure from Lending

Our lending businesses are subject to credit risk management processes, both at origination and on an ongoing basis. An overview of these processes is described in the “Credit Risk” section of this Risk Report.

Loan book categories segregated into a lower, medium and higher risk bucket

 

Dec 31, 2014

Dec 31, 20131

in € m.

Total

thereof: Non-Core

Total

thereof: Non-Core

1

Prior year numbers were not restated to reflect business segment structure as of December 31, 2014, as it would require a disproportinate effort.

2

Loans largely unwound in March 2013.

3

Thereof vendor financing on loans sold in Leveraged Finance amounting to € 0 million and in Commercial Real Estate amounting to € 0 million as of December 31, 2014 (€ 353 million and € 22 million as of December 31, 2013, respectively).

4

Includes loans from CMBS securitizations. Commercial Real Estate is based on business unit classification, irrespective of counterparty industry classification. The industry contributing most is “Commercial real estate activities” (€ 13.9 billion as of December 31, 2014).

5

Includes loans managed by CPSG.

6

Includes other smaller loans predominantly in our CB&S business division.

Lower risk bucket:

 

 

 

 

PBC Mortgages

157,099

6,637

154,444

7,372

Investment-Grade/Postbank Non-Retail

30,604

465

30,751

1,077

GTB

77,334

0

72,868

0

Deutsche AWM

39,298

622

33,147

934

PBC small corporates

17,640

140

16,601

280

Government collateralized/structured transactions2

40

0

33

0

Corporate Investments

33

33

28

28

Sub-total lower risk bucket

322,048

7,897

307,871

9,690

Moderate risk bucket:

 

 

 

 

PBC Consumer Finance

20,188

412

20,204

796

Asset Finance (Deutsche Bank sponsored conduits)

13,961

2,648

12,728

2,832

Collateralized hedged structured transactions

21,394

3,422

11,470

3,328

Financing of pipeline assets3

0

0

375

22

Sub-total moderate risk bucket

55,543

6,482

44,778

6,977

Higher risk bucket:

 

 

 

 

Commercial Real Estate4

17,406

1,010

15,832

3,410

Leveraged Finance5

4,877

229

4,707

633

Other6

10,951

2,432

8,983

2,504

Sub-total higher risk bucket

33,234

3,670

29,522

6,548

Total loan book

410,825

18,049

382,171

23,215

Our exposure in collateralized hedged structured transactions increased by € 10 billion at December 31, 2014 compared with prior year-end. This increase is predominantly driven by ETF related collateral restructuring within CB&S which resulted in replacing our physical securities exposure by entering into fully funded total returns swaps.

The majority of our low risk exposures is associated with our PBC retail banking activities. 78 % of our loan book at December 31, 2014 was in the low risk category.

Our higher risk bucket mainly relates to commercial real estate exposures which increased by € 1.6 billion at December 31, 2014 compared with prior year-end. Our credit risk management approach puts strong emphasis specifically on the portfolios we deem to be of higher risk. Portfolio strategies and credit monitoring controls are in place for these portfolios.

Impaired loans and allowance for loan losses for our higher-risk loan bucket

 

Dec 31, 2014

Dec 31, 2013

 

Total

thereof: Non-Core

Total

thereof: Non-Core

in € m.

Impaired loans

Allowance for loan losses

Impaired loans

Allowance for loan losses

Impaired loans

Allowance for loan losses

Impaired loans

Allowance for loan losses

Commercial Real Estate

775

321

486

181

1,592

698

1,109

443

Leveraged Finance

48

69

43

29

119

116

0

1

Other

355

188

351

158

403

136

372

127

Total

1,178

578

880

368

2,114

951

1,481

570

In 2014, impaired loans as well as allowance for loan losses significantly decreased by 44 % and 39 % respectively, driven by exposure reductions and charge-off of allowances in Commercial Real Estate in NCOU, reflecting among other factors disposals as well as the consolidation of borrowers under IFRS 10.