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DEUTSCHE BANK MEXICO, S. A. Institución de Banca Múltiple

Financial Statements

December 31, 2007 and 2006

(With Independent Auditors’ Report Thereon)

(Free Translation from Spanish Language

Original)

Independent Auditors’ Report (Free translation from Spanish language original)

The Board of Directors and Stockholders Deutsche Bank México, S. A., Institución de Banca Múltiple: We have examined the accompanying balance sheets of Deutsche Bank México, S. A., Institución de Banca Múltiple (“the Bank”) as of December 31, 2007 and 2006, and the related statements of income, changes in stockholders’ equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Mexico. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with the accounting criteria for credit institutions in Mexico. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in note 2 to the financial statements, the Bank is required to prepare and present its financial statements in accordance with the accounting criteria established by the National Banking and Securities Commission (“the Banking Commission”) for credit institutions in Mexico, which in general, conform to Mexican Financial Reporting Standards (MFRS), issued by the Mexican Board for Research and Development of Financial Reporting Standards (Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera or CINIF). Such accounting criteria includes particular rules which in certain respects depart from such standards. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Deutsche Bank México, S. A., Institución de Banca Múltiple as of December 31, 2007 and 2006 and the results of its operations, the changes in its stockholders’ equity and the changes in its financial position for the years then ended, in conformity with the accounting criteria established by the Banking Commission for credit institutions in Mexico, as described in note 2 to the financial statements. KPMG CARDENAS DOSAL, S. C.

SIGNATURE Hermes Castañón Guzmán February 28, 2008.

DEUTSCHE BANK MEXICO, S. A.Institución de Banca Múltiple

Balance Sheets


(Millions of Mexican pesos of constant purchasing power as of December 31, 2007,except when otherwise indicated)

Assets 2007 2006 Liabilities and Stockholders' Equity 2007 2006

Cash and due from banks (note 5) $ 855 1,758 Time deposits $ 12 -

Investment securities: Securities and derivative transactions:Trading securities (note 6) 1,024 841 Credit balances on repurchase/resell

agreements (note 7) - 1 Securities and derivative transactions: Credit balances on securities lendingCredit balances on repurchase/resell transactions (note 8) 704 -

agreements (note 7) 1 49 Derivative financial instrumentsDebit balances on securities lending (note 9) 1,535 3,638

transactions (note 8) 718 - Derivative financial instruments 2,239 3,639

(note 9) 1,441 3,531 Other accounts payable:Income tax (note 14) 51 -

2,160 3,580 Sundry creditors and other accountspayable (note 13) 1,171 2,219

Other accounts receivable, net (note 10) 994 1,320 Total liabilities 3,473 5,858

Deferred income tax, net (note 14) 69 120 Stockholders' equity (note 15):

Other assets ( note 12) 238 19 Paid-in capital stock 1,003 1,003

Earned capital:Statutory reserves 101 100 Retained earnings 676 668 Net income 87 9

864 777

Total stockholders' equity 1,867 1,780

Commitments (note 19)

Total assets $ 5,340 7,638 Total liabilities and stocholders' equity $ 5,340 7,638

Memorandum accounts (notes 7 and 17):2007 2006

Property in trust or under mandate $ 80,768 64,966 Assets in custody or under management 4,458 284

Securities deliverable on securities lending transactions $ 704 -Assets to be received in guarantee on securities lending transactions (718) -

$ (14) -

Other memoranda records $ 6 -

Securities receivable under repurchase agreements $ 3,152 5,291Creditors under agreements to repurchase (3,151) 5,242

1 49

Debtors under agreements to resell - -Securities deliverable under resell agreements - -

- -

$ 1 49

See accompanying notes to the financial statements.

SIGNATURE SIGNATURE Tito Vidaurri Del Castillo Ma. Guadalupe Morales OrtegaGeneral Director Chief Financial Officer

SIGNATURE SIGNATURE Gustavo Romero Lima Javier Maldonado AlamillaGeneral Accountant Internal Auditor

"These balance sheets were prepared in accordance with the accounting criteria for credit institutions issued by the National Banking and Securities Commission based on Articles 99, 101 and 102 of the CreditInstitutions Law, which are of general and mandatory nature and have been applied on a consistent basis, accordingly, they reflect all the transactions carried out by the Institution through the dates noted above.Furthermore, these transactions were carried out and valued in accordance with sound banking practices and the applicable legal and administrative provisions".

"These balance sheets were approved by the Board of Directors under the responsibility of the undersigned officers".

"The Bank's historical capital stock as of December 31, 2007 amounts to $709 million of Mexican pesos".

"The capitalization index is 64.62% and 23.64% as of December 31, 2007 and 2006, respectively".

www.db.com/mexicowww.cnbv.gob.mx/estadistica


Statements of Income

Years ended December 31, 2007 and 2006

(Millions of Mexican pesos of constant purchasing power as of December 31, 2007)

2007 2006

Interest income (note 18a) $ 420 434 Interest expense (note 18a) (234) (272) Monetary position loss, net (note 18a) (113) (117)

Financial margin 73 45

Commissions and fees, net (note 11) 103 87

Brokerage income, net (note 18b) 186 12

Total operating income, net 362 144

Administrative and promotional expenses (notes 11 ) (354) (255)

Net operating income (loss) 8 (111)

Other income, net 165 92

Income (loss) before income tax (IT) 173 (19)

Current IT (note 14) (35) -Deferred IT (note 14) (51) 28

Net income $ 87 9




"These statements of income were prepared in accordance with the accounting criteria for credit institutions issued by theNational Banking and Securities Commission based on Articles 99, 101 and 102 of the Credit Institutions Law, which are ofgeneral and mandatory nature and have been applied on a consistent basis, accordingly, they reflect all the revenues anddisbursements relating to the transactions carried out by the Institution for the years noted above. Furthermore, thesetransactions were carried out and valued in accordance with sound banking practices and the applicable legal andadministrative provisions".

"These statements of income were approved by the Board of Directors under the responsibility of the undersigned officers".



Statements of Changes in Stockholders' Equity



Paid-in Totalcapital Statutory Retained Net stockholders'stock reserves earnings income equity

Balances at December 31, 2005 $ 1,003 66 364 338 1,771

Items related to stockholder resolutions:Appropriation to retained earnings - 34 304 (338) -

Items related to the recognition of comprehensive income:Net income - - - 9 9

Balances at December 31, 2006 1,003 100 668 9 1,780

Items related to stockholder resolutions:Appropriation to retained earnings - 1 8 (9) -

Items related to the recognition of comprehensive income:Net income - - - 87 87

Balances at December 31, 2007 $ 1,003 101 676 87 1,867


"These statements of changes in stockholders' equity were prepared in accordance with the accounting criteria for credit institutions issued by the NationalBanking and Securities Commission based on Articles 99, 101 and 102 of the Credit Institutions Law, which are of general and mandatory nature and have beenapplied on a consistent basis, accordingly, they reflect all the stockholders' equity account entries relating to the transactions carried out by the Institution for theyears noted above. Furthermore, these transactions were carried out and valued in accordance with sound banking practices and the applicable legal andadministrative provisions".

"These statements of stockholders' equity were approved by the Board of Directors under the responsibility of the undersigned officers".


SIGNATURE . Tito Vidaurri Del Castillo General Director

SIGNATURE Ma. Guadalupe Morales Ortega Chief Financial Officer

SIGNATURE . Javier Maldonado Alamilla Internal Auditor

SIGNATURE . Gustavo Romero Lima General Accountant


Statements of Changes in Financial Position



2007 2006

Operating activities:Net income $ 87 9 Items included in operations not requiring (providing) cash:

Results on valuation to fair value of derivativetransactions and investment securities 35 (62)

Deferred income tax 51 (28)

Cash provided by (used in) operations 173 (81)

Net (investing in) financing from operating accounts:Derivative transactions and investment securities (198) 640 Other accounts payable (997) 802 Other accounts receivable and other assets 107 (564) Decrease in loans and other entities - (27) Received in time deposits 12 -

Cash provided (used in) in operating activities (903) 770

Cash and due from banks:At beginning of year 1,758 988

At end of year $ 855 1,758




"These statements of changes in financial position were prepared in accordance with the accounting criteria for creditinstitutions issued by the National Banking and Securities Commission based on Articles 99, 101 and 102 of theCredit Institutions Law, which are of a general and mandatory nature and have been applied on a consistent basis,accordingly, they reflect all sources and applications of funds relating to the transactions carried out by the Institutionthrough the dates noted above. Furthermore, these transactions were carried out and valued in accordance with soundbanking practices and the applicable legal and administrative provisions".

"These statements of changes in financial position were approved by the Board of Directors under the responsibilityof the undersigned officers".



Notes to Financial Statements


(Millions of Mexican pesos of constant purchasing power as of December 31, 2007,

except when indicated otherwise) These financial statements have been translated from the Spanish language original solely for the convenience of foreign/Englishspeaking readers. (1) Operations-

The Mexican Ministry of Finance and Public Credit (SHCP) through resolutions 101-67 from January 21, 2000 and DGBA/AIBM/71/2000 from February 18, 2000, authorized the incorporation and operation of Deutsche Bank México, S. A. (the Bank), as an Affiliate Multiple Banking Institution and according to the Credit Institutions Law, the Bank is authorized to carry out full-service banking activities. The Bank is a 99.99% subsidiary of Deutsche Bank Americas Holding Corporation (the Corporation). The Bank has no employees and, therefore, it is not subject to labor obligations. Administrative services are provided by DB Servicios México, S. A. de C. V. (DB Servicios) an affiliated company, for a fee (notes 11).

(2) Authorization and bases of presentation-

On February 28, 2008, the officers who provide administrative services and hold the following positions authorized the issuance of the accompanying financial statements and related notes thereto: Tito Vidaurri Del Castillo General Director Ma. Guadalupe Morales Ortega Chief Financial Officer Gustavo Romero Lima General Accountant Javier Maldonado Alamilla Internal Auditor

The Bank’s financial statements are prepared based on the applicable banking legislation and in conformity with the accounting criteria established by the National Banking and Securities Commission (“the Banking Commission”) who is responsible for the inspection and supervision of financial institutions and for reviewing their financial information. Such criteria include the modifications issued by the Banking Commission and published in the Official Gazette of the Federation on September 15, 2006 (the Modifications), effective as of 2007.

(Continued)

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The Modifications homologate the basic frame of the accounting of credit institutions with the Mexican Financial Reporting Standards (MFRS) issued by the Mexican Board for Research and Development of Financial Reporting Standards (Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera or CINIF) and include particular recording, valuation, presentation and disclosure rules for specific captions and specialized transactions, which in certain instances differ from such MFRS. The implementation of the Modifications did not have a significant impact on the Bank's financial information. The accounting criteria MFRS A-8 include a process which provides for the supplementary use of other accounting principles and standards, and only for those cases not contemplated in International Financial Reporting Standards issued and approved by the International Accounting Standards Board (IASB); The Bank may be able to use other accounting principals and standards only if they comply with all requirements established in such MFRS A-8, applying them in the following order: accounting principles generally accepted in the United States of America (US GAAP); or in cases not covered by these principles and standards, any other formal and recognized accounting standard that are part of formal and recognized standards.

(3) Summary of significant accounting policies-

The preparation of financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include valuation allowances for financial instruments, deferred income tax assets and recoverability of receivables. Actual results could differ from those estimates and assumptions. The Bank’s financial statements recognize the assets and liabilities arising from the purchase and sale of foreign currencies, investments in securities, lending securities and repurchase agreements, as well as derivative financial instruments on the day the transactions are entered into regardless of the settlement date. For purposes of disclosure in the notes to the financial statements, when reference is made to pesos or “$”, it refers to Mexican pesos, and dollars or “USD” refers to dollars of the United States of America. Significant accounting policies applied in the preparation of the accompanying financial statements are shown on the following page.

(Continued)

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(a) Recognition of the effects of inflation-

The accompanying financial statements are expressed in millions of Mexican pesos of constant purchasing power, using the Investment Unit (UDI) value. The UDI is a unit of measurement whose value is determined by the Banco de México (Central Bank) based on inflation. UDI values at December 31 are as follows: At December 31 UDI Annual inflation 2007 $ 3.932983 3.80% 2006 3.788954 4.16% 2005 3.637532 2.90%

(b) Cash and due from banks-

This caption comprises cash, bank balances, 24 and 48-hour foreign-currency purchase/sale transactions, and deposits with Central Bank, which include monetary regulatory deposits that the Bank is required to maintain by Law, for the purpose of regulating liquidity in the money market. Such deposits have no maturity and bear interest at the average rate for bank deposits.

The receivables associated with 24 and 48-hour foreign currency sales are recorded in “Other accounts receivable” while the obligations arising from foreign currency purchases are recorded in “Sundry creditors and other accounts payable”.

(c) Investment securities- Investment securities consist of government securities and other fixed income securities, classified depending on management’s investment intentions into: Trading– Trading securities are bought and held principally to be sold in the near term. Debt securities are initially recorded at cost and subsequently marked to market using information provided by an independent price vendor. When a fair and representative market value cannot be determined, fair values of financial instruments with similar characteristics or prices calculated based on formal widely-accepted valuation techniques are used. Valuation effects are recognized in the statement of income.

(Continued)

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Securities acquired for settlement on a subsequent date, up to a maximum of 4 business days following the purchase transaction agreement date shall be deemed restricted securities, while securities sold shall be accounted for as an outflow of investment securities. The counterparty should be a settlement, credit or debit account, as applicable.

(d) Securities under repurchase/resell agreements-

Securities under repurchase/resell agreements (respos) are stated at market value using information provided by an independent price vendor, and the obligations or rights from the commitments to repurchase or resell the securities are stated at the net present value at maturity. The balance sheet presents the sum of debit or credit balances after individually offsetting the restated values of the securities receivable or deliverable and the repurchase or resale commitment of each repurchase/resell agreement. Transactions where the Bank acts as repurchaser and repurchasee with the same entity are not offset. The presentation of repurchase/resell agreements differs from that of MFRS, which present the balances separately and requires offsetting similar transactions with the same counterparty. Interest, premiums, gains or losses and valuation adjustments from these transactions are reported in the statement of operations under “Interest income”, “Interest expense”, and the valuation effects are recognized in the “Brokerage income (loss), net”, respectively. In accordance with Central Bank Circular 1/2003, it is mandatory that in repurchase/resell agreement transactions with a maturity of more than three days, the parties contractually agree to guarantee such transactions when the fluctuations in the value of the securities under the repurchase/resell agreement cause an increase in the net exposure that exceeds the maximum value agreed upon by the parties. The guarantee granted (without transfer of property) is recorded in the securities portfolio as trading instruments, restricted or pledged as security, and if they correspond to cash deposits, as restricted cash balances. The guarantees received that do not represent a transfer of property are recorded in memorandum accounts as assets held in custody or under management. The guarantees are valued in accordance with the current dispositions for valuing investment securities, cash and equivalents and assets in custody or under management, respectively. Repurchase agreements that establish the impossibility of trading “repo” securities are recorded as collateralized loans. Premiums are recognized in income as they accrue, on a straight-line basis, throughout the term of the transaction.

(Continued)

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(e) Securities lending transactions-

Securities lending transactions comprise the transfer of title to securities from the lender to the borrower who, in turn, undertakes to return to the former, securities of the same issuer and characteristics after the term of the loan has expired. The Bank carries out securities loan transactions as borrower. Securities received on loan are included within liabilities, which represents the obligation to settle or return the securities to the lender. Securities granted as security are recognized as securities receivable in guarantee within the assets caption. The Bank pays a premium for each loan, which is due upon expiration or renewal. Securities received on loan and granted as security are carried at fair value, based on the prices provided by the price vendor.

(f) Derivative financial instruments- Transactions with derivate financial instruments comprise those carried out for trading, the accounting treatment of which is described below: Forward contracts – The net change in market value of the future price of the contract is presented in the balance sheet with a corresponding charge or credit to the statement of income, and is netted against the underlying asset or liability. Swaps Rights or obligations established in the contract arising from the exchange of cash flows or asset yields (swaps) are recorded as assets or liabilities. The assets and liabilities derived from swaps for trading purposes are marked to market, reporting the net value of the swap on the balance sheet while the related gains or losses are recognized in the statement of income. According to Bulletin C-10 of MFRS, derivative financial instruments are recognized, without considering their purpose, at fair value, which is originally represented by the agreed-upon consideration; transaction-related costs and cash flows received or delivered to mark the instrument to market at the beginning of the transaction, not associated with premiums on options, are amortized during the transaction’s validity period. Changes in fair value of derivative financial instruments for trading purposes are recognized under Comprehensive Financial Results, in the statement of income.

(Continued)

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(g) Clearing accounts- Clearing accounts record the amounts receivable and payable derived from investment securities, repurchase/resell agreements, securities loan transactions, and/or transactions with derivative financial instruments that have reached maturity and that are pending settlement, as well as amounts receivable or payable resulting from currency purchase or sale transactions for which immediate settlement is not stipulated, or on those with a same-day value date. Debit and credit balances of the clearing accounts resulting from currency purchase or sale transactions are offset provided there is a contractual right to compensate the amounts recorded and at the same time there is the intention to settle them on a net basis or else realize the asset and settle the liability simultaneously. Assets and liabilities in transactions that are of the same nature or are derived from the same agreement are also offset provided they have the same maturity and are liquidated simultaneously.

(h) Other receivables-

Amounts relating to sundry debtors not recovered within 90 days following their initial recording (60 days if the balances are not identified) are reserved and charged to the year's income, regardless of the likelihood of recovery, except for those relative to tax recoverable balances, value added tax paid and clearing accounts. This caption also includes debtors on the settlement of transactions (24 and 48-hour foreign currency sale transactions). In the case of accounts receivable from identified debtors with a maturity in excess of 90 days, an allowance should be created to reflect the degree of uncollectibility.

(i) Deposits-

Deposits comprise time deposits of the general public, including money market funding. Interest is charged to expense on accrual basis.

(j) Fees and premiums- Premiums and other fees for services are recognized in income on accrual basis and provided, respectively.

(Continued)

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(k) Deferred income tax (IT)-

Deferred IT is accounted for under the asset and liability method which compares accounting and tax values. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as for unamortized tax loss carry-forwards and unused tax credits. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period enacted.

(l) Restatement of capital stock, statutory reserves and retained earnings- This restatement is determined by multiplying stockholder contributions and retained earnings by UDI factors, which measure accumulated inflation from the dates contributed or generated through the most recent year end. The resulting amounts represent the constant value of stockholders’ equity.

(m) Monetary position gains and losses- The Bank recognizes in income the effect (gain or loss) in the purchasing power of its monetary position, which is determined by multiplying the difference between monetary assets and liabilities at the beginning of each month by inflation through year end. The aggregate of these results represents the monetary gain or loss for the year arising from inflation, which is reported in results of operations for the year. The gain or loss from interest-bearing monetary assets and liabilities is included in the statement of income as part of the “Financial margin”, while the gain or loss from all other monetary items is presented in “Other income, net”.

(n) Revenue recognition-

The interests on investments in fixed-income securities are recognized in results of operations as earned. The premiums earned on repurchase agreement transactions is calculated based on the present value of the price at maturity.

(Continued)

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Trust fees collected in advance are recorded as deferred revenues and applied to income as earned. Where these fees reflect 90 days of aging, earned revenues is suspended. While the accrual of revenues is suspended and revenues are not collected, the Bank maintains control in memoranda accounts. If collected, they are recognized directly in income.

(o) Foreign currency transactions- The accounting records are maintained in both pesos and foreign currencies, which for financial statement presentation purposes, in the case of currencies other than the dollar are translated from the respective currency into dollars, as established by the Banking Commission, and the dollar equivalence with Mexican currency is translated at the exchange rate determined by the Central Bank. Foreign exchange gains and losses are recognized in results of operations when incurred.

(p) Contributions to the Bank Savings Protection Institute (IPAB)- Among other provisions, the Bank Savings Protection Law establishes the creation of the IPAB, as a system to protect the guaranteed savings of the public and regulate the financial support granted to banking institutions in order to comply with this objective. Pursuant to such Law, the IPAB guarantees the bank deposits of savers up to 400 thousand UDIS. The Bank recognizes in results of operations the mandatory contributions to the IPAB.

(r) Contingencies- Liabilities for loss contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. When a reasonable estimation cannot be made, qualitative disclosure is provided in the notes to the financial statements. Contingent income, earnings or assets are not recognized until their realization is virtually assured.

(Continued)

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Changes in accounting policies

Included in the financial statements as of 2007:

The most relevant modifications in effect as of 2007 are described as follows:

Investment securities- Only the transfer of held-to-maturity to available-for-sale securities is allowed in cases

where the holder does not intend to hold such securities until maturity.

Repurchase transactions and securities loans - Recording, valuation and presentation rules are included for the offsetting of collateral

in repurchase transactions and securities loans.

Derivative financial instruments- The application of Bulletin C-10 of MFRS is compulsory for recording derivative

financial instruments, including hedging and structured transactions. The financial statements for the year 2006 were reclassified to conform to the presentation used in 2007, mainly for the balance sheet presentation of derivative financial instruments at fair value in accordance with Bulletin C-10 of MFRS. Changes in effect as of 2008:

The CINIF has issued the following MFRS, effective for years beginning after December 31, 2007, and which do not provide for earlier application.

(a) MFRS B-10 “Effects of inflation”- MFRS B-10 supersedes Bulletin B-10 and its

five amendments, as well as the related circulars and INIF (Interpretation of Financial Reporting Standards) 2. The principal considerations established by this MFRS are: (i) the change in the value of the Investment Unit (UDI) may be used for determining the inflation for a given period; (ii) an entity is only required to recognize the effects of inflation when operating in an inflationary economic environment (accumulated inflation equal to or greater than 26% in the most recent three-year period); y (iii) the accounts of Gain or Loss from Holding Non-monetary Assets (RETANM - Spanish acronym), Monetary Position Gains or Losses, and Deficit/Excess in Equity Restatement, will be reclassified to retained earnings, when the unrealized portion is not identified.

In view that the accumulated inflation over the past three years is less than 26%, the Bank may cease recognizing inflation on its financial information beginning in 2008 and until an inflationary economic environment as noted above does not prevail.

(Continued)

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(b) MFRS D-4 “Income Tax”- MFRS supersedes Bulletin D-4 and Circulars 53 and 54. The principal considerations established by this MFRS are: (i) the balance of the cumulative IT effects resulting from the initial adoption of Bulletin D-4 in 2000 is reclassified to retained earnings; (ii) AT is recognized as a tax credit (benefit) rather than as a tax prepayment; and (iii) the accounting treatment of employee statutory profit sharing incurred and deferred is transferred to MFRS D-3. Management estimates that the initial effects of this new MFRS will not be material.

(c) MFRS B-2 “Statement of cash flows”- MFRS supersedes Bulletin B-12 and

paragraph 33 of Bulletin B-16. The principal considerations established by this MFRS are: (i) the statement of cash flows replaces the statement of changes in financial position; (ii) cash inflows and cash outflows are reported in nominal currency units i.e. the effects of inflation are not included; (iii) two alternative preparation methods (direct and indirect) are established, without stating preference for either method. Furthermore, cash flows from operating activities are to be reported first, followed by cash flows from investing activities and lastly by cash flows from financing activities; (iv) captions of principal items are to be reported gross; and (v) disclosure of the composition of those items considered cash equivalents is required. The enactment of this MFRS shall have no effects for the Bank, as long as the Banking Commission does not adopt MFRS B-2, being that a specific criterion currently exists for ruling the presentation of the statement of changes in financial position.

(4) Foreign currency exposure and exchange rates-

(a) Foreign currency exposure- Central Bank regulations require that banks maintain balanced positions in foreign currencies within certain limits. The short or long position permitted by the Central Bank is equivalent to a maximum of 15% of the basic capital of the Bank (25.7 and 24.7 millions of dollars as of December 31, 2007 and 2006, respectively). As of December 31, 2007 and 2006, the Bank maintained a position in foreign currencies within the limits mentioned, which is analyzed as shown in the next page.

(Continued)

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2007 2006 Assets 1,024 1,443 Liabilities (1,022) (1,441)

Long position, net 2 2 ===== =====

(b) Exchange rates-

The exchange rate of the peso to the dollar at December 31, 2007 and 2006, was $10.9157 and $10.8116, respectively.

(5) Cash and due from banks- At December 31, 2007 and 2006, cash and due from banks are analyzed as follows: 2007 2006 Banks and due from banks $ 12 19 Restricted funds:

Deposit in Central Bank 328 327 Foreign currency purchases to be settled

within 24 and 48 hours 1,709 3,078 Foreign currency sales to be settled within

24 and 48 hours (1,210) (1,666) Other availabilities 16 -

$ 855 1,758 ==== ==== As explained in note 3(b), the liability corresponding to foreign currency purchases is recorded in “Sundry creditors and other accounts payable” and the asset corresponding to foreign currency sales is recorded in “Other accounts receivable”. At December 31, 2007 and 2006, the deposits in Central Bank correspond to deposits without a term for regulating liquidity in the financial markets and such deposits have no maturity and bear interest at the average rate for bank deposits.

(Continued)

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(6) Investment securities- At December 31, 2007 and 2006, short-term investment securities for trading purposes are analyzed as follows:

2007 2006 Unrestricted Government securities $ 1,342 890 Private securities - 431 Value date transactions, sale

(see notes 10 and 13) (787) (1910) $ 555 (589)

Restricted Value date transactions, purchase

(see notes 10 and 13) 469 1,430 $ 1,024 841 ==== ====

At December 31, 2007 and 2006, the term of government securities ranges between 12 days and 15 years, bearing average annual rates of 7.84% and 6.73%, respectively, while private securities have terms between 26 and 34 years and average annual interest rates of 7.97% for 2006.

(7) Securities repurchase/resell agreements-

At December 31, 2007 and 2006, the Bank had entered into securities repurchase/resell agreements, which have average weighted term of 3 days with average annual rates of 7.80% and 7.17% respectively, are analyzed as follows:

December 31, 2007 Assets Liabilities Securities receivable $ 3,152 - Accounts receivable on repurchase agreements - (3,151)

3,152 (3,151) Offsetting reclassification (note 3d.) (3,151) 3,151

$ 1 - ==== ====

(Continued)

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December 31, 2006 Assets Liabilities Securities receivable $ 5,291 - Accounts payable on repurchase

agreements - (5,243)

5,291 (5,243) Offsetting reclassification

(note 3d.) (5,242) 5,242

$ 49 (1) ===== ===== At December 31, 2007 and 2006, the securities receivable and deliverable are analyzed as follows: Securities receivable 2007 2006 Government securities:

Bonds $ 260 224 Cetes 2,891 2,075 Udibonos - 1,810 Others private securities - 1,145 Accrued interest and valuation adjustment 1 37

$ 3,152 5,291 ==== ====

(8) Securities lending transactions-

During 2007, the Bank began participating as market maker in securities lending transactions, acting as borrower with the Central Bank. Such transactions are negotiated with maturities on the business day following that of the loan and should be guaranteed by Bonds or Cetes (Federal Treasury Certificates) at 102% of the requested value. The Central Bank returns the pledged bonds or Cetes received upon the maturity of the securities loans. The amount of securities received, subject matter of the loan and the securities to be received, pledged as security at December 31, 2007 are analyzed on the following page.

(Continued)

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2007 Securities receivable Securities as security deliverable Term Assets Liabilities

Government securities: Cetes 1 day $ 646 634 Bonds 1 day 72 70

$ 718 704 === ===

(9) Derivative financial instruments-

At December 31, 2007 and 2006, derivative instruments for trading purposes are analyzed as follows: 2007 Notional amounts Reasonable value, (millions) net USD Nominal pesos Assets Liabilities Foreign exchange forwards 120 - $ 25 17

==== =====

Swaps: Interest rate 1,470 76,788 1,109 1,184 Cross currency 675 7,595 307 334 ==== ===== ==== ====

1,416 1,518

$ 1,441 1,535 ==== ====

(Continued)

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2006 Notional amounts Reasonable value, (millions) net USD Nominal pesos Assets Liabilities

Anticipated Contracts of currencies 1,515 - $ 1,511 1,466 ==== =====

Swaps: Interest rate 208 60,785 1,561 1,713 Cross currency 513 5,267 459 459 ==== ===== ==== ==== 2,020 2,172

$ 3,531 3,638 ==== =====

The notional amounts of contracts represent the derivative volume outstanding and do not represent the gain or loss associated with the market risk or credit risk of such instruments. The notional amounts represent the amount to which a rate or price is applied to determine the amount of cash flows to be exchanged.

(10) Other accounts receivable, net-

Other accounts receivable (payable) are comprised of the following: 2007 2006 Debtors for value date transactions (see

note 6) $ 787 1,910 Value date transactions offsetting (see note 13) - (827) Debtors for liquidation of transactions 1,209 1,668 Offsetting of operations of purchase - sale

of currency transactions (see note 13) (1,209) (1,635) Recoverable taxes 2 111 Other debtors, net _205 93 $ 994 1,320 ==== ====

(Continued)

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(11) Related-party transactions and balances-

Transactions carried out in the years ended December 31, 2007 and 2006 with affiliate and related companies were as follows:

2007 2006 Commissions collected $ 198 112 Administrative services and rents paid 153 141

=== === Balances receivable from (payable to) affiliate and related companies at December 31, 2007 and 2006, are analyzed as follows: 2007 2006 Deutsche Bank AG, London Branch $ 181 83 DB Servicios México - (6) === == Balances receivable from and payable to related companies are included in the “Other accounts receivable” and “Sundry creditors and other accounts payable” captions, respectively. In accordance with the IT Law, corporations carrying out transactions with related parties, whether domestic or foreign, are subject to certain limitations and tax requirements as to the determination of prices, since such prices must be equivalent to those that would be used in arm’s-length transactions.

(12) Other assets-

Trust Certificate On December 28, 2006 the Bank acquired a certificate of trust rights (the Certificate) covering 50% of the surplus of distributions to be made by the irrevocable trust F/00036 (the Trust) to the holders of such Certificate after the Trust has completely paid the Stock-exchange Certificates (CBs) derived from the securitization process of the mortgage loan portfolio originated by Crédito y Casa, S. A. de C. V. SOFOL to the holders of CBs and the amounts owed have been paid to Sociedad Hipotecaria Federal, in accordance with the trust agreement where J.P. Morgan, S. A. acts as Trustee. The Bank paid $16.7 nominal (1.5 million dollars) for the certificate.

(Continued)

17



At December 31, 2007, the value of the certificate amounts to $12.7, recorded under other assets by the amortized cost method. The Bank has received trust payments for $4. Prepaid taxes This caption is used for recording prepayments by way of estimated income taxes for $209 at December 31, 2007.

(13) Sundry creditors and other accounts payable-

Sundry creditors and other accounts payable at December 31, 2007 and 2006 are analyzed as follows:

2007 2006 Creditors for value date transactions settlements

(see note 6) $ 470 1,430 Offsetting of dates value transactions (see

note 10) - (827) Creditors for settlement of foreign currency

transactions 1,708 3,088 Offsetting of foreign currency transactions (1,209) (1,635) Va lue date transactions offsetting 141 128 Other 61 35

$ 1,171 2,219 ==== ====

Changes to the principal accruals are analyzed below.

2007 2006

Balances at beginning of year $ 128 81 Increases charged to income:

Pre-operating expenses 112 126 Other 51 - Payments and cancellations (150) (83) Restatement - 4

Balances at December 31, 2007 $ 141 128 === ===

(Continued)

18



(14) Income tax (IT), asset tax (AT) and tax loss carry-forwards-

For determining the IT liability there are specific rules for the deductibility of expenses and the recognition of the effects of inflation. Under current Mexican tax law, corporations must pay the greater of their IT and AT. Both taxes recognize the effects of inflation although differently than the MFRS. Through December 31, 2006, the AT Law provided for a tax of 1.8% on restated assets, reduced by certain liabilities (1.25% for 2007, with no deductions whatsoever). For the years ended December 31, 2007 and 2006, the Bank was not subject to AT being that it lacked assets subject to such tax according to Article 5-B of the AT Law. On October 1, 2007 new laws were published, a number of tax laws were revised, and additionally a presidential decree was issued on November 5, 2007, all of which will come into effect on January 1, 2008. The most important changes are: (i) derogation of the Asset Tax Law and (ii) the introduction of a new tax (Flat Rate Business Tax or IETU) which is based on cash flows and limits certain deductions; additionally, certain tax credits are granted mainly with respect to inventories, salaries taxed for IT purposes and social security contributions, tax losses arising from accelerated deductions, recoverable asset tax, and deductions related to investments in fixed assets, deferred charges and expenses. The IETU rate is 16.5% for 2008, 17% for 2009 and 17.5% for 2010 and thereafter.

Accordingly, beginning in 2008, companies will be required to pay the greater of IETU or IT. If IETU results, the payment will be considered final i.e. not subject to recovery in subsequent years (with certain exceptions). According to management estimates, the Bank will continue paying IT. Following is a condensed reconciliation between the accounting income (loss) and taxable income in nominal values for the years ended December 31, 2007 and 2006: 2007 2006 Income (loss) before IT $ 173 (19) Accounting effects of inflation 63 69

Nominal income, to the next page 236 50

(Continued)

19

DEUTSCHE BANK MEXICO, S. A.

Institución de Banca Múltiple


2007 2006

Nominal income, from the previous page $ 236 50

Reconciling items: Tax effects of inflation (53) (68) Mark-to-market adjustments 40 (58) Taxable deductions for forwards (41) (84) Non-deductible expenses 12 8 Provision for irrecoverable accounts 5 14 Provisions for diverse obligations 21 58 Other (2) (10)

Taxable profit (loss) 218 (90) Tax losses from previous years (94) - .

Taxable income 124 -

Tax rate 28% 29%

Current IT expense $ 35 -

==== ====

In accordance with the tax reforms to the IT Law, the income tax rate for the 2007 was of 28% and 29% in 2006, for the fiscal year 2007 and subsequent years will be to 28%.

In accordance with Mexican tax law, the tax authorities are entitled to examine transactions carried out during the five years prior to the most recent income tax return filed.

The deferred tax asset at December 31, 2007 and 2006, is made up of the following (nominal) items:

2007 2006

Valuation of investment securities, and derivatives transactions $ 29 56

Miscellaneous provisions 40 32 Tax losses carry-forwards - 28

To the next page $ 69 116

(Continued)

20



2007 2006

From previous page $ 69 116

Restatement for inflation – 4

$ 69 120 == ===

Movements in profit and loss by deferred

income tax $ 51 27 Restatement for inflation - 1

Deferred IT recognized in profit and loss $ 51 28 == ==

(15) Stockholders’ equity-

(a) Structure of capital stock-

The capital stock is represented by 708,832 shares with a par value of one thousand pesos each, of which 708,831 are Series “F” shares and one is a Series “B” share. The Series “F” shares must represent at least 51% of capital stock and may only be acquired by a foreign financial institution or by their affiliate holding company. Series “B” shares may represent up to 49% of the Bank’s capital stock and may be subscribed without restrictions.

As of December 31, 2007 paid-in capital stock was comprised as follows: Capital stock Nominal Restated Initial contribution on February 28,

2000 $ 231 332 Capital stock contribution on July 12,

2000 478 671 $ 709 1,003 === ====

(Continued)

21



(b) Comprehensive income-

During the years ended December 31, 2007 and 2006 there are no items which, according to the applicable MFRS, need be reported directly in stockholders' equity; therefore, the comprehensive income is equal to the year's net income presented on the statement of income.

(c) Restrictions on stockholders’ equity-

The Banking Law requires an appropriation of ten percent of net income for the year to statutory reserves, until such reserves reach an amount equal to paid-in capital. As of December 31, 2007 the Bank increased its statutory reserve for $1, which reached $101, figure that has not reached the required amount.

Stockholder contributions, and retained earnings on which income tax has been paid, restated on a tax basis, may be distributed or refunded to stockholders tax-free. Other refunds and distributions in excess of these amounts are subject to IT as provided for in the IT Law.

(d) Capitalization

The SHCP requires credit institutions to maintain a minimum capitalization percentage over risk assets, which is calculated by applying specific percentages in accordance with the risk assigned. At December 31, 2007 and 2006 the net capital, risk assets and Bank’s capitalization requirement is as follows: Net capital at December 31, 2007 and 2006 amounts to $1,867 and $1,780, respectively.

(Continued)

22



Equivalent Capital risk assets requirement 2007 2006 2007 2006 Risk assets: Market risk: Operations:

Mexican currency at a nominal rate $ 2,044 2,622 164 210

Nominal rate in a foreign currency 82 57 7 4

Real rates 74 3,408 6 273 UDIS - 21 - 2 Foreign currency position 45 67 3 5

Total market risk 2,245 6,175 180 494

Credit risk: On derivatives 294 1,147 24 91 On deposits and loans 138 43 11 3 Other 214 164 17 14

Total credit risk 646 1,354 52 108 Total market and credit

risk $ 2,891 7,529 232 602 ==== ==== === ===

Capitalization index: 2007 2006 Capital to market and credit risk assets 64.62% 23.64% Capital to total required capital 8.08 times 2.96 times ======== =======

(Continued)

23



(16) Risk Management (unaudited)-

Risk management refers to the set of objectives, policies, procedures and actions implemented to identify, measure, monitor, limit, control, inform and disclose the various types of risks to which the Bank is exposed. The Board of Directors of the Bank approved objectives, limits, guidelines and policies on risk exposure, which are reviewed at least once a year. Also, the Board of Directors designated a Risk Committee for the purpose of providing a forum that will allow monitoring compliance with the above mentioned objectives, limits, guidelines and policies. Objectives Risks must be assumed in moderation, in relation to available capital and where

attractive opportunities for reward exist.

Risks taken should be measured using a common basis.

Risks must be supervised in accordance with the type of risk, and the different areas involved should be duly informed.

Risks assumed must comply strictly with the limitations contained in Mexican Legislation and corporate standards.

Use of the best risk management practices.

Principles The principles of the policy on risk management for the Bank’s activities are based on: Excellence and integrity in its transactions. Balancing risk-taking with appropriate controls. The importance of discipline and respect for limits. Diversification so as to avoid unnecessary concentration of risk. Balancing the dependence on models with the use of good judgment. Determination of limits depends on (i) the internal and external economic factors that imply some type of risk (mainly the economic framework, economic expectations, market liquidity and volatility) and (ii) the capacity to absorb losses based on the Bank’s capital.

(Continued)

24



Risk Committee and comprehensive Risk Management Unit The Risk Committee is chaired by a owner member of the Board of Directors and its comprised by General Director, an adviser, the person responsible for the Comprehensive Risk Management Unit (UAIR) and the person responsible for credit; with the participation of the risk and internal audit areas, among others. This Committee meets every third Monday of the month and permit to review and discuss the points presented by the UAIR, such as: 1. Performance of risk factors.

2. Performance of the positions exposed to risk and their sensitivity analysis.

3. Updating of the methodology and models for measuring and controlling risks.

4. Risk policies with respect to:

management of risks in excess of the established limits

analysis of market liquidity and creation of liquidity reserves

analysis of sensitivity

analysis of new products

5. Performance of asset and liability positions

6. Creation of preventive liquidity reserves

7. Specific analysis of quantifiable and non-quantifiable risks. The Bank has manuals that set forth the guidelines and directives necessary for comprehensive risk management. The UAIR is independent and separate from the business areas. This area is responsible for identifying, measuring, monitoring, limiting and controlling the Bank’s risks through the use of approved risk measurement standards. If the UAIR identifies a problem with regard to the exposure, limits or control of some type of risk, it immediately informs the General Director, the Risk Committee and the area responsible for adopting the necessary measures. The UAIR must be satisfied that the measures taken will solve the problem and minimize the probabilities of a recurrence.

(Continued)

25



Methodology to identify and quantify the credit, liquidity and market risk To measure market risk, the UAIR determines the Value at Risk (VaR) daily based on

the Montecarlo Simulation method, generating 1,000 scenarios based on a 252-day holding period and a 99% confidence level. The calculation is made for the total portfolio and by type of product. The VaR permits measuring the market risk of a given portfolio and the benefits of its correlation.

The PV01 is an additional measure, which offers more opportunities; therefore, it is a

widely used tool in the intra-day risk monitoring process. The PV01 results from subtracting the market value from the market value + 1 basis point.

The monetary position is calculated for quantifying the risk associated with exchange

rate variances. It consists of calculating the present value of the current positions in foreign currency so as to measure their sensibility.

Additionally, a monthly calculation is done of the impact of stress scenarios that

contemplate parallel displacements of the market curves, as well as actual crisis scenarios and the comparative analysis is done of the VaR and the results obtained in back testing, explaining significant variations between operating losses and maximum VaR losses.

Liquidity: The liquidity risk is monitored daily, by checking that the maximum negative net flow

does not exceed the limits set per week; performance of the first eight weeks is monitored. A daily settlement operating limit is also monitored.

Based on the Bank’s positions and the difference between market purchase and sale

prices the UAIR makes a monthly estimate of potential losses from having to liquidate the securities portfolio in a short period of time. Also monthly, the impact of market liquidity contingency scenarios is also assessed.

Excess liquidity and admission of liabilities and foreign exchange position limit of the

Central Bank. Capitalization rules issued by the Ministry of Finance and Public Credit.

(Continued)

26



Credit: In measuring credit risk, risk exposure limits are set through a lines of credit process

performed by the Credit officer. Such lines of credit are determined based on analyses made of the financial position of each counterparty, its rating, the nature of exposure, degree of documentation and its market and sector conditions.

The rating of each counterparty determines the risk exposure level and the likelihood of debtor default.

For monitoring risk exposure credit systems are used where it is possible to consult positions valued at market and their maximum exposure level. Corporate models for such monitoring are CCE (Current Credit Exposure), which considers the market value of all current aggregated transactions by the counterparty and PFE (Potential Future Exposure), a guide of what could happen with the CCE in the future.

Additionally, an additional calculation is made of the Expected and Unexpected Loss based on the exposure and rating of each counterparty.

The Bank compares monthly its estimated credit risk exposure with actual credit risk exposure. Corrections, if any, should be made should the projected and actual credit risk exposure differ significantly.

Stress Testing purports to identify events or influences that may have an impact on the Bank's credit risk exposure.

The system used by the Bank in calculating market risk, liquidity and concentration of credit may, at the user's request, synchronize the information relative to the operating system transactions during the day.

Description of methodologies used for managing and controlling operating, technology and legal risks Operational risk: Potential loss due to failure or deficiencies in the information systems, internal controls or errors in the processing of transactions. Topics related to operational and legal risks and their potential impacts as well as gains/losses due to errors are discussed on a monthly basis. The UAIR classifies them in a historic database within the DB IRS system, including the type of loss and related cost.

(Continued)

27



The Bank has operating manuals that provide for the internal controls to ensure the integrity of transactions, which are primarily based on proper segregation of duties, where any transaction will be reviewed by trained personnel to ascertain the adequate and efficient flow of operations.

Besides the manuals, all Bank areas: Maintain matrices that identify and document processes that describe the activities of

each operating or business area and the related implied operating risks. Evaluate and inform, at least quarterly, the consequences on the business from the

materialization of identified risks. The results are informed to those responsible of the units involved so as to determine the control measures to be applied in mitigating such risks.

The Bank has a plan, which purpose is to use an alternative location in the State of Mexico in case of contingency. This alternative site is intended for use in case of a catastrophe that prevents access to the premises during a period in excess of 4 hours. The business activities may continue to be carried out at the alternative premises but to a limited extent, until the previously designated individuals from the Business, Risks, Operations, Systems and Controllership areas may return to the Bank’s principal site. Throughout the year, tests are made simulating a contingency scenario. All employees have been assigned with duties to be performed in case of contingency. The contingency manual describes the functions of each and every one of the Bank’s employees. Technology risk The methodology adopted to ensure the prevention of technology-related risks is designed for the specific purpose of identifying, assessing and documenting any risk associated with an information asset. The purposes are described below. Facilitate the identification and documentation of risks associated with information

assets; technical, procedural, operating and regulatory controls required for mitigating identified information security risks and from control weaknesses/gaps that do not meet information safety standards.

Communicate to the owner of the information asset the control profile and risk associated with the asset and obtain approval in that controls and associated risks have been documented and communicated to the Information Risk Manager/Team.

(Continued)

28



The foregoing must be considered for each system development procedure, so as to include information security processes. In like manner, the process for documenting developments should consider the definition of security requirements, documented using a particular form, access rights according to the security of the application developed and the procedure for the proper functioning of the security management processes. Information systems should consider an analysis of the business “criticality” and the likelihood of specific threats and vulnerabilities that is made through a questionnaire to be reviewed on a regular basis and that allows for the identification and communication of the protection level required in case a contingency arises, as well as the attention to be given to significant processes of applications deemed “critical”. There are firewalls and data encryption for safeguarding the integrity of information in the Bank’s data network. Also, loss of information and software is prevented through information backups. Availability levels and response times are monitored using various tools. Database performance is monitored continually, which prevents the deterioration in response time and functionality of applications. This process takes place by clearing temporary files and the analysis of database behavior, which result in diagnosis reports with recommendations that should be applied for maintaining an outstanding performance of applications. The Bank’s applications allow for the possibility of generating control reports, stored electronically for validating the type of user access to the applications depending on the job to be performed as well as user behavior while using the application. Legal Risk Legal risks are the potential loss resulting from noncompliance with the applicable legal and administrative provisions, the issue of adverse administrative and judicial resolutions and the application of penalties in connection with the Bank’s operations. The Bank has engaged several prestigious and experienced lawyer firms for legal consulting and opinion of services regarding the various legal relationships with customers, counterparties, suppliers and regulatory authorities.

Master agreements are used in connection with the Bank’s legal relationship with customers and counterparties; therefore, prior to executing any of these agreements, the Bank knows in advance the type of legal risks to which it will be exposed.

(Continued)

29



Any amendments to the approved wording of the agreements would necessarily require the intervention of the legal area so that the Bank would be in a position to fully know the legal risks inherent in such amendments.

Any regulatory provisions issued by the different authorities are distributed internally and, if the topic so warrants, meetings are held for discussing and analyzing the effects of such provisions.

It is obligatory that all officers and employees attend courses on (i) Bank conduct policies; (ii) money laundering; (iii) activities with the public and third parties that may compromise the Bank’s or the employee’s reputation, equality and respect in commercial relationships, personal transactions and privileged information. All newly-hired employees receive a copy of the Ethics Code applicable to all employees, which they should read carefully and certify that they are aware of its contents.

The regulations Controllership conducts reviews and, as applicable, supervises the internal policies and regulatory provisions. Such review also includes the legal aspects of transactions such as the review of agreements and contracts, as well as of financial products and services the Bank operates. As for legal issues, it may discuss and analyze the impact from the review findings. The Bank must conduct at least one legal audit per year.

The frequency with which the Bank’s risk exposure is reported on is as follows:

Group Frequency

Board of Directors Quarterly Risk Committee Monthly General Director Daily Risk Units Daily The VaR (unaudited) at December 31, 2007 and 2006 was as follows:

2007 2006

Debt securities $ 4 15 Derivatives 7 10 == ==

Total $ 4 13 == ==

Utilization 4.73% 16% ===== ===

(Continued)

30



(17) Memorandum accounts-

(a) Property in trust or under mandate- The Bank trust activity at December 31, 2007 and 2006, recorded in memorandum accounts, is summarized as follows:

2007 2006 Type of trust:

Administrative $ 27,917 14,477 Administrative and guarantee 3,131 2,987 Administrative and dominion 3,287 3,281 transmission Administrative and investment 93 108 Guarantee 39,851 37,396

Mandates 6,489 6,717 $ 80,768 64,966 ===== =====

For the years ended December 31, 2007 and 2006 the Bank's revenues by way of trust or mandate transactions were $49 y $27, respectively.

(b) Assets in custody or under management-

In this account the Bank records third party securities received in custody, as security or for management purposes. At December 31, 2007 and 2006, this account includes mainly securities under management of DB Servicios, Delowrezham de México, S. de R. L. de C. V., Farezco I, S. de R. L. de C. V. and Farezco II, S. de R. L. de C. V. (related parties) for $4,458 and $284 respectively. The Bank did not obtain revenues from securities custody transactions for the years ended December 31, 2007 and 2006.

(Continued)

31



(18) Additional information on transactions- (a) Financial margin-

For the years ended December 31, 2007 and 2006, the financial margin is comprised of the following: Interest revenue: Interest revenue for the years ended December 31, 2007 and 2006 is analyzed as follows (in nominal pesos):

2007 2006 Cash and due from banks $ 4 46 Investment securities 76 298 Interest and premiums from

repurchase/resell agreements 308 4 Other, including restatement 32 86 $ 420 434 === ===

Interest expense: Interest expense for the years ended December 31, 2007 and 2006, is analyzed as follows (in nominal pesos):

2007 2006 Due to banks and other financial institutions $ 5 1 Interest and premiums from repurchase/resell agreements 220 257 Other, including restatement 9 14

$ 234 272 === ===

(Continued)

32



Monetary position gains and losses: For the years ended December 31, 2007 and 2006 the net monetary position derived from the accounts relative to the financial margin generated a loss of $113 and $117, respectively, and a gain of $47 and $53, respectively, arising from accounts not affecting the financial margin and included in "other income, net" in the statement of income.

In the chart below, we show the principal monetary assets and liabilities that produce a monetary position within and without the financial margin at December 31, 2007 and 2006.

2007 2006 Margin outside Margin outside financial Margin financial Margin Assets:

Cash $ 1,718 - 1,177 - Investment securities 1,273 - 1,597 - Repurchase transactions 5,097 - 2,340 - Securities and derivatives transactions 1,200 53,769 - 78,255 Other receivables - 1,721 - 989 Deferred taxes - 10,588 - 10,105 Other taxes - 107 - 12

Monetary assets 9,288 66,185 5,114 89,361

Liabilities:

Interbank loans - - 26 - Repurchase transactions 5,051 - 2,332 - Other accounts payable - 3,132 - 1,872 Securities and derivatives

transactions 1,200 53,872 - 78,535 Deferred income tax - 10,473 - 10,074

Monetary liabilities 6,251 67,477 2,358 90,481 Net monetary position $ 3,037 (1,292) 2,756 (1,120) ==== ===== ==== ====

(Continued)

33



(b) Brokerage result, net

For the years ended December 31, 2007 and 2006 the brokerage result, net is comprised of the following (in nominal pesos): 2007 2006

Valuation to market, net: Investment securities $ (4) (30) Securities repurchase/resell agreements (37) 41 The lending of securities (8) - Derivative financial instruments for

trading 4 46 Other, including restatement 10 5

(35) 62

Result from purchases and sales: Investment securities 27 29 Derivative financial instruments for

trading 110 (298) Foreign currency exchange 84 221 Restatement - (2)

221 (50) $ 186 12 === ===

(19) Commitments-

The Bank has entered into an indefinite-term lease and service contract with DB Servicios, for the use of its office space, the rent increases based in changes in several economic factors and for provide all types of services related with the support and operation of its corporate purpose. Total payments for services were $153 and $141 in 2007 and 2006, respectively (see note 11), and are included in “Administrative and promotional expenses” in the statement of income.

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