Derivative Financial Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The table below presents the gross amounts of fair value of our derivative instruments and the associated notional amounts:

	September 30, 2019						December 31, 2018
	Notional		Fair Value of Assets(a)		Fair Value of Liabilities(a)		Notional		Fair Value of Assets(a)		Fair Value of Liabilities(a)
Derivatives designated as hedges
Fair value hedges
Interest rate swaps	$	10,702	$	384	$	4	$	9,533	$	42	$	231
Foreign currency swaps	1,744		—		101		1,829		37		60
Cash flow hedges
Interest rate swaps	553		1		5		768		8		—
Foreign currency swaps	4,269		16		241		2,075		43		58
Derivatives not designated as hedges
Interest rate contracts	86,848		302		384		99,666		372		520
Total(b)	$	104,116	$	703	$	735	$	113,871	$	502	$	869

_________________

(a) The gross amounts of the fair value of our assets and liabilities are included in other assets and other liabilities, respectively. Amounts accrued for interest payments in a net receivable position are included in other assets. Amounts accrued for interest payments in a net payable position are included in other liabilities. All our derivatives are categorized within Level 2 of the fair value hierarchy. The fair value for Level 2 instruments was derived using the market approach based on observable market inputs including quoted prices of similar instruments and foreign exchange and interest rate forward curves.

(b) We primarily enter into derivative instruments through AmeriCredit Financial Services, Inc. (AFSI); however, our SPEs may also be parties to derivative instruments. Agreements between AFSI and its derivative counterparties include rights of setoff for positions with offsetting values or for collateral held or posted. At September 30, 2019 and December 31, 2018, the fair value of assets and liabilities available for offset was $383 million and $320 million. At September 30, 2019 and December 31, 2018, we held $258 million and $30 million of collateral from counterparties which is available for netting against our asset positions. At September 30, 2019 and December 31, 2018, we posted $129 million and $451 million of collateral to counterparties which is available for netting against our liability positions.

Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location

The following amounts were recorded in the condensed consolidated balance sheet related to items designated and qualifying as hedged items in fair value hedging relationships:

	Carrying Amount of Hedged Items				Cumulative Amount of Fair Value Hedging Adjustments(a)
	September 30, 2019		December 31, 2018		September 30, 2019			December 31, 2018
Unsecured debt	$	20,453	$	17,923	$	(135	)	$	459

_________________

(a) Includes $131 million and $247 million at September 30, 2019 and December 31, 2018 of amortization remaining on hedged items for which hedge accounting has been discontinued.

Effect of Derivative Instruments on the Condensed Consolidated Statements of Income

The table below presents the effect of our derivative financial instruments in the condensed consolidated statements of income:

	Income (Losses) Recognized In Income
	Three Months Ended September 30,												Nine Months Ended September 30,
	2019						2018						2019						2018
	Interest Expense(a)			Operating Expenses(b)			Interest Expense(a)			Operating Expenses(b)			Interest Expense(a)			Operating Expenses(b)			Interest Expense(a)			Operating Expenses(b)
Fair value hedges
Hedged items - interest rate swaps	$	(159	)	$	—		$	68		$	—		$	(682	)	$	—		$	345		$	—
Interest rate swaps	80			—			(73		)	—			546			—			(359		)	—
Hedged items - foreign currency swaps	—			78			—			—			—			85			—			—
Foreign currency swaps	(15		)	(77		)	—			—			(46		)	(81		)	—			—
Cash flow hedges
Interest rate swaps	1			—			4			—			5			—			11			—
Foreign currency swaps	(23		)	(134		)	(14		)	(23		)	(62		)	(149		)	(36		)	(91		)
Derivatives not designated as hedges
Interest rate contracts	89			—			(7		)	—			79			—			(2		)	—
Foreign currency swaps	—			—			(15		)	(5		)	—			—			(35		)	(92		)
Total	$	(27	)	$	(133	)	$	(37	)	$	(28	)	$	(160	)	$	(145	)	$	(76	)	$	(183	)

_________________

(a) Total interest expense was $879 million and $838 million for the three months ended September 30, 2019 and 2018 and $2.8 billion and $2.4 billion for the nine months ended September 30, 2019 and 2018.

(b) Activity is offset by translation activity also recorded in operating expenses related to foreign currency-denominated loans. Total operating expenses were $384 million and $369 million for the three months ended September 30, 2019 and 2018 and $1.1 billion for both the nine months ended September 30, 2019 and 2018.

The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income:

	Gains (Losses) Recognized In Accumulated Other Comprehensive Loss
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Fair value hedges
Foreign currency swaps	$	(10	)	$	—		$	(30	)	$	—
Cash flow hedges
Interest rate swaps	(3		)	—			(5		)	5
Foreign currency swaps	(127		)	(10		)	(198		)	(50		)
Total	$	(140	)	$	(10	)	$	(233	)	$	(45	)

	(Gains) Losses Reclassified From Accumulated Other Comprehensive Loss Into Income(a)(b)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Fair value hedges
Foreign currency swaps	$	10		$	—		$	32		$	—
Cash flow hedges
Interest rate swaps	(1		)	(2		)	(4		)	(5		)
Foreign currency swaps	119			13			160			69
Total	$	128		$	11		$	188		$	64

_________________

(a) All amounts reclassified from accumulated other comprehensive loss were recorded to interest expense.

(b) During the next twelve months, we estimate $(17) million will be reclassified into pretax earnings from derivatives designated for hedge accounting.