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Loans (Tables)
6 Months Ended
Jun. 30, 2015
Receivables [Abstract]  
Components of Loans
Loans consisted of the following:
 
June 30, 2015
 
December 31, 2014
 
(in millions)
Commercial loans:
 
 
 
Construction and other real estate
$
11,520

 
$
10,300

Business and corporate banking
19,712

 
17,819

Global banking(1)
28,942

 
26,387

Other commercial
3,422

 
3,581

Total commercial
63,596

 
58,087

Consumer loans:
 
 
 
Residential mortgages
17,233

 
16,661

Home equity mortgages
1,686

 
1,784

Credit cards
692

 
720

Other consumer
410

 
489

Total consumer
20,021

 
19,654

Total loans
$
83,617

 
$
77,741

 
(1) 
Represents large multinational firms including globally focused U.S. corporate and financial institutions and U.S. dollar lending to multinational banking customers managed by HSBC on a global basis. Also includes loans to HSBC affiliates which totaled $4,607 million and $4,821 million at June 30, 2015 and December 31, 2014, respectively. See Note 13, "Related Party Transactions," for additional information regarding loans to HSBC affiliates.
Summary of Past Due Status of Loans
The following table summarizes the past due status of our loans at June 30, 2015 and December 31, 2014. The aging of past due amounts is determined based on the contractual delinquency status of payments under the loan. An account is generally considered to be contractually delinquent when payments have not been made in accordance with the loan terms. Delinquency status is affected by customer account management policies and practices such as re-age, which results in the re-setting of the contractual delinquency status to current.
 
Past Due
 
Total Past Due 30 Days or More
 
 
 
 
At June 30, 2015
30 - 89 days
 
90+ days
 
 
Current(1)
 
Total Loans
 
(in millions)
Commercial loans:
 
 
 
 
 
 
 
 
 
Construction and other real estate
$
14

 
$
21

 
$
35

 
$
11,485

 
$
11,520

Business and corporate banking
23

 
7

 
30

 
19,682

 
19,712

Global banking

 

 

 
28,942

 
28,942

Other commercial
4

 
6

 
10

 
3,412

 
3,422

Total commercial
41

 
34

 
75

 
63,521

 
63,596

Consumer loans:
 
 
 
 
 
 
 
 
 
Residential mortgages
356

 
831

 
1,187

 
16,046

 
17,233

Home equity mortgages
13

 
52

 
65

 
1,621

 
1,686

Credit cards
9

 
9

 
18

 
674

 
692

Other consumer
7

 
8

 
15

 
395

 
410

Total consumer
385

 
900

 
1,285

 
18,736

 
20,021

Total loans
$
426

 
$
934

 
$
1,360

 
$
82,257

 
$
83,617

 
Past Due
 
Total Past Due 30 Days or More
 
 
 
 
At December 31, 2014
30 - 89 days
 
90+ days
 
 
Current(1)
 
Total Loans
 
(in millions)
Commercial loans:
 
 
 
 
 
 
 
 
 
Construction and other real estate
$
25

 
$
22

 
$
47

 
$
10,253

 
$
10,300

Business and corporate banking
32

 
9

 
41

 
17,778

 
17,819

Global banking

 

 

 
26,387

 
26,387

Other commercial
15

 
6

 
21

 
3,560

 
3,581

Total commercial
72

 
37

 
109

 
57,978

 
58,087

Consumer loans:
 
 
 
 
 
 
 
 
 
Residential mortgages
390

 
931

 
1,321

 
15,340

 
16,661

Home equity mortgages
21

 
56

 
77

 
1,707

 
1,784

Credit cards
11

 
10

 
21

 
699

 
720

Other consumer
9

 
9

 
18

 
471

 
489

Total consumer
431

 
1,006

 
1,437

 
18,217

 
19,654

Total loans
$
503

 
$
1,043

 
$
1,546

 
$
76,195

 
$
77,741


 
(1) 
Loans less than 30 days past due are presented as current.
Summary of Nonaccrual Loans and Accruing Receivables 90 Days or More Delinquent
Nonaccrual loans, including nonaccrual loans held for sale, and accruing loans 90 days or more delinquent consisted of the following:
 
June 30, 2015
 
December 31, 2014
 
(in millions)
Nonaccrual loans:
 
 
 
Commercial:
 
 
 
     Construction and other real estate
$
64

 
$
65

Business and corporate banking
47

 
74

     Commercial nonaccrual loans held for sale
30

 
43

Total commercial
141

 
182

Consumer:
 
 
 
Residential mortgages(1)(2)(3)
798

 
847

Home equity mortgages(1)(2)
70

 
68

Consumer nonaccrual loans held for sale
3

 
4

Total consumer
871

 
919

Total nonaccruing loans
1,012

 
1,101

Accruing loans contractually past due 90 days or more:
 
 
 
Commercial:
 
 
 
Business and corporate banking
1

 
1

Total commercial
1

 
1

Consumer:
 
 
 
Credit cards
9

 
10

Other consumer
9

 
10

Total consumer
18

 
20

Total accruing loans contractually past due 90 days or more
19

 
21

Total nonperforming loans
$
1,031

 
$
1,122

 
(1) 
At June 30, 2015 and December 31, 2014, nonaccrual consumer mortgage loans include $755 million and $817 million, respectively, of loans that are carried at the lower of amortized cost or fair value of the collateral less cost to sell.
(2) 
Nonaccrual consumer mortgage loans include all receivables which are 90 or more days contractually delinquent as well as loans discharged under Chapter 7 bankruptcy and not re-affirmed and second lien loans where the first lien loan that we own or service is 90 or more days contractually delinquent.
(3) 
Nonaccrual consumer mortgage loans for all periods does not include guaranteed loans purchased from the Government National Mortgage Association ("GNMA"). Repayment of these loans are predominantly insured by the Federal Housing Administration and as such, these loans have different risk characteristics from the rest of our consumer loan portfolio.
Schedule of Additional Information on Nonaccrual Loans
The following table provides additional information on our nonaccrual loans:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Interest income that would have been recorded if the nonaccrual loans had been current in accordance with contractual terms during the period
$
23

 
$
22

 
$
44

 
$
46

Interest income that was recorded on nonaccrual loans and included in interest income during the period
6

 
6

 
12

 
14

Summary of Receivables which were Modified and as a Result Became Classified as TDR Loans
The following table presents information about loans which were modified during the three and six months ended June 30, 2015 and 2014 and as a result of this action became classified as TDR Loans:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Commercial loans:
 
 
 
 
 
 
 
Construction and other real estate
$
4

 
$

 
$
4

 
$

Business and corporate banking
24

 
11

 
50

 
11

Global banking

 

 
13

 

Other commercial

 

 

 
10

Total commercial
28

 
11

 
67

 
21

Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
35

 
46

 
70

 
79

Home equity mortgages
1

 
1

 
1

 
2

Credit cards
1

 
1

 
2

 
3

Total consumer
37

 
48

 
73

 
84

Total
$
65

 
$
59

 
$
140

 
$
105

Summary of TDR and Related Credit Loss Reserves for TDR Loans
The following tables present information about our TDR Loans and the related credit loss reserves for TDR Loans:

June 30, 2015
 
December 31, 2014
 
(in millions)
TDR Loans(1)(2):
 
 
 
Commercial loans:
 
 
 
Construction and other real estate
$
120

 
$
186

Business and corporate banking
68

 
24

Global banking
13

 

Total commercial
201

 
210

Consumer loans:
 
 
 
Residential mortgages(3)
1,021

 
972

  Home equity mortgages(3)
21

 
20

Credit cards
6

 
6

Total consumer
1,048

 
998

Total TDR Loans(4)
$
1,249

 
$
1,208

Allowance for credit losses for TDR Loans(5):
 
 
 
Commercial loans:
 
 
 
Construction and other real estate
$
2

 
$
4

Business and corporate banking
4

 
5

Total commercial
6

 
9

Consumer loans:
 
 
 
Residential mortgages
41

 
43

  Home equity mortgages
1

 
2

Credit cards
1

 
2

Total consumer
43

 
47

Total allowance for credit losses for TDR Loans
$
49

 
$
56

 
(1) 
TDR Loans are considered to be impaired loans. For consumer loans, all such loans are considered impaired loans regardless of accrual status. For commercial loans, impaired loans include other loans in addition to TDR Loans which totaled $39 million and $85 million at June 30, 2015 and December 31, 2014, respectively.
(2) 
The TDR Loan balances included in the table above reflect the current carrying amount of TDR Loans and includes basis adjustments on the loan, such as unearned income, unamortized deferred fees and costs on originated loans, partial charge-offs and premiums or discounts on purchased loans. The following table reflects the unpaid principal balance of TDR Loans:

June 30, 2015
 
December 31, 2014
 
(in millions)
Commercial loans:
 
 
 
Construction and other real estate
$
139

 
$
201

Business and corporate banking
75

 
51

Global banking
13

 

Total commercial
227

 
252

Consumer loans:
 
 
 
Residential mortgages
1,189

 
1,139

   Home equity mortgages
46

 
44

Credit cards
6

 
6

Total consumer
1,241

 
1,189

Total
$
1,468

 
$
1,441


(3) 
Includes $775 million and $763 million at June 30, 2015 and December 31, 2014, respectively, of loans that are recorded at the lower of amortized cost or fair value of the collateral less cost to sell.
(4) 
Includes $471 million and $485 million at June 30, 2015 and December 31, 2014, respectively, of loans which are classified as nonaccrual.
(5) 
Included in the allowance for credit losses.
Trouble Debt Restructuring Additional Information
The following table presents information about average TDR Loans and interest income recognized on TDR Loans:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Average balance of TDR Loans:
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
Construction and other real estate
$
149

 
$
220

 
$
161

 
$
244

Business and corporate banking
56

 
23

 
45

 
22

Global banking
13

 

 
9

 
17

Other commercial

 
5

 

 
12

Total commercial
218

 
248

 
215

 
295

Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
999

 
929

 
988

 
928

     Home equity mortgages
20

 
19

 
20

 
19

Credit cards
6

 
8

 
6

 
8

Total consumer
1,025

 
956

 
1,014

 
955

Total average balance of TDR Loans
$
1,243

 
$
1,204

 
$
1,229

 
$
1,250

Interest income recognized on TDR Loans:
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
Construction and other real estate
$
1

 
$
2

 
$
2

 
$
8

Business and corporate banking

 

 
1

 

Total commercial
1

 
2

 
3

 
8

Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
9

 
8

 
18

 
17

     Home equity mortgages
1

 
1

 
1

 
1

Total consumer
10

 
9

 
19

 
18

Total interest income recognized on TDR Loans
$
11

 
$
11

 
$
22

 
$
26

Loans Classified as TDR Loans
The following table presents loans which were classified as TDR Loans during the previous 12 months which for commercial loans became 90 days or greater contractually delinquent or for consumer loans became 60 days or greater contractually delinquent during the three and six months ended June 30, 2015 and 2014:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Commercial loans:
 
 
 
 
 
 
 
Construction and other real estate
$

 
$

 
$
2

 
$
12

Business and corporate banking
2

 

 
3

 

Total commercial
2

 

 
5

 
12

Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
8

 
9

 
17

 
17

Total consumer
8

 
9

 
17

 
17

Total
$
10

 
$
9

 
$
22

 
$
29

Impaired Commercial Loans Considered as TDR Loans
Impaired commercial loans  The following table summarizes impaired commercial loan statistics:
 
Amount with
Impairment
Reserves
 
Amount
without
Impairment
Reserves
 
Total Impaired
Commercial
Loans(1)(2)
 
Impairment
Reserve
 
(in millions)
At June 30, 2015
 
 
 
 
 
 
 
Construction and other real estate
$
13

 
$
119

 
$
132

 
$
3

Business and corporate banking
13

 
75

 
88

 
3

Global banking

 
13

 
13

 

Other commercial
1

 
6

 
7

 
1

Total commercial
$
27

 
$
213

 
$
240

 
$
7

At December 31, 2014
 
 
 
 
 
 
 
Construction and other real estate
$
18

 
$
179

 
$
197

 
$
5

Business and corporate banking
72

 
18

 
90

 
24

Global banking

 

 

 

Other commercial
2

 
6

 
8

 
1

Total commercial
$
92

 
$
203

 
$
295

 
$
30

 

(1) 
Includes impaired commercial loans that are also considered TDR Loans which totaled $201 million and $210 million at June 30, 2015 and December 31, 2014, respectively.
(2) 
The impaired commercial loan balances included in the table above reflect the current carrying amount of the loan and includes basis adjustments, such as partial charge-offs, unamortized deferred fees and costs on originated loans and any premiums or discounts. The following table reflects the unpaid principal balance of impaired commercial loans included in the table above:

June 30, 2015
 
December 31, 2014
 
(in millions)
Construction and other real estate
$
156

 
$
224

Business and corporate banking
120

 
122

Global banking
13

 

Other commercial
7

 
8

Total commercial
$
296

 
$
354

Average Balance and Interest Income Recognized on Impaired Commercial Loans
The following table presents information about average impaired commercial loan balances and interest income recognized on the impaired commercial loans:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Average balance of impaired commercial loans:
 
 
 
 
 
 
 
Construction and other real estate
$
166

 
$
237

 
$
176

 
$
269

Business and corporate banking
92

 
36

 
91

 
37

Global banking
13

 

 
9

 
22

Other commercial
7

 
15

 
7

 
24

Total average balance of impaired commercial loans
$
278

 
$
288

 
$
283

 
$
352

Interest income recognized on impaired commercial loans:
 
 
 
 
 
 
 
Construction and other real estate
$
1

 
$
2

 
$
2

 
$
8

Business and corporate banking

 

 
1

 

Total interest income recognized on impaired commercial loans
$
1

 
$
2

 
$
3

 
$
8

Summary of Criticized Assets for Commercial Loans
The following table summarizes criticized commercial loans:
 
Special Mention
 
Substandard
 
Doubtful
 
Total
 
(in millions)
At June 30, 2015
 
 
 
 
 
 
 
Construction and other real estate
$
158

 
$
213

 
$
2

 
$
373

Business and corporate banking
1,060

 
447

 
4

 
1,511

Global banking
2,088

 
218

 

 
2,306

Other commercial
2

 
7

 
1

 
10

Total commercial
$
3,308

 
$
885

 
$
7

 
$
4,200

At December 31, 2014
 
 
 
 
 
 
 
Construction and other real estate
$
310

 
$
230

 
$
7

 
$
547

Business and corporate banking
1,001

 
238

 
22

 
1,261

Global banking
1,770

 
202

 

 
1,972

Other commercial
1

 
6

 

 
7

Total commercial
$
3,082

 
$
676

 
$
29

 
$
3,787

Status of Commercial Loan Portfolio
The following table summarizes the status of our commercial loan portfolio, excluding loans held for sale:
 
Performing
Loans
 
Nonaccrual
Loans
 
Accruing Loans
Contractually Past
Due 90 days or More
 
Total
 
(in millions)
At June 30, 2015
 
 
 
 
 
 
 
Construction and other real estate
$
11,456

 
$
64

 
$

 
$
11,520

Business and corporate banking
19,664

 
47

 
1

 
19,712

Global banking
28,942

 

 

 
28,942

Other commercial
3,422

 

 

 
3,422

Total commercial
$
63,484

 
$
111

 
$
1

 
$
63,596

At December 31, 2014
 
 
 
 
 
 
 
Construction and other real estate
$
10,235

 
$
65

 
$

 
$
10,300

Business and corporate banking
17,744

 
74

 
1

 
17,819

Global banking
26,387

 

 

 
26,387

Other commercial
3,581

 

 

 
3,581

Total commercial
$
57,947

 
$
139

 
$
1

 
$
58,087

Credit Risk Profile of Commercial Loan
The following table shows the credit risk profile of our commercial loan portfolio:
 
Investment
Grade(1)
 
Non-Investment
Grade
 
Total
 
(in millions)
At June 30, 2015
 
 
 
 
 
Construction and other real estate
$
8,946

 
$
2,574

 
$
11,520

Business and corporate banking
10,491

 
9,221

 
19,712

Global banking
23,767

 
5,175

 
28,942

Other commercial
1,796

 
1,626

 
3,422

Total commercial
$
45,000

 
$
18,596

 
$
63,596

At December 31, 2014
 
 
 
 
 
Construction and other real estate
$
7,820

 
$
2,480

 
$
10,300

Business and corporate banking
8,835

 
8,984

 
17,819

Global banking
23,400

 
2,987

 
26,387

Other commercial
1,873

 
1,708

 
3,581

Total commercial
$
41,928

 
$
16,159

 
$
58,087

 
(1) 
Investment grade includes commercial loans with credit ratings of at least BBB- or above or the equivalent based on our internal credit rating system.
Delinquency Ratio for Consumer Loan
The following table summarizes dollars of two-months-and-over contractual delinquency and as a percent of total loans and loans held for sale ("delinquency ratio") for our consumer loan portfolio:
 
June 30, 2015
 
December 31, 2014
  
Delinquent Loans
 
Delinquency
Ratio
 
Delinquent Loans
 
Delinquency
Ratio
 
(dollars are in millions)
Residential mortgages(1)(2)
$
903

 
5.23
%
 
$
1,013

 
6.07
%
Home equity mortgages(1)(2)
56

 
3.32

 
62

 
3.48

Credit cards
13

 
1.88

 
14

 
1.94

Other consumer
11

 
2.21

 
14

 
2.52

Total consumer
$
983

 
4.88
%
 
$
1,103

 
5.59
%
 
(1) 
At June 30, 2015 and December 31, 2014, consumer mortgage loan delinquency includes $873 million and $936 million, respectively, of loans that are carried at the lower of amortized cost or fair value of the collateral less cost to sell.
(2) 
At June 30, 2015 and December 31, 2014, consumer mortgage loans include $634 million and $658 million, respectively, of loans that were in the process of foreclosure.
Status of Consumer Loan Portfolio
The following table summarizes the status of our consumer loan portfolio, excluding loans held for sale:
 
Performing
Loans
 
Nonaccrual
Loans
 
Accruing Loans
Contractually Past
Due 90 days or More
 
Total
 
(in millions)
At June 30, 2015
 
 
 
 
 
 
 
Residential mortgages
$
16,435

 
$
798

 
$

 
$
17,233

Home equity mortgages
1,616

 
70

 

 
1,686

Credit cards
683

 

 
9

 
692

Other consumer
401

 

 
9

 
410

Total consumer
$
19,135

 
$
868

 
$
18

 
$
20,021

At December 31, 2014
 
 
 
 
 
 
 
Residential mortgages
$
15,814

 
$
847

 
$

 
$
16,661

Home equity mortgages
1,716

 
68

 

 
1,784

Credit cards
710

 

 
10

 
720

Other consumer
479

 

 
10

 
489

Total consumer
$
18,719

 
$
915

 
$
20

 
$
19,654