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Allowance for Credit Losses
6 Months Ended
Jun. 30, 2017
Receivables [Abstract]  
Allowance for Credit Losses
 Allowance for Credit Losses
 

The following table summarizes the changes in the allowance for credit losses by product and the related loan balance by product during the three and six months ended June 30, 2017 and 2016:
 
Commercial
 
Consumer
 
 
 
Real Estate, including Construction
 
Business
and Corporate Banking
(1)
 
Global
Banking
(1)
 
Other
Comm'l
 
Residential
Mortgages
 
Home
Equity
Mortgages
 
Credit
Cards
 
Other
Consumer
 
Total
 
(in millions)
Three Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses – beginning of period
$
92

 
$
266

 
$
470

 
$
15

 
$
24

 
$
17

 
$
31

 
$
6

 
$
921

Provision charged (credited) to income
(9
)
 
(5
)
 

 

 
(8
)
 
(4
)
 
6

 
(1
)
 
(21
)
Charge-offs
(2
)
 
(2
)
 
(45
)
 
(1
)
 

 
(2
)
 
(8
)
 
(1
)
 
(61
)
Recoveries

 
2

 

 

 
4

 
1

 
1

 
1

 
9

Net (charge-offs) recoveries
(2
)
 

 
(45
)
 
(1
)
 
4

 
(1
)
 
(7
)
 

 
(52
)
Allowance for credit losses – end of period
$
81

 
$
261

 
$
425

 
$
14

 
$
20

 
$
12

 
$
30

 
$
5

 
$
848

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses – beginning of period
$
95

 
$
334

 
$
457

 
$
16

 
$
55

 
$
25

 
$
31

 
$
10

 
$
1,023

Provision charged (credited) to income
(3
)
 
5

 
136

 
(1
)
 
(7
)
 
(6
)
 
9

 
1

 
134

Charge-offs

 
(11
)
 
(78
)
 

 

 
(2
)
 
(8
)
 
(4
)
 
(103
)
Recoveries

 
3

 

 

 
2

 
2

 
1

 
1

 
9

Net (charge-offs) recoveries

 
(8
)
 
(78
)
 

 
2

 

 
(7
)
 
(3
)
 
(94
)
Allowance for credit losses – end of period
$
92

 
$
331

 
$
515

 
$
15

 
$
50

 
$
19

 
$
33

 
$
8

 
$
1,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses – beginning of period
$
92

 
$
317

 
$
508

 
$
13

 
$
26

 
$
20

 
$
34

 
$
7

 
$
1,017

Provision charged (credited) to income
(8
)
 
(47
)
 
(39
)
 
2

 
(8
)
 
(6
)
 
9

 
(1
)
 
(98
)
Charge-offs
(3
)
 
(23
)
 
(45
)
 
(1
)
 
(3
)
 
(4
)
 
(16
)
 
(2
)
 
(97
)
Recoveries

 
14

 
1

 

 
5

 
2

 
3

 
1

 
26

Net (charge-offs) recoveries
(3
)
 
(9
)
 
(44
)
 
(1
)
 
2

 
(2
)
 
(13
)
 
(1
)
 
(71
)
Allowance for credit losses – end of period
$
81

 
$
261

 
$
425

 
$
14

 
$
20

 
$
12

 
$
30

 
$
5

 
$
848

Ending balance: collectively evaluated for impairment
$
74

 
$
221

 
$
223

 
$
14

 
$
13

 
$
11

 
$
29

 
$
5

 
$
590

Ending balance: individually evaluated for impairment
7

 
40

 
202

 

 
7

 
1

 
1

 

 
258

Total allowance for credit losses
$
81

 
$
261

 
$
425

 
$
14

 
$
20

 
$
12

 
$
30

 
$
5

 
$
848

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment(2)
$
10,197

 
$
12,584

 
$
20,446

 
$
4,427

 
$
16,114

 
$
1,215

 
$
643

 
$
424

 
$
66,050

Individually evaluated for impairment(3)
43

 
284

 
601

 
6

 
58

 
3

 
4

 

 
999

Loans carried at lower of amortized cost or fair value less cost to sell

 

 

 

 
947

 
67

 

 

 
1,014

Total loans
$
10,240

 
$
12,868

 
$
21,047

 
$
4,433

 
$
17,119

 
$
1,285

 
$
647

 
$
424

 
$
68,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
Consumer
 
 
 
Real Estate, including Construction
 
Business
and Corporate Banking
(1)
 
Global
Banking
(1)
 
Other
Comm'l
 
Residential
Mortgages
 
Home
Equity
Mortgages
 
Credit
Cards
 
Other
Consumer
 
Total
 
(in millions)
Six Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses – beginning of period
$
86

 
$
407

 
$
267

 
$
19

 
$
68

 
$
24

 
$
32

 
$
9

 
$
912

Provision charged (credited) to income
6

 
(42
)
 
333

 
(4
)
 
(16
)
 
(3
)
 
14

 
3

 
291

Charge-offs

 
(39
)
 
(85
)
 

 
(9
)
 
(5
)
 
(16
)
 
(5
)
 
(159
)
Recoveries

 
5

 

 

 
7

 
3

 
3

 
1

 
19

Net (charge-offs) recoveries

 
(34
)
 
(85
)
 

 
(2
)
 
(2
)
 
(13
)
 
(4
)
 
(140
)
Allowance for credit losses – end of period
$
92

 
$
331

 
$
515

 
$
15

 
$
50

 
$
19

 
$
33

 
$
8

 
$
1,063

Ending balance: collectively evaluated for impairment
$
90

 
$
228

 
$
268

 
$
14

 
$
22

 
$
18

 
$
32

 
$
8

 
$
680

Ending balance: individually evaluated for impairment
2

 
103

 
247

 
1

 
28

 
1

 
1

 

 
383

Total allowance for credit losses
$
92

 
$
331

 
$
515

 
$
15

 
$
50

 
$
19

 
$
33

 
$
8

 
$
1,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment(2)
$
10,875

 
$
14,180

 
$
25,036

 
$
8,202

 
$
16,423

 
$
1,433

 
$
663

 
$
421

 
$
77,233

Individually evaluated for impairment(3)
98

 
456

 
688

 
8

 
188

 
5

 
5

 

 
1,448

Loans carried at lower of amortized cost or fair value less cost to sell

 

 

 

 
1,056

 
73

 

 

 
1,129

Total loans
$
10,973

 
$
14,636

 
$
25,724

 
$
8,210

 
$
17,667

 
$
1,511

 
$
668

 
$
421

 
$
79,810

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 
During the fourth quarter of 2016, we transferred certain client relationships from Commercial Banking to Global Banking and Markets as discussed further in Note 13, "Business Segments." As a result, we reclassified $4.4 billion of loans and $27 million of allowance for credit losses from business and corporate banking to global banking at June 30, 2016 to conform with the current year presentation.
(2) 
During the first quarter of 2017, in conjunction with the creation of the new Corporate Center segment as discussed further in Note 13, "Business Segments," we reclassified loans to HSBC affiliates from global banking to other commercial and revised the prior period to conform with the current year presentation. As a result, other commercial includes loans to HSBC affiliates totaling $1,423 million and $5,072 million at June 30, 2017 and 2016, respectively, for which we do not carry an associated allowance for credit losses.
(3) 
For consumer loans and certain small business loans, these amounts represent TDR Loans for which we evaluate reserves using a discounted cash flow methodology. Each loan is individually identified as a TDR Loan and then grouped together with other TDR Loans with similar characteristics. The discounted cash flow analysis is then applied to these groups of TDR Loans. Loans individually evaluated for impairment exclude TDR Loans that are carried at the lower of amortized cost or fair value of the collateral less cost to sell which totaled $670 million and $763 million at June 30, 2017 and 2016, respectively.