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Loans (Tables)
6 Months Ended
Jun. 30, 2017
Receivables [Abstract]  
Components of Loans
Loans consisted of the following:
 
June 30, 2017
 
December 31, 2016
 
(in millions)
Commercial loans:
 
 
 
Real estate, including construction
$
10,240

 
$
10,890

Business and corporate banking
12,868

 
14,080

Global banking(1)(2)
21,047

 
23,481

Other commercial(2)
4,433

 
5,765

Total commercial
48,588

 
54,216

Consumer loans:
 
 
 
Residential mortgages
17,119

 
17,181

Home equity mortgages
1,285

 
1,408

Credit cards
647

 
688

Other consumer
424

 
382

Total consumer
19,475

 
19,659

Total loans
$
68,063

 
$
73,875

 
(1) 
Represents large multinational firms including globally focused U.S. corporate and financial institutions, U.S. dollar lending to multinational banking clients managed by HSBC on a global basis and complex large business clients supported by Global Banking and Markets relationship managers.
(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 which totaled $1,423 million and $3,274 million at June 30, 2017 and December 31, 2016, respectively. All tables below have been restated to reflect this reclassification, as applicable. See Note 12, "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, excluding loans held for sale, at June 30, 2017 and December 31, 2016. 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, 2017
30 - 89 Days
 
90+ Days
 
 
Current(1)
 
Total Loans
 
(in millions)
Commercial loans:
 
 
 
 
 
 
 
 
 
Real estate, including construction
$
39

 
$
2

 
$
41

 
$
10,199

 
$
10,240

Business and corporate banking
14

 
2

 
16

 
12,852

 
12,868

Global banking

 
55

 
55

 
20,992

 
21,047

Other commercial
1

 
7

 
8

 
4,425

 
4,433

Total commercial
54

 
66

 
120

 
48,468

 
48,588

Consumer loans:
 
 
 
 
 
 
 
 
 
Residential mortgages
329

 
324

 
653

 
16,466

 
17,119

Home equity mortgages
8

 
36

 
44

 
1,241

 
1,285

Credit cards
8

 
8

 
16

 
631

 
647

Other consumer
6

 
5

 
11

 
413

 
424

Total consumer
351

 
373

 
724

 
18,751

 
19,475

Total loans
$
405

 
$
439

 
$
844

 
$
67,219

 
$
68,063

 
Past Due
 
Total Past Due 30 Days or More
 
 
 
 
At December 31, 2016
30 - 89 Days
 
90+ Days
 
 
Current(1)
 
Total Loans
 
(in millions)
Commercial loans:
 
 
 
 
 
 
 
 
 
Real estate, including construction
$
17

 
$
6

 
$
23

 
$
10,867

 
$
10,890

Business and corporate banking
35

 
9

 
44

 
14,036

 
14,080

Global banking
1

 
64

 
65

 
23,416

 
23,481

Other commercial
4

 
7

 
11

 
5,754

 
5,765

Total commercial
57

 
86

 
143

 
54,073

 
54,216

Consumer loans:
 
 
 
 
 
 
 
 
 
Residential mortgages
402

 
317

 
719

 
16,462

 
17,181

Home equity mortgages
10

 
43

 
53

 
1,355

 
1,408

Credit cards
9

 
10

 
19

 
669

 
688

Other consumer
7

 
7

 
14

 
368

 
382

Total consumer
428

 
377

 
805

 
18,854

 
19,659

Total loans
$
485

 
$
463

 
$
948

 
$
72,927

 
$
73,875


 
(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, 2017
 
December 31, 2016
 
(in millions)
Nonaccrual loans:
 
 
 
Commercial:
 
 
 
Real estate, including construction
$
50

 
$
56

Business and corporate banking
188

 
187

Global banking
537

 
546

Other commercial

 
1

Commercial nonaccrual loans held for sale
29

 
11

Total commercial
804

 
801

Consumer:
 
 
 
Residential mortgages(1)(2)(3)
432

 
435

Home equity mortgages(1)(2)
70

 
75

Consumer nonaccrual loans held for sale
34

 
369

Total consumer
536

 
879

Total nonaccruing loans
1,340

 
1,680

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

 
1

Total commercial
1

 
1

Consumer:
 
 
 
Credit cards
8

 
10

Other consumer
6

 
7

Total consumer
14

 
17

Total accruing loans contractually past due 90 days or more
15

 
18

Total nonperforming loans
$
1,355

 
$
1,698

 
(1) 
At June 30, 2017 and December 31, 2016, nonaccrual consumer mortgage loans held for investment include $383 million and $382 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 held for investment include all loans 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. 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,
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Interest income that would have been recorded if the nonaccrual loans had been current in accordance with contractual terms during the period
$
18

 
$
19

 
$
38

 
$
40

Interest income that was recorded on nonaccrual loans and included in interest income during the period
2

 
3

 
13

 
9

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, 2017 and 2016 and as a result of this action became classified as TDR Loans:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Commercial loans:
 
 
 
 
 
 
 
Business and corporate banking
$
24

 
$
190

 
$
24

 
$
304

Global banking
86

 

 
86

 

Total commercial
110

 
190

 
110

 
304

Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
10

 
16

 
16

 
43

Home equity mortgages
2

 
3

 
4

 
5

Credit cards
1

 
1

 
2

 
2

Total consumer
13

 
20

 
22

 
50

Total
$
123

 
$
210

 
$
132

 
$
354

Summary of TDR and Related Credit Loss Reserves for TDR Loans
The following table presents information about our TDR Loans and the related allowance for credit losses for TDR Loans:
 
June 30, 2017
 
December 31, 2016
 
Carrying Value
 
Unpaid Principal Balance
 
Carrying Value
 
Unpaid Principal Balance
 
(in millions)
TDR Loans:(1)(2)
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
Real estate, including construction
$
31

 
$
33

 
$
32

 
$
33

Business and corporate banking
261

 
334

 
300

 
363

Global banking
198

 
201

 
150

 
152

Total commercial(3)
490

 
568

 
482

 
548

Consumer loans:
 
 
 
 
 
 
 
Residential mortgages(4)
701

 
797

 
708

 
797

Home equity mortgages(4)
30

 
63

 
27

 
59

Credit cards
4

 
4

 
5

 
5

Total consumer
735

 
864

 
740

 
861

Total TDR Loans(5)
$
1,225

 
$
1,432

 
$
1,222

 
$
1,409

Allowance for credit losses for TDR Loans:(6)
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
Real estate, including construction
$
6

 
 
 
$

 
 
Business and corporate banking
31

 
 
 
37

 
 
Global banking
39

 
 
 

 
 
Total commercial
76

 
 
 
37

 
 
Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
7

 
 
 
9

 
 
Home equity mortgages
1

 
 
 
1

 
 
Credit cards
1

 
 
 
1

 
 
Total consumer
9

 
 
 
11

 
 
Total allowance for credit losses for TDR Loans
$
85

 
 
 
$
48

 
 
 
(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 $444 million and $571 million at June 30, 2017 and December 31, 2016, respectively.
(2) 
The carrying value of TDR Loans includes basis adjustments on the loans, such as unearned income, unamortized deferred fees and costs on originated loans, partial charge-offs and premiums or discounts on purchased loans.
(3) 
Additional commitments to lend to commercial borrowers whose loans have been modified in TDR Loans totaled $237 million and $184 million at June 30, 2017 and December 31, 2016, respectively.
(4) 
At June 30, 2017 and December 31, 2016, the carrying value of consumer mortgage TDR Loans held for investment includes $670 million and $672 million, respectively, of loans that are recorded at the lower of amortized cost or fair value of the collateral less cost to sell.
(5) 
At June 30, 2017 and December 31, 2016, the carrying value of TDR Loans includes $630 million and $645 million, respectively, of loans which are classified as nonaccrual.
(6) 
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,
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Average balance of TDR Loans:
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
Real estate, including construction
$
31

 
$
87

 
$
31

 
$
89

Business and corporate banking
265

 
326

 
277

 
268

Global banking
143

 
107

 
145

 
111

Total commercial
439

 
520

 
453

 
468

Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
708

 
934

 
712

 
990

Home equity mortgages
30

 
25

 
29

 
24

Credit cards
4

 
5

 
4

 
5

Total consumer
742

 
964

 
745

 
1,019

Total average balance of TDR Loans
$
1,181

 
$
1,484

 
$
1,198

 
$
1,487

Interest income recognized on TDR Loans:
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
Real estate, including construction
$

 
$

 
$

 
$
1

Business and corporate banking
1

 
3

 
4

 
4

Global banking
1

 

 
1

 

Total commercial
2

 
3

 
5

 
5

Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
7

 
9

 
14

 
19

Home equity mortgages
1

 
1

 
1

 
1

Total consumer
8

 
10

 
15

 
20

Total interest income recognized on TDR Loans
$
10

 
$
13

 
$
20

 
$
25

Loans Classified as TDR Loans
The following table presents consumer loans which were classified as TDR Loans during the previous 12 months which subsequently became 60 days or greater contractually delinquent during the three and six months ended June 30, 2017 and 2016:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Consumer loans:
 
 
 
 
 
 
 
Residential mortgages
$
2

 
$
4

 
$
5

 
$
15

Total consumer
$
2

 
$
4

 
$
5

 
$
15

Impaired Commercial Loans Considered as TDR Loans
  The following table presents information about impaired commercial loans and the related impairment reserve for impaired commercial loans:
 
Amount 
with
Impairment
Reserves(1)
 
Amount
without
Impairment
Reserves(1)
 
Total Impaired
Commercial
Loans(1)(2)
 
Impairment
Reserve
 
Unpaid Principal Balance
 
(in millions)
At June 30, 2017
 
 
 
 
 
 
 
 
 
Real estate, including construction
$
32

 
$
11

 
$
43

 
$
7

 
$
45

Business and corporate banking
146

 
138

 
284

 
40

 
346

Global banking
453

 
148

 
601

 
202

 
616

Other commercial

 
6

 
6

 

 
6

Total commercial
$
631

 
$
303

 
$
934

 
$
249

 
$
1,013

At December 31, 2016
 
 
 
 
 
 
 
 
 
Real estate, including construction
$
2

 
$
41

 
$
43

 
$
1

 
$
45

Business and corporate banking
176

 
166

 
342

 
55

 
397

Global banking
417

 
244

 
661

 
251

 
674

Other commercial
1

 
6

 
7

 
1

 
7

Total commercial
$
596

 
$
457

 
$
1,053

 
$
308

 
$
1,123

 
(1) 
Reflects the carrying value of impaired commercial loans and includes basis adjustments on the loans, such as partial charge-offs, unamortized deferred fees and costs on originated loans and any premiums or discounts on purchased loans.
(2) 
Includes impaired commercial loans that are also considered TDR Loans which totaled $490 million and $482 million at June 30, 2017 and December 31, 2016, respectively.
Average Balance and Interest Income Recognized on Impaired Commercial Loans
The following table presents information about average impaired commercial loans and interest income recognized on impaired commercial loans:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Average balance of impaired commercial loans:
 
 
 
 
 
 
 
Real estate, including construction
$
44

 
$
101

 
$
43

 
$
104

Business and corporate banking
304

 
381

 
317

 
326

Global banking
577

 
342

 
605

 
268

Other commercial
7

 
8

 
7

 
7

Total average balance of impaired commercial loans
$
932

 
$
832

 
$
972

 
$
705

Interest income recognized on impaired commercial loans:
 
 
 
 
 
 
 
Real estate, including construction
$

 
$

 
$

 
$
1

Business and corporate banking
1

 
3

 
5

 
5

Global banking
1

 
2

 
1

 
2

Total interest income recognized on impaired commercial loans
$
2

 
$
5

 
$
6

 
$
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, 2017
 
 
 
 
 
 
 
Real estate, including construction
$
393

 
$
79

 
$
7

 
$
479

Business and corporate banking
564

 
676

 
44

 
1,284

Global banking
756

 
2,318

 
250

 
3,324

Other commercial

 
6

 

 
6

Total commercial
$
1,713

 
$
3,079

 
$
301

 
$
5,093

At December 31, 2016
 
 
 
 
 
 
 
Real estate, including construction
$
445

 
$
152

 
$
1

 
$
598

Business and corporate banking
597

 
803

 
58

 
1,458

Global banking
899

 
2,478

 
298

 
3,675

Other commercial

 
6

 
1

 
7

Total commercial
$
1,941

 
$
3,439

 
$
358

 
$
5,738

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, 2017
 
 
 
 
 
 
 
Real estate, including construction
$
10,190

 
$
50

 
$

 
$
10,240

Business and corporate banking
12,679

 
188

 
1

 
12,868

Global banking
20,510

 
537

 

 
21,047

Other commercial
4,433

 

 

 
4,433

Total commercial
$
47,812

 
$
775

 
$
1

 
$
48,588

At December 31, 2016
 
 
 
 
 
 
 
Real estate, including construction
$
10,834

 
$
56

 
$

 
$
10,890

Business and corporate banking
13,892

 
187

 
1

 
14,080

Global banking
22,935

 
546

 

 
23,481

Other commercial
5,764

 
1

 

 
5,765

Total commercial
$
53,425

 
$
790

 
$
1

 
$
54,216

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, 2017
 
 
 
 
 
Real estate, including construction
$
7,304

 
$
2,936

 
$
10,240

Business and corporate banking
5,940

 
6,928

 
12,868

Global banking
13,366

 
7,681

 
21,047

Other commercial
3,234

 
1,199

 
4,433

Total commercial
$
29,844

 
$
18,744

 
$
48,588

At December 31, 2016
 
 
 
 
 
Real estate, including construction
$
7,857

 
$
3,033

 
$
10,890

Business and corporate banking
6,348

 
7,732

 
14,080

Global banking
14,205

 
9,276

 
23,481

Other commercial
4,473

 
1,292

 
5,765

Total commercial
$
32,883

 
$
21,333

 
$
54,216

 
(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, 2017
 
December 31, 2016
  
Delinquent Loans
 
Delinquency
Ratio
 
Delinquent Loans
 
Delinquency
Ratio
 
(dollars are in millions)
Residential mortgages(1)(2)
$
442

 
2.57
%
 
$
765

 
4.23
%
Home equity mortgages(1)(2)
38

 
2.96

 
46

 
3.26

Credit cards
11

 
1.70

 
14

 
2.03

Other consumer
8

 
1.63

 
11

 
2.43

Total consumer
$
499

 
2.54
%
 
$
836

 
4.05
%
 
(1) 
At June 30, 2017 and December 31, 2016, consumer mortgage loan delinquency includes $368 million and $711 million, respectively, of loans that are carried at the lower of amortized cost or fair value of the collateral less cost to sell, including $39 million and $358 million, respectively, relating to loans held for sale.
(2) 
At June 30, 2017 and December 31, 2016, consumer mortgage loans and loans held for sale include $219 million and $474 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, 2017
 
 
 
 
 
 
 
Residential mortgages
$
16,687

 
$
432

 
$

 
$
17,119

Home equity mortgages
1,215

 
70

 

 
1,285

Credit cards
639

 

 
8

 
647

Other consumer
418

 

 
6

 
424

Total consumer
$
18,959

 
$
502

 
$
14

 
$
19,475

At December 31, 2016
 
 
 
 
 
 
 
Residential mortgages
$
16,746

 
$
435

 
$

 
$
17,181

Home equity mortgages
1,333

 
75

 

 
1,408

Credit cards
678

 

 
10

 
688

Other consumer
375

 

 
7

 
382

Total consumer
$
19,132

 
$
510

 
$
17

 
$
19,659