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Allowance for Credit Losses
 9 Months Ended
Sep. 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 nine months ended September 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 September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses – beginning of period
$
81

 
$
261

 
$
425

 
$
14

 
$
20

 
$
12

 
$
30

 
$
5

 
$
848

Provision charged (credited) to income
(1
)
 
(9
)
 
(21
)
 
(1
)
 
4

 
(2
)
 
8

 
—

 
(22
)
Charge-offs
(4
)
 
(7
)
 
(14
)
 
—

 
—

 
(1
)
 
(8
)
 
(1
)
 
(35
)
Recoveries
—

 
2

 
—

 
—

 
2

 
1

 
2

 
1

 
8

Net (charge-offs) recoveries
(4
)
 
(5
)
 
(14
)
 
—

 
2

 
—

 
(6
)
 
—

 
(27
)
Allowance for credit losses – end of period
$
76

 
$
247

 
$
390

 
$
13

 
$
26

 
$
10

 
$
32

 
$
5

 
$
799

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses – beginning of period
$
92

 
$
331

 
$
515

 
$
15

 
$
50

 
$
19

 
$
33

 
$
8

 
$
1,063

Provision charged (credited) to income(2)
(8
)
 
13

 
38

 
(1
)
 
11

 
1

 
7

 
1

 
62

Charge-offs(2)(3)
—

 
(26
)
 
(7
)
 
—

 
(34
)
 
(4
)
 
(7
)
 
(1
)
 
(79
)
Recoveries
6

 
3

 
—

 
—

 
3

 
1

 
1

 
—

 
14

Net (charge-offs) recoveries
6

 
(23
)
 
(7
)
 
—

 
(31
)
 
(3
)
 
(6
)
 
(1
)
 
(65
)
Allowance for credit losses – end of period
$
90

 
$
321

 
$
546

 
$
14

 
$
30

 
$
17

 
$
34

 
$
8

 
$
1,060

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses – beginning of period
$
92

 
$
317

 
$
508

 
$
13

 
$
26

 
$
20

 
$
34

 
$
7

 
$
1,017

Provision charged (credited) to income
(9
)
 
(56
)
 
(60
)
 
1

 
(4
)
 
(8
)
 
17

 
(1
)
 
(120
)
Charge-offs
(7
)
 
(30
)
 
(59
)
 
(1
)
 
(3
)
 
(5
)
 
(24
)
 
(3
)
 
(132
)
Recoveries
—

 
16

 
1

 
—

 
7

 
3

 
5

 
2

 
34

Net (charge-offs) recoveries
(7
)
 
(14
)
 
(58
)
 
(1
)
 
4

 
(2
)
 
(19
)
 
(1
)
 
(98
)
Allowance for credit losses – end of period
$
76

 
$
247

 
$
390

 
$
13

 
$
26

 
$
10

 
$
32

 
$
5

 
$
799

Ending balance: collectively evaluated for impairment
$
75

 
$
196

 
$
228

 
$
13

 
$
19

 
$
9

 
$
31

 
$
5

 
$
576

Ending balance: individually evaluated for impairment
1

 
51

 
162

 
—

 
7

 
1

 
1

 
—

 
223

Total allowance for credit losses
$
76

 
$
247

 
$
390

 
$
13

 
$
26

 
$
10

 
$
32

 
$
5

 
$
799

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment(4)
$
10,425

 
$
13,008

 
$
19,434

 
$
4,408

 
$
16,207

 
$
1,164

 
$
652

 
$
379

 
$
65,677

Individually evaluated for impairment(5)
17

 
320

 
516

 
—

 
59

 
3

 
4

 
—

 
919

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

 
—

 
—

 
—

 
930

 
67

 
—

 
—

 
997

Total loans
$
10,442

 
$
13,328

 
$
19,950

 
$
4,408

 
$
17,196

 
$
1,234

 
$
656

 
$
379

 
$
67,593

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses – beginning of period
$
86

 
$
407

 
$
267

 
$
19

 
$
68

 
$
24

 
$
32

 
$
9

 
$
912

Provision charged (credited) to income(2)
(2
)
 
(29
)
 
371

 
(5
)
 
(5
)
 
(2
)
 
21

 
4

 
353

Charge-offs(2)(3)
—

 
(65
)
 
(92
)
 
—

 
(43
)
 
(9
)
 
(23
)
 
(6
)
 
(238
)
Recoveries
6

 
8

 
—

 
—

 
10

 
4

 
4

 
1

 
33

Net (charge-offs) recoveries
6

 
(57
)
 
(92
)
 
—

 
(33
)
 
(5
)
 
(19
)
 
(5
)
 
(205
)
Allowance for credit losses – end of period
$
90

 
$
321

 
$
546

 
$
14

 
$
30

 
$
17

 
$
34

 
$
8

 
$
1,060

Ending balance: collectively evaluated for impairment
$
88

 
$
253

 
$
275

 
$
13

 
$
20

 
$
16

 
$
33

 
$
8

 
$
706

Ending balance: individually evaluated for impairment
2

 
68

 
271

 
1

 
10

 
1

 
1

 
—

 
354

Total allowance for credit losses
$
90

 
$
321

 
$
546

 
$
14

 
$
30

 
$
17

 
$
34

 
$
8

 
$
1,060

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment(4)
$
10,899

 
$
13,658

 
$
24,889

 
$
7,451

 
$
16,121

 
$
1,378

 
$
663

 
$
380

 
$
75,439

Individually evaluated for impairment(5)
59

 
399

 
670

 
7

 
62

 
4

 
5

 
—

 
1,206

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

 
—

 
—

 
—

 
908

 
72

 
—

 
—

 
980

Total loans
$
10,958

 
$
14,057

 
$
25,559

 
$
7,458

 
$
17,091

 
$
1,454

 
$
668

 
$
380

 
$
77,625

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 14, "Business Segments." As a result, we reclassified $3.6 billion of loans and $21 million of allowance for credit losses from business and corporate banking to global banking at September 30, 2016 to conform with the current year presentation.
(2) 
The provision for credit losses and charge-offs for residential mortgage loans during both the three and nine months ended September 30, 2016 includes $11 million related to the lower of amortized cost or fair value adjustment attributable to credit factors for loans transferred to held for sale. See Note 6, "Loans Held for Sale," for additional information.
(3) 
For collateral dependent loans that are transferred to held for sale, the existing allowance for credit losses at the time of transfer are recognized as a charge-off. We transferred to held for sale certain residential mortgage loans during the three and nine months ended September 30, 2016 and, accordingly, we recognized the existing allowance for credit losses on these loans as additional charge-off totaling $20 million and $22 million during the three and nine months ended September 30, 2016, respectively.
(4) 
During the first quarter of 2017, in conjunction with the creation of the new Corporate Center segment as discussed further in Note 14, "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 $1,820 million and $4,463 million at September 30, 2017 and 2016, respectively, for which we do not carry an associated allowance for credit losses.
(5) 
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 $662 million at both September 30, 2017 and September 30, 2016.