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Loans (Tables)

12 Months Ended

Dec. 31, 2017

Loans consisted of the following:



At December 31,	2017		2016
	(in millions)
Commercial loans:
Real estate, including construction	$	10,533	$	10,890
Business and corporate banking	12,504		14,080
Global banking⁽¹⁾⁽²⁾	20,088		23,481
Other commercial⁽²⁾	9,910		5,765
Total commercial	53,035		54,216
Consumer loans:
Residential mortgages	17,273		17,181
Home equity mortgages	1,191		1,408
Credit cards	721		688
Other consumer	343		382
Total consumer	19,528		19,659
Total loans	$	72,563	$	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 2017, in conjunction with the creation of the new Corporate Center segment as discussed further in Note 22, "Business Segments," we reclassified loans to HSBC affiliates from global banking to other commercial and revised prior periods to conform with the current year presentation. As a result, other commercial includes loans to HSBC affiliates which totaled $6,750 million and $3,274 million at December 31, 2017 and 2016, respectively. All tables below have been restated to reflect this reclassification, as applicable. See Note 21, "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 December 31, 2017 and 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 December 31, 2017	30 - 89 Days		90+ Days		Total Past Due 30 Days or More		Current⁽¹⁾		Total Loans
	(in millions)
Commercial loans:
Real estate, including construction	$	27	$	9	$	36	$	10,497	$	10,533
Business and corporate banking	25		5		30		12,474		12,504
Global banking	—		25		25		20,063		20,088
Other commercial	43		—		43		9,867		9,910
Total commercial	95		39		134		52,901		53,035
Consumer loans:
Residential mortgages	369		344		713		16,560		17,273
Home equity mortgages	11		36		47		1,144		1,191
Credit cards	8		9		17		704		721
Other consumer	5		7		12		331		343
Total consumer	393		396		789		18,739		19,528
Total loans	$	488	$	435	$	923	$	71,640	$	72,563



	Past Due				Total Past Due 30 Days or More
At December 31, 2016	30 - 89 Days		90+ Days		Total Past Due 30 Days or More		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.

Schedule of Receivables, Contractual Maturities

Contractual maturities of loans outstanding at December 31, 2017 were as follows:



	2018		2019		2020		2021		2022		Thereafter		Total
	(in millions)
Commercial loans:
Real estate, including construction	$	4,870	$	1,538	$	1,231	$	1,098	$	977	$	819	$	10,533
Business and corporate banking	5,781		1,825		1,461		1,304		1,160		973		12,504
Global banking	9,287		2,932		2,347		2,095		1,863		1,564		20,088
Other commercial	6,710		866		693		616		539		486		9,910
Consumer loans:
Residential mortgages	1,214		485		452		456		452		14,214		17,273
Home equity mortgages⁽¹⁾	505		261		158		96		62		109		1,191
Credit cards⁽²⁾	—		721		—		—		—		—		721
Other consumer	149		162		14		8		4		6		343
Total	$	28,516	$	8,790	$	6,356	$	5,673	$	5,057	$	18,171	$	72,563


⁽¹⁾	Home equity mortgage maturities reflect estimates based on historical payment patterns.


⁽²⁾	As credit card receivables do not have stated maturities, the table reflects estimates based on historical payment patterns.

Schedule of Receivables, Contractual Maturities, Repricing Characteristics

The following table summarizes contractual maturities of loans outstanding at December 31, 2017 due after one year by repricing characteristic:



December 31, 2017	After One But Within Five Years		After Five Years
	(in millions)
Receivables at predetermined interest rates	$	1,535	$	4,496
Receivables at floating or adjustable rates	24,341		13,675
Total	$	25,876	$	18,171

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:



At December 31,	2017		2016
	(in millions)
Nonaccrual loans:
Commercial:
Real estate, including construction	$	12	$	56
Business and corporate banking	215		187
Global banking	385		546
Other commercial	1		1
Commercial nonaccrual loans held for sale	—		11
Total commercial	613		801
Consumer:
Residential mortgages^(1)(2)(3)	414		435
Home equity mortgages⁽¹⁾⁽²⁾	67		75
Consumer nonaccrual loans held for sale	1		369
Total consumer	482		879
Total nonaccruing loans	1,095		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	9		10
Other consumer	8		7
Total consumer	17		17
Total accruing loans contractually past due 90 days or more	18		18
Total nonperforming loans	$	1,113	$	1,698


⁽¹⁾	At December 31, 2017 and 2016, nonaccrual consumer mortgage loans held for investment include $360 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:



Year Ended December 31,	2017	2016	2015
	(in millions)
Interest income that would have been recorded if the nonaccrual loans had been current in accordance with contractual terms during the period	68	91	85
Interest income that was recorded on nonaccrual loans and included in interest income during the period	24	22	22

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 2017, 2016 and 2015 as a result of this action became classified as TDR Loans:



Year Ended December 31,	2017		2016		2015
	(in millions)
Commercial loans:
Real estate, including construction	$	—	$	—	$	4
Business and corporate banking	40		323		162
Global banking	160		—		67
Total commercial	200		323		233
Consumer loans:
Residential mortgages	34		62		168
Home equity mortgages	9		8		4
Credit cards	4		4		4
Total consumer	47		74		176
Total	$	247	$	397	$	409

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:



	December 31, 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	$	—	$	—	$	32	$	33
Business and corporate banking	194		266		300		363
Global banking	175		180		150		152
Total commercial⁽³⁾	369		446		482		548
Consumer loans:
Residential mortgages⁽⁴⁾	683		779		708		797
Home equity mortgages⁽⁴⁾	33		66		27		59
Credit cards	4		4		5		5
Total consumer	720		849		740		861
Total TDR Loans⁽⁵⁾	$	1,089	$	1,295	$	1,222	$	1,409
Allowance for credit losses for TDR Loans:⁽⁶⁾
Commercial loans:
Real estate, including construction	$	—			$	—
Business and corporate banking	12				37
Global banking	19				—
Total commercial	31				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	$	40			$	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 $329 million and $571 million at December 31, 2017 and 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 $245 million and $184 million at December 31, 2017 and 2016, respectively.


⁽⁴⁾	At December 31, 2017 and 2016, the carrying value of consumer mortgage TDR Loans held for investment includes $655 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 December 31, 2017 and 2016, the carrying value of TDR Loans includes $559 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:



Year Ended December 31,	2017		2016		2015
	(in millions)
Average balance of TDR Loans:
Commercial loans:
Real estate, including construction	$	19	$	69	$	136
Business and corporate banking	246		292		76
Global banking	154		121		44
Total commercial	419		482		256
Consumer loans:
Residential mortgages	704		740		1,017
Home equity mortgages	31		25		21
Credit cards	4		5		6
Total consumer	739		770		1,044
Total average balance of TDR Loans	$	1,158	$	1,252	$	1,300
Interest income recognized on TDR Loans:
Commercial loans:
Real estate, including construction	$	—	$	4	$	4
Business and corporate banking	7		8		3
Global banking	2		1		—
Total commercial	9		13		7
Consumer loans:
Residential mortgages	28		25		37
Home equity mortgages	2		1		1
Total consumer	30		26		38
Total interest income recognized on TDR Loans	$	39	$	39	$	45

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 years ended December 31, 2017 and 2016 and 2015:



Year Ended December 31,	2017		2016		2015
	(in millions)
Consumer loans:
Residential mortgages	$	9	$	24	$	36
Home equity mortgages	2		—		1
Total consumer	$	11	$	24	37

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 December 31, 2017
Real estate, including construction	$	—	$	11	$	11	$	—	$	11
Business and corporate banking	121		129		250		45		311
Global banking	262		175		437		82		520
Other commercial	—		—		—		—		—
Total commercial	$	383	$	315	$	698	$	127	$	842
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 $369 million and $482 million at December 31, 2017 and 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:



Year Ended December 31,	2017		2016		2015
	(in millions)
Average balance of impaired commercial loans:
Real estate, including construction	$	32	$	83	$	151
Business and corporate banking	304		344		125
Global banking	554		487		44
Other commercial	4		7		7
Total average balance of impaired commercial loans	$	894	$	921	$	327
Interest income recognized on impaired commercial loans:
Real estate, including construction	$	—	$	4	$	4
Business and corporate banking	9		9		4
Global banking	2		—		—
Total interest income recognized on impaired commercial loans	$	11	$	13	$	8

Summary of Criticized Assets for Commercial Loans

The following table summarizes criticized commercial loans:



	Special Mention		Substandard		Doubtful		Total
	(in millions)
At December 31, 2017
Real estate, including construction	$	467	$	117	$	1	$	585
Business and corporate banking	477		519		44		1,040
Global banking	452		1,612		82		2,146
Other commercial	11		—		—		11
Total commercial	$	1,407	$	2,248	$	127	$	3,782
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 December 31, 2017
Real estate, including construction	$	10,521	$	12	$	—	$	10,533
Business and corporate banking	12,288		215		1		12,504
Global banking	19,703		385		—		20,088
Other commercial	9,909		1		—		9,910
Total commercial	$	52,421	$	613	$	1	$	53,035
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 December 31, 2017
Real estate, including construction	$	7,456	$	3,077	$	10,533
Business and corporate banking	5,752		6,752		12,504
Global banking	13,218		6,870		20,088
Other commercial	8,341		1,569		9,910
Total commercial	$	34,767	$	18,268	$	53,035
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:



	December 31, 2017				December 31, 2016
	Delinquent Loans		Delinquency Ratio		Delinquent Loans		Delinquency Ratio
	(dollars are in millions)
Residential mortgages⁽¹⁾⁽²⁾	$	425	2.46	%	$	765	4.23	%
Home equity mortgages⁽¹⁾⁽²⁾	39		3.27		46		3.26
Credit cards	12		1.66		14		2.03
Other consumer	10		2.48		11		2.43
Total consumer	$	486	2.48	%	$	836	4.05	%


⁽¹⁾	At December 31, 2017 and 2016, consumer mortgage loan delinquency includes $342 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 $1 million and $358 million, respectively, relating to loans held for sale.


⁽²⁾	At December 31, 2017 and 2016, consumer mortgage loans and loans held for sale include $159 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 December 31, 2017
Residential mortgages	$	16,859	$	414	$	—	$	17,273
Home equity mortgages	1,124		67		—		1,191
Credit cards	712		—		9		721
Other consumer	335		—		8		343
Total consumer	$	19,030	$	481	$	17	$	19,528
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