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Loans (Tables)

12 Months Ended

Dec. 31, 2019

Loans consisted of the following:



At December 31,	2019		2018
	(in millions)
Commercial loans:
Real estate, including construction	$	11,501	$	11,344
Business and corporate banking	13,479		13,066
Global banking⁽¹⁾	17,915		20,167
Other commercial:
Affiliates⁽²⁾	2,343		2,274
Other	2,973		2,491
Total other commercial	5,316		4,765
Total commercial	48,211		49,342
Consumer loans:
Residential mortgages	17,801		17,383
Home equity mortgages	853		982
Credit cards	1,405		1,019
Other consumer	283		252
Total consumer	20,342		19,636
Total loans	$	68,553	$	68,978


⁽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⁾	See Note 23, "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 December 31, 2019 and 2018. 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, 2019	30 - 89 Days		90+ Days		Total Past Due 30 Days or More		Current⁽¹⁾		Total Loans
	(in millions)
Commercial loans:
Real estate, including construction	$	7	$	1	$	8	$	11,493	$	11,501
Business and corporate banking	60		35		95		13,384		13,479
Global banking	—		—		—		17,915		17,915
Other commercial	22		—		22		5,294		5,316
Total commercial	89		36		125		48,086		48,211
Consumer loans:
Residential mortgages	342		272		614		17,187		17,801
Home equity mortgages	10		24		34		819		853
Credit cards	24		24		48		1,357		1,405
Other consumer	5		5		10		273		283
Total consumer	381		325		706		19,636		20,342
Total loans	$	470	$	361	$	831	$	67,722	$	68,553



	Past Due				Total Past Due 30 Days or More
At December 31, 2018	30 - 89 Days		90+ Days		Total Past Due 30 Days or More		Current⁽¹⁾		Total Loans
	(in millions)
Commercial loans:
Real estate, including construction	$	76	$	3	$	79	$	11,265	$	11,344
Business and corporate banking	79		38		117		12,949		13,066
Global banking	—		—		—		20,167		20,167
Other commercial	15		—		15		4,750		4,765
Total commercial	170		41		211		49,131		49,342
Consumer loans:
Residential mortgages	469		254		723		16,660		17,383
Home equity mortgages	14		27		41		941		982
Credit cards	13		14		27		992		1,019
Other consumer	5		5		10		242		252
Total consumer	501		300		801		18,835		19,636
Total loans	$	671	$	341	$	1,012	$	67,966	$	68,978


⁽¹⁾	Loans less than 30 days past due are presented as current.

Contractual Maturities of Loans Outstanding

Contractual maturities of loans outstanding at December 31, 2019 were as follows:



	2020		2021		2022		2023		2024		Thereafter		Total
	(in millions)
Commercial loans:
Real estate, including construction	$	4,517	$	1,676	$	1,712	$	1,609	$	1,515	$	472	$	11,501
Business and corporate banking	5,293		1,964		2,006		1,885		1,775		556		13,479
Global banking	7,157		2,610		2,667		2,506		2,238		737		17,915
Other commercial	2,088		775		791		744		700		218		5,316
Consumer loans:
Residential mortgages	393		504		501		509		518		15,376		17,801
Home equity mortgages⁽¹⁾	356		189		114		70		45		79		853
Credit cards⁽²⁾	—		1,405		—		—		—		—		1,405
Other consumer	110		133		16		9		6		9		283
Total	$	19,914	$	9,256	$	7,807	$	7,332	$	6,797	$	17,447	$	68,553


⁽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 an average estimate based on historical payment patterns.

Contractual Maturities of Loans Outstanding by Repricing Characteristic

The following table summarizes contractual maturities of loans outstanding at December 31, 2019 due after one year by repricing characteristic:



December 31, 2019	After One But Within Five Years		After Five Years
	(in millions)
Receivables at predetermined interest rates	$	1,733	$	4,929
Receivables at floating or adjustable rates	29,459		12,518
Total	$	31,192	$	17,447

Summary of Nonaccrual Loans and Accruing Receivables 90 Days or More Delinquent

Nonperforming loans, including nonaccrual loans and accruing loans 90 days or more delinquent, consisted of the following:



At December 31,	2019		2018
	(in millions)
Nonaccrual loans:
Commercial:
Real estate, including construction	$	6	$	7
Business and corporate banking	82		70
Global banking	149		65
Other commercial	—		1
Total commercial	237		143
Consumer:
Residential mortgages^(1)(2)(3)	381		341
Home equity mortgages⁽¹⁾⁽²⁾	46		55
Total consumer	427		396
Total nonaccruing loans	664		539
Accruing loans contractually past due 90 days or more:
Commercial:
Business and corporate banking	1		1
Total commercial	1		1
Consumer:
Credit cards	24		14
Other consumer	5		6
Total consumer	29		20
Total accruing loans contractually past due 90 days or more	30		21
Total nonperforming loans	$	694	$	560


⁽¹⁾	At both December 31, 2019 and 2018, nonaccrual consumer mortgage loans include $289 million 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 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 is 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,	2019		2018		2017
	(in millions)
Interest income that would have been recorded if the nonaccrual loans had been current in accordance with contractual terms during the period	$	35	$	46	$	68
Interest income that was recorded on nonaccrual loans and included in interest income during the period	15		31		24

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 2019, 2018 and 2017 and as a result of this action became classified as TDR Loans:



Year Ended December 31,	2019		2018		2017
	(in millions)
Commercial loans:
Business and corporate banking	$	—	$	6	$	40
Global banking	—		—		160
Total commercial	—		6		200
Consumer loans:
Residential mortgages	8		26		34
Home equity mortgages	1		5		9
Credit cards	3		4		4
Total consumer	12		35		47
Total	$	12	$	41	$	247

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, 2019				December 31, 2018
	Carrying Value		Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance
	(in millions)
TDR Loans:⁽¹⁾⁽²⁾
Commercial loans:
Business and corporate banking	$	36	$	61	$	68	$	86
Global banking	68		78		113		119
Total commercial⁽³⁾	104		139		181		205
Consumer loans:
Residential mortgages⁽⁴⁾	580		663		640		730
Home equity mortgages⁽⁴⁾	32		60		35		65
Credit cards	4		4		3		4
Total consumer	616		727		678		799
Total TDR Loans⁽⁵⁾	$	720	$	866	$	859	$	1,004
Allowance for credit losses for TDR Loans:⁽⁶⁾
Commercial loans:
Business and corporate banking	$	1			$	12
Global banking	—				—
Total commercial	1				12
Consumer loans:
Residential mortgages	4				3
Home equity mortgages	1				1
Credit cards	1				1
Total consumer	6				5
Total allowance for credit losses for TDR Loans	$	7			$	17


⁽¹⁾	TDR Loans are considered to be impaired loans. For commercial loans, impaired loans include other loans in addition to TDR Loans which totaled $164 million and $54 million at December 31, 2019 and 2018, respectively.


⁽²⁾	The carrying value of TDR Loans includes basis adjustments on the loans, such as partial charge-offs.


⁽³⁾	Additional commitments to lend to commercial borrowers whose loans have been modified in TDR Loans totaled $222 million and $151 million at December 31, 2019 and 2018, respectively.


⁽⁴⁾	At December 31, 2019 and 2018, the carrying value of consumer mortgage TDR Loans includes $557 million and $615 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, 2019 and 2018, the carrying value of TDR Loans includes $230 million and $286 million, respectively, of loans which are classified as nonaccrual.


⁽⁶⁾	Included in the allowance for credit losses.

Troubled Debt Restructuring Additional Information

The following table presents information about average TDR Loans and interest income recognized on TDR Loans:



Year Ended December 31,	2019		2018		2017
	(in millions)
Average balance of TDR Loans:
Commercial loans:
Real estate, including construction	$	—	$	—	$	19
Business and corporate banking	55		122		246
Global banking	81		124		154
Total commercial	136		246		419
Consumer loans:
Residential mortgages	608		660		704
Home equity mortgages	33		35		31
Credit cards	4		4		4
Total consumer	645		699		739
Total average balance of TDR Loans	$	781	$	945	$	1,158
Interest income recognized on TDR Loans:
Commercial loans:
Business and corporate banking	$	2	$	12	$	7
Global banking	2		3		2
Total commercial	4		15		9
Consumer loans:
Residential mortgages	26		27		28
Home equity mortgages	2		2		2
Total consumer	28		29		30
Total interest income recognized on TDR Loans	$	32	$	44	$	39

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, 2019, 2018 and 2017:



Year Ended December 31,	2019		2018		2017
	(in millions)
Consumer loans:
Residential mortgages	$	3	$	8	$	9
Home equity mortgages	—		2		2
Total consumer	$	3	$	10	$	11

Impaired Commercial Loans Considered as TDR Loans

The following table presents information about impaired commercial loans and the related impairment reserve:



	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, 2019
Real estate, including construction	$	2	$	3	$	5	$	—	$	5
Business and corporate banking	57		33		90		23		109
Global banking	32		141		173		15		183
Total commercial	$	91	$	177	$	268	$	38	$	297
At December 31, 2018
Real estate, including construction	$	3	$	3	$	6	$	1	$	6
Business and corporate banking	58		37		95		18		109
Global banking	—		133		133		—		140
Other commercial	—		1		1		—		1
Total commercial	$	61	$	174	$	235	$	19	$	256


⁽¹⁾	Reflects the carrying value of impaired commercial loans and includes basis adjustments on the loans, such as partial charge-offs.


⁽²⁾	Includes impaired commercial loans that are also considered TDR Loans which totaled $104 million and $181 million at December 31, 2019 and 2018, 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,	2019		2018		2017
	(in millions)
Average balance of impaired commercial loans:
Real estate, including construction	$	5	$	9	$	32
Business and corporate banking	111		200		304
Global banking	127		239		554
Other commercial	—		—		4
Total average balance of impaired commercial loans	$	243	$	448	$	894
Interest income recognized on impaired commercial loans:
Business and corporate banking	$	4	$	15	$	9
Global banking	3		7		2
Total interest income recognized on impaired commercial loans	$	7	$	22	$	11

Summary of Criticized Assets for Commercial Loans

The following table summarizes criticized commercial loans:



	Special Mention		Substandard		Doubtful		Total
	(in millions)
At December 31, 2019
Real estate, including construction	$	516	$	203	$	—	$	719
Business and corporate banking	467		386		23		876
Global banking	184		196		15		395
Other commercial	11		—		—		11
Total commercial	$	1,178	$	785	$	38	$	2,001
At December 31, 2018
Real estate, including construction	$	452	$	93	$	4	$	549
Business and corporate banking	193		314		15		522
Global banking	262		277		—		539
Other commercial	—		1		—		1
Total commercial	$	907	$	685	$	19	$	1,611

Status of Commercial Loan Portfolio

The following table summarizes the status of our commercial loan portfolio:



	Performing Loans		Nonaccrual Loans		Accruing Loans Contractually Past Due 90 days or More		Total
	(in millions)
At December 31, 2019
Real estate, including construction	$	11,495	$	6	$	—	$	11,501
Business and corporate banking	13,396		82		1		13,479
Global banking	17,766		149		—		17,915
Other commercial	5,316		—		—		5,316
Total commercial	$	47,973	$	237	$	1	$	48,211
At December 31, 2018
Real estate, including construction	$	11,337	$	7	$	—	$	11,344
Business and corporate banking	12,995		70		1		13,066
Global banking	20,102		65		—		20,167
Other commercial	4,764		1		—		4,765
Total commercial	$	49,198	$	143	$	1	$	49,342

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, 2019
Real estate, including construction	$	6,332	$	5,169	$	11,501
Business and corporate banking	6,029		7,450		13,479
Global banking	12,981		4,934		17,915
Other commercial	4,649		667		5,316
Total commercial	$	29,991	$	18,220	$	48,211
At December 31, 2018
Real estate, including construction	$	6,769	$	4,575	$	11,344
Business and corporate banking	5,674		7,392		13,066
Global banking	14,764		5,403		20,167
Other commercial	3,990		775		4,765
Total commercial	$	31,197	$	18,145	$	49,342


⁽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 ("delinquency ratio") for our consumer loan portfolio:



	December 31, 2019				December 31, 2018
	Delinquent Loans		Delinquency Ratio		Delinquent Loans		Delinquency Ratio
	(dollars are in millions)
Residential mortgages⁽¹⁾⁽²⁾	$	350	1.96	%	$	347	1.99	%
Home equity mortgages⁽¹⁾⁽²⁾	25		2.93		30		3.05
Credit cards	34		2.42		20		1.96
Other consumer	7		2.47		8		2.62
Total consumer	$	416	2.04	%	$	405	2.05	%


⁽¹⁾	At December 31, 2019 and 2018, consumer mortgage loan delinquency includes $256 million and $254 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 December 31, 2019 and 2018, consumer mortgage loans include $142 million and $125 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:



	Performing Loans		Nonaccrual Loans		Accruing Loans Contractually Past Due 90 days or More		Total
	(in millions)
At December 31, 2019
Residential mortgages	$	17,420	$	381	$	—	$	17,801
Home equity mortgages	807		46		—		853
Credit cards	1,381		—		24		1,405
Other consumer	278		—		5		283
Total consumer	$	19,886	$	427	$	29	$	20,342
At December 31, 2018
Residential mortgages	$	17,042	$	341	$	—	$	17,383
Home equity mortgages	927		55		—		982
Credit cards	1,005		—		14		1,019
Other consumer	246		—		6		252
Total consumer	$	19,220	$	396	$	20	$	19,636