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Loans (Tables)
6 Months Ended
Jun. 30, 2012
Loans, Allowance for Credit Losses and Loans Held for Sale [Abstract]  
Components of Loans
                 
    

June 30,

2012

   

December 31,

2011

 
    (in millions)  

Commercial loans:

               

Construction and other real estate

  $ 7,977     $ 7,860  

Business banking and middle markets enterprises

    11,256       10,225  

Global banking (1)

    15,042       12,658  

Other commercial

    3,142       2,906  
   

 

 

   

 

 

 

Total commercial

    37,417       33,649  
   

 

 

   

 

 

 

Consumer loans:

               

Home equity mortgages

    2,455       2,563  

Other residential mortgages

    14,758       14,113  

Credit cards

    783       828  

Other consumer

    651       714  
   

 

 

   

 

 

 

Total consumer

    18,647       18,218  
   

 

 

   

 

 

 

Total loans

  $ 56,064     $ 51,867  
   

 

 

   

 

 

 

 

 

(1) 

Represents large multinational firms including globally focused U.S. corporate and financial institutions and USD lending to select high quality Latin American and other multinational customers managed by HSBC on a global basis.

Summary of past due status of loans
                                                 
    Days Past Due                    
At June 30, 2012   1 - 29 days     30 - 89 days     90+ days     Total Past Due     Current     Total Loans  
    (in millions)  

Commercial loans:

                                               

Construction and other real estate

  $ 100     $ 38     $ 114     $ 252     $ 7,725     $ 7,977  

Business banking and middle market enterprises

    496       37       51       584       10,672       11,256  

Global banking

    110       -       8       118       14,924       15,042  

Other commercial

    554       17       26       597       2,545       3,142  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    1,260       92       199       1,551       35,866       37,417  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer loans:

                                               

HELOC and home equity mortgages

    145       40       77       262       2,193       2,455  

Other residential mortgages

    100       465       844       1,409       13,349       14,758  

Credit cards

    31       15       17       63       720       783  

Other consumer

    10       5       31       46       605       651  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    286       525       969       1,780       16,867       18,647  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 1,546     $ 617     $ 1,168     $ 3,331     $ 52,733     $ 56,064  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

                                                 
    Days Past Due                    
At December 31, 2011   1 - 29 days     30 - 89 days     90+ days     Total Past Due     Current     Total Loans  
    (in millions)  

Commercial loans:

                                               

Construction and other real estate

  $ 72     $ 31     $ 231     $ 334     $ 7,526     $ 7,860  

Business banking and middle market enterprises

    615       58       71       744       9,481       10,225  

Global banking

    898       34       74       1,006       11,652       12,658  

Other commercial

    350       84       21       455       2,451       2,906  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    1,935       207       397       2,539       31,110       33,649  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer loans:

                                               

HELOC and home equity mortgages

    181       54       89       324       2,239       2,563  

Other residential mortgages

    109       526       815       1,450       12,663       14,113  

Credit cards

    37       20       20       77       751       828  

Other consumer

    11       6       35       52       662       714  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    338       606       959       1,903       16,315       18,218  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 2,273     $ 813     $ 1,356     $ 4,442     $ 47,425       51,867  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Summary of Nonaccrual loans and accruing receivables 90 days or more delinquent
                 
    

June 30,

2012

   

December 31,

2011

 
    (in millions)  

Nonaccrual loans:

               

Commercial:

               

Real Estate:

               

Construction and land loans

  $ 101     $ 103  

Other real estate

    374       512  

Business banking and middle markets enterprises

    46       58  

Global banking

    114       137  

Other commercial

    19       15  
   

 

 

   

 

 

 

Total commercial

    654       825  
   

 

 

   

 

 

 

Consumer:

               

Residential mortgages, excluding home equity mortgages

    844       815  

Home equity mortgages

    77       89  
   

 

 

   

 

 

 

Total residential mortgages (1)

    921       904  

Other consumer loans

    5       8  
   

 

 

   

 

 

 

Total consumer loans

    926       912  
   

 

 

   

 

 

 

Nonaccrual loans held for sale

    65       91  
   

 

 

   

 

 

 

Total nonaccruing loans

    1,645       1,828  
   

 

 

   

 

 

 

Accruing loans contractually past due 90 days or more:

               

Commercial:

               

Real Estate:

               

Construction and land loans

    -       -  

Other real estate

    -       1  

Business banking and middle market enterprises

    2       11  

Global banking

    -       -  

Other commercial

    1       2  
   

 

 

   

 

 

 

Total commercial

    3       14  
   

 

 

   

 

 

 

Consumer:

               

Credit card receivables

    17       20  

Other consumer

    26       27  
   

 

 

   

 

 

 

Total consumer loans

    43       47  
   

 

 

   

 

 

 

Total accruing loans contractually past due 90 days or more

    46       61  
   

 

 

   

 

 

 

Total nonperforming loans

  $ 1,691     $ 1,889  
   

 

 

   

 

 

 

 

 

(1) 

Nonaccrual residential mortgages includes all receivables which are 90 or more days contractually delinquent as well as second lien loans where the first lien loan that we own or service is 90 or more days contractually delinquent.

Summary of receivables which were modified and as a result became classified as TDR loans
                 
    

Three Months Ended

June 30, 2012

   

Six Months Ended

June 30, 2012

 
    (in millions)  

Commercial loans:

               

Construction and other real estate

  $ -     $ 70  

Business banking and middle market enterprises

    -       22  

Global banking

    -       -  

Other commercial

    -       -  
   

 

 

   

 

 

 

Total commercial

    -       92  
   

 

 

   

 

 

 

Consumer loans:

               

Residential mortgages

    52       108  

Credit cards

    -       -  
   

 

 

   

 

 

 

Total consumer

    52       108  
   

 

 

   

 

 

 

Total

  $ 52     $ 200  
   

 

 

   

 

 

 
Summary of TDR and the related credit loss reserves for TDR loans
                 
    

June 30,

2012

   

December 31,

2011

 
    (in millions)  

TDR Loans (1)(2):

               

Commercial loans:

               

Construction and other real estate

  $ 353     $ 342  

Business banking and middle market enterprises

    86       94  

Global banking

    -       -  

Other commercial

    34       37  
   

 

 

   

 

 

 

Total commercial

    473       473  
   

 

 

   

 

 

 

Consumer loans:

               

Residential mortgages

    677       608  

Credit cards

    18       21  
   

 

 

   

 

 

 

Total consumer

    695       629  
   

 

 

   

 

 

 

Total TDR Loans (3):

  $ 1,168     $ 1,102  
   

 

 

   

 

 

 

 

                 
    

June 30,

2012

   

December 31,

2011

 
    (in millions)  

Allowance for credit losses on TDR Loans (4):

               

Commercial loans:

               

Construction and other real estate

  $ 26     $ 17  

Business banking and middle market enterprises

    3       3  

Global banking

    -       -  

Other commercial

    -       -  
   

 

 

   

 

 

 

Total commercial

    29       20  
   

 

 

   

 

 

 

Consumer loans:

               

Residential mortgages

    97       94  

Credit cards

    6       7  
   

 

 

   

 

 

 

Total consumer

    103       101  
   

 

 

   

 

 

 

Total Allowance for credit losses on TDR Loans

  $ 132     $ 121  
   

 

 

   

 

 

 

 

 

(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 TDRs which totaled $434 million and $614 million at June 30, 2012 and December 31, 2011, respectively.

(2) 

The TDR Loan balances included in the table above reflect the current carrying amount of TDR Loans and includes all basis adjustments on the loan, such as unearned income, unamortized deferred fees and costs on originated loans, partial charge-offs and premiums or discounts on purchased loans. The following table reflects the unpaid principal balance of TDR Loans:

 

                 
    

June 30,

2012

   

December 31,

2011

 
    (in millions)  

Commercial loans:

               

Construction and other real estate

  $ 374     $ 393  

Business banking and middle market enterprises

    135       147  

Global banking

    -       -  

Other commercial

    37       40  
   

 

 

   

 

 

 

Total commercial

    546       580  
   

 

 

   

 

 

 

Consumer loans:

               

Residential mortgages

    770       682  

Credit cards

    18       20  
   

 

 

   

 

 

 

Total consumer

    788       702  
   

 

 

   

 

 

 

Total

  $ 1,334     $ 1,282  
   

 

 

   

 

 

 

 

 

(3) 

Includes balances of $377 million and $331 million at June 30, 2012 and December 31, 2011, respectively, which are classified as nonaccrual loans.

 

(4) Included in the allowance for credit losses.
Trouble debt restructuring additional information
                                 
    Three Months Ended
June  30,
    Six Months Ended
June  30,
 
         2012             2011             2012             2011      
    (in millions)  

Average balance of TDR Loans:

                               

Commercial loans:

                               

Construction and other real estate

  $ 360     $ 357     $ 358     $ 373  

Business banking and middle market enterprises

    96       84       98       87  

Large corporate

    -       -       -       -  

Other commercial

    35       50       36       49  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    491       491       492       509  
   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer loans:

                               

Residential mortgages

    669       477       653       456  

Credit cards

    18       24       19       25  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    687       501       672       481  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total average balance of TDR Loans

  $ 1,178     $ 992     $ 1,164     $ 990  
   

 

 

   

 

 

   

 

 

   

 

 

 

Interest income recognized on TDR Loans:

                               

Commercial loans:

                               

Construction and other real estate

  $ 2     $ 2     $ 4     $ 3  

Business banking and middle market enterprises

    -       -       -       -  

Large corporate

    -       -       -       -  

Other commercial

    2       1       3       3  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    4       3       7       6  
   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer loans:

                               

Residential mortgages

    7       5       13       8  

Credit cards

    -       -       -       1  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    7       5       13       9  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income recognized on TDR Loans

  $ 11     $ 8     $ 20     $ 15  
   

 

 

   

 

 

   

 

 

   

 

 

 
Commercial loans classified as TDR Loans
                 
    

Three Months Ended

June 30, 2012

   

Six Months Ended

June 30, 2012

 
    (in millions)  

Commercial loans:

               

Construction and other real estate

  $ -     $ -  

Business banking and middle market enterprises

    -       -  

Global banking

    -       -  

Other commercial

    -       -  
   

 

 

   

 

 

 

Total commercial

    -       -  
   

 

 

   

 

 

 

Consumer loans:

               

Residential mortgages

    7       13  

Credit cards

    -       -  
   

 

 

   

 

 

 

Total consumer

    7       13  
   

 

 

   

 

 

 

Total

  $ 7     $ 13  
   

 

 

   

 

 

 
Impaired commercial loans considered as TDR Loans
                                 
    

Amount with

Impairment

Reserves

   

Amount

without

Impairment

Reserves

   

Total Impaired

Commercial

Loans(1)(2)

   

Impairment

Reserve

 
    (in millions)  

At June 30, 2012:

                               

Construction and other real estate

  $ 267     $ 324     $ 591     $ 111  

Business banking and middle market enterprises

    55       60       115       7  

Global banking

    96       18       114       13  

Other commercial

    3       84       87       1  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 421     $ 486     $ 907     $ 132  
   

 

 

   

 

 

   

 

 

   

 

 

 

At December 31, 2011:

                               

Construction and other real estate

  $ 391     $ 342     $ 733     $ 114  

Business banking and middle market enterprises

    68       59       127       12  

Global banking

    137       -       137       90  

Other commercial

    1       89       90       -  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 597     $ 490     $ 1,087     $ 216  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

(1) 

Includes impaired commercial loans which are also considered TDR Loans as follows:

 

                 
    

June 30,

2012

   

December 31,

2011

 
    (in millions)  

Construction and other real estate

  $ 353     $ 342  

Business banking and middle market enterprises

    86       94  

Global banking

    -       -  

Other commercial

    34       37  
   

 

 

   

 

 

 

Total

  $ 473     $ 473  
   

 

 

   

 

 

 
(2) 

The impaired commercial loan balances included in the table above reflect the current carrying amount of the loan and includes all basis adjustments, such as unamortized deferred fees and costs on originated loans, any premiums or discounts and any principal write-downs. The unpaid principal balance of impaired commercial loans included in the table above are as follows:

 

                 
    

June 30,

2012

   

December 31,

2011

 
    (in millions)  

Construction and other real estate

  $ 613     $ 784  

Business banking and middle market enterprises

    164       180  

Global banking

    114       137  

Other commercial

    90       93  
   

 

 

   

 

 

 

Total

  $ 981     $ 1,194  
   

 

 

   

 

 

 
Average balance and interest income recognized on impaired commercial loans
                                 
    Three Months Ended
June  30,
    Six Months Ended
June  30,
 
       2012         2011          2012         2011    
    (in millions)  

Average balance of impaired commercial loans:

                               

Construction and other real estate

  $ 624     $ 759     $ 660     $ 757  

Business banking and middle market enterprises

    127       161       127       158  

Large corporate

    66       74       90       84  

Other commercial

    88       103       89       107  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total average balance of impaired commercial loans

  $ 905     $ 1,097     $ 966     $ 1,106  
   

 

 

   

 

 

   

 

 

   

 

 

 

Interest income recognized on impaired commercial loans:

                               

Construction and other real estate

  $ 1     $ 2     $ 3     $ 3  

Business banking and middle market enterprises

    1       1       2       2  

Large corporate

    -       -       -       -  

Other commercial

    1       -       1       1  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income recognized on impaired commercial loans

  $ 3     $ 3     $ 6     $ 6  
   

 

 

   

 

 

   

 

 

   

 

 

 
Summary of criticized assets for commercial loans
                                 
     Special Mention     Substandard     Doubtful     Total  
    (in millions)  

At June 30, 2012:

                               

Construction and other real estate

  $ 805     $ 969     $ 132     $ 1,906  

Business banking and middle market enterprises

    447       155       8       610  

Global banking

    64       97       96       257  

Other commercial

    46       74       1       121  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

  $ 1,362     $ 1,295     $ 237     $ 2,894  
   

 

 

   

 

 

   

 

 

   

 

 

 

At December 31, 2011:

                               

Construction and other real estate

  $ 1,009     $ 990     $ 186     $ 2,185  

Business banking and middle market enterprises

    445       241       12       698  

Global banking

    45       397       109       551  

Other commercial

    99       131       -       230  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

  $ 1,598     $ 1,759     $ 307     $ 3,664  
   

 

 

   

 

 

   

 

 

   

 

 

 
Status of commercial loan portfolio
                                 
    

Performing

Loans

   

Nonaccrual

Loans

   

Accruing Loans

Contractually Past

Due 90 days or More

    Total  
    (in millions)  

At June 30, 2012:

                               

Construction and other real estate

  $ 7,502     $ 475     $ -     $ 7,977  

Business banking and middle market enterprise

    11,208       46       2       11,256  

Global banking

    14,928       114       -       15,042  

Other commercial

    3,122       19       1       3,142  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

  $ 36,760     $ 654     $ 3     $ 37,417  
   

 

 

   

 

 

   

 

 

   

 

 

 

At December 31, 2011:

                               

Construction and other real estate

  $ 7,244     $ 615     $ 1     $ 7,860  

Business banking and middle market enterprise

    10,156       58       11       10,225  

Global banking

    12,521       137       -       12,658  

Other commercial

    2,889       15       2       2,906  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

  $ 32,810     $ 825     $ 14     $ 33,649  
   

 

 

   

 

 

   

 

 

   

 

 

 
Credit risk profile of commercial loan
                         
     Investment  Grade(1)     Non-Investment Grade     Total  
    (in millions)  

At June 30, 2012:

                       

Construction and other real estate

  $ 3,343     $ 4,634     $ 7,977  

Business banking and middle market enterprises

    5,608       5,648       11,256  

Global banking

    13,333       1,709       15,042  

Other commercial

    1,212       1,930       3,142  
   

 

 

   

 

 

   

 

 

 

Total commercial

  $ 23,496     $ 13,921     $ 37,417  
   

 

 

   

 

 

   

 

 

 

At December 31, 2011:

                       

Construction and other real estate

  $ 3,133     $ 4,727     $ 7,860  

Business banking and middle market enterprises

    4,612       5,613       10,225  

Global banking

    9,712       2,946       12,658  

Other commercial

    843       2,063       2,906  
   

 

 

   

 

 

   

 

 

 

Total commercial

  $ 18,300     $ 15,349     $ 33,649  
   

 

 

   

 

 

   

 

 

 

 

 

(1) 

Investment grade includes commercial loans with borrowers that have credit ratings of at least BBB- or above or the equivalent based on our internal credit rating system.

Delinquency ratio for consumer loan
                                 
    June 30, 2012     December 31, 2011  
    

Dollars of

Delinquency

   

Delinquency

Ratio

   

Dollars of

Delinquency

   

Delinquency

Ratio

 
    (dollars are in millions)  

Consumer:

                               

Residential mortgage, excluding home equity mortgages (1)

  $ 1,107       7.16   $ 1,101       7.19

Home equity mortgages

    62       2.33       99       2.89  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total residential mortgages

    1,169       6.45       1,200       6.41  

Credit card receivables

    23       2.62       28       2.25  

Other consumer

    28       3.68       30       3.17  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

  $ 1,220       6.18   $ 1,258       6.01
   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

(1) 

At June 30, 2012 and December 31, 2011, residential mortgage loan delinquency includes $938 million and $803 million, respectively, of loans that are carried at the lower of amortized cost or fair value less cost to sell.

Status of consumer loan portfolio
                                 
    

Performing

Loans

   

Nonaccrual

Loans

   

Accruing Loans

Contractually Past

Due 90 days or More

    Total  
    (in millions)  

At June 30, 2012:

                               

Consumer:

                               

Residential mortgage, excluding home equity mortgages

  $ 13,914     $ 844     $ -     $ 14,758  

Home equity mortgages

    2,378       77       -       2,455  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total residential mortgages

    16,292       921       -       17,213  

Credit card receivables

    766       -       17       783  

Other consumer

    620       5       26       651  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

  $ 17,678     $ 926     $ 43     $ 18,647  
   

 

 

   

 

 

   

 

 

   

 

 

 

At December 31, 2011:

                               

Consumer:

                               

Residential mortgage, excluding home equity mortgages

  $ 13,298     $ 815     $ -     $ 14,113  

Home equity mortgages

    2,474       89       -       2,563  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total residential mortgages

    15,772       904       -       16,676  

Credit card receivables

    808       -       20       828  

Other consumer

    679       8       27       714  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

  $ 17,259     $ 912     $ 47     $ 18,218  
   

 

 

   

 

 

   

 

 

   

 

 

 
High LTV, interest-only and ARM loans
                 
    

June 30,

2012

   

December 31,

2011

 
    (in billions)  

Residential mortgage loans with high LTV and no mortgage insurance (1)

  $ 1.0     $ 1.1  

Interest-only residential mortgage loans

    4.0       3.9  

ARM loans (2)

    10.0       9.9  

 

 

(1) 

Residential mortgage loans with high LTV and no mortgage insurance includes both fixed rate and adjustable rate mortgages. Excludes $61 million and $68 million of sub-prime residential mortgage loans held for sale at June 30, 2012 and December 31, 2011, respectively.

 

(2) 

ARM loan balances above exclude $26 million and $28 million of sub-prime residential mortgage loans held for sale at June 30, 2012 and December 31, 2011, respectively. During the remainder of 2012 and during 2013, approximately $104 million and $350 million, respectively, of these ARM loans will experience their first interest rate reset.

First and second liens within outstanding residential mortgage loan portfolio
                 
    

June 30,

2012

   

December 31,

2011

 
    (in millions)  

Closed end:

               

First lien

  $ 14,758     $ 14,113  

Second lien

    210       237  

Revolving:

               

Second lien

    2,245       2,326  
   

 

 

   

 

 

 

Total

  $ 17,213     $ 16,676