Loans and Accounts Receivable

9 Months Ended

Sep. 30, 2018

Loans Notes Trade And Other Receivables Disclosure [Abstract]

3. Loans and Accounts Receivable

Our lending and charge payment card products result in the generation of Card Member loans and Card Member receivables, respectively.

Card Member loans by segment and Other loans as of September 30, 2018 and December 31, 2017 consisted of:

(Millions)		2018		2017
Global Consumer Services Group^(a)	$	65,400	$	62,319
Global Commercial Services		12,203		11,080
Card Member loans		77,603		73,399
Less: Reserve for losses		1,937		1,706
Card Member loans, net	$	75,666	$	71,693
Other loans, net^(b)	$	3,431	$	2,607

Includes approximately $23.7 billion and $25.7 billion of gross Card Member loans available to settle obligations of a consolidated variable interest entity (VIE) as of September 30, 2018 and December 31, 2017, respectively. The balance as of September 30, 2018 also includes loans related to the acquired Hilton portfolio (refer to Note 2).
Other loans primarily represent consumer and commercial non-card financing products. Other loans are presented net of reserves for losses of $111 million and $80 million as of September 30, 2018 and December 31, 2017, respectively.

Card Member accounts receivable by segment and Other receivables as of September 30, 2018 and December 31, 2017 consisted of:

(Millions)	2018		2017
Global Consumer Services Group^(a)	$	18,916	$	20,946
Global Commercial Services		36,600		33,101
Card Member receivables		55,516		54,047
Less: Reserve for losses		544		521
Card Member receivables, net	$	54,972	$	53,526
Other receivables, net^(b)	$	3,160	$	3,209

Includes $7.7 billion and $8.9 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of September 30, 2018 and December 31, 2017, respectively.
Other receivables primarily represent amounts related to (i) GNS partners for items such as royalty and franchise fees, (ii) tax-related receivables, (iii) certain merchants for billed discount revenue, and (iv) loyalty coalition partners for points issued, as well as program participation and servicing fees. Other receivables are presented net of reserves for losses of $29 million and $31 million as of September 30, 2018 and December 31, 2017, respectively.

Card Member Loans and Card Member Receivables Aging

Generally, a Card Member account is considered past due if payment is not received within 30 days after the billing statement date. The following table presents the aging of Card Member loans and receivables as of September 30, 2018 and December 31, 2017:

2018 (Millions)		Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
Global Consumer Services Group	$	64,490	$	271	$	197	$	442	$	65,400
Global Commercial Services
Global Small Business Services		12,018		46		30		63		12,157
Global Corporate Payments^(a)		(b)		(b)		(b)		―		46
Card Member Receivables:
Global Consumer Services Group		18,681		79		48		108		18,916
Global Commercial Services
Global Small Business Services	$	16,671	$	90	$	49	$	103	$	16,913
Global Corporate Payments^(a)		(b)		(b)		(b)	$	153	$	19,687

2017 (Millions)		Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Card Member Loans:
Global Consumer Services Group	$	61,491	$	238	$	190	$	400	$	62,319
Global Commercial Services
Global Small Business Services		10,892		43		31		59		11,025
Global Corporate Payments^(a)		(b)		(b)		(b)		―		55
Card Member Receivables:
Global Consumer Services Group		20,696		82		54		114		20,946
Global Commercial Services
Global Small Business Services	$	15,868	$	91	$	54	$	106	$	16,119
Global Corporate Payments^(a)		(b)		(b)		(b)	$	148	$	16,982

For Global Corporate Payments (GCP) Card Member loans and receivables in GCS, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member loan or receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. See also (b).
Delinquency data for periods other than 90 days past billing is not available due to system constraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances.

Credit Quality Indicators for Card Member Loans and Receivables

The following tables present the key credit quality indicators as of or for the nine months ended September 30:

		2018						2017
		Net Write-Off Rate						Net Write-Off Rate
		Principal Only^(a)		Principal, Interest & Fees^(a)		30+ Days Past Due as a % of Total		Principal Only^(a)		Principal, Interest & Fees^(a)		30+ Days Past Due as a % of Total
Card Member Loans:
	Global Consumer Services Group	2.1	%	2.5	%	1.4	%	1.8	%	2.1	%	1.3	%
	Global Small Business Services	1.7	%	2.0	%	1.1	%	1.6	%	1.9	%	1.1	%
Card Member Receivables:
	Global Consumer Services Group	1.7	%	1.8	%	1.2	%	1.6	%	1.7	%	1.3	%
	Global Small Business Services	1.8	%	2.1	%	1.4	%	1.6	%	1.8	%	1.4	%

						2018				2017
						Net Loss Ratio as a % of Charge Volume		90+ Days Past Billing as a % of Receivables		Net Loss Ratio as a % of Charge Volume		90+ Days Past Billing as a % of Receivables
Card Member Receivables:
	Global Corporate Payments					0.11	%	0.8	%	0.10	%	0.9	%

We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because we consider uncollectible interest and/or fees in estimating our reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented.

Impaired Card Member Loans and Receivables

Impaired Card Member loans and receivables are individual larger balance or homogeneous pools of smaller balance loans and receivables for which it is probable that we will be unable to collect all amounts due according to the original contractual terms of the Card Member agreement. In certain cases, these Card Member loans and receivables are included in one of our various Troubled Debt Restructuring (TDR) modification programs. Impaired Card Member loans and receivables outside the U.S. are not significant as of September 30, 2018 and December 31, 2017; therefore, such loans and receivables are not included in the following tables unless otherwise noted.

The following tables provide additional information with respect to our impaired Card Member loans and receivables as of September 30, 2018 and December 31, 2017:

		As of September 30, 2018

					Accounts Classified as a TDR^(c)
2018 (Millions)	Over 90 days Past Due & Accruing Interest^(a)		Non-Accruals^(b)		In Program^(d)		Out of Program^(e)		Total Impaired Balance		Unpaid Principal Balance		Allowance for TDRs
Card Member Loans:
Global Consumer Services Group^(f)	$	304	$	205	$	279	$	122	$	910	$	823	$	69
Global Commercial Services		37		36		53		26		152		142		11
Card Member Receivables:
Global Consumer Services Group		―		―		26		11		37		36		2
Global Commercial Services		―		―		56		23		79		78		3
Total	$	341	$	241	$	414	$	182	$	1,178	$	1,079	$	85

		As of December 31, 2017

					Accounts Classified as a TDR^(c)
2017 (Millions)	Over 90 days Past Due & Accruing Interest^(a)		Non-Accruals^(b)		In Program^(d)		Out of Program^(e)		Total Impaired Balance		Unpaid Principal Balance		Allowance for TDRs
Card Member Loans:
Global Consumer Services Group^(f)	$	289	$	168	$	178	$	131	$	766	$	694	$	49
Global Commercial Services		38		31		31		27		127		118		8
Card Member Receivables:
Global Consumer Services Group		―		―		15		9		24		24		1
Global Commercial Services		―		―		37		19		56		56		2
Total	$	327	$	199	$	261	$	186	$	973	$	892	$	60

Our policy is generally to accrue interest through the date of write-off (typically 180 days past due). We establish reserves for interest that we believe will not be collected. Amounts presented exclude Card Member loans classified as a TDR.
Non-accrual loans not in modification programs primarily include certain Card Member loans placed with outside collection agencies for which we have ceased accruing interest. Amounts presented exclude Card Member loans classified as a TDR.
Accounts classified as a TDR include $17 million and $15 million that are over 90 days past due and accruing interest and $5 million that are non-accruals as of both September 30, 2018 and December 31, 2017.
In Program TDRs include Card Member accounts that are currently enrolled in a modification program.
Out of Program TDRs include $138 million and $141 million of Card Member accounts that have successfully completed a modification program and $44 million and $45 million of Card Member accounts that were not in compliance with the terms of the modification programs as of September 30, 2018 and December 31, 2017, respectively.
GCSG includes balances outside the U.S. of $65 million and $56 million that are over 90 days and accruing interest and $64 million and $55 million in unpaid principal as of September 30, 2018 and December 31, 2017, respectively.

The following table provides information with respect to our average balances and interest income recognized from impaired Card Member loans and the average balances of impaired Card Member receivables:

	Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
(Millions)		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
Card Member Loans:
Global Consumer Services Group	$	882	$	27	$	841	$	79
Global Commercial Services		153		5		144		16
Card Member Receivables:
Global Consumer Services Group		35		―		31		―
Global Commercial Services		77		―		70		―
Total	$	1,147	$	32	$	1,086	$	95

	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
(Millions)		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
Card Member Loans:
Global Consumer Services Group	$	695	$	21	$	682	$	61
Global Commercial Services		122		5		119		13
Card Member Receivables:
Global Consumer Services Group		20		―		19		―
Global Commercial Services		44		―		42		―
Total	$	881	$	26	$	862	$	74

Card Member Loans and Receivables Modified as TDRs

The following table provides additional information with respect to Card Member loans and receivables modified as TDRs for the three and nine months ended September 30, 2018 and 2017.

	Three Months Ended					Nine Months Ended
	September 30, 2018					September 30, 2018
	Number of Accounts (in thousands)	Outstanding Balances ($ in millions)^(a)		Average Interest Rate Reduction (% Points)	Average Payment Term Extension (# of Months)	Number of Accounts (in thousands)	Outstanding Balances($ in millions)^(a)		Average Interest Rate Reduction (% Points)	Average Payment Term Extension (# of Months)
Troubled Debt Restructurings:
Card Member Loans	13	$	98	12	(b)	36	$	267	12	(b)
Card Member Receivables	1		24	(c)	27	4		78	(c)	28
Total	14	$	122			40	$	345

	Three Months Ended					Nine Months Ended
	September 30, 2017					September 30, 2017
	Number of Accounts (in thousands)	Outstanding Balances ($ in millions)^(a)		Average Interest Rate Reduction (% Points)	Average Payment Term Extension (# of Months)	Number of Accounts (in thousands)	Outstanding Balances($ in millions)^(a)		Average Interest Rate Reduction (% Points)	Average Payment Term Extension (# of Months)
Troubled Debt Restructurings:
Card Member Loans	8	$	57	9	(b)	23	$	160	10	(b)
Card Member Receivables	1		18	(c)	31	4		64	(c)	27
Total	9	$	75			27	$	224

Represents the outstanding balance immediately prior to modification. The outstanding balance includes principal, fees and accrued interest on Card Member loans and principal and fees on Card Member receivables. Modifications did not reduce the principal balance.
For Card Member loans, there have been no payment term extensions.
We do not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing.

The following table provides information with respect to Card Member loans and receivables modified as TDRs that subsequently defaulted within 12 months of modification. A Card Member is considered in default of a modification program after one and up to two missed payments, depending on the terms of the modification program. For all Card Members that defaulted from a modification program, the probability of default is factored into the reserves for Card Member loans and receivables.

	Three Months Ended				Nine Months Ended
	September 30, 2018				September 30, 2018
		Number of Accounts(in thousands)	Aggregated Outstanding Balances Upon Default ($ in millions)^(a)			Number of Accounts (in thousands)	Aggregated Outstanding Balances Upon Default($ in millions)^(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans		2	$	13		5	$	30
Card Member Receivables		1		2		3		7
Total		3	$	15		8	$	37


	Three Months Ended				Nine Months Ended
	September 30, 2017				September 30, 2017
		Number of Accounts(in thousands)	Aggregated Outstanding Balances Upon Default ($ in millions)^(a)			Number of Accounts (in thousands)	Aggregated Outstanding Balances Upon Default($ in millions)^(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans		2	$	9		5	$	30
Card Member Receivables		1		2		3		4
Total		3	$	11		8	$	34

The outstanding balances upon default include principal, fees and accrued interest on Card Member loans, and principal and fees on Card Member receivables.