Finance Receivables

6 Months Ended

Apr. 30, 2021

Finance receivables are receivables of our Financial Services operations. Finance receivables generally consist of wholesale notes and accounts, as well as retail notes, finance leases and accounts. Total finance receivables reported on the Consolidated Balance Sheets are net of an allowance for credit losses. Total assets of our Financial Services operations net of intercompany balances were $2.5 billion and $2.2 billion as of April 30, 2021 and October 31, 2020, respectively.

Included in total assets of our Financial Services operations were finance receivables of $1.6 billion as of both April 30, 2021 and October 31, 2020. We have two portfolio segments of finance receivables that we distinguish based on the type of customer and nature of the financing inherent to each portfolio. The retail portfolio segment represents loans or leases to end-users for the purchase or lease of vehicles. The wholesale portfolio segment represents loans to dealers to finance their inventory.

In connection with the COVID-19 pandemic, we have previously received extension requests from certain customers in the retail note and finance lease portfolios in Mexico. These requests were generally granted for short-term extensions (6 months or less), without interest or principal forgiveness. The related credit exposure was not material to the consolidated financial statements. We will continue to monitor our portfolios in light of the ongoing economic uncertainties resulting from the COVID-19 pandemic. We may offer additional extensions and modifications to customers going forward in order to maximize the recoverability of outstanding receivable balances.

Our Finance receivables, net in our Consolidated Balance Sheets consist of the following:


(in millions)	As of April 30, 2021		As of October 31, 2020
Retail portfolio	$	643	$	622
Wholesale portfolio	1,009		1,025
Total finance receivables	1,652		1,647
Less: Allowance for credit losses	34		25
Total finance receivables, net	1,618		1,622
Less: Current portion, net(A)	1,360		1,371
Noncurrent portion, net	$	258	$	251

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(A)The current portion of finance receivables is computed based on contractual maturities. Actual cash collections typically vary from the contractual cash flows because of prepayments, extensions, delinquencies, credit losses, and renewals.

Securitizations

Our Financial Services operations transfer wholesale notes, retail accounts receivable, finance leases, and operating leases to special purpose entities ("SPEs"), which generally are only permitted to purchase these assets, issue asset-backed securities, and make payments on the securities issued. In addition to servicing receivables, our continued involvement in the SPEs may include an economic interest in the transferred receivables and, in some cases, managing exposure to interest rate changes on the securities using interest rate swaps or interest rate caps. There were no transfers of finance receivables that qualified for sale accounting treatment as of April 30, 2021 or October 31, 2020, and as a result, the transferred finance receivables are included in our Consolidated Balance Sheets and the related interest earned is included in Finance revenues.

We transfer eligible finance receivables into trusts in order to issue asset-backed securities. These trusts are VIEs of which we are determined to be the primary beneficiary and, therefore, the assets and liabilities of the trusts are included in our Consolidated Balance Sheets. The outstanding balance of finance receivables transferred into these VIEs was $668 million and $649 million as of April 30, 2021 and October 31, 2020, respectively.

Other finance receivables related to secured transactions that do not qualify for sale accounting treatment were $142 million and $182 million as of April 30, 2021 and October 31, 2020, respectively. For more information on assets and liabilities of consolidated VIEs and other securitizations accounted for as secured borrowings by our Financial Services segment, see Note 1, Summary of Significant Accounting Policies.

Finance Revenues

The following table presents the components of our Finance revenues from our Financial Services segment:


	Three Months Ended April 30,				Six Months Ended April 30,

(in millions)	2021		2020		2021		2020
Retail notes and finance leases revenue	$	15	$	18	$	31	$	34
Wholesale notes revenue	9		19		20		35
Operating lease revenue	24		23		47		44
Retail and wholesale accounts revenue	2		4		3		8
Gross finance revenues	50		64		101		121
Less: Intercompany revenues	7		14		13		25
Finance revenues	$	43	$	50	$	88	$	96