Allowance for Credit Losses

12 Months Ended

Dec. 31, 2024

Description of Economic Scenarios at December 31, 2024 and Other Changes During the Year Ended December 31, 2024 During 2024, economic uncertainty remained due to elevated interest rates and the effects from higher inflation. We updated our Consensus Economic Scenarios and our Alternative Downside scenario to reflect management's current view of forecasted economic conditions and utilized the four updated scenarios for estimating lifetime ECL at December 31, 2024. Each of the four scenarios were assigned weightings with the majority of the weighting placed on the Central scenario, lower equal weights placed on the Upside and Downside scenarios and the lowest weighting placed on the Alternative Downside scenario. This weighting was deemed appropriate for the estimation of lifetime ECL under current conditions. The following discussion summarizes the Central, Upside, Downside and Alternative Downside scenarios at December 31, 2024. The economic assumptions described in this section have been formed specifically for the purpose of calculating lifetime ECL.

In the Central scenario, inflation re-accelerates modestly starting in the second half of 2025. With squeezed consumer spending and reduced trade growth, U.S. Gross Domestic Product ("GDP") growth moderates in 2025 and 2026 compared with 2024, while the FRB continues to reduce its policy rate in 2025. Amid weaker GDP growth, the unemployment rate increases slightly, but remains near historic lows, while residential housing prices grow modestly as weaker demand is offset by a limited supply of homes for sale. In the financial markets, the growth in financial asset prices moderates compared with 2024.

In the Upside scenario, the economy grows at a faster pace than in the Central scenario as inflation wanes and tariff actions do not escalate. As a result, the unemployment rate falls and remains lower than in the Central scenario, while both residential housing and commercial real estate prices are higher than in the Central scenario. In this scenario, the equity price index climbs with strong momentum and overall optimism fueled by easing inflation allows the FRB to normalize its policy rate slightly faster than currently anticipated, which, combined with lower inflation expectations, drive the 10-year U.S. Treasury yield lower than in the Central scenario.

In the Downside scenario, inflation re-accelerates beyond the Central scenario and the economy enters a mild recession, with the unemployment rate increasing and remaining at a higher level, while residential housing and commercial real estate prices undergo correction due to weakness in the labor market and rising inflation. In this scenario, the FRB raises its policy rate initially to tackle inflation and the equity price index goes through a substantial correction by the end of 2026 driven by an overall erosion of consumer and business sentiments, which eventually results in lower interest rates than in the Central scenario.

In the Alternative Downside scenario, geopolitical tensions and tariff actions escalate significantly, and more severe inflationary pressures accompanied by tighter monetary policy lead the U.S. economy into a deep recession in 2025, followed by a very anemic recovery starting in the second half of 2026. An extended period of economic contraction keeps the unemployment rate at an elevated level, which pressures residential housing prices to depreciate, while at the same time, contracting corporate activities and increased unemployment pushes the commercial real estate market into a downturn. In this scenario, financial markets experience a major sell-off and volatility in the financial markets remains extremely high over the next year, widening corporate credit spreads, and flight to safe-haven assets pushes the 10-year U.S. Treasury yield lower.

The following table presents the forecasted key macroeconomic variables in our Central scenarios used for estimating lifetime ECL at December 31, 2024 and 2023:


	For the Quarter Ended
	June 30, 2025		December 31, 2025
Unemployment rate (quarterly average):
Forecast at December 31, 2024	4.4	%	4.4	%

Forecast at December 31, 2023	4.2		4.1
GDP growth rate (year-over-year):
Forecast at December 31, 2024	2.0		1.8

Forecast at December 31, 2023	1.8		2.1

As part of our updates to the economic scenarios, during 2024, we also decreased our commercial allowance for credit losses for risk associated with large loan exposures.

In addition to the updates to the economic scenarios, during 2024, we decreased the management judgement allowance on our commercial loan portfolio for risk factors associated with higher risk industry exposures that are not fully captured in the models, while we increased the management judgement allowance on our commercial loan portfolio for risk factors associated with innovation banking exposures that are not fully captured in the models.

While we believe that the assumptions used in our credit loss models are reasonable within the parameters for which the models have been built and calibrated to operate, inflation and elevated interest rates have resulted in a macroeconomic environment that is outside the parameters for which the models have been built. As a result, adjustments to model outputs to reflect consideration of management judgment are used with stringent governance in place to ensure an appropriate lifetime ECL estimate.

The impacts of elevated interest rates and the effects from higher inflation will continue to impact our business and our allowance for credit losses in future periods, the extent of which remains uncertain. We will continue to monitor these situations closely and will continue to adapt our approach as necessary to reflect management's current view of forecasted economic conditions.

Allowance for Credit Losses / Liability for Off-Balance Sheet Credit Exposures The following table summarizes our allowance for credit losses and the liability for off-balance sheet credit exposures:


At December 31,	2024		2023
	(in millions)
Allowance for credit losses:
Loans	$	537	$	591
Securities held-to-maturity(1)	—		—
Other financial assets measured at amortized cost(2)	—		—
Securities available-for-sale(1)	—		—
Total allowance for credit losses	$	537	$	591

Liability for off-balance sheet credit exposures	$	139	$	111

(1)See Note 6, "Securities," for additional information regarding the allowance for credit losses associated with our security portfolios.

(2)Primarily includes accrued interest receivables and customer acceptances.

The following table summarizes the changes in the allowance for credit losses on loans by product or line of business during the years ended December 31, 2024, 2023 and 2022:


	Commercial Loans								Consumer Loans
	Real Estate, including Construction		Business and Corporate Banking		Global Banking		Other Comm'l		Residential Mortgages		Home Equity Mortgages		Credit Cards		Other Consumer		Total Loans
	(in millions)


















Year Ended December 31, 2024
Allowance for credit losses – beginning of period	$	144	$	302	$	127	$	1	$	(9)	$	7	$	16	$	3	$	591


Provision charged (credited) to income	17		27		(16)		—		(7)		(2)		1		2		22
Charge-offs	(17)		(58)		(3)		—		—		—		(8)		(1)		(87)
Recoveries	—		2		—		—		4		1		4		—		11
Net (charge-offs) recoveries	(17)		(56)		(3)		—		4		1		(4)		(1)		(76)

Allowance for credit losses – end of period	$	144	$	273	$	108	$	1	$	(12)	$	6	$	13	$	4	$	537

Year Ended December 31, 2023
Allowance for credit losses – beginning of period	$	200	$	230	$	120	$	1	$	11	$	2	$	16	$	4	$	584


Provision charged (credited) to income	(56)		111		7		—		(19)		4		4		—		51
Charge-offs	—		(48)		—		—		(4)		(1)		(8)		(1)		(62)
Recoveries	—		9		—		—		3		2		4		—		18
Net (charge-offs) recoveries	—		(39)		—		—		(1)		1		(4)		(1)		(44)

Allowance for credit losses – end of period	$	144	$	302	$	127	$	1	$	(9)	$	7	$	16	$	3	$	591


	Commercial Loans								Consumer Loans
	Real Estate, including Construction		Business and Corporate Banking		Global Banking		Other Comm'l		Residential Mortgages		Home Equity Mortgages		Credit Cards		Other Consumer		Total Loans
	(in millions)
Year Ended December 31, 2022
Allowance for credit losses – beginning of period	$	73	$	243	$	100	$	4	$	8	$	5	$	14	$	—	$	447


Provision charged (credited) to income	129		(8)		29		(3)		—		(6)		(2)		4		143
Charge-offs	(3)		(9)		(9)		—		(2)		(1)		(1)		(1)		(26)
Recoveries	1		4		—		—		5		4		5		1		20
Net (charge-offs) recoveries	(2)		(5)		(9)		—		3		3		4		—		(6)

Allowance for credit losses – end of period	$	200	$	230	$	120	$	1	$	11	$	2	$	16	$	4	$	584

The following table summarizes the changes in the liability for off-balance sheet credit exposures during the years ended December 31, 2024, 2023 and 2022:



Year Ended December 31,	2024		2023		2022
	(in millions)
Balance at beginning of period	$	111	$	117	$	103


Provision charged (credited) to income	28		(6)		14
Balance at end of period	$	139	$	111	$	117

Accrued Interest Receivables The following table summarizes accrued interest receivables associated with financial assets carried at amortized cost and securities available-for-sale along with the related allowance for credit losses, which are reported net in other assets on the consolidated balance sheet. These accrued interest receivables are excluded from the amortized cost basis disclosures presented elsewhere in these financial statements, including Note 6, "Securities," and Note 7, "Loans."


At December 31,	2024		2023
	(in millions)
Accrued interest receivables:
Loans	$	249	$	259
Securities held-to-maturity	67		57
Other financial assets measured at amortized cost	25		19
Securities available-for-sale	117		87
Total accrued interest receivables	458		422
Allowance for credit losses	—		—
Accrued interest receivables, net	$	458	$	422

During 2024, 2023 and 2022, we charged-off accrued interest receivables by reversing interest income for loans of $3 million, $14 million and $3 million, respectively.