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Allowance for Credit Losses
 9 Months Ended
Dec. 31, 2021
Loans And Leases Receivable Disclosure [Abstract]  
Allowance for Credit Losses

Note 4 – Allowance for Credit Losses

The following tables provide information related to our allowance for credit losses for finance receivables and certain off-balance sheet lending commitments by portfolio segment:

 

 

 

Three months ended December 31, 2021

 

 

 

Retail loan

 

 

Dealer products

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, October 1, 2021

 

$

1,135

 

 

$

89

 

 

$

1,224

 

Charge-offs

 

 

(64

)

 

 

-

 

 

 

(64

)

Recoveries

 

 

14

 

 

 

-

 

 

 

14

 

Provision for credit losses

 

 

55

 

 

 

(10

)

 

 

45

 

Ending balance, December 31, 2021 1

 

$

1,140

 

 

$

79

 

 

$

1,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended December 31, 2021

 

 

 

Retail loan

 

 

Dealer products

 

 

Total

 

Beginning balance, April 1, 2021

 

$

1,075

 

 

$

140

 

 

$

1,215

 

Charge-offs

 

 

(152

)

 

 

-

 

 

 

(152

)

Recoveries

 

 

46

 

 

 

-

 

 

 

46

 

Provision for credit losses

 

 

171

 

 

 

(61

)

 

 

110

 

Ending balance, December 31, 2021 1

 

$

1,140

 

 

$

79

 

 

$

1,219

 

 

1

Ending balance includes $34 million of allowance for credit losses related to off-balance sheet commitments in the dealer products portfolio which is included in Other liabilities on the Consolidated Balance Sheet.

 

 

 

Three months ended December 31, 2020

 

 

 

Retail loan

 

 

Dealer products

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, October 1, 2020

 

$

1,020

 

 

$

154

 

 

$

1,174

 

Charge-offs

 

 

(113

)

 

 

-

 

 

 

(113

)

Recoveries

 

 

12

 

 

 

8

 

 

 

20

 

Provision for credit losses

 

 

133

 

 

 

(15

)

 

 

118

 

Ending balance, December 31, 2020 2

 

$

1,052

 

 

$

147

 

 

$

1,199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended December 31, 2020

 

 

 

Retail loan

 

 

Dealer products

 

 

Total

 

Beginning balance, April 1, 2020

 

$

486

 

 

$

241

 

 

$

727

 

Adoption of ASU 2016-13 1

 

 

281

 

 

 

11

 

 

 

292

 

Charge-offs

 

 

(228

)

 

 

-

 

 

 

(228

)

Recoveries

 

 

33

 

 

 

9

 

 

 

42

 

Provision for credit losses

 

 

480

 

 

 

(114

)

 

 

366

 

Ending balance, December 31, 2020 2

 

$

1,052

 

 

$

147

 

 

$

1,199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Cumulative pre-tax adjustments recorded to retained earnings as of April 1, 2020.  See Note 1 – Basis of Presentation and Significant Accounting Policies in our fiscal 2021 Form 10-K.

2

Ending balance includes $37 million of allowance for credit losses related to off-balance sheet commitments in the dealer products portfolio which is included in Other liabilities on the Consolidated Balance Sheet.

 


 

Note 4 – Allowance for Credit Losses (Continued)

 

We have elected to exclude accrued interest from the measurement of expected credit losses as we apply policies and procedures that result in the timely write-offs of accrued interest. Accrued interest is written off within allowance for credit losses at the earlier of when an account is deemed to be uncollectible or when an account is greater than 120 days past due.

 

Finance receivables for the dealer products portfolio segment as of December 31, 2021 includes $922 million in finance receivables that are guaranteed by Toyota Motor North America, Inc. (“TMNA”), and $183 million in finance receivables that are guaranteed by third-party private Toyota distributors.  Finance receivables for the dealer products portfolio segment as of December 31, 2020 includes $1,025 million in finance receivables that are guaranteed by TMNA, and $164 million in finance receivables that are guaranteed by third-party private Toyota distributors.  These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMNA and third-party private Toyota distributors.

 

During the first nine months of fiscal 2022, the allowance for credit losses increased $4 million as the growth of our retail loan portfolio and increase in delinquencies was largely offset by improvement in the financial performance of our dealers.  In contrast, during the first nine months of fiscal 2021, the allowance for credit losses increased $472 million reflecting an increase to the allowance for credit losses of $292 million related to the adoption of ASU 2016-13, and an increase of $180 million primarily due to the increase in expected credit losses for the retail loan portfolio driven by economic conditions caused by the COVID-19 pandemic and the restrictions designed to slow the spread of COVID-19, including stay-at-home orders, increased unemployment, and decreased consumer spending.