Allowance for Expected Credit Losses (Tables)

3 Months Ended

Mar. 31, 2020

Credit Loss [Abstract]

Amortized cost basis, by year of origination and credit quality indicator

The following tables present our recorded investment in each class of loans by credit quality indicator as of the dates indicated:

March 31, 2020	Commercial and Financial		Commercial Real Estate		Total Loans
(In millions)
Investment grade	$	25,075	$	1,815	$	26,890
Speculative	5,413		—		5,413
Special mention(1)	64				64
Substandard(2)	12		—		12
Total(3)	$	30,564	$	1,815	$	32,379

December 31, 2019	Commercial and Financial		Commercial Real Estate		Total Loans
(In millions)
Investment grade	$	19,501	$	1,766	$	21,267
Speculative	5,008		—		5,008
Special mention	25		—		25
Substandard	9		—		9
Total(3)	$	24,543	$	1,766	$	26,309

 

⁽¹⁾ Includes approximately $25 million of impaired loans. Please refer to Note 4 for additional discussion of our impaired loans.

⁽²⁾ Includes approximately $10 million of impaired loans. Please refer to Note 4 for additional discussion of our impaired loans.

⁽³⁾ Loans to investment funds Include $8,685 million and $3,256 million of overdrafts as of March 31, 2020 and December 31, 2019, respectively.

The following table presents the amortized cost basis, by year of origination and credit quality indicator as of March 31, 2020. For origination years before the fifth annual period, we present the aggregate amortized cost basis of loans. For purchased loans, the date of issuance is used to determine the year of origination, not the date of acquisition. For modified, extended or renewed lending arrangements, we evaluate whether a credit event has occurred which would consider the loan to be a new arrangement.

(In millions)	2020		2019		2018		2017		2016		2015		Prior		Revolving Loans		Total(1)(2)
Domestic loans:
Commercial and financial:
Risk Rating:
Investment grade	$	4,511	$	438	$	5	$	120	$	200	$	—	$	—	$	12,273	$	17,547
Speculative	340		1,024		976		802		137		—		—		245		3,524
Special mention	—		10		29		25		—		—		—		—		64
Substandard	—		10		—		—		—		—		—		—		10
Total commercial and financing	$	4,851	$	1,482	$	1,010	$	947	$	337	$	—	$	—	$	12,518	$	21,145
Commercial real estate:
Risk Rating:
Investment grade	$	49	$	549	$	711	$	280	$	197	$	29	$	—	$	—	$	1,815
Total commercial real estate	$	49	$	549	$	711	$	280	$	197	$	29	$	—	$	—	$	1,815
Non-U.S. loans:
Commercial and financial:
Risk Rating:
Investment grade	$	3,642	$	—	$	—	$	—	$	—	$	—	$	—	$	3,886	$	7,528
Speculative	596		372		408		184		24		—		70		235		1,889
Substandard	—		—		2		—		—		—		—		—		2
Total commercial and financing	$	4,238	$	372	$	410	$	184	$	24	$	—	$	70	$	4,121	$	9,419
Total loans	$	9,138	$	2,403	$	2,131	$	1,411	$	558	$	29	$	70	$	16,639	$	32,379
Off-balance sheet commitments and guarantees:
Unfunded credit facilities	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	30,971	$	30,971
Indemnified securities financing	376,975		—		—		—		—		—		—		—		376,975
Standby letters of credit	—		—		—		—		—		—		—		3,273		3,273
Total off-balance sheet commitments and guarantees	$	376,975	$	—	$	—	$	—	$	—	$	—	$	—	$	34,244	$	411,219
Total financing receivables and off-balance sheet commitments and guarantees	$	386,113	$	2,403	$	2,131	$	1,411	$	558	$	29	$	70	$	50,883	$	443,598

⁽¹⁾ Any reserve associated with accrued interest is not material.

⁽²⁾ As of March 31, 2020, accrued interest receivable of $76 million included in the amortized cost basis of loans has been excluded from the amortized cost basis within this table.

Schedule of Activity in the Allowance for Loan Losses

The following table presents the activity in the allowance for credit losses by portfolio and class for the periods indicated:

	Three Months Ended March 31, 2020
	Commercial and Financial
(In millions)	Senior Secured Bank Loans			Other Loans		Commercial Real Estate		Held-to-Maturity Securities		Off-Balance Sheet Commitments		All Other		Total Credit Reserve
Allowance for credit losses:
Beginning balance	$	61		$	10	$	2	$	—	$	19	$	1	$	93
Charge-offs	(5		)	—		—		—		—		—		(5		)
Provision	27			—		2		4		3		—		36
Ending balance	$	83		$	10	$	4	$	4	$	22	$	1	$	124

Allowance for Loan Losses under Incurred Loss Methodology for the period ended March 31, 2019

The following table presents activity in the allowance for loan losses as of March 31, 2019 under the incurred loss methodology:

(In millions)	Three months ended March 31, 2019
Allowance for loan losses:
Beginning balance	$	67
Provision for credit losses(1)	4
Other(2)	(1		)
Ending balance	$	70

 

⁽¹⁾ The provisions for credit losses were primarily attributable to exposure to purchased senior secured loans to non-investment grade loans

⁽²⁾ Consists primarily of FX translation