v3.26.1
Derivative Instruments and Hedging Activities
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities
We enter into derivative instruments, which may include interest rate swaps, foreign-currency forwards, equity options, and interest rate options, in connection with our risk-management activities. Our primary objective for using derivative financial instruments is to manage interest rate risk associated with our fixed-rate and variable-rate assets and liabilities, foreign exchange risks related to our net investments in foreign subsidiaries, as well as foreign-currency denominated assets and liabilities, and other market risks related to our investment portfolio.
Interest Rate Risk
We monitor our mix of fixed-rate and variable-rate assets and liabilities and may enter into interest rate swaps, forwards, and options to achieve a more desired mix of fixed-rate and variable-rate assets and liabilities. We execute these trades to modify our exposure to interest rate risk by converting certain fixed-rate instruments to a variable-rate and certain variable-rate instruments to a fixed-rate. We use a mix of both derivatives that qualify for hedge accounting treatment and economic hedges that do not qualify for hedge accounting treatment.
Derivatives qualifying for hedge accounting treatment can include receive-fixed swaps designated as fair value hedges of specific fixed-rate unsecured debt obligations, receive-fixed swaps designated as fair value hedges of specific fixed-rate FHLB advances, pay-fixed swaps designated as fair value hedges of securities within our available-for-sale portfolio, and pay-fixed swaps designated as fair value hedges of fixed-rate held-for-investment consumer automotive loan assets. Other derivatives qualifying for hedge accounting consist of interest rate floor contracts designated as cash flow hedges of the expected future cash flows in the form of interest receipts on a portion of our dealer floorplan commercial loans.
Our economic hedges include interest rate swaps that we offer as an accommodation to our customers within our Corporate Finance business. We offset the majority of the market risk of these customer swaps by entering into offsetting derivatives transactions with other counterparties.
We also entered into interest rate lock commitments and forward commitments that were executed as part of our mortgage business that met the accounting definition of a derivative.
We may execute other economic hedges, which could consist of interest rate swaps, forwards, and options to mitigate interest rate risk.
Foreign Exchange Risk
We enter into derivative financial instrument contracts to mitigate the risk associated with variability in cash flows related to our various foreign-currency exposures.
We enter into foreign-currency forwards with external counterparties as net investment hedges of foreign exchange exposure on our investment in foreign subsidiaries. Our equity is impacted by the cumulative translation adjustments resulting from the translation of foreign subsidiary results; this impact is reflected in our accumulated other comprehensive income and loss. We also periodically enter into foreign-currency forwards to economically hedge any foreign-denominated debt, centralized lending, and foreign-denominated third-party loans. These foreign-currency forwards used as economic hedges are recorded at fair value, with changes recorded as income or expense offsetting the gains and losses on the associated foreign-currency transactions.
Investment Risk
We enter into equity options to mitigate the risk associated with our exposure to the equity markets.
Credit Risk
We entered into various retail automotive-loan purchase agreements with certain counterparties. As part of those agreements, we may have been required to pay the counterparty at agreed upon measurement dates and determinable amounts if actual credit performance of the acquired loans on the measurement date was better than what was estimated at the time of acquisition. Based upon these terms, these contracts met the accounting definition of a derivative.
We enter into arrangements with certain counterparties through which we issue credit-linked notes covering a specified pool of loans. These notes contain an embedded derivative (referred to as credit-linked note derivatives), which provides us credit protection against the risk of loss when a specified credit event occurs on the reference pool.
Counterparty Credit Risk
Derivative financial instruments contain an element of credit risk if counterparties are unable to meet the terms of the agreements. Credit risk associated with derivative financial instruments is measured as the net replacement cost should the counterparties that owe us under the contract completely fail to perform under the terms of those contracts, with adjustments to reflect the exchange of collateral for margined transactions.
We manage our risk to financial counterparties through internal credit analysis, limits, and monitoring. Additionally, derivatives and repurchase agreements are entered into with approved counterparties using industry standard agreements.
We execute certain OTC derivatives, such as interest rate options, using bilateral agreements with financial counterparties. Bilateral agreements generally require both parties to post collateral in the event the fair values of the derivative financial instruments meet posting thresholds established under the agreements. If either party defaults on the obligation, the secured party may seize the collateral. Payments related to the exchange of collateral for OTC derivatives are recognized as collateral.
We also execute certain derivatives, such as interest rate swaps, with clearinghouses, which require us to post and receive collateral. For these clearinghouse derivatives, these payments are recognized as settlements rather than collateral.
Certain derivative instruments contain provisions that require us to either post additional collateral or immediately settle any outstanding liability balances upon the occurrence of a specified credit-risk-related event. No such specified credit-risk-related events occurred during the three months ended March 31, 2026, or 2025.
We placed cash and noncash collateral with counterparties totaling $13 million and $290 million, respectively, supporting our derivative positions at March 31, 2026, compared to $4 million and $328 million, of cash and noncash collateral, respectively, at December 31, 2025. These amounts include noncash collateral placed at clearinghouses and exclude cash and noncash collateral pledged under repurchase agreements. The receivables for cash collateral placed are included on our Condensed Consolidated Balance Sheet in other assets. We granted our counterparties the right to sell or pledge the noncash collateral.
We received cash collateral from counterparties totaling $3 million at March 31, 2026. These amounts exclude cash and noncash collateral pledged under repurchase agreements. The payables for cash collateral received are included on our Condensed Consolidated Balance Sheet in accrued expenses and other liabilities.
Balance Sheet Presentation
The following table summarizes the amounts of derivative instruments reported on our Condensed Consolidated Balance Sheet. The amounts are presented on a gross basis, are segregated by derivatives that are designated and qualifying as hedging instruments or those that are not, and are further segregated by type of contract within those two categories.
Derivative contracts in a receivable and payable position exclude open trade equity on derivatives cleared through central clearing counterparties. Any associated margin exchanged with our central clearing counterparties are treated as settlements of the derivative exposure, rather than collateral. Such payments are recognized as settlements of the derivatives contracts in a receivable and payable position on our Condensed Consolidated Balance Sheet.
Notional amounts are reference amounts from which contractual obligations are derived and are not recorded on the balance sheet. In our view, derivative notional is not an accurate measure of our derivative exposure when viewed in isolation from other factors, such as market rate fluctuations and counterparty credit risk.
March 31, 2026December 31, 2025
Derivative contracts in a
Notional amount
Derivative contracts in a
Notional amount
($ in millions)
receivable position
payable position
receivable position
payable position
Derivatives designated as accounting hedges
Interest rate contracts
Swaps
$— $— $22,507 $— $— $23,257 
Purchased options
— — 2,250 — — 3,450 
Foreign exchange contracts
Forwards
2 — 187 — 4 199 
Total derivatives designated as accounting hedges
2 — 24,944 — 4 26,906 
Derivatives not designated as accounting hedges
Interest rate contracts
Swaps1 1 216 — — — 
Total interest rate risk
1 1 216 — — — 
Foreign exchange contracts
Forwards— — 35 — — 71 
Total foreign exchange risk— — 35 — — 71 
Credit contracts
Credit-linked note derivatives— 1 1,224 — — 1,381 
Total credit risk— 1 1,224 — — 1,381 
Equity contracts
Written options
— 1 — — — — 
Total equity risk
— 1 — — — — 
Total derivatives not designated as accounting hedges
1 3 1,475 — — 1,452 
Total derivatives
$3 $3 $26,419 $— $4 $28,358 
The following table presents amounts recorded on our Condensed Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges.

Carrying amount of the hedged itemsCumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items
TotalDiscontinued (a)
($ in millions)
March 31, 2026December 31, 2025March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Assets
Available-for-sale securities (b)$14,968 $15,240 $(68)$7 $(51)$(54)
Finance receivables and loans, net (c)23,942 27,808 (23)7 1 1 
Liabilities
Long-term debt$3,395 $3,378 $76 $79 $76 $79 
(a)Represents the fair value hedging adjustment on qualifying hedges for which the hedging relationship was discontinued. This represents a subset of the amounts reported in the total hedging adjustment.
(b)These amounts include the amortized cost basis and unallocated basis adjustments of closed portfolios of available-for-sale securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. At March 31, 2026, and December 31, 2025, the amortized cost basis and unallocated basis adjustments of the closed portfolios used in these hedging relationships was $13.5 billion and $13.7 billion, respectively, of which $13.2 billion and $13.4 billion, respectively, represents the amortized cost basis and unallocated basis adjustments of closed portfolios designated in an active hedge relationship. At March 31, 2026, and December 31, 2025, the total cumulative basis adjustments associated with these hedging relationships was a $72 million liability and a $8 million liability, respectively, of which the portion related to discontinued hedging relationships was a $51 million liability and a $54 million liability, respectively. At both March 31, 2026, and December 31, 2025, the notional amounts of the designated hedged items were $11.0 billion, with cumulative basis adjustments of a $21 million liability and a $46 million asset, respectively, which would be allocated across the entire remaining closed pool upon dedesignation of the hedge relationship. Refer to Note 6 for a reconciliation of the amortized cost basis and fair value of available-for-sale securities.
(c)These amounts include the carrying value of closed portfolios of loan receivables used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. At March 31, 2026, and December 31, 2025, the carrying value of the closed portfolios used in these hedging relationships was $23.9 billion and $27.8 billion, respectively, of which $19.1 billion and $21.8 billion, respectively, represents the carrying value of closed portfolios designated in an active hedge relationship. At March 31, 2026, and December 31, 2025, the total cumulative basis adjustments associated with these hedging relationships was a $23 million liability and $7 million asset, respectively, of which the portion related to discontinued hedging relationships was a $1 million asset at both March 31, 2026, and December 31, 2025. At March 31, 2026, and December 31, 2025, the notional amounts of the designated hedged items were $10.0 billion and $10.8 billion, respectively, with cumulative basis adjustments of a $24 million liability and a $6 million asset, respectively, which would be allocated across the entire remaining closed pool upon dedesignation of the hedge relationship.
Statement of Income Presentation
The following table summarizes the location and amounts of gains and losses on derivative instruments not designated as accounting hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
Three months ended March 31,
($ in millions)20262025
Gain (loss) recognized in earnings
Interest rate contracts
Gain on mortgage and automotive loans, net$— $1 
Total interest rate contracts— 1 
Foreign exchange contracts
Other operating expenses1 — 
Total foreign exchange contracts
1 — 
Credit contracts
Other income, net of losses(1)— 
Total credit contracts(1)— 
Total gain recognized in earnings$— $1 
The following table summarizes the location and amounts of gains and losses on derivative instruments designated as qualifying fair value and cash flow hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
Interest and fees on finance receivables and loansInterest and dividends on investment securities and other earning assetsInterest on long-term debt
Three months ended March 31, ($ in millions)
202620252026202520262025
Gain (loss) on fair value hedging relationships
Interest rate contracts 
Hedged available-for-sale securities$— $— $(77)$130 $— $— 
Derivatives designated as hedging instruments on available-for-sale securities— — 77 (130)— — 
Hedged fixed-rate consumer automotive loans(30)29 — — — — 
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans30 (29)— — — — 
Total gain on fair value hedging relationships— — — — — — 
Loss on cash flow hedging relationships
Interest rate contracts
Hedged variable-rate commercial loans
Reclassified from accumulated other comprehensive loss into income(5)(7)— — — — 
Total loss on cash flow hedging relationships$(5)$(7)$— $— $— $— 
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income
$2,658 $2,709 $234 $230 $265 $271 
During the next 12 months, we estimate $3 million of losses will be reclassified into pretax earnings from derivatives designated as cash flow hedges.
The following table summarizes the location and amounts of gains and losses related to interest and amortization on derivative instruments designated as qualifying fair value and cash flow hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
Interest and fees on finance receivables and loansInterest and dividends on investment securities and other earning assetsInterest on long-term debt
Three months ended March 31, ($ in millions)
202620252026202520262025
Gain on fair value hedging relationships
Interest rate contracts
Amortization of deferred unsecured debt basis adjustments$— $— $— $— $2 $2 
Amortization of deferred basis adjustments of available-for-sale securities— — 3 5 — — 
Interest for qualifying accounting hedges of available-for-sale securities— — 1 17 — — 
Amortization of deferred loan basis adjustments— 2 — — — — 
Interest for qualifying accounting hedges of consumer automotive loans held for investment5 19 — — — — 
Total gain on fair value hedging relationships$5 $21 $4 $22 $2 $2 
The following table summarizes the effect of cash flow hedges on accumulated other comprehensive loss.
Three months ended March 31,
($ in millions)20262025
Interest rate contracts
Gain recognized in other comprehensive income$5 $7 
The following table summarizes the effect of net investment hedges on accumulated other comprehensive loss.
Three months ended March 31,
($ in millions)20262025
Foreign exchange contracts (a) (b)
Gain recognized in other comprehensive income$3 $— 
(a)There were no amounts excluded from effectiveness testing for the three months ended March 31, 2026, or 2025.
(b)Gains and losses reclassified from accumulated other comprehensive loss are reported as other income, net of losses, in our Condensed Consolidated Statement of Comprehensive Income. There were no amounts reclassified for the three months ended March 31, 2026, or 2025.