Adjustment to the existing allowance

[Table of Contents](#ica158fb683c247fdb170955b492f9216_7)HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2021, presented on an amortized cost basis by year of origination was as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | As of October 31, 2021 |
|  | Risk Rating |
|  | Low |  | Moderate |  | High |
| Fiscal Year | In millions |
| 2021 | $ | 1,978  |  |  | $ | 1,542  |  |  | $ | 49  |  |
| 2020 | 1,441  |  |  | 1,061  |  |  | 87  |  |
| 2019 | 829  |  |  | 771  |  |  | 85  |  |
| 2018 | 364  |  |  | 407  |  |  | 78  |  |
| 2017 and prior | 169  |  |  | 234  |  |  | 103  |  |
| Total | $ | 4,781  |  |  | $ | 4,015  |  |  | $ | 402  |  |

The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2020, was as follows:

|  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |
|   | As of October 31, |
|   | 2020 |  |  |
|   | In millions |
| Risk Rating: |   |  |  |
| Low | $ | 4,590  |  |  |  |
| Moderate | 4,091  |  |  |  |
| High | 377  |  |  |  |
| Total | $ | 9,058  |  |  |  |

Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB– or higher, while accounts rated moderate risk generally have the equivalent of BB+ or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of impairment. Effective November 1, 2020, under the new guidance for credit losses, the Company discloses its credit quality by year of origination. The credit quality indicators do not reflect any mitigation actions taken to transfer credit risk to third parties.Allowance for Credit LossesThe allowance for credit losses for financing receivables and changes therein were as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | As of October 31, |
|   | 2021 |  | 2020 |  | 2019 |
|   | In millions |
| Balance at beginning of period | $ | 154  |  |  | $ | 131  |  |  | $ | 120  |  |
| Adjustment for adoption of the new credit loss standard | 28  |  |  | —  |  |  | —  |  |
| Provision for credit losses | 61  |  |  | 43  |  |  | 33  |  |
| Adjustment to the existing allowance | 19  |  |  | —  |  |  | —  |  |
| Write-offs | (34) |  |  | (20) |  |  | (22) |  |
| Balance at end of period | $ | 228  |  |  | $ | 154  |  |  | $ | 131  |  |

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