LOANS RECEIVABLE, NET

12 Months Ended

Dec. 31, 2023


	December 31,
	2023		2022
	(In millions)
Loans receivable	$	3,671	$	2,778
Allowance for doubtful accounts	(1,042)		(1,074)
Current loans receivable, net	$	2,629	$	1,704


	December 31,
	2023		2022
	(In millions)
Loans receivable	$	107	$	62
Allowance for doubtful accounts	(42)		(30)
Non current loans receivable, net	$	65	$	32

The Company classifies loans receivable as “On-line merchant”, “Consumer”, “In-store merchant” and “Credit cards”. As of December 31, 2023 and December 31, 2022, Loans receivable, net were as follows:


	December 31, 2023
	Loans receivable		Allowance for doubtful accounts		Loans receivable, net
	(In millions)
On-line merchant	$	429	$	(119)	$	310
Consumer	1,808		(592)		1,216
In-store merchant	332		(137)		195
Credit cards	1,209		(236)		973
Total	$	3,778	$	(1,084)	$	2,694


	December 31, 2022
	Loans receivable		Allowance for doubtful accounts		Loans receivable, net
	(In millions)
On-line merchant	$	394	$	(120)	$	274
Consumer	1,568		(614)		954
In-store merchant	267		(145)		122
Credit cards	611		(225)		386
Total	$	2,840	$	(1,104)	$	1,736

The allowance for doubtful accounts with respect to the Company’s loans receivable amounts to $1,102 million and $1,112 million as of December 31, 2023 and 2022, respectively, which includes $18 million and $8 million related to unused agreed loan commitment on credit cards portfolio presented in Other liabilities of the consolidated balance sheets as of December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, the Company is exposed to off-balance sheet unused agreed loan commitment on credit cards portfolio which expose the Company to credit risks for $934 million and $271 million, respectively. For the years ended December 31, 2023 and 2022 the Company recognized in Provision for doubtful accounts $8 million and $8 million as expected credit losses, respectively.

The following tables summarize the allowance for doubtful accounts activity during the years ended December 31, 2023, 2022 and 2021:


	December 31, 2023
	On-line merchant		Consumer		In-store merchant		Credit cards		Total
	(In millions)
Balance at beginning of year	$	120	$	614	$	145	$	225	$	1,104
Net charged to Net Income	104		572		129		211		1,016
Currency translation adjustments	6		6		3		18		33
Write-offs	(111)		(600)		(140)		(218)		(1,069)
Balance at end of year	$	119	$	592	$	137	$	236	$	1,084

	December 31, 2022
	On-line merchant		Consumer		In-store merchant		Credit cards		Total
	(In millions)
Balance at beginning of year	$	79	$	232	$	76	$	48	$	435
Net charged to Net Income	109		600		139		210		1,058
Currency translation adjustments	1		(9)		(1)		(1)		(10)
Write-offs	(69)		(209)		(69)		(32)		(379)
Balance at end of year	$	120	$	614	$	145	$	225	$	1,104

The increase in write-offs, for the year ended December 31, 2023 compared to the same period in 2022, is mainly generated by higher originations of loans receivable in 2022, compared to the same period in 2021, generating a higher write-offs effect in the year ended December 31, 2023.


	December 31, 2021
	On-line merchant		Consumer		In-store merchant		Credit cards		Total
	(In millions)
Balance at beginning of year	$	20	$	45	$	13	$	—	$	78
Net charged to Net Income	75		234		74		51		434
Currency translation adjustments	(3)		(7)		(3)		—		(13)
Write-offs	(13)		(40)		(8)		(3)		(64)
Balance at end of year	$	79	$	232	$	76	$	48	$	435

The Company closely monitors credit quality for all loans receivable on a recurring basis to assess and manage its exposure to credit risk. To assess merchants and consumers seeking a loan under the Mercado Credito solution, the Company uses, among other indicators, risk models internally developed, as a credit quality indicator to help predict the merchant’s and consumer’s ability to repay the principal balance and interest related to the credit. The risk model uses multiple variables as predictors of the merchant’s and consumer’s ability to repay the credit, including external and internal indicators. Internal indicators consider user behavior related to credit/payment history, and with lower weight in the risk models, the Company uses number of transactions in the Company’s ecosystem and merchant’s annual sales volume, among other indicators. In addition, the Company considers external bureau information to enhance the model and the decision making process.

The amortized cost of the loans receivable classified by the Company’s credit quality internal indicator was as follows:


	December 31,
	2023		2022
	(In millions)
1-14 days past due	$	99	$	54
15-30 days past due	92		64
31-60 days past due	114		88
61-90 days past due	103		86
91-120 days past due	111		103
121-150 days past due	97		110
151-180 days past due	82		112
181-210 days past due	76		100
211-240 days past due	74		93
241-270 days past due	69		89
271-300 days past due	59		73
301-330 days past due	74		85
331-360 days past due	66		75
Total past due	1,116		1,132
To become due	2,662		1,708
Total	$	3,778	$	2,840

As of December 31, 2023 and 2022, renegotiations represented 2.8%% and 1% of the loans receivable portfolio, respectively.

As described in Note 2 – Summary of significant accounting policies, the Company places loans on non-accrual status at 90 days past due. There are no loans receivable on non-accrual status for which there is no related allowance for doubtful accounts.