1 GE Capital Investor Meeting Caution Concerning Forward-Looking Statements: "Results are preliminary and unaudited. This document contains “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of U.S. and foreign government programs to restore liquidity and stimulate national and global economies; the impact of conditions in the financial and credit markets on the availability and cost of GE Capital’s funding and on our ability to reduce GE Capital’s asset levels and commercial paper exposure as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the soundness of other financial institutions with which GE Capital does business; the adequacy of our cash flow and earnings and other conditions which may affect our ability to maintain our quarterly dividend at the current level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, network television, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. “This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com.” “In this document, “GE” refers to the Industrial businesses of the Company including GECS on an equity basis. “GE (ex. GECS)” and/or “Industrial” refer to GE excluding Financial Services.” March 19, 2009 2 Key messages Running GE to be safe and secure over the long term ‒ Liquidity position is extremely strong ‒ Completed 93% of our 2009 planned long term funding Have sufficient capital and alternatives to weather adverse economic conditions Running GE with intensity ‒ Resizing our cost footprint in a meaningful way ‒ Management team is focused on delivering cash ‒ Continuing to invest/position company for long term growth We expect GE Capital will be profitable in 1Q’09 and 2009 We are committed to GE Capital GE will come out of this cycle a stronger, more focused and competitively advantaged company
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1
GE Capital
Investor Meeting
Caution Concerning Forward-Looking Statements: "Results are preliminary and unaudited. This document contains “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of U.S. and foreign government programs to restore liquidity and stimulate national and global economies; the impact of conditions in the financial and credit markets on the availability and cost of GE Capital’s funding and on our ability to reduce GE Capital’s asset levels and commercial paper exposure as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the soundness of other financial institutions with which GE Capital does business; the adequacy of our cash flow and earnings and other conditions which may affect our ability to maintain our quarterly dividend at the current level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, network television, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
“This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com.”
“In this document, “GE” refers to the Industrial businesses of the Company including GECS on an equity basis. “GE (ex. GECS)” and/or “Industrial” refer to GE excluding Financial Services.”
March 19, 2009
2
Key messages
� Running GE to be safe and secure over the long term‒ Liquidity position is extremely strong‒ Completed 93% of our 2009 planned long term funding
� Have sufficient capital and alternatives to weather adverse economic conditions
� Running GE with intensity‒ Resizing our cost footprint in a meaningful way‒ Management team is focused on delivering cash‒ Continuing to invest/position company for long term growth
� We expect GE Capital will be profitable in 1Q’09 and 2009
� We are committed to GE Capital
GE will come out of this cycle a stronger, more focused and competitively advantaged company
2
3
GE: safe & secure
Infused equity intoGE Capital
Strengthened liquidity~$45B $42B
Completedto date
TY’09E
Reduced dividend … ~$9B in annualized savings
82¢
40¢~4%
Dividends/share Yield @ today’s price
20102009 2009
7:1~6:1
1Q’09E4Q’08
GECC leverage-a)
’09 long term funding needs
4.9%~6.0%
1Q’09E4Q’08
GECC tangible common equity/tangible assets
$48B
1Q’09E4Q’08
GE cash
(a- net of cash and equivalents and withclassification of hybrid debt as equity
22
33
11
~$41B
4
Ratings update
� Concluded rating review with S&P
– Detailed GE Capital updates on liquidity, funding, business model, risk assessment & capital levels
– Industrial assessment (2009/2010) on revenue, margins & cash flow
� S&P rated GE & GE Capital at AA+ with a stable outlook:
– This rating means “very strong capability to meet its financial commitments” and “rating is unlikely to change in next six months to two years”
“The ratings on GE continue to reflect our view of its excellentbusiness risk profile, its significant cash flow and liquidity, its strong corporate governance, and management’s commitment to maintaining a very high credit quality” – S&P, March 12, 2009
3
5
Support• GE support to ensure GECC 1.1x fixed-charge
coverage ratio
• GE TLGP FDIC backstop
• Infused $15B & reduced dividend from GECS
• History of capital infusion or dividendreductions when necessary
Operating businesses(Capital Finance)
GE Capital structure
100%
100%
AA+/Aaa
General Electric Capital
Corporation
Primary GE Issuer/GuarantorPrimary GE Issuer/Guarantor
General Electric
Company
General Electric
Capital Services, Inc.
Owns all ofGE’s financing
assets
Real Estate GECAS
CommercialLending &Leasing
EnergyFinancialServices
AA+/Aaa 100%
ConsumerFinancing
6
GE Capitaloverview
4
7
2009 outlookEnvironment
• Difficult market with many macro-economic indicators still deteriorating
• Pockets of increased liquidity for consumers and mid-market businesses
• Industry losses continuing
• Delinquencies and non-earning assets pressured in both Consumer and Commercial
• Very difficult to execute asset sales in today’s market
– TALF may help
8
GE Capital business model
� GE Capital has performed for decades� Will reposition for long term success
• Capacity of $98B (incl. GE) … pricing @ slight penalty to market
• GECC/GECS outstandings matured in February … none outstanding today
• Enables GE to support investor liquidity needs & manage duration … serves as liquidity backstop
• Newly announced Fed/Treasury facility … covers AAA ABS for specified assets …currently auto & credit card … may be extended to equipment & CMBS
• $10B+ of PLCC/CDF maturing securitization debt likely eligible
• Potential for increased liquidity for real estate and equipment … may reduce cost of securitization funding … continuing to evaluate
• GECC capacity of $126B … important for LT debt market & CP market access …program now extended through October 31, 2009
• $37B LT debt issued under the program … $3B remaining for ’09
• Manage ~$25-$35B CP outstandings under TLGP
• ~$50-$60B capacity remaining … option to fund some ’10 maturities in ’09
Programs GE impact
Commercial paper funding facility
(CPFF)
Temporary liquidity guarantee program
(TLGP)
Term Asset-backed securities
loan facility
(TALF)
• New facility in development … initial focus on marketable securities & other MTM assets … could expand to leveraged loans, real estate, equipment, etc.
• Improved liquidity in these asset classes to help overall market
Public Private investment funds
(PPIF)
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23
2009 alternate funding($ in billions)
CD’s : Distributed through multiple firms to support asset growth in US banks
• Industrial Loan Corporation deposits $17B–Adding 3 complete business platforms to ILC …
direct origination a)
–Originating CD’s to match bank assets profile(~$7B > 1 yr. maturity as of 4Q’08)
• Federal Savings Bank deposits $2B–Direct origination of sales finance assets
International deposits $6B– Drive market share in emerging markets – Tap large/developed markets
French Gov’t program: $1B ’09 target ($0.4B YTD)
Covered bonds program: 1st issuance by Jul ’09
Exploring other asset based funding options
Cost of funding attractive vs. LT debt
Transition banks to deposit funding
4Q'07 4Q'08 4Q'09E
International
Other
11
$55
$30
18
19
20
~$81
U.S. FederalSavings Bank
U.S. Industrial LoanCorporation
27
17
1711
15
10
1
a) Subject to regulatory approval
24
$58.2B bank lines ... ~100% CP coverage
Remaining Term as of 3/11/09
• ~80% lines from Aaa/Aa banks
• Lines from 64 banks globally
• Syndicated: $22.9B; Bilateral: $35.3B
• ~$12B also available to GE parent
Comments
Liquidity in great shape … on track to meet CP coverage targetswith $50B+ bank lines and $30B+ cash
• Strong base of $37B lines >1 year
• $19.8B up for renewal in Mar-Dec ’09 … phased reduction planned as outstanding CP comes down
• Expect $10B renewals by June with remaining $3-5B during 2H’09
• Support levels not materially impacted by bank consolidation
• No MAC clauses
• No covenants or rating triggers
• Drawn pricing at capped spread over Libor
$30B> 3 years but less than 4
$22Bless than 1 year 94% w/ term out
$4B
> 4 years
$3B> 1 yr but less
than 3
($ in billions)
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25
Capital ratios
� GE infused $5.5B cash into GECS 4Q … plan to infuse ~$9.5B into GECS 1Q’09
� Leverage commitments ahead of plan … ~6:1 by 1Q’09
� TCE/TA ratio at the top end of the banks even if banks convert their TARP preferred equity into common equity
GE Capital Corp. leverage a) GE Capital Corp. TCE/TA ratio b)
4Q’08
7:1
~6:1
1Q’09ETangible bookLeverage c) 17X 14X
(a- net of cash and equivalents and with classification of hybrid debt as equity(b- TCE : Book equity less goodwill & intangibles; TA : Total assets less goodwill & intangibles(c- Total borrowings/equity less goodwill & intangibles(d- As of 4Q’08 excludes TARP equity; Source : Federal Reserve Y9 filings
>70% International~22% in developing markets~58% of receivables – Prime
6%
JVs
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Commercial Portfolio Diversification
Others
Hotels Restaurants &
Leisure
Construction
Health Care
Energy
Automotive
Business Services
Diversified Finance
Real Estate
Commercial Airlines
Machinery
& Equipment
Industry sectors ($386B)
45% less than 6% industry weighting -
51 industries
13%
24%
2%
6%
32%
2%
6%
4%
6%
3%
2%
A/c Rec and Inv
Cash Flow
Comm. Aircraft
Fleet Vehicles
Franchise
Healthcare Equipment
FF&E and Other Equip
Others
Comm. Real
Estate
Corporate Jets
Transportation
Equipment
Energy
Generation/Distribution
Dealer Inventories
Collateral type ($386B)
Diversified portfolio in long-standing GECC collateral types
13%
24%
9%
4%
12%
4% 5%
10%
7%
3%
3%
4%2%
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31
Commercial Customer Concentrations
Over $1B, 15 accounts:
Airlines, Class 1 Railroads, Electric Utilities, Aircraft Manufacturing, Real Estate
$500MM-$1B, 27 accounts:
Airlines, Automotive, Healthcare, Power Generating Projects, Oil & Gas Refining, Cable, Broadcast Media
$300MM-$500MM, 44 accounts:
Automotive, Airlines, Electric Utilities, Broadcast Media, Healthcare, Technology Equipment
$100MM-200MM
Over $1B
Under $50MM
$50MM-$100MM
$500MM-$1B
$200MM-300MM
$300MM-500MM
61% 11%
8%
4%
5%
5%6%
72% of single risk exposures <$100MM
Larger exposures secured primarily by essential operating assets
($386B)
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Key portfolio risks – 12/2 view(Pre-tax losses - $ in millions)December 2, 2008 outlook
2009 Assumptions
Estimated’09 financial
impact
Downside case
U.S. Consumer 7% • 8.5% unemployment ~$4.2B ~$5.0B 9%unemployment
U.K. Mortgage 4% • HPI (17%) 2008• HPI (15%) 2009
Real Estate 14% • Cap rates 50-100 bps. higher $250 $400- Debt • Cap rates 50-100 bps. higher,- Equity long-term hold
GECAS 7% • Global traffic growth down ~2% 2009
$240 $500
~$300 ~$550
%Assets AssumptionsImpact
+200 bps. highest historical cap rate by
asset type
• (3%) traffic decline (9/11)
Economic environment more challenging
$600 $800 (20%) HPI
March ’09outlookvs. Dec. 2
=
=
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33
Stress testing approach
Consumer
• Mortgages, credit cards, auto and personal loans and sales credit financing
– By product, by geography – market specific
– Consistent methodology applied across product types globally
Commercial
• Commercial Real Estate: By market and property type
• Commercial Aircraft: Valuation by equipment type
• Energy loans and leases: Stress obligor ratings, increase severity, based on outlook
• Commercial Loans and Leases: Stress probabilities of default, recovery rates
Bottoms up – asset by asset, business by business
Large commercial exposures over $300MM stressed individually
34
Consumer portfolio stress testing
Key Drivers:
Macro • Unemployment
• Home equity access
Portfolio • Credit quality
• Credit lines
• Loss sharing
• Recovery rates
Key Drivers:
Macro • Home prices
• Unemployment
• Refinancing ability
Portfolio • LTV
• Mortgage insurance
• Borrower credit quality
• FX movements (Central Europe)
U.S. Non-U.S. Mortgage
Key Assumptions:
U.K. • 15% HPI decline in ’09 (34%’08-’09)
• 9% unemployment
• Additional loss on sale 20-25%
Central Europe • 15-30% further devaluation from today’s FX rate based on country
• Unemployment up to 13% basedon market
Key Assumptions:
GDP (2.0%) (3.3%)
U/E avg. 8.4% 8.9%
U/E peak 9.3% 10.1%
Debt sale recovery rate:
PLCC 10% to 7.2% 25% to ~6%
Sales Finance 16% to ~6.6% 25% to ~6%
Fed Base Fed Stress
Adverse
No benefits assumed from U.S. Stimulus Programs
18
35
Commercial portfolio stress testing
Key Drivers:
Macro • GDP, Unemployment
• Liquidity
Portfolio • Senior diversified positions
• Borrower leverage
• Sector diversification
• Asset value of collateral
Key Drivers:
Macro • GDP, Unemployment
• Liquidity
Portfolio • LTV
• Property cash flow
• Borrower leverage
• Cap rates, liquidity
Commercial Loans, Leases Real Estate
Key Assumptions:
GDP (2.0%) (3.3%)
U/E avg. 8.4% 8.9%
Cap rates
Output
Key Assumptions:
GDP (2.0%) (3.3%)
U/E avg. 8.4% 8.9%
U/E peak 9.3% 10.1%
Fed Base Fed Stress
Defaults Increased ~100% from 2008 levels to ~6%
Severity Increased GECC historical severity by 50% on average to
~20-35%
Increased ~70% from 2008 levels to ~5%
Increased GECC historical severity by 35% on average to
~15-30%
Fed Base Fed Stress
Revert to historical medianof last 18 years
PPR model forecasting greater declines in office property cash flows
No benefits assumed from U.S. Stimulus Programs
36
Portfolio overview
Asset type
Consumer 30% 64%
Commercial 70% 36%
U.S. 41% 86%
U.S. consumer 6% 58%
- Cards 3% 9%
- Mortgage 0% 40%
- Auto 0% 1%
- Student loan 0% 1%
- Sales Finance/other 4% 7%
* Weighted average of top 4 U.S. money center banks
• Less Consumer
• No U.S. mortgage, auto or student loans
• More global
• Minimal real estate construction exposure
• 46% of portfolio is cross-collateralized with other 1st mortgages
• Operate each owned property
• Underwrite to hold on book
• Minimal junior debts, small hold positions
• Global redeployment, remarketing capabilities
• Deep domain expertise in Commercial Air & Power Generation
• PLCC has smaller average balance, lower loss severity, retailer loss sharing
GE position vs. banks
GE mix different than banks
% of total portfolio
(as of 4Q’08)
GE Banks*
19
37
Business reviews
38
Real Estate
20
39
Finance purchase of real estate by 3rd parties in multiple asset classes, individually and in cross-collateralized portfolios
Own, manage and add value to real estate as single assets and portfolios across office, apartment, warehouse, and retail asset classes around the world
Provide financing to owner-occupied commercial real estate for small to middle market businesses
GE Real Estate … what we do
11
22
33
40
How we manage riskRigorous process around market, customers and asset evaluations
Sophisticated tools for easier market analysis and deal assessment • Market data
• Customer relationship management
Semi-annual market evaluations•Global data driven, investment hurdle setting process• Leverage GE portfolio data as well as 3rd party data and analytics
Experienced, independent valuation/underwriting teams• Local presence … utilizing consistent process globally• Tenant credit analysis• Detailed lease by lease review … process designed to haircut revenue above historical avg. levels• Valuations generally 90-95% of MAI appraisal values
Led by seasoned risk leadership team• Over 25 years of experience, on average
Ongoing risk analytics review combined with asset management surveillance• Identifies risk trends, concentrations• Allows for proactive risk management measures
• Economic/market sensitivities
• Deal review/approval system
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41
Rigorous portfolio valuation processDetailed source document review• 100% lease review, rent rolls, income statement, GL, etc.
• Thorough credit review of major tenants
• Review of borrower/partner operating capability and financial strength
• Know Your Customer “KYC” Surveys
• Perform cash flow audits
3rd party consultant review• Environmental survey
• Structural survey (earthquake as needed)
Market/site analysis• Detailed inspection of property and surrounding neighborhood
• On-site management and tenant interviews
• In depth discussions with brokers, appraisers
• Survey competing owner/operators for rents, occupancy and expenses, in addition to public data
• Inspection of recent sale comparables
Financial modeling• DYNA lease / proprietary models created for DCF valuations
Process culminatesin roundtable asset valuation review …all assumptions challenged
42
Key market risks in 2009/2010
Challenging environment
Economic fundamentals– Industry transaction volume in 4Q’08 down 80% from 4Q’07– Rental rates , absorption , vacancies , delinquencies ,
demand , supply constant– Virtually no new liquidity available … TALF should help … 2nd half
may be better
Over $500B* of U.S. loans set to mature in 2009, $35B* from CMBS pools
– Banks deleveraging– Limited new refinancing capacity in the system
Equity valuations– Up to 20% drop in major market rents expected, vacancies up
significantly– Values still under downward pressure … our values down ~18%
’07-’08
11
22
33
* Source: Property & Portfolio Research (PPR)
22
43
Primary real estate productsDebt portfolio: $48B Equity portfolio: $33B
• On balance sheet lending
• Senior secured, first mortgage
• Not a construction lender
• 35 year track record
• Owner-occupied: mid-market credit/single tenant
• Well diversified, A-/B+ quality, avg. inv. $10MM, minimal construction risk
• Primarily wholly-owned with no 3rd party debt - $29B, joint venture investments – $4B
• Hold at historical cost less depreciation … $1.5B annual NOI, $1.1B annual depreciation
� Debt portfolio primarily senior secured first mortgages, no “hung” inventory � Equity portfolio is good quality, primarily 100% owned operating real estate� Under Fed Reserve adverse stress test, potential total portfolio losses are manageable
Office
49%
Retail 9%
Other RE
6%Warehouse
12%
Apartment
14%
Parking 3%
Mixed 6%
Hotel 1%
Office
23.5%
Mixed
3%
Owner-occupied
19%
Apartment
19%
Warehouse
9%
Other RE
6%
Construction
1.5%
Retail
8%
Hotel
11%
44
Debt
23
45
$62MM
GE Real Estate position in debt markets
Senior secured debt
• Layer of capital protection if stressed
• Real capital committed in junior position/equity
• Clear path to exercise remedies and take control of property
- We avoid legal jurisdictions where a property owners’ rights are not respected
CMBSunrated
CMBSrated
Equity
Mezzanine
Seniorsecured/
1stmortgage
Global RE debt market$6 trillion*
* Source: PPR
97%senior
secured/1st mortgage
3% ���� $1.4B
GE $48B
46% cross collateralized
GE Real EstateCMBS
Subordinated
46
Singles
32%
Crossed
portfolios
46%
Sub-debt
3%
Collateral type dispersion
Debt portfolio
Debt structure
Total debtexposure:$48B
Geographical profile
• Crossed portfolios (46%): a single loan secured by multiple properties in multiple locations. Benefit: loss from a single property can be offset by excess cash flow and/or value from other assets in the portfolio
• Hotel exposure: 35% acquired at a discount post credit crunch; 54% cross-collateralized; largest loan exposure at $1.1B was 33% LTC at U/W, cash flow up 7% since U/W and current DSC @ 5.52X
• $0.7B construction portfolio: 65% acquired at a discount
• Japan/UK/Germany: portfolios acquired at a discount
• Reserve % driven by recovery of specific reserves from loan payoffs and improvements in debt service coverage
Reserves
(1) Specific reserve process - FAS 114
• Quarterly surveillance process based on 7 triggers (DSC<1x, LTV>100%, “Risk/Watch” accounts, delinquent or non-earning, cost recovery, past maturity>90 days, loans with specific reserves)
• Specific reserves posted when loans deemed not fully recoverable, generally when LTV > 100%
(2) General reserves process - FAS 5
• Based upon robust analysis utilizing PPR “Compass” model technology - real estate market data and GE portfolio statistics
($ in millions)
’05 ’06 ’07 ‘08
PPR forecastcredit costs*
Actual GE REnet charge offs
* Forecast at end of preceding year
1117
33
69
Better experience
Losses/reserves
• ’05-’08 period generally benign, however industry model losses > GE RE losses
• Over longer periods GE RE portfolio outperformed due to:
- Product mix (very low construction exposure)
- Underwriting (valuations, rigor)
- Asset management (extensive network)
54
Fed Baseline
Case
Median long term historical cap rate +adders for asset quality
Asset-by-asset business plan* reflects PPR/PMA** recession case
• 2 year US office market rents flat
Median long term historical cap rate +adders for asset quality
Median long term historical cap rate +adders for asset quality
High hurdle = rising vacancy, falling rents/values
Medium hurdle = specific issues to be addressed
Low hurdle = balanced supply/demand, stable to rising rents/values
PPR / PMA (3rd party/independent)Bottom-up review by local field network; debate through semi-annual meetingsConsistent methodology for analyzing marketsAlignment of market views between credit committee and fieldEstablishes new business parameters (no equity originations currently), and portfolio indicators
Market collateral pairs
Debt Equity
Debt Equity Debt Equity
S/T
L/T
M
Very rigorous origination guidelines
60
Equity portfolio: $33B
Debt portfolio: $48B
• Equity hurdles shifted higher in ‘05/’06 resulting in fewer deals
• Focused investments on countries/ locations with low per capita retail exposure and a growing middle class
• 60% anchored by hypermarkets: Tesco, Walmart, Metro, Tokyu Hands
– Reduced U.S. equity exposure early
•Avoided malls
• Very limited retail exposure to single tenants
•Grocery anchored and DIY retail (~20%) and strip centers, less affected by discretionary spending (e.g. fashion)
•Cross-collateralized $2.8B = ~70% of retail exposure
U.S. retail
$240
$167 $157
($ in millions)
Example: hurdle process limits retail exposure
$3B
* Excludes owner-occupied lending
Retail
9%
Retail
8%*
Japan
22%
Other
10%
C. Eur
28%
Italy
10%
UK
5%
Korea
7%
Mexico
5% Spain
6%
N.
America
7%
0
50
100
150
200
250
300
‘06 ‘07 ‘08
31
61
How we operate our assets (debt & equity)
Experiencedteam network
Intensive asset surveillance processes
Issue resolution/value creation techniques
• 97 field office network• Asset management team
averages 20+ years RE experience
• Shifted focus of global team from originations to asset management
• Global equipment finance seeing weakness in transportation, construction and automotive
• Consumer-related inventory and U.S. restaurant financing under pressure
• Leveraged lending experiencing weakness in newspaper, automotive, radio and retail
Leveraging broader domain expertise
to drive portfolio solutions
• Created senior executive roles in each region to lead loss mitigation teams
• Shifted significant resources to drive work-out and portfolio management activities
• Reduced exposure to troubled sectors and restricted approvals to top-tier credits
Monitoring current portfolio trends
78
Leveraged
Market
$5.2 TrillionGE
$68 Billion
Sub debt
Re-packaged(CDO)
High Yield
Asset-based
Seniorsecured
ABL & factoring … assets betterpositioned than last cycle
2000 2008
Liquidation coverage (ABL) 1.2x 1.7x
Interest coverage (ABL) 1.3x 1.7x
Average exposure (ABL) $5MM $24MM
% Top 10 names 19% 7%
% Top 10 industries 66% 43%
Factoring 90-days 8.4% 4.2%
2000 2008Senior debt multiple 3.5x 3.5x
Senior interest coverage 1.3x 2.1x
% Top 10 names 18% 8%
% Top 10 industries 63% 61%
% > 4.5x senior debt multiple 31% 32%
Average exposure $13MM $27MM
Cov lite exposure 4.5% vs. 15% industry
Leveraged lending … strong U/W discipline, better spread of risk
Global lending overview
Senior secured portfolio rigorously managed by an experienced team of professionals
$30B
$38B
$70MM
40
79
Leveraged loans: outperforms industry benchmarks in periods of stress
2.37%
1.59%
0.49%
0.93%0.37%
0.30%
0.31%0.43%0.86%
4.60%
2.95%
0.46%2.08%
2.47%1.32%
1.00%0.29% 0.16%
'00 '01 '02 '03 '04 '05 '06 '07 '08
Market loss rate*
GE loss rate
* Market Loss Rate computed using Moody’s speculative grade default rate x S&P LossStat 1st lien cash flow loss-given-default rate
• Starts with good underwriting: underwrite to hold, senior secured facilities, known industries; no junior debt, start-ups, leveraged build-ups or small EBITDA companies … underwrite assuming work-out
• Rigorous portfolio management: sophisticated tools & proprietary data to re-rate portfolio as accounts or markets change; routine stress testing & scenario analysis … account surveillance to ensure early detection of stressed credits
• Proven work-out ability: willing to work longer & harder to recover full value; not selling early or into illiquid markets
Asset backed facilities with broad spread of risk by collateral,transaction size and geography
(1.8%)
• PD is impacted by slowing economy
• LGD increase is driven by price declines in major collaterals (aircraft, transportation, construction) and lower frequency of full recovery for small transactions
Sources for macro economic outlook range:FSA guidance on stress testing, CML (Council of Mortgage Lenders), Global Insight, Moody’s Economy.com, RICS (Royal Institution of Chartered Surveyors)
Stress case also includes:
11 Limited refinance ability for high risk segments
22 Counterparty risk to mortgage insurance reliance
’08A
↓19%
0.7%
5%
5.7%
$201
64
127
Mortgage stress - remaining portfolios
’09 outlook Base Proxy Adverse Proxy
Australia HPI decline 2% 5% 10%
Addn’l loss on sale 15% 20% 25%
Unemployment 5% 5% 6.4%
FranceHPI decline 0% 5% 15%
Addn’l loss on sale 20% 20% 30%
Unemployment 8% 8.6% 9.2%
MexicoHPI decline - - 10%
Addn’l loss on sale - 15% 20%
Unemployment 4.3% 5% 5.8%
SpainHPI decline 30% 35% 45%
Addn’l loss on sale 15% 15% 15%
Unemployment 13.9% 20% 22%
IrelandHPI decline 9% 15% 19%
Addn’l loss on sale 13% 20% 20%
Unemployment 9.2% 13% 19%
Key stress assumptions
Portfolio (assets) ’09 outlookFed BaseProxy
Fed AdverseProxy
Australia $4 $6 $43
($ in millions)
Mexico 9 12 37
Spain 55 71 100
Rest of World 18 22 62
France 21 30 59
$13B
$11B
$2B
$1.3B
$3.6B(Ex UK and CEE)
Ireland 8 35 47$0.9B
$115 $176 $348
Credit costs
128
SummaryU.S. Consumer
� Took loss actions early … entry rates down
�Mitigating losses with profit sharing and revenue actions
� Solid reserve position … 2x non-earnings
Mortgage
� Low risk and stable performance outside U.K.
� Solid U.K. underwriting, low LTVs and MI mitigatedown cycle
�Aggressive collections/loss mitigation focus
Prepared for challenging U.S. and U.K. economies
65
129
GE Capital Global Banking
130
Emerging markets bank dynamics
Who we are and what we do
- 89% Europe
• 15 countries presence … diversified assets
- 8% Asia
- 3% Central America
• Well positioned in core markets
- Top 5 in Czech & Poland
- Top 3 in Turkey & Central America
• High quality portfolio
- 56% secured financing
- 82% A/B risk credit grades
- Underwrite to hold
Strong franchise
• Wholly owned banks ($27.8B) + bank JVs ($4.7B)
-~ 3,000 branches
-~ 25MM customers
Assets $11.7B
Poland
Assets $6.7B
Czech/Slovakia Assets $4.7B
Hungary
Assets $0.8B
Latvia
Assets $0.6B
Romania
Assets $1.9B
Turkey
Assets $2.5B
Thailand
Assets $1.0B
Russia
Assets $1.0B
LatinAmerica
66
131
46%
17%
19%
11%
7%
PortfolioProduct portfolio
$22B 4Q‘08 Receivables (%) a)
Credit profile
SME
Sales Finance
Cards
Mortgages
Auto
8%
20%
PersonalLoans
21%
6%
35%
10%
Credit distribution (%)
Diversified portfolio … 63% A/A+ credit quality
A+
D
C
B
A
a) $27.8B total assets
132
GE early mover in Eastern EuropeFinancials
Conservative entry … organic growth over time
Czech/Slovakia
PROSPERITA’97-’00
Romania/Latvia
’06
Hungary
’01
Poland
’95-’98-’08
PAM
Russia
’04
2008
Assets ($B) 27.1
NI ($B) 0.5
ROI (%) 2.2%
’05-’08 CAGR %
20%
15%
(40) bps.
2005
10.5
0.3
2.8%
Credit performance
Credit Cost %
30+%
Global Consumer%
’02 ’03 ’04 ’05 ’06 ’07 ’08
2.89%
1.79%
7.47%
2.99%
5.72%
2.42%
ex-Acq. & FX
67
133
Slower Eastern Europe growth
Oct.’08 forecast Mar. ’09 forecast
Assets $1.0B$4.7B
(1.8%)
$0.6B$11.7B
CEE GDP growth%*
$0.8B
*Sources: EIU Reports February/March 2009
2009 loss planning reflects tougher environment
$6.7B $1.9B
Russia
5.5%
(2.0%)
Hungary
3.0%
(3.0%)
Romania
4.8%
Poland
3.8%
0.7%
Latvia(12.0%)
(0.5%)
Czech
4.3%
(2.0%)
Turkey
3.2%
(2.0%)
GE 4Q’08
134
Eastern Europe outlookCurrent challenges driven by…
Expansion led by EU accession & GDP growth
Banking penetration remains low
Macro imbalances
Currency volatility
Structural dependencies
Czech Hungary Latvia Poland Russia
Exports/GDP
FX lending
Loans / Deposits
80 4780 3242
57 888 2125
132 23871 11692
Czech
42%
Hungary
101%
Latvia
114%
Poland
52%
Russia
31%
Deficit / Surplus
(1.9) (1.9) 3.6(1.4) (3.0)
0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
CEE
RussiaMiddle East
ChinaIndia
LatinAmerica
Africa
WesternEurope
NorthAmerica
0 10 12 16 182 36144 6 8
Revenue CAGR (2000–2007)
Margins 2
007, p
erc
ent
* Asia excl. China, India and JapanSource: EIU, McKinsey, FPK, UBS, Reuters
March’08 March’09 V%
Czech 16.0 20.4 ↓ 27%
Hungary 163.9 228.4 ↓ 37%
Poland 2.2 3.5 ↓ 53%
Russia 23.5 34.7 ↓ 45%
1
2
3
External debt / GDP
Total banking revenue / GDP
WE Middle East
ANZ North America
Asia* Latam
9.4%
6.8%4.8% 4.7% 4.5%
3.6%
Eastern Europe
3.0%
Near term potential volatility … long term attractive
U.S. Consumer - Card 12 16.31% 18.91% 21.33% 9.35%
U.S. Consumer – Sales Finance 14 11.14% 13.71% 14.98% 4.95%
Non-U.S. Mortgage 59 1.09% 2.05% 2.76% –
Other Non-U.S. Consumer 50 4.18% 4.71% 5.71% –
Total GE Capital Finance $368 2.37% c) 3.13% 3.73%
Total GECC $371
Memo:
- U.S. Construction loans 10.60%
- 1st lien residential 3.90%
- Home Equity/2nd’s 6.15%
($ in billions)
None
None
None
GECC
a) Derived from Goldman Sachs Equity Researchb) C&I loans used for leveraged loans, “other leases/loans” for equipmentc) 2.63% including $1B management planning additional losses
156
Top bank 3σ stress
• Stressed $266B financing receivables in proprietary model
• For $102B non-U.S. consumer receivables assumed growth in loss rates 50% higher than U.S.
• Scenario
– 9.4% peak U/E 2Q’10 (4Q’09 9.2%)
– 30% peak to trough housing decline
• Stressed 3 std. to 95% confidence
• Did not specifically stress assets beyond financing receivables
2009 outlook Losses & impairments
• 2008 back-testing of their results vs. actuals– 15% lower than modeled
3rd party 3σσσσstressed
GECCadversecase
$368BFinancing
receivables$14.5B
$13.7B
3rd party 3σσσσ stress within 5% of adverse stress of financing receivables
79
157
TCE/TA ratio a)
5.9% b)
GECC4Q’08
BAC4Q’08
WFC4Q’08
Citi4Q’08
JPM4Q’08
3.4%2.1%
1.1% 1.3%
Tier 1 common ratio
6.9% b)
GECC4Q’08
6.5%
4.4%3.1%
2.3%
TCE/Risk weighted assets a)
6.0% b)
5.4%
2.4%
1.2%
2.7%
RWA/ Total Assets 93%61% 51%84%72%
GECC4Q’08
GECC’09
AdverseStress
Key ratios – GECC
6.1% c) 7.1% c)
GECC’09
AdverseStress
6.2% c)
GECC’09
AdverseStress
4.9%5.8%
5.0%
BAC4Q’08
WFC4Q’08
Citi4Q’08
JPM4Q’08
BAC4Q’08
WFC4Q’08
Citi4Q’08
JPM4Q’08
• Strong tangible equity ratios even in adverse case
– Ratios improve vs. pro-forma 4Q’08 in adverse case due to balance sheet shrinkage
• Tier 1 common ratio strong in adverse case, well above 5.5% estimated regulatory target post stress
• Tangible equity reflects $5.3B unrealized loss on investment securities
c) Assumes no changes to FX and level of unrealized losses
b) Adjusted for equity infusion & CTA/OCI impact
a) TCE: Book equity less preferred equity, goodwill & intangibles; TA: Total assets less goodwill & intangibles
Source: Federal Reserve Y-9 and/or SEC 10-K filings for 4Q’08; No pro-forma adjustments across peer group
158
Financing receivables reserve methodology
Accounting model Methodology
FAS 5• Formulaic calculation for smaller
balance homogeneous loans• Estimate of incurred losses imbedded in
portfolio at a point in time– Not life losses or future losses not
yet incurred
FAS 114• Specific reserves on individual loans
deemed impaired
FAS 5• Formulaic calculation of losses
embedded in portfolio for whicha default or loss event has beenincurred but not yet observable
Consumer• Primarily roll rate models
• Write-off policy
– Closed-end installment – 120 days
– Revolving – 180 days
– Mortgage – 360 days
Commercial• FAS 114
– Specific credit or collection evaluation approach
• FAS 5
– Primarily static pool model applying historical loss curves
– PD x LGD history applied to loans individually determined non-impaired
4Q’08
$371B
Aviation/Energyloans
Real Estatedebt
Corporateloans
Franchise/Other
U.S. Consumer
Non-U.S.Mortgage
OtherConsumer
Mid-Marketlease/loan
Other
$226B
$145B
Each methodology incorporates current trends and conditions and other observable environmental factors
80
159
Non-earning reserve coverage
Commercial
4Q’08Non-earning
4Q’08Reserves
Exposure
Collateralvalue on
remainingexposure
Loans inrecovery/workout
Expect fullrecovery
100%recovery
($ in billions)
$3.2
$1.7
228%coverage
1.1
0.5
0.8
0.8
Estimatedloss exposure
160
Non-earning reserve coverage
Consumer
4Q’08Non-earning
4Q’08Mortgagereserves
EstimatedMI
Estimatedcollateral
value
Mortgage non-earnings
Non-mortgage
$3.2non-mortgage
reserves
($ in billions)
$4.7
231%coverage 133%
coverage
1.4
3.3
0.2 $0.4
1.8
0.3
Cure
1.0
Estimatedloss
exposure
81
161
U.S. Consumer
- U.S. credit cards $12.7 6.30% 3.4% $238 7.8% 7% 7.8% x 12.7
a) Consumer data avg. of Top 3 BanksReal estate data source Top 5 Bank, loss coverage est. split construction vs. non-construction Commercial loans and leases data source Top 5 Bank
17%
29%
U.S. reserves comparable
162
GECS investment securities($ in billions)
Diversified, predominantly long term debt-based portfolio
12/31/08
ABS
RMBS
20
U.S.gov’t.
3Non-U.S.
gov’t./corp. Equity
1
$41B
U.S.corporate
1
2
4
CMBS 2
Retainedinterests
6
2
State & Muni
� Assets primarily support the run-off insurance operations long term liabilities and guaranteed investment contracts
� We do not have debt securities classified asFAS 115 HTM
� $8B asset-backed securities; $1.3B subprimeexposure ($1.1B wrapped by monolines) – no CDO’s
� U.S. corporate debt :�70+% investment grade�600 Companies, 60 >$100MM book value� Largest single exposures Fannie & Freddie $0.8B
in total, Wells Fargo $0.3B, rest $0.2B or less
82
163
Investments
• Compare fair value to book value; Is fair value <book value?
–68% of portfolio priced via market price or pricing services, other non-binding broker quotes, or internal models
Measure
Evaluate
Test
• Evaluate underlying issuer or cash flows
–Debt securities – analyze 8 credit-related and financial performance criteria
–Asset backed securities – run cash flow recoverability analysis
–Consider monoline wraps and ability to pay claims
• Challenge pricing service for a sample of securities; confirm process
• Confirm cash flow assumptions based on current market information
• Compare subordination of our holding; compare to expected losses
Conclude
• Corporate reviews of all securities with unrealized loss >$5MM and>6 months underwater OR <6 months underwater and >20% decline, regardless of test result
• Determine other than temporary impairments
• GE Corporate Audit Staff and KPMG audits
$1.4B pretax impairments in 2008 … estimated $0.7B at risk for 2009
Impairment review process
164
GECC Goodwill($ in billions)
FAS 142reporting units
Consumer $9.1
Commercial Lendingand Leasing 12.6
Real Estate 1.2
Aviation 0.2
Energy Financial Services 2.2
GECC $25.2
Goodwillas of 12/31/08 Methodology/frequency
• Tested for impairment annually and whenever events or circumstances make it more likely than not that fair value < book value
• If reporting unit fair value < book value, then must fair value each identified tangible and intangible asset. Goodwill impaired when implied fair value < goodwill book value
• Fair value of reporting units estimated using discounted cash flow method; corroborated with market multiples, when available
• Retesting reporting unit goodwill for impairment in 1Q’09
– No impairments indicated
– Continuing to monitor
83
165
Hyundai – Korea 43% $3.2 Stable Low
Garanti Bank – Turkey 21% 1.9 Outperform Low
CAMGE – Spain 50% 1.3 Stable Low
Bank of Ayudhya – Thailand 33% 1.1 Stable Low
GE Nissen – Japan 50% 0.9 Stable Low
BAC International – C. America 50% 0.7 Stable Low
Dogus GE BV – Romania 50% 0.5 Stable Low
Colpatria – Colombia 50% 0.3 Stable Low
Brunswick/Polaris – CFS 50% 0.3 Stable Low
Southern Star (LP) – Kentucky 60% 0.3 Outperform Low
Cosmos Bank – Taiwan 23% 0.3 Challenged Medium
All others 8.5 100+ partnerships, avg. $50 investment
$19.3
GECC Associated companies($ in billions)
Investment Holding4Q’08
Investment a) Performance
View ofimpairment risk
as of 2/09
a) $18.7 GECS
166
Rigorous process for evaluating asset impairments
• All FAS115 assets reviewed quarterly for other than temporary impairment
• Multiple layers of review:
– Business unit
– Capital Finance
– Corporate accounting
– CAS/Auditors
• All equipment coming off lease evaluated for impairment
• All annual reviews updated if there is change in assumptionsor circumstance
(GECS $ in billions)
Accounting models utilized are prescribed
Rigorous process
<2% assets subject to mark-to-market
Equities-trading $0.8
FAS133 hedges –Retained interest 1.8(Consumer)
4Q’08 assets
CMBS $–
Assets held for sale 7.7
4Q’08 assets
-Money 3.1-Real Estate 0.3
-Other 4.3
Assets reviewed for impairment
4Q’08 assets FrequencyPrimary
acc’ting. model
Real estate owned $36.7 At least annually FAS144
Cost & equity method inv. 21.6 At least annually APB18/FAS115Retained interest 4.6 Quarterly FAS115
Equipment leased to others At least annually FAS144- Aircraft 32.3
- Equipment 27.3Goodwill/intangibles 29.0 At least annually FAS142/144
GECS Insurance securities 22.0 Quarterly FAS115
84
167
Summary
We follow the appropriate accounting guidelines
Our reserves are very comparable to banks in similar asset categories
We are a secured lender
We do not see significant impairment risk in goodwill or associated companies
We have sufficient capital even under adverse stress tests
22
33
44
11
55
168
GECC Summary+ Outlook
85
169
Primary questions … the answers� Commercial Real Estate
We will experience lower earnings through this cycle, but believe we have it covered in our own business framework
� What is the risk in U.K. mortgage? We expect credit losses will increase, but mortgage insurance and operational rigor should help mitigate the impact to a manageable level
� What is the risk in Eastern Europe? These are long established franchises. We expect credit losses to increase, but not
significantly higher than the rest of world
� What is the risk in U.S. Consumer? We see a tough cycle driven by unemployment in 2009, and are planning for higher losses in line with the industry
� Losses/Impairments/ReservesWe apply appropriate accounting policies. Our reserves are adequate for current economic conditions
� CapitalBased on stressed losses, capital appears adequate. Further options available if conditions worsen
170
GE Capital future
OtherEnergyGECAS
Consumer
Real Estate
Commercial
Assets $637B $400-450
ROI 1.3% 1.5-2%
Core75%
Verticals 15%
Today Future
Banks 10%
Why to like this business
• Deposit funding with potential for growth
• High margin new business
• Consolidation + partnership potential
• 25+ year track record
• Leverage GE brand/competencies/synergy
• Leasing and asset management intensive platforms advantaged vs. banks
• Direct origination to mid-market
• Core underwriting skills
• Fewer FinCos
• Bank consolidation … historically positive
Banks
Verticals
Core
86
171
2009 Summary
Environment much tougher – we think GECC is prepared
• Strong liquidity/limited refinancing risk today
Thoughtful view of stressed losses … working aggressively
Revised 2009 outlook – higher losses, but more cost-out
Intense focus on risk management, work-out and restructuring
• Rigorous asset management/manage risk
GE Capital business model robust as the economy recovers
22
33
44
11
55
172
Closing
87
173
How to think about GE Capital riskEven under Fed adverse stress tests, GE Capital is approximately breakeven in 2009 and we should not need to inject additional capital
Framework can accommodate ~$40B of losses over 3 years without requiring additional capital
Losses and impairments $10 $14 $18
Net income $5 $2 $0
Fixed charge coverage a) ~1.52 ~1.32 ~1.19
Tangible equity ratio 6.9% 6.4% 6.1%
Op plan Fed base Fed adverse
Cases
Base plan $10B ~$30B ~$40B
20082009/2010
Cumulative3 years
Potential losses & impairments
(a- includes ~$B equity infusion
22
11
174
Sources of contingent capital
We have $34B of tangible equity after $9.5B infusion
Other potential sources
• Announced dividend cut provides additional capital
• Ability to control new originations/GECC asset sales
• Ability to monetize assets or take responsibilityfor GECS liabilities
Current outlook does not require external capital
88
175
Company update
Energy Infrastructure ++ �
Tech. Infrastructure + �
NBCU 0/‒ —
Capital Finance $5 Profitable
Corporate Flat �
Dec. 16 1Q Comments
• Global growth
• Aviation on track• Healthcare pressured
• Advertising market weak• Tough comps
• Strong cost reductions • Tax credits
• C&I/pension pressure• Costs lower
176
� Running GE to be safe and secure over the long term‒ Liquidity position is extremely strong‒ Completed 93% of our 2009 planned long term funding
� Have sufficient capital and alternatives to weather adverse economic conditions
� Running GE with intensity‒ Resizing our cost footprint in a meaningful way‒ Management team is focused on delivering cash‒ Continuing to invest/position company for long term growth
� We expect GE Capital will be profitable in 1Q’09 and 2009
� We are committed to GE Capital
GE will come out of this cycle a stronger, more focused and competitively advantaged company