GE Capital Investor Meeting July 28, 2009 "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, including the impact of proposed financial services regulation; 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.” 2 Key Messages GE Capital well run thru this recession, will provide attractive long term returns Funding and liquidity dramatically improved and future profile very manageable Portfolios performing as expected or slightly better, most below Fed Base Case 2010 stress test loss scenarios show losses similar to 2009 Historically, new regulation included grandfathering … believe we have strong support for our business model and will defend vigorously We don't see the need to raise external capital, even under adverse scenarios Post this cycle, GE Capital will emerge as competitively advantaged $400B business with attractive returns (2%+ ROI) 1 2 3 4 5 6 Much better Early in cycle, but OK Challenging • U.S. Consumer • U.K. Mortgage • Commercial loans and leases • Global Banking • Commercial Real Estate 7
32
Embed
GE Capital Investor Meeting - General Electric Capital Investor Meeting July 28, 2009 "Results are preliminary and unaudited. This document contains “forward-looking statements”-that
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
GE Capital
Investor Meeting
July 28, 2009"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, including the impact of proposed financial services regulation; 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.”
2
Key MessagesGE Capital well run thru this recession, will provide attractive long term returns
Funding and liquidity dramatically improved and future profile very manageable
Portfolios performing as expected or slightly better, most below Fed Base Case
2010 stress test loss scenarios show losses similar to 2009
Historically, new regulation included grandfathering … believe we have strong support for our business model and will defend vigorously
We don't see the need to raise external capital, even under adverse scenarios
Post this cycle, GE Capital will emerge as competitively advantaged $400B business with attractive returns (2%+ ROI)
11
22
33
44
55
66
Much better Early in cycle, but OK Challenging
• U.S. Consumer • U.K. Mortgage
• Commercial loansand leases
• Global Banking
• Commercial Real Estate
77
3
GE Capital is a strong franchise
Earnings power*
� Large in-house originations … great geographic/domain coverage
� Support of AA/AA+ rating
� Strong risk management culture
� Asset management expertise
>$80B
$13B
20 yrs. Since 4Q’07
Strengths
Throughcycle Future
Volume – =
Margin + +
SG+A + +
Credit costs – +
Gains/impairments – +
Tax � –
Positioned to grow in future
We will come out of this cycle strong and competitively
advantaged* Earnings of GECC through 2Q’09
4
1st half results – Capital Finance($ in billions)
1H update
� ENI excluding FX �$24B from 4Q …continuing to rapidly reduce balance sheet
� $144B of total YTD originations … $15B of commercial on-book originations at attractive returns
� Credit cost at $2.8B for 2Q, $5.1B YTD; YTD impairments $0.7B … currently running better than Fed base case
� Reserves $6.6B, up $0.9B from 1Q …coverage 1.81%, up 22 bps.
� SG&A down (28%), $1.9B of savings …strong cost out actions
$1.7
$557
Net earnings Assets
� GECC earnings $1.3B
(69%)
(11%)
1H losses trending slightly better than base case
2009 TYOriginal outlook ~$5.0
Fed base case ~2.0-2.5
Fed adverse case ~$0
5
Capital Finance safe & secure
GECS Commercial paper
4Q'08 1Q'09 2Q'09
$72$58 $50
GECC leverage–c)
4Q'08 1Q'09 2Q'09
7.1:16.0:1 5.6:1
Long-term debt funding
’08 ’09 ’10F
$84
$45–a) $35-40
18–b)
4Q'08 1Q'09 2Q'09
Tier 1 common ratio
5.7%7.3% 7.4%
4.7 6.3 6.5GECC
GECS
1 2
4 5
3
c) - net of cash & equivalents with hybrid debt as equity ex-non-controlling interests
Ending net investment–d)
$525$514
$501
4Q'08 1Q'09 2Q'09
Completed’09 goal …
expect lower
Cash & backup bank lines >2X CPa) - includes $13B pre-funded in 2008b) - completed through July 22nd
($ in billions)
d) - excluding effects of FX
6
GE Capital … important source of liquidity to U.S. businesses and consumers
1H'09 U.S.
volume
Continuing to provide liquidity to critical areas of U.S. economy
$69B � $155B of new financings to companies, infrastructure projects and municipalities
� $127B of credit extended to ~50 million consumers
� GECC has outstanding credit with more than 330,000 commercial customers and 145,000 small businesses supported by our Retail programs
� In 2009, added ~16,000 new commercial customers and ~23,000 new small businesses supported through our Retail programs
� Supported virtually all U.S. airlines, leader in bankruptcy financing, healthcare and energy infrastructure
Since 1/1/08
$43BOn-book
$26BFlow
Estimated U.S. market position
• Middle Market Commercial Lending #1
• Equipment Lending/Leasing #1
• Middle Market Corporate Finance #1
• Aircraft Financing #1
• Healthcare Financing #1
• Energy Financing & Project Financing #1
• Fleet Leasing #1
• Franchise Finance #1
• Commercial Real Estate Lending Top 3
• Dealer Financing #1
• Private Label Credit Cards #1
7
2009 originations and collections
Dynamics
$92
$68
+24B
� Assumed TY sales/securitizations ~$20B� (41%) … $10B in 1H
� Assumed TY R/E equity sales ~$1.6B � (64%)
� Actual sales and collections out-paced new originations by ~$62B since 3Q’08
• TY’09 Planned volume:– Consumer: $112B - includes revolving credit
– Commercial: $41B
• Monthly pricing reviews
• Repositioning portfolio to higher yielding core businesses:
– Philippines + Thailand FinCo ($1.2B) to close in 2H’09
• Enhanced collections activities
• Regular Capital reviews
– Volume pipeline
– Alternate fundingOutlook
1H ENI reduction on pace to achieve lower Y/E target
$501
’08 ’092Q’09*
* ex-FX
10
Dispositions($ in billions)
Sales ENI Buyer Closed
Japan – Personal Loans 5.9 3Q
Office Imaging 0.5 2Q
Healthcare – Practice Solutions 0.8 4Q
Corporate Card $1.3 1Q
Australia Mortgage 1.5 1Q
Partnership Marketing Group 0.4 2Q
Region
Continuing disposition momentum
Austria 1.7 1Q
Finland 1.7 1Q
U.K. Unsecured 5.6 1Q
Germany 3.4 4Q
Philippines 0.2 2H*
Thailand Finance Co. 1.0 2H*
* Signed, scheduled to close in 3Q/4Q
Canada Mortgage 0.1 2Q
Total $12.3
Total $11.8
’08
’09
11
SG&A costs – Capital Finance Running with intensity
Focused approach
• Restructuring continues
� Consolidating geographies, platforms and HQs
• Attacking indirect spending
� Consolidating roof-tops … down 180 from YE’08
� Indirect costs down 36%
• Exiting and running-off underperforming andnon-strategic platforms
• Rigorous GE operating mechanisms
1H’09
$4.8
a) - Excludes Penske which was deconsolidated 1Q’09, acquisitions and corporate assessments
$6.7
2Q’09 YTD -a) 2009 estimate -a)
1H’08
($1.9)
ex-FX – $5.1 – $9.8
TY’09
~$9.3
$13.1
TY’08
($3.8)
(28%) (29%)
Now estimate $3.8B cost-out in ’09 …$0.6B more out since 3/19 update
($ in billions)
12
Financial Services reform proposal• Treasury white paper issued on June 16 … outlines sweeping proposal - Fed as systemic regulator of Tier 1 Financial Holding Companies (FHC)- Consolidation of federal banking regulators- Conversion of thrifts & Industrial Loan Companies (ILC) to banks- FDIC-like resolution authority over failing FHCs- Consumer financial products commission
• One of dozens of proposals in White Paper recommends separating non-financial from financial companies … ILCs, thrifts & others … 5 years to separate
• Opposed to forced separation … not a cause of the crisis … affects important source of lending- Existing structures traditionally grandfathered- Reform should recognize diverse funding sources
• Congress will now consider … long, complex process
• GE supportive of systemic regulation … GE Capital anticipated & planned for � regulation
• Executing plan for smaller, more focused GE Capital … nothing in proposal changes that
� Financial services reform in very early stages� GE will continue to support GE Capital
13
Update from March 19thmeeting
� Commercial Real Estate <Fed base case; Difficult environment
� U.K. Mortgage ~Fed base case; HPI trending better … early
� Global banks and Eastern Europe ~Fed base case; Profitable
� U.S. Consumer Better than Fed base case; Outperforming unemployment
� Total Losses/impairments <Fed base case; Continued reserve increases
Capital adequacy and funding Ratios strong and improving; Funding well ahead of plan
Other:
– Investment securities • Investment securities unrealized loss $2.0B lower• than 1Q
– Goodwill • Goodwill tested 1Q; Annual update in 2H
Areas of interest 1H’09 loss update; Outlook
1st half losses slightly below Fed base case
14
Agenda
Funding & Liquidity
Portfolio Quality & Reserves
Business Reviews & Stress Testing
– Overview
– Real Estate
– Mortgage/U.S. Consumer
– Banks and JVs
GE Context
Q&A
Kathy Cassidy – GECC Treasurer
Jeff Bornstein – GECC CFO
Jim Colica
Ron Pressman
Mark Begor
Bill Cary
Keith Sherin – GE Vice Chairman & CFO
15
Funding & Liquidity
16
GECS funding
• Global debt markets recovering ... exiting government programs
• Received FDIC approval for TLGP exit plan … new CP issuance will benon-guaranteed & TLGP LT debt remaining capacity will be ~$14B
• ’09 long-term funding plan complete ($45B) … mid-way through ’10 plan ($18B of $35-$40B)
• Issued $12B non-guaranteed debt … largest non-guaranteed issuer YTD
• CP balance @ ~$50B as of 6/’09 … ahead of plan by 6 months
• Strong GECC capital ratios … Tier 1 common ratio at 7.4% (2Q’09) vs. 5.7% (4Q’08) & leverage at 5.6 (2Q’09) vs. 7.1 (4Q’08)
• Strong cash and liquidity position … $50B cash, $55B bank lines
• Funding cost remains competitive
17
4Q'08 4Q'09E 4Q'10F
GECS funding through 2010($ in billions, ex-FX/SFAS 167)
Cash & equiv. $37 $60+ $45+
Comm’l paper
Deposits/CDs/ Other
Non - g’teed -LT debt
FIN 46
~$495
~$500~5
50
60-65
321
$509
$515
6
72
55
369
~$445
~$450~5
40-50
65-75
270-280
1364
59
TLGP - LT debt
• Will continue to shrink non-guaranteed LT debt through business assets reduction
• Will continue to grow alternate funding sources
–Lower assets in U.S. banks driving lower deposits
–Proposing to add business platforms to ILC & grow direct origination (subject to regulatory approval)
–Emerging market deposits � … CEE & Central America
–Asset based funding … $1.4B Euro covered bonds issued in July ’09
• Will continue to maintain strong cash & liquidity position
Comments
18
GECS strategic funding plan($ in billions, ex-FX/SFAS 167)
4Q'08
$515
20-30
(150)-(160)
Wholesale funding
Alternate /biz. specific funding
•CP � to $40-$50B
• LT debt issuance of $140-$150B vs. $270-$280B maturities
•Grow U.S. bank deposits
•Grow intl. bank deposits
•Grow asset based funding
369
2009 - 2012
Conservative + diversified funding
4Q'12F
$350-375
230-250
Deposits/OthersFin 46 debtLT TLGP Debt
LT Debt
Comm’l paper 72
556 13
75-85
40-50
~5
Capital Finance ENI $525 ~ $400
Cash, Insurance & $43 $40-$50Disc. Ops ENI
19
Beginning cash balance
Sources
LT debt issuances – TLGP
LT debt issuances – non-guaranteed
Alternate funding
Collections > originations
Capital infusion from GE
Total sources
Uses
TLGP LT debt maturities
CP reduction
Others incl. non-guaranteed LT debt maturities
Total uses
Ending cash balance
� ~2% of unsecured debt market� Conservative plan to diversify funding� TLGP maturity profile very manageable� Maintaining strong liquidity position
($ in billions, ex-FX)’09E
$37
52
15-20
5-10
40-45
10
~127-132
(1)
(22)
~(78)
~(101)
~$63-68
’10F
~$63-68
–
20
5-10
25-30
–
~55
(5)
0-(10)
(60)-(65)
(65)-(80)
~$45-60
GECS strategic funding plan by year
Notes:• Funding plan assumes outstanding commercial paper of $40-50B• Pre-funding : ’09 ($13.4B completed in ’08), ’10 (100%: ~$35-$40B in ’09), ’11 (50%: ~$20B in ’10) & ’12 (15%: ~$6B in ’11)
’11F
~$45-60
–
26
5-10
25-30
~2
~63
(20)
–
(40)-(45)
(60)-(65)
~$40-55
’12F
~$40-55
–
34
5-10
25-30
–
~69
(39)
–
(40)-(45)
(79)-(84)
~$25-40
20
GECC & GECS capital metricsTCE/TA ratio -a)
GECS
4Q’08 1Q’09 2Q’09
4Q’09E
Base Adv
4Q’10F
Base Adv
GECC
3.9
5.45.9 5.9
5.6
6.9
5.6
4.9%
6.6% 6.9% ~6.9%~6.6%
~8.1%
~6.9%
Tier 1 common ratio
GECS
4Q’08 1Q’09 2Q’09
4Q’09E
Base Adv
4Q’10F
Base
GECC
4.7
6.36.5
6.9
6.6
7.8
6.5
5.7%
7.3% 7.4%~8.0%~7.7%
~9.0%
~7.7%
Leverage -b)
GECC
4Q’08 1Q’09 2Q’09
4Q’09E
Base Adv
4Q’10F
Base
GECS
7.16.0 5.6
5.35.4 4.8 5.2
7.7
6.45.9 ~5.7 ~5.9
~5.1~5.7
• Strong tangible common equity ratios even in adverse case … well positioned relative to peer average
• Leverage commitments ahead of plan … GECC ~6:1 since 1Q’09 and can be maintained even in Fed adverse scenario
a) -Tangible Common Equity (TCE): Shareholders’ equity less goodwill & intangibles; Tangible Assets (TA): Total assets less goodwill & intangibles
b) -Net of cash & equivalents with hybrid debt as equity ex. non-controlling interests
Adv
Adv
• 2010 likely to be impacted by SFAS 167 requiring to account for securitizations on-book
• 2010 adverse case Tier 1 common ratio well above 4% threshold defined by the Fed as part of SCAP
21
Portfolio Quality& Reserves
22
Commercial portfolio
- Real Estate –a) $0.7 $2.4 $3.6 $0.6
- Aviation and Energy 0.3 0.4 0.7 0.1
- Mid-market lease/lend 1.5 2.0 2.6 1.1
- Other Commercial 0.3 0.5 1.5 0.2
Consumer portfolio
- U.S. 4.3 5.1 5.7 1.9
- Non-U.S. Mortgage 0.6 1.2 1.6 0.6
- Other Consumer 1.9 2.2 2.7 1.3
Management planning 1.0 – – –
Total ~$10.6 ~$13.8 ~$18.4 $5.8
Summary losses and impairments($ in billions)
Originaloutlook
Estimated Fedbase case
Estimated Fedadverse case 1H’09A
Original 3/19 update – TY’09
a) – Equity impairment multi-year. ’09 revised view: Fed base case $1.6B, Fed adverse case $2.1B.Total revised view: Fed base case ~$13.0B, Fed adverse case ~$16.9B
–a)
23
1.48% 1.61%
2.17%
2.78%
1.46%
2.45%
1.12%
1.68%
2.27%
2.84%
2Q'08 3Q'08 4Q'08 1Q'09 2Q'09
Capital Finance portfolio qualityEquipment Consumer
Delinquencies
Non-earners 4.34%
5.62% 6.02% 5.92%
5.91%6.38%
7.43%8.20%8.47%
9.22%
10.56%
11.80%
4.70%
8.73%
13.23%
2Q'08 3Q'08 4Q'08 1Q'09 2Q'09
� North America delinquencies down 14 bps. to 6.96%‒ Better entry rates & improved late stage collection effectiveness helping delinquencies
‒ Non-earners balance flat to prior quarter … reduction in assets driving up rate
U.S. Commercial- Real Estate debt 27.6 1.47% 23% 43.1 0.67% 0.67% x 27.6- Real Estate construction 0.6 4.46% 0.5% 13.1 9.37% 9.37% x 0.6- Commercial loans 27.1 1.84% 23% 229.3 1.35% 1.35% x 27.1- Commercial leases 37.7 1.30% 32% 22.4 1.14% 1.14% x 37.7
$93.1 1.53% 79% $914 2.18% 38% 1.12%
Total $118.1 2.60% 100% $2.4T 3.60% 2.17%
U.S. financing receivables vs. topU.S. banks
GECCReservecoverageReceivables
%Portfolio
($ in billions, as of 2Q’09)Top banks average
ReservecoverageReceivables
%Portfolio
Top bankscoverageGECC assetcomposition
a)- Consumer data avg. of Top 3 Banksb)- Real estate data source Top 5 Bank as of 4Q’08, loss coverage est. split construction vs. non-constructionc) - Commercial loans and leases data source Top 5 Bank
17%
27%
U.S. reserves in line
b)
- (a
c)
27
Non-earnings
4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 2Q'09
Capital Finance
$13.0B1.47%
3.59%
Non-earnings %financing receivables
2.80%
1Q’09 $10.0 $5.7 57%
Walk
Interbanca 0.4 – 0% (2)
Real Estate 0.8 0.2 23% (2)
Mortgage 1.0 0.3 30% (2)
Comm’l lending& leasing 0.7 0.4 48% –
U.S. Consumer – (0.1) n/a (1)
Banks andnon-mortgage 0.1 0.2 129% 1
2Q’09 $13.0 $6.6 51%
1.41%
• U.S. Consumer non-earning flat; reserves �due to � in 30+ and � collection effectiveness on 90+
Coverage walk ($MM)
Non-earners Reserves
Non-earnerscoverage %
Consumer
Commercial
Total
2.13%
1.73%1.53%
$10.0B
$8.0B$7.3B
$6.5B$6.1B
$5.4B
50.5%56.9%66.6%63.4%69.4%70.8%78.1%
6.4
4.53.2
2.51.91.91.7
6.6
5.5
4.74.8
4.64.23.7
ex-FX $12.1B
Non-earnings coverage %
28
Non-earnings definitions
Non-earning Est. lossexposure
1
2
4
3
Non-earnings: Receivables 90 days or more past due (or where collection has become doubtful)
100% recovery: 100% collateral coverage
Workout/cure: In active restructuring/ negotiation with our customer (often timing/technical default issues) … expect full recovery
Remaining collateral: Recovery based on enterprise values, liens on assets or other sources of recovery (guarantees, etc.) but less than 100% collateral coverage
Mortgage insurance: Partial recovery of loss on sale of assets from insurance
Estimated loss exposure: Exposure at risk in excess of collateral
5
6
Remainingcollateral/Mortgageinsurance
Workout/cure
Exposureafter fullrecovery
100%recovery
1
2
3
4
5
6
29
Non-earnings coverage
•100% collateral recovery
• Typically no specific reserve required
100% recovery Workout/cureCollateral on
remaining exposure
•Accounts in active restructuring/negotiation
• Typically no specific reserve required
• Typically requires a specific reserve to cover collateral gap
ExampleCompany “B”
•U.S. real estate industry
• Senior-secured loan
• $13MM non-earning @ 12/’08
• Property value $20MM+
•Loan restructured at higher pricing and enhanced foreclosure rights in 2Q’09
ExampleCompany “A”
•U.S. retailer
•ABL facility – A/R + inventory
•GE commitment $150MM
•Filed bankruptcy 3Q’08
•Business sold 3Q’08
•GE fully recovered outstandings
ExampleCompany “C”
•U.S. home security industry
•Corporate loan
•$34MM non-earning @ 12/’08
•$10MM specific reserve
•Business sold and proceeds of $25MM received in 2Q’09
24
3
30
Commercial non-earnings($ in billions)
Payoffs/payments $0.6
Cured 0.2
Foreclosed/recovery 0.2
Write-off 0.4
$1.4
Bankruptcy proceedings $0.4Customer paying 0.5Negotiation/restructure 0.3In process of liquidating collateral 0.3All other, net 0.3
$1.8Paying customer (0.5)
$1.3
Real Estate $0.1EFS 0.2GECAS 0.2CLL 1.3
$1.8
• Semgroup
• Balli
• Business Prop. loans
• Loans and leases
159
Non-earning reserve coverage
Commercial
4Q’08Non-earning
4Q’08Reserves
Exposure
Collateralvalue onremainingexposure
Loans inrecovery/workout
Expect fullrecovery
100%recovery
($ in billions)
$3.2
$1.7
228%coverage
1.1
0.5
0.8
0.8
Estimatedloss exposure
100% recovery $1.1 $0.5 ($0.6)
Loss in recovery/workout 0.5 0.4 (0.1)
Collateral onremaining exp. 0.8 0.5 (0.3)
Est. loss exposure 0.8 0.4 (0.4)
$3.2 $1.8 ($1.4)
Balance@ 4Q’08
Remaining@ 2Q’09 ∆∆∆∆
March 19 presentation (p. 159)
2Q’09 composition
Non-earnings roll-forward
1H reduction
• $3.2B reduced to $1.8B• Estimate $400MM remaining loss exposure
31
2Q’09 non-earning exposure walk($ in billions)
2Q’09Non-earning
2Q’09Reserves
Collateral value on remainingexposure
Loans inrecovery/workout
Expect fullrecovery/cure
100%recovery
$6.4
$2.5
(1.5)
(1.2)
(1.9)
1.4
Est. lossexposure
Commercial
173%coverage
1Q’09 $4.5 (1.4) (1.0) – 2.1 (1.2) 0.9 $2.0
$3.3
220%coverage
Interbancaloans @ FV
(0.4)
Change in coverage driven by increase in Real Estate at lower loss given default
a) - Excludes $8.5B owner occupied and $1.0B other debt balances
Sub-debt
$1.3 ($0.1)($0.3)
$0.6
$0.2
($0.7)
N/E Collateral Workout Other Exposure Reserve100% full collateral at risk
recovery recovery
5%
Owner-occupied18%
Singles26%
Crossedportfolios51%
Delinquency by class
44
Debt maturities2009 maturities update
$6.0
$0.2
$3.3
$2.5
3/19
$6.0Total
13%$0.8Foreclose
58%$3.5Extend
29%$1.7Collect
% of total7/28
Estimated result($ in billions)
$6.0
$3.8
3.5
0.3
2H’09
1H’09
($0.4)
2.0
Collect
YTD actions on ’09 maturities
4.0
($1.7)
Extend
Extensions
($0.1)
Foreclose
($ in billions)
Pending
Maturing2H’09
Safety �
Exposure �
Senior crossed mortgage on pool of hotel assets
• Strong deal structure includes 8% cash on cash extension hurdle
• 3rd party mezzanine cancelled• Senior paid down
• LTV from 60% to 51%• 15% principal reduction
Foreclosures3 apartment complexes
Matured12/’08
Exposure �
Margins �
• Foreclosed 1/’09• 78% occupied
• Occupancy up to 85%• ~25% NOI increase
• Installed strong operator• Invested in maintenance
45
• Leased 11.8MM sq. ft. YTD (8.5MM renewals;3.3MM new leases)
Equity portfolio @ 2Q’09
NOI
2Q-a)
$1.6
Yield
2Q–a)
5.7%
3/19 3/19
5.4% $1.5
Property income
a) - 2Q’09 annualized
1Q’09
81%
2Q’09
Occupancy-b)
80%
b) - Excludes multifamily, hotel, parking, & Mexico JV assets
• Yield � driven by strong NOI• Each asset a small business with multiple performance levers
Asset class ($33B) 87% wholly-owned
Top markets:
1. Paris 9%
2. Tokyo 8%,
3. Chicago 4%
4. San Diego 3%
5. London 3%
• 97% existing properties
• 3% development
• $11MM average investment
Owned RE87%
JV11%
Other RE5%
Warehouse12%
Retail 10%
Hotel 1%
Mixed 5%
Parking 3%
Apartment 14%
Other2%
Office50%
105. New York <0.1%
46
Equity unrealized loss update
Dynamics
• Eurozone macro environment projected deterioration drives rental/occupancy decline … � $0.8B in unrealized loss
• Limited update impact on Americas …economic forecasts had incorporated significant deterioration
• Cap rates appear to be stabilizing in some markets
2Q’09 unrealized loss at $5B Unrealized loss by vintage
($0.3)’08+
’07
’06
<=’05
($3.7)
($1.3)
$0.3
($ in billions, pre-tax)
Unrealized loss �$1.0Bvs. year end ’08
Americas
AsiaEurope
YE’08 2Q’09
($4.0)
($5.0)
(3.1) (3.2)
(0.5) (0.6)
(1.2)(0.4)
JV/other($1.2)
Owned RE($3.8)
• For owned properties, per U.S. GAAP we must state at depreciated cost, subject to impairment testing
47
Stress test update
� Macro environment continues to be challenging� We are committed to providing investor transparency� Losses will materialize over time, should outperform peers� Results remain manageable for GE Capital and GE
($ in billions, pre-tax)
• Goal to outperform Fed adverse losses through strong property level execution
• Highly experienced global team focused on maximizing asset values
Unrealized equity loss over time (est.)
$0.0$1.0
($5.0) $1.4
$2.6
b) - Owner occupied reported separately ($0.1B)c) - Amounts derived from current estimate
Unrealizedequity loss (5.0) (4.7) (5.9) (5.0) (7.7)
(Afterimpairments) n/a (4.0) (4.8) (3.1) (5.1)
Implied loss onaffected assets 26% 28% 31% 26% 34%
Adversecase
Basecase
Loss views
Adversecase
Basecase-c)
2009E-b) 2010F
3/19 7/28
$0.5
$1.9 1.5
1.4EquityDebt
0.9 1.0
1.4
0.5
$2.9
1H’09
$1.6$2.1
1.10.7
a) - Fed adverse case
Depreciation/potential impairment-a)
Current 2H’09E ’10F ’11F Staticloss 2011 YE
estimate view
48
Mortgage/U.S. Consumer
49
69% with MI
Overall portfolio performing …1H net income better than base case
Global Mortgage – 1H’09 performance
a) - % of Receivables
b) - Top 4 markets
+ ~$195 vs. Base stress
+ ~$345 vs. Adverse
Down $19B … 24%
2Q’08 2Q’09
$81$62
Net income ($MM)
Reserve coverage-a) 0.4% 1.3%
1H’08 1H’09 Base stress
Adversestress
$553
($66)
Delinquency-a) 8.5% 13.2%
Credit costs-a) 0.2% 1.9% ~2.4% ~3.1%
~($260)~($410)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Dec '07 Mar '08 Jun '08 Sep '08 Dec '08 Mar '09 Jun '09
90+ delinquency
Total
0.5% Poland
Australia
1.6% France
U.K.15.8%
7.8%
2.4%
Portfolio quality
4Q’08 2Q’09
61% 62%
21% 20%
18% 18%
A/A+
B
C/D
62% A/A+ Indexed LTV & insurance coverage -b)
>80% LTV
<80% LTV
50%
50%
2Q’094Q’08
49%
51%
98% paidclaims rate
Assets ($B)
50
Implies (35%) peak to trough
HPI (YoYchange)
2Q’08 3Q’08 4Q’08 1Q’09 2Q’09 ’09E ’10F
(6.1%) (12.4%) (16.2%) (17.5%) (15%) (10%) (5%)
2H’09(8%)
1H (2%)
0%
5%
10%
15%
20%
25%
30%
Dec '07 Mar '08 Jun '08 Sep '08 Dec '08 Mar '09 Jun '09
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Down $6B … 21%
House prices stabilizing … out-performed Stress scenarios
Assets ($B)
2Q’08 2Q’09
$29$23
Net income ($MM)
Reserve coverage-a) 0.4% 2.5%
1H’08 1H’09 Base stress
Adversestress
$284
($220)
Delinquency-a) 17.5% 25.9%
Credit costs-a) 0.1% 4.4% ~5.3% ~6.0%
HPI stabilizing … 1H’09 -2%
~($285) ~($335)
a) - % of Receivables
U.K. Mortgage – 1H’09 performance
Delinquencies rising with unemployment
30+ (LHS)
90+ (LHS)
U/E % (RHS)
25.9%
15.8%
8.0%
DQ% U/E%U/E % Est.
51
Portfolio overview ($22.7B) –a)
A 20%
B 37%
C 25%
D 12%
2009/2010 stressed scenarios
Indexed LTV distribution
Pre 200749%
‘08 17%
2007 34%
>100%28%
<80%38%
80-90%17%
90-100%17%
A+ 6%
Credit distribution(internal GE Scores)
a) - Financing receivablesb) - 87% mortgage insured
Aggressive REO, loss mitigation & collections actions producing results
’09/’10 stress scenario – U.S. ConsumerPortfolio overview ($30.8B)
’10 Retail Cards $14.0B
Key variables
2009/2010 stressed scenarios*
’10 Retail Sales Finance $16.8B
A+ 36%
A 17% B 21%
C 12%
D 14%
A+ 37%
A 24%B 17%
C 11%
D 11%
Credit distribution (internal GE Scores)
Credit distribution (internal GE Scores)
Adverse Base AdverseBase
Credit cost %(% period AFR)
19.16% 16.24% 17.14%17.23% 13.05%
Unemployment(average)
8.9% 10.2% 10.3%8.4% 8.7%
1H’09actual
Recovery rate (Sales Finance)
5.9% 7.0% 6.4%6.6% 6.9%
Recovery rate (Cards)
6.0% 5.3% 4.7%7.2% 6.4%
2009E 2010F
� 1H’09 performance favorable vs. plan & stress scenarios� Early and aggressive risk actions paying off� Well positioned for challenging U.S. consumer environment