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1 GE Capital Credit Roundtable Chicago November 2012 Caution Concerning Forward-Looking Statements: This document contains “forward-looking statements”

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Presentation on theme: "1 GE Capital Credit Roundtable Chicago November 2012 Caution Concerning Forward-Looking Statements: This document contains “forward-looking statements”"— Presentation transcript:

1 1 GE Capital Credit Roundtable Chicago November 2012 Caution Concerning Forward-Looking Statements: 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: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; potential market disruptions or other impacts arising in the United States or Europe from developments in the European sovereign debt situation; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding and on our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (GE Money Japan); pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; 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 adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level; GECC’s ability to pay dividends to GE at the planned level; our ability to convert pre-order commitments into orders; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; strategic actions, including acquisitions, joint ventures and dispositions and our success in completing announced transactions and integrating acquired businesses; the impact of potential information technology or data security breaches; 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” “In this document, “GE” refers to the Industrial businesses of the Company including GECC on an equity basis. “GE (ex. GECC)” and/or “Industrial” refer to GE excluding Financial Services.”

2 2 GE Capital Business Commercial Loans & Leases (CLL) 3Q’12 assets Entered in the 60’s ~100% secured loans and leases Support mid-market customers Entered in the 70’s Secured loans against diversified properties Own/operate high quality properties Entered in the 30’s Store cards and sales finance for retailers Broad spread of risk Entered in the 60’s GE domain Broad product set with full life cycle management Entered in the 80’s GE domain Essential assets; secure cash flows Domain + expertise Businesses we know … decades of performance Real Estate$55B - Debt - Equity Consumer$136B - U.S. PLCC - Global Aviation Services$49B Energy Financial Services$20B $181B $550B+ assets, $49B revenue FY’11, ~51K employees, 50+ countries

3 3 GE Capital earnings history $1 Recession Japan recession Asia currency crisis 9/11 recession U.S. growth European slowdown War SARS Airline bankruptcy Katrina $12 $7 $1 $3 $6.6 Profitable through the credit crisis… on track for double digit growth in ’12 ++ ($ in billions) ~1/3 rd smaller balance sheet Raised FICO cut-offs early High collateral recoveries Early to exit LBO, CMBS, U.S. mortgages Portfolio insulated from rate swings Successes in crisis

4 4 Looking back ENI -1) (2007 # is peak ENI = 3Q’08+FAS 167) $637$446$(191) Long term debt outstanding$361$303$(58) Annual long term debt issuance$90$27$(63) Commercial paper (CP)$101$44$(57) Alt. funding/total debt8%22%+14% Liquidity$9$80$71 T1C Basel 1 %4.4%9.9%+5.5% Adj. debt/equity ratio7.4:14.2:1(3.2) 20072011 Funding & liquidity Capital Lessons learned De-levered Strong capital ratios V 1) - Ex. cash @ 1Q’10 Fx rates, peak excludes legacy insurance & some corporate components ($ in billions) Early, proactive management actions Stronger liquidity & funding profile Improved liquidity management framework Shrunk while maintaining franchise

5 5 Bank lines$65 $48 CP coverage 64%100%+ Cash & equiv. $9 $78 LT debt<1 yr.$56 $61 (a- Continuing operations (b- Includes ~$2.2B YTD FX impact and ~$0.9B YTD FAS 133 GECC funding ($ in billions) Debt composition –a) Comm’l paper LT debt $420 -b) Non-recourse Securitization $524 Alternative funding/others Diversifying by growing alternative funding sources $40 $96 7% of debt 22% of debt Alternative funding U.S. CD program GE Interest Plus International deposits Securitization Covered bonds Maintained match-funding principles Sustain Brokered CD program in US … issue CDs to match assets Met Life acquisition $6B retail deposits Fundamentally different funding profile 43 69 277 31 101 30 361 32

6 6 GECC long term debt dynamics GECC issuances and maturities ($B) –a) 90 84 70 25 27 45 56 69 66 64 25- 30 25- 35 80 35 2012 issuance substantially complete Issuance in 9 currencies … >6 year WAM Smaller market footprint <2% of USD investment grade index Support from diverse investor base Committed to current rating (A1/AA+) (a- senior unsecured long term debt Share of USD issuance 4.6%2.8%1.8%1.8%1.6% Significantly reduced long term debt issuance and market share 2012 YTD issuance - ~$29B

7 7 GE Capital 5yr bond spread vs. peers Source: Barclays Capital WF C GEC C Bank Index JP M FinCo Index C Investors rewarding GE Capital Aa Corp

8 KSS China CEO Program 06-17-10/8 GECC disciplines key to success Repositioned GE Capital  Balance sheet reduced …. $489B at 3Q’10 … $425B by 2012  Significantly increase cash balance to strengthen liquidity Improved funding plan  Commercial paper reduced from $100B+ to $40-$50B … back up lines at 100%+  Long term debt issuance down … $90B in ‘07; $25-30B in ‘11  Managing debt maturities in 2013 and beyond ~$35B Increased disclosure  Three analyst meetings in 2009; supplemental data available Improved capital metrics  Cash increased from ~$15B to $60+B  Debt to equity ratio improved … 7.7:1 at 4Q’08; 3.9:1 at 2Q’12  Tier 1 common ratio … 5.7% at 4Q’08; 10.1% at 2Q’12 after $3B dividend to parent How GE managed through the crisis

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