GE Consumer Finance Overview

Transcription

1 GE Consumer Finance Driving Growth in the Americas Mark Begor September 29, 2006 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 often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from the behavior of financial markets, including fluctuations in interest rates and commodity prices; from future integration of acquired businesses; from future financial performance of major industries which we serve including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; from unanticipated loss development in our insurance businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory 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 presentation includes certain non-gaap financial measures as defined by SEC rules. As required by SEC rules, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in our Supplemental Information file on our investor relations website at GE Consumer Finance Overview

2 Our Charter A. Double-Digit Asset and Profit Growth with Strong ROE B. Develop Consumer Marketing Zealots C. Risk Management Vigilance D. Execute in a Huge Marketplace ($40T) 3 What Do We Do? Targeted Product Line Multiple Distribution Channels Target Customers PLCC Bank Cards Personal Loans Sales Finance Mortgages Auto Deposits & Insurance Retailers Dealers Brokers Mail Telemarketing Branches / Partner Points ATM / Kiosks Internet Focused Provider of Consumer Finance Products 4

3 Industry Landscape 2006 Global Portfolio (Lending & Deposits) Personal Loans $1.0 T Secured Debt $1.8 T Auto $1.5 T Card $1.5 T Deposits $20.0 T Mortgage $14.4 T GE Money Market Share < 1% Fastest Growing Products Are Mortgages and Cards Total = $40 T We Are a Small Player in a Huge Market 5 Our Earnings Are Uniquely Global (~75%) Argentina Australia Austria Belgium Brazil Canada China Costa Rica Czech Republic Denmark DOMs El Salvador Finland France Germany Guatemala Honduras Hong Kong Hungary India Indonesia Ireland Serving Over 118MM Consumers In 53 Countries Italy Japan Korea Latvia Mexico New Zealand Nicaragua Norway Panama Poland Portugal Romania Russia Singapore Slovakia Slovenia Spain Sweden Switzerland Taiwan Thailand United Kingdom United States 6

4 Products and Reach Net Income Reach Personal Loans 23% 18% Sales Finance Customers 118MM Assets $159B Auto 14% ATMs 225M SME 2% Mortgages 13% 30% Cards Retail Outlets 200M Branches ~3,400 A Diversified Specialty Consumer Financial Services Company 7 GE Consumer Finance Performance Assets ($B) Net Income ($B) $31 $57 17% CAGR $107 $77 $63 ~+15% $151 $159 $0.4 $1.4 22% CAGR $2.2 $2.5 $1.7 $1.9 ~+15% $ Consistent Double Digit Growth 8

5 Geographic Composition Assets Net Income ANZ 17% z 13% Asia ANZ 10% 21% Asia Americas 24% Americas 27% 46% Europe 42% Europe Americas Comprises 24% of Total Assets 9 GE Consumer Finance Americas

6 Americas Transformation Net Revenue ~$6.2B Net Revenue $4.0B Canada 2% LA 7% LA 2% Sales Finance 20% Cards 78% Mortgage 7% Sales Finance 24% Personal Loans2 % Cards 57% E Progress Made Transformation Has Only Begun! 11 7% 6 5 The US Consumer Unemployment $10B 9 8 Consumer Spending % Wages $7.5B Existing Home Sales Wages July 05 July 06 Consumer Indicators Balanced and Spending Strong 12

7 Managing Through Economic Cycles Strong Economy US Consumer Low Un-employment High Disposable Income Strong Consumer Confidence Low Inflation Weak Economy US Consumer Rising Un-employment Softening Housing Market Inflation Consumer Finance + High Spend / Active + Low Losses - Higher Turn, Lower Average Balance - Lower Late Fees & Finance Charges Consumer Finance + Slower Payment Speeds + Higher Average Balance + Higher Late Fees & Finance Charges - Higher Losses Business Operates Through Cycles 13 Delinquencies & Losses Delinquencies at ~4.6% Down 130bps From 03 Losses at ~4.3% Down 220bps From 03 6% 5.9% 7% 6.5% 5% ~4.6% 6% 5% 5.7% 4.8% ~4.3% 4% 4% 3% 3% Delinquencies & Losses Performing Well 14

8 Strong Risk Team - Deep Industry and GE Experience 800 Risk Professionals ~400 with >10 Yrs. Experience ~10% ~40% ~50% 0-5yrs yrs. 10+ yrs. Seasoned Risk Professionals with deep industry knowledge and experience Disciplined Policies & Monitoring Rigorous Credit Line Management Strict Re-Aging Policies Monthly Policy 6.0 Monthly Board Meeting Quarterly CEC Strong Team With Broad Industry Knowledge & Deep Domain Experience 15 Best in Class Collections Team ~5,660 FTE s ~73% in BCC 4,510 5,160 ~5,660 ~4,132 ~5,660 Collectors Across the Americas Significant Industry Knowledge & Experience 2,345 3,200 BCC World Class Collections tools and strategies 2,165 1,960 ~1,528 Domestic Ability to Respond Quickly to Changing Consumer Environment Deep Team With Proven Experience in Different Economic Cycles 16

9 Americas Overview Assets / Originations ($B) Reach ~$91 Customers 56 Million $78 $27 $ ~35 ~56 Originations Assets Retail Outlets 40,000 Dealers 130,000 Brokers 14,000 NI $MM '03A $465 '04A '05A '06E $646 $872 ~$1,100 Branches 420 ATM s 2,600 Fast Growing, Focused Consumer Finance Company 17 Cards Assets Growth Strategy Dual Card 17% $21.2B 1.6 ~$24.9B ~3.2 2X In Expand Retail Distribution Accelerate Bank Card Transformation PLCC (ex Macys & Exxon) 19.6 ~ Innovate by Adding New Retail Products: Personal Loan, Debt Can 05A New Accounts 16MM 17MM 4 Drive Cross-sell Bank Card and X-sell Driving Growth 18

10 New Product Partnerships RCF RSF Dual Card BCS CPS Personal Loan Canada Latin America KAWASAKI MOTORS RETAIL FINANCE 45+ New Partnerships Added 19 Dual Card Roll-Out Asset Growth ~$3.2B Launch Date (Oct 03) (Oct 04) (Oct 04) 06 Cards 80, , ,000 +$3B (Feb 05) 390,000 $1.6B (Mar 05) 1,300,000 $0.2B (Apr 06) (Jun 06) 180, ,000 (Oct 06) 30,000 Targeting ~3MM Dual Cards by 06 20

11 Card Rewards U.S. Bank Card Assets $725B Reward Plan Dual Card Focus Non-Rewards 42% 4 pt in-store; 1 pt out of store 2 pt in-store; 1 pt out of store Airlines CashBack In-House Retail Source: Nilson Report 25% 4% 16% 13% Up to 1% Cashback; Gas Discount Up to 1% for Base Member; Up to 2% for Plus Member 2 pt in-store; 1 pt out of store Dual Card to Offer Reward Program to Non-Rewards Card Holders 21 US Dual Card vs. PLCC Average Balance $460 PLCC 114% $983 Dual CV / Active Expected $766 Sales / Active $1,417 PLCC 2.8X $3,944 $2,050 In-Store Dual Net Income / Active * Expected 2, % In-Store 38% $112 Expected $116 37% $26 $81 $19 Expected $16 PLCC Dual PLCC Dual Dual Card Portfolio Maturing Exceeding Expectations * Excluding Reserves 22

12 New Product Features QuickScreen TM Contactless Devices (RFID) Driver s License Test Blind Pre-screen at Retailer POS Requires Availability of Name/address 3X Take Rate! Cardholder Waves Card by Reader Authorization Through Radio Signal 2X Speed! Scan Drivers License into Kiosk Cross-Sell Built In for Speed Pass 60% Lift in Approval Rate Making it Easy to Offer And Easy to Apply 23 Personal Loans Assets ($MM) Growth Strategy ~$1.6B 1 Expand Retail Partnerships +$1.3B $0.3B $0.6B 2 Continue D2C Growth 04A 05A Strong Core Growth... Targeting ~$3B Assets by 07 24

13 Retail Sales Finance Assets Growth Strategy ~36% ~$16.3B 1 Expand Distribution $11.8B $8.8B 2 Drive Usage and Penetration 04A 05A 3 Expand into New Markets 4 Leverage Technology and Infrastructure to Drive Productivity 5 Transform From Single to Multiproduct Model New Markets and Increased Share Driving Growth 25 $83B Space Dentists Volume Insured $30B Self Pay $53B Orthodontists Veterinaries Optometrists Weight Loss Clinics $1.4B +$1.8B $2.4B ~$3.2B Patient Financing of Self Pay Treatment Healthy Industry Profit Margins Scaleable Cost Base Still Relatively Low Penetration Established Relationships with Large Base of Providers 04A 05A Penetration Providers 25% 40% Penetration 8% 20% Market Share 2% 8% Strong Growth in Healthcare Segments 26

14 Production CAGR 36% $33B ~$35B Growth Strategy 1 Continue to Leverage Capital Markets to Grow and Mitigate Risk $19B 2 Add New Products 40-Year, HELOC 3 Expand Technology 04A 05A 4 Continue Geographic Expansion 3 Hubs, 16 Sales Offices US Geographic Expansion Driving Growth 27 WMC Geographic Expansion 415 Sales Force 27% 643 ~731 HUB Locations Strategic Sales Offices Brokers Game Plan 3 Hubs Supporting 16+ Sales Offices Drive Cost/Process Efficiencies 10,900 9% 12,500 ~13,000 Explore Additional Funding Sources Attract Top Talent

15 Using Technology To Drive Growth Targeting & Reporting Market BDR Level Market Penetration Sales Planning Automated Marketing Customer Segmentation Lifecycle Marketing Customized BDR Communication Web Tools & Enhancement Mobile Technology Mortgage Expert - Prequal WMCDirect Enhancement POS Approvals Investments in Technology to Drive Speed and Efficiency Broker Management High Potential Prospects Risk Mitigation 29 Americas Regional Expansion US US Canada Panama Mexico Mexico Guatemala Honduras Brazil Brazil El Salvador Nicaragua Argentina Argentina Costa Rica 4 Countries to 11 30

16 Latin America and Canada Assets $B Strategy 22X ~$8.8B Mexico: Continue to drive new products and enter new market segments Brazil: Grow Payroll product, continue to improve Risk Management & Collections $0.4B 04 Mexico Mexico Argentina Brazil Brazil Central America Canada Argentina: Improve Product Channels, Maintain Solid Risk Management Central America: Drive Growth, Grow GE Culture Canada: Build Out New Products HELOC, Prime Mortgage, Dual Card Diversifying Into Canada, Latin & Central America 31 Mexico Asset Growth Growth Strategy Mortgage Consumer $ A 35% $ A ~$2.2 ~0.9 ~1.3 1 Cards Adding Retailers And Co-Brand 2 Mortgage Growth And Builder Strategy 3 Auto Increase Distribution GE Money Strong Double Digit Growth in Fast Growing Market 32

17 Canada Assets ($B) ~$1.9B ~$1.3B Growth HBC Addition of Leading Retailer in Canada Mortgage Accelerate Rollout through Partner Build $0.1B 05 ~$0.6B Powersports Infrastructure in Place to Support OEM Growth MasterCard Expand Distribution, Four Launches Underway Building Scale Position in Canada 33 Central America Expansion JV Assets Branch Network Costa Rican Branch 20% ~$4.1B Guatemala 17 Branches Honduras 16 Branches $3.4B Guatemalan Branch El Salvador 17 Branches Nicaragua 20 Branches 05 GE NI $13MM ~$39MM Credomatic - Panama Costa Rica 22 Branches Panama 4 Branches Strategic Expansion into Central America 34

18 Cross-sell Cross-sell Process Flow Volume 2.7X ~$2.4B Database Marketing (Modeled Names) Trigger Events Risk Change Utilization Usage Behavior Late Pay $0.9B Customers Flagged Warm Lead Channels 05A Collections Internet Products / Customer 1.5 ~1.8 Customer Svc Declines Statements/DM At Risk Homeowner Calls Cross-sell Driving Asset And Income Growth 35 Using Lean to Drive Growth Mar 06 Jul 06 Jul 06 Sep 06 Oct 06 Mexico Mortgage Money Services (PMG) Personal Finance Workstation CPS Time to Yes & Time to Fund Faster Approval & Funding Higher Pull Thru Rate & Increased Mkt. Share New Deals Faster Deal Process Write Volume Faster & Additional Capacity for Further Deals Small Deal Process Faster Deal Process Write Volume Faster & More Efficient Use of Our Resources Enhance New New Client Functionality On-Boarding Faster Deployment of Faster Approval Process New Capability & On- Write Volume Faster & Boarding of New Clients Additional Capacity for Further Deals Cycle Time: 75 Days to 48 Days Cycle Time: 270 Days to 90 Days Cycle Time: 400 Days to 80 Days Cycle Time: 321 Days to 168 Days Cycle Time: 188 Days to 86 Days ~$170MM Volume ~$15MM Revenue ~$240MM Revenue ~$6MM Income ~$200MM Revenue ~$650MM+ Volume Opportunity 36

19 Americas Financials Served Assets ($B) Net Income ($MM) CAGR 21% ~$56 CAGR 30% ~$1,100 $38 $45 $872 $652 '04 '05 '06E '04 '05 '06E Consistent Double-Digit Growth 37 Americas Transformation Net Revenue ~$6.2B Net Revenue $4.0B Canada 2% LA 7% LA 2% Sales Finance 20% Cards 78% Mortgage 7% Sales Finance 24% Personal Loans2 % Cards 57% E Progress Made Transformation Has Only Begun! 38