SECOND QUARTER 2018 EARNINGS PRESENTATION. July 25, 2018

Transcription

1 SECOND QUARTER 2018 EARNINGS PRESENTATION July 25, 2018

2 SAFE HARBOR STATEMENT This presentation contains several forward-looking statements. Forward-looking statements are those that use words such as believe, expect, intend, plan, may, likely, should, estimate, continue, future or anticipate and other comparable expressions. These words indicate future events and trends. Forward-looking statements are our current views with respect to future events and financial performance. These forward-looking statements are subject to many assumptions, risks and uncertainties that could cause actual results to differ significantly from historical results or from those anticipated by us. The most significant risks are detailed from time to time in our filings and reports with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, Such risks include - but are not limited to - GM s ability to sell new vehicles that we finance in the markets we serve; the viability of GM-franchised dealers that are commercial loan customers; the availability and cost of sources of financing; our joint venture in China, which we cannot operate solely for our benefit and over which we have limited control; the level of net charge-offs, delinquencies and prepayments on the loans and leases we originate; the effect, interpretation or application of new or existing laws, regulations, court decisions and accounting pronouncements; the prices at which used vehicles are sold in the wholesale auction markets; vehicle return rates and the residual value performance on vehicles we lease; interest rate fluctuations and certain related derivatives exposure; foreign currency exchange rate fluctuations; our financial condition and liquidity, as well as future cash flows and earnings; changes in general economic and business conditions; competition; our ability to manage risks related to security breaches and other disruptions to our networks and systems; and changes in business strategy, including expansion of product lines and credit risk appetite, acquisitions and divestitures. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected. It is advisable not to place undue reliance on any forward-looking statements. We undertake no obligation to, and do not, publicly update or revise any forward-looking statements, except as required by federal securities laws, whether as a result of new information, future events or otherwise. Unless otherwise noted, prior period information excludes Discontinued Operations and reflects results for North America, Latin America and China. 2

3 SECOND QUARTER OPERATING HIGHLIGHTS June 2018 June 2017 ($M) Quarter Quarter Earnings Before Tax $536 $356 Total Originations (Loan & Lease) $12,252 $12,004 Ending Earning Assets $90,427 $80,500 Net Charge-offs as an Annualized % of Avg. Retail Finance Receivables 1.7% 1.7% Operating results Strong quarterly earnings, up significantly year-over-year U.S. retail loan originations in the quarter totaled $5.2B, up from $4.4B in the June 2017 quarter, with 83% attributable to prime and near-prime loans (FICO score 620) compared to 73% in the prior quarter Credit performance benefiting from continued mix shift to prime credit quality assets in the U.S. U.S. disposition proceeds on leased vehicles returned in the quarter compared to estimates at origination were favorable due to stable used vehicle pricing environment Funding platform Issued $9.1B in public and private debt securities in the quarter, and renewed 12 credit facilities Launched commercial paper program with $615M outstanding as of June 30,

4 GM AND GMF PENETRATION STATISTICS Quarter Ended Jun-18 Mar-18 Jun-17 GMF as a % of GM Retail Sales U.S. 45.4% 44.5% % Latin America 53.2% 66.7% 59.2% GMF Wholesale Dealer Penetration U.S. 22.9% 21.6% 18.2% Latin America 96.4% 98.2% 95.3% GM as % of GMF Retail Originations (GM New / GMF Retail Loan and Lease) U.S. 90.2% 89.1% 87.8% Latin America 93.1% 93.5% 94.7% U.S. retail penetration increased year-over-year primarily due to further alignment with GM and greater dealer engagement Latin America penetration of GM retail sales remains strong due to joint campaign activity with GM 1. GMF penetration of GM retail sales in the U.S. for the March 2018 quarter was revised to align with GM's reporting period 4

5 RETAIL LOAN ORIGINATIONS & PORTFOLIO BALANCE ($B) North America GM New 1 $31.1 $32.3 $32.8 $26.0 $27.0 $27.6 $34.3 $28.8 $35.7 $30.6 North America GM Used 2 North America Non-GM 3 International North America Retail Finance Receivables Total Retail Finance Receivables $5.3 $3.1 $4.7 $2.6 $4.4 $2.4 $5.1 $3.1 $6.0 $4.1 $0.6 $0.6 $0.5 $0.6 $0.6 $0.7 $0.5 $0.5 $0.5 $0.5 $0.9 $1.0 $1.0 $0.9 $0.8 Jun-17 Sept-17 Dec-17 Mar-18 Jun-18 U.S. Metrics: GMF as % of GM New loans % 18% 14% 29% 34% GMF as % of GM New loans <620 48% 40% 34% 36% 38% Weighted Avg. FICO Score Loans originated on new vehicles by GM dealers 2. Loans originated on used vehicles by GM dealers 3. Loans originated on vehicles by non-gm dealers 5

6 RETAIL LOAN CREDIT PERFORMANCE 5.0% 4.0% Net charge-offs 1 3.0% day delinquency 2.0% 1.7% 1.9% 2.2% 2.1% 1.7% 61+ day delinquency 1.0% 0.0% North America Recovery Rate Jun-17 Sept-17 Dec-17 Mar-18 Jun-18 54% 52% 50% 51% 2 52% June 2018 net charge-offs percentage is stable compared to June 2017 due to continued positive impact of credit mix shift to prime in the U.S. Finance receivables with a FICO score <620 comprise 32% of the North America retail loan portfolio at June 30, 2018, compared to 41% at June 30, 2017 North America recovery rate expected to trend down on a year-over-year basis for the remainder of the year 1. As an annualized percentage of average retail finance receivables 2. Recovery rate for the three months ended March 31, 2018 was revised due to the reclassification of $4.0M in non-repossession recoveries 6

7 LEASE ORIGINATIONS ($B) $39.7 $41.8 $42.9 $43.4 $44.1 $6.7 $0.5 $6.5 $0.4 $5.8 $0.3 $5.7 $0.4 $6.2 $0.5 $6.2 $6.1 $5.5 $5.3 $5.7 Jun-17 Sept-17 Dec-17 Mar-18 Jun-18 U.S. lease portfolio at June 30, 2018: U.S. Lease Volume Other Lease Volume 1 Total Lease Portfolio 1.6 million contracts with a balance of $41.6B 96% of lease portfolio had a FICO score greater than or equal to 620 at origination 99% of operating leases were current with respect to payment status Experienced stronger than anticipated used vehicle prices in the first half of 2018; however, increasing off-lease supply is expected to pressure prices and therefore expect a price decline in 2018 of 2-4% in the U.S. as compared to Canada and International 7

8 COMMERCIAL LENDING 1,459 1,502 1,538 1,592 1,643 $9.7 $1.4 $9.5 $1.4 $10.3 $1.6 $10.4 $1.5 $10.7 $1.3 $8.3 $8.1 $8.7 $8.9 $9.4 Jun-17 Sept-17 Dec-17 Mar-18 Jun-18 North America Commercial Finance Receivables Outstanding ($B) International Commercial Finance Receivables Outstanding ($B) Number of Dealers Steady growth in number of U.S. dealers and receivables outstanding U.S. dealers totaled 1,019 at June 30, 2018, increase of 23% year-over-year Floorplan financing represents more than 90% of commercial portfolio 8

9 SAIC-GMAC CHINA JOINT VENTURE Quarter Ended Jun-18 Mar-18 Jun-17 China JV as a % of SGM 1 Retail Sales % 36.3% 36.5% Retail Originations ($B) 2 $2.6 $3.0 $2.2 Ending Earning Assets ($B) Retail $11.2 $11.7 $8.5 Commercial 3 $4.2 $3.7 $3.5 Net Retail Charge-offs % 0.05% 0.10% GMF Equity Income ($M) $45 $52 $41 Strong year-over-year results Penetration of SGM retail sales and total retail originations driven by continued increase in acceptance of consumer financing and joint marketing campaigns with the OEM 1. SAIC General Motors Corporation Limited 2. Includes off-balance sheet contracts originated for third parties 3. Commercial receivables are not netted with dealer deposits, in comparison to GMF U.S. GAAP presentation of $3.4B, $2.9B and $2.9B at June 30, 2018, March 31, 2018 and June 30, 2017, respectively 4. As an annualized percentage of average retail finance receivables 9

10 FINANCIAL RESULTS Earnings Before Taxes ($M) North America International $979 $536 $356 $585 June 2018 Qtr June 2017 Qtr H H Year-over-year June quarter earnings increased due to overall portfolio growth, stable credit performance and better than expected residual value performance Effective yield on retail finance receivables decreased to 8.6% from 9.3% due primarily to increased lending to borrowers with prime credit Operating expenses increased from $333M to $382M in the June 2018 quarter relating to growth in earning assets and investments to support origination and servicing capabilities in the U.S. Provision expense as an annualized percentage of average retail finance receivables was down year-overyear to 1.4% from 2.0% due primarily to a decrease in the loss confirmation period as well as an increase in forecasted recovery rates on repossessed vehicles CY 2018 pre-tax earnings expected to be meaningfully higher than 2017 driven by strong H performance Expect decline in used vehicle prices to reduce pre-tax earnings in H compared to H

11 SOLID BALANCE SHEET Ending Earning Assets ($B) Total Debt ($B) Liquidity ($B) $80.5 $86.0 $90.4 $78.5 $80.7 $84.4 $17.0 $17.9 $23.1 Jun-17 Dec-17 Jun-18 Jun-17 Dec-17 Jun-18 Jun-17 Dec-17 Jun-18 Retail Loan Retail Lease Commercial Loan Secured Debt Unsecured Debt Borrowing Capacity Cash Composition of ending earning assets continued to shift to more prime credit profile Sub-prime loan portfolio (FICO score <620) represented approximately 11% of ending earning assets at June 30, 2018, down from 14% at June 30, 2017 Total debt increased commensurate with earning asset growth and the percentage of unsecured debt was 54% at June 30, 2018, up from 51% at June 30, 2017 Liquidity at June 30, 2018 was up $5.2B from December 31, 2017 due to increased borrowing capacity on unpledged eligible assets and the addition of $2.0B in borrowing capacity on the GM Revolving 364-Day Credit Facility to which GMF has exclusive access 11

12 SOLID BALANCE SHEET (CONTINUED) Tangible Net Worth ($B) Leverage Ratio 1 $8.0 $9.1 $ x 9.49x 9.14x Jun-17 Dec-17 Jun-18 Jun-17 Dec-17 Jun-18 Tangible net worth and the leverage ratio benefited from earnings growth in H Support Agreement leverage ratio threshold was 11.50x at June 30, Calculated consistent with GM/GMF Support Agreement, filed on Form 8-K with the Securities and Exchange Commission on April 18,

13 FUNDING ACTIVITY North America Unsecured Debt 49% Debt Outstanding at June 30, 2018 International 6% North America Credit Facilities 2% $84.4B Credit facilities Committed credit facilities totaling $25.9B provided by 29 banks $2.2B drawn on uncommitted credit facilities Capital markets Public securitization funding in the quarter totaled $3.5B GMCAR (U.S. Prime Retail Loan), $1.2B AMCAR (U.S. Sub-prime Retail Loan), $1.1B GMALT (U.S. Lease), $1.2B Senior unsecured note issuances in the quarter totaled $3.6B (in the U.S.) Subsequent to quarter-end, inaugural issuance in Colombia of COP 300B ($103M) fixed and floating rate notes Private amortizing securitizations North America Securitization 43% Closed four U.S. transactions, supporting the lease and prime loan platforms, totaling $2.0B in the quarter Other In April, GM and GMF amended the support agreement, giving GMF exclusive access to the $2.0B GM Revolving 364-Day Credit Facility In June, commercial paper program launched to enhance and diversify funding 13

14 PUBLIC DEBT ISSUANCES $26.7B $20-24B $12.7 $14.0 $13.8B $7.0 $6.8 ~$7-9 ~$13-15 CY 2017 H CY 2018 Forecast Securitization1 1 Unsecured Maintain strategy of funding locally, with flexibility to issue globally to support U.S. funding needs and enhance investor diversification Securitization platforms segregated by asset type and geography AMCAR - U.S. Sub-prime Retail Loan GCOLT - Canada Lease GMALT - U.S. Lease GMCAR - U.S. Prime Retail Loan GFORT - U.S. Floorplan Global senior notes platform funding operations in U.S., Canada and Latin America (6-8 issuances per year) Will continue to be regular issuer off EMTN shelf to support U.S. funding needs Unsecured issuance in 2018 forecast to be lower than 2017 due to limited refinancing activity 1. Includes 144a transactions 14

15 For more information, visit gmfinancial.com Investor Relations contact: Stephen Jones Vice President, Investor Relations (817)