GE Capital. Overview / Strategy first quarter

Transcription

1 GE Capital Overview / Strategy 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 expect, anticipate, intend, plan, believe, seek, or will. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest and exchange rates and commodity and equity prices; the commercial and consumer credit environment; the impact of regulation and regulatory and legal actions; strategic actions, including acquisitions and dispositions; future integration of acquired businesses; 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; 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."

2 GE

3 GE s portfolio and financials 2011 revenue $147B 59% outside U.S. & 37% in growth mkts -a) $12B Industrial CFOA Energy Infrastructure Rev. OP $43.7B $6.7B Aviation Healthcare Transportation GE Capital $18.9B $18.1B $4.9B $45.7B $3.5B $2.8B $0.8B $6.5B Home & Business Solutions $8.5B $0.3B Thermal Wind Oil & Gas Services T&D Commercial Military Service Avionics/Systems (a-excludes GECS & NBC Universal Healthcare Systems Life Sciences Healthcare IT Molecular Diagnostics Locomotives Services Propulsion Systems Commercial Consumer Real Estate GECAS EFS Appliances Lighting Intelligent Platforms 2012 Outlook

4 1Q 12 consolidated results ($ in billions except EPS) ($ in millions) Continuing operations 1Q 12 V% Revenues $35.2 (8)% Industrial sales Capital revenue 11.4 (12) Operating earnings Operating EPS Continuing EPS a) 0.31 Net EPS 0.29 (6) CFOA Industrial CFOA Revenues Segment profit $ V% $ V% Energy Infra. $11,168 18% $1,524 10% Aviation 4, Healthcare 4, Transportation 1, H&BS 2, (11) Tax rate 16% 20% GE (ex. GECC) GECC 9 19 (a- Earnings attributable to common shareowners 1Q 12 1Q 11 (ex. NBCU) Memo: includes NBCU JV pretax profit of $187MM; excluding impact of NBCU, GE revenues +4%, Industrial sales +13% Industrial 23, , GE Capital 11,442 (12 ) 1,792 $35,162 4% $5,061 6% 4

5 1Q 12 orders +20% ($ in billions) 1Q orders $23.1B Equipment Services $ V% $ V% Energy $4.1 29% $3.6 13% O&G Energy Infra Aviation Healthcare Transportation 1.0 F Total $ % $ % Equip. Svcs. $158 Strong backlog ($B) $172 $175 $175 $200 $ % 1Q orders price profile +0.5% +1.0% +2.1% (1.4)% +1.0% Energy O&G Aviation Healthcare Transportation Highlights 14% organic orders growth Energy Infrastructure +29%, +15% ex. acquisitions Transportation +67%... locomotive strength continues Equipment book-to-bill 1.06 Emerging markets +21% Highest 1Q orders in history 5

6 Generating cash ($ in billions) Industrial $1.7 1Q CFOA $2.1 V% 22% GE cash balance walk Consolidated cash $84B Total Beginning balance 1/1/12 $8.4 CFOA 2.1 Dividends (1.8 ) P&E (1.0 ) Acquisitions (0.2 ) Managing working capital needs to fulfill strong backlog Continuing investment for organic growth Change in debt/fx/other 0.5 March 2012 $8.0 Strong CFOA performance 6

7 2012 operating framework Operating earnings 2012F 2012 drivers Industrial ++ GE Capital ++ Corporate -a) ~Flat Total operating ++ earnings Strong global organic growth Energy acquisitions performing Broad-based strength Improved losses & impairments Real Estate improving 11 items: NBCU gain & restructuring Total cost ~$3B a) in 11 & 12 CFOA Industrial $11-12B Industrial CFOA $12-13B before pension contribution of $1B Total revenues 0-5% (a- Excluding NBCU pretax gain $3.7B in 2011 Industrial organic 5-10%, Capital (5)% to flat NBCU gain 11 impact Strong growth across Industrial & Capital 7

8 Summary + Markets continue to be attractive our investments have accelerated our organic growth and give us a strong competitive position + Expect margin improvements through the year; Healthcare and Transportation margin growth has begun + GE Capital is very strong; the turn of Real Estate is important and makes us feel positive about the balance of Cash flow is solid; plan to resume GE Capital dividend subject to Fed review; capital allocation will be balanced and investor-friendly + We continue to be vigilant on risk management in a volatile world; we have strong liquidity and are prepared for a variety of outcomes Well positioned for double-digit earnings growth in Industrial & GE Capital 8

9 GE Capital

10 GE Capital a) 11 ENI b) : $445B 11 revenue: $46B 11 profit: $6.5B Commercial Lending & Leasing Energy Financial Services GECAS Consumer Real Estate Middle market lending & leasing Financing for energy & water industries Commercial aircraft leasing & financing Consumer & retail financing Debt & equity financing for commercial real estate $175B ENI b) $15B ENI $40B ENI $128B ENI $60B ENI 2012 Outlook c) + ++ Continue to focus on high return segments targeting 2%+ ROI over time Well positioned for double digit earnings growth in 12 a) Merging GECS and GE Capital in 1Q 12 b) ENI is shown ex-cash 10 c) Excluding Garanti

11 Key messages Our businesses are strong and competitively positioned Significant earnings growth in 2011 and expect double-digit growth in 2012 Returns on new business continue to exceed pre-crisis levels with lower risk Losses are much better credit costs getting close to pre-crisis levels and we are actively managing uncertainty and a volatile world We continue to strengthen our balance sheet, liquidity and funding continuing to diversify funding sources Real Estate is improving Capital levels are well in excess of expected targets planning to re-start dividend in 2012 We are on track to meet $425B-$440B a) ENI target while growing core assets continued re-mixing will provide significant earnings growth a) - Ex. 1Q 10 Fx rates 11

12 GE Capital ($ in millions) 1Q 12 $ V% Key capital metrics Revenue $11,442 (12)% Pretax earnings 1,991 (12) Net income 1,792 Flat Ex. Garanti 27 ENI (ex. cash) 436B (5) Assets ($B) $ V% Segment profit ($MM) $ V% Consumer $136 (4)% $829 (33)% Real Estate 59 (17 ) 56 Fav. CLL 190 (4 ) GECAS 49 Flat EFS (37) Tier 1 Common 10.4% 9.9% Leverage 4.0:1 4.2:1 1Q dynamics 1Q 12 4Q 11 Net income +27% ex. 11 Garanti $(0.4B) Real Estate income positive first time in 13 quarters Volume of $39B, +7% new business ROI s 3%+ Net Interest Margin 4.8%, +38bps ENI on track Irish mortgage moved to disc. ops. Reserve coverage at 2.0%, non-earnings $(0.3)B vs. 4Q 11 $1.2B losses & impairments, $(0.5) vs. 4Q 11 Core net income growing from improvements in RE & margins 12

13 GE Capital structure Support GE support to ensure GECC 1.1x fixed-charge coverage ratio (strengthened Income Maintenance Agreement in 2009) History of capital infusion or dividend reductions when necessary General Electric Company AA+/Aa3 100% Commitment to local markets GECC unconditional guarantee Highly rated parent Proceeds used primarily to fund local assets Access to deeper investor base General Electric Capital Corporation Primary GE Issuer/Guarantor AA+/A1 100% Owns all of GE s financing assets GE Japan Funding KK GE Capital UK Funding GE Capital European Funding GE Capital New Zealand Funding GE Capital Australia Funding GE Capital Canada Funding GE Capital Mexico Funding 13

14 GE credit ratings Moody s Rating Short Term Long Term Short Term S&P Rating Long Term General Electric Company P-1 Aa3 A-1+ AA+ General Electric Capital Corporation P-1 A1 A-1+ AA+ GE Capital Australia Funding* P-1 A1 A-1+ AA+ GE Capital Canada Funding* P-1 A1 A-1+ AA+ GE Capital European Funding* P-1 A1 A-1+ AA+ GE Japan Funding KK* P-1 A1 A-1+ AA+ GE Capital Mexico Funding* P-1 A1 A-1+ AA+ GE Capital UK Funding* P-1 A1 A-1+ AA+ * Guaranteed by General Electric Capital Corporation 14

15 GE Capital future -a) (ENI, $ in billions) ~$600 -b) $425 - $440 ~2.0% ROI ROI Consistent strategic focus Winning specialty finance platforms Consumer ~35% ~20-30% ~2% Select Consumer, competitively funded Real Estate smaller, debt focused Real Estate ~14% ~10-15% ~1-2% Verticals with unique domain expertise Advantaged core mid-market platforms Connected to GE Verticals ~10% ~15-20% ~2-3% High-returning, scale positions in markets that matter Mid-market Lending & Leasing ~41% ~45-50% ~2% Portfolio re-mix will drive earnings growth Safe and secure capital structure Re-start dividend to parent in 12 Peak Future Strengthening industrial connection GE Capital will deliver for investors a) - Ex. 1Q 10 Fx rates b) - As of 3Q 08 15

16 Relative performance Peak loss given default (Net charge offs/non-performing assets) Current reserve coverage vs. peak losses a) (Current LLR/NPA Peak Net charge offs/non performing assets) Note: Peak annual net charge off (NCO)/non-performing assets (NPA) ratio since SourceCompany filings, SNL Financial, FactSet, I/B/E/S 40% 57% 64% 91% 143% 146% 109% 109% 124% 145% 96% 92% 74% 74% GECC peak NCO/NPA in 2010 NCO $8B, NPA $21B 65% 55% 54% 49% Peak year Super Super Reg l. Reg l. Top 5 Top 5 Super Super Reg l. Reg l. Top 5 Top Asset quality NCOs / Avg. loans Super GECC Super Top 5 Top 5 Super Super Top 5 Top 5 Reg l. Reg l. Reg l. Reg l. (a- Company filings, SNL Financial, FactSet, I/B/E/S Note: Calculated as 3Q 11 loan loss reserve (LLR)/non-performing assets (NPA) ratio divided by peak annual net charge off (NCO)/non-performing assets (NPA) ratio since 2007 GECC net interest margin (% of AEA, YTD annualized) Interest income Bank peer average Net interest margin GE Capital Interest expense Notes: Bank peers includes JPM, WFC, BAC, C, USB Source: Goldman Sachs 16

17 GE Capital reserves ($ in billions) 30+ delinquency % Mortgage CRE $10.5 $1.1 $9.7 $1.0 Non-earnings $B $9.4 $1.0 $8.8 $0.8 $8.5 $0.8 vs 4Q 11 ($MM) ($29) Consumer Cons $5.1 $4.9 $4.8 $4.6 $4.4 ($182) Real Estate CLL CLL $4.0 $3.5 $3.3 $3.3 $3.3 ($37) UK mortgage (86)bps vs. 4Q 11 US Consumer Retail at 4.4% 9 year low CRE down 100bps vs 1Q 11 CLL stable at ~2% Environment continues to improve Non earning % of finance receivables 3.38% 3.15% 3.12% 2.99% 2.97% Excludes GECAS, EFS and other non earning assets of $88MM in 1Q 12, $54MM from 4Q 11 17

18 GE Capital Europe exposure as of 3Q 11 ($ in billions, financing assets -a) ) Netherlands 2% Switzerland 4% $132 $132 Other 8% Germany 7% Focus b) countries 13% GECAS 9% CRE 10% CLL 29% EFS/Other 1% Europe dynamics ~85% of assets secured by collateral Well diversified... ~700K commercial customers in 43 countries France 19% Minimal sovereign debt in focus countries... $0.2B in Greece & Italy at 4Q 11 E. Europe 19% U.K. 28% Country Consumer 51% Business Delinquencies stable across Europe Actively managing counter-party exposures Market volatility has potential risk to the portfolio but long term may create opportunities Managing Europe volatility a) - Includes gross financing receivables, ELTO & other investments, excludes cash & cash equivalents b) - Portugal, Italy, Ireland, Greece, Spain 18

19 Commercial Real Estate - debt 1Q 12 Collateral type Geography Pacific Basin 7% Warehouse 10% Mixed 3% Retail 10% Hotel 11% Europe 13% Other RE 6% Americas 17% Apartment 14% Office 21% Owner occupied 25% US 62% Quality book Dynamics Avoided high risk segments i.e. construction, 2 nd lien Disciplined underwriting ~70% LTV at origination, 2.6X DSCR Diverse spread of risk 1Q 12 delinquency at 3.08% down 100bps from prior year Adequately reserved 1Q 12 coverage 2.95% Managing debt maturities Debt business profitable 19

20 Commercial Real Estate - equity 1Q 12 Collateral type Retail 9% Hotel 1% Mixed 4% Geography Warehouse 9% Apartment 14% Other 12% Americas 11% Office 55% U.S. 29% Dynamics Diverse spread of risk portfolio Primarily wholly owned, limited 3 rd party debt Occupancy (~81%) and NOI yield (~6%) stable Liquidity improving $0.5B sold in 1Q 12 Estimated unrealized loss declining 4Q 09 4Q 10 4Q 11 Pacific Basin 28% Europe 32% ~$(7) ~$(5) ~$(2.6) Signs of stabilization in equity business 20

21 A strong GE Capital + Financially sound balance sheet + Safe & sound liquidity plan + On track for more focused investment + Profitable origination (a- Ex. cash & equivalents (b- Ex. Garanti 1Q % Tier 1 common ratio, +50 bps. vs. 4Q 11 Non-earning assets $300MM $76B cash CP 2.5X ENI $436B Real Estate profitable Exit Irish Mortgage Core NI b) +27% NIM 4.8% New business ROI 3%+ Business executing ahead of expectations 21

22 22