General Electric by alicejenny

VIEWS: 8 PAGES: 23

									General Electric Company
Financial Services -
Overview/Strategy



"This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such
as "expects", "anticipates","intends", "plans", "believes", "seeks", "estimates", "will" or words of similar meaning and include, but are not limited to, statements about the expected future business
and financial performance of GE. Forward-looking statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks and
changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from these expectations and assumptions due to changes in global political, economic,
business, competitive, market, regulatory and other factors. We undertake no obligation to publicly update or review any forward-looking information, whether as a result of new information,
future developments or otherwise."




                                                                                                                                                     2006 second quarter
General Electric Company

      Infrastructure                   Industrial
          Oil & Gas             Strategy/Integration                      Commercial Finance
           Energy              Consumer & Industrial                         Capital Solutions
             Rail               Equipment Services                             Real Estate
      Aircraft Engines                  Plastics                       Corporate Financial Services
           Water                   Silicones/Quartz                    Healthcare Financial Services
 Energy Financial Services              Security
 Aviation Financial Services            Sensing
                                         Fanuc
                                     Inspect Tech




      NBC Universal                  Healthcare                             Consumer Finance
          Network                Diagnostic Imaging                                Europe
          Stations                Clinical Systems                                  Asia
       Entertainment              Info Technology                                Americas
         Universal                    Services                             Australia/New Zealand
      Sports/Olympics               Bio Sciences                                                            2/
                                                                                                           GE /
                               Bold and Italicized text denotes GECC                        2006 second quarter
Legal structure & ratings commitment

                                             General Electric
Explicit support                                Company
  GE support to ensure GECC 1.1x fixed-    AAA/Aaa
  charge coverage ratio                                100%
  Guarantee of up to $1B subordinated
  debt
                                             General Electric
                                           Capital Services, Inc.
Implicit support examples
  Acquisition capital – Heller (~$2.5B)
                                                      100%




                        Primary GE        General Electric Capital
                     Issuer/Guarantor          Corporation

                                                 AAA/Aaa



                                                                                     3/
                                                                                    GE /
                                                                     2006 second quarter
Local funding entities
Commitment to local markets
  GECC unconditional guarantee
  Parent rated “Triple-A”
  Proceeds used primarily to                                            Primary GE
                                       General Electric Capital
  fund local assets                         Corporation              Issuer/Guarantor
  Access to deeper investor                                              AAA/Aaa
  base
                                                    100%


                         GE Japan              GE Capital            GE Capital
                        Funding KK           Canada Funding       European Funding



GE Capital Auto Lease       GE Capital            GE Capital          General Electric
   Public Company        Australia Funding        UK Funding         Capital Canada Inc
     (Thailand)



                                                                                                  4/
                                                                                                 GE /
                                                                                  2006 second quarter
GECS segment results – continuing
operations
($ in millions – net earnings)

                                                       2Q’06               2Q’05   V%

   Commercial Finance                                 $1,057               $872    21%
   – Capital Solutions                                   433                325    33
   – Real Estate                                         334                240    39

   Consumer Finance                                      $880              $735    20

   Infrastructure–a)                                     $472              $387    22

   Industrial–a)                                           $60              $36    67

   Corp. items & elims.                                    $31              $(2)    F

   (a- Includes only portions of the segment that are Financial Services



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                                                                                                        GE /
                                                                                         2006 second quarter
GECS segment assets
GECS & consolidated affiliates
($ in billions)
                                                                          2Q’06    2Q’05    V%

  Commercial Finance                                                      $206.5   $185.7   11%
  Consumer Finance                                                         169.4    149.6   13
  Infrastructure–a)                                                         56.8     50.5   12
  Industrial–a)                                                             19.0     17.4    9
  Corp. items & elims.                                                      61.5     64.8    (5)
  Total GECS – continuing operations                                      $513.2   $468.0   10%
  Assets of discontinued operations                                         15.1    143.9   (90)
  Total GECS                                                              $528.3   $611.9   (14)%

  (a- Includes only portions of the segment that are Financial Services




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                                                                                                                   GE /
                                                                                                    2006 second quarter
Second quarter consolidated results
($ in billions – except EPS)             ($ in millions)
                                                                                              Segment
Continuing operations                                                  Revenues                profit-a)      Vs.
                          2Q’06   V%                                    $         V%          $      V%    guidance

Revenues               $39.9       9% Infrastructure               $11,332          11% $2,107       10%
– Industrial sales      24.4       9
– Financial Svcs. rev. 15.3       10  Industrial                       8,788            6     729    15

Earnings                   4.9    11     Commercial Fin.               5,527        12       1,057   21

EPS                        .47    15     Consumer Fin.                 5,268            7     880    20

CFOA YTD                  14.3    78     Healthcare                    4,156        10        795    18
– Industrial CFOA          6.7     9
                                         NBC Universal                 3,858            0     882 (10)
Tax rate
– GE (ex. GECS) –   2Q      24%
                –   YTD     24%                                                             $6,450   11%
– GECS          –   2Q      11%          (a- Financial Services on an after-tax basis

                –   YTD     13%

                                       Strong performance                                                                  7/
                                                                                                                          GE /
                                                                                                           2006 second quarter
Commercial Finance
         Real                   Corporate                       Energy
                                Financial                       Financial
         Estate                 Services                        Services
                                Healthcare
        Capital                                                 Aviation
                                Financial
        Solutions                                               Services
                                Services

 Provider of global commercial real estate capital and services
 Global provider of Innovative financial solutions across the entire supply chain
 Financing for working capital & capital expansion
 Provider of equipment, real estate and working capital financing to the global
 Healthcare Industry

 Financing Global Energy, industrial and infrastructure development
 1,400+ Commercial Aircraft – owned and managed
                  Businesses with small share in big markets
                        delivering through the cycles
                                                                                             8/
                                                                                            GE /
                                                                             2006 second quarter
 2Q highlights – Commercial Finance
                                                       2nd quarter dynamics
 Commercial Finance – 2Q’06
                                             • Strong volume growth +36%
                            $       V%         – Capital Solutions +13%; Real Estate +72%;
 Revenues               $5,527MM    12%          CFS +59%; Healthcare +24%
 Segment profit         $1,057MM    21%      • Segment profit remains strong
 Assets                  $207B      11%        – Strong core growth
                                               – Optimizing portfolio & capitalizing on market
                                                 opportunities
        Key 2Q business results
                                             • Non-earnings, delinquencies & write-offs        vs.
                   Assets      Segment         prior year & historical averages
                    ($B)      profit ($MM)
                  $      V%    $       V%
                                                     3Q’06 segment profit dynamics
Capital Solutions $91     7% $433     33%
                                             • Continued portfolio strength & global growth
Real Estate       44     24   334     39
                                             • Stable asset quality


                        3Q’06 outlook … segment profit 10-15%
                                                                                                     9/
                                                                                                    GE /
                                                                                     2006 second quarter
GE Commercial Finance
($ in billions)
                                                 20% of GE
                    ~$210   ~10%
             $191                    High visibility + long-term growth
Assets
                    ~$5.0   10-15%
             $4.3                    + Accelerate global growth

Net
income                               + Largest direct origination


                                     + World class risk management
              '05   '06E
ROE           24%   ~25%             + Scale businesses quickly



                                                                                   10 /
                                                                                   GE /
                                                                    2006 second quarter
GE Commercial Finance
($ in billions)
                    Real Estate                      Capital Solutions
                            ~$40   ~10%                            ~$95   ~10%
                  $35                                  $87
                                           Assets
 Assets                                                           ~$1.7   10-15%
                           ~$1.4 10-15%               $1.5
              $1.3
 Net                                       Net
 income                                    income



                  '05       '06E                       '05         '06E

• Continue to drive a global portfolio    • Customer focused … offering integrated
• NPI/developing markets                    solutions
• Manage through cycles                   • Maintain portfolio quality



                        Strong & broad based … room to grow
                                                                                           11 /
                                                                                           GE /
                                                                            2006 second quarter
GE Commercial Finance
Powerful origination advantage
      Unique go to market                         Leverage domain expertise
Enterprise selling                          Healthcare
 Sell full suite of products      ~$8B        Industry we know … benefit from
 3,000 accounts targeted                      domain knowledge
                               4X             Drives top line & lower risk
 Dedicated sales force
 Products per customer       $2B
                                                      ’05 financials           ’01-’05
 1.2 2+
                            '05      '06E          Assets          $13B         17%
                                                                                AAGR
                             Volume                Net income ~$230MM

European Corporate Finance                  Transportation
                                ~$320MM
  Dedicated GE VP, sales     3X               Added capability to existing
  team in ’03 to under-  $100MM               platform (Citicapital acq.)
  served market                               $10B+ in assets, 90K customers
  Bring US core                               GE domain expertise … Penske,
                            '02    '05
  competencies to Europe                      Trailer Leasing
  Taking model to Asia     Net income
                                  ($MM)

                   Large & deep bench … 8,500+ origination team
                   – Unmatched in industry                                                        12 /
                                                                                                  GE /
                                                                                   2006 second quarter
GE Commercial Finance
Diversified portfolio
($~190B assets)
                             Collateral                                                 Industry
                                                                                      Specialty
                          Other                                                        Retail
                                                                      Business                        Healthcare
                                               A/R + Inv
                                                                      Services           8%
           Trans.                                                                                   6%         Hotels
                             10%          16%
           Equip                                                                 9%                       5%
                    5%                                                                                                Auto
 Healthcare
   Equip.   5%                                               Cash                                              5%
                                                              Flow                                                       Trucking
Franchise                                             10%                                                        4%
            4%
                                                                      12% Real Estate                                      Tech.
                                                                                                                    4%     Hardware
 Fleet      5%
Vehicles                                                                                                                  Machinery
                                                                                                                 4%
                                                                                                                          Equip.
                                                  14%        Real           Other (48)
                                                             Estate                                            3% Diversified Fin.
                                                                            1% or Less                        2%
                    15%
                                                                                                             2% Food & Beverage
                                                                                  24%                      2% Chemical
    FF&E/                                 4%                                                             2% Building Products
                                    10%                                                               2% Steel
  Other Equip                                                                                     2% 2% Construction
                                                Corp. Jets
                                                                                                      Construction Material
                             Dealer Inv                                                             Consumer Services

                          Senior secured positions… broad spread of risk
                                                                                                                                     13 /
                                                                                                                                     GE /
                                                                                                                      2006 second quarter
GE Commercial Finance
Delinquency / Non Earnings
(As a % of Financing Receivables)

          Equipment delinquency                           Non Earnings
                                             2.10
 1.90
                                             1.90
 1.70
                                             1.70
 1.50
                                             1.50
 1.30
                                             1.30
 1.10
                                             1.10
 0.90                                        0.90

 0.70                                        0.70

 0.50                                        0.50

         '00   '01   '02   '03   '04   '05          '00   '01   '02   '03   '04      '05

        Sustained low delinquency                   Consistent broad based
                 rates…                             portfolio improvement…

                                                                                                 14 /
                                                                                                 GE /
                                                                                  2006 second quarter
Financial Verticals - Infrastructure
($ in billions)
              Aviation Services                        Energy Financial Services
                              ~$44      ~10%                                     ~15%
              $40                                                        ~$13
                                                             $11
                                                  Assets
 Assets                                 10-15%                         $0.6–$0.7 10-15%
              $0.7          $0.8-$0.9                        $0.6
 Net                                              Net
 income                                           income



                  '05          '06E                           '05         '06E

• Global aviation market remains                 • Robust market, continue to invest
  strong…traffic up ~6% in ‘05                   • Expand to new segments…wind, solar
• Continue to manage N.A. accounts               • Strong risk management discipline
• Growth in developing markets

                        Domain expertise, broad business momentum
                                                                                                  15 /
                                                                                                  GE /
                                                                                   2006 second quarter
GE Consumer Finance Overview
                    • Largest Provider Of Retailer Finance
                      Programs In The World
                        • 180,000 locations worldwide
                        • 180,000 locations worldwide

                    • Only Global Independent Auto Finance
                      Company
                        • 45 relationships / 3MM cars
                        • 45 relationships / 3MM cars

                    • A Fast Growing Personal Loan Company
                        • 3,400 locations; 225,000 cash access points
                        • 3,400 locations; 225,000 cash access points

                    • An Emerging Global Mortgage Provider
                        • In 25 countries today…and expanding
                        • In 25 countries today…and expanding



      A Growing Global Consumer Finance Company
                                                                              16 /
                                                                              GE /
                                                               2006 second quarter
GE Consumer Finance
($ in billions)

                    ~$185   ~15%               15% of GE
             $159
Assets
                                   High visibility + long-term growth
                    ~$3.5   ~15%

             $3.1                  + Build out developing countries

Net                                + Balance global portfolio
income
                                   + Accelerate NPI

                                   + Sustain risk management
              '05   '06E

ROE           29%   ~27%




                                                                                 17 /
                                                                                 GE /
                                                                  2006 second quarter
GE Consumer Finance
Business Overview – 2005

                 Assets                                   Net Income

           Australia                                            Japan
                          Japan               Australia
                 17%    7%   Asia                               16%        Asia
                                                          11%         5%
                          6%

Americas   24%
                                         Americas   23%
                                                                              Europe
                       46%                                        45%


                             Europe




                             A Global GE Business                                           18 /
                                                                                            GE /
                                                                             2006 second quarter
GE Consumer Finance
Market entry through partnerships
    Korea - Hyundai                           Spain - CAMGE



 Providing personal loans, auto        Regional savings bank, personal loan &
 financing & card products             credit card business
 • ~$100MM net income in ’06F          • ~$15MM net income in ’06F

Central America - BAC                         Turkey - Garanti




 Retail bank & credit cards            Full service retail & commercial bank
 • ~$40MM net income in ’06F           • ~$100MM net income in ’06F
                      Smart, profitable market entries
                                                                                       19 /
                                                                                       GE /
                                                                        2006 second quarter
GE Consumer Finance
       2Q 2006 Highlights
                                                 Broaden distribution
                  2nd quarter             Branches
                   $        V%                           250+ more in ’06
                                                         Continue deposit taking
Revenues       $5,268MM       7%
Segment profit   $880MM     20%
Assets           $169B      13%           Global expansion
         2nd quarter dynamics                            Developing countries
                                                         – Turkey, Cent. Am. – ’05
• Global net income strong                               – Deeper in Eastern Europe
                                                           & Asia – ’06+
  – Americas +33%
  – Europe +22%
                                                        New products
• Assets +13% … solid core growth,        Dual Cards
  portfolio quality stable                               10 new clients in ’06
                                                         – 10MM accounts by ’06
• Japan down 14% … competitive and
  regulatory pressure                     Cash access
  3Q’06 outlook … segment profit 10-15%
                                                         225K+ ATMs globally
  – Strong global growth                                 Expanding to PLCC customer
  – Stable asset quality                                 base…”Cash out at checkout”

                        Repeatable organic growth process                                 20 /
                                                                                          GE /
                                                                           2006 second quarter
GE Consumer Finance regions
($ in billions)
                  Europe                   Americas                           Asia

                           ~$85
            $73                                      ~$45                            ~$55
Assets                                    $39                          $47
                       ~$1.6
           $1.4                                                                      ~$1.1
                                                    ~$1.0              $1.0
                                          0.7

Net
Income


            '05            '06E           '05        '06E              '05            '06E
  • Invest in Eastern Europe        • Regional expansion       • Invest in developing countries
  • Productivity through              – Central America/Mexico   – China, India
    regionalization                 • Driving cross-sell       • Scale/productivity/NPI
  • Expansion in Southern           • Dual Card momentum …       – Korea, Thailand, Japan
    Europe                            rollout expands in ’06   • Expand to emerging markets
                                                                 – Philippines, Malaysia, Vietnam

                                  Double digit growth in ’06
                                                                                                        21 /
                                                                                                        GE /
                                                                                         2006 second quarter
GE Consumer Finance – Asset Quality
                     7%




                     6%
 30+ Delinquencies



                                                                                                                                   5.23%       5.08%
                                                                     5.02%
                     5%
                                   5.02%
                                                                                                            4.85%
                     4%


                                                                      GECF 30+% Delinquency
                     3%




                     2%
                          Dec              Mar    Jun          Sep   Dec         Mar     Jun         Sep    Dec     Mar    Jun     Sep         Dec


                                    2002                2003                                  2004                          2005

                                                                                       U.S.
                                                 6.5                       6.3
                     Loss Rate %




                                                                                                      5.7
                                                                                                                          4.8

                                                                                 International

                                                 2.4                       2.5                        2.0                 1.9

                                                 '02                       '03                        '04                 '05



                                            Stable Asset Quality, Loss Trends Improving                                                                 22 /
                                                                                                                                                        GE /
                                                                                                                                         2006 second quarter
GE credit ratings
                                            Moody’s Rating            S&P Rating
                                          Short Term Long Term   Short Term   Long Term

General Electric Company                      P-1      Aaa          A-1+        AAA
General Electric Capital Services             P-1      Aa1          A-1+        AAA
General Electric Capital Corporation          P-1      Aaa          A-1+        AAA
  • GE Capital Australia Funding*             P-1      Aaa          A-1+        AAA
  • GE Capital Canada Funding*                P-1      Aaa          A-1+        AAA
  • GE Capital European Funding*              P-1      Aaa          A-1+        AAA
  • GE Japan Funding*                         P-1      Aaa          A-1+        AAA
  • GE Capital UK Funding*                    P-1      Aaa          A-1+        AAA
  • General Electric Capital Canada Inc.* P-1          Aaa          A-1+        AAA


* Guaranteed by General Electric Capital Corporation



                                                                                                  23 /
                                                                                                  GE /
                                                                                   2006 second quarter

								
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