GE Capital Finance Overview by qfc86623

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									GE Capital Finance Overview



December 2, 2008
"Results are preliminary and unaudited. 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, commodity and equity prices and the value of financial assets: continued volatility and further deterioration of the capital markets;
the commercial and consumer credit environment; the impact of regulation and regulatory, investigative 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.“

“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 www.ge.com.”

“In this document, “GE” refers to the Industrial businesses of the Company including GECS on an equity basis. “GE (ex. GECS)” and/or “Industrial” refer to GE excluding Financial Services.”
Overview
• Macro environment is very challenging
• 4Q’08 results are trending toward low end of range … $.50-.52
• In addition, evaluating restructuring and other charges to accelerate cost out
  and reviewing losses in current environment
        Expecting ~$1.0-1.4B after tax charge
        Industrial and financial cost out
• GE Capital is a vital financial services business
    1) Safe + conservative in economic environment
    2) Creating a financial framework to earn ~$5B in 2009
    3) Business model that performs for the long term
    4) A strong fit with GE
• GE is well positioned to perform in a difficult 2009
        Board approved management plan to sustain dividend at $1.24/share
            Including restructuring and other charges, Company earns
            ~$4B in 4Q … $18B+ in ’08
            GE Capital Finance earns ~$9B in ’08
            Financial Services earns ~$8B in ’08


                                                           CFPA1397 December 2008 Analysts Pitch_V6   2
Additional 4Q items
($ in billions – after tax)
                                                     Focus
                $1.0-1.4B
                                        Financial Services & Industrial
                                        headcount reductions
                                        Financial Services portfolio exits
                                        Facility consolidations
                                        Structural improvements
                                        Additional losses, higher reserves
         Restructuring, higher          Approximately ~70% financial
        losses & other charges          services

                4Q items drive:
                + 5% lower base cost in 2009
                + Loss reserves reflecting a tougher environment


                                                           CFPA1397 December 2008 Analysts Pitch_V6   3
GE is committed to the Triple A rating
                9/25 Commitment                                  Additional actions
1 Improve liquidity profile                              1 Issued $15B of common & preferred stock
    – Reduce absolute reliance on CP ( to ~$80B)           to accelerate liquidity planning
    – Bank lines & cash ≥ CP by 4Q’08
                                                         2 Gained access to CPFF & TLGP
    – Shrink GECS through originations/collection
                                                           – $98B capacity under CPFF incl. GE
      management … assuming no issuance in 4Q’08
                                                           – $132B guaranteed debt capacity under TLGP
2                                                        3 Refined business model to allow core
  Strengthen capital base
    –   Reduce GECS dividend to parent to 10%              growth with cash redeployed from run-off
    –   6:1 book leverage w/hybrids by end ’09             portfolio … ’09 LT debt plan to $45B
    –   Suspend share buyback until 1Q’10
    –   No increase to GE dividend for ’09               4 Targeting $50B CP balance by YE’09 with
                                                           100% bank lines coverage
3
    More focused Financial Services                      5 Grew deposits base by >$20B in ’08 … plan
    – Smaller commercial Real Estate, more debt/           to double size in ’09
      less equity
    – Reduce high leverage products (mortgages)          6 Committed to 7:1 leverage YE’08
    – Shrinking overall portfolio & changing asset mix     – Evaluating ~$5B capital infusion to GECS

                                 Substantial actions completed


                                                                            CFPA1397 December 2008 Analysts Pitch_V6   4
GE Capital business model
                       Financial Services value chain

                                     “Factory”
“Raw material”           GE Advantage:                                 “Origination”
  (capital)                                                        GE Advantage:
                            Low cost         Treasury
GE Advantage:                                                          Global position
  Competitive cost          Risk             Asset Mgmt.               Brand
  “AAA”                                                                Domain expertise
                            Talent           Tax



                        Pre-crisis competitive position:

     + Scale         ++ Margins and results > banks + FinCo       +++ Brand/domain

                     GE Capital has performed for decades
                     Will reposition for long term success


                                                              CFPA1397 December 2008 Analysts Pitch_V6   5
GE Capital Finance
GE Capital has a strong franchise
One of the few liquidity sources since 3Q’07          Estimated U.S. market position
• $120B of new financings to U.S. companies,    • Middle Market Commercial Lending                   #1
 infrastructure projects and municipalities
                                                • Equipment Lending/Leasing                          #1
• $245B credit extended to U.S. consumers       • Middle Market Corporate Finance                    #1

• 1Q’08 Merrill Lynch – bought $13B of          • Aircraft Financing                                 #1
  troubled assets
                                                • Healthcare Financing                               #1

• 3Q’08 CitiBank – bought $13B of middle        • Energy Financing & Project Financing               #1
  market commercial financings
                                                • Fleet Leasing                                      #1
• Have contributed to support all major U.S.    • Franchise Finance                                  #1
  airlines and auto companies with financings
  as they work through cyclical issues          • Commercial Real Estate Lending                   Top 3

                                                • Dealer Financing                                   #1
• Leading DIP/Bankruptcy lender for
  restructuring U.S. companies                  • Private Label Credit Cards                         #1


                    Core is strong + competitively advantaged


                                                                       CFPA1397 December 2008 Analysts Pitch_V6   7
GE Capital Finance overview
($ in billions)
                          Net income
                                               ~$50B
                    $12.2B                   4Q volume                 Our focus
                                          ~$9B
      Capital                                            1 Manage current cycle in a safe and
      Finance                                              responsible way
                                                              – Reposition funding model
                      ’07                 ’08E                – Manage credit cycle
GECC ENI              537                  545
ROI                  2.4%                 1.7%
ROE                  22%                  15%            2 Reposition GE Capital as a well-
 Challenging year but strong relative performance          funded, smaller finance company
                                                              – Outperform in 2009
   Earnings                 3Q’07-3Q’08     3Q assets
    GE Capital Services         $10.6        $680B            – Position business to grow in 2010
    JPM                          7.9          1.8T              and beyond
    GS                           7.6          1.1T
    WF                           6.8          620B
    BoA                           6.2         1.7T
    Next 5                       12.0         1.1T




                                                                          CFPA1397 December 2008 Analysts Pitch_V6   8
Reposition funding
     model
Strategy: Diversified FinCo model
Current view of future capacity (2010+)                               Pre-crisis        Post-crisis

                Capital                    Leverage                         8:1              ~6:1
               ~$70-80B
                                           Funding                        ~$535B           ~$470B

                                            CP outstanding                ~100B            ~$50B
              LTD 2016+
                                            LT debt annual capacity    $80 – $100B         ~ $50B
                ~$85B
            LTD @ ~$50B/yr.                 Spread                         L+10           L+100 +

         5 yr. maturity ~$250B                                                          Capacity to
                                           Growth                        10 - 12%       continue to
     CP backed 100% by bank lines                                                          grow
                ~$50B                      ROE                             20%           15% - 20%

       Deposits/alternate funding
                                           Ratings                       AAA/Aaa          AAA/Aaa
                 ~$85B

               ~$470B
                       Strong diversified funding plan


                                                               CFPA1397 December 2008 Analysts Pitch_V6   10
U.S. government programs
Programs              GE   GE impact

                           • Capacity of $98B … pricing @ slight penalty to market
Commercial paper
 funding facility
                           • Enables GE to support investor liquidity needs and manage
     (CPFF)                  duration
                           • Serves as liquidity backstop

                           • GECC capacity of $132B
     Temporary             • Solidifies debt issuance capacity ($45B) and improves LT debt
liquidity guarantee
      program                pricing & CP market access
        (TLGP)             • CDS & cash spreads tightening … reduces refinancing risk
                             perception

                           • GE not participating
TARP/TARP capital
  purchase plan            • $15B GE equity raise provides capital/liquidity flexibility if
                             markets continue to deteriorate


                           Programs level playing field


                                                                      CFPA1397 December 2008 Analysts Pitch_V6   11
 Debt market size
  ($ in trillions)
                      CP market – U.S. only      • Institutional demand from money funds,
       $2.2T          $1.8                         state & local governments, corporation &
                               ~$1.5     ~$1.5
       peak                                        central banks
                                                 • CPFF helped stabilize declining market …
                                                      rollover risk and liquidity enhanced
                      2007      2008E    2009+     investor confidence & led to term buying
GECS Global O/S ($B) 101         80        50
GECS US mkt. share     ~4%       ~4%      ~3%

                Global IG Term issuances
                                         +$6T
                     $2.7                Govt.
                                                 • TLGP opens GE access to government
                              ~$2.0
                                        market     debt buyers through June’09
                                        ~$1.3
                                                 • Pension funds / insurance companies will
                                                   continue to invest in LT debt driving need
                     2007     2008E     2009E    • GECC targeting $45B issuances in ’09 …
GECC issuance ($B)     90       70       ~45
                                                   half of ‘07
Market share           3.3%     3.5%     <1%

                         Government programs have helped restart debt
                        markets … GECC aligning issuance plan to markets

                                                                      CFPA1397 December 2008 Analysts Pitch_V6   12
2009 funding plan
($ in billions)
                  $536
                           ~$514
                                                    Focus: Downsize + diversify
                                     ~$485
                                                1 CP at $50B by YE’09
                                                     100% bank line coverage
LT debt            391
                            377
                                      354       2 Lower LT debt … $45B issuance in ’09

                                                3 Grow alternative funding to $80B+
Deposits/
Others             57       57         81                          +
Comm’l paper       88       80         50            Plan on government programs
                                                     ending
                  3Q'08   4Q'08E* 4Q'09E*
 Equity            $56     ~$57       ~$62
                                                     Origination pricing > cost of funds
 Bank lines +                                        ENI   ~$45B … 3Q’08 – 4Q’09
 cash/CP           85%    100%+       100%+
 * Constant FX

                                   Solid + conservative plan


                                                                 CFPA1397 December 2008 Analysts Pitch_V6   13
Commercial paper update
($ in billions)
              $101
                                                         Limited use of CPFF … helping investors
Int’l          30       ~$80                             manage redemptions … plan assumes
                         15         ~$65                 CPFF ends as scheduled
                                     15         ~$50
                                                 10      CP markets have improved … more term
U.S.           71        65
                                                         buying
                                     50          40
                                                         GE maintained good demand, pricing and
                                                         term issuance despite market disruption
              4Q'07     4Q'08E     1H'09E       4Q'09E
                                                           – Portfolio cost at 2.15% as of 11/21
              Weighted average yield %                     – Weighted average maturity restored to
                GECC U.S. CP portfolio cost %                55-65 day target
        6.0

        5.0                                              Diverse, deep global investor base
        4.0                                                – 1,250 U.S. investors
        3.0                                                – 11 currencies, 15 programs
        2.0
                                                         100% coverage with cash + bank lines
        1.0
          Feb- May- Aug- Nov- Feb- May- Aug- Nov-
           07   07   07   07   08   08   08   08



                                                                           CFPA1397 December 2008 Analysts Pitch_V6   14
Long term debt
($ in billions)
                               ’09 Plan
                  $29                $39                   ~$61
       $23                                       ~$50
                               $22                                                              • FDIC TLGP eligibility solidifies
                                                                             Issuance             annual debt issuance
                                                                             Maturities           capacity ($45B) and improves
                                                                             Guaranteed           pricing
                                                                             debt
            1H’09              2H’09              ’10E                                          • Pricing to reflect market
                  Performance vs. 5 yr. cash bonds                                                dynamics
Libor-OAS (bps)
  850
                                                                                  FinCo Index
 750
 650
                                                                                                • Continue to maintain match
 550                                                                              Bank Index
                                                                                  C
                                                                                                  funded book
 450
                                                                                  JPM
 350
                                                                                  GECC
 250                                                                              WFC           • Opportunistic TLGP issuance
 150
  50                                                                                              in 4Q’08 to pre-fund ’09
   Jul-08             Jul-08     Aug-08           Sep-08     Oct-08          Nov-08

             FinCo Index              Bank Index              GECC 5yr Spreads
             C 5yr Spreads            JPM 5yr Spreads         WFC 5yr Spreads
 Source: Barclays Capital




                                                                                                           CFPA1397 December 2008 Analysts Pitch_V6   15
2009 alternate funding
($ in billions)
                                             ~$96   International deposits $4B
                               Additional    +15B
                                                     – Drive market share in emerging markets
                               opportunity           – Tap large/developed markets
                                             ~$81
                               ~$54B                Brokered CD’s : Distributed through multiple
                               today          18    firms to support asset growth in US banks

                                  ~$57               • Industrial Loan Corporation deposits $17B
                                                        –Direct origination into ILC
                                              27        –Bank loan group; Distribution Finance
                                   23
                                                         Business properties; Franchise Finance
                        $30                             –Originating CD’s to match bank assets
Other                              10         18         profile
U.S. Industrial Loan
Corporation             18         10
U.S. Federal                                         • Federal Savings Bank deposits $8B
Savings Bank
                  1                           18        –Direct origination of sales finance assets
                        11         14
International
                                                    Ongoing exploration of thrift opportunities
                       4Q'07     4Q'08E 4Q'09E      with FDIC cooperation

                                Transition banks to deposit funding


                                                                          CFPA1397 December 2008 Analysts Pitch_V6   16
GECC cost of funds
          Average USD cost of funds
            5.3%                             Match       • Portfolio downsizing reducing impact
                      ~4.6%                 funded
                                  ~4.3%                    of new higher cost debt … only ~30%
Fixed      5.1%                                            new / roll-over debt
                      ~5.3%
                                 ~5.4%
                                                         • Match funded portfolio minimizes
Float      5.5%                                            interest rate and currency risk
                      ~3.5%      ~2.8%
            ’07        ’08E        ’09E                  • Floating portfolio rates reducing due
        2009 new/roll-over debt costs                      to benchmark rate cuts
Instrument        Amount Spread to Libor (bps.)
                                                         • New fixed debt spread            …
CP                 ~$50B   (5)-(30) same as ’08YTD         substantially offset by          benchmark
Deposits/Other ~$25-50B 30-200 based on maturity
                                                           rates

LT debt            ~$45B   180-200 under TLGP &             Costs are competitive
                           350-400 for 3+ yr. duration

% of Portfolio      ~30%




                                                                         CFPA1397 December 2008 Analysts Pitch_V6   17
Strong capital base
                  GECC Debt/Equity w/hybrids*                                 • GECC has lower book leverage than
                           7.7X                                                 most peers
                                            ~7X          Target
                                                          ~6X                 • GECC leverage ratio appropriate for
                                                                                business model
                                                                                 –   Lower loss rates than banks
                                                                                 –   Secured portfolio
                                                                                 –   Asset management capabilities
                                                                                 –   History of successful acquisitions
                          3Q’08          4Q’08E            4Q’09E
                                                                              • Achieve 6:1 leverage through
Debt/Equity                 8.8X            ~8X              ~7X
                                                                                 – Retained earnings growth
Debt/Tangible
                  13.6X                   ~12.5X           ~10.5X                – Lower GECC dividends
Equity w/hybrids*
                                                                                 – Portfolio actions
Assets/Tangible
                  17.0X                     ~16X            ~14X
Equity w/hybrids*                                                             • Evaluating ~$5B capital contribution
* ~$8B Hybrids represent sub-debt receiving rating agency equity credit and
have a maturity of 60 years, callable at the end of year 10


                               $15B capital raised at GE provides flexibility
                                     to strengthen capital as needed


                                                                                                    CFPA1397 December 2008 Analysts Pitch_V6   18
Funding summary
   1   Well funded, smaller Finance Company

   2   Safer, more diversified funding model …
       at competitive cost

   3   Participating in applicable government
       programs that level playing field …
       Currently don’t see need to become
       Bank Holding Company



                                      CFPA1397 December 2008 Analysts Pitch_V6   19
Weather credit cycle
GE Capital Finance portfolio model
             What we do                                      What we don’t do
 • Underwrite to hold                           • Did not originate CDO’s, SIV’s, etc.
 • Senior secured financings                    • Did not sell credit default insurance
 • Match funding                                • Do not trade securities
 • Diversified Consumer portfolio               • Do not trade/hold mezzanine or high yield
 • Restructure/work out problem                   debt/bonds
   loans/assets

        Actions already taken
   U.S. mortgage – exited early
   Japan P-loans – exited
   UK Private Label CC – agreement to sell
   ANZ Mortgage & Auto – exiting
   U.S. Consumer – tightened underwriting, reduced credit lines, more collectors
   UK Mortgage – tightened underwriting, 2008 volume down ~60%




                                                                    CFPA1397 December 2008 Analysts Pitch_V6   21
Comprehensive risk assessment and
capital allocation GE    Key risk policies
                                                                                 Policy 5.0 - Delegation
• CRO independent review                               Board                     • Maximum single risk approval
  with GE CEO                                                                      authorities - Most <$100MM
• GE Audit committee                                                             • Major acquisitions reviewed by
  chairman attends 3                             • Investments,                    the Board
  GECC Board meetings GE Capital Board
                                                   portfolio reviews
                        of Directors
                                              • 5.0 authorities
                                                                                 Policy 6.0 - Monitoring
                                            • Risk policy, Exposure              • Sets portfolio risk limits
                  GE Corporate                database (REM)                     • Defines risk parameters
                      risk              • BOD investments, portfolio             • Sets trigger points – early
                                          management                               warnings
                                                                                 • Establishes corrective actions
                                     • Capital allocation, portfolio analytics
                                                                                 • Monitors performance
                                   • Portfolio management, emerging issues
            Business
                                 • Delegates approval authorities under 5.0
            CEO level
                               • Capital markets execution
                             • Capital allocation & product leverage implementation
   Business                • Focused risk organization in each market
  “field” level        • Product level performance monitoring (6.0)
                     • Product level delegated authorities (5.0)




                                                                                      CFPA1397 December 2008 Analysts Pitch_V6   22
Key portfolio risks
(Pre-tax losses - $ in millions)
                                                         Estimated
                                                        ’09 financial        Downside case
                  %
                Assets   2009 Assumptions                  impact       Impact           Assumptions
U.S. Consumer     7%     • 8.5% unemployment 2009          ~$4.2B       ~$5.0B                9%
                                                                                          unemployment

UK Mortgage       4%     • HPI (17%) 2008
                                                            $600         $800                (20%) HPI
                         • HPI (15%) 2009

Real Estate      14%     • Cap rates 50-100 bps. higher     $250        $400           +200 bps. highest
- Debt                   • Cap rates 50-100 bps. higher,                               historical cap rate
- Equity                   long-term hold                   $240        $500
                                                                                          by asset type

GECAS             7%     • Global traffic growth down      ~$300        ~$550           • (3%) traffic
                           1-2% 2009                                                      decline (9/11)
                                                                                        • 2 airlines
                                                                                          liquidate


              Credit impact is “incremental” and well understood


                                                                         CFPA1397 December 2008 Analysts Pitch_V6   23
2009 estimated losses
($ in billions)
            Credit losses (pre-tax)                                                  Assumptions/drivers
                                                         +22%
                                                 +64% ~$9.0                   • U.S. consumer cycle expected to
                                                 ~$7.2
                                                                                peak in 2009 w/ unemployment
                                          $4.4                   Consumer       estimated at 8.5% by Dec ’09
             $3.0   $3.2    $3.2   $3.0
    $2.5

                                                                 Commercial   • Mortgages – UK HPI down 15% in
                                                                                2009
    '02      '03    '04     '05    '06    '07    '08E    '09E


                           Reserves                      ~$6.6
                                                                              • Commercial cycle tends to lag
                                                 ~$5.8
             $5.2                                                               consumer 12 to 18 months … likely
    $4.6            $4.9
                            $3.9
                                   $3.9
                                          $4.2                   Consumer       shorter lag this cycle

                                                                              • Bank loan default rates expected
                                                                 Commercial     to increase from ~3% in ’08 to
                                                                                7-8% in ’09
     '02     '03    '04     '05    '06    '07    '08E    '09E
Cov. 2.44%   2.36% 1.85%    1.42% 1.21% 1.10% 1.38%      1.61%




                                                                                          CFPA1397 December 2008 Analysts Pitch_V6   24
U.S. Consumer
         What we do                           Risk approach

     $54B served assets                Strong, disciplined underwriting
                                       approach
                                        – Proprietary scoring models

                                       Broad geographic distribution with
   Private Label    Sales              investment grade retailers
    credit card    Finance
        $32          $22               56MM active accounts

                                       Low credit lines … $600 average
                                       PLCC balance

                                       Loss sharing with retail partners


     Broad diversification and strong underwriting risk principles



                                                      CFPA1397 December 2008 Analysts Pitch_V6   25
U.S. Consumer
                         Delinquency                                                 Actions
   30+                                                    6.17%
         5.44%                    5.52%   5.75%   5.55%
                 5.00%   4.93%                                    Tightened underwriting on new accounts
   90+                                                             −   Raised approval hurdles — new volume at A/B
         1.86%   1.70%   1.74%    1.84%   1.91%   2.08% 2.24%
                                                                   −   Enhanced GE credit scoring to mitigate
                                                                       weaknesses in FICO
                                                                   −   Lowered initial lines
          '04     '05     '06      '07    1Q'08 2Q'08 3Q'08

                                                                  Account management
                  Losses / Reserves                                − Reduced open lines
                                                          8.15%
Loss %
         6.22%                    5.82%
                                          6.44%   6.23%           Exited higher risk sales finance markets
                 4.50%    4.02%                                   Added 1,300 collectors
Coverage %
         3.76%                            3.62% 3.47%     4.07%
                 3.08% 3.03%      3.31%                           Increasing restructuring efforts by 60%

                                                                  Monitoring new accounts — performing better with
          '04     '05      '06     '07    1Q'08 2Q'08 3Q'08
                                                                  lower delinquency/first payment default rates
            Estimated ’09 Reserve coverage ~6%+


                 Planning for 8.5% U.S. unemployment … 2009 losses $4.2B


                                                                                          CFPA1397 December 2008 Analysts Pitch_V6   26
 Consumer mortgage
        Country diversification                                                   Portfolio dynamics
                     $72B Assets                                      Exited U.S. Consumer Mortgage business in 2007
                                                                      Originate to Hold model
                                           Czech $1.5
                                                                      Strong GE risk/valuation management
                                              Other $5.8
                     U.K. $26.9                                       MI with strong (in country) insurers
                                                  Spain $1.4            – AA/A+ rated, separately capitalized and regulated
                                                   Mexico $2.4        No mark-to-market risk in GE Money

                                                  Poland $5.6
                       ANZ
                      $17.0
                                  France                                   Major market assumptions
                                   $11.7
                                                                    U.K.
                                                                    • HPI decline 15% in ’09
                         Asset quality                              • MI on LTV >80%
                                                             9.28   • Portfolio LTV ~ 79% at current market prices
              8.12                                  8.53
                         7.38     7.26     7.80                     • Continue to tighten underwriting – expect ’09 volume to be
   30+ 6.89
                                                                      minimal
              4.25                                  4.15   4.64          Estimated losses increasing from $0.3B to ~$0.6B
   90+ 3.39              3.45     3.39     3.75
                                                                    Australia & New Zealand
Loss % 0.43   0.28       0.15              0.16     0.16     0.38   • Exited October 2008 — Wizard sale in process, remainder of
                                  -
                                                                      portfolio in liquidation
       '04    '05        '06      '07    1Q'08 2Q'08 3Q'08          • Mortgage insured (first dollar loss)


                                Seeing continued pressure, but manageable


                                                                                                CFPA1397 December 2008 Analysts Pitch_V6   27
GE Real Estate portfolio
                             • $41B first mortgages and $10B owner-occupied;
                               $34B equity
                             • 58% international
       Diversified           • ~8,600 properties, 2600 cities, 28 countries
                             • Average investment size $12MM
                             • 62% office, multi-family




                             • Debt – 70% LTV
   Strong underwriting,      • In house risk teams value each property
    asset management         • A-/B+ asset quality
   – operating mindset       • $23.4B in crossed portfolios
                             • 400+ experienced risk professionals



               Real estate is an operating platform
               Strong performance through cycles


                                                        CFPA1397 December 2008 Analysts Pitch_V6   28
GE Real Estate debt portfolio $51B
       Debt property type                                 Actions

         Other RE Storage
                                               Max LTV advance limits reduced
  Warehouse
              7% 1%
                            Office
                                               in ’07
       11%                  30%
                                               $10B owner-occupied in run-off/
                                               restructure
    Retail
    12%
                                               Rate caps to protect debt service
                            Apartment
                                               coverage
       Hotel
       14%                  25%
                                               Front end resources moved to
                                               portfolio account management
 1.6x debt service coverage; 70% LTV
                                               Protect occupancy
 2009 debt maturities - $5.6B ($4B <80% LTV)
                                               - Tenant rollovers
 3Q delinquency on Real Estate debt 0.1%       - Fund improvements


                      Solid 1st mortgage portfolio, low LTV’s


                                                             CFPA1397 December 2008 Analysts Pitch_V6   29
GE Real Estate equity portfolio $34B
               Property type                                         Actions
               Other 6%   Hotel 1%
                                                          Asset-by-asset portfolio
 Warehouse
                                                          management
    12%
                                                          Annual NOI $1.9B
                                          Weighted
 Retail
  13%                          Office     avg. yield      Preserve/improve property cash
                               54%
                                             6%           flow - until markets recover
                                                            – Yield covers carrying costs
  Apartment
    14%
                                                            – Depreciate basis $0.9B/yr.
                                                          Complete value add strategy
  •   Diversified portfolio                               through renovation & lease up
          –   3200 properties — A/B+ quality
          –   Average investment ~$11MM                   308 properties sold, $5.0B, through
          –   150 markets globally                        3Q’08
          –   Top 10 markets ~36% of portfolio
          –   Paris 10%, Tokyo 7%, Others <4%

                                        Hold for longer term value


                                                                      CFPA1397 December 2008 Analysts Pitch_V6   30
GECAS portfolio $47B
                   Asset type                                    Assumptions
                              Cargo
             RJs         9%                          • Planning for 1-2% decline in global
                   16%
                                                       traffic growth in 2009
   Wide-body 21%
                                                     • Worst year in last downturn (2002)
                              54%     Narrow-body
                                                       was 2.5% decline

                                                                    Actions
 • Average age 6 years
                                                    1• Pre-placing assets in anticipation of
                                                       restructurings at weaker credits
 • 85% of narrow-body fleet is high-demand
   A320 + 737NG aircraft                            2• Advanced placement of roll-off and
 • $6B earnings since 2001                             skyline helps manage cycle
 • No unsecured airline lending                     3• 50-seat RJs and 737 classics
   Versus entering last cycle (’01)                     – Redeploy in emerging markets
                              Today      ’01            – Bombardier remarketing JV (RJ)
   Placement higher
                                                        – Cargo conversion/parts-out (classics)
     – Roll-offs               67%      10%
     – New orders              100       48         4– Capitalize on opportunity

                              Proactively position for downturn


                                                                       CFPA1397 December 2008 Analysts Pitch_V6   31
Rigorous process for evaluating asset
impairments
(GECS $ in billions)
 Assets reviewed for impairment                                                        Rigorous process
                                                                  Primary
                                3Q’08 assets    Frequency      acc’ting model   • All FAS115 assets reviewed
 Real estate owned                  $37.2    At least annually    FAS144          quarterly for other than
 Equities (Cost & equity methods)    22.7    At least annually APB18/FAS115       temporary impairment
 Retained interest                    4.0        Quarterly        FAS115
 Debt securities                     11.7        Quarterly        FAS115
 ($10B Trinity)                                                                 • Multiple layers of review:
 Equipment leased to others              At least annually       FAS144            –   Business unit
 - Equipment                     33.3
 - Aircraft                      28.7                                              –   Capital Finance
 Goodwill/intangibles            29.9    At least annually    FAS142/144           –   Corporate accounting
 GECS Insurance securities       21.7        Quarterly          FAS115             –   CAS/Auditors

 <2% assets subject to mark-to-market                                           • All equipment coming off lease
                     3Q’08 assets                              3Q’08 assets       evaluated for impairment
 Equities-trading        $1.0              CMBS (FAS159)            $0.1
 FAS133 hedges             –               Assets held for sale      7.0        • All annual reviews updated if
 Retained interest        2.0                -Money             2.8               there is change in assumptions
 (Consumer)                                  -Real Estate       1.2               or circumstance
                                             -Other             3.0

                                $0.7B of pre-tax impairments 3QYTD’08
                                 Anticipating a similar profile in 2009
                                                                                        CFPA1397 December 2008 Analysts Pitch_V6   32
Off balance sheet securitization assets
($ in billions)

  Collateral type   $53.5
  Equipment loans    6.6
                            $50.1
  and leases
                             6.2
                                             Consideration
  Commercial
  Real Estate        9.2            •
                                    1 Assumed on balance sheet for
  loans                      8.3      capital/leverage purposes

  Credit card                       •
                                    2 True sale of assets
  receivables       22.8
                             21.9
                                          $2.3B liquidity/credit support

  Trade
                     2.0
  receivables                2.6    •
                                    3 No SIV, CDO structures
  Other             12.9
  receivables                11.1


                    2007    3Q’08




                                                    CFPA1397 December 2008 Analysts Pitch_V6   33
Risk summary

  Positioned the Company for very difficult credit cycle
   + Reserves 2X versus 2007
   + Substantial resources involved


  Credit impact is “incremental” and well understood
   + Always have risk that unemployment is 9% versus
     8.5%
   + Do not foresee unplanned or large exposure that
     emerges suddenly



                                          CFPA1397 December 2008 Analysts Pitch_V6   34
Reposition GE Capital as a well-funded
+ focused finance company

 – Expect to outperform in 2009

 – Position to grow in 2010




                                  CFPA1397 December 2008 Analysts Pitch_V6   35
 Segmentation strategy
                    Forward
                     return           Core                       Competitive
                    dynamics       competencies                    outlook                       Size ($B)
Core
Core mid-market     2-5% ROI   •   Underwriting                      +++                             345
lending + leasing              •   Direct origination      - Likely no FinCo’s
                                                                                                  Grow
+ verticals                    •   Asset mgmt. intensive   - Fewer captives
                               •   Re-marketing            - Bigger banks                       long term
                               •   Deep domain

GE Banking                                                                                            90
European &                     • Enhance value via                    ++
Emerging Market                  product development       - Strong local franchises
                    2-4% ROI   • Grow deposit base         - Lots of options                     Enhance
banks & JV’s                   • Operating synergies                                              value


Restructure                                                                                           90
Various Consumer               • Origination                          —
& Commercial     <2% ROI       • AAA funding               - High leverage            Restructure/
platforms                                                  - Tend to compete w/ banks   run-off




                                                                            CFPA1397 December 2008 Analysts Pitch_V6   36
GE Capital Finance
($ in billions)
                   Earnings                         2009 plan basics

                  ~$9                       1 Expectations of higher losses and
                                               fewer gains
                                  +10%
                           ~$5
                                            2 Collections and volume plan that
        Capital
                                               assumes no 1st half improvements
        Finance                                and take into account customer
                                               refinancing risk

                                            3 Invest @ high ROI’s

                                            4 Execute $2B (pre-tax) cost-out plan
                  ’08E    ’09F     ’10F
GECC ENI          $545     $525    $515     5 Position core business and Bank Co.
Lvg. w/hybrids*    ~7x     ~6x     ~6x         for longer term growth
*GECC

                  Balanced view of 2009 … position for growth in 2010


                                                             CFPA1397 December 2008 Analysts Pitch_V6   37
2009 earnings outlook
                           Capital
                           Finance                     ’09 dynamics
2008 estimated earnings    ~$9B

Assets/portfolio          ~0-(1.0)    • Fewer assets   , new business margins


Gains                     (1.4)-(1.8) • Assuming ~$1B in gains … Real Estate down
                                       ~$1B vs. 2008
Losses                    (1.3)-(2.0) • Higher credit losses/impairments … more
                                       conservative than 10/10 Earnings call guidance
SG&A cost                  1.1-1.3    • Lower headcount and indirect spend

Tax                       (1.0)-(2.0) • Lower tax benefits planned

2009 estimated earnings    ~$5B




                                                              CFPA1397 December 2008 Analysts Pitch_V6   38
 2009 estimated originations &
 collections                                                                                                       Net
                                                                                                                   $30
                                                                                                                           $10B
 ($ in billions)                                                                                          $234
                                                                                                                           Hedge
                                                                                        Net
                                            Net
                                                                                        $11                              $204
                                            $12                   Net             $68
                    Net               $64
                                                                  $2
                    $4                                                                        $57
                                                  $52       $53          $51
              $49
Sales/Sec.                 $45


Cash
collections



          Collections/    Volume   Collections/ Volume   Collections/ Volume   Collections/ Volume     Collections/ Volume
             sales                    sales                 sales                 sales                   sales
                    1QE                     2QE                   3QE                   4QE                      TYE

      Commercial volume $60B on book, $260B                         $10B hedge for re-financing risk and
      with revolving credit                                         sales/securitization plan
      Consumer volume $145B                                         $25B sales/securitizations, down 20% vs. ’08
      Balancing cash flow with originations                             –$11.3B sales/securitizations in 2H’08



                                                                                           CFPA1397 December 2008 Analysts Pitch_V6   39
Portfolio margins expand in 2009
                     Capital Solutions                                                  Corporate Finance
Portfolio
Margin % 4.64
                            4.48                            4.50
                                                  4.14
                                                                                                                                6.00
                                                                   Portfolio
                                                            4.28   Margin %* 4.11                                     4.17
                                           3.77                                               3.43
New      3.38                                                                                                                   3.50
Business                    3.30                                   New        3.15
Margin % *                                                         Business                                    3.17
                                                                   Margin %                   3.27

            06A             07A                   08E        09E              06A              07A                    08E        09E
 *NBM = economic yield – leveraged cost of funding                  *Note: Excludes Capital Gains
 • Business pricing actions driving ’08 NBM +47 bps.                • Business pricing actions driving ’08 NBM +74 bps.
 • Portfolio margins accretive starting 1Q’09                       • Portfolio margins accretive starting 1Q’09

       3Q YTD volume on-book (ex-flow)                                        3Q YTD volume on-book (ex-flow)
                               Volume ($B)          NBM    ROE                                       Volume ($B)        NBM    ROE
    Equipment Financing              6.9            3.81   21.8        Corporate Lending                 8.2            4.38   30.7
    Europe Leasing                   6.1            4.21   23.2        Sponsor                           7.8            5.22   30.8
    Canada Leasing                   2.4            2.90   33.5        Media/Communications              2.8            4.95   30.9
    Fleet                            2.2            3.89   20.5        Europe                            3.9            3.14   20.7
    Franchise Finance                1.6            3.07   20.2


                        Replacing run-off with higher ROI, lower risk assets


                                                                                                       CFPA1397 December 2008 Analysts Pitch_V6   40
GE Capital Finance SG&A plan
($ in billions)

                                                 Focused approach
             ~$14.5
                           (~15%)    1 Organization structure … $250MM
                      ~$12.5             Geographic consolidation

                                     2 Sizing and indirect spending … $1.4B
                                         Re-size Real Estate
                                         Lease outside services and legal, sourcing and
                                         consultant costs


                                     3 Business exits … $175MM
             12/08E   12/09F             Closing/exiting underperforming/non-strategic
                                         platforms


                       Lean and competitive structure



                                                           CFPA1397 December 2008 Analysts Pitch_V6   41
GE Capital Finance (core)
($ in billions)
                                                    Competitive positioning
                  ~$355B
                                            • Verticals leverage GE competencies
      ~$335B
                                            • Leasing and asset management intensive
                                              platforms advantaged vs. banks
                                            • PLCC and Real Estate equity; selectively
                                    ++        harvest
                           $3-4B
                                            • Direct origination to mid-market
                                            • Core underwriting skills
                                            • Few, if any FinCos
                                            • Bank consolidation … historically positive
                                                             Outlook
                                            • New business >2%+ROI
                                            • Re-invest run-off/restructure into higher
        '09          '10    '09      '10      return core
               ENI            Earnings
                                            • Benchmark interest rates going lower …
                     ROI    1.1%    1.5%+
                                              support asset values

     Very attractive AAA FinCo more focused, competitively advantaged


                                                                  CFPA1397 December 2008 Analysts Pitch_V6   42
GE Capital global banking
($ in billions)
      $100B
                                                         Competitive positioning
                     $90B
                                                • Wholly-owned banks ($85B) + bank JV ($15B)
                                         +           Well positioned in attractive regions
                            $1.0-1.5B
                                                • CEE, Asia, Latin America

                                                • Deposit funding with potential for growth


                                                                  Outlook
                                                • High margin new business
        '09           '10      '09       '10
               ENI                Earnings
                                                • Consolidation + partnership potential
         ROI                  1.5%       1.6%
         Deposits/funding     20%        50%

                       Robust business models in fast growth regions
                        – Deposit funded + multiple earnings levers


                                                                     CFPA1397 December 2008 Analysts Pitch_V6   43
Run-off/restructure redeployment
(ENI - $ in billions)
        $102
                    ~$90
                                                                Portfolio
                                                     Equipment Services
                              ~$70
                                                     Consumer mortgages
                                        ~$40         ~12 Consumer/Commercial platforms

                                                               Game plan
                                                     Manage investment down $60B+ by
       2008E       2009F     2010F      2011F        2012 … reinvest in core and funding
                                                     model
  Reduction:       $12B       $20B      $30B
                                                     Primarily based on pay down/ term
                        ~$60B investment             Opportunistically sell or swap

      Reinvest                         Pay down      Maximize value – many attractive
       in core                         CP & LTD      platforms for banks longer term

     2%-6% ROI                           Safer          Focused organization with
                                     funding model   strong leader and clear charter


                                                                 CFPA1397 December 2008 Analysts Pitch_V6   44
GE Capital Finance framework
($ in billions)
                         2010 Net income drivers
                                                                                 +10%
            ~$5
                      Margins                                Cost
                  • Portfolio run-off                    • Carryover of
                    @ 0.3% ROI                             2009 actions
                                        2010 loss cycle
                  • New business        + Consumer better    Deliver
                    @ ~3% ROI           - Commercial worse    cost
                    Re-mix                  Manage
                                          credit cycle




          2009F                                                                   2010F
                  Favorable competitive dynamics
                  High margin origination
                  Create options for further capital redeployment
                  ~80%+ spread income vs. gains

                                                                       CFPA1397 December 2008 Analysts Pitch_V6   45
Business model still strong … smaller,
more focused
                                      “Factory”
“Raw material”            GE Advantage:                               “Origination”
  (capital)                                                       GE Advantage:
                             Low cost         Treasury
GE Advantage:                                                         Global position
  Competitive cost           Risk             Asset Mgmt.             Brand
  “AAA”                                                               Domain expertise
                             Talent           Tax


                         Pre-crisis competitive position:
     + Scale          ++ Margins and results > banks + FinCo      +++ Brand/domain

                     1) Solid plan for 2009
                     2) Diversify + remix + grow for 2010
                     3) New origination at 2% + ROI
                     4) Solid GE business

                                                            CFPA1397 December 2008 Analysts Pitch_V6   46
Summary
 GE is very strong
    Portfolio                                        Great Industrial businesses
                                                     1 Sustain Infrastructure
                “Infrastructure-type”                   earnings growth
                                              ~60%
          Energy              Technology                   Big backlog
          Energy               Aviation                    Strong services
         Oil & Gas          Transportation                 Global diversity
          Water               Healthcare                   Technical strength
                             Ent. Solutions                Margin enhancement
~30% Financial Services             Media     ~10%
                                                     2 NBCU performs through
       Comm’l. Finance              NBCU
         GE Money                                       cycles
          Verticals                                        Diverse revenue streams
                                                           Cost control

                     Preparing for a very difficult environment …
                       but remain confident in our businesses


                                                            CFPA1397 December 2008 Analysts Pitch_V6   48
GE dividend
                      ’05      ’06      ’07     ’08E     ’09F     ’10F
Cash Generation
 Ind’l CFOA-CAPX      9.9     11.0     13.0     ~13      13-14     +
                                                                                    Progress down
 GECS dividend         7.8     9.8      7.3      2.4       .5     ++               offset by working
                                                                                   capital and capex
 Other/dispositions    1.9     3.1     11.8      2.5      2+       =                   reductions

                      19.6    23.9     32.1     ~18      ~16       +

Return to Shareholders
 Dividend             (9.4)   (10.4)   (11.5)   (12.4)   (13.4)    =
 Buyback              (5.0)    (8.1)   (13.9)    (3.2)     0       =               Historic return
                                                                                 high percentage of
 “Surplus”            5.2      5.5       6.7      ~2      2-3      +            earnings to Investors
 Dividend + buyback
   % NI             83         95      115       80        =       =


                         GE plans to sustain 2009 dividend


                                                                         CFPA1397 December 2008 Analysts Pitch_V6   49
Summary
 • Macro environment is very challenging
 • 4Q’08 results are trending toward low end of range … $.50-.52
 • In addition, evaluating restructuring and other charges to
   accelerate cost out and reviewing losses in current environment
       Expecting ~$1.0-1.4B after tax charge
       Industrial + Financial cost out
 • GE Capital is a vital financial services business
    1) Safe + conservative in economic environment
    2) Creating a financial framework to earn ~$5B in 2009
    3) Business model that performs for the long term
    4) GE is committed to GE Capital
 • GE is well positioned to perform in a difficult 2009
       Board approved management plan to sustain dividend
       at $1.24/share


                                                   CFPA1397 December 2008 Analysts Pitch_V6   50

								
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