GE-Financial Services Investor Meeting

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Slide 1: 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.” Slide 2: 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 ~$8B in ’08 CFPA1397 December 2008 Analysts Pitch_V6 2 Slide 3: Additional 4Q items ($ in billions – after tax) $1.0-1.4B Focus Financial Services & Industrial headcount reductions Financial Services portfolio exits Facility consolidations Structural improvements Additional losses, higher reserves Approximately ~70% financial services Restructuring, higher losses & other charges 4Q items drive: + 5% lower base cost in 2009 + Loss reserves reflecting a tougher environment CFPA1397 December 2008 Analysts Pitch_V6 3 Slide 4: GE is committed to the Triple A rating 9/25 Commitment 1 Improve liquidity profile – Reduce absolute reliance on CP ( to ~$80B) – Bank lines & cash ≥ CP by 4Q’08 – Shrink GECS through originations/collection management … assuming no issuance in 4Q’08 Additional actions 1 Issued $15B of common & preferred stock to accelerate liquidity planning 2 Gained access to CPFF & TLGP – $98B capacity under CPFF incl. GE – $132B guaranteed debt capacity under TLGP 2 Strengthen capital base – – – – Reduce GECS dividend to parent to 10% 6:1 book leverage w/hybrids by end ’09 Suspend share buyback until 1Q’10 No increase to GE dividend for ’09 3 Refined business model to allow core growth with cash redeployed from run-off portfolio … ’09 LT debt plan to $45B 4 Targeting $50B CP balance by YE’09 with 100% bank lines coverage 5 Grew deposits base by >$20B in ’08 … plan to double size in ’09 6 Committed to 7:1 leverage YE’08 – Evaluating ~$5B capital infusion to GECS 3 More focused Financial Services – Smaller commercial Real Estate, more debt/ less equity – Reduce high leverage products (mortgages) – Shrinking overall portfolio & changing asset mix Substantial actions completed CFPA1397 December 2008 Analysts Pitch_V6 4 Slide 5: GE Capital business model Financial Services value chain “Factory” “Raw material” (capital) GE Advantage: Competitive cost “AAA” GE Advantage: Low cost Risk Talent Treasury Asset Mgmt. Tax “Origination” GE Advantage: Global position Brand Domain expertise 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 Slide 6: GE Capital Finance Slide 7: GE Capital has a strong franchise One of the few liquidity sources since 3Q’07 • $120B of new financings to U.S. companies, Estimated U.S. market position • Middle Market Commercial Lending • Equipment Lending/Leasing • Middle Market Corporate Finance • Aircraft Financing • Healthcare Financing • Energy Financing & Project Financing • Fleet Leasing • Franchise Finance • Commercial Real Estate Lending • Dealer Financing • Private Label Credit Cards #1 #1 #1 #1 #1 #1 #1 #1 Top 3 #1 #1 infrastructure projects and municipalities • $245B credit extended to U.S. consumers • 1Q’08 Merrill Lynch – bought $13B of troubled assets • 3Q’08 CitiBank – bought $13B of middle market commercial financings • Have contributed to support all major U.S. airlines and auto companies with financings as they work through cyclical issues • Leading DIP/Bankruptcy lender for restructuring U.S. companies Core is strong + competitively advantaged CFPA1397 December 2008 Analysts Pitch_V6 7 Slide 8: GE Capital Finance overview ($ in billions) Net income $12.2B Capital Finance ’07 GECC ENI ROI ROE 537 2.4% 22% ~$50B 4Q volume Our focus 1 Manage current cycle in a safe and ~$9B responsible way – Reposition funding model ’08E 545 1.7% 15% – Manage credit cycle 2 Reposition GE Capital as a well- Challenging year but strong relative performance Earnings GE Capital Services JPM GS WF BoA Next 5 3Q’07-3Q’08 $10.6 7.9 7.6 6.8 6.2 12.0 3Q assets $680B 1.8T 1.1T 620B 1.7T 1.1T funded, smaller finance company – Outperform in 2009 – Position business to grow in 2010 and beyond CFPA1397 December 2008 Analysts Pitch_V6 8 Slide 9: Reposition funding model Slide 10: Strategy: Diversified FinCo model Current view of future capacity (2010+) Capital ~$70-80B Leverage Funding Pre-crisis 8:1 ~$535B ~100B $80 – $100B L+10 10 - 12% 20% AAA/Aaa Post-crisis ~6:1 ~$470B ~$50B ~ $50B L+100 + Capacity to continue to grow 15% - 20% AAA/Aaa LTD 2016+ ~$85B LTD @ ~$50B/yr. 5 yr. maturity ~$250B CP backed 100% by bank lines ~$50B Deposits/alternate funding ~$85B CP outstanding LT debt annual capacity Spread Growth ROE Ratings ~$470B Strong diversified funding plan CFPA1397 December 2008 Analysts Pitch_V6 10 Slide 11: U.S. government programs Programs Commercial paper funding facility (CPFF) GE GE impact • Capacity of $98B … pricing @ slight penalty to market • Enables GE to support investor liquidity needs and manage duration • Serves as liquidity backstop • GECC capacity of $132B Temporary liquidity guarantee program (TLGP) • Solidifies debt issuance capacity ($45B) and improves LT debt pricing & CP market access • CDS & cash spreads tightening … reduces refinancing risk perception • GE not participating • $15B GE equity raise provides capital/liquidity flexibility if markets continue to deteriorate TARP/TARP capital purchase plan Programs level playing field CFPA1397 December 2008 Analysts Pitch_V6 11 Slide 12: Debt market size ($ in trillions) CP market – U.S. only $2.2T peak $1.8 ~$1.5 ~$1.5 • Institutional demand from money funds, state & local governments, corporation & central banks • CPFF helped stabilize declining market … rollover risk and liquidity enhanced investor confidence & led to term buying 2007 2008E 2009+ GECS Global O/S ($B) 101 GECS US mkt. share ~4% 80 ~4% 50 ~3% Global IG Term issuances $2.7 ~$2.0 +$6T Govt. market • TLGP opens GE access to government debt buyers through June’09 • Pension funds / insurance companies will continue to invest in LT debt driving need • GECC targeting $45B issuances in ’09 … half of ‘07 ~$1.3 2007 2008E 2009E GECC issuance ($B) Market share 90 3.3% 70 3.5% ~45 <1% Government programs have helped restart debt markets … GECC aligning issuance plan to markets CFPA1397 December 2008 Analysts Pitch_V6 12 Slide 13: 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 Comm’l paper 57 88 57 80 81 50 + 3Q'08 Equity Bank lines + cash/CP * Constant FX 4Q'08E* 4Q'09E* ~$57 100%+ ~$62 100%+ Plan on government programs ending Origination pricing > cost of funds ENI ~$45B … 3Q’08 – 4Q’09 $56 85% Solid + conservative plan CFPA1397 December 2008 Analysts Pitch_V6 13 Slide 14: Commercial paper update ($ in billions) $101 Int’l 30 ~$80 15 ~$65 15 U.S. 71 65 50 ~$50 10 40 Limited use of CPFF … helping investors manage redemptions … plan assumes CPFF ends as scheduled CP markets have improved … more term buying GE maintained good demand, pricing and term issuance despite market disruption – Portfolio cost at 2.15% as of 11/21 – Weighted average maturity restored to 55-65 day target 4Q'07 4Q'08E 1H'09E 4Q'09E Weighted average yield % 6.0 5.0 4.0 3.0 2.0 1.0 Feb- May- Aug- Nov- Feb- May- Aug- Nov07 07 07 07 08 08 08 08 GECC U.S. CP portfolio cost % Diverse, deep global investor base – 1,250 U.S. investors – 11 currencies, 15 programs 100% coverage with cash + bank lines CFPA1397 December 2008 Analysts Pitch_V6 14 Slide 15: Long term debt ($ in billions) $29 $23 $22 ’09 Plan $39 ~$50 Issuance Maturities Guaranteed debt ~$61 • FDIC TLGP eligibility solidifies annual debt issuance capacity ($45B) and improves pricing • Pricing to reflect market dynamics 1H’09 Libor-OAS (bps) 850 750 650 550 450 350 250 150 50 Jul-08 Jul-08 FinCo Index C 5yr Spreads 2H’09 ’10E Performance vs. 5 yr. cash bonds FinCo Index Bank Index C JPM • Continue to maintain match funded book • Opportunistic TLGP issuance in 4Q’08 to pre-fund ’09 GECC WFC Aug-08 Sep-08 Oct-08 Nov-08 Bank Index JPM 5yr Spreads GECC 5yr Spreads WFC 5yr Spreads Source: Barclays Capital CFPA1397 December 2008 Analysts Pitch_V6 15 Slide 16: 2009 alternate funding ($ in billions) Additional opportunity ~$96 +15B International deposits $4B – Drive market share in emerging markets – Tap large/developed markets Brokered CD’s : Distributed through multiple firms to support asset growth in US banks • Industrial Loan Corporation deposits $17B –Direct origination into ILC –Bank loan group; Distribution Finance Business properties; Franchise Finance –Originating CD’s to match bank assets profile • Federal Savings Bank deposits $8B –Direct origination of sales finance assets Ongoing exploration of thrift opportunities with FDIC cooperation ~$54B today ~$57 23 ~$81 18 27 U.S. Industrial Loan Corporation U.S. Federal 1 Savings Bank Other $30 18 11 10 10 14 18 18 International 4Q'07 4Q'08E 4Q'09E Transition banks to deposit funding CFPA1397 December 2008 Analysts Pitch_V6 16 Slide 17: GECC cost of funds Average USD cost of funds 5.3% ~4.6% ~5.3% ~4.3% ~5.4% ~2.8% ’09E Match funded Fixed Float 5.1% • Portfolio downsizing reducing impact of new higher cost debt … only ~30% new / roll-over debt • Match funded portfolio minimizes interest rate and currency risk • Floating portfolio rates reducing due to benchmark rate cuts • New fixed debt spread substantially offset by rates Costs are competitive … benchmark 5.5% ’07 ~3.5% ’08E 2009 new/roll-over debt costs Instrument CP Amount Spread to Libor (bps.) ~$50B (5)-(30) same as ’08YTD Deposits/Other ~$25-50B 30-200 based on maturity LT debt % of Portfolio ~$45B ~30% 180-200 under TLGP & 350-400 for 3+ yr. duration CFPA1397 December 2008 Analysts Pitch_V6 17 Slide 18: Strong capital base GECC Debt/Equity w/hybrids* 7.7X ~7X Target ~6X • GECC has lower book leverage than most peers • GECC leverage ratio appropriate for business model – – – – Lower loss rates than banks Secured portfolio Asset management capabilities History of successful acquisitions 3Q’08 Debt/Equity 8.8X Debt/Tangible 13.6X Equity w/hybrids* Assets/Tangible 17.0X Equity w/hybrids* 4Q’08E ~8X ~12.5X ~16X 4Q’09E ~7X ~10.5X ~14X • Achieve 6:1 leverage through – Retained earnings growth – Lower GECC dividends – Portfolio actions * ~$8B Hybrids represent sub-debt receiving rating agency equity credit and have a maturity of 60 years, callable at the end of year 10 • Evaluating ~$5B capital contribution $15B capital raised at GE provides flexibility to strengthen capital as needed CFPA1397 December 2008 Analysts Pitch_V6 18 Slide 19: Funding summary 1 Well funded, smaller Finance Company Safer, more diversified funding model … at competitive cost Participating in applicable government programs that level playing field … Currently don’t see need to become Bank Holding Company 2 3 CFPA1397 December 2008 Analysts Pitch_V6 19 Slide 20: Weather credit cycle Slide 21: GE Capital Finance portfolio model What we do • Underwrite to hold • Senior secured financings • Match funding • Diversified Consumer portfolio • Restructure/work out problem loans/assets What we don’t do • Did not originate CDO’s, SIV’s, etc. • Did not sell credit default insurance • Do not trade securities • Do not trade/hold mezzanine or high yield debt/bonds 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 Slide 22: • CRO independent review with GE CEO • GE Audit committee chairman attends 3 GECC Board meetings GE Comprehensive risk assessment and Key risk policies capital allocation GE Board Capital Board of Directors • Investments, portfolio reviews • 5.0 authorities • Risk policy, Exposure database (REM) • BOD investments, portfolio management • Capital allocation, portfolio analytics Policy 6.0 - Monitoring • Sets portfolio risk limits • Defines risk parameters • Sets trigger points – early warnings • Establishes corrective actions • Monitors performance Policy 5.0 - Delegation • Maximum single risk approval authorities - Most <$100MM • Major acquisitions reviewed by the Board GE Corporate risk Business CEO level Business “field” level • Portfolio management, emerging issues • Delegates approval authorities under 5.0 • Capital markets execution • Capital allocation & product leverage implementation • Focused risk organization in each market • Product level performance monitoring (6.0) • Product level delegated authorities (5.0) CFPA1397 December 2008 Analysts Pitch_V6 22 Slide 23: Key portfolio risks (Pre-tax losses - $ in millions) % Assets U.S. Consumer UK Mortgage Real Estate - Debt - Equity 7% 2009 Assumptions • 8.5% unemployment 2009 Estimated ’09 financial impact ~$4.2B Downside case Impact ~$5.0B Assumptions 9% unemployment (20%) HPI +200 bps. highest historical cap rate by asset type • (3%) traffic decline (9/11) • 2 airlines liquidate 4% • HPI (17%) 2008 • HPI (15%) 2009 • Cap rates 50-100 bps. higher • Cap rates 50-100 bps. higher, long-term hold • Global traffic growth down 1-2% 2009 $600 $250 $240 ~$300 $800 $400 $500 ~$550 14% GECAS 7% Credit impact is “incremental” and well understood CFPA1397 December 2008 Analysts Pitch_V6 23 Slide 24: 2009 estimated losses ($ in billions) Credit losses (pre-tax) ~$7.2 $4.4 $2.5 $3.0 $3.2 $3.2 $3.0 Commercial Consumer +22% +64% ~$9.0 Assumptions/drivers • U.S. consumer cycle expected to peak in 2009 w/ unemployment estimated at 8.5% by Dec ’09 • Mortgages – UK HPI down 15% in 2009 • Commercial cycle tends to lag consumer 12 to 18 months … likely shorter lag this cycle • Bank loan default rates expected to increase from ~3% in ’08 to 7-8% in ’09 '02 '03 '04 '05 '06 '07 '08E '09E ~$6.6 Reserves $4.6 $5.2 $4.9 $3.9 $3.9 $4.2 ~$5.8 Consumer Commercial '02 Cov. 2.44% '03 '04 '05 '06 '07 '08E '09E 1.61% 2.36% 1.85% 1.42% 1.21% 1.10% 1.38% CFPA1397 December 2008 Analysts Pitch_V6 24 Slide 25: U.S. Consumer What we do $54B served assets Risk approach Strong, disciplined underwriting approach – Proprietary scoring models Broad geographic distribution with investment grade retailers 56MM active accounts Low credit lines … $600 average PLCC balance Loss sharing with retail partners Private Label credit card $32 Sales Finance $22 Broad diversification and strong underwriting risk principles CFPA1397 December 2008 Analysts Pitch_V6 25 Slide 26: U.S. Consumer Delinquency 30+ Actions 5.55% 6.17% 5.44% 90+ 5.00% 1.70% 4.93% 1.74% 5.52% 5.75% Tightened underwriting on new accounts − 1.86% 1.84% 1.91% 2.08% 2.24% Raised approval hurdles — new volume at A/B Enhanced GE credit scoring to mitigate weaknesses in FICO Lowered initial lines − − '04 '05 '06 '07 1Q'08 2Q'08 3Q'08 Losses / Reserves Loss % Account management − Reduced open lines 8.15% 6.22% 4.50% 4.02% 5.82% 6.44% 6.23% Exited higher risk sales finance markets Added 1,300 collectors Coverage % 3.76% 3.08% 3.03% 3.31% 3.62% 3.47% 4.07% Increasing restructuring efforts by 60% Monitoring new accounts — performing better with lower delinquency/first payment default rates '04 '05 '06 '07 1Q'08 2Q'08 3Q'08 Estimated ’09 Reserve coverage ~6%+ Planning for 8.5% U.S. unemployment … 2009 losses $4.2B CFPA1397 December 2008 Analysts Pitch_V6 26 Slide 27: Consumer mortgage Country diversification $72B Assets Czech $1.5 U.K. $26.9 Other $5.8 Spain $1.4 Mexico $2.4 Poland $5.6 France $11.7 Portfolio dynamics Exited U.S. Consumer Mortgage business in 2007 Originate to Hold model Strong GE risk/valuation management MI with strong (in country) insurers – AA/A+ rated, separately capitalized and regulated No mark-to-market risk in GE Money ANZ $17.0 Major market assumptions U.K. • HPI decline 15% in ’09 • MI on LTV >80% • Portfolio LTV ~ 79% at current market prices • Continue to tighten underwriting – expect ’09 volume to be minimal Estimated losses increasing from $0.3B to ~$0.6B Asset quality 30+ 6.89 90+ 3.39 Loss % 0.43 '04 8.12 4.25 7.38 3.45 0.15 7.26 3.39 7.80 3.75 8.53 9.28 4.15 4.64 Australia & New Zealand 0.16 0.16 0.38 0.28 - '05 '06 '07 1Q'08 2Q'08 3Q'08 • Exited October 2008 — Wizard sale in process, remainder of portfolio in liquidation • Mortgage insured (first dollar loss) Seeing continued pressure, but manageable CFPA1397 December 2008 Analysts Pitch_V6 27 Slide 28: GE Real Estate portfolio • $41B first mortgages and $10B owner-occupied; Diversified $34B equity • 58% international • ~8,600 properties, 2600 cities, 28 countries • Average investment size $12MM • 62% office, multi-family Strong underwriting, asset management – operating mindset • Debt – 70% LTV • In house risk teams value each property • A-/B+ asset quality • $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 Slide 29: GE Real Estate debt portfolio $51B Debt property type Other RE Storage 7% 1% Warehouse 11% Actions Max LTV advance limits reduced in ’07 $10B owner-occupied in run-off/ restructure Rate caps to protect debt service coverage Front end resources moved to portfolio account management Protect occupancy - Tenant rollovers - Fund improvements Office 30% Retail 12% Hotel 14% Apartment 25% 1.6x debt service coverage; 70% LTV 2009 debt maturities - $5.6B ($4B <80% LTV) 3Q delinquency on Real Estate debt 0.1% Solid 1st mortgage portfolio, low LTV’s CFPA1397 December 2008 Analysts Pitch_V6 29 Slide 30: GE Real Estate equity portfolio $34B Property type Other 6% Warehouse 12% Hotel 1% Actions Asset-by-asset portfolio management Weighted avg. yield 6% Annual NOI $1.9B Preserve/improve property cash flow - until markets recover – Yield covers carrying costs – Depreciate basis $0.9B/yr. Complete value add strategy through renovation & lease up 308 properties sold, $5.0B, through 3Q’08 Retail 13% Office 54% Apartment 14% • Diversified portfolio – – – – – 3200 properties — A/B+ quality Average investment ~$11MM 150 markets globally Top 10 markets ~36% of portfolio Paris 10%, Tokyo 7%, Others <4% Hold for longer term value CFPA1397 December 2008 Analysts Pitch_V6 30 Slide 31: GECAS portfolio $47B Asset type 16% 9% RJs Cargo Wide-body 21% 54% Narrow-body Assumptions • Planning for 1-2% decline in global traffic growth in 2009 • Worst year in last downturn (2002) was 2.5% decline Actions • Average age 6 years • 85% of narrow-body fleet is high-demand A320 + 737NG aircraft • $6B earnings since 2001 • No unsecured airline lending 1• Pre-placing assets in anticipation of restructurings at weaker credits 2• Advanced placement of roll-off and skyline helps manage cycle 3• 50-seat RJs and 737 classics – Redeploy in emerging markets – Bombardier remarketing JV (RJ) – Cargo conversion/parts-out (classics) 4– Capitalize on opportunity Versus entering last cycle (’01) Placement higher – Roll-offs – New orders Today ’01 67% 100 10% 48 Proactively position for downturn CFPA1397 December 2008 Analysts Pitch_V6 31 Slide 32: Rigorous process for evaluating asset impairments (GECS $ in billions) Assets reviewed for impairment Rigorous process • All FAS115 assets reviewed quarterly for other than temporary impairment • Multiple layers of review: – – – – Business unit Capital Finance Corporate accounting CAS/Auditors Primary 3Q’08 assets Frequency acc’ting model Real estate owned $37.2 At least annually FAS144 Equities (Cost & equity methods) 22.7 At least annually APB18/FAS115 Retained interest 4.0 Quarterly FAS115 Debt securities 11.7 Quarterly FAS115 ($10B Trinity) Equipment leased to others - Equipment - Aircraft Goodwill/intangibles GECS Insurance securities 33.3 28.7 29.9 21.7 At least annually At least annually Quarterly FAS144 FAS142/144 FAS115 <2% assets subject to mark-to-market 3Q’08 assets Equities-trading FAS133 hedges Retained interest (Consumer) 3Q’08 assets CMBS (FAS159) $0.1 Assets held for sale 7.0 -Money 2.8 -Real Estate 1.2 -Other 3.0 • All equipment coming off lease evaluated for impairment • All annual reviews updated if there is change in assumptions or circumstance $1.0 – 2.0 $0.7B of pre-tax impairments 3QYTD’08 Anticipating a similar profile in 2009 CFPA1397 December 2008 Analysts Pitch_V6 32 Slide 33: Off balance sheet securitization assets ($ in billions) Collateral type Equipment loans and leases Commercial Real Estate loans $53.5 6.6 9.2 $50.1 6.2 8.3 Consideration 1 Assumed on balance sheet for • capital/leverage purposes Credit card receivables 22.8 21.9 • 2 True sale of assets $2.3B liquidity/credit support • 3 No SIV, CDO structures Trade receivables Other receivables 2.0 12.9 2.6 11.1 2007 3Q’08 CFPA1397 December 2008 Analysts Pitch_V6 33 Slide 34: Risk summary Positioned the Company for very difficult credit cycle + Reserves 2X versus 2007 + Substantial resources involved Credit impact is “incremental” and well understood + Always have risk that unemployment is 9% versus 8.5% + Do not foresee unplanned or large exposure that emerges suddenly CFPA1397 December 2008 Analysts Pitch_V6 34 Slide 35: Reposition GE Capital as a well-funded + focused finance company – Expect to outperform in 2009 – Position to grow in 2010 CFPA1397 December 2008 Analysts Pitch_V6 35 Slide 36: Segmentation strategy Forward return dynamics Core Core mid-market lending + leasing + verticals 2-5% ROI • • • • • Core competencies Underwriting Direct origination Asset mgmt. intensive Re-marketing Deep domain Competitive outlook +++ - Likely no FinCo’s - Fewer captives - Bigger banks Size ($B) 345 Grow long term GE Banking European & Emerging Market banks & JV’s 2-4% ROI • Enhance value via product development • Grow deposit base • Operating synergies ++ - Strong local franchises - Lots of options 90 Enhance value 90 Restructure Various Consumer <2% ROI & Commercial platforms • Origination • AAA funding — - High leverage Restructure/ - Tend to compete w/ banks run-off CFPA1397 December 2008 Analysts Pitch_V6 36 Slide 37: GE Capital Finance ($ in billions) Earnings ~$9 ~$5 Capital Finance 2009 plan basics 1 Expectations of higher losses and +10% fewer gains 2 Collections and volume plan that assumes no 1st half improvements and take into account customer refinancing risk 3 Invest @ high ROI’s ’08E GECC ENI Lvg. w/hybrids* GECC ’09F $525 ~6x ’10F $515 ~6x 4 Execute $2B (pre-tax) cost-out plan 5 Position core business and Bank Co. $545 ~7x for longer term growth Balanced view of 2009 … position for growth in 2010 CFPA1397 December 2008 Analysts Pitch_V6 37 Slide 38: 2009 earnings outlook Capital Finance ’09 dynamics 2008 estimated earnings Assets/portfolio Gains Losses SG&A cost Tax 2009 estimated earnings ~$9B ~0-(1.0) • Fewer assets , new business margins (1.4)-(1.8) • Assuming ~$1B in gains … Real Estate down ~$1B vs. 2008 (1.3)-(2.0) • Higher credit losses/impairments … more 1.1-1.3 • Lower headcount and indirect spend conservative than 10/10 Earnings call guidance (1.0)-(2.0) • Lower tax benefits planned ~$5B CFPA1397 December 2008 Analysts Pitch_V6 38 Slide 39: 2009 estimated originations & collections ($ in billions) Net $4 $45 $64 Net $12 $52 $53 Net $2 $51 $68 Net $11 $57 $234 Sales/Sec. Cash collections $49 Net $30 $10B Hedge $204 Collections/ sales Volume 1QE Collections/ Volume sales 2QE Collections/ Volume sales 3QE Collections/ Volume sales 4QE Collections/ Volume sales TYE Commercial volume $60B on book, $260B with revolving credit Consumer volume $145B Balancing cash flow with originations $10B hedge for re-financing risk and sales/securitization plan $25B sales/securitizations, down 20% vs. ’08 –$11.3B sales/securitizations in 2H’08 CFPA1397 December 2008 Analysts Pitch_V6 39 Slide 40: Portfolio margins expand in 2009 Portfolio Margin % 4.64 Capital Solutions 4.48 4.14 3.77 3.30 4.28 Portfolio Margin % 4.11 Corporate Finance 4.50 6.00 4.17 3.43 3.50 3.17 08E 09E New 3.38 Business Margin % * New Business Margin % 3.15 3.27 06A 07A 06A 07A 08E 09E NBM = economic yield – leveraged cost of funding Note: Excludes Capital Gains • Business pricing actions driving ’08 NBM +47 bps. • Portfolio margins accretive starting 1Q’09 • Business pricing actions driving ’08 NBM +74 bps. • Portfolio margins accretive starting 1Q’09 3Q YTD volume on-book (ex-flow) Volume ($B) Equipment Financing Europe Leasing Canada Leasing Fleet Franchise Finance 6.9 6.1 2.4 2.2 1.6 NBM 3.81 4.21 2.90 3.89 3.07 ROE 21.8 23.2 33.5 20.5 20.2 3Q YTD volume on-book (ex-flow) Volume ($B) Corporate Lending Sponsor Media/Communications Europe 8.2 7.8 2.8 3.9 NBM 4.38 5.22 4.95 3.14 ROE 30.7 30.8 30.9 20.7 Replacing run-off with higher ROI, lower risk assets CFPA1397 December 2008 Analysts Pitch_V6 40 Slide 41: GE Capital Finance SG&A plan ($ in billions) ~$14.5 (~15%) ~$12.5 Focused approach 1 Organization structure … $250MM 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 … $175MM 12/08E 12/09F Closing/exiting underperforming/non-strategic platforms Lean and competitive structure CFPA1397 December 2008 Analysts Pitch_V6 41 Slide 42: GE Capital Finance (core) ($ in billions) ~$335B ~$355B Competitive positioning • Verticals leverage GE competencies • Leasing and asset management intensive platforms advantaged vs. banks • PLCC and Real Estate equity; selectively harvest • Direct origination to mid-market • Core underwriting skills • Few, if any FinCos • Bank consolidation … historically positive $3-4B ++ Outlook '09 '10 ROI ENI '09 Earnings '10 1.1% 1.5%+ • New business >2%+ROI • Re-invest run-off/restructure into higher return core • Benchmark interest rates going lower … support asset values Very attractive AAA FinCo more focused, competitively advantaged CFPA1397 December 2008 Analysts Pitch_V6 42 Slide 43: GE Capital global banking ($ in billions) $100B $90B Competitive positioning $1.0-1.5B + • Wholly-owned banks ($85B) + bank JV ($15B) Well positioned in attractive regions • CEE, Asia, Latin America • Deposit funding with potential for growth Outlook '09 ENI ROI Deposits/funding '10 '09 '10 Earnings 1.5% 20% 1.6% 50% • High margin new business • Consolidation + partnership potential Robust business models in fast growth regions – Deposit funded + multiple earnings levers CFPA1397 December 2008 Analysts Pitch_V6 43 Slide 44: Run-off/restructure redeployment (ENI - $ in billions) $102 ~$90 ~$70 ~$40 Portfolio Equipment Services Consumer mortgages ~12 Consumer/Commercial platforms Game plan 2008E Reduction: 2009F $12B 2010F $20B 2011F $30B Manage investment down $60B+ by 2012 … reinvest in core and funding model Primarily based on pay down/ term Opportunistically sell or swap Maximize value – many attractive platforms for banks longer term ~$60B investment Reinvest in core 2%-6% ROI Pay down CP & LTD Safer funding model Focused organization with strong leader and clear charter CFPA1397 December 2008 Analysts Pitch_V6 44 Slide 45: GE Capital Finance framework ($ in billions) 2010 Net income drivers +10% ~$5 Margins • Portfolio run-off @ 0.3% ROI • New business @ ~3% ROI 2010 loss cycle + Consumer better - Commercial worse Manage credit cycle Cost • Carryover of 2009 actions Deliver cost Re-mix 2009F Favorable competitive dynamics High margin origination Create options for further capital redeployment ~80%+ spread income vs. gains 2010F CFPA1397 December 2008 Analysts Pitch_V6 45 Slide 46: Business model still strong … smaller, more focused “Factory” “Raw material” (capital) GE Advantage: Competitive cost “AAA” GE Advantage: Low cost Risk Talent Treasury Asset Mgmt. Tax “Origination” GE Advantage: Global position Brand Domain expertise 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 Slide 47: Summary Slide 48: GE is very strong Portfolio “Infrastructure-type” Energy Energy Oil & Gas Water Technology Aviation Transportation Healthcare Ent. Solutions Media NBCU Great Industrial businesses 1 Sustain Infrastructure ~60% ~30% Financial Services Comm’l. Finance GE Money Verticals ~10% earnings growth Big backlog Strong services Global diversity Technical strength Margin enhancement 2 NBCU performs through cycles Diverse revenue streams Cost control Preparing for a very difficult environment … but remain confident in our businesses CFPA1397 December 2008 Analysts Pitch_V6 48 Slide 49: GE dividend ’05 Cash Generation Ind’l CFOA-CAPX GECS dividend Other/dispositions 9.9 7.8 1.9 19.6 Return to Shareholders Dividend Buyback “Surplus” (9.4) (5.0) 5.2 (10.4) (8.1) 5.5 95 (11.5) (13.9) 6.7 115 (12.4) (3.2) ~2 80 (13.4) 0 2-3 = = = + = Historic return high percentage of earnings to Investors ’06 11.0 9.8 3.1 23.9 ’07 13.0 7.3 11.8 32.1 ’08E ~13 2.4 2.5 ~18 ’09F 13-14 .5 2+ ~16 ’10F + ++ = + Progress down offset by working capital and capex reductions Dividend + buyback % NI 83 GE plans to sustain 2009 dividend CFPA1397 December 2008 Analysts Pitch_V6 49 Slide 50: 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