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GE Capital
Investor Meeting
Caution Concerning Forward-Looking Statements: "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 financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of U.S. and foreign government programs to restore liquidity and stimulate national and global economies; the impact of conditions in the financial and credit markets on the availability and cost of GE Capital’s funding and on our ability to reduce GE Capital’s asset levels and commercial paper exposure as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the soundness of other financial institutions with which GE Capital does business; the adequacy of our cash flow and earnings and other conditions which may affect our ability to maintain our quarterly dividend at the current level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, network television, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; 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.”
March 19, 2009
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Key messages
� Running GE to be safe and secure over the long term‒ Liquidity position is extremely strong‒ Completed 93% of our 2009 planned long term funding
� Have sufficient capital and alternatives to weather adverse economic conditions
� Running GE with intensity‒ Resizing our cost footprint in a meaningful way‒ Management team is focused on delivering cash‒ Continuing to invest/position company for long term growth
� We expect GE Capital will be profitable in 1Q’09 and 2009
� We are committed to GE Capital
GE will come out of this cycle a stronger, more focused and competitively advantaged company
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GE: safe & secure
Infused equity intoGE Capital
Strengthened liquidity~$45B $42B
Completedto date
TY’09E
Reduced dividend … ~$9B in annualized savings
82¢
40¢~4%
Dividends/share Yield @ today’s price
20102009 2009
7:1~6:1
1Q’09E4Q’08
GECC leverage-a)
’09 long term funding needs
4.9%~6.0%
1Q’09E4Q’08
GECC tangible common equity/tangible assets
$48B
1Q’09E4Q’08
GE cash
(a- net of cash and equivalents and withclassification of hybrid debt as equity
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~$41B
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Ratings update
� Concluded rating review with S&P
– Detailed GE Capital updates on liquidity, funding, business model, risk assessment & capital levels
– Industrial assessment (2009/2010) on revenue, margins & cash flow
� S&P rated GE & GE Capital at AA+ with a stable outlook:
– This rating means “very strong capability to meet its financial commitments” and “rating is unlikely to change in next six months to two years”
“The ratings on GE continue to reflect our view of its excellentbusiness risk profile, its significant cash flow and liquidity, its strong corporate governance, and management’s commitment to maintaining a very high credit quality” – S&P, March 12, 2009
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Support• GE support to ensure GECC 1.1x fixed-charge
coverage ratio
• GE TLGP FDIC backstop
• Infused $15B & reduced dividend from GECS
• History of capital infusion or dividendreductions when necessary
Operating businesses(Capital Finance)
GE Capital structure
100%
100%
AA+/Aaa
General Electric Capital
Corporation
Primary GE Issuer/GuarantorPrimary GE Issuer/Guarantor
General Electric
Company
General Electric
Capital Services, Inc.
Owns all ofGE’s financing
assets
Real Estate GECAS
CommercialLending &Leasing
EnergyFinancialServices
AA+/Aaa 100%
ConsumerFinancing
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GE Capitaloverview
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2009 outlookEnvironment
• Difficult market with many macro-economic indicators still deteriorating
• Pockets of increased liquidity for consumers and mid-market businesses
• Industry losses continuing
• Delinquencies and non-earning assets pressured in both Consumer and Commercial
• Very difficult to execute asset sales in today’s market
– TALF may help
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GE Capital business model
� GE Capital has performed for decades� Will reposition for long term success
Financial Services value chain
“Raw material”(capital)
GE Advantage:
Competitive cost
“Origination”
GE Advantage:
� Global position
� Brand
� Domain expertise
� Low cost
� Risk
� Talent
� Treasury
� Asset Mgmt.
� Tax
“Factory”
+ Scale ++ Margins and results > banks + FinCo +++ Brand/domain
GE Advantage:
Pre-crisis competitive position:
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GE Capital portfolioBusiness
CommercialLoans & Leases $230B $1.7B
GECC2008 Financials
Assets Net income
• Entered in the 60’s• ~100% secured loans and leases• Support mid-market customers
• Entered in the 70’s• Secured loans against diversified properties• Own/operate high quality properties
• Entered in the 30’s• Store cards and sales finance for retailers• Broad spread of risk
• Entered in the 60’s• GE domain• Broad product set with full life cycle management
• Entered in the 80’s• GE domain• Essential assets; secure cash flows
Domain + expertise
Businesses we know … decades of performance
Real Estate 85 1.2- Debt- Equity
Consumer 183 3.7- U.S. PLCC- Global
Aviation Services 49 1.2
Energy Fin. Services 22 0.8
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GE Capital: our approachWhat we do
What we don’t do
+ Senior secured financings
+ Diversified portfolio
+ Operate assets … global remarketing capabilities
+ Underwrite to hold
+ Restructure/work out problem loans/assets
+ Small hold positions
+ Match fund
�Did not originate CDOs, SIVs, etc.
�Did not sell credit default insurance
�Do not trade securities … Minimal MTM in up or down cycles
�Do not originate mezzanine or high yield debt/bonds
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GE Capital has a strong franchise
• $86B of new financings to global companies, infrastructure projects and municipalities
• $177B credit extended to global consumers
• Have continued to support virtually 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
• Global leader in mid-market commercial lending
• Provided $6B financing to support global energy projects
Estimated U.S. market position
• Middle Market Commercial Lending #1
• Equipment Lending/Leasing #1
• Middle Market Corporate Finance #1
• Aircraft Financing #1
• Healthcare Financing #1
• Energy Financing & Project Financing #1
• Fleet Leasing #1
• Franchise Finance #1
• Commercial Real Estate Lending Top 3
• Dealer Financing #1
• Private Label Credit Cards #1
Core is strong + competitively advantaged
One of the few liquidity sources in 2008
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Portfolio strategyForwardreturn
dynamicsCore
competenciesCompetitiveoutlook
Ending netinvestment
’09 outlook ($B)
CoreCore mid-marketlending + leasing+ verticals
2-5% ROI• Underwriting +++• Direct origination - Likely fewer FinCo’s• Asset mgmt. intensive - Fewer captives• Re-marketing - Bigger banks• Deep domain
Growlong term
GE BankingEuropean &Emerging Marketbanks & JV’s
2-4% ROI
• Enhance value via ++product development - Strong local franchises
• Grow deposit base - Lots of options• Operating synergies
Enhancevalue
RestructureVarious Consumer& Commercial platforms
<2% ROI • Origination —• Funding advantage - High leverage
- Tend to competew/ banks
Restructure/run-off
$356
$64
$80
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Primary questions regarding GE Capital
� Commercial Real Estate– What is in our portfolio and what is the corresponding risk?
� What is the risk in U.K. mortgage?
� What is the risk in Eastern Europe?
� What is the risk in U.S. Consumer?
� Losses/Impairments/Reserves– Are our reserves adequate and how do they compare to other banks?
� Capital– Does GE Capital have enough equity to handle future losses?
� Other investment securities, associated companies, goodwill
We will cover all of these questions today
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Stress testing approach
Consumer
• Mortgages, credit cards, auto and personal loans and sales credit financing
– By product, by geography – market specific
– Consistent methodology applied across product types globally
Commercial
• Commercial Real Estate: By market and property type
• Commercial Aircraft: Valuation by equipment type
• Energy loans and leases: Stress obligor ratings, increase severity, based on outlook
• Commercial Loans and Leases: Stress probabilities of default, recovery rates
Bottoms up – asset by asset, business by business
Large commercial exposures over $300MM stressed individually
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Summary of stress testing
2009outlook
Pretax pre-provision ~$13.3 ~$11.1 ~$9.2
Credit losses 9.7 11.5 13.7
Net income ~$5 $2.0-2.5 ~$0
Avg. U.S. U/E 7.7% 8.4% 8.9%
Peak U.S. U/E 8.5% 9.3% 10.1%
U.S. GDP (1.8%) (2.0%) (3.3%)
Est. Fedbase
Est. Fedadverse
2009 macro guidance
($ in billions)
Stress assumptions utilize Fed guidance and 3rd party forecasts
Capital Finance
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Key messages
� GE Capital funding is 93% complete and we have ~$60B capacity under Federal programs
� GE Capital is well capitalized and compares favorably to banks
� GE Capital is a conservative lender … losses should be lower than banks
� Real Estate equity valuation estimates are comparable to other real estate investors
� U.S. Consumer credit losses comparable to similar U.S. bank portfolio performance
� Adverse stress case losses of global mortgage should be manageable
� CEE Banks should be profitable even in an adverse stress scenario
� We are operating GE Capital with intensity … Collections >originations, lower cost, aggressive risk management
� We expect GE Capital will be profitable in 1Q’09 and 2009
� Have sufficient capital alternatives to weather adverse economic conditions
� GE Capital has a profitable vision for the future
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AgendaFunding & Liquidity
Portfolio & Risk Management
Business Reviews & Stress Testing
– Real Estate
– Commercial Lending & Leasing
– GECAS
– U.S. Consumer
– Mortgage
– European Banks
Break
Operations Update
Financial Update
GE Capital Summary & Outlook
Closing
Q&A
Kathy Cassidy – GE Treasurer
Jim Colica – GECC Chief Risk Officer
Ron Pressman, Stewart Koenigsberg & Jayne Day
Dan Henson & William Brasser
Henry Hubschman & Anne Kennelly-Kraky
Mark Begor & Ray Duggins
Mark Begor & Ray Duggins
Dmitri Stockton & Denis Hall
Lunch
Bill Cary – GECC COO
Jeff Bornstein – GECC CFO
Mike Neal – GE Vice Chairman & GECC CEO
Keith Sherin – GE Vice Chairman & CFO
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Funding/Liquidity
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GECS 2009 funding
• Global debt markets remain difficult for financial sector issuers ... strong market demand for Government supported funding
• 93% long term funding complete ($42B of $45B) … considering early funding of ’10 maturities in ’09
• Issued $5B non-guaranteed debt: 30 yr. USD & GBP
• CP balance @ ~$60B as of 2/09 … 100% covered by bank lines
• $15B capital infusion in 4Q’08/1Q’09 improves capital ratios … leverage … TCE/TA ratio at top-end of banks
• Strong cash and liquidity position
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4Q'08 4Q'09E 4Q'10E
GECS funding($ in billions)
Bank lines $60 ~$50 ~$50
CP coverage 83% 100%+ 100%+
Cash & equiv. $37 ~$30+ ~$30+
LT debt<1 yr. $69 ~$67 ~$60-$65
Comm’l paper
Deposits/CD’s/ Other
LT debt
FIN 46
~$479
~$485~6
50
81
348
$509
$5156
72
55
382
~$445
~$450~5
40-50
85-90
320-330
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GECS ’09/’10 Funding plan
Beginning cash balance
Sources
LT debt issuances
Alternate funding
Business originations/ collections mgmt.
Capital infusion from GE
Total sources
Uses
LT debt maturities
CP reduction
Total uses
Ending cash balance
’09
37
32-a)
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25
9
92
(69)
(22)
(91)
~38
’10
~38
35-40
4-9
20-35
–
60-80
(67)
0-(10)
(67)-(77)
~31-41
Comments
93% of ’09 funding complete … lower ’10 planned issuances … considering early funding of ’10
CD's, Intl. bank deposits & other programs
$205B collections/$180B originations in ’09
Back-up liquidity
Cash / liquid assets
CPFF – unused capacity
BOE/ECB/BOC facilities
Bank lines
(a. Ex-$13B funded in ’08
Strategy : assets, alternate funding, … maintain strong liquidity
($ in billions)
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Government programs
• Capacity of $98B (incl. GE) … pricing @ slight penalty to market
• GECC/GECS outstandings matured in February … none outstanding today
• Enables GE to support investor liquidity needs & manage duration … serves as liquidity backstop
• Newly announced Fed/Treasury facility … covers AAA ABS for specified assets …currently auto & credit card … may be extended to equipment & CMBS
• $10B+ of PLCC/CDF maturing securitization debt likely eligible
• Potential for increased liquidity for real estate and equipment … may reduce cost of securitization funding … continuing to evaluate
• GECC capacity of $126B … important for LT debt market & CP market access …program now extended through October 31, 2009
• $37B LT debt issued under the program … $3B remaining for ’09
• Manage ~$25-$35B CP outstandings under TLGP
• ~$50-$60B capacity remaining … option to fund some ’10 maturities in ’09
Programs GE impact
Commercial paper funding facility
(CPFF)
Temporary liquidity guarantee program
(TLGP)
Term Asset-backed securities
loan facility
(TALF)
• New facility in development … initial focus on marketable securities & other MTM assets … could expand to leveraged loans, real estate, equipment, etc.
• Improved liquidity in these asset classes to help overall market
Public Private investment funds
(PPIF)
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2009 alternate funding($ in billions)
CD’s : Distributed through multiple firms to support asset growth in US banks
• Industrial Loan Corporation deposits $17B–Adding 3 complete business platforms to ILC …
direct origination a)
–Originating CD’s to match bank assets profile(~$7B > 1 yr. maturity as of 4Q’08)
• Federal Savings Bank deposits $2B–Direct origination of sales finance assets
International deposits $6B– Drive market share in emerging markets – Tap large/developed markets
French Gov’t program: $1B ’09 target ($0.4B YTD)
Covered bonds program: 1st issuance by Jul ’09
Exploring other asset based funding options
Cost of funding attractive vs. LT debt
Transition banks to deposit funding
4Q'07 4Q'08 4Q'09E
International
Other
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$55
$30
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20
~$81
U.S. FederalSavings Bank
U.S. Industrial LoanCorporation
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1711
15
10
1
a) Subject to regulatory approval
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$58.2B bank lines ... ~100% CP coverage
Remaining Term as of 3/11/09
• ~80% lines from Aaa/Aa banks
• Lines from 64 banks globally
• Syndicated: $22.9B; Bilateral: $35.3B
• ~$12B also available to GE parent
Comments
Liquidity in great shape … on track to meet CP coverage targetswith $50B+ bank lines and $30B+ cash
• Strong base of $37B lines >1 year
• $19.8B up for renewal in Mar-Dec ’09 … phased reduction planned as outstanding CP comes down
• Expect $10B renewals by June with remaining $3-5B during 2H’09
• Support levels not materially impacted by bank consolidation
• No MAC clauses
• No covenants or rating triggers
• Drawn pricing at capped spread over Libor
$30B> 3 years but less than 4
$22Bless than 1 year 94% w/ term out
$4B
> 4 years
$3B> 1 yr but less
than 3
($ in billions)
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Capital ratios
� GE infused $5.5B cash into GECS 4Q … plan to infuse ~$9.5B into GECS 1Q’09
� Leverage commitments ahead of plan … ~6:1 by 1Q’09
� TCE/TA ratio at the top end of the banks even if banks convert their TARP preferred equity into common equity
GE Capital Corp. leverage a) GE Capital Corp. TCE/TA ratio b)
4Q’08
7:1
~6:1
1Q’09ETangible bookLeverage c) 17X 14X
(a- net of cash and equivalents and with classification of hybrid debt as equity(b- TCE : Book equity less goodwill & intangibles; TA : Total assets less goodwill & intangibles(c- Total borrowings/equity less goodwill & intangibles(d- As of 4Q’08 excludes TARP equity; Source : Federal Reserve Y9 filings
U.S. Large BHC avg.
4.9%
~6%
1Q’09E4Q’08
1.9% d)
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Portfolio overview
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Risk management
Disciplined approach to managing risk
� Diversified portfolio – broad spread of risk, managed exposure limits
� Senior secured financings – disciplined underwriting to GE “on book” standards
– Collaterals GECC knows well – 2 decades of experience
� Conservative asset residuals – 520 experienced asset managers – market intelligence & redeployment capabilities
� Significant commitment of people resources – ~16,000 globally
– Senior risk officers have over 25 years experience
� Data-driven analytics – identify & monitor key risks, measure capital & leverage
� Rigorous process approach – detailed approval authorities, GECC Board reviews
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Brazil
Czech Republic
Korea
Others
Thailand
China
Russia
Mexico
Turkey
Poland
Hungary
India
GECC PortfolioTotal assets ($637B) Geography
Developing Markets $70B
U.S.48%
Canada
Europe
Latin America
Asia Pacific
Other
3%
27%
2%
11%
9%
~70% of financing activities - Commercial
~11% Developing Markets
Commercial Lending & Leasing
$230B
Other$68B
EFS$22B
GECAS$49B
36%
3%
8%
29%
11%
Real Estate$85B
13%
Consumer$183B
17%
18%
8%
5%
5%
4%4%
6%
4%
10%
7%
12%
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Consumer Portfolio (assets)Product ($183B) Geography ($183B)
Sales Finance
14%
6%
14%34%
11%
6%
9%
25%
20%
17%
13%
16%
2%
7%North America
Personal Loan
Small andMedium
Enterprises
CardsMortgage
Auto
Other Asia
Latin America
ANZ
UK
Western Europe
Eastern Europe
>70% International~22% in developing markets~58% of receivables – Prime
6%
JVs
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Commercial Portfolio Diversification
Others
Hotels Restaurants &
Leisure
Construction
Health Care
Energy
Automotive
Business Services
Diversified Finance
Real Estate
Commercial Airlines
Machinery
& Equipment
Industry sectors ($386B)
45% less than 6% industry weighting -
51 industries
13%
24%
2%
6%
32%
2%
6%
4%
6%
3%
2%
A/c Rec and Inv
Cash Flow
Comm. Aircraft
Fleet Vehicles
Franchise
Healthcare Equipment
FF&E and Other Equip
Others
Comm. Real
Estate
Corporate Jets
Transportation
Equipment
Energy
Generation/Distribution
Dealer Inventories
Collateral type ($386B)
Diversified portfolio in long-standing GECC collateral types
13%
24%
9%
4%
12%
4% 5%
10%
7%
3%
3%
4%2%
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Commercial Customer Concentrations
Over $1B, 15 accounts:
Airlines, Class 1 Railroads, Electric Utilities, Aircraft Manufacturing, Real Estate
$500MM-$1B, 27 accounts:
Airlines, Automotive, Healthcare, Power Generating Projects, Oil & Gas Refining, Cable, Broadcast Media
$300MM-$500MM, 44 accounts:
Automotive, Airlines, Electric Utilities, Broadcast Media, Healthcare, Technology Equipment
$100MM-200MM
Over $1B
Under $50MM
$50MM-$100MM
$500MM-$1B
$200MM-300MM
$300MM-500MM
61% 11%
8%
4%
5%
5%6%
72% of single risk exposures <$100MM
Larger exposures secured primarily by essential operating assets
($386B)
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Key portfolio risks – 12/2 view(Pre-tax losses - $ in millions)December 2, 2008 outlook
2009 Assumptions
Estimated’09 financial
impact
Downside case
U.S. Consumer 7% • 8.5% unemployment ~$4.2B ~$5.0B 9%unemployment
U.K. Mortgage 4% • HPI (17%) 2008• HPI (15%) 2009
Real Estate 14% • Cap rates 50-100 bps. higher $250 $400- Debt • Cap rates 50-100 bps. higher,- Equity long-term hold
GECAS 7% • Global traffic growth down ~2% 2009
$240 $500
~$300 ~$550
%Assets AssumptionsImpact
+200 bps. highest historical cap rate by
asset type
• (3%) traffic decline (9/11)
Economic environment more challenging
$600 $800 (20%) HPI
March ’09outlookvs. Dec. 2
=
=
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Stress testing approach
Consumer
• Mortgages, credit cards, auto and personal loans and sales credit financing
– By product, by geography – market specific
– Consistent methodology applied across product types globally
Commercial
• Commercial Real Estate: By market and property type
• Commercial Aircraft: Valuation by equipment type
• Energy loans and leases: Stress obligor ratings, increase severity, based on outlook
• Commercial Loans and Leases: Stress probabilities of default, recovery rates
Bottoms up – asset by asset, business by business
Large commercial exposures over $300MM stressed individually
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Consumer portfolio stress testing
Key Drivers:
Macro • Unemployment
• Home equity access
Portfolio • Credit quality
• Credit lines
• Loss sharing
• Recovery rates
Key Drivers:
Macro • Home prices
• Unemployment
• Refinancing ability
Portfolio • LTV
• Mortgage insurance
• Borrower credit quality
• FX movements (Central Europe)
U.S. Non-U.S. Mortgage
Key Assumptions:
U.K. • 15% HPI decline in ’09 (34%’08-’09)
• 9% unemployment
• Additional loss on sale 20-25%
Central Europe • 15-30% further devaluation from today’s FX rate based on country
• Unemployment up to 13% basedon market
Key Assumptions:
GDP (2.0%) (3.3%)
U/E avg. 8.4% 8.9%
U/E peak 9.3% 10.1%
Debt sale recovery rate:
PLCC 10% to 7.2% 25% to ~6%
Sales Finance 16% to ~6.6% 25% to ~6%
Fed Base Fed Stress
Adverse
No benefits assumed from U.S. Stimulus Programs
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Commercial portfolio stress testing
Key Drivers:
Macro • GDP, Unemployment
• Liquidity
Portfolio • Senior diversified positions
• Borrower leverage
• Sector diversification
• Asset value of collateral
Key Drivers:
Macro • GDP, Unemployment
• Liquidity
Portfolio • LTV
• Property cash flow
• Borrower leverage
• Cap rates, liquidity
Commercial Loans, Leases Real Estate
Key Assumptions:
GDP (2.0%) (3.3%)
U/E avg. 8.4% 8.9%
Cap rates
Output
Key Assumptions:
GDP (2.0%) (3.3%)
U/E avg. 8.4% 8.9%
U/E peak 9.3% 10.1%
Fed Base Fed Stress
Defaults Increased ~100% from 2008 levels to ~6%
Severity Increased GECC historical severity by 50% on average to
~20-35%
Increased ~70% from 2008 levels to ~5%
Increased GECC historical severity by 35% on average to
~15-30%
Fed Base Fed Stress
Revert to historical medianof last 18 years
PPR model forecasting greater declines in office property cash flows
No benefits assumed from U.S. Stimulus Programs
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Portfolio overview
Asset type
Consumer 30% 64%
Commercial 70% 36%
U.S. 41% 86%
U.S. consumer 6% 58%
- Cards 3% 9%
- Mortgage 0% 40%
- Auto 0% 1%
- Student loan 0% 1%
- Sales Finance/other 4% 7%
* Weighted average of top 4 U.S. money center banks
• Less Consumer
• No U.S. mortgage, auto or student loans
• More global
• Minimal real estate construction exposure
• 46% of portfolio is cross-collateralized with other 1st mortgages
• Operate each owned property
• Underwrite to hold on book
• Minimal junior debts, small hold positions
• Global redeployment, remarketing capabilities
• Deep domain expertise in Commercial Air & Power Generation
• PLCC has smaller average balance, lower loss severity, retailer loss sharing
GE position vs. banks
GE mix different than banks
% of total portfolio
(as of 4Q’08)
GE Banks*
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Business reviews
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Real Estate
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Finance purchase of real estate by 3rd parties in multiple asset classes, individually and in cross-collateralized portfolios
Own, manage and add value to real estate as single assets and portfolios across office, apartment, warehouse, and retail asset classes around the world
Provide financing to owner-occupied commercial real estate for small to middle market businesses
GE Real Estate … what we do
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How we manage riskRigorous process around market, customers and asset evaluations
Sophisticated tools for easier market analysis and deal assessment • Market data
• Customer relationship management
Semi-annual market evaluations•Global data driven, investment hurdle setting process• Leverage GE portfolio data as well as 3rd party data and analytics
Experienced, independent valuation/underwriting teams• Local presence … utilizing consistent process globally• Tenant credit analysis• Detailed lease by lease review … process designed to haircut revenue above historical avg. levels• Valuations generally 90-95% of MAI appraisal values
Led by seasoned risk leadership team• Over 25 years of experience, on average
Ongoing risk analytics review combined with asset management surveillance• Identifies risk trends, concentrations• Allows for proactive risk management measures
• Economic/market sensitivities
• Deal review/approval system
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Rigorous portfolio valuation processDetailed source document review• 100% lease review, rent rolls, income statement, GL, etc.
• Thorough credit review of major tenants
• Review of borrower/partner operating capability and financial strength
• Know Your Customer “KYC” Surveys
• Perform cash flow audits
3rd party consultant review• Environmental survey
• Structural survey (earthquake as needed)
Market/site analysis• Detailed inspection of property and surrounding neighborhood
• On-site management and tenant interviews
• In depth discussions with brokers, appraisers
• Survey competing owner/operators for rents, occupancy and expenses, in addition to public data
• Inspection of recent sale comparables
Financial modeling• DYNA lease / proprietary models created for DCF valuations
Process culminatesin roundtable asset valuation review …all assumptions challenged
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Key market risks in 2009/2010
Challenging environment
Economic fundamentals– Industry transaction volume in 4Q’08 down 80% from 4Q’07– Rental rates , absorption , vacancies , delinquencies ,
demand , supply constant– Virtually no new liquidity available … TALF should help … 2nd half
may be better
Over $500B* of U.S. loans set to mature in 2009, $35B* from CMBS pools
– Banks deleveraging– Limited new refinancing capacity in the system
Equity valuations– Up to 20% drop in major market rents expected, vacancies up
significantly– Values still under downward pressure … our values down ~18%
’07-’08
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* Source: Property & Portfolio Research (PPR)
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43
Primary real estate productsDebt portfolio: $48B Equity portfolio: $33B
• On balance sheet lending
• Senior secured, first mortgage
• Not a construction lender
• 35 year track record
• Owner-occupied: mid-market credit/single tenant
• Well diversified, A-/B+ quality, avg. inv. $10MM, minimal construction risk
• Primarily wholly-owned with no 3rd party debt - $29B, joint venture investments – $4B
• Hold at historical cost less depreciation … $1.5B annual NOI, $1.1B annual depreciation
� Debt portfolio primarily senior secured first mortgages, no “hung” inventory � Equity portfolio is good quality, primarily 100% owned operating real estate� Under Fed Reserve adverse stress test, potential total portfolio losses are manageable
Office
49%
Retail 9%
Other RE
6%Warehouse
12%
Apartment
14%
Parking 3%
Mixed 6%
Hotel 1%
Office
23.5%
Mixed
3%
Owner-occupied
19%
Apartment
19%
Warehouse
9%
Other RE
6%
Construction
1.5%
Retail
8%
Hotel
11%
44
Debt
23
45
$62MM
GE Real Estate position in debt markets
Senior secured debt
• Layer of capital protection if stressed
• Real capital committed in junior position/equity
• Clear path to exercise remedies and take control of property
- We avoid legal jurisdictions where a property owners’ rights are not respected
CMBSunrated
CMBSrated
Equity
Mezzanine
Seniorsecured/
1stmortgage
Global RE debt market$6 trillion*
* Source: PPR
97%senior
secured/1st mortgage
3% ���� $1.4B
GE $48B
46% cross collateralized
GE Real EstateCMBS
Subordinated
46
Singles
32%
Crossed
portfolios
46%
Sub-debt
3%
Collateral type dispersion
Debt portfolio
Debt structure
Total debtexposure:$48B
Geographical profile
• Crossed portfolios (46%): a single loan secured by multiple properties in multiple locations. Benefit: loss from a single property can be offset by excess cash flow and/or value from other assets in the portfolio
• Hotel exposure: 35% acquired at a discount post credit crunch; 54% cross-collateralized; largest loan exposure at $1.1B was 33% LTC at U/W, cash flow up 7% since U/W and current DSC @ 5.52X
• $0.7B construction portfolio: 65% acquired at a discount
• Japan/UK/Germany: portfolios acquired at a discount
Comments
$1.4B
Owner-occupied19%
CMBS bonds$62MM
First mortgage senior secured 97%
a)
Office
23.5%
Mixed
3%
Owner-
occupied
19%
Apartment
19%
Warehouse
9%
Other RE
6%
Construction
1.5%
Retail
8%
Hotel
11%
US -CA, 8%
US-GA 3%
US-FL, 4%
US-TX, 5%
US-Oth, 23%
US/Canada-
Owner occupied
19%
Canada 8%
Mexico 8%
Japan 7%
UK 7%
Germany 4%Other 4%
24
47
Commercial real estate at GE
• Senior secured lending in markets we understand
• Value add properties in good locations
• Mid range office
• Affordable middle class apartments
- Avoid luxury
• Retail focus grocery/hyper market anchored centers
• Warehouse
- Crossed parks w/multi tenant, high CoC
• Opportunistic portfolio acquisitions at discounts
What we do
Other Commercial
Construction, Land and Developer Debt
$112.4 $142.2 $68.2 $48.0
Bank 1 Bank 2 Bank 3 GE
Commercial RE debt as of Dec ’08
Total O/S ($B)
1.5%
What we typically avoid
• Construction lending
• Land loans
• Single family residential development
• 2nd mortgages
• Mezzanine high yield
• CMBS hold positions – A or B pieces
• Syndication book, “hung” inventory
• Malls
• Trophy buildings
• Brownfield sites
• Resorts
• Exited condo conversion early
• BRICs28%
15%
64%72%
85%98%
36%
65% bought < parand 8% crossed w/stabilized properties
1.5%
48
0%
3%
5%
Dec-00 Dec-01 Dec-02 'Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08
6.0 6.4 7.89.4
Debt portfolio performance
Delinquency/defaults
Vintage profile*
$7.0B $6.8B
$11.3B
$14.4B
N. America
Asia
Europe2.4
2.6
55% of ’08 is opportunistic discounted debt purchase
<2006 2006 2007 2008
* Excludes owner-occupied
(% of Total O/S) 5.4%*
Maturity profile*$B
$9.2B $9.2B
GE1.2%/$0.6B
Commercial banks (4Q’08)
GECommercial Banks
$6.1B
$14.9B
0
5
10
15
'09 '10 '11 Thereafter
2.90.6
* Source: FFIEC
25
49
•Primary driver is product mix
•Construction and development loans
- 32% of banks’ commercial real estate portfolio vs. 1.5% at GE … 65% acquired at opportunistic discounts
- We also generally avoid other higher risk asset classes/structures – 2nd mortgages, mezzanine, malls, resorts, condo conversions, etc.
•Underwriting rigor/standards/valuations
- Independent/in-house risk underwriting
- Our underwritten valuations are generally 5-10% below appraisal values
•Asset management capabilities
- Extensive local network … unparalleled
- Every loan matters
Why our delinquencies and losses are lower than competitors
Can’t apply banks’ delinquency and loss experience to GE portfolio
Construction& development (C&D)
GE
C&D % portfolio 32% 1.5%
C&D charge-offs as% of total charge-offs 83% 0
C&D delinquencies 11.4% 3.8%
C&D delinquencies% of total delinquencies 66% 4.4%
Banks*
Construction and development loans drive bank losses &
delinquencies
*Source: FFIEC
50
Maintaining relatively strong performance
Portfolio metrics
<75%$20.8B
>90%$4.3B
75-90%$12.8B
DSC 2.0x
LTV 74%
Loan to value (LTV)
Debt service coverage (DSC)
Comments
92% paying current
$2.1B mitigated- Supported by letters of credit, cash
reserves, guarantees covering at least 12 months debt service payments
$2.7B not mitigated- $1.2B <80% LTV- Fully reserved if not deemed recoverable
>1.2$30.3B
<1.0$4.8B
1.0-1.2$4.4B
Excludes owner-occupied, purchased non-performing loans, tax credits
DebtU.S.: 100 markets
LTVEur: 32 markets
<75% 75-90% >90%
High $5.0 $3.8 $2.4
Medium $3.1 $2.6 $0.9
Low $0.2 $0.5 -
Mexico $3.6 - -
Japan $3.1 $0.2 -
Canada $1.5 $1.2 $0.1
Other Mkts. $1.7 $2.2 $0.5
Hotel/Other RE U.S.
Total
$2.6 $2.3 $0.4Not Rated
$20.8 $12.8 $4.3
• Top 10 markets account for 33% of total• 15% matures in ’09
Values:
Current re-underwriting, historically 5-10% less than appraisals
Excludes owner-occupied
26
51
Debt maturities risk
$6.1B debt maturing in ’09
>85%LTV
<85%LTV
$1.0B
$1.3B
$1.9B $1.9B
�Maturing 2009
�<85% LTV loans likely to meet contractual extension requirements … expect all to extend
�Potential refinance, low LTV, amortization
�>85% LTV loans pose refinancing risk in current environment
•$0.6B expected to pay-off
•$0.5B expected to pay-down•$0.5B expected foreclosures (90%+ of loans with specific reserves or purchase discount)
$6.1B
2.2B
1.6B
2.3B
’09 maturity components
0.7B
1.2B1.0B
1.6B
0.3B
0.9B
0.1B
0.3B
1Q 2Q 3Q 4Q
52
0%
2%
4%
1988 1992 1996 2000 2004 2008
Owner-occupied mid-market lendingRatings by maturityDeal size segmentation Geographic concentration
by NEA
88% of deals NEA <$5MM57% of NEA <$5MM
Largest concentration = CA 14%Only 4 states >5% concentration
Historical delinquency& losses (1988-2008)
Total NEA $9.7B
14%
6%
6%
5%
4%
5%
40%
NJ
2%
OH
2%
2% 3%GA
3%2% IL
3%PA
3% NC
Remaining
CA
TX
FL
NY
ONTARIO
QUEBEC
AZWA
Stress test comments
EAD ($B) PD LGD
Loss/yr ($MM)
4Q’08 outlook 10.5 3.9% 15% 63Stress case 10.5 5.1% 20% 107
AAA-A BBB-B CCC-C D
2010
2011& after
2009#: 7$: 9%: 0.1
#: 7$: 59%: 0.6
#: 203$: 674%: 6.6
#: 82$: 198%: 2.0
#: 78$: 132%: 1.5
#: 2,618$: 8,254%: 85.1
#: 4$: 1%: 0
#: 3$: 5%: 0.1
#: 132$: 339%: 3.5
#: 8$: 11%: 0.1
#: 2$: 5%: 0.1
#: 29$: 46%: 0.5
$MM
Deal Size/ <$1MM $1-$3MM $3-$5MM $5-$10MM $10-$15MM $15-$20MM >$20MM
Total NEA$0.9B $2.7B $1.9B $2.3B $1.1B $0.4B $0.4B
• Stress PD is 30% higher than Plan PD; reflects 2 notch drop for < B+, 1 notch drop for > BB-
• Stress LGD is a 33% increase over 4Q outlook LGD• Stress LGD of 20% requires a 50%+ collateral value loss given average LTV of 61%
Weighted avg. historical delinquency .73% / loss .09%, excludes off-balance sheet
Delinquency % Losses %
1.5%
# of deals
142389
344
500
1,492
1,658
0
200
400
600
800
1000
1200
1400
1600
1800
Credit underwriting with property collateral
27
53
156128
9997
Credit costs – total debt portfolioOur portfolio has outperformed
the industry over time’05 ’06 ’07 ‘08
Credit costs(provisions) $31 ($5) $24 $135
Reserve % 1.31% 0.74% 0.52% 0.64%Reserve $ 189 155 168 301Debt servicecoverage 1.4x 1.6x 1.5x 2.0x
• Reserve % driven by recovery of specific reserves from loan payoffs and improvements in debt service coverage
Reserves
(1) Specific reserve process - FAS 114
• Quarterly surveillance process based on 7 triggers (DSC<1x, LTV>100%, “Risk/Watch” accounts, delinquent or non-earning, cost recovery, past maturity>90 days, loans with specific reserves)
• Specific reserves posted when loans deemed not fully recoverable, generally when LTV > 100%
(2) General reserves process - FAS 5
• Based upon robust analysis utilizing PPR “Compass” model technology - real estate market data and GE portfolio statistics
($ in millions)
’05 ’06 ’07 ‘08
PPR forecastcredit costs*
Actual GE REnet charge offs
* Forecast at end of preceding year
1117
33
69
Better experience
Losses/reserves
• ’05-’08 period generally benign, however industry model losses > GE RE losses
• Over longer periods GE RE portfolio outperformed due to:
- Product mix (very low construction exposure)
- Underwriting (valuations, rigor)
- Asset management (extensive network)
54
Fed Baseline
Case
Median long term historical cap rate +adders for asset quality
Asset-by-asset business plan* reflects PPR/PMA** recession case
• 2 year US office market rents flat
Median long term historical cap rate +adders for asset quality
Median long term historical cap rate +adders for asset quality
Cap rate assumptionNOI assumption
FedAdverse
Case
Property valuation stress methodology
4Q’08Outlook*
Asset by asset = 35,000 commercial tenants, 8,000 properties, 2,600 cities
Negative rent growth and occupancy per PPR/PMA** utilizing Fed more adverse assumptions for GDP / unemployment
• 2 year US office market rents ���� 15% • Impact on office equity portfolios: NOI ���� 16% over 2 years
Negative rent growth and occupancy per PPR/PMA** utilizing Fed baseline assumptions for GDP / unemployment
• 2 year US office market rents ���� 13% • Impact on office equity portfolios NOI ���� 14% over 2 years
* Outlook reflects the best local market data available to asset managers in 4Q’08** Property Market Analysis (PMA)
28
55
Real Estate loan loss stress cases
$1.0B
10%
27%
(2.7)
3.7
(9.6)
13.3
(26.2)
$39.5B*
$0.9B
8%
27%
(2.3)
3.2
(7.8)
11.0
(28.5)
$39.5B*
= Potential loss
Implied default rate
Implied LGD
Minus collateral
value
= > 100% LTV and<1.0x DSC
Minus >1.0x DSC
= Net >100% LTV
Minus 0 - 100% LTV
Total debt NEA
Fed baseline case Fed adverseComments
• Current delinquency of $0.4B* on $39.5B*
• 4Q’08 outlook of $0.3B credit losses
• Impact of Fed base and adverse scenarios determined as follows:
Apply PPR’s adjusted rent and occupancy assumptions, by market and collateral type to the underlying individual property value
• Stressed property value compared with loan principal amount to determine those above 100% LTV
• Stressed property cash flows compared with debt service required by each loan to determine those with <1.0x DSC
* Excludes owner-occupied lending
($ in billions, pretax)
56
Equity
29
57
48% originated before 2007
Collateral profile
Equity portfolio
Predominantly office (Japan, U.S., France)Apts. (U.S., Japan); Warehouse (Mexico, U.S.)
Equity structure
Total equityexposure:$33B
Geographical profile
U.S. – Top 3 cities (5% of total) – San Diego, Seattle, AustinJapan – Tokyo 9%/France – Paris 8%
Wholly-owned
JV
Other
Office
49%Hotel
1%
Mixed
6%Parking
3% Apartment
14%
Warehouse
12%
Other RE
6%
Retail
9%
12%
86%
2%
USA 29%
UK 6%
France 12%
Japan 19%
Canada 6%
Germany 6%
Spain 4%
Australia 4%
GE equity by vintage
1.32.6
8.3
1.4
3.7
2.6
2.8
3.8
3.9
1.2
$5.5
$10.1
$2.6
<2006 2006 2007 2008
0.41.0 N. America
Asia
Europe
$14.8
58
Portfolio characteristicsPortfolio profileAsset size
> $100MM
$20-50MM
$50-100MM
<$20MM
$33B
10%
18%
29%
43%
Avg. investment $10MM
Development
assets 3%
In-place assets
97%
5.8
14.8
9.2
3.2
30
59
MM
M
L
L
Global hurdle process
L/T = 3-5 yrs
Debt Equity
S/T
L/T
Retail Warehouse
Office
Washington, DC
S/T = < 3 yrs
L/T
S/T
HurdlesLow
MediumHigh
L/T
S/T
Apartments
H
H
H
H
HH
H
H
L
L
Semi-annual top-down assessment of:
54 U.S. / 32 Europe markets
4 major collateral types
Multiple inputs used:
Macro Micro
GDP, demographics Local supply/demand
Industry trends Construction
Market liquidity Actual sales/leasing activity
High hurdle = rising vacancy, falling rents/values
Medium hurdle = specific issues to be addressed
Low hurdle = balanced supply/demand, stable to rising rents/values
PPR / PMA (3rd party/independent)Bottom-up review by local field network; debate through semi-annual meetingsConsistent methodology for analyzing marketsAlignment of market views between credit committee and fieldEstablishes new business parameters (no equity originations currently), and portfolio indicators
Market collateral pairs
Debt Equity
Debt Equity Debt Equity
S/T
L/T
M
Very rigorous origination guidelines
60
Equity portfolio: $33B
Debt portfolio: $48B
• Equity hurdles shifted higher in ‘05/’06 resulting in fewer deals
• Focused investments on countries/ locations with low per capita retail exposure and a growing middle class
• 60% anchored by hypermarkets: Tesco, Walmart, Metro, Tokyu Hands
– Reduced U.S. equity exposure early
•Avoided malls
• Very limited retail exposure to single tenants
•Grocery anchored and DIY retail (~20%) and strip centers, less affected by discretionary spending (e.g. fashion)
•Cross-collateralized $2.8B = ~70% of retail exposure
U.S. retail
$240
$167 $157
($ in millions)
Example: hurdle process limits retail exposure
$3B
* Excludes owner-occupied lending
Retail
9%
Retail
8%*
Japan
22%
Other
10%
C. Eur
28%
Italy
10%
UK
5%
Korea
7%
Mexico
5% Spain
6%
N.
America
7%
0
50
100
150
200
250
300
‘06 ‘07 ‘08
31
61
How we operate our assets (debt & equity)
Experiencedteam network
Intensive asset surveillance processes
Issue resolution/value creation techniques
• 97 field office network• Asset management team
averages 20+ years RE experience
• Shifted focus of global team from originations to asset management
• Captive loan servicing–Billing and collections– Insurance, property tax escrows–Real-time delinquency
monitoring
• Intensive property surveillance–Asset level business plans– Lease reviews and approvals– Financial statement audits–Collateral monitoring & security
• Portfolio reviews and metrics–Asset categorizations–Differentiated surveillance
levels based on asset performance
–Proprietary in-house global information system
–Portfolio performance metrics
• Change partners/operators– Improve property performance–Asset strategy changes
• Investment structure modifications
–Cash pay downs and lockboxes– Joint ventures/mergers– Seller financing
• Reposition real estate–Renovate/redevelop–Re-tenant
Highly experienced global team focused to maximize asset values
Extensive depth of resources, asset surveillance activities, and value creation techniques
Asset mgt
2,200
59%
30%
11%
Risk, finance,
etc.
Originations
1,500
56%
4%
40%
’07 ’09
• We buy assets … run them like a factory
• Many competitors have limited operating skills and lack local presence
GE vs. competitors
Focus:
Headcount
62
Office
Ind'l
Retail
Equity NOI revenues & expensesSourcing mindset for expenses
� Rebidding 3rd party PMC service contracts
� Leverage portfolio-wide buying power
� Review/revise service scopes
� Filing for property tax reassessments
� Sustainability & energy efficiency cost reductions and asset value enhancements
MM square feet
84.565.8
16.5
Property-level revenue actions
Vacancy % 16%
’09 rollover % 15%
� Intense focus on existing tenants … working plans months ahead of renewal process
� 22 million sq. ft. leased/rolled in 2008
� 81% of projected ’09 revenues from in place leases rolling in ’10+
� Leveraging our local teams, using best-in-class brokers to develop detailed leasing plans for vacant spaces
Property management
Property taxes
Utilities and other
~167MM SF (excl. apartment, hotel, parking)
22
11
33
Targeting $1.5B NOI in ’09 … Fed baseline $64MM, Fed adverse $74MM
32
63
GE vs. industry
• Maturities and periodic value swings make third party debt challenging
- Creates artificial timing in the asset life
• Third party debt generally less attractive than GE internal cost of funds
• Prefer to “control our destiny”
- Use external leverage only when economic
- Levered equity structured with skilled partners
• Leverage can magnify upside/downside
Third party external debt
Equity
65-90%
10-35%
Fund leveredequity
GERE$29B
GE3 big differences vs. opportunity funds
1) We don’t mark assets up
2) We depreciate assets each year
3) We generally don’t lever up
64
GE $100
Why is our unrealized loss “so small” compared with opportunity funds?
$97$94
Unrealizedgain/(loss)
Acquisition-’06 ’07 (peak) YE ’08
Depreciation3% Depreciation
3%Unleveredinvestment-book value(historical cost)
Asset value $100 $103 $85
- $6 ($9)
Investmentvalue 3%
Investmentvalue ����17%
Opportunity fund $33 $36$18
Acquisition-’06 ’07 (peak) YE ’08
Leveredinvestment-book value(mark to market)
3rd party debt (2:1)
$67 $67 $67
Investmentvalue 9%
Investmentvalue ����50%
Asset value $100 $103 $85
33
65
Levered equity positions of funds amplifies losses
Fund - levered equity*GE all-cash
$29B
100%equity
’08 vs. ’07value loss
15%
Investment loss
15%
33% equityValue loss
15%
Investment loss
45%
67%3rd party debt
For GE, value loss % on real estate = investment loss
For “Fund”, value loss %on real estate does NOT
= investment loss
* Assumes ~2:1 leverage
GE’s $4B unrealized loss @ year end ’08= (18%) vs. ’07, (54%) if levered 2:1
66
Equity unrealized losses summary
Rigorous valuations process• Valuations updated minimum 2 times per year
• Standard guidelines with 3rd party market assumptions
• Cap rates – long term median, range of 4.2% - 14.7%
• Local teams prepare valuations, global teams review and approve
• 3rd party data – PPR, PMA, RCA, Co-Star, Reis, etc.
• 353 dedicated asset managers review 3,200 assets across 150 markets each cycle – tremendous local knowledge
($ in billions, pretax)
Value change vs. YE’07
Wholly-owned (15%)
JV (42%)
Total (18%)
Value drop as % of GE book value
YE’07 – unrealized gain $3
Sales ($2)
Depreciation $1
Change in value ($6)
YE’08 – unrealized loss ($4)
Walk
JV’s($1.1)
Owned RE($2.9)
YE’08 unrealized loss - $4B
San Diego Office ($0.3) 8.3%
London Office (0.3) 7.4
Seattle Office (0.2) 8.1
Chicago Office (0.2) 8.0
Atlanta Apartment (0.2) 7.7
Irvine Office (0.2) 7.7
Tokyo Mixed use (0.1) 4.5
Dallas Apartment (0.1) 7.8
San Jose Office (0.1) 8.8
All Other Various (2.3)
Total ($4.0) 7.5%
UnrealizedTop losses: Collateral loss Cap rate
Rigorous valuation process supported by 3rd
party data from respected industry sources
34
67
’05 ’06 ’07 ‘08
Equity impairments
$30 $54$153
$294
($ in millions, pre tax)
• For our owned properties, per U.S. GAAP we MUST state at depreciated cost, subject to impairment testing(mark-to-market is NOT optional)
• We do disclose the unrealized loss in our financial statements - $4B pre tax loss at year end ’08
– ’07 vintage is primary driver … $3.3B (EOP suburban Chicago 29%, Carr America 37%, Dundee 23%)
Quarterly impairment review process - FAS 144 review process
• Run undiscounted cash flow test quarterly on 100% of our portfolio
• Inputs are consistent with our rigorous asset valuation process utilizing 3rd party data sources and long term historical median cap rates
• Hold periods vary, up to 10 years
• If an asset fails the undiscounted cash flow test, it is impaired, fair valued based on current value and an impairment charge is recorded
Equity impairments
~($4.0)
$1.1
$2.1
$3.1
$4.1
’08UL
’09 ’10 ’11 ’12
• Real estate assets depreciated over estimated useful life (~3% annual)
• Cumulative depreciation balance eliminates current embedded loss over time and reduces risk of impairment
YE ’08 unrealized loss (‘UL’) mitigatedby cumulative depreciation
($ in billions)
68
Fed Baseline
Case
Median long term historical cap rate +adders for asset quality
Asset-by-asset business plan* reflects PPR/PMA recession case
• 2 year US office market rents flat
Median long term historical cap rate +adders for asset quality
Median long term historical cap rate +adders for asset quality
Cap rate assumptionNOI assumption
FedAdverse
Case
Property valuation stress methodology
4Q’08Outlook*
Asset by asset = 35,000 commercial tenants, 8,000 properties, 2,600 cities
Negative rent growth and occupancy per PPR/PMA utilizing Fed more adverse assumptions for GDP / unemployment
• 2 year US office market rents ���� 15% • Impact on office equity portfolios: NOI ���� 16% over 2 years
Negative rent growth and occupancy per PPR/PMA utilizing Fed baseline assumptions for GDP / unemployment
• 2 year US office market rents ���� 13% • Impact on office equity portfolios NOI ���� 14% over 2 years
* Outlook reflects the best local market data available to asset managers in 4Q’08
35
69
Rent growth assumptionsLondon office
Outlook Fed Base Fed Adverse
San Diego office
Atlanta apartment
Dallas warehouse
% %
% %
Source: PPR, PMA
-20
-15
-10
-5
0
5
10
15
20
2009 2010 2011 2012 2013
-15
-10
-5
0
5
10
15
2009 2010 2011 2012 2013-12
-10
-8
-6
-4
-2
0
2
4
6
8
2009 2010 2011 2012 2013
-6
-4
-2
0
2
4
6
8
2009 2010 2011 2012 2013
70
Los Angeles equity exampleHistorical perspectivePortfolio mix
Market fundamentalsApartmentOffice
Expected Cap Rates
8.90% 8.71%
7.83% 7.64%
5.67%
4.77%
4%
9%
Office Apartment
Max
Median
Min
$0.4B
Source: PPR
Office
73%
Warehouse
9%
Apartment
13%
Retail
5%
Rent Levels
$27
$32
$25
$23
Office Apartment
$1,780
$1,528
$1,247
$1,076
Max
In-Place
Median
Low
psf p/u
� 18 yr. median cap rates toward historic high cap rate levels� Current GE office portfolio rents 18% below market
36
71
Fed base case stress analysis - equity value
$293 $252 $211 $183
$54$24
$26$23$38
$38$37
$35
$1$3
$1
$19
0
250
500
750
NEA Outlook Fed base Fed adverse
Retail
Warehouse
Apartment
Office
Los Angeles equityRent growth Equity $0.4B
•Portfolio comprised of office $293MM, apartment $54MM, warehouse $35MM, retail $19MM
Impairments $ 0 $10 $76
$400
$313$278
$245
($ in millions)
Office
-12%
-8%
-4%
0%
4%
8%
12%Outlook Fed base Fed adverse
Apartment
-6%
-4%
-2%
0%
2%
4%
6%
2009 2010 2011 2012 2013
2009 2010 2011 2012 2013
Source: PPR
Outlook Fed base Fed adverse
Stress case impairments driven by office
72
Real Estate equity stress summary
Total estimated portfolio losses utilizing impairment test:
• Test: Undiscounted cash flows vs. NEA (net earning assets)• If failed, loss = Discounted FMV vs. NEA
31%28%23%Implied loss on
affected assets
($5.9B)($4.7B)($4.0B)Embedded loss on equity assets
17%11%5%% of NEA impaired
44%40%24%Implied loss rate on impaired assets
$1.5B
Fed base case
$2.6B$0.4B
4Q’08outlook
Equity impairments
Fed adversecase
(after impairments) ($3.6B) ($3.2B) ($3.3B)
($ in billions, pretax)
37
73
Real Estate summary
• We are primarily a senior secured debt underwriter and wholly owned equity operator
• We believe that we are a conservative and diligent real estate investor with strong underlying risk and valuation methodology
• The forward looking macro environment will be tough on the commercial real estate market
• Our portfolios are solid but have challenges to manage
• Even under the Federal Reserve stress cases, losses would be manageable
74
Commercial Lending and Leasing
38
75
Commercial lending & leasing overview
Who we are and what we do
EMEA22%
Asia11%
Americas67%
Portfolio Mix by Region ($230B)
Equipment leases & loans
54% Leveraged loans17%
Othersenior-secured
Factoring&ABL13%
Product Portfolio Mix ($230B)
10%
Other
6%
• Leasing and lending against hard assets for 25+ years
• Operations across 30+ countries
• No SIV/CDO exposure
• Organized by product and industry expertise
• Spread of risk: 1B+ transactions annually for 1MM+ customers globally
• 21,400 employees with over 25% dedicated to risk management
76
What we do
Equipment leases & loans
Product
$125 Collateral: hard, foreclosable assets•Inv grade & mid market customers•Equipment & OEMs we know
Assets Approach
•Essential use equipment•Remarketing expertise•Manufacturer support
ABL & factoring $30 Collateral: inventory & receivables •Working capital for mid mkt•Industries & assets we know
•Advance rate on eligible assets•Monitoring, audits, cash control•Credit insurance for factoring
Leveraged loans $38 Collateral: enterprise & assets•Mid mkt LBO & acq finance•Sponsors & industries we know
•Limited hold sizes & multiples•Originate to hold•Predetermined exit strategies
Franchise finance $13 Collateral: equipment & enterprise•Top tier and larger operators•Concepts & geographies we know
•Secured by assets & real estate •Avoid start-ups & locals•Leverage franchisor support
Inventory finance $6 Collateral: dealer floor inventory•Equipment & OEMs we know
•1st lien on inventory•In-house audit staff – 320 FTE•Manufacturer support
Focus
Originate to hold…dedicated industry teams…foreclosable assets
($ in billions)
39
77
2.3%
1.3%1.3%1.3%1.5%1.4%
1.8%
0.8%
0.4%0.1%0.2%
0.5%
0.9%1.1%
$1.0$0.9
$0.5
$0.2$0.1
$0.5
$1.4
'02 '03 '04 '05 '06 '07 '08
Global lease & loan portfolioCredit costs
Loss rate
($ in billions)
Credit costs
Reserve % 1.93% 1.51% 1.24% 0.78% 0.56% 0.60% 0.80%
Delinquency and non-earnings
$2.7
$1.7$1.5
$1.2$1.3$1.5
$2.1
'02 '03 '04 '05 '06 '07 '08
Delinquency %
Non-earnings
• Global equipment finance seeing weakness in transportation, construction and automotive
• Consumer-related inventory and U.S. restaurant financing under pressure
• Leveraged lending experiencing weakness in newspaper, automotive, radio and retail
Leveraging broader domain expertise
to drive portfolio solutions
• Created senior executive roles in each region to lead loss mitigation teams
• Shifted significant resources to drive work-out and portfolio management activities
• Reduced exposure to troubled sectors and restricted approvals to top-tier credits
Monitoring current portfolio trends
78
Leveraged
Market
$5.2 TrillionGE
$68 Billion
Sub debt
Re-packaged(CDO)
High Yield
Asset-based
Seniorsecured
ABL & factoring … assets betterpositioned than last cycle
2000 2008
Liquidation coverage (ABL) 1.2x 1.7x
Interest coverage (ABL) 1.3x 1.7x
Average exposure (ABL) $5MM $24MM
% Top 10 names 19% 7%
% Top 10 industries 66% 43%
Factoring 90-days 8.4% 4.2%
2000 2008Senior debt multiple 3.5x 3.5x
Senior interest coverage 1.3x 2.1x
% Top 10 names 18% 8%
% Top 10 industries 63% 61%
% > 4.5x senior debt multiple 31% 32%
Average exposure $13MM $27MM
Cov lite exposure 4.5% vs. 15% industry
Leveraged lending … strong U/W discipline, better spread of risk
Global lending overview
Senior secured portfolio rigorously managed by an experienced team of professionals
$30B
$38B
$70MM
40
79
Leveraged loans: outperforms industry benchmarks in periods of stress
2.37%
1.59%
0.49%
0.93%0.37%
0.30%
0.31%0.43%0.86%
4.60%
2.95%
0.46%2.08%
2.47%1.32%
1.00%0.29% 0.16%
'00 '01 '02 '03 '04 '05 '06 '07 '08
Market loss rate*
GE loss rate
* Market Loss Rate computed using Moody’s speculative grade default rate x S&P LossStat 1st lien cash flow loss-given-default rate
• Starts with good underwriting: underwrite to hold, senior secured facilities, known industries; no junior debt, start-ups, leveraged build-ups or small EBITDA companies … underwrite assuming work-out
• Rigorous portfolio management: sophisticated tools & proprietary data to re-rate portfolio as accounts or markets change; routine stress testing & scenario analysis … account surveillance to ensure early detection of stressed credits
• Proven work-out ability: willing to work longer & harder to recover full value; not selling early or into illiquid markets
80
Equipment lease & loan overviewRisk management approach
• Underwriting teams organized by collateral & industry
• Transaction analysis combines credit review and extensive asset valuation
• Continuous monitoring of portfolio with dedicated industry groups
• Experienced collection and work-out teams to exercise remedies and mitigate losses
• $14B of residual exposure
Industry mix ($125B)
15%
14%
8%
4%
Construction
Business Services
Other(<2%)
5%
Retail
ManufacturingMachinery
FinancialServices
Airlines
Food & Bev
Trucking 7%8%6%
%
4%
4%
Healthcare Providers
Technology
5%
5%
Transportation
Real Estate
3%
2%2%
Consumer Services
Automotive
41
81
U.S. equipment vs. benchmark
ELFA*
GE Equipment
• Underwrite to hold with emphasis on asset values and credit quality
• 500+ person global asset management and remarketing team (specialized by asset/ industry)
• 900+ person global collection and work-out team- weekly calls with underwriting teams and senior risk leaders
• Collaterals and industries where we don’t have strong domain expertise
• Broker/intermediary sourced deal flow
• Smaller regional restaurant concepts and collateral with thin secondary markets
• Auction channels that we don't manage with our specialized remarketing teams
Consistent performance over a sustained period
Differentiators Areas we avoid
U.S. Equipment lending charge-offs vs. ELFA
0.80%
1.41%
0.44%
0.71%
1.58%
1.17%1.11%
1.30%1.40%
1.50%
0.85%
0.48%
1.08%
0.64%0.57%
0.39%0.38%0.33%0.26%
0.46%0.55%
0.72%0.72%
0.31%
Dec'01 Dec'02 Dec'03 Dec'04 Dec'05 Dec'06 Dec'07 Mar'08 Jun'08 Sep'08 Dec'08 Jan'09
*Equipment Leasing Finance Association performance indicator report & monthly leasing and finance index
82
Equipment residual values
Impairment methodology
Operating leases ($8B)• Portfolio reviewed at least annually
• If undiscounted rentals plus residual value < BV, leased asset impaired to fair value
Finance leases ($6B)• Reviewed at least annually
• Compare current estimated residual to residual established at lease inception
• If current < original estimate, record impairment if decline is deemed other-than-temporary
Total residual value ($14B)
1998-2008 RV performance
Copiers
6%
Health
7%
Marine
2%
Trucks
3%
Forklifts
2%
Asset management approach
• 500+ person global team organized by collateral, industry and geography
• Independent team sets residuals utilizing extensive secondary market & proprietary data
• Multiple remarketing channels to maximize value
• Dedicated remarketing team managing all 3rd
party sales including auction processes
• 80+% of equipment (ex-fleet) sold in place or renewed
80%
100%
120%
140%
160%
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08
% of Booked RV
Fleet Aircraft Copiers Total
Fleet
32%
Aircraft
30%
Other
18%
42
83
0-5
44%
11-15
8%
16-20
7%21-25
5% > 255%
6-10
31%
Portfolio mix by aircraft type ($13B)
Portfolio vintage in years ($13B)
Medium
13%
Rotary7%Large/Global
62%
Small10%
Turbo Props/Other 8%
• 72% of customers > BB- with 15% investment grade
• Average lease term is 10 years … stringent conditions protect economics upon early termination
• 85% lease maturities beyond 2013 … $312MM in ’09-’10
• 41 aircraft ($384MM) on ground, avg. age 13 years vs. 30+ year useful life
• Original outlook: credit costs of $30MM; Fed base $78MM; Fed adverse $120MM
Well-diversified corp. aircraft portfolioHistorical residual performance
116%114%
117%
110%
105%106%
125%
114%107%
104%
110%
'9 8 '9 9 '0 0 '0 1 '0 2 '0 3 '0 4 '0 5 '0 6 '0 7 '0 8
100%
(% of booked residual value)
Portfolio dynamics
84
• No residual risk to GE for U.S. Fleet product
• Established distribution channels for vehicles
– Retail & wholesale outlets– Broad multi-country distribution
– Web-based remarketing tools
• Rigorous monthly monitoring, increased deflation assumption and shifted away from large cars
• Residual realization pressured in Europe
– Outlook losses of $50MM … avg. loss $1k/car
– Currently experiencing losses of $1.6k/car
• Implementing multiple mitigation strategies … targeting $40MM
– Extending terms
– Direct remarketing
– End of term fees
• Original global outlook: credit/remarketing losses $70MM; Fed base $93MM; Fed adverse $116MM
Global exposure ($4.7B) Portfolio dynamics
Global fleet residual value exposure
Germany
28%
Other EU
22%France
20%
ANZ
18%
UK
8%
Japan
4%
Historical performance
101%103%
101%103%
105%
96%
100%
100%
104%
101%
101%
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08
100%
(% of booked residual value)
43
85
Exposures of interest
Probable restructuring scenario
• Strong operating results but company over-levered
• Bankruptcy filing anticipated
• Senior debt fully covered
• No impairment of GE exposure expected
Big 3 exposure Large cable company
Senior debt facility structure
• Secured by all assets
• Liquidation coverage of 1.8x
• Senior debt service coverage of 1.8x
• Senior to $14B of junior capital
GE has $750MM of $8.3B senior debt facilityAuto #1 $521
Auto #2 362
Auto #3 60
Total $943
• 93% supported by equipment leases & loans in core collaterals
• All facilities current with principle and interest
• Exposures amortizing monthly
• Proactively monitoring situation
• Potential Loss of $80–150MM …Driven by restructuring scenarios
($ in millions)
86
Stress testing summary
Originaloutlook
Americas equipment $349 $445 $599
Leveraged loans 499 672 880
Franchise finance 101 127 153
EU equipment 173 212 250
Asia Pacific 186 225 310
U.S. asset-based loans 92 117 151
All other 117 190 246
Total $1,517 $1,988 $2,589
Fedbase
Fedadverse Key assumptionsPortfolio
($ in millions)
Credit costs
• U.S. unemployment at Fed cases
• Further deflated asset values
• Decreased same store sales in Franchise
• Stressed exit scenarios in leveraged lending
• No benefit assumed for stimulus package and potential risk mitigation actions
Loss rate 0.93% 1.22% 1.59%
44
87
Stress scenarios – Americas equipmentPortfolio overview ($55B)
347269Net Charge offs
0.83%
349
1.3%
3.1%
2009 Outlook
0.79%
278
0.8%
2.2%
2008 Actual
Credit cost
Reserves %
90+
30+
Citi14%
Small ticket16%Fleet
13%
HFS13%
Canada16%
Stress assumptions
Key variablesOriginalOutlook
Fed.Base
Fed.Adverse
(2.0%) (3.3%)Change in GDP
2.9% 3.3%Probability of Default (PD)
4.2%
0.76% 0.97%Estimated loss rate 1.30%
349 445Est. Credit Cost 599
26% 29%Loss GivenDefault (LGD)
31%
Unemployment(average)
8.4% 8.9%7.7%
AAA to BBB-19%
BB+ to BB-41%
B+ and below40%
Credit Distribution Collaterals
Asset backed facilities with broad spread of risk by collateral,transaction size and geography
(1.8%)
• PD is impacted by slowing economy
• LGD increase is driven by price declines in major collaterals (aircraft, transportation, construction) and lower frequency of full recovery for small transactions
Outlook & stressed scenarios
Key metrics
LAEF
Const.
Comm’l Eq.11%
Office Eq.
Fleet13%
Healthcare
Trucking
Canada16%
7%
5%
Corp Air
8%
Other
9%4%
13%
14%
88
Stress scenarios – Leveraged loansOutlook & stressed scenarios
Stress assumptions
Senior secured credit facilities - primarily term loans collateralized by 1st lien on all assets
AAA to BBB-
7%
< B-28%
BB+ to BB-18%
333317Net Charge offs
1.2%
499
1,219
2009 Outlook
0.8%
475
827
2008 Actual
Credit cost
Reserves %
Non-Earning
Credit Distribution Industries
Cable/TV 10%
BusinessServices 10%
Printing &
Publishing 8%
Other51%
Radio/Broadcasting 9%
Chemicals andAllied Products 7%
Health Services 5%
B+ to B-48%
Key variablesFed.Base
Fed.Adverse
7.8% 8.6% 9.0%
(1.8%) (2.9%)
6.9% 8.3% 9.7%
19.9% 22.2% 24.9%
499 672 880
1.37% 1.84% 2.41%
Change in GDP
Probability of Default (PD)
Estimated loss rate
Est. Credit Cost
Loss GivenDefault (LGD)
Unemployment(average)
(1.6%)
• PD increase driven by weakening economic environment and deteriorating obligor financial health
• LGD increase driven by greater uncertainty in ultimate resolution value
Portfolio overview ($38B)
Key metrics
(64 industries <5%)
OriginalOutlook
45
89
Stress scenarios – Franchise finance
80% of portfolio concentrated in 45 larger concepts
10038Net Charge offs
1.75%
101
2.4%
4%
2009 Outlook
1.73%
131
1.6%
2.7%
2008 Actual
Credit cost
Reserves %
90+
30+
Bev/Other
RestaurantCasual 26%
C&G11% L/S
Hotel8%
Stress assumptions
Key variablesFed.Base
Fed.Adverse
8.4% 8.9%
(2.0%) (3.3%)
5.3% 5.6% 6.1%
101 127 153
21% 25% 28%
7.7%
1.12% 1.41% 1.71%
RestaurantQuick-service
49%
Segments
Change in GDP
Probability of Default (PD)
Estimated loss rate
Est. Credit Cost
Loss GivenDefault (LGD)
Unemployment(average)
(1.8%)
Credit Distribution
• PD increase resulting from higher unemployment and stressed same store sales
• LGD increase driven by drop in real estate values
B+ and below37%
BB+ to BB-58%
AAA to BBB-
5%
Outlook & stressed scenariosPortfolio overview ($13B)
Key metrics
5%
OriginalOutlook
90
Stress scenarios – EU equipment
Stress assumptions
Key variablesFed.Base
Fed.Adverse
173 212 250
0.98% 1.20% 1.42%
163145Net Charge offs
1.44%
173
1.29%
2.39%
2009 Outlook
1.24%
147
1.03%
2.29%
2008 Actual
Credit cost
Reserves %
90+
30+
8.9% 9.4%
(1.1%) (1.8%)
26% 30% 32%
8.1%
3.8% 4.0% 4.4%
Fleet30%
CDF 9%
EF58%
Asset backed facilities with broad spread of risk by collateral,transaction size and geography
Change in GDP
Probability of Default (PD)
Estimated loss rate
Est. Credit Cost
Loss GivenDefault (LGD)
Unemployment(average)
(1.0%)
Credit Distribution
• PD increase driven by slowing economy
• LGD increase driven by reduction in fleet prices and lower frequency of full recovery for small transactions
AAA to BBB-
BB+ to BB-51%
B+ and below38%
Outlook & stressed scenariosPortfolio overview ($18B)
Key metrics
11%
Healthcare 3%
Fleet30%
Inventory9%
Office Equipment
22%
Const./Mfg. Equipment
24%
Aircraft 7%
Other 5%
OriginalOutlook
Collaterals
46
91
Stress scenarios – Asia Pacific
Stress assumptions
Key variablesFed.Base
5.7% 6.0%
(2.2%) (4.2%)
4.0% 4.5% 5.7%
186 225 310
1.12% 1.36% 1.87%
28% 30% 33%
5.2%
Senior secured financings, primarily equipment, in developed economies
Japan 60%
ANZ 28%
India 5%
Other 7%
Credit Distribution Countries
Fed.Adverse
159114Net Charge offs
1.0%
186
2.2%
3.4%
2009 Outlook
1.0%
152
1.4%
2.4%
2008 Actual
Credit cost
Reserves %
90+
30+
Change in GDP
Probability of Default (PD)
Estimated loss rate
Est. Credit Cost
Loss GivenDefault (LGD)
Unemployment(average)
(1.2%)
• PD increase is driven by deterioration in Japan and Australia economy
• LGD increase is driven by moderate reduction in fleet vehicle prices and collateral value depreciation
BB+ to BB-59%
AAA to BBB-19%
B+ and below22%
Outlook & stressed scenariosPortfolio overview ($20B)
Key metrics
OriginalOutlook
92
Senior secured credit facilities secured by 1st lien on current assets, managed via formulaic borrowing base
Key variablesFed.Base
Fed.Adverse
7.7% 8.4% 8.9%
Stress assumptions
Credit Distribution
Stress scenarios – U.S. ABL
Industries
5523Net Charge offs
0.7%
92
215
2009 Outlook
0.3%
36
90
2008 Actual
Credit cost
Reserves %
Non-Earnings
Retail12%
Healthsvcs 10%
Wholesalenon-durable
MetalBus Svcs
Other41%
Wholesaledurable 18%
(2.0%) (3.3%)
9.1% 10.6% 12.5%
92 117 151
0.91% 1.16% 1.50%
10.0% 11.0% 12.0%
Change in GDP
Probability of Default (PD)
Estimated loss rate
Est. Credit Cost
Loss GivenDefault (LGD)
Unemployment(average)
(1.8%)
< B-42%
9%
AAA to BBB-
B+ to B-44%
8%6%5%
• PD increase driven by weakening economic environment and deteriorating obligor financial health
• LGD increase driven by lower current asset recovery value
Outlook & stressed scenariosPortfolio overview ($10B)
Key metrics
BB+ - BB-5%
(40 industries <5%)
OriginalOutlook
47
93
GECAS
94
GECAS dynamicsWho we are and what we do
• Global fleet with ~1,500 owned and ~350 managed aircraft plus order book
• Broad range of leasing, financing and servicing products
• Expansive geographic footprint: 28 offices serving ~230 customers in over 70 countries … a leader in emerging markets
• Experienced team with deep technical, financial, marketing and restructuring expertise
• Full asset lifecycle management
48
95
Industry overviewIndustry World fleet
↓ Anticipated global traffic declining by ’08 … trending higher
↑ Aircraft demand continues to slow … OEM order deferrals; fleet reductions increase via retirements/scrapping/parking
↑ Lower jet fuel prices helps compensate for weakness in demand
↑ Due to pro-active capacity cuts & alternative revenue fees, U.S. slightly better positioned
↑ Accelerated retirement of least efficient aircraft
↔ Capital markets liquidity scarce … harder to secure financing
GECAS well-positioned to manage through another cycle:
� Asset-based financing
� Proven placement capability
� Strong industry experience
� Diversified portfolio
Total Parked Passenger Aircraft = 2,025
In-Transit(194)
Parked>1yr(865)
OlderTypes(459)
Age>20yrs(156)
VIABLEPARKED
351
TotalWorldFleet=
20,392
CargoAircraft2,072
TotalWorld
PassengerFleet=
18,320
ParkedFleet2,025
TotalActiveWorld
PassengerFleet=
16,295
LeastEfficient2,331
(e.g. MD80, 732, BAE, DC9, 727, A300, 742)
MoreEfficient13,964
(e.g. 737, A320, 777, A330, 744, CRJ, ERJ, EMB)
LESS LESS LESS =
(GECAS Impact)
(GECASPAX fleet)
1,386
21
0
96
Strong asset backed financing & industry expertiseIndustry/airline monitoring
• Continuous prospective focus on industry/assets: monitor production rates, passenger growth and retirements to anticipate cycle
• Frequent and direct dialogue with OEMs/airline management on current products, new technologies, and forecasts
• Asset based lender/investor with significant technical expertise
• Target high quality collateral – excellent buy & hold aircraft
• Limited older and out of production technology
Equipment
Focused approach on assets utilizing deep domain expertise
Proprietary valuations tool
• Forecasts of aircraft value and loss given default models
• Cross-functional steering committee of aviation experts establishes/reviews values, leveraging GE market intelligence
49
97
Performance
Placing ahead … and through downturn
Demonstrated placement capability
GECAS approach
• Advanced placement of roll-off and skyline, easing cycle impact
– Remarketing initiated at least 18 months in advance of expected re-lease date
– 80+ technical specialists servicing assets globally
• History of pre-placing assets in anticipation of restructurings at weaker credits… actively manage exposures
– Minimize losses, AOG & downtime
– Bi-weekly portfolio review process
– Granular watch rating system
� Stronger position than last downturn … placed ahead of projected cycle
� Closely monitoring & placing unanticipated roll-offs (52 in 2008, 16YTD in 2009)
Placement as of 1Q’08:
2008 2009 2010 2011
Roll-off 99% 66% 23% 0%Today 90% 37% 15%
New Order 100% 100% 95% 51%Today 100% 100% 69%
98
Attractive portfolio mix supports cycle management*% of Aviation exposure $’s at 4Q’08
Diversified portfolio
• Portfolio* well positioned with high demand, widely used, fuel efficient aircraft
– Average age: 7 years
– ~85% of fleet is < 10 years old
– ~85% of narrow body fleet is high demand A320 & 737NG
– Majority of wide body fleet has broad user base and can be readily redeployed (777 & A330)
• Deliberate evolution of portfolio to operating leases & secured loans
– Defensive loans provide cross collateralization with good LTVs
• Asset-based approach facilitates redeployment and mitigates airlines’ credit quality
– Strong track record managing through similar cycles
• Geographically diverse
Key comments
Leased assets
20%
Products
Cargo RJs
Wide-body
Narrow-body
9%16%
20%55%
Operating LeaseFinance
Lease
Loan
Other
2 %
19 %
14 %
6 5 %
15%34%
20%
5%
7%
19%
US
Asia
C&LA
Canada
Europe
MAC
Regions
50
99
Stress analysis
Values are driven by changes in supply & demand
• All aircraft types are expected to be negatively affected by global recession
• Weaker outlets for older aircraft
• OEM production cuts, retirements & parked aircraft mitigate portfolio impact
~$265
~$635
~$320
’09 Outlook Base Adverse
Aircraft values
LA GDP
AIRCRAFT
VALUES
DEMAND(Traffic)
SUPPLY(Active Fleet)
WORLD GDP
FLEETEXITING
FLEETENTERING
RetirementsParkingConversions
ProductionUtilizationNew OEMs
PRICEFareStimulation
US GDP
EU GDP
AS GDP
OTHER GDP
Impairments/losses
Current dynamics
$109
~$265
$128
’07 ‘08 ’09 Outlook
’09 outlook: assumes a higher 1-yr decline vs. the average 1-yr drop during last downturn
US GDP impacted by: unemployment, housing, production, etc
(Pretax $ in millions)
Base: assumes the worst 1-yr decline from last downturn occurs in ’09
Adverse: assumes the worst case peak-to-trough cycle decline in last downturn (’00-03) all occurs by ’09
100
Successfully managed through previous periods of distress
36 from Varig (’02-’03)
22 from ATA (’05)
7 from Kitty Hawk (’07)
6 from Kingfisher (’08)
8 from XL Aviation (’08)
Fleet redeployments:
Assess airline’s long term viability (franchise strength and credit outlook) and ease of asset redeployment
• If viable and willing but unable to pay: consider deferral, larger restructuring, defensive deal to provide liquidity, aircraft put and call rights
• If airline not viable: take early, aggressive action to repossess /redeploy
• If airline unwilling to pay: pursue claims aggressively (if necessary, litigate)
Improved collateral position with ~$155MM spares loan – 4Q’08
Improved collateral position with ~$240MM aircraft loan - 3Q’08
Restructurings/defensive deals:
Improved collateral position through~$360MM spare parts/engine loan – 4Q’08
Proactive approach to distressed accounts
11
22
33
51
101
Summary
Proven track record
40+ years experience and strong customer relationships
Asset-based approach to business; broad product set with full life cycle management
Demonstrated global redeployment capability supported by world-class technical department
Pricing and risk discipline with proactive portfolio focus
Successfully managed through multiple cycles
102
U.S. Consumer
52
103
U.S. Consumer FinanceWho we are and what we do
• Founded in 1932
• Diversified consumer lender; $31B PLCC& $22B Sales Finance managed receivables ($27B on book)
• Broad geographic distribution with investment grade partners … over ~140,000 retail & merchant outlets
• 76% of receivables with A & B credit quality customers … avg. FICO 694
• 56MM active accounts … avg. bal. ~$950
• Exited U.S. mortgage in 2007
• ~10,000 employees
Long history of profitability challenged in current U.S. environment
2008 Served assets
PLCC$22.9B
Dual Card$8.1B Retail
$9.5B
CareCredit$4.8B
Power$3.7B
RVM$3.8B
104
Tough U.S. retail environment
GE risk actions driving volume down
U.S. retailer salesYoY % change
GE programs
Retailer Feb. ’09 Act. YoY V % GE YoY %
$1,316 (9%) (17%)
$539 (14%) (24%)
$745 (7%) (14%)
$20,071 +8% (10%)(14%)
(12%)
(10%)
(8%)
(6%)
(4%)
(2%)
0%
2%
4%
Mar
'08
Apr
'08
May
'08
Jun
'08
Jul
'08
Aug
'08
Sep
'08
Oct
'08
Nov
'08
Dec
'08
Jan
'09
Feb
'09
Retailer Sales Retailer
GE estimate
53
105
Private Label vs. Bank Cards(2008)
Avg. served assets ($13.5B on book) $29B ~$850B
Average balance $620 $3,000
Average credit limit $2,512 $10,800
Sales/active $1,298 $5,580
Turnover (months) 5.7 6.5
Margins (net CV/ASA) 19.7% 12.4%
Write-offs (NCOs)/ASA 7.1% 6.0%
% of accounts that charge off 5.7% 4.1%
Spread (ex-reserves & OPEX) 12.6% 6.4%
Avg. FICO 699 700
Profit sharing Yes No
GE PLCC Bank carda)
a) Source: Citi, Chase, BoA, Cap One 2008 quarterly reports and supplemental datasets & Argus Syndicated Studies(3Q’08 Co-Brand Retail Benchmarks)
Smaller loss severity … 23% of industry line &21% of balance
Higher margins to cover losses … 2x Spread
PLCC has higher yields on smaller balances
Comparable credit quality
b)
b) Excludes benefits of profit or (loss) sharing with retailers
Dampenslosses
106
Significant Underwriting actionsRisk actions
New Accounts
� PLCC FICO cut off to 640, DC to 760
� Sales Finance FICO cut off moved to 710
�New account lines down 10% PLCC & 20% SF
Portfolio
� Cut lines 37% in PLCC & 43% in Dual Card
� Removed $216B of ‘Open-to-Buy’ through account closures & credit line decreases
�No authorizations on delinquent accounts
�No over limit authorizations on Accounts<780 FICO … cutting out 2.5MM authorizations
� Exited higher loss portfolios … RV/Marine & Home Improvement portfolios ($4.1B)
� Added over 1,000 Collectors to mitigate delinquencies
Began underwriting activity in early 2007
54.9% 53.4% 51.3%52.7%48.3% 46.7%
Cut credit lines
$1,610
$990
Revolving
$4,953$3,984
SalesFinance
Raised cut-offs and reduced approvals
728 730744
3Q 4Q FebruaryOctober February
Previous Year
Current Year
Cut open to buy ($B)
$372
’07 NewVolume
$36
’08 Red.
($200)
’08
$192
1Q’09 Red.
($16)
($216B)
(39%) (20%)
+38 FICO768
(460 bps.)
Avg. U.S. FICO: 693
Avg. FICO Approval rates
54
107
New volume RACV by FICO band
New PLCC volume profitable
Risk actions in place for higher unemployment
Return hurdle
C BC/B B/A A/A+ A+A
FICO
(39%)
(1%)
4%
9%
14%
19%
<586
586-610 611-640 641-670 671-695 696-725 726-755 756-780 781-810 811-835 836+
7.7% U/E
8.4% U/E
8.9% U/E
D/C
No new accounts+ credit line decreases on existing accounts
Credit line decreases on existing accounts
Dual card cutoff 760
Risk action
GE Risk grade Average
108
18.35%
2008
Driving $592MM price to mitigate higher losses
Price
Driving yield to offset lossesRevenue / Average Net Investment %
17.88%
2007
19.64%
2009 Outlook
$399
$228
$592
Late Fee % 3.68% 4.06% 4.61% 55 bps.
+129 bps.
50
349
110
382
100Additionalopportunity
Merchant
Consumer
+$193MM
Yield up with more challenging economy
� Revolve rates +240 bps. SF, +86 bps. PLCC
� Average late fee +5% for Sales Finance & 9% for PLCC
Increase Pricing
� Avg. APR up ~60 bps.
� Late Fee assessments up: +620 bps. Sales Finance & +330 bps. PLCC
� Terms: changes driving other fee income +$50MM
Merchant Pricing up
� Renegotiate contracts
� Promotional pricing up 25% YoY
22
33
11
20082007 2009 Outlook
55
109
16.23%15.15%15.90%
17.88%20.42%19.52%
22.63%
52.4%
46.5%47.9%
42.6% 43.8%
39.0%36.5%
1Q
'06
2Q
'06
3Q
'06
4Q
'06
1Q
'07
2Q
'07
3Q
'07
4Q
'07
1Q
'08
2Q
'08
3Q
'08
4Q
'08
1Q
'09
Credit Costs increasing
Entry rates reflect tightened underwriting…still seeing pressure on backend collections
Credit Cost (on book)
Reserve Change
Write Offs (NCOs)
’07 ’08 ’09 OutlookReserve % 3.29% 5.77% 6.77%
30+ DQ. (Served) 5.53% 7.19% 7.88%
90+ DQ. 1.98% 2.82% 3.46%
2.79%
4.91%
3.93%
9.58%
4.17%
6.19%
13.51%
11.10%
6.96%
9.95%
10.40%
10.93%
11.49%
10.52%
11.37%
10.84%
1Q '06 3Q '06 1Q '07 3Q '07 1Q '08 3Q '08 1Q '09
est
11.28%
Actual
4 yr. Avg.
3 due CE
4+ CE
Entry rate at historic lows
Collections more challenging
45.0%
4 yr. avg.
18.3%
4 yr. avg.
(133bps.)
(850bps.)
110
Historical DQ – U/E correlation breaks in July ’08 as U/W actions take hold
Delinquency - U/E correlation
Janu
ary
Febru
ary
Mar
chApr
il
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nov
ember
Dec
ember
2008
‘09 Outlook
Fed. Base
Fed. Adverse
U.S. unemployment
4.9
7.2
7.6
5.1
7.4
8.1
8.5
5.5
7.6
8.5
8.8
6.2
8.0
8.9
9.3
7.2
8.5
9.0
10.0
• Unemployment outpacing Delinquency
– 6 month U/E average � 48% YoY
– Average 30+ delinquency � at 27%
– Average 90+ delinquency � at 32%
DQ. vs. U/EYOY % change
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09
U/E
90+
30+
Underwriting actions
Historical ratio(U/E:Write-Off)
1 : 1.1
DQ – U/EVariance
Feb. 8.1% vs. 7.3% Plan
56
111
• Interest rates
• Unemployment
• Wages & inflation
• House prices
• Refinance opportunities
Global Consumer stress test framework
Macro environmentVolatility & inter dependency relationships
Risk layers
Portfolio performance & assumptions
• Observed PD/ LGD
• Cure rates & Refi rates
• Recovery assumptions
• Additional loss on sale assumptions
Output• Analysis by geography &
product type & segments
• PD, LGD and Loss distributions by scenario
• Sensitivity to individual risk drivers (macro + assumptions)
ExternalForecastrange
Model
•Default = borrower’s option
•Exercise probability based on:– Cash flows (DTIR)
– Leverage (LTV)
•Non-linear relationships:– Skewed distributions
– Fat tails
• Severity: collateral/collections
Scenario Generator
•Monte Carlo simulation
•Possible paths of macroeconomic variables
• Credit grade
• LTV
• Debt-to-Income (DTIR)
• Product structure
• Credit insurance
• Quarterly back testing
• Roll rate analysis triangulation
Validation
Input Risk assessment &decisioning model (RAD)
• Loss and capital adequacy planning
• Risk mitigation planning
• Portfolio strategy
Uses
112
Stress scenarios – PLCCPortfolio overview ($30.4B)
Credit distribution Portfolio vintage
2009 Outlook & stressed scenarios
Stress assumptions
Key variablesFed.Base
Fed.adverse
• 54% prime book• Average FICO 699
A+ 37%
A 17% B 21%
C 12%
D 13%
Pre 200774%
’0812%
200714%
8.4% 8.9%Unemployment(average)
10%Recovery rate 25%
1,621956Net Write-offs (NCOs)
6.1%
2,202
3.6%
8.1%
2009 Outlook
6.0%
1,530
3.5%
7.5%
2008 Actual
Credit Cost
Reserves %
90+
30+ (Served)
Key metrics$2,552Est. Credit Cost $2,879
18.9%Credit Cost % 21.3%
On book $13.5B
7.7%
8.0%
$2,202
16.3%
3.6% 4.3% 5.0%90+ Delinquency
‘08
5.8%
12.3%
$1,530
12.1%
3.5%
Stress case does not include :
22
11 Stimulus benefits
Future benefit from risk actions
‘09Outlook
57
113
Stress scenarios – Sales FinancePortfolio overview ($21.5B)
Credit distribution Portfolio vintage
Stress assumptions
• 61% prime book• Average FICO 685
A+ 37%
A 24%B 17%
C 11%
D 11%
Pre 200731% ’08 40%
2007 29%
7.7% 8.4% 8.9%Unemployment(average)
7.8% ↓16%Recovery rate ↓25%
Key variablesFed.Base
Fed.adverse
1,204744Net Write-Offs (NCOs)
7.7%
1,784
3.3%
7.7%
2009 Outlook
5.4%
1,515
2.4%
6.8%
2008 Actual
Credit Cost
Reserves %
90+
30+ (Served)
Key metrics$1,784 $2,194Est. Credit Cost $2,398
11.1% 13.7%Credit Cost % 15.0%
On book $16.0B
3.3% 3.8%90+ Delinquency 4.1%
2009 Outlook & stressed scenarios
$1,515
10.3%
12.4%
2.4%
5.8%
‘08‘09
Outlook
Stress case does not include :
22
11 Stimulus benefits
Future benefit from risk actions
114
Mortgage
58
115
($ in billions)
Overview
• $60B assets across 19 platforms
• Protected by Mortgage Insurance (MI)
• Exited $1.5B ANZ assets in Feb ’09
U.K.$22
ANZ$13
France$11
Poland $5
Mexico $2Hungary $1
Others $5 (12 platforms)
Spain $1
4Q’08 assets
Net income history
61% A/A+ credit rating
18% 18% 19% 18% 18% 18%
23% 21% 20% 20% 20% 21%
59% 61% 61% 62% 62% 61%
'06 '07 1Q '08 2Q '08 3Q '08 4Q '08
A+/A
B
C/D
’05 ’06 ’07 ’08
Mortgage overview
$0.7
$0.9
$1.2 $1.1
Platform>80% current LTV with MI Exceptions
U.K.
Australia
France
Poland
Pre ’03 vintage, HPI impact
Run-off portfolio
31%
66%
96%
100%
Seasoned book; Prime
>80% A/B credits and MI protection
1.6% 1.7% 1.9% 1.6%ROI%
n/a
116
Q4'08Q3'08Q2'08Q1'08Q4'07Q3'07
0
500
1,000
1,500
2,000
Mortgage portfolio performance90 day delinquency (top 4 markets)
90%DQrate
0.3%
0.2%0.2%0.2%0.1% 0.3%
1.1%
0.7%
0.1% 0.1%0.0% 0.1%
Q4'08Q3'08Q2'08Q1'08Q4'07Q3'07
Annualized credit costs
NCO /ANI
Credit costs / ANI
Intense focus on REO
Avg. value $100,000
$1,354
557 986 U.K.
$1,868
Total Mortgage
Poland0%
2%
4%
6%
8%
10%
12%
Sep ‘07 Dec’07 Mar ‘08 Jun’ 08 Sep ‘08 Dec ‘08 Feb ‘09
14%
Australia
France
189
217 Australia
TotalMortgage70%
with MI
Indexed portfolio LTV (top 4 markets)
51%
49%
'08
U.K.
>80%
<80%
59
117
Down $21.4
Down $24.4
Shrinking Mortgage everywhere($ in billions)
Cut volume dramatically … February YTD down 88%
U.K. $4.8 $0.1 ($4.7) (97%) $22.4 $19.7 ($2.7) (12%)
ANZ 2.1 0.1 (2.0) (97%) 12.6 8.4 (4.2) (34%)
France 2.3 0.5 (1.8) (79%) 11.1 10.2 (0.9) (8%)
Poland 1.5 0.1 (1.4) (91%) 5.2 4.5 (0.7) (14%)
Others 3.1 0.2 (2.9) (94%) 10.0 8.5 (1.5) (15%)
Total $13.8 $1.0 ($12.8) (93%) $61.3 $51.3 ($10.0) (16%)
Country 2008 2009 outlook V$ V% 2008 2009 outlook V$ V%
’08 ’09 outlook
$13.8
$1.0
’08 ’09 outlook
$61.3
$51.3
Originations ENI
‘07
$72.7
’07
$25.4
118
Mortgage portfolio composition (’08)
Assets Avg. Avg. 30+ 90+ NCO Total
Country ($B) loan ($M) Prime Orig. LTV DQ DQ % MI% # of insurers/ Rating
U.K. $22 $94 26% 78% 21.0% 11.0% 0.4% 36% 2; A+/Negative, A+/Negative
Australia 13 174 84% 79% 4.9% 2.0% 0.2% 94% 2; AA-/ Stable, AA-/Negative
France 11 155 87% 71% 2.0% 1.1% 0.1% 16% 1; A+/Stable
Poland 5 66 98% 73% 1.2% 0.4% 0.0% 40% 1; BBB
Mexico 2 105 70% 68% 8.3% 4.8% 0.3% 22% 1; Government entity
Spain 1 94 74% 68% 23.2% 13.6% 0.7% 13% 1; A+/Negative
Hungary 1 34 98% 57% 3.0% 1.0% 0.0% 15% 1; A+/Negative
Vast majority of portfolio protected by strong credits, low LTV and insurance
60
119
U.K. Home Lending (U.K.-HL)
Repositioned to de-risk the business
$22B mortgage assets
1st mortgage$19.1
2nd mortgage$2.6
• Created from acquisitions of igroup (’01) & First National (’03)
• Originations through intermediaries
• In-house underwriting, collections & asset management
• Mortgage originations down 97%
• Solid LTV. … 78% and MI coverage on 66% of > 80% LTV
• Reorganized business to focus on collections & loss mitigation
• ~1,350 employees
Originations
$0.1
$10.7
’07 ’08 ’09
($ in billions)
Down $10.6
$4.8
120
Expect3-5% in’09-’10
U.K.-HL comparison to U.S. lendersU.S. GE U.K.-HL
Business model
Intermediaries
Originate to sell
Non Regulated
Originate to hold
100% Regulated
Loan
Mortgage insurance Minimal 66% of >80% indexed LTV
Consumer
− Owner occupied
− Origination LTV
− Pricing
− Term (avg.)
House supply Oversupply Shortage
Write-off rates (’08) 10-12% <1%
~70% ~97%
100%+ ~78%
30 years 20 years
Variable teasers ~60% fixed
~7.2% ~6.3%− Unemployment (’08)
Pressured by U.K. economy, but fundamentally different from U.S.
− Bankruptcy filing Low barrier High barrier
30+ DQ rate (’08) 40-45% ~21%
Our Balance Sheet
Better Consumer dynamics
Better credits
61
121
U.K. economic environment
HPI % (YOY change) –b)
(a- Source: Global Insight
(b- Source: Actuals from HPI; GE forecasts
Planning for a difficult environment
GDP % -a)
3.03.4%
2.6
1.8
-1.80.3
3Q’07 4Q’07 1Q’08 2Q’08 3Q’08
4Q08
’09 forecast
’10 forecast
-3 ~0%
1.1
5.2
10.7%
-16.2 -17.7-12.4-6.1
3Q’07 4Q’07 1Q0’8
2Q’08
3Q’08
4Q’08Feb ‘09
’09 forecast
’10 forecast
-10 -5%
122
Dialer
Portfolio management
Secured collections
Loss mitigation
90+0-90
MI
1st 90+ inbound and outbound
2nd 90+ inbound and outbound
2nd 0-90 i/b & non-high risk
o/b
2nd 0-90 high risk outbound
Tracking & monitoring
Liquidation: WO’s, short
sales
Retention: Modification
Set up
Litigation
Advisors
Customer service
COO
1st 0-29 inbound & outbound
1st 30-90 i/b & non-high risk
o/b
1st 30-90 high risk o/b
Unsecured collections
U.K. collections and loss mitigation
Shifted entire organization to focus on collections / workouts
New collections organization Actions taken
� New organization in place
� Dedicated loss mitigation group
� Top talent focused on collections/ workouts
� Increased collectors 3x to ~510
� Structuring hardship & workout offers based on segmentation analysis (LTV, recent payment history & product type)
� Engaged McKinsey … on site supporting new process
� Weekly reviews
62
123
U.K. credit experience30+ & 90+ Delinquencies Net Charge-offs (NCO)
14.4% 14.4%
21.0%
15.3%
13.3%
6.3%7.4% 7.0% 6.8%
11.0%
2004 2005 2006 2007 2008
30+ DQ rate90+ DQ rate
$25$14
$115($ in millions)
$69
$29
NCO% 0.1% 0.3% 0.1% 0.4%0.1%
Drivers of NCO Reserving policy
Past due / event Policy
• 90 days
• 360 days/ Repo
Non-earning; Revenue suspended until account cures to < 90 days
Marked to Net realizable value; Quarterly marks thereafter
($ in millions)
• Repo sale Book final gain / loss on sale
’05 ’06 ’07 ’08’04
’08
$115
~$17
~$124
~($26)
Loss on sale
360+ days / Quarterly MTM
MI recoveries
� Added ~340 collectors
� New Loss Mitigation team
� Intense REO focus … CFO led
� MI provides protection
DQ’s pressured by weaker economy
• Base reserve Model driven
124
1st Mortgage coverage
�Coverage for 80% or greater LTV originations … in place since ‘03
�Certification process at origination
U.K. Mortgage insurance coverage
Insurance example
Property Value (PV) $200,000
Original LTV 90%
Loan Amount $180,000
80% of PV $160,000
Insurance coverage $ 20,000
PV with -15% HPI $170,000
Re-Indexed LTV 106%
Loss before MI $10,000
MI claim $10,000
Net loss $0
’08 assets $19.1B
($ in billions)
No MI $11.4
MI $7.7
With MI No MI
$200,000
90%
$180,000
N/A
$0
$170,000
106%
$10,000
MI provides additional credit support
� Insurers rated “A” … locally regulated & capitalized
�~99% claims effectiveness
$0
$10,000
�59% of delinquent balances with > 80% LTV covered by MI
63
125
U.K. risk layering and losses
90+ DQ %
Total
IndexedLTV%
Credit Grade
($ in billions)
LTV and MI mitigate charge-offs
1stMortgage
0-80% 80-90% >90%
A+/A B C/D A+/A B C/D B C/DA+/A
$1.9 $2.6 $2.7 $0.6 $1.3 $1.4 $1.6 $3.6 $3.4
$7.2 $3.3 $8.6
$19.1
2nd Mortgage
$2.6
0-80%
$1.2
80-90%
$0.5
>90%
$0.9
C/D
$0.5
A/B
$0.7
C/D
$0.2
A/B
$0.7
C/D$0.2
A/B
$0.3
6.8% 10.8% 13.8% 9.7% 14.6% 20.7%
90+ DQNon-earners
$2.4 ($0.8)
($1.3)
$0.2
Cure Est. collateralvalue
Est. netcharge-offs
($0.1)
Est. MI
Non-earners to NCO
126
U.K. Mortgage stress scenarios
~$159$115Net Charge offs (NCOs)
~2.9%
~$564
~16.5%
~29.2%
‘09 outlook
0.8%
$201
11.0%
21.0%
‘08 A
Credit costs
Reserves %
90+
30+
$MM
Portfolio overview ($22B)
Key metrics
Credit mix
• Avg. origin LTV: 78%• Avg. indexed LTV: 84%• Vintage: Pre-’06 26%, ’06 23%, ’07 34%, ’08 17%
Indexed LTV mix
A 20%
B 38%C 24%
D 12%
A+ 6%
Pre 200749%
‘08 17%
2007 34%
>100%27% <80%
38%
80-90%17%
90-100%18%
2009 outlook & stressed scenarios
Key variables’09
OutlookU.K.Base
↓10%HPI decline
2.6% 4.5%Estimated credit cost %
5.1%
U.K.Adverse
↓12% ↓15%
12%Loss on sale 20% 25%
Unemployment (average)
8.5% 9%7.4%
$558 $995Estimated credit costs $MM
$1,125
Sources for macro economic outlook range:FSA guidance on stress testing, CML (Council of Mortgage Lenders), Global Insight, Moody’s Economy.com, RICS (Royal Institution of Chartered Surveyors)
Stress case also includes:
11 Limited refinance ability for high risk segments
22 Counterparty risk to mortgage insurance reliance
’08A
↓19%
0.7%
5%
5.7%
$201
64
127
Mortgage stress - remaining portfolios
’09 outlook Base Proxy Adverse Proxy
Australia HPI decline 2% 5% 10%
Addn’l loss on sale 15% 20% 25%
Unemployment 5% 5% 6.4%
FranceHPI decline 0% 5% 15%
Addn’l loss on sale 20% 20% 30%
Unemployment 8% 8.6% 9.2%
MexicoHPI decline - - 10%
Addn’l loss on sale - 15% 20%
Unemployment 4.3% 5% 5.8%
SpainHPI decline 30% 35% 45%
Addn’l loss on sale 15% 15% 15%
Unemployment 13.9% 20% 22%
IrelandHPI decline 9% 15% 19%
Addn’l loss on sale 13% 20% 20%
Unemployment 9.2% 13% 19%
Key stress assumptions
Portfolio (assets) ’09 outlookFed BaseProxy
Fed AdverseProxy
Australia $4 $6 $43
($ in millions)
Mexico 9 12 37
Spain 55 71 100
Rest of World 18 22 62
France 21 30 59
$13B
$11B
$2B
$1.3B
$3.6B(Ex UK and CEE)
Ireland 8 35 47$0.9B
$115 $176 $348
Credit costs
128
SummaryU.S. Consumer
� Took loss actions early … entry rates down
�Mitigating losses with profit sharing and revenue actions
� Solid reserve position … 2x non-earnings
Mortgage
� Low risk and stable performance outside U.K.
� Solid U.K. underwriting, low LTVs and MI mitigatedown cycle
�Aggressive collections/loss mitigation focus
Prepared for challenging U.S. and U.K. economies
65
129
GE Capital Global Banking
130
Emerging markets bank dynamics
Who we are and what we do
- 89% Europe
• 15 countries presence … diversified assets
- 8% Asia
- 3% Central America
• Well positioned in core markets
- Top 5 in Czech & Poland
- Top 3 in Turkey & Central America
• High quality portfolio
- 56% secured financing
- 82% A/B risk credit grades
- Underwrite to hold
Strong franchise
• Wholly owned banks ($27.8B) + bank JVs ($4.7B)
-~ 3,000 branches
-~ 25MM customers
Assets $11.7B
Poland
Assets $6.7B
Czech/Slovakia Assets $4.7B
Hungary
Assets $0.8B
Latvia
Assets $0.6B
Romania
Assets $1.9B
Turkey
Assets $2.5B
Thailand
Assets $1.0B
Russia
Assets $1.0B
LatinAmerica
66
131
46%
17%
19%
11%
7%
PortfolioProduct portfolio
$22B 4Q‘08 Receivables (%) a)
Credit profile
SME
Sales Finance
Cards
Mortgages
Auto
8%
20%
PersonalLoans
21%
6%
35%
10%
Credit distribution (%)
Diversified portfolio … 63% A/A+ credit quality
A+
D
C
B
A
a) $27.8B total assets
132
GE early mover in Eastern EuropeFinancials
Conservative entry … organic growth over time
Czech/Slovakia
PROSPERITA’97-’00
Romania/Latvia
’06
Hungary
’01
Poland
’95-’98-’08
PAM
Russia
’04
2008
Assets ($B) 27.1
NI ($B) 0.5
ROI (%) 2.2%
’05-’08 CAGR %
20%
15%
(40) bps.
2005
10.5
0.3
2.8%
Credit performance
Credit Cost %
30+%
Global Consumer%
’02 ’03 ’04 ’05 ’06 ’07 ’08
2.89%
1.79%
7.47%
2.99%
5.72%
2.42%
ex-Acq. & FX
67
133
Slower Eastern Europe growth
Oct.’08 forecast Mar. ’09 forecast
Assets $1.0B$4.7B
(1.8%)
$0.6B$11.7B
CEE GDP growth%*
$0.8B
*Sources: EIU Reports February/March 2009
2009 loss planning reflects tougher environment
$6.7B $1.9B
Russia
5.5%
(2.0%)
Hungary
3.0%
(3.0%)
Romania
4.8%
Poland
3.8%
0.7%
Latvia(12.0%)
(0.5%)
Czech
4.3%
(2.0%)
Turkey
3.2%
(2.0%)
GE 4Q’08
134
Eastern Europe outlookCurrent challenges driven by…
Expansion led by EU accession & GDP growth
Banking penetration remains low
Macro imbalances
Currency volatility
Structural dependencies
Czech Hungary Latvia Poland Russia
Exports/GDP
FX lending
Loans / Deposits
80 4780 3242
57 888 2125
132 23871 11692
Czech
42%
Hungary
101%
Latvia
114%
Poland
52%
Russia
31%
Deficit / Surplus
(1.9) (1.9) 3.6(1.4) (3.0)
0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
CEE
RussiaMiddle East
ChinaIndia
LatinAmerica
Africa
WesternEurope
NorthAmerica
0 10 12 16 182 36144 6 8
Revenue CAGR (2000–2007)
Margins 2
007, p
erc
ent
* Asia excl. China, India and JapanSource: EIU, McKinsey, FPK, UBS, Reuters
March’08 March’09 V%
Czech 16.0 20.4 ↓ 27%
Hungary 163.9 228.4 ↓ 37%
Poland 2.2 3.5 ↓ 53%
Russia 23.5 34.7 ↓ 45%
1
2
3
External debt / GDP
Total banking revenue / GDP
WE Middle East
ANZ North America
Asia* Latam
9.4%
6.8%4.8% 4.7% 4.5%
3.6%
Eastern Europe
3.0%
Near term potential volatility … long term attractive
68
135
39%
29% 18%31%
18%
25%
Core Eastern Europe banks
$0.6B$2.5B
$11.7B
’00 ’04 ’08
4.2% 3.8% 2.2%
Assets
30+%
$1.4B$3.4B
$6.7B
’00 ’04 ’08
5.2% 2.1% 2.2%
’01 ’04 ’08
$1.1$2.5B
$4.7B
1.4% 1.4% 2.7%
SF 6%
PLoans30%
SME 24%
Cards 6%
Mortgages23%
Auto11%
A/B Credit = 91%A/B Credits = 84%A/B Credits = 87%
PLoans 16%
SME 13%
Cards4%
Mortgages55%
Auto5%
SF7% PLoans
9%
SME 42%
Cards 3%
Mortgage25%
Auto19%
SF 1%
#5 in Poland #4#4 in Czech #8#8 in Hungary
Solid businesses… high quality portfolio
* CAGR % ex-Acquisition
*BPH
136
1
FX mortgage underwriting
Centralized underwriting & full docs on every loan
-Property valuations, income verification, etc.
Underwriting guidelines routinely adjusted based on FX rate movements, wage growth, & interest rate changes
Conservative Debt to Income and Loan to Value ratios
-100% Mortgage insurance on >80% originated LTVs
No exotic products: low doc loans, self certification, interest only, teaser rates, etc.
Borrowers qualified based on their capability to handle a local currency loan, even though they are given a lower interest rate FX loan
FX loans fully hedged with cross currency swaps
2
3
4
5
6
Extensive process with high standards
69
137
FX mortgages
Adverse
Poland ($4.5B)
A+ 95%
A 2%,B,C,D 1% each
Credit distribution
Avg. LTV=71% Avg. DTI =26%
Stress test ’09 Outlook Base
$87Credit losses ($MM) $7 $26
HPI 4% 10% 20%
FX (from today) 15% 15% 30%
Unemployment 9.5% 10.5% 13%
Hungary ($1B)
A 24%
A+74%
B 2%
Credit distribution
Avg. LTV=57% Avg. DTI =23%
AdverseStress test ’09 Outlook Base
$49Credit losses ($MM) $2 $22
HPI Flat 10% 20%
FX (from today) 5% 15% 25%
Unemployment 8.5% 9.4% 10.4%
06 08
2.3%
1.2%
06 08
0.7%
3.0%
30+ delinquency 30+ delinquency
• Strong credit quality• Conservative underwriting• Performing well
138
Stress testing approach
Robust process, oversight and testing
Assumptions
Forum and frequency:
• Operating plan & short range outlooks• Monthly portfolio reviews• Product / portfolio deep dives
Purpose and use:
• Risk management mitigation planning• Loss and capital adequacy planning• Portfolio expansion or exit
Oversight/Review:
• Banking Group CEO, CRO, CFO• GE Capital Investment Committee & Board
(selective reviews annually)
Macro
• Home prices• Unemployment• Currency rate movement• Interest rates
Portfolio
• Loan to values• Debt to income• Credit quality• Additional loss on sales (mortgage)
Key Drivers:
Key assumptions:
10-20% further decreasefrom today
Home price decline
150-470bps increasedepending on market
Unemployment
Another 15-30% declinefrom today
Currency movement
Approach
* Source: EIU, Internal Inputs
*
70
139
Under severe stress scenario … emerging market banks still earn ~$300MM
Stress test assumptions’09
outlook Base
HPIUnemployment
flat5.3%
(5)%7.3%
(20)%10%
Adverse
HPIUnemployment
(10)%6.4%
(10)%7.4%
(20)%7.9%
Unemployment 6.7% 9% 11%
HPIUnemployment
(4)%9.5%
(10)%10.5%
(20)%13%
Unemployment 1.4% 3.0% 5.0%
HPIUnemployment
flat8.5%
(10)%9.4%%
(20)%10.4%
V’09 Outlook ($MM)
$220-612
Stress test’09 Outlook
Assets ($B)
Credit Cost ($MM)
$6.9
0.9
0.6
13.4
1.2
$27.4
4.4
$128
87
63
192
113
$656
73
2.2%
7.1%
24.3%
2.8%
9.0%
3.6%
3.8%
30 +
Stress Test
$167
161
155
328
225
$1,268
232
$144
94
85
230
160
$876
163
Adverse($MM)
Base($MM)
$16-39
7-74
22-92
38-136
47-112
90-159
Czech
Russia
Latvia
Poland
Thailand
Hungary
Total
Czech
Russia
Latvia
Poland
Thailand
Hungary
Banks stress test results
140
Summary• Nearly 15 years experience in these geographies
� Started small … organic growth overtime
• High quality book … 82% A/B credits
� We underwrite to hold
• Strong delinquency & credit cost performance
� 30+: 5.72% in ’02 to 2.89% in ’08
� Low credit cost at 1.79% in ’08
• Rigorous stress testing to get ahead of problems
• Adjusted originations to limit volatility
� 4Q’08: Reduced Mortgage/Auto originations ~50%
� 2009: Mortgage/Auto originations volumes planned ~80%
� 2009: A/B credit originations only
71
141
Operationsupdate
142
Operating GE Capital
Tightly managing investment … 2009 YE ENI to $500B, $25B
Driving higher new business returns … new business ROI Feb YTD ~2.7%
Taking substantial cost out … 2009 SG&A 19%(ex-FX); Headcount 13% … 1Q on target to deliver annual savings rate
Disposing/running-down ‘red’ assets … closed $23B of dispositions, Feb YTD mortgage originations 88%
Driving results with rigorous operating processes
22
33
44
11
72
143
103
6564
356
80
357
'08 '09
2009 ending net investment
Dynamics
Core
Banks
($ in billions)
$525
ENI
V%
(5%)
–%
(2%)
(22%)Restructuring
$500
• Reduced volume across all portfolios
• RE, Mortgage and U.S. Consumer volume limited to commitments
• Limited BD activity assumed
– Santander/Interbanca deals executed Jan. ’09
– ANZ Mortgage $1.5B closed Feb. ’09
• Enhanced collections activities
• Capital bi-monthly reviews
– Volume pipeline
– Disposition activity
– Alternate funding
Outlook
144
2009 originations and collections
Originations
$97$84
+13B
� Assumed sales/securitizations reduced to $25B (19%) … $10B in 1Q
� Assumed R/E equity sales reduced to $3B (41%)
� Actual collections will pace new originations
• Planned volume:– Consumer: $125 - includes
revolving credit
– Commercial: $55
• Monthly pricing reviews
• Pricing floors with minimum target ROIs
• Platform sales potential upside to volume and/or collections
Sales/collections
Volume
$108
$96
+12B
Volume
1st half 2nd half
($ in billions)
Sales/collections
Sales
Collections
Platform ’09YTD ROI
Americas ~2.9%Asia ~2.5%Europe ~2.4%
Banking ~2.3%EFS ~8.4%GECAS ~3.8%
73
145
Recent deals in core segmentsDeal size Deal typeBusiness FinancialsCustomer benefit
Americas,Healthcare Financial Services
Senior loan for a medical device customer
$89MM ($22MM hold)
Fast turn-around thanks to GE’s Healthcare domain expertise
3.2% ROI
Americas,Corporate Lending
Working capital facility for a global chemical customer
$175MM Closed deal in 25 days 3.2% ROI
Strong customer value delivery at high returns for GE Capital
Americas,Restructuring Finance
Asset-backed DIP finance for a paper & packaging customer
$100MM 9.7% ROI Provided a wing-to-wing solution in a quick turn-around time
EnergyFinancial Services
49% limited partnership with an Oil & Gas producer
$150MM Maintained pipeline development program at reduced debt
11% ROI
GECAS Aircraft sale leaseback and spare parts for a leading airline
$290MM Provided liquidity 3.7% ROI
Global BankingSME Financing
Short-term, line for a CEE energy customer
$13MM Improve working capital management
11.7% ROI
146
25%19% ex-FX
SG&A cost($ in billions)
11
22
33
Focused approach
Organization structure and headcount re-sizing… ~$1.0B
�Geographic consolidation
Sizing and indirect spending … ~$1.0B
�Driving lower roof-tops
�Lease, outside services, legal, sourcing and consultant costs
Business exits … ~$700MM
�Closing/exiting underperforming/non-strategic platforms
Lean and competitive structure … $1.2B more out since 12/08 (ex-FX)
1.3 1.2
5.6
5.3
4.0
7.1Direct
Indirect
$14.0
Operations
$10.5
2008 2009Outlook (ex-Acq.)
(C&B)
$2.7B
FX 0.8$11.3
74
147
Run-off/restructure redeployment(ENI - $ in billions)
Game plan
� Equipment Services
� Consumer mortgages
� ~15 Consumer/Commercial platforms
� Manage investment down ~$70B 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
$103
2008 2009 2010
Focused organization withstrong leader and clear charter
2011
~$80
~$60
~$35
$23B $20B $25B
~$70B investment
Reinvestin core
Pay downCP & LTD
2%-6% ROI Saferfunding model
Reduction:
Portfolio
OutlookOutlookOutlook
148
Recent dispositions – $23B ($ in billions)
Sales ENI Buyer Closed
Japan – Personal Loans $5.9 3Q’08
Office Imaging 0.5 2Q’08
Healthcare – Practice Solutions 0.8 4Q’08
Corporate Card 1.3 1Q’08
Australia Mortgage 1.5 1Q’09
Partnership Marketing Group 0.4 2Q’08
Austria 1.7 1Q’09
Finland 1.7 1Q’09
U.K. Unsecured 5.6 1Q’09
Germany 3.4 4Q’08
Region
Reduced assets + exited ‘challenged’ markets
75
149
‘Red’ assets process• Frequency: BD leaders bimonthly reviews with senior leadership
• Rigorous pipeline review & status of ‘red’/‘yellow’ assets …Resources working transactions and structures
• Consideration of asset swaps, JV’s, partial or full dispositions
• Content for review:
– Summary metrics of deal activity
– Active divestitures
– Immediate visibility into status of
all deals
Pipeline Red/Yellow Status Prime the Pipeline
– Complete overview of ‘red’ &
‘yellow’ assets
– Recap of most current strategic
assessment
– Rack & stack process
– Creative structuring
– Market feedback
– Preparing platforms for sale
GE Capital
150
Operating GE Capital
11
22
33
Rigorous operating mechanisms
Controlled Capital allocation
– ENI to $500B or less
– Turnover to higher returning volume
Delivering cost out
Driving asset reallocation
– ‘Red’ assets
– Lower leverage/higher returns… Mortgage
44
76
151
Financialupdate
152
Commercial portfolio
- Real Estate $0.7 $2.4 $3.6
- Aviation and Energy 0.3 0.4 0.7
- Mid-market lease/lend 1.5 2.0 2.6
- Other Commercial 0.3 0.5 1.5
Consumer portfolio
- U.S. 4.3 5.1 5.7
- Non-U.S. Mortgage 0.6 1.2 1.6
- Other Consumer 1.9 2.2 2.7
Management planning 1.0 – –
Total ~$10.6 ~$13.8 ~$18.4
Summary losses and impairments($ in billions)
Originaloutlook
Estimated Fedbase case
Capital Finance earnings ~$5B ~$2.0-2.5B ~$0
Estimated Fedadverse case
77
153
Stress summary credit costs vs. impairments
Real Estate $0.3 $0.4 $0.7 $0.9 $1.5 $2.4 $1.0 $2.6 $3.6
Aviation/Energy 0.1 0.2 0.3 0.1 0.3 0.4 0.1 0.6 0.7
Mid-marketlease/lend 1.5 – 1.5 2.0 – 2.0 2.6 – 2.6
Other Commercial – 0.3 0.3 – 0.5 0.5 – 1.5 1.5
U.S. Consumer 4.3 – 4.3 5.1 – 5.1 5.7 – 5.7
Non-U.S. Mortgage 0.6 – 0.6 1.2 – 1.2 1.6 – 1.6
Bank/JV/Other 1.9 – 1.9 2.2 – 2.2 2.7 – 2.7
Mgmt. planning 1.0 – 1.0 – – – – – –
Total $9.7 $0.9 $10.6 $11.5 $2.3 $13.8 $13.7 $4.7 $18.4
Total
Original outlook
Creditcosts Impairments Total
EstimatedFed base case
Creditcosts Impairments Total
EstimatedFed adverse case
Creditcosts Impairments
($ in billions)
154
Estimated stress impact
Originaloutlook
Estimated Fedbase case
Estimated Fedadverse case
a) Includes capital contribution
Pretax, pre-provision ~$13.3 ~$11.1 ~$9.2
Credit costs 9.7 11.5 13.7
Pretax 3.6 (0.4) (4.5)
Capital Finance net income ~5.0 2.0-2.5 ~0
GECC Corporate items (0.2) (0.2) (0.2)
GECC net income ~$4.8 $2.0-2.5 ~($0.2)
Estimated:
Fixed charge coverage a) ~1.52X ~1.32X ~1.19X
($ in billions)
78
155
Estimated credit costs vs. estimated Fed 1 yr. ‘adverse’ loss assumptions
12/31 financingrec. net of reserves
2009outlookloss rate
EstimatedFed baseloss rate
EstimatedFed adverseloss rate
1 yearestimated Fed a)
loss rates
Real Estate $46 0.61% 1.94% 2.15% 2.95%
Aviation/Energy 24 0.28% 0.41% 0.70% n/a
Mid-market lease/lend 163 0.94% 1.22% 1.59% 1.57%b)
U.S. Consumer - Card 12 16.31% 18.91% 21.33% 9.35%
U.S. Consumer – Sales Finance 14 11.14% 13.71% 14.98% 4.95%
Non-U.S. Mortgage 59 1.09% 2.05% 2.76% –
Other Non-U.S. Consumer 50 4.18% 4.71% 5.71% –
Total GE Capital Finance $368 2.37% c) 3.13% 3.73%
Total GECC $371
Memo:
- U.S. Construction loans 10.60%
- 1st lien residential 3.90%
- Home Equity/2nd’s 6.15%
($ in billions)
None
None
None
GECC
a) Derived from Goldman Sachs Equity Researchb) C&I loans used for leveraged loans, “other leases/loans” for equipmentc) 2.63% including $1B management planning additional losses
156
Top bank 3σ stress
• Stressed $266B financing receivables in proprietary model
• For $102B non-U.S. consumer receivables assumed growth in loss rates 50% higher than U.S.
• Scenario
– 9.4% peak U/E 2Q’10 (4Q’09 9.2%)
– 30% peak to trough housing decline
• Stressed 3 std. to 95% confidence
• Did not specifically stress assets beyond financing receivables
2009 outlook Losses & impairments
• 2008 back-testing of their results vs. actuals– 15% lower than modeled
3rd party 3σσσσstressed
GECCadversecase
$368BFinancing
receivables$14.5B
$13.7B
3rd party 3σσσσ stress within 5% of adverse stress of financing receivables
79
157
TCE/TA ratio a)
5.9% b)
GECC4Q’08
BAC4Q’08
WFC4Q’08
Citi4Q’08
JPM4Q’08
3.4%2.1%
1.1% 1.3%
Tier 1 common ratio
6.9% b)
GECC4Q’08
6.5%
4.4%3.1%
2.3%
TCE/Risk weighted assets a)
6.0% b)
5.4%
2.4%
1.2%
2.7%
RWA/ Total Assets 93%61% 51%84%72%
GECC4Q’08
GECC’09
AdverseStress
Key ratios – GECC
6.1% c) 7.1% c)
GECC’09
AdverseStress
6.2% c)
GECC’09
AdverseStress
4.9%5.8%
5.0%
BAC4Q’08
WFC4Q’08
Citi4Q’08
JPM4Q’08
BAC4Q’08
WFC4Q’08
Citi4Q’08
JPM4Q’08
• Strong tangible equity ratios even in adverse case
– Ratios improve vs. pro-forma 4Q’08 in adverse case due to balance sheet shrinkage
• Tier 1 common ratio strong in adverse case, well above 5.5% estimated regulatory target post stress
• Tangible equity reflects $5.3B unrealized loss on investment securities
c) Assumes no changes to FX and level of unrealized losses
b) Adjusted for equity infusion & CTA/OCI impact
a) TCE: Book equity less preferred equity, goodwill & intangibles; TA: Total assets less goodwill & intangibles
Source: Federal Reserve Y-9 and/or SEC 10-K filings for 4Q’08; No pro-forma adjustments across peer group
158
Financing receivables reserve methodology
Accounting model Methodology
FAS 5• Formulaic calculation for smaller
balance homogeneous loans• Estimate of incurred losses imbedded in
portfolio at a point in time– Not life losses or future losses not
yet incurred
FAS 114• Specific reserves on individual loans
deemed impaired
FAS 5• Formulaic calculation of losses
embedded in portfolio for whicha default or loss event has beenincurred but not yet observable
Consumer• Primarily roll rate models
• Write-off policy
– Closed-end installment – 120 days
– Revolving – 180 days
– Mortgage – 360 days
Commercial• FAS 114
– Specific credit or collection evaluation approach
• FAS 5
– Primarily static pool model applying historical loss curves
– PD x LGD history applied to loans individually determined non-impaired
4Q’08
$371B
Aviation/Energyloans
Real Estatedebt
Corporateloans
Franchise/Other
U.S. Consumer
Non-U.S.Mortgage
OtherConsumer
Mid-Marketlease/loan
Other
$226B
$145B
Each methodology incorporates current trends and conditions and other observable environmental factors
80
159
Non-earning reserve coverage
Commercial
4Q’08Non-earning
4Q’08Reserves
Exposure
Collateralvalue on
remainingexposure
Loans inrecovery/workout
Expect fullrecovery
100%recovery
($ in billions)
$3.2
$1.7
228%coverage
1.1
0.5
0.8
0.8
Estimatedloss exposure
160
Non-earning reserve coverage
Consumer
4Q’08Non-earning
4Q’08Mortgagereserves
EstimatedMI
Estimatedcollateral
value
Mortgage non-earnings
Non-mortgage
$3.2non-mortgage
reserves
($ in billions)
$4.7
231%coverage 133%
coverage
1.4
3.3
0.2 $0.4
1.8
0.3
Cure
1.0
Estimatedloss
exposure
81
161
U.S. Consumer
- U.S. credit cards $12.7 6.30% 3.4% $238 7.8% 7% 7.8% x 12.7
- Residential mortgages - - - $1,078 2.3% 39%
- Auto - - - 2%
- Student loans - - - 1%
- Sales finance/other 18.3 5.46% 4.9% 580 1.7% 9% 1.7% x 18.3
31.0 5.81% 8.4% 1,896 3.1% 59% 3.94%
U.S. Commercial
- Real Estate debt 28.3 0.71% 7.6% 43.1 0.67% 0.67% x 28.2
- Real Estate construction 0.6 0.79% 0.2% 13.1 9.35% 9.35% x 0.6
- Commercial loans 33.1 0.78% 8.9% 231.1 1.01% 1.01% x 36.0
- Commercial leases 43.3 1.03% 11.7% 22.4 1.0% 1.00% X 43.3
$105.3 0.87% 28.4% $1,170 2.0% 36% 0.96%
Financing receivables vs. top U.S. banks
GECC
ReservecoverageReceivables
%Portfolio
($ in billions, as of 4Q’08) Top banks average a)
ReservecoverageReceivables
%Portfolio
Top bankscoverageGECC assetcomposition
a) Consumer data avg. of Top 3 BanksReal estate data source Top 5 Bank, loss coverage est. split construction vs. non-construction Commercial loans and leases data source Top 5 Bank
17%
29%
U.S. reserves comparable
162
GECS investment securities($ in billions)
Diversified, predominantly long term debt-based portfolio
12/31/08
ABS
RMBS
20
U.S.gov’t.
3Non-U.S.
gov’t./corp. Equity
1
$41B
U.S.corporate
1
2
4
CMBS 2
Retainedinterests
6
2
State & Muni
� Assets primarily support the run-off insurance operations long term liabilities and guaranteed investment contracts
� We do not have debt securities classified asFAS 115 HTM
� $3.1B insured by monolines – $2.2B FSA, MBIA,Ambac; $0.7B FGIC
� $8B asset-backed securities; $1.3B subprimeexposure ($1.1B wrapped by monolines) – no CDO’s
� U.S. corporate debt :�70+% investment grade�600 Companies, 60 >$100MM book value� Largest single exposures Fannie & Freddie $0.8B
in total, Wells Fargo $0.3B, rest $0.2B or less
82
163
Investments
• Compare fair value to book value; Is fair value <book value?
–68% of portfolio priced via market price or pricing services, other non-binding broker quotes, or internal models
Measure
Evaluate
Test
• Evaluate underlying issuer or cash flows
–Debt securities – analyze 8 credit-related and financial performance criteria
–Asset backed securities – run cash flow recoverability analysis
–Consider monoline wraps and ability to pay claims
• Challenge pricing service for a sample of securities; confirm process
• Confirm cash flow assumptions based on current market information
• Compare subordination of our holding; compare to expected losses
Conclude
• Corporate reviews of all securities with unrealized loss >$5MM and>6 months underwater OR <6 months underwater and >20% decline, regardless of test result
• Determine other than temporary impairments
• GE Corporate Audit Staff and KPMG audits
$1.4B pretax impairments in 2008 … estimated $0.7B at risk for 2009
Impairment review process
164
GECC Goodwill($ in billions)
FAS 142reporting units
Consumer $9.1
Commercial Lendingand Leasing 12.6
Real Estate 1.2
Aviation 0.2
Energy Financial Services 2.2
GECC $25.2
Goodwillas of 12/31/08 Methodology/frequency
• Tested for impairment annually and whenever events or circumstances make it more likely than not that fair value < book value
• If reporting unit fair value < book value, then must fair value each identified tangible and intangible asset. Goodwill impaired when implied fair value < goodwill book value
• Fair value of reporting units estimated using discounted cash flow method; corroborated with market multiples, when available
• Retesting reporting unit goodwill for impairment in 1Q’09
– No impairments indicated
– Continuing to monitor
83
165
Hyundai – Korea 43% $3.2 Stable Low
Garanti Bank – Turkey 21% 1.9 Outperform Low
CAMGE – Spain 50% 1.3 Stable Low
Bank of Ayudhya – Thailand 33% 1.1 Stable Low
GE Nissen – Japan 50% 0.9 Stable Low
BAC International – C. America 50% 0.7 Stable Low
Dogus GE BV – Romania 50% 0.5 Stable Low
Colpatria – Colombia 50% 0.3 Stable Low
Brunswick/Polaris – CFS 50% 0.3 Stable Low
Southern Star (LP) – Kentucky 60% 0.3 Outperform Low
Cosmos Bank – Taiwan 23% 0.3 Challenged Medium
All others 8.5 100+ partnerships, avg. $50 investment
$19.3
GECC Associated companies($ in billions)
Investment Holding4Q’08
Investment a) Performance
View ofimpairment risk
as of 2/09
a) $18.7 GECS
166
Rigorous process for evaluating asset impairments
• All FAS115 assets reviewed quarterly for other than temporary impairment
• Multiple layers of review:
– Business unit
– Capital Finance
– Corporate accounting
– CAS/Auditors
• All equipment coming off lease evaluated for impairment
• All annual reviews updated if there is change in assumptionsor circumstance
(GECS $ in billions)
Accounting models utilized are prescribed
Rigorous process
<2% assets subject to mark-to-market
Equities-trading $0.8
FAS133 hedges –Retained interest 1.8(Consumer)
4Q’08 assets
CMBS $–
Assets held for sale 7.7
4Q’08 assets
-Money 3.1-Real Estate 0.3
-Other 4.3
Assets reviewed for impairment
4Q’08 assets FrequencyPrimary
acc’ting. model
Real estate owned $36.7 At least annually FAS144
Cost & equity method inv. 21.6 At least annually APB18/FAS115Retained interest 4.6 Quarterly FAS115
Debt securities 12.1 Quarterly FAS115($8B Trinity)
Equipment leased to others At least annually FAS144- Aircraft 32.3
- Equipment 27.3Goodwill/intangibles 29.0 At least annually FAS142/144
GECS Insurance securities 22.0 Quarterly FAS115
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Summary
We follow the appropriate accounting guidelines
Our reserves are very comparable to banks in similar asset categories
We are a secured lender
We do not see significant impairment risk in goodwill or associated companies
We have sufficient capital even under adverse stress tests
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11
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GECC Summary+ Outlook
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Primary questions … the answers� Commercial Real Estate
We will experience lower earnings through this cycle, but believe we have it covered in our own business framework
� What is the risk in U.K. mortgage? We expect credit losses will increase, but mortgage insurance and operational rigor should help mitigate the impact to a manageable level
� What is the risk in Eastern Europe? These are long established franchises. We expect credit losses to increase, but not
significantly higher than the rest of world
� What is the risk in U.S. Consumer? We see a tough cycle driven by unemployment in 2009, and are planning for higher losses in line with the industry
� Losses/Impairments/ReservesWe apply appropriate accounting policies. Our reserves are adequate for current economic conditions
� CapitalBased on stressed losses, capital appears adequate. Further options available if conditions worsen
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GE Capital future
OtherEnergyGECAS
Consumer
Real Estate
Commercial
Assets $637B $400-450
ROI 1.3% 1.5-2%
Core75%
Verticals 15%
Today Future
Banks 10%
Why to like this business
• Deposit funding with potential for growth
• High margin new business
• Consolidation + partnership potential
• 25+ year track record
• Leverage GE brand/competencies/synergy
• Leasing and asset management intensive platforms advantaged vs. banks
• Direct origination to mid-market
• Core underwriting skills
• Fewer FinCos
• Bank consolidation … historically positive
Banks
Verticals
Core
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2009 Summary
Environment much tougher – we think GECC is prepared
• Strong liquidity/limited refinancing risk today
Thoughtful view of stressed losses … working aggressively
Revised 2009 outlook – higher losses, but more cost-out
Intense focus on risk management, work-out and restructuring
• Rigorous asset management/manage risk
GE Capital business model robust as the economy recovers
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Closing
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How to think about GE Capital riskEven under Fed adverse stress tests, GE Capital is approximately breakeven in 2009 and we should not need to inject additional capital
Framework can accommodate ~$40B of losses over 3 years without requiring additional capital
Losses and impairments $10 $14 $18
Net income $5 $2 $0
Fixed charge coverage a) ~1.52 ~1.32 ~1.19
Tangible equity ratio 6.9% 6.4% 6.1%
Op plan Fed base Fed adverse
Cases
Base plan $10B ~$30B ~$40B
20082009/2010
Cumulative3 years
Potential losses & impairments
(a- includes ~$B equity infusion
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Sources of contingent capital
We have $34B of tangible equity after $9.5B infusion
Other potential sources
• Announced dividend cut provides additional capital
• Ability to control new originations/GECC asset sales
• Ability to monetize assets or take responsibilityfor GECS liabilities
Current outlook does not require external capital
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Company update
Energy Infrastructure ++ �
Tech. Infrastructure + �
NBCU 0/‒ —
Capital Finance $5 Profitable
Corporate Flat �
Dec. 16 1Q Comments
• Global growth
• Aviation on track• Healthcare pressured
• Advertising market weak• Tough comps
• Strong cost reductions • Tax credits
• C&I/pension pressure• Costs lower
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� Running GE to be safe and secure over the long term‒ Liquidity position is extremely strong‒ Completed 93% of our 2009 planned long term funding
� Have sufficient capital and alternatives to weather adverse economic conditions
� Running GE with intensity‒ Resizing our cost footprint in a meaningful way‒ Management team is focused on delivering cash‒ Continuing to invest/position company for long term growth
� We expect GE Capital will be profitable in 1Q’09 and 2009
� We are committed to GE Capital
GE will come out of this cycle a stronger, more focused and competitively advantaged company
Key messages
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