GE Consumer Finance. Dave Nissen President and CEO, GE Consumer Finance Mark Begor President and CEO, GE Consumer Finance Americas

Transcription

1 GE Consumer Finance Dave Nissen President and CEO, GE Consumer Finance Mark Begor President and CEO, GE Consumer Finance Americas October 29, 2003 This presentation includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global economic, business, competitive, market and regulatory factors. More detailed information about those factors is contained in GE's filings with the Securities and Exchange Commission. This presentation includes certain non-gaap financial measures as defined under SEC rules. As required by SEC rules, at the end of this slide presentation we have provided a reconciliation of those measures to the most directly comparable GAAP measure and a copy of the relevant slides is available on our investor relations website. Strong Asset Growth Record Served Assets ($B) ~$100 ~18% AAGR $48 $54 $58 $65 $80 $27 $30 $ E Consistent Growth Through Cycles Nissen Analyst Final 2

2 Earnings History Net Income ($B) Double-Digit Growth At 30+% ROE 20+% AAGR European Slowdown $ War / SARS/ War Slow Growth Uncertainty/ Stagnant Economy 9/11 Recession Asia Currency Crisis Japan Recession U.S. Growth Economy $ E Consistent Growth Through Cycles Nissen Analyst Final 3 Charter Net Income ($B) 1 Double-Digit Asset and Profit Growth 2 Develop Consumer Marketing Zealots 3 Risk Management Vigilance 4 Execute in a Huge Marketplace ($14T) E A Strong, Growing Consumer Finance Business Nissen Analyst Final 4

3 Industry Landscape Consumer Market = $14Trillion Industry Returns Continues To Be Strong ROA % Personal Loan 735 Secured Debt 1,350 Auto via Dealers 1, Cards 925 Mortgages 10, Huge Industry With Strong Returns Nissen Analyst Final 5 What We Do Broad Product Line Credit Cards Personal Loans Multiple Distribution Channels Retailers Mail Target Customers Sales Finance Telemarketing Mortgages Branches / Partner Points Auto ATM / Kiosks Insurance Internet Nissen Analyst Final 6

4 Products and Reach Product Lines Served Assets Reach Personal Loans 18% Auto 21% Sales Finance 16% 23% Cards Customers 103MM Served Assets $95B ATMs 185M Commercial 3% 19% Mortgages Retail Outlets 140M Large and Diverse Customer Base Nissen Analyst Final 7 Business Overview Served Assets Net Income Australia Japan Japan Americas 26% 7% 10% 5% Asia Australia 6% 20% 3% Asia 52% Europe Americas 34% 37% Europe A Global GE Business Nissen Analyst Final 8

5 2003 Acquisitions FNB - $8.2B Conseco - $2.7B Allbank - $2.3B GC Card - $1.1B AMAG - $1.0B Auxifina - $0.3B ~$16B Assets YTD Nissen Analyst Final 9 Acquisition Window Good Geographic Spread of Opportunities - 16 Deals In Pipeline; 4 Deals In Due Diligence Solid Pipeline Heading Into 04 Nissen Analyst Final 10

6 Post Acquisition Growth ($B) Post Acquisition Income Growth Acquisition Year Income $1.3 $0.8 $0.4 $0.5 $ $ $ $ $ % AAGR '95 '96 '97 '98 '99 '00 '01 '02 '03 E We Don t Buy Growth We Grow What We Buy Nissen Analyst Final 11 Core Growth Focus Broad Distribution Cross-Sell / Up-Sell Consumer Marketing NPI Double-Digit Core Growth 4 Years Running Nissen Analyst Final 12

7 Global Product Offerings: NPI Czech Ger Switz Rep Sweden Norway Spain Indonesia UK Denmark France Austria Poland Portugal Japan Australia Hungary Ireland India Brazil Mexico Product Lines Hong Kong Thailand US PLCC / Cards Bank Cards Sales Finance Personal Loans Mortgages Auto Loan / Lease Cash Access Insurance / PPI Savings / Deposits Life General PURCHASED ADDED OPPORTUNITY Huge Opportunity to Expand Global Product Offerings Nissen Analyst Final 13 Risk Management World Class Risk Management Apps, Collections and Behavior Scoring Rigorous Credit Line Management High Tech Collection Centers Risk Dashboards for Continuous Portfolio Monitoring ~7,000+ Risk and Collection Professionals Strong Reserving Policies 3Q 03 Reserves up 40% to $3.7B from 3Q 02 Revolving 180 Day = Full Reserve / W/O Closed End 120 Day = Full Reserve / W/O Strict Re-Aging Policies Great Long-Term Performance World Class Risk Management Critical To Success Nissen Analyst Final 14

8 7% 30+ Delinquencies GE Consumer Finance 10% U.S. 6% 5% 4% 5.48% 4.89% 5.37% 4.74% 5.56% 5.58% 4.89% 4.94% 5.84% 5.81% 5.11% 5.08% 5.62% 4.91% 9% 8% 7% 6% 5% 6.71% 6.25% 6.84% 6.61% 6.85% 6.46% 5.96% 3% 30+% 30+% excl igroup 4% 3% 2% 2% Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Jan Mar May Jul Sep Nov Jan Mar May Jul Sep * Excludes THD % International 20% igroup 6% 5% 4.21% 4.22% 4.25% 4.42% 4.56% 4.88% 4.51% 15% 10% 13.98% 14.04% 14.04% 12.90% 13.06% 13.46% 12.83% 4% 3% 5% 2% 0% Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Jan Mar May * Excludes igroup Asset Quality Stable Jul Sep Nov Jan Mar May Jul Sep Nissen Analyst Final 15 Loss Trends U.S. Loss Rate % International '99 '00 '01 '02 '03E A Broad Range of Product Risk Profiles Higher Spreads Compensate for Higher Losses Sales Personal Mortgage Auto Finance Loans Cards Loss Rate % Losses Have Been Stable Nissen Analyst Final 16

9 Productivity OP & Admin / ANI % 7.0% 6.9% 6.1% 5.7% 5.3% $2.1 $2.3 $2.6 $2.9 $3.1 Assets / Head ($MM) YTD Consistent Productivity Gains Every Year Nissen Analyst Final 17 Compliance Compliance Leadership in Every Country Compliance Culture Spirit & Letter Ombuds System Key Priority of Acquisition Integration Telephone Follow Ups Secret Shoppers / Secret Audits More Than 200 Legal, Compliance and Audit Personnel Ongoing Corporate Audit Staff Involvement Nissen Analyst Final 18

10 GE Consumer Finance Americas Becoming a Broad Consumer Finance Company Our Priorities 1. Drive Retail Finance 2. Transformation Into Consumer Finance More Retailers Penetration/New Accounts Manage Losses Drive Productivity Leverage Large Base of Touchpoints Adding New Products Dual Card, Personal Loan, Home Finance Drive Core at Retail Build on Touchpoints With New Products Nissen Analyst Final 20

11 Expanding Distribution Through Retailers 100+ Partners + 90,000 Dealers Recent Extensions / New Deals Wal-Mart U.S. Wal-Mart Canada Sam s Club Canada Lowe s Commercial & Consumer Bebe Brooks Brothers Meijer Carrefour Yamaha Grupo Gigante Grupo Mercado Building Retail Relationship And Source Of Customers Nissen Analyst Final 21 Grow Retail Card Offerings Served Assets $25B $18B 10-15% Today 2006F Key Growth Objectives Win More Deals Extend Current Retailer Relationships Expand Functionality Cash Access Debt Cancellation Improved Statements Youth & Hispanic Grow Canada & Mexico Double-Digit Growth From Core Business Nissen Analyst Final 22

12 Drive Sales Finance Served Assets $12B $6B 25-30% Key Growth Objectives Expand Relationships Integrate and Grow Conseco Drive New Market Growth Healthcare, Power Sports Today 2006F X-Sell Opportunity And New Products Great Growth Business Huge X-Sell Opportunity Nissen Analyst Final 23 Drive Healthcare Sales Finance $83B Industry Insured $30B Self Pay $53B Dentists Orthodontists Veterinaries Optometrists Weight Loss Clinics Patient Financing Of Self Pay Treatments 02 CareCredit & 03 Citi Acquisitions Strong Relationships In Dental 40 Medical Associations Endorsements Exploring New Industries Dental Served Assets $0.8B $0.5 Vision $0.1 Vet / Other $0.2 Today Growth 04F 44% 35% 82% 59% Dealers 40,000 27,000 6,000 7,000 Expanding In High Growth Healthcare Industry Nissen Analyst Final 24

13 Risk Management Loss Rate % Key Risk Levers 6.1% 6.5% Excess Fraud 6.3% Increase Approval Rates With Consistent Credit Standards Continuous Re-Scoring Of Portfolio Drives Stable Credit Quality Manage Credit Lines In All Economies '01 '02 '03E Driving Collection Effectiveness Through Capacity & Strategic Models Holding Losses In A Tough Environment Nissen Analyst Final 25 Credit Quality Mix % Of Assets 80% 60% Low Risk 40% 20% 0% Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Medium Risk Higher Risk Advanced Risk Tools Resulting In Stable Credit Quality Nissen Analyst Final 26

14 Productivity Cost / Active Account Core Business $31.32 (7%) Driving Core Productivity $ Activity-Based Costing 2. Low-Cost Countries 3. Technology & Op Excellence 03E '04F '05F 7% Reduction In Cost/Active Account Fueling New Product Growth Nissen Analyst Final 27 U.S. Consumer Finance Landscape Assets ($B) Growth Areas Products Revolving Non-Revolving Real Estate $7,100 $93 $610 $966 $5,431 PLCC Bank Card Loans Mortgage/ Home Equity Our Focus Product Attractiveness L M H Bankcard Mortgages Auto Vacation Education Dual Card Home Equity Personal Loans Boats / RVs Manuf. Housing GE Focus Private Label Sales Finance L M H GE s Expertise Huge Market With Big Growth Potential for GE Nissen Analyst Final 28

15 Using Customer Touch Points To X-Sell New Products Direct Mail X-Sell Channels Out-Bound Calls Customer Service/ Collections Offers Statements X-Sell New GECF Products Dual Card Personal Loans Convenience Checks Cash Access Debt Consolidation Home Equity & Secured Debt IVR Kiosk In Store Multi-Product Relationships Core GECF Capability Nissen Analyst Final 29 Expand Product Offerings Dual Card Private Label Entry Card Lower Lines Promo s Roll-Out 1. Convert Inactives 2. Upgrade Actives Dual Card Expanded Functionality Not Just Co-Brand Loyalty / Rewards Larger Lines Cash Access 3. POS Integration 4. Dual Application 5. Selective Direct Mail Right Card for Right Customer... Dual Card To $5B By 06 Nissen Analyst Final 30

16 Expand Product Offerings Personal Loans 1. Retailer Branded Big Ticket Purchases... Kitchens, Decks, Electronics, Furniture Roll-Out Actives + Inactives 44MM 48MM POS Offers By Retailer (Months) Offer? Offer? Offer? 2. GE FlexPlus X-Sell Sales Finance Offers In Life Cycle Direct Mail Customer Service Offer 1. Direct Mail 2. POS / Dual Application 3. Customer Service Offers 4. Statement Messages $3-4B Assets By 06 Nissen Analyst Final 31 Expand Product Offerings Secured Debt Cross-Sell Models Highly Analytic PLCC and Sales Finance Customer Base Target Roll-Out Test Now Closing Outside Network Of Lawyers, Appraisers, etc. Close X-Sell Sell Telesales Large, Centralized Locations Best Practice Compliance X-Sell Secured Credit To Our Customer Base Nissen Analyst Final 32

17 Our Vision For Consumer Finance Acquire Customers Finance Retail Sales Build on GE Touchpoints X-Sell New Products 21MM Cards Issued Dual Card 86MM Cust. Service Calls Retailer + Dealer Partnerships Personal Loans 550MM Statements 15MM Letters 49 MM Collection Calls (In/Out) Home Equity Line Extensions Cash Access Credit Protection 10MM Hits From 1 Product / Customer To Multi-Product Focus Nissen Analyst Final 33 Financials Americas Served Assets ($B) Net Income ($MM) AAGR = 18-22% Core Growth 12% $28.1 THD 7.2 $20.9 '02 # Active A/Cs (MM) 45 $ $ $627 Conseco $23.4 '03E 44 ROE '02 '03E 46% ~50% Continued Asset and Earnings Growth Nissen Analyst Final 34 17

18 Transformation Into Broad Consumer Finance Player $26B Private Label/ Sales Finance Today $50B Home Fin Personal Loan Dual Card Private Label/ Sales Finance Future Our Focus Consumer Life Cycle # Products/Customer X-Sell Rate Customers & Partners Product / Retailer P&Ls Strong Growth Potential Still Small in Huge Market Nissen Analyst Final 35 European Growth Served Assets 44% Core Growth Consumer... Launched Dualcard Mortgage... Launching Start-ups Acquisitions... Deals Completed UK Germany Swiss Poland Belgium Nissen Analyst Final 36

19 Growth - Eastern Europe Strong Growth: Population (MM) Czech Republic 10 Hungary 10 Poland 40 Total 60 NEA s ($B) NI ($MM) 4.2B 40+% E 02 03E AAGR = 51% With Further Potential: GDP per Head Consumer Indebtedness Eastern Europe $4.7 M 7% EU Average 20.8 M 50% A Growth Engine in Europe Nissen Analyst Final 37 Europe: Productivity Ongoing Commitment... Opex to CV % OpEx / CV % 59% 63% Cetelem 2000A 2001A 2002A 03SI SI SI SI % 59.4% 89.1% 94.8% 80.6% 72.9% 68.6% Austria 93.1% 57% 51.6% Belgium 40.6% 39.8% 36.0% 32.5% Czech Republic 59.1% 49.6% 47.9% 45.6% 41.1% DOMs 40.7% 37.3% 37.8% 33.7% 35.2% 35.2% 34.9% 90.8% 64.8% 92.6% 54% 73.7% 68.7% 63.3% 74.5% MBNA 65.8% 71.0% 65.4% France 98.0% 57.0% 50.8% Germany 103.9% 54.9% 49.4% 81.2% 64.8% 45.6% 53% 48.4% Hungary -1.3% 63.2% 60.9% Ireland 43.2% 42.2% 66.2% 47.7% 52% 42.7% 31.8% 53.0% 50.3% 47.9% 42.4% 42.3% 39.0% 29.4% GECF-E 28.3% 29.0% Italy 61.5% 38.3% Poland GECB 56.1% 28.1% Poland HB Portugal Norway 88.1% 57.9% 28.4% 63.6% 69.7% 32.1% 42.9% 56.3% 30.2% 43.1% 61.1% 49% 30.2% 39.6% 62.3% 30.8% 36.7% 55.9% 30.3% 34.4% 48.8% 29.5% Sweden Auto Sweden 46.3% 67.2% 45.9% 72.0% 44.6% 69.5% 43.6% 64.3% 42.4% 47% 62.1% 38.8% 54.9% 38.1% 48.8% Denmark 37.0% 46.2% 47.9% 49.0% 48.4% 45.8% 41.1% Spain Auto 67.7% 72.2% 65.8% 70.8% 60.4% 52.6% 47.1% Spain Mortgage 353.2% 119.3% 70.3% 49.7% 34.8% 31.9% 38.0% 43% 35.2% Switzerland 53.9% 49.0% 45.6% 38.6% 38.2% UK Auto 43.1% 46.7% 65.2% 40.5% 38.8% UK Consumer 44.7% 43.4% 41.5% 47.6% 46.1% 44.1% 40.8% UK First National 37.4% 35.2% 31.0% 28.5% 34.7% 32.2% % 40% % UK igroup 76.9% 43.2% 40.9% 37.5% Europe HQ % % 379.6% % 171.9% GECF Europe 56.9% 57.0% 50.9% 49.3% 47.1% 43.6% 40.2% Citi Cons W-Eur '00 '01 '02 '03 '04 '05 '06 Acquisition Integration On Track Double Digit Productivity Served Assets / Head 15% Building Cross-Border Capabilities Increasing Focus 40% OpEx To CV % By 2006 Nissen Analyst Final 38

20 Europe: Risk Management Loss Rate % 1.4% 1.4% '01 '02 '03 E 30+ Delinquency 4.3% 4.3% 4.4% * Excludes igroup '01 '02 '03 Stable Portfolio Performance Nissen Analyst Final 39 Financials - Europe Served Assets ($B) Net Income ($MM) $25.9 Core Growth $33.2 ~10% $ Acq $36.3 AAGR = 31% $510 $671 $ '01 '02 '03E '01 '02 '03E # Active A/Cs MM ROE 31% 32% ~25 30% Growth, Productivity & Risk Vigilance Driving Strong Results Nissen Analyst Final 40

21 2003 Japan Performance $9.2B +1% ~$440MM (10%) Economy Continues to Struggle Lenders Dealing with Higher Bankruptcy / Loss Environment GE Loss Rate Up 164 bps to ~6.70% Served Assets 03E Net Income 03E ROE 40+% Taking Necessary Actions Core Assets/Earnings Down Tightened Credit Lines 35% More Collectors in 03 Implementing Global Best Practices Opportunistic Acquisition Environment (GC Card) Very Profitable Business Managing A Tough Environment Nissen Analyst Final 41 Japan: Strategy Summary 1. Become the Low Cost Player in the Market 2. Proactive Risk Management 3. Expand Breadth & Depth Branch Consolidation Back-office Centralization Dalian Outsourcing Risk Based Pricing Build Line Management Skills Upgrade Scores for Anti-BKO Visa / MC Acquisition (GC Card) Cross-Sell Debt Consolidation Creating A Sustainable Growth Company Nissen Analyst Final 42

22 Japan: Productivity Results E OP & Admin / ANI % 6.7% (70bps) 6.0% (30bps) 5.7% Comparison (Est.) NEA ($B) Kiosks Manned Branches EFT Opex/ ANI Citi $ , % Acom 14 1, , % Promise 12 1, , % Aiful 11 1, , % GECF-Japan 9.6 1, , % Takefuji 15 1, , % Source: 02 Yr. End internal estimates Nissen Analyst Final 43 Japan: Risk Management 4.30% 4.10% 3.90% 3.70% 3.50% 3.30% 3.10% 2.90% 2.70% 2.50% 5.0% 30+ Delinquency 4.00% 3.93% 4.03% 4.06% 3.68% 3.56% 3.33% Mar June Sept Dec Mar June Sept Annualized BKO % of Outstandings 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Delinquency And Bankruptcies Stabilizing Nissen Analyst Final 44

23 Financials Australia/New Zealand Served Assets ($B) Net Income ($MM) Core Growth ~20% $7.1 $6.0 AAGR = 37% $80 $93 $ $2.4 # Active A/Cs '01 '02 '03E MM '01 '02 '03E Loss Rate % 2.0% 1.9% 2.0% ROE 22% 24% ~25 28% Dual Card and Cross-Sell Re-energizing Core Growth and Margin Nissen Analyst Final 45 GECF Asia In 8 Countries Good Economic Recovery 3 Billion Population New Player in Dynamic Growing Market Nissen Analyst Final 46

24 Financials - Asia Served Assets ($B) Net Income ($MM) Core Growth 26% $5.3 $4.2 $2.8 AAGR = 50% $29 $46 $60-70 '01 '02 '03E '01 '02 '03E # Active A/Cs MM Loss Rate % 2.4% 3.5% 4.2% ROE 19% 21% ~21 23% Strengthening Resources Across Asia Nissen Analyst Final 47 GE Consumer Finance 03 Financials Net Income ~$ B ~20% ROE 30+% Assets ~$100B 25% Risk Management Loss Rate % U.S. 6.3% Int l 2.6% State of the Art Risk Management Productivity Reduce Expenses As % Investment 40 bps 6σ Process Discipline Acquisitions $16B Assets Core Acquisitions A Strong, Growing Consumer Finance Business Nissen Analyst Final 48