GE Commercial Finance Meeting
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Mike Neal GE Commercial Finance Overview Organized for faster growth and lower cost 90’s 2002 Today GE Commercial Consumer Commercial Infrastructure Industrial NBCU Healthcare MID -MARKET FINANCING Vendor Financial Finance Finance Commercial Commercial Services Commercial Dave Calhoun John Rice Bob Wright Equipment European Finance Bill Castell Structured Vice Chairman Vice Chairman Vice Chairman Vice Chairman Financing Equipment Finance Joe Hogan Finance Finance Sr. Vice President3 Dave Nissen Mike Neal Card Services Finance Group Healthcare Sr. Vice President Vice Chairman Global Finance Real – Aircraft Engines – Cons. & Ind’l. – Network – Diagnostic Consumer Estate – Energy – Plastics – Film Imaging – Oil & Gas – Silicones/Quartz – Stations – Biosciences Finance – Rail – Security – Ent. Cable – Clinical Sys. – Water – Sensing – TVPD – Info. Tech. –Europe –Capital Solutions Financial Equity GE Consumer – Energy Fin. – Fanuc – Sports/Olympics – Services Assurance Svcs. – Inspect Tech. – Parks – Aviation Fin. – Equip. Svcs. –Asia –Real Estate CONSUMER SPECIALIZED FINANCING 2002 Svcs. (GECAS) SPECIALIZED SERVICES GE Capital SPECIALTY INSURANCE –Americas –Corp. Fin. Svcs. SPECIALIZED SERVICES SPECIALTY INSURANCE Finance Employers Capital Reinsurance –Australia –Healthcare Markets Reinsurance Corporation Re-org Fin. Svcs. Global Process Mortgage –Insurance Solutions InsuranceInsurance GE Insurance Technology Rail Financial Services Services Guaranty Aviation Insurance Penske Truck Services Mod Space Leasing Fleet Trailer European Equipment Services Leasing EQUIPMENT MANAGEMENT GESeaCo Management GE Equipment Management From: To: Sub-scale vs. competitors Large global businesses with scale Redundant Back-rooms Common Back-rooms… lower cost Multiple faces to the customer One face to the customer A proven model for growth, simplification and lower cost GE Commercial Finance Overview 2005 / 2 1 / GE / Global Commercial Finance provider Capital Solutions Corporate Finance Over 1 million customers ~22,000 Employees 30+ Countries Real Estate Healthcare Financial Services 8,500+ Front-end Insurance Aviation Energy Services Financial Global presence, local underwriting expertise GE Commercial Finance Overview 2005 / 3 Strong net income and asset growth ($ in billions) Commercial Finance Assets Net Income ~$193B ~22% ROE ~$4.2B 1144% CCAAGGRR 1177% CCAAGGRR $59 $1.0 '96 '05E '96 '05E Insurance $32B ~$100B $0.8B ~$1B Consistent growth through good and bad economic times GE Commercial Finance Overview 2005 / 4 2 / GE / Commercial Finance Corporate Real Corporate Energy Financial Estate Financial Services Services Healthcare Capital Insurance Financial Aviation Solutions Services Services Provider of global commercial real estate capital and services Global provider of Innovative financial solutions across the entire supply chain Financing for working capital & capital expansion Provider of equipment, real estate and working capital financing to the global Healthcare Industry Global provider of Insurance and Reinsurance solutions Financing Global Energy, industrial and infrastructure development 1,300+ Commercial Aircraft – owned Group of businesses with small share in big markets delivering through the cycles GE Commercial Finance Overview 2005 / 5 Small in big markets Served available markets U.S. Europe Asia* 2% 0.8% 0.3% ~$6T ~$5T ~$4T *Developed Asia Source FDIC, FRB, ECB, BDJ, PBOL, BOK, RBA Despite scale, still very small share GE Commercial Finance Overview 2005 / 6 3 / GE / What makes us different AAA rated – ~22,000 world class resources Origination +Risk Management + GE Value Proposition • Largest direct origination • Very disciplined risk processes • Six Sigma strategy aligned team 8,500+ • Broad spread of Risk / Small hold with business imperatives • Broad product portfolio positions and customer requirements • Targeted focus with deep • World-class Risk Management • Use GE intellectual capital to industry knowledge Organization around the globe help our customers… share best practices • Unparalleled collateral • Key Risk leaders each with 15-25 knowledge and experience years experience and have • Simplifying businesses to serve our customers better • Highly motivated and experienced 2 cycles leveraged • Collateralized by assets we know • Access to “all GE” solutions • Acquisitive – M&A / integration • “Smart Tools”/digitized processes to expertise trigger increased surveillance • Tough Love “Industrial” approach to Financial Services GE Commercial Finance Overview 2005 / 7 How we grow… Commercial “Net Promoter Score” Excellence Lean Six Sigma enabling growth Driving organic growth Imagination Breakthroughs Enterprise selling – Delivering one GE solution to the customer Industry Industry and channel focused solutions Specialization Healthcare - Offering the total GE solution Geographic Expand in Europe Expansion Create one Commercial Finance in Japan Capital Originate to sell Markets Leveraging our front end resources Platform Strategic acquisitions Expansion Grow what we buy GE Commercial Finance Overview 2005 / 8 4 / GE / Business model delivers through economic cycles More Less Supply of Capital in market Approach Approach • Selective on book asset growth • Originate to hold… Grow • Higher off book volume on book assets • Originate to sell • Cheaper acquisitions • More fees • More spread Double Digit Income Growth Consistent growth through good and bad economic times GE Commercial Finance Overview 2005 / 9 Imagination Breakthroughs - Enterprise selling - Retention / Net promoter score 5 / GE / IB’s delivering organic growth IB New Enterprise Client Manager brings the full breadth of Enterprise Selling CF’s products and services making it easier for our customers Proactive program to identify customer life-cycle leverage Retention points to extend or replace maturing products Delivering value to 4 distinct “customers”: direct borrowers, CFS: Large Cap sponsors, investors and lead banks Utilize industry Domain Knowledge to develop New Product HFS: Hospital Growth Initiatives to meet changing Hospital needs Grow CF share of IT finance through better Coordination CF: IT Financing & Best-Practice Sharing across Multiple CF Platforms Growing Japan Coordinate CF resources to accelerate growth Embed affiliate sales to pull products through CF’s ‘anchor Dealer Solutions relationships’ adding depth and breadth GE Commercial Finance Overview 2005 / 11 Enterprise selling IB ~2,000 potential accounts identified Products: Dedicated • Equipment Finance Sales force • North America • Inventory Finance Industry expertise • Fleet • Europe • Working capital • Japan • Real Estate • Australia Leveraging 8,500+ Front-end across commercial finance Enterprise Selling Increase share of wallet… Currently 1.3 products / customer GE Commercial Finance Overview 2005 / 12 6 / GE / Enterprise selling IB Pilot Results Resources In Place • 325 accounts piloted • Single point of contact • Indirect relationships driving • Strong Product Set direct opportunities • Deep Industry Experience • $1.0B in new opportunities identified • Support Processes aligned • Easier to do business Enterprise Selling Increase share of wallet beyond 1.3 products/customer… Deliver full GE solution to our customers GE Commercial Finance Overview 2005 / 13 “Net Promoter Score” metric to IB drive customer loyalty Target… Listen… Understand… Act… Focus on key 6,000 Surveys to Drill down on Leverage segments date Promoters and Promoters Detractors Decision Makers Management Respond to Follow-up Consistent “Tree Detractors Key Influencers Structure” Address Non- Analytics Use GE tools Respondents CTQ-based customer segmentation to NPS is driving real change Progress monitored through regular Lean Six Sigma enabling growth improve targeting CEO reviews Origination Flexible Front Ends Focus Areas Baseline Scores Customer Insights P&L One Page Template Sample 1.Same Meeting Selling - driving Customer Needs Net Promoter Score By Segment Key Drivers per Value Tree CF Businesses $400B U.S. Equip. Financing Opportunity conversion RESPONSES Products 16% Consistent pricing Hospital DIC MGP 2.Simplification - creating capacity 60.0% 55.0% 100% 6 PROMOTERS 60.0% Quality Products 9-10 People 59% External Full range of products 37% Many Underwriting Lean Six Sigma Taking Hold PASSIVELY SATISFIED 25.4% 22.5% 30.0% Quote Process 21% Basic Needs Best-in-Class 7- 8 80 Value Processes • Some of everything 70% 100% Image 25% Application 20% Underwriting and •Every CF business in the game DETRACTORS 14.6% 17.5% 15.0% Process 4 1- 6 14% Approval 20% Portfolio •50 action workouts already conducted Responsiveness NPS 45.4% 42.5% 40.0% Process 60 21% Fewer Process Driven N= 130 N= 80 N= 40 Cost Closing Process Management • Speed & accuracy People OVERALL VALUE 7.99 7.48 8.10 49% Understand my Loan Servicing Process 18% • Reputation business N : 283 40 Availability 2 Driving Customer Value Focus Areas Status & Next Steps Fulfillment •CF easier to do business with • Willingness to lend Common OTR Few 20 Easy to do business •Improving speed and reliability Relationship Seekers Processes/Area to Current Target NPS • Action 1, Owner, Date Processes, Systems & • Relationship longevity 0 Improve -10 0 10 20 30 40 50 60 70 Metric Perf. Impact •Address customer issues faster • Flexibility & innovation Processes Speed • Action 2, Owner, Date Locations 0 • Action 3, Owner , Date Services Wholesale Trade Manufacturing Simplicity Lease, Loan COEs Transportation Construction • Etc. GE Commercial Finance Overview 2005