GE shares are now above $11 as the company is meeting investors for a “deep dive” into GE capital.
The company has put out a press release basically saying that GE Capital will be profitable in Q1 and for all of 2009 and that the company has fulfilled 93% of its long-term funding commitments for 2009.
“To give our investors further assurance and recognising the uncertainty of the current climate, we have stress tested GE Capital Finance using assumptions consistent with the Federal Reserve’s base case and a more severe adverse case, which contemplates unemployment peaking at 10% and GDP declining by more than 3% in 2009,” [GE Capital CEO Mike] Neal said. “Even under this more severe case, which would potentially cause our losses and impairments to increase significantly, GE Capital Finance would still essentially break even and not require additional capital.
“GE Capital Finance’s key capital ratios compare favourably to banks, including the important ratio of tangible common equity to tangible assets (TCE/TA),” Neal said. “With the recent $9.5 billion capital infusion by GE, GE Capital Finance will have a TCE/TA ratio of approximately 6%, which reflects a very strong capital base.”
The full event, along with sldes, can be found here.