GE 2012 Annual Report Download - page 54

management’s discussion and analsis
52 GE 2012 ANNUAL REPORT
The following table provides information surrounding selected ratios related to nonearning financing receivables and the allowance
for losses.
Nonearning financing
receivables as a percent of
financing receivables
Allowance for losses as a
percent of nonearning
financing receivables
Allowance for losses
as a percent of total
financing receivables
December 31 2012 2011 2012 2011 2012 2011
COMMERCIAL
CLL
Americas 1.8 % 2.3 % 36.8 % 47.7% 0.7 % 1.1 %
Europe 3.5 3.2 34.3 34.3 1.2 1.1
Asia 1.7 2.3 41.5 58.4 0.7 1.3
Other 8.6 2.5 11.5 36.4 1.0 0.9
Total CLL 2.4 2.6 35.5 43.8 0.8 1.1
Energy Financial Services — 0.4 — 118.2 0.2 0.4
GECAS — 0.5 — 30.9 0.1 0.1
Other 2.7 5.1 23.1 56.9 0.6 2.9
Total Commercial 2.1 2.3 36.0 44.3 0.8 1.0
REAL ESTATE
Debt 1.6 2.2 86.9 175.4 1.4 3.9
Business Properties 10.3 3.0 33.3 56.2 3.4 1.7
Total Real Estate 2.1 2.4 72.1 137.8 1.5 3.3
CONSUMER
Non-U.S. residential mortgages 7.7 8.1 18.7 19.0 1.4 1.5
Non-U.S. installment and revolving credit 1.2 1.4 278.1 272.6 3.4 3.9
U.S. installment and revolving credit 2.0 2.1 222.4 202.8 4.5 4.3
Non-U.S. auto 0.6 0.8 279.2 234.9 1.6 1.8
Other 4.3 5.8 49.0 47.5 2.1 2.7
Total Consumer 3.6 4.0 86.4 77.9 3.1 3.1
Total 2.7 3.0 66.2 70.1 1.8 2.1
Included below is a discussion of financing receivables, allowance
for losses, nonearning receivables and related metrics for each of
our significant portfolios.
CLL—AMERICAS. Nonearning receivables of $1.3 billion repre-
sented 17.7% of total nonearning receivables at December 31,
2012. The ratio of allowance for losses as a percent of nonearning
receivables decreased from 47.7% at December 31, 2011, to
36.8% at December 31, 2012, reflecting an overall improvement
in the credit quality of the remaining portfolio and an overall
decrease in nonearning receivables. The ratio of nonearning
receivables as a percent of financing receivables decreased from
2.3% at December 31, 2011, to 1.8% at December 31, 2012, pri-
marily due to reduced nonearning exposures in most of our
portfolios, partially offset by declines in overall financing receiv-
ables. Collateral supporting these nonearning financing
receivables primarily includes assets in the restaurant and hospi-
tality, trucking and industrial equipment industries and corporate
aircraft and, for our leveraged finance business, equity of the
underlying businesses.
CLL—EUROPE. Nonearning receivables of $1.3 billion represented
17.3% of total nonearning receivables at December 31, 2012. The
ratio of allowance for losses as a percent of nonearning receiv-
ables remained constant at 34.3% at December 31, 2012,
reflecting increases in allowance for losses in our Interbanca S.p.A.
and acquisition finance portfolios, offset by an increase in non-
earning receivables in our Interbanca S.p.A. and asset-backed
lending portfolios. The majority of our CLL—Europe nonearning
receivables are attributable to the Interbanca S.p.A. portfolio,
which was acquired in 2009. The loans acquired with Interbanca
S.p.A. were recorded at fair value, which incorporates an estimate
at the acquisition date of credit losses over their remaining life.
Accordingly, these loans generally have a lower ratio of allowance
for losses as a percent of nonearning receivables compared to the
remaining portfolio. Excluding the nonearning loans attributable
to the 2009 acquisition of Interbanca S.p.A., the ratio of allowance
for losses as a percent of nonearning receivables increased from
55.9% at December 31, 2011, to 58.4% at December 31, 2012,
primarily due to an increase in the allowance for losses in our
acquisition finance portfolio. The ratio of nonearning receivables
as a percent of financing receivables increased from 3.2% at
December 31, 2011, to 3.5% at December 31, 2012, for the reasons