General Electric Company (GE) on Thursday said that it expects its embattled finance unit to be profitable in the first quarter, and the continuation of 2009. GE is unveiling the unit's financial status at a conference aimed at convincing investors that GE Capital is sound despite a worsening economy that has hurt borrowing and increased delinquencies on credit cards and mortgages. “Even in this difficult environment of credit pressure and declining asset values, we expect GE Capital Finance to be profitable in the first quarter and full year 2009. Our funding position is strong, having already completed 93 percent of (the) 2009 funding goal,” GE Chief Financial Officer Keith Sherin said in a statement. The Fairfield, Connecticut-based conglomerate said it is committed to GE Capital, and that it has enough capital to cope with the current global economic crisis. GE Capital could earn up to $5 billion this year, but under the worse-case scenario for the entire company, GE Capital will maintain its balance, the company said. “Recognizing 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,” GE Capital CEO Mike Neal said in a statement. That severe case includes U.S. unemployment peaking at 10 percent and GDP declining 3 percent this year. Worries over GE Capital have contributed to a dramatic drop in GE's share prices over the past year. Investors fear big losses may be looming in GE Capital's units, which own commercial real estate, issue mortgages and provide lending for credit cards. GE had previously forecast $5 billion in earnings this year for GE Capital. In 2008, GE Capital made up about half of GE's overall earnings, but GE is restructuring the unit and expects GE Capital will eventually account for only about 30 percent of the total GE profit. Shares of GE rose 77 cents, or 7.5 percent, to $11.09 in early trading Thursday.
