GE praises UK mortgage arm
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GE Money Home Lending has been praised by GE chiefs for net gains as a result of reduced mortgage arrears.
GE’s UK mortgage arm posted earnings of £26.2m ($40m) in the first quarter of 2010 that GE says has pushed GEMHL into the black. It does detail exactly how much of a profit the subsidiary made for the US firm.
General Electric posted profits of $2.3bn (£1.5bn) for Q1 2010 on Friday, down 18 per cent on last year’s figures. GE Capital, its finance subsidiary that includes GEMHL, posted profits of $600m (£393m) but made losses of $400m on its global real estate book.
GE chairman and chief executive Jeff Immelt says: “We are very encouraged by GE Capital’s performance. We are originating new business at attractive margins and our funding costs have declined. GE Capital losses seem to have peaked.”
Immelt says the UK lending business has performed particularly well: “The real positive in mortgages comes in the UK. The 30-day delinquencies declined 65bps in the quarter. We continue to realise net gains versus our marks on our foreclosed properties, which is a good sign.”
As of December 31 2009, 25.2 per cent of GE’s £13.9bn UK mortgage portfolio was in 30-day arrears. It held 1,200 homes in repossession worth £131m.
In July 2009, GE revealed that its UK business was losing £1m a day. At the time, it warned that the growing UK delinquencies were skewing its entire global mortgage book.
Immelt says: “Our UK mortgage business continues to stabilise. I think we are getting continued positive trend data as the delinquencies have rolled over and started to decline. But you know, we still are cautious - we want to continue to watch what happens with house prices and unemployment in the UK before we get a full recovery.”
Last week, GEMHL launched two mortgages for borrowers with minor credit problems.
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