13. SUPPLEMENTAL INFORMATION ABOUT THE CREDIT QUALITY OF FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES

We provide further detailed information about the credit quality of our Commercial, Real Estate and Consumer financing receivables portfolios. For each portfolio, we describe the characteristics of the financing receivables and provide information about collateral, payment performance, credit quality indicators, and impairment. We manage these portfolios using delinquency and nonaccrual data as key performance indicators. The categories used within this section such as impaired loans, troubled debt restructuring (TDR) and nonaccrual financing receivables are defined by the authoritative guidance and we base our categorization on the related scope and definitions contained in the related standards. The categories of nonaccrual and delinquent are used in our process for managing our financing receivables.

		June 30, 2014									December 31, 2013
		Over 30 days			Over 90 days						Over 30 days			Over 90 days
(In millions)		past due			past due			Nonaccrual			past due			past due			Nonaccrual

Commercial
CLL
Americas	$	651		$	379		$	1,306		$	755		$	359		$	1,275
International		1,549			931			1,224			1,490			820			1,459
Total CLL		2,200			1,310			2,530			2,245			1,179			2,734
Energy Financial Services		-			-			76			-			-			4
GECAS		1			-			153			-			-			-
Other		-			-			-			-			-			6
Total Commercial		2,201			1,310			2,759	(a)		2,245			1,179			2,744	(a)

Real Estate		295			224			1,948	(b)		247			212			2,551	(b)

Consumer
Non-U.S. residential mortgages		3,304			2,032			2,082			3,406			2,104			2,161
Non-U.S. installment and revolving credit		391			109			51			512			146			88
U.S. installment and revolving credit		2,055			894			1			2,442			1,105			2
Non-U.S. auto		85			12			16			89			13			18
Other		147			76			269			172			99			351
Total Consumer		5,982			3,123	(c)		2,419	(d)		6,621			3,467	(c)		2,620	(d)

Total	$	8,478		$	4,657		$	7,126		$	9,113		$	4,858		$	7,915
Total as a percent of financing receivables		3.4	%		1.9	%		2.9	%		3.5	%		1.9	%		3.1	%

	With no specific allowance						With a specific allowance
		Recorded	Unpaid		Average			Recorded	Unpaid				Average
	investment		principal		investment		investment		principal		Associated		investment
(In millions)	in loans		balance		in loans		in loans		balance		allowance		in loans

June 30, 2014

Commercial
CLL
Americas	$	1,806	$	2,302	$	1,756	$	238	$	336	$	50	$	304
International(a)		1,174		3,136		1,164		428		747		155		574
Total CLL		2,980		5,438		2,920		666		1,083		205		878
Energy Financial Services		1		1		6		76		76		15		35
GECAS		48		48		16		10		10		3		25
Other		-		-		1		-		-		-		1
Total Commercial(b)		3,029		5,487		2,943		752		1,169		223		939

Real Estate(c)		2,337		2,668		2,626		654		803		38		879

Consumer(d)		88		136		109		2,607		2,744		514		2,774
Total	$	5,454	$	8,291	$	5,678	$	4,013	$	4,716	$	775	$	4,592

December 31, 2013

Commercial
CLL
Americas	$	1,670	$	2,187	$	2,154	$	417	$	505	$	96	$	509
International(a)		1,104		3,082		1,136		691		1,059		231		629
Total CLL		2,774		5,269		3,290		1,108		1,564		327		1,138
Energy Financial Services		-		-		-		4		4		1		2
GECAS		-		-		-		-		-		-		1
Other		2		3		9		4		4		-		5
Total Commercial(b)		2,776		5,272		3,299		1,116		1,572		328		1,146

Real Estate(c)		2,615		3,036		3,058		1,245		1,507		74		1,688

Consumer(d)		109		153		98		2,879		2,948		567		3,058

Total	$	5,500	$	8,461	$	6,455	$	5,240	$	6,027	$	969	$	5,892

(b) We recognized $91 million, $218 million and $112 million of interest income, including none, $60 million and $36 million on a cash basis, in the six months ended June 30, 2014, the year ended December 31, 2013 and the six months ended June 30, 2013, respectively, principally in our CLL Americas business. The total average investment in impaired loans for the six months ended June 30, 2014 and the year ended December 31, 2013 was $3,882 million and $4,445 million, respectively.

(c) We recognized $34 million, $187 million and $110 million of interest income, including none, $135 million and $90 million on a cash basis, in the six months ended June 30, 2014, the year ended December 31, 2013 and the six months ended June 30, 2013, respectively. The total average investment in impaired loans for the six months ended June 30, 2014 and the year ended December 31, 2013 was $3,505 million and $4,746 million, respectively.

(d) We recognized $91 million, $221 million and $112 million of interest income, including $1 million, $3 million and $1 million on a cash basis, in the six months ended June 30, 2014, the year ended December 31, 2013 and the six months ended June 30, 2013, respectively, principally in our Consumer U.S. installment and revolving credit portfolios. The total average investment in impaired loans for the six months ended June 30, 2014 and the year ended December 31, 2013 was $2,883 million and $3,156 million, respectively.


(In millions)		Non-impaired financing receivables		General reserves		Impaired loans		Specific reserves

June 30, 2014

Commercial	$	120,816	$	669	$	3,781	$	223
Real Estate		16,808		124		2,991		38
Consumer		99,760		3,587		2,695		514
Total	$	237,384	$	4,380	$	9,467	$	775

December 31, 2013

Commercial	$	125,377	$	677	$	3,892	$	328
Real Estate		16,039		118		3,860		74
Consumer		106,051		3,414		2,988		567
Total	$	247,467	$	4,209	$	10,740	$	969

Impaired loans classified as TDRs in our CLL business were $2,698 million and $2,961 million at June 30, 2014 and December 31, 2013, respectively, and were primarily attributable to CLL Americas ($1,579 million and $1,770 million, respectively). For the six months ended June 30, 2014, we modified $599 million of loans classified as TDRs, primarily in CLL Americas ($362 million). Changes to these loans primarily included extensions, interest only payment periods, debt to equity exchange and forbearance or other actions, which are in addition to, or sometimes in lieu of, fees and rate increases. Of our $1,283 million and $1,961 million of modifications classified as TDRs in the twelve months ended June 30, 2014 and 2013, respectively, $27 million and $87 million have subsequently experienced a payment default in the six months ended June 30, 2014 and 2013, respectively.

Real Estate TDRs decreased from $3,625 million at December 31, 2013 to $2,829 million at June 30, 2014, primarily driven by resolution of TDRs through paydowns. We deem loan modifications to be TDRs when we have granted a concession to a borrower experiencing financial difficulty and we do not receive adequate compensation in the form of an effective interest rate that is at current market rates of interest given the risk characteristics of the loan or other consideration that compensates us for the value of the concession. The limited liquidity and higher return requirements in the real estate market for loans with higher loan-to-value (LTV) ratios has typically resulted in the conclusion that the modified terms are not at current market rates of interest, even if the modified loans are expected to be fully recoverable. For the six months ended June 30, 2014, we modified $531 million of loans classified as TDRs. Changes to these loans primarily included forbearance, maturity extensions and changes to collateral or covenant terms or other actions, which are in addition to, or sometimes in lieu of, fees and rate increases. Of our $1,349 million and $2,858 million of modifications classified as TDRs in the twelve months ended June 30, 2014 and 2013, respectively, $215 million and $65 million have subsequently experienced a payment default in the six months ended June 30, 2014 and 2013, respectively.

Impaired loans in our Consumer business represent restructured smaller balance homogeneous loans meeting the definition of a TDR, and are therefore subject to the disclosure requirement for impaired loans, and commercial loans in our Consumer–Other portfolio. The recorded investment of these impaired loans totaled $2,695 million (with an unpaid principal balance of $2,880 million) and comprised $88 million with no specific allowance, primarily all in our Consumer–Other portfolio, and $2,607 million with a specific allowance of $514 million at June 30, 2014. The impaired loans with a specific allowance included $244 million with a specific allowance of $26 million in our Consumer–Other portfolio and $2,363 million with a specific allowance of $488 million across the remaining Consumer business and had an unpaid principal balance and average investment of $2,744 million and $2,774 million, respectively, at June 30, 2014.

Impaired loans classified as TDRs in our Consumer business were $2,586 million and $2,874 million at June 30, 2014 and December 31, 2013, respectively. We utilize certain loan modification programs for borrowers experiencing financial difficulties in our Consumer loan portfolio. These loan modification programs primarily include interest rate reductions and payment deferrals in excess of three months, which were not part of the terms of the original contract, and are primarily concentrated in our non-U.S. residential mortgage and U.S. credit card portfolios. For the six months ended June 30, 2014, we modified $560 million of consumer loans for borrowers experiencing financial difficulties, which are classified as TDRs, and included $324 million of non-U.S. consumer loans, primarily residential mortgages, credit cards and personal loans and $236 million of U.S. consumer loans, primarily credit cards. We expect borrowers whose loans have been modified under these programs to continue to be able to meet their contractual obligations upon the conclusion of the modification. Of our $1,150 million and $1,688 million of modifications classified as TDRs in the twelve months ended June 30, 2014 and 2013, respectively, $80 million and $158 million have subsequently experienced a payment default in the six months ended June 30, 2014 and 2013, respectively.

Substantially all of our Commercial financing receivables portfolio is secured lending and we assess the overall quality of the portfolio based on the potential risk of loss measure. The metric incorporates both the borrower's credit quality along with any related collateral protection.

Our internal risk ratings process is an important source of information in determining our allowance for losses and represents a comprehensive, statistically validated approach to evaluate risk in our financing receivables portfolios. In deriving our internal risk ratings, we stratify our Commercial portfolios into 21 categories of default risk and/or six categories of loss given default to group into three categories: A, B and C. Our process starts by developing an internal risk rating for our borrowers, which is based upon our proprietary models using data derived from borrower financial statements, agency ratings, payment history information, equity prices and other commercial borrower characteristics. We then evaluate the potential risk of loss for the specific lending transaction in the event of borrower default, which takes into account such factors as applicable collateral value, historical loss and recovery rates for similar transactions, and our collection capabilities. Our internal risk ratings process and the models we use are subject to regular monitoring and validation controls. The frequency of rating updates is set by our credit risk policy, which requires annual Risk Committee approval. The models are updated on a regular basis and statistically validated annually, or more frequently as circumstances warrant.

As described above, financing receivables are assigned one of 21 risk ratings based on our process and then these are grouped by similar characteristics into three categories in the table below. Category A is characterized by either high-credit-quality borrowers or transactions with significant collateral coverage that substantially reduces or eliminates the risk of loss in the event of borrower default. Category B is characterized by borrowers with weaker credit quality than those in Category A, or transactions with moderately strong collateral coverage that minimizes but may not fully mitigate the risk of loss in the event of default. Category C is characterized by borrowers with higher levels of default risk relative to our overall portfolio or transactions where collateral coverage may not fully mitigate a loss in the event of default.

	Secured
(In millions)	A		B		C		Total

June 30, 2014

CLL
Americas	$	64,216	$	1,403	$	1,718	$	67,337
International		43,198		565		1,159		44,922
Total CLL		107,414		1,968		2,877		112,259

Energy Financial Services		2,645		60		42		2,747

GECAS		8,238		83		119		8,440

Other		138		-		-		138
Total	$	118,435	$	2,111	$	3,038	$	123,584

December 31, 2013

CLL
Americas	$	65,545	$	1,587	$	1,554	$	68,686
International		44,930		619		1,237		46,786
Total CLL		110,475		2,206		2,791		115,472

Energy Financial Services		2,969		9		-		2,978

GECAS		9,175		50		152		9,377

Other		318		-		-		318
Total	$	122,937	$	2,265	$	2,943	$	128,145

For our secured financing receivables portfolio, our collateral position and ability to work out problem accounts mitigates our losses. Our asset managers have deep industry expertise that enables us to identify the optimum approach to default situations. We price risk premiums for weaker credits at origination, closely monitor changes in creditworthiness through our risk ratings and watch list process, and are engaged early with deteriorating credits to minimize economic loss. Secured financing receivables within risk Category C are predominantly in our CLL businesses and are primarily composed of senior term lending facilities and factoring programs secured by various asset types including inventory, accounts receivable, cash, equipment and related business facilities as well as franchise finance activities secured by underlying equipment.

Loans within Category C are reviewed and monitored regularly, and classified as impaired when it is probable that they will not pay in accordance with contractual terms. Our internal risk rating process identifies credits warranting closer monitoring; and as such, these loans are not necessarily classified as nonaccrual or impaired.

Our unsecured Commercial financing receivables portfolio is primarily attributable to our Interbanca S.p.A. and GE Sanyo Credit acquisitions in CLL International. At June 30, 2014 and December 31, 2013, these financing receivables included $362 million and $313 million rated A, $425 million and $580 million rated B, and $226 million and $231 million rated C, respectively.

Due to the primarily non-recourse nature of our Debt portfolio, loan-to-value ratios (the ratio of the outstanding debt on a property to the re-indexed value of that property) provide the best indicators of the credit quality of the portfolio.

	Loan-to-value ratio
	June 30, 2014						December 31, 2013
	Less than		80% to		Greater than		Less than		80% to		Greater than
(In millions)	80%		95%		95%		80%		95%		95%

Debt	$	15,944	$	1,361	$	1,558	$	15,576	$	1,300	$	2,111

The credit quality of the owner occupied/credit tenant portfolio is primarily influenced by the strength of the borrower's general credit quality, which is reflected in our internal risk rating process, consistent with the process we use for our Commercial portfolio. As of June 30, 2014, the balances of our owner occupied/credit tenant portfolio with an internal risk rating of A, B and C approximated $646 million, $141 million and $149 million, respectively, as compared to the December 31, 2013 balances of $571 million, $179 million and $162 million, respectively.

The financing receivables within our Debt portfolio are primarily concentrated in our North American and European Lending platforms and are secured by various property types. A substantial majority of our Debt financing receivables with loan-to-value ratios greater than 95% are paying in accordance with contractual terms. Substantially all of these loans and the majority of our owner occupied/credit tenant financing receivables included in Category C are impaired loans that are subject to the specific reserve evaluation process. The ultimate recoverability of impaired loans is driven by collection strategies that do not necessarily depend on the sale of the underlying collateral and include full or partial repayments through third-party refinancing and restructurings.

At June 30, 2014, our U.S. consumer financing receivables included private-label credit card and sales financing for approximately 59 million customers across the U.S. with no metropolitan area accounting for more than 6% of the portfolio. Of the total U.S. consumer financing receivables, approximately 65% relate to credit card loans that are often subject to profit and loss sharing arrangements with the retailer (which are recorded in revenues), and the remaining 35% are sales finance receivables that provide financing to customers in areas such as electronics, recreation, medical and home improvement.

Our Consumer financing receivables portfolio comprises both secured and unsecured lending. Secured financing receivables comprise residential loans and lending to small and medium-sized enterprises predominantly secured by auto and equipment, inventory finance, and cash flow loans. Unsecured financing receivables include private-label credit card financing. A substantial majority of these cards are not for general use and are limited to the products and services sold by the retailer. The private-label portfolio is diverse with no metropolitan area accounting for more than 6% of the related portfolio.

For our secured non-U.S. residential mortgage book, we assess the overall credit quality of the portfolio through loan-to-value ratios (the ratio of the outstanding debt on a property to the value of that property at origination). In the event of default and repossession of the underlying collateral, we have the ability to remarket and sell the properties to eliminate or mitigate the potential risk of loss.

		Loan-to-value ratio
	June 30, 2014						December 31, 2013
	80% or		Greater than		Greater than		80% or		Greater than		Greater than
(In millions)	less		80% to 90%		90%		less		80% to 90%		90%

Non-U.S. residential mortgages	$	16,706	$	4,985	$	7,903	$	17,224	$	5,130	$	8,147

The majority of these financing receivables are in our U.K. and France portfolios and have re-indexed loan-to-value ratios of 72% and 56%, respectively. Re-indexed loan-to-value ratios may not reflect actual realizable values of future repossessions. We have third-party mortgage insurance for about 22% of the balance of Consumer non-U.S. residential mortgage loans with loan-to-value ratios greater than 90% at June 30, 2014. Such loans were primarily originated in France and the U.K.

We assess overall credit quality using internal and external credit scores. For our U.S. installment and revolving credit portfolio we use Fair Isaac Corporation (“FICO”) scores. FICO scores are generally obtained at origination of the account and are refreshed at a minimum quarterly, but could be as often as weekly, to assist in predicting customer behavior. We categorize these credit scores into the following three categories; (a) 661 or higher, which are considered the strongest credits; (b) 601 to 660, which are considered moderate credit risk; and (c) 600 or less, which are considered weaker credits.

		Refreshed FICO score
	June 30, 2014						December 31, 2013
	661 or		601 to		600 or		661 or		601 to		600 or
(In millions)	higher		660		less		higher		660		less

U.S. installment and
revolving credit	$	38,758	$	10,612	$	3,995	$	40,079	$	11,142	$	4,633

For our non-U.S. installment and revolving credit and non-U.S. auto portfolios, our internal credit scores imply a probability of default that we consistently translate into three approximate credit bureau equivalent credit score categories, including (a) 671 or higher, which are considered the strongest credits; (b) 626 to 670, which are considered moderate credit risk; and (c) 625 or less, which are considered weaker credits.

		Internal ratings translated to approximate credit bureau equivalent score
	June 30, 2014						December 31, 2013
	671 or		626 to		625 or		671 or		626 to		625 or
(In millions)	higher		670		less		higher		670		less

Non-U.S. installment and
revolving credit	$	6,173	$	2,480	$	2,129	$	8,310	$	2,855	$	2,512
Non-U.S. auto		1,202		307		254		1,395		373		286

U.S. installment and revolving credit accounts with FICO scores of 600 or less and non U.S. installment and revolving credit accounts with credit bureau equivalent scores of 625 or less have an average outstanding balance less than one thousand U.S. dollars and are primarily concentrated in our retail card and sales finance receivables in the U.S. and closed-end loans outside the U.S., which minimizes the potential for loss in the event of default. For lower credit scores, we adequately price for the incremental risk at origination and monitor credit migration through our risk ratings process. We continuously adjust our credit line underwriting management and collection strategies based on customer behavior and risk profile changes.

We develop our internal risk ratings for this portfolio in a manner consistent with the process used to develop our Commercial credit quality indicators, described above. We use the borrower's credit quality and underlying collateral strength to determine the potential risk of loss from these activities.

At June 30, 2014, Consumer – Other financing receivables of $6,289 million, $258 million and $404 million were rated A, B and C, respectively. At December 31, 2013, Consumer – Other financing receivables of $6,137 million, $315 million and $501 million were rated A, B and C, respectively.