General Electric Co. said the returns from its massive banking operations have fallen below the company’s cost of capital, adding urgency to its consideration of a bigger exit from the business.
In his annual letter to shareholders, Chief Executive Jeff Immeltsaid GE is focused on making its banking arm—which alone is the seventh-largest U.S. bank—smaller and more connected to the company’s industrial businesses.
“To be clear, GE is an industrial company first and foremost,” Mr. Immelt wrote. “We are still defining the competitive position for GE in the financial services industry.”
GE is rethinking the scale of its finance business, contemplating deeper cuts such as spinning off its commercial lending business, people familiar with the matter have said. GE wants to retain the parts of GE Capital that focus on fields like aviation, energy and health care where it has industrial operations.
Such moves mark a break from the past when GE stood by its lending operation as an important piece of the conglomerate better known for its power turbines, jet engines and light bulbs.
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