Disappointing its investors with a smaller rise in its profit margins than it had predicted, GE nevertheless helped its 2013 results with 2013 tax gain of about $1 billion, The Financial Times (registration required) reported Friday.
The tax advantage stemmed from GE’s flotation of a majority stake in its Swiss consumer credit operation in November. That meant that the company’s tax charge dropped from 15 percent of pre-tax profits in 2012 to 4 percent in 2013.
GE’s improvement in profit margins fell a tad short of the 0.7 percentage-point increase that the company had forecast previously.
CFO Jeff Bornstein said on the company’s earnings call on Friday morning that the tax rate at GE Capital, GE’s banking arm, “was significantly negative in the fourth quarter, primarily driven by the tax-efficient sale of our Swiss platform, which resulted in about $1 billion of tax benefits in the quarter.” For the year GE Capital’s tax rate was a negative 14 percent.
GE continued to shrink the size of GE Capital in the quarter, selling off its remaining stake in Thailand’s Bank of Ayudhya and $700 million of mortgage assets in the Netherlands. GE Capital also recorded an impairment charge on an investment in a Taiwanese bank.