In his annual letter to shareholders, chief executive Jeffrey R. Immelt, wrote the company is emphasizing a “culture of simplification”. Immelt said the effort to simplify includes reducing the size of its specialty finance franchise and noted, “We have decided to make it smaller.”

Immelt noted that GE had settled the remaining liabilities of its former Japanese consumer finance business. Immelt said, “The business had been a financial drag on the company, and our exit is a positive for investors.” And, he added, “We announced a planned split-off of our Retail Finance business in a capital-efficient process beginning in 2014.” Immelt noted that GE has a solid franchise in the private label credit card business, but it is a step removed from GE Capital’s strength of lending to industrial middle-market companies. By 2015, we expect financial services should be 30% of our earnings.

The following was excerpted from Immelt’s letter:

GE Capital is a valuable middle-market franchise that builds on GE strengths and our domain expertise. We have strong leadership franchises in areas like equipment and inventory finance, and a portion of our assets are around GE’s installed base. This gives us unique capability in aviation, energy and healthcare.

We link our Capital customers to GE through a program called “Access GE,” through which we share our best practices to help them run their businesses better. GE Capital has never been stronger or safer, and we are making substantial investments to meet the standards expected from a Federal Reserve regulated financial institution.

GE’s portfolio sets our potential. We have completed substantial work over the past decade. We have repositioned GE Capital as a smaller and safer specialty finance leader with less leverage and more liquidity. We have redeployed capital from businesses outside the GE core-like insurance and media-to platforms that can leverage our strengths like Oil & Gas and Life Sciences. We expect this portfolio to deliver valuable growth and trade at a premium in the future.

To read Jeffrey R. Immelt’s letter to shareholders, click here.