National Bank Financial suggests that General Electric won’t be the last firm to report earnings woes due to weakness in the consumer finance business.

“GE surprised markets on Friday with a profit warning that stemmed mostly from deteriorating conditions in its financial services operations. Given the current trends in U.S. consumer credit, we do not think that GE will be an isolated incident,” NBF says in a research note.

It points out that finance companies have significantly increased their market share of U.S. consumer credit over the past five years. And, as of February they held a record 31% of non-revolving credit, which is a US$1.6 trillion market. This compares to a share of only 9% for revolving credit (a market of US$950 billion).

“At this point, it is very important to note that only 14% of non-revolving credit outstanding is securitized, vs. 50% for credit cards. This means that finance companies have a relatively larger exposure to potential losses coming from deteriorating economic conditions — hence GE’s decision to significantly increase loan-loss provisions,” NBF explains.

“As if this news was not already bad enough, we note that the only segment of consumer credit where securitization is still occurring is in credit cards,” it says, adding that the pool of securitized assets of non-revolving credit has actually shrunk by about 5% since the start of the credit crisis.

As a result, “We remain cautious on the outlook for finance companies,” it concludes.