General Electric cut its quarterly dividend for the first time since 1938, marking a reversal of the conglomerate’s repeated defence of the pay-out and an admission that the severity of the financial crisis defies its expectations.

GE plans to slash the quarterly dividend to 10 cents a share from 31 cents, beginning in the second half of this year. The move, which will save the company $9bn annually, ends months of speculation about the pay-out’s fate and could serve to assuage investors’ concerns for its finance arm, GE Capital.