WASHINGTON: The biggest US banks have boosted their dividends after passing this year’s Federal Reserve (Fed) stress tests, a hurdle that has softened in recent years as regulators hash out new requirements.
JPMorgan Chase & Co, the country’s largest lender, increased its quarterly payout to US$1.65 a share from US$1.50, while Goldman Sachs Group Inc raised its dividend to US$5 from US$4.50 after the results of the Fed’s annual review were announced.
JPMorgan also authorised a new US$50bil share-repurchase programme from July 1.
Citigroup Inc boosted its quarterly dividend to 67 US cents from 60 cents, subject to board approvals, while Wells Fargo & Co lifted its payout to 50 cents from 45 cents.
Morgan Stanley increased its dividend to US$1.15 from US$1.
The Fed’s exam, an outgrowth of the 2008 financial crisis, showed that all of the banks examined would maintain enough capital to withstand an economic downturn.
The review tends to set the tone for how aggressive banks are in returning capital to shareholders through dividends and repurchasing shares. It requires banks to consider hypothetical crisis scenarios and estimate losses they might face based on their books of business.
Bank of America (BoA) Corp said it will make its next quarterly dividend announcement after its July board meeting. The lender had almost US$23bil remaining on its stock repurchase plan at end-March.
“Today’s results demonstrated BoA’s strong capital position, as we continue to invest in the company, while supporting clients and a growing economy,” its chief executive officer Brian Moynihan said.
The 2026 results won’t impact capital requirements as the Fed continues revising the tests to make them more bank-friendly.
As a result of that decision “there is no expectation that the firms delay until a particular time the public disclosure of their planned capital actions through the third quarter of 2027”, the Fed said Wednesday.
This year’s test has limited impact as the Fed voted to freeze the stress capital buffer requirements until 2027 as it continues to overhaul the annual exam. — Bloomberg
