U.S. Banks Increase Dividends And Stock Buybacks
As was widely expected, the largest U.S. banks have raised their dividend payouts and increased their stock buybacks after passing the Federal Reserve’s annual stress test.
JPMorgan Chase (JPM), the world’s biggest bank, increased its quarterly dividend to $1.50 U.S. per share from $1.40 U.S. previously and authorized a new $50 billion U.S. buyback program.
Bank of America (BAC) is boosting its dividend to $0.28 U.S. per share from $0.26 U.S., while Wells Fargo (WFC) hiked its quarterly distribution to $0.45 U.S. a share from $0.40 U.S.
Investment banks are also increasing their shareholder rewards.
Morgan Stanley (MS) is raising its dividend to $1 U.S. a share from $0.92 U.S. and authorized a share repurchase plan of up to $20 billion U.S.
Goldman Sachs (GS) lifted its dividend payout to $4 U.S. per share from $3 U.S., while Citigroup (C) increased its distribution to shareholders to $0.60 U.S. from $0.56 U.S.
The dividend increases and stock buybacks come as the leading American lenders determine how they will spend their excess capital after clearing the annual stress test that determines the capital buffers required to withstand an economic shock or market crash.
The U.S. central bank last week said that all 22 participating banks passed this year’s test that featured a less dramatic scenario than in previous years.
The banks’ new capital plans come as regulators weigh changes to future stress tests, a move that would appease longtime demands from Wall Street.
The annual stress tests were established in the wake of the 2008-09 financial crisis and are used to assess banks’ health and vulnerabilities.
While some banks gripe about the stress tests, other executives applaud them. JPMorgan Chief Executive Officer (CEO) Jamie Dimon recently said, “I like stress testing.”
Fed Chair Jerome Powell has called stress testing “the most successful supervisory innovation of the postcrisis era.”
JPM stock has gained 21% this year to trade at $290.41 U.S. per share.
