Global Courant
Jamie Dimon, CEO, JP Morgan Chase, during interview with Jim Cramer, February 23, 2023.
CNBC
Major US banks, including JPMorgan Chase, Wells Fargo And Morgan Stanley said Friday they plan to increase their quarterly dividends after passing the Federal Reserve’s annual stress test.
JPMorgan plans to increase its payout from $1.05 per share to $1.05 per share beginning in the third quarter, the New York-based bank said in a statement.
“The Federal Reserve stress test results for 2023 show that banks are resilient – even as they weather severe shocks – and continue to serve as a pillar of strength for the financial system and wider economy,” JPMorgan CEO Jamie Dimon said in a statement. the release. “The Board’s intended dividend increase represents a sustainable and modestly increased level of capital return to our shareholders.”
On Wednesday, the Fed announced Results of its annual exercise, saying that all 23 banks that participated had cleared the regulatory hurdle. The test prescribes how much capital banks can return to shareholders through buybacks and dividends. In this year’s exam, banks underwent a “severe global recession” with unemployment reaching 10%, a 40% drop in commercial property values and a 38% drop in house prices.
Wells Fargo said it would increase its dividend from 30 cents per share to 35 cents per share, and Morgan Stanley said it would increase its payout from 77.5 cents per share to 85 cents per share.
Goldman Sachs announced the biggest per-share boost among major banks, with its dividend moving to $2.75 per share from $2.50 per share.
Meanwhile, Citigroup said it would increase its quarterly payout from 51 cents per share to 53 cents per share, the smallest increase among its peers. That’s probably because while JPMorgan and Goldman surprised analysts this week with better-than-expected results that allowed smaller capital buffers, Citigroup was one of the banks whose buffers increased after the stress test.
“While we clearly would have preferred not to see an increase in our stress capital buffer, these results still demonstrate Citi’s financial resilience in all economic conditions,” said Jane Fraser, CEO of Citigroup, in her company’s press release.
All major banks were hesitant to announce specific plans to boost share buybacks. JPMorgan and Morgan Stanley each said they could buy back shares thanks to previously announced buyback plans; Wells Fargo simply said it had “the capacity to repurchase common stock” in the coming year.
Analysts have said banks are likely to be more conservative with their capital return plans this year. That’s because the finalization of international banking regulations is expected to raise the levels of capital that the largest global companies like JPMorgan are supposed to maintain.
There are other reasons for banks to hold on to capital: regional banks could also be held to higher standards as part of regulators’ response to the SVB collapse in March, and a possible recession could exacerbate future credit losses for the sector .
This story is evolving. Check back later for updates.
