Major banks in the United States (US) increased their dividends after successfully passing the annual stress test that was held last week. The Fed said last Thursday that major US banks had passed the stress test.
These banks could easily overcome the severe economic slowdown. It shows that banks have sufficient capital to deal with a severe economic crisis with soaring unemployment, falling real estate prices and plunging stock prices.
Major banks in the United States (US) increased their dividends after successfully passing the annual stress test that was held last week. The Fed said last Thursday that major US banks had passed the stress test.
These banks could easily overcome the severe economic slowdown. It shows that banks have sufficient capital to deal with a severe economic crisis with soaring unemployment, falling real estate prices and plunging stock prices.
The Fed’s statement effectively gave the banks the green light to return billions of dollars to investors in dividends and through stock buybacks. Morgan Stanley and Goldman Sachs Group Inc. led gains in dividend payouts and share buybacks among US banks.
Goldman Sachs will increase its quarterly dividend by 25% to US$ 2.5 per share from US$ 2. Morgan Stanley will increase its dividend from 70 cents to 77.5 cents per share.
Goldman Sachs CEO David Salomon said the company’s client-oriented strategy will continue to diversify the company and provide strong returns for its investors.
“We will continue to dynamically manage capital and remain well positioned to support our clients,” he said.
Meanwhile, JPMorgan Chase & Co. maintains a stable dividend distribution of US$ 1 per share. The bank in its official statement said dividends were not increased given the higher future capital requirements. Citigroup Inc also said its dividend would remain steady at 51 cents per share.
Goldman Sachs shares were up about 1.7% after the announcement at 5:20 p.m. in extended New York trading. Morgan Stanley was up about 2.5%. JPMorgan shares fell nearly 1% to $115.50 immediately after his statement.
The Fed said more than 30 lenders it examined could stay above their minimum capital requirements during a hypothetical downturn, which would lead to a total projected loss of $612 billion. Banks use tests to assess how much capital they are able to provide investors without falling below the amount they should hold as a cushion.
Overall, the US banking giant will return $80 billion to shareholders this year, according to data compiled by Bloomberg based on forecasts provided by analysts at Barclays Plc.
Wells Fargo & Co, the retail banking giant based in San Francisco, announced it would raise its dividend 20% to 30 cents per share from 25 cents previously. Likewise with Bank of America Corp., plans to raise a dividend of 22 cents from 21 cents.
“Bank of America maintains a strong capital position to serve its customers and clients through the current economic environment and our continued discipline around risk has prepared us well for the severe economic stress scenario,” the bank’s CEO Alastair Borthwick said in a statement.
In addition, there is State Street Corp which will increase its dividend by 10% to 63 cents per share, Truist Financial Corp. is ready to increase its dividend by 8% to 52 cents per share, Bank of New York Mellon Corp’s dividend will increase 9% to 37 cents. per share, and Fifth Third Bancorp is likely to hoist a dividend of 3 cents per share from the current 30 cents.