Biggest US banks hike dividends, announce share buybacks after acing stress tests
The moves come after the lenders showed they have enough capital to withstand scenarios including a severe economic downturn, spiking unemployment and market turmoil.
JPMorgan Chase (JPM.N), opens new tab, the nation's largest bank, raised its dividend to $1.50 a share from $1.40, according to a regulatory filing. It also announced a new $50 billion share repurchase program, effective on Tuesday and with an unspecified end date.
"The board's intended dividend increase, our second this year, represents a sustainable level of capital distribution to our shareholders and is supported by our strong financial performance," JPMorgan CEO Jamie Dimon said.
"The new share repurchase program provides the ability to distribute capital to our shareholders over time, as we see fit," Dimon said, adding that the stress test shows that banks are resilient.
Separately, Bank of America (BAC.N), opens new tab will raise its dividend by 8% to 28 cents per share, while Wells Fargo (WFC.N), opens new tab increased it to 45 cents a share from 40 cents, they said in separate filings.
Morgan Stanley's board has approved a new $20 billion share repurchase program without specifying an end date and also plans to raise its quarterly dividend to $1 per share.
Goldman Sachs' (GS.N), opens new tab dividend will climb to $4 from $3, while Citigroup's (C.N), opens new tab will go up to 60 cents from 56 cents.
On average, the Fed's stress test found banks retained an average 11.6% ratio of their common equity Tier 1 capital, well above the 4.5% minimum required by regulators. The nation's six largest banks all retained double-digit capital ratios under the test.
The Fed is in the process of overhauling the way the test is conducted.
The regulator proposed in April that the results should be averaged over two years, which could lead to less volatility in outcomes.
"The Federal Reserve has expressed its intention to institute a more transparent and fair approach to these tests, as it looks to uphold the safety and soundness of our financial system," Goldman CEO David Solomon said.
JPM's Dimon also said that the new stress testing models could provide more transparency.
That rule-writing project is still ongoing, but the central bank said on Friday that if the 2025 and 2024 results were averaged, banks would have needed to set aside more capital to meet the requirements.
Source: Regulatory filing
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