Latest news with #BetsyGraseck
Business Times
11 hours ago
- Business
- Business Times
Wall Street forecasts windfall for big US banks from Fed plan to ease leverage rule
[BENGALURU] Large US global banks can expect as much as US$6 trillion in additional balance sheet capacity and billions in freed up capital under a Federal Reserve plan to relax leverage rules, Wall Street brokerages estimated on Thursday (Jun 26). The US Fed unveiled a proposal on Wednesday that would overhaul how much capital large global banks must hold against relatively low-risk assets, as part of a bid to boost participation in US Treasury markets. Shares of JPMorgan Chase advanced 1.3 per cent, Morgan Stanley 1.2 per cent and Goldman Sachs 1.6 per cent, while Bank of America added 1 per cent and Citigroup 1.5 per cent. The S&P 500 Banks Index, which tracks large-cap US lenders, rose 1.4 per cent. The plan, approved by a 5-2 Fed vote, marks the first in a possible series of deregulatory moves led by the central bank's new vice-chair for supervision, Michelle Bowman. The proposal would reform the so-called 'enhanced supplementary leverage ratio' so that the amount of capital banks must set aside is directly tied to how large a role each firm plays in the global financial system. 'SLR reform is the first of many capital proposals we expect over Michelle Bowman's tenure,' Morgan Stanley analysts led by Betsy Graseck wrote in a note. It forecast that the proposal could free up US$185 billion for banks under its coverage. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Treasury market boost? The supplementary leverage ratio requires banks to hold capital against all assets equally, including low-risk US Treasuries – an approach critics said could discourage banks from holding government debt and limit their role in key funding markets. Goldman Sachs analysts expects the rule change to free bank balance sheets by up to US$5.5 trillion. 'The changes to the SLR calculation should increase the availability (and potentially lower the cost) of short-term, secured financing for market participants, improving liquidity in financial markets and the US treasury market in particular.' Fed officials described the changes as a necessary fix to a rule introduced after the 2008 crisis, saying the leverage requirement had grown over time to occasionally limit bank activity, especially as government debt surged in recent years. 'The Fed's proposal to calibrate eSLR should give the banking system meaningful capacity to expand its balance sheet in low-risk assets,' analysts at brokerage Barclays said. 'It makes sense for banks to utilise the theoretical leverage capacity as long as the return from investing in low-risk assets/activity is sufficient,' they said. REUTERS
Business Times
3 days ago
- Business
- Business Times
Big US banks expected to ace stress tests, boost dividends
[NEW YORK] The biggest US lenders are expected to clear the Federal Reserve's annual health check this year, showing they have ample capital that can be used to boost dividends, analysts said. The results of the central bank's so-called 'stress tests' on Friday (Jun 27) will determine how much cash lenders would need to hold to withstand a severe economic downturn. A less strenuous methodology this year means banks will probably perform better and return more money to investors via dividends and share buybacks, analysts said. The yearly exercise, introduced following the 2007-to-2009 financial crisis, is integral to capital planning for the 22 large lenders being tested. It is also used by banks to determine how much in dividends can be given to shareholders. 'With the improved regulatory tone, hopes are high for some reduction in capital requirements... driven by less harsh stress tests,' said Vivek Juneja, an analyst at JPMorgan. Given banks' high capital levels, he anticipated they would increase dividends by an average of about 3 per cent and boost share repurchases. Tepid loan growth and a favourable regulatory environment will make banks more flexible as they manage capital and grow dividends. However, banks may stay cautious with capital. 'Despite an improved outlook for capital return, we continue to expect management teams to remain somewhat conservative nearer-term given ongoing tariff, economic uncertainty and the timing and the magnitude of regulatory reform,' analysts from Raymond James said in a report. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The scenarios for this year's stress test are also expected to be less onerous versus last year. 'It includes a smaller decline in US real GDP, a smaller rise in unemployment rate, smaller declines in short/long-end rates and other improvements including less aggressive housing and equity pricing declines,' analysts at Jefferies wrote in a note. In more good news for banks, the tests are expected to only become more manageable for banks going forward. In April, the Fed kicked off a sweeping effort to overhaul the tests, which would include, in future years, averaging results to reduce volatility and giving banks more visibility into how they are graded by the Fed. 'We view this as a major positive that will help banks and regulators better align on methodology between internal and Fed-run stress tests, with the output being less of a black box,' said Betsy Graseck, an analyst at Morgan Stanley. Changes in the process could begin as early as this year, she added. Wall Street firms could also see some relief in their stress capital buffers, an additional layer of capital that the Fed requires large banks to hold on top of minimum capital requirements. Goldman Sachs and Morgan Stanley, which saw their buffers increased last year, are 'poised for improvements this year,' the analysts at Jefferies wrote. Meanwhile, Citibank and M&T Bank could see a slight uptick in their capital requirements, said analysts at Keefe, Bruyette & Woods. Overall, analysts expect the regulatory environment for big banks to be more benign under the second administration of US President Donald Trump. 'Stress tests are likely to be less stressful in Trump 2.0,' analysts at Raymond James said. REUTERS
Bloomberg
16-04-2025
- Business
- Bloomberg
Bank Earnings Signal Cautious Optimism
"Bloomberg Markets" follows the market moves across every global asset class and discusses the biggest issues for Wall Street. Today's guests; Rock Creek Group CEO and Founder Afsaneh Beschloss, Morgan Stanley Global Head: Banks and Diversified Finance Research, Betsy Graseck, Jefferies US Equity Research Analyst Sheila Kahyaoglu, and Bloomberg's Erik Hertzberg and Anna Wong. (Source: Bloomberg)
Yahoo
14-04-2025
- Business
- Yahoo
How To Earn $500 A Month From Bank of America Stock Ahead Of Q1 Earnings
Bank of America Corporation (NYSE:BAC) will release its first-quarter financial results before the opening bell on Tuesday, April 15. Analysts expect the bank to report quarterly earnings at 82 cents per share, up from 76 cents per share in the year-ago period. Bank of America projects quarterly revenue of $26.91 billion, compared to $25.82 billion a year earlier, according to data from Benzinga Pro. On April 7, Morgan Stanley analyst Betsy Graseck upgraded Bank of America from Equal-Weight to Overweight but lowered the price target from $56 to $47. With the recent buzz around Bank of America, some investors may be eyeing potential gains from the company's dividends too. As of now, Bank of America offers an annual dividend yield of 2.89%. That's a quarterly dividend amount of 26 cents per share ($1.04 a year). To figure out how to earn $500 monthly from Bank of America, we start with the yearly target of $6,000 ($500 x 12 months). Next, we take this amount and divide it by Bank of America's $1.04 dividend: $6,000 / $1.04 = 5,769 shares. So, an investor would need to own approximately $207,396 worth of Bank of America, or 5,769 shares to generate a monthly dividend income of $500. Assuming a more conservative goal of $100 monthly ($1,200 annually), we do the same calculation: $1,200 / $1.04 = 1,154 shares, or $41,486 to generate a monthly dividend income of $100. View more earnings on BAC Note that dividend yield can change on a rolling basis. The dividend payment and the stock price both fluctuate over time. The dividend yield is calculated by dividing the annual dividend payment by the current stock price. As the stock price changes, the dividend yield will also change. For example, if a stock pays an annual dividend of $2 and its current price is $50. That means its dividend yield would be 4%. However, if the stock price increases to $60, the dividend yield would decrease to 3.33% ($2/$60). Conversely, if the stock price decreases to $40, the dividend yield would increase to 5% ($2/$40). Further, the dividend payment itself can also change over time, which can also impact the dividend yield. If a company increases its dividend payment, the dividend yield will increase even if the stock price remains the same. Similarly, if a company decreases its dividend payment, the dividend yield will decrease. BAC Price Action: Shares of Bank of America gained by 0.3% to close at $35.95 on More: Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? This article How To Earn $500 A Month From Bank of America Stock Ahead Of Q1 Earnings originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
