Latest news with #stressTest
Yahoo
08-07-2025
- Business
- Yahoo
How Goldman Sachs won big in the Fed's annual stress test
Goldman Sachs stood to lose just $300 million in an economic shock under the Federal Reserve's stress test scenario this year. Sign in to access your portfolio
Yahoo
07-07-2025
- Business
- Yahoo
Why Citizens Financial Group Stock Soared in June
This year's edition of the Federal Reserve's bank stress test saw all tested institutions pass. Although Citizens didn't have to participate, it benefited from the positive results. The company also substantially added to its existing share repurchase initiative. 10 stocks we like better than Citizens Financial Group › A seriously bulked-up share repurchase plan and good results of the Federal Reserve's latest banking industry stress test improved the share price of regional lender Citizens Financial Group (NYSE: CFG) in June. Over the course of the month, investors traded the bank's stock up by nearly 11% in reaction to this. The rally basically started in the middle of the month, when Citizens announced that stock buyback news. To the satisfaction of its shareholders, the company said it would bolster the existing program by a hefty $1.2 billion. As there was $300 million remaining from the previous authorization, granted in June 2024, the new total is $1.5 billion. For a stock with a sub-$21 billion market cap, that's substantial, and it should have a positive impact on the share price. A more critical, industrywide development occurred at the end of the month with the stress tests. For those unfamiliar, these are an annual set of analyses in which major U.S. banks are tested to see how they would weather adverse economic conditions, some of which are quite drastic. As has become the norm, the institutions under the microscope -- which include the "big four" American lenders, Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup -- did quite well. All 22 passed their tests, albeit with the caveat that this year's edition was less rigorous than previous rounds. Citizens Financial isn't sizable enough to go through this wringer annually, instead it's tested every two years, and in 2025 it got a break. Still, there were several regional banks not unlike itself among the 22 tested. All in all, the good results were taken to mean that mid- and large-sized banks in this country are generally doing well, and in the worst-case scenarios can probably cope with catastrophe. I don't blame investors of Citizens Financial -- or any other bank of its size on this market -- for reacting positively to the stress test results. Despite some cuts and scrapes lately, our economy has been performing well, and the smart and disciplined approach of its better lenders is an ever-important factor in this. Having said that, I'm not all that excited about Citizen Financial's performance recently. In its first quarter revenue was essentially stagnant, as was the company's end-quarter deposits figure. And average loans and leases slumped, even as a bump in non-interest income pushed headline net profit 12% higher to $374 million. To me, it's the larger banks that have better potential these days. Before you buy stock in Citizens Financial Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Citizens Financial Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Wells Fargo is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a disclosure policy. Why Citizens Financial Group Stock Soared in June was originally published by The Motley Fool
Yahoo
06-07-2025
- Business
- Yahoo
Why Citizens Financial Group Stock Soared in June
This year's edition of the Federal Reserve's bank stress test saw all tested institutions pass. Although Citizens didn't have to participate, it benefited from the positive results. The company also substantially added to its existing share repurchase initiative. 10 stocks we like better than Citizens Financial Group › A seriously bulked-up share repurchase plan and good results of the Federal Reserve's latest banking industry stress test improved the share price of regional lender Citizens Financial Group (NYSE: CFG) in June. Over the course of the month, investors traded the bank's stock up by nearly 11% in reaction to this. The rally basically started in the middle of the month, when Citizens announced that stock buyback news. To the satisfaction of its shareholders, the company said it would bolster the existing program by a hefty $1.2 billion. As there was $300 million remaining from the previous authorization, granted in June 2024, the new total is $1.5 billion. For a stock with a sub-$21 billion market cap, that's substantial, and it should have a positive impact on the share price. A more critical, industrywide development occurred at the end of the month with the stress tests. For those unfamiliar, these are an annual set of analyses in which major U.S. banks are tested to see how they would weather adverse economic conditions, some of which are quite drastic. As has become the norm, the institutions under the microscope -- which include the "big four" American lenders, Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup -- did quite well. All 22 passed their tests, albeit with the caveat that this year's edition was less rigorous than previous rounds. Citizens Financial isn't sizable enough to go through this wringer annually, instead it's tested every two years, and in 2025 it got a break. Still, there were several regional banks not unlike itself among the 22 tested. All in all, the good results were taken to mean that mid- and large-sized banks in this country are generally doing well, and in the worst-case scenarios can probably cope with catastrophe. I don't blame investors of Citizens Financial -- or any other bank of its size on this market -- for reacting positively to the stress test results. Despite some cuts and scrapes lately, our economy has been performing well, and the smart and disciplined approach of its better lenders is an ever-important factor in this. Having said that, I'm not all that excited about Citizen Financial's performance recently. In its first quarter revenue was essentially stagnant, as was the company's end-quarter deposits figure. And average loans and leases slumped, even as a bump in non-interest income pushed headline net profit 12% higher to $374 million. To me, it's the larger banks that have better potential these days. Before you buy stock in Citizens Financial Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Citizens Financial Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Wells Fargo is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a disclosure policy. Why Citizens Financial Group Stock Soared in June was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-07-2025
- Business
- Yahoo
Top US banks boost dividends
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. The biggest U.S. banks are increasing quarterly dividends following the Federal Reserve's Friday release of stress test results. Dividend increases come as the 22 stress-tested banks demonstrated they have sufficient capital to withstand a severe recession and continue lending while remaining above minimum capital requirements. This year's scenario wasn't as harsh as last year's, but given the results, large banks were expected to have room to hike dividends or share repurchases. Since large bank capital levels remain robust, 'investors should continue to expect that any excess capital that cannot be redeployed into growing the companies' core businesses either organically or through acquisition will eventually be returned to shareholders,' RBC Capital Markets analyst Gerard Cassidy wrote Tuesday. More 'aggressive' use of buyback plans should follow once a Basel III capital requirements proposal is finalized, he added. Dividend increases came out to a median of 7.1%, analysts noted. Among the top five biggest U.S. banks, JPMorgan Chase is boosting its dividend to $1.50 per share, from $1.40, for the third quarter. Bank of America said its dividend is increasing by 8%, to $0.28 per share. Citi is hiking its dividend to $0.60 per share, from $0.56. Wells Fargo is boosting its dividend to $0.45, from $0.40. U.S. Bank's dividend will tick up to $0.52 per share, from $0.50. Goldman Sachs logged a 33% increase, with its dividend jumping to $4 per share. PNC is hiking its dividend 6%, to $1.70 per share. Truist said its current dividend of $0.52 per share will remain. Preliminary stress capital buffers telegraphed Tuesday 'confirmed broad improvement in capital requirements, clearing the way for large banks to lower CET-1 targets,' Truist Securities analyst John McDonald wrote. JPMorgan, for example, said its required common equity tier 1 capital ratio dropped to 11.5%, from 12.3%. Most of the banks' stress capital buffers will be at the 2.5% regulatory minimum based on test results; Citi's is highest, at 3.6%. However, most were based on current methodology. 'The big question is whether the Fed proceeds with its proposal to average stress test results over two years, which would reduce the magnitude of improvement in capital requirements by ~half for the group,' McDonald wrote. The Fed will inform banks of their final 2025 stress capital buffer requirements by Aug. 31. The Fed also trimmed Wells Fargo's 2024 stress capital buffer, from 3.8% to 3.7%, and cut Goldman Sachs' 2024 stress capital buffer from 6.2% to 6.1%. Goldman's was reduced last year from 6.4%, after the bank contested the Fed's stress capital buffer requirement. On Tuesday, CEO David Solomon reiterated the desire for stress test changes. '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 in a news release. 'A more balanced approach to the tests would allow Goldman Sachs to continue to serve our clients' needs, invest in our world-class businesses, and support economic growth. We look forward to continued progress.' At JPMorgan – where the board of directors also approved a new $50 billion share repurchase program – CEO Jamie Dimon expressed similar sentiments. 'We look forward to future proposals from the Federal Reserve on stress test models and scenarios that will increase transparency and address longstanding issues with the current SCB framework,' Dimon said in a news release. The amount and timing of JPMorgan's common share repurchases under the new authorization 'will be subject to various factors,' the bank said. Morgan Stanley, which said it was increasing its dividend to $1 per share, from $0.925, also announced its board re-authorized a $20 billion share repurchase program. 'Given how much de-regulation has picked up steam as a topic between reporting seasons, we expect management teams to field questions on buyback cadence specifically and plans for excess capital deployment generally,' UBS analyst Erika Najarian wrote Tuesday. Recommended Reading Largest banks sail through Fed's stress test Sign in to access your portfolio
Globe and Mail
02-07-2025
- Business
- Globe and Mail
Will BAC's Intended Dividend Hike Boost Investor Confidence?
After clearing the Federal Reserve's 2025 stress test, Bank of America BAC has announced plans to increase its quarterly common stock dividend 7.7% to 28 cents per share beginning third-quarter 2025. This year, all 22 banks that were tested have passed the stress test, given that the 2025 scenario used to test the banks was less severe than last year. The current scenario modelled a 10% unemployment rate, a 33% drop in home prices, a 30% decline in commercial real estate prices, an 8% contraction in GDP and a 50% equity market decline. The aggregate simulated losses across the group totaled more than $550 billion. Yet, banks remained well-capitalized with common equity tier 1 (CET1) ratios far above the 4.5% minimum. Per the results, BAC's preliminary stress capital buffer (SCB) would improve 70 bps to 2.5% and its CET1 minimum requirement would be 10%, effective Oct. 1, 2025. However, if the Fed's proposed modifications to the SCB calculation are adopted, Bank of America's SCB would be 2.7% and its CET1 minimum requirement is 10.2%, effective Jan. 1, 2026. Currently, BAC has a payout ratio of 31% and its annual dividend yield is 2.20%. After clearing the 2024 stress test, the company increased its quarterly dividend 8.3% to 26 cents per share, following a 9.1% hike in 2023, a 4.8% rise in 2022 and 17% hike in 2021. BAC also has a share repurchase plan in place. In July 2024, the company authorized a $25-billion stock repurchase program, effective Aug. 1. As of March 31, 2025, $14.4 billion worth of authorization remained available. Moreover, as of March 31, 2025, Bank of America had total debt worth $721.9 billion and cash and cash equivalents of $273.6 billion. Given a decent liquidity position and strong balance sheet, BAC is expected to continue to reward shareholders with efficient capital deployments. Capital Deployment Plans of BAC's Peers Like BAC, JPMorgan JPM has announced that it intends to increase its quarterly common stock dividend 7.1% to $1.50 per share for the third quarter of 2025. Also, JPM's board of directors authorized a share repurchase program worth $50 billion, effective July 1, 2025. After clearing last year's stress test, JPMorgan had authorized a repurchase program of $30 billion. As of March 31, 2025, $11.7 billion in authorization remained available. Moreover, in March 2025, the Wall Street giant raised its quarterly dividend 12%, following a 9% hike in September 2024. Morgan Stanley MS announced that it would increase its quarterly dividend from 92.5 cents per share to $1.00 in the third quarter. Also, MS' board of directors reauthorized a multi-year common equity share repurchase program of up to $20 billion, without any expiration date. Following the clearance of the 2024 stress test, Morgan Stanley hiked its dividend by 8.8%. BAC's Price Performance, Valuation & Estimates So far this year, shares of Bank of America have gained 9.6% compared with the industry 's 18% growth. YTD Price Performance From a valuation standpoint, BAC trades at a price-to-tangible book ratio of 1.82, well below the industry average of 2.85. Price-to-Tangible Book Ratio The Zacks Consensus Estimate for BAC's 2025 and 2026 earnings indicates year-over-year growth rates of 11.9% and 16.7%, respectively. Earnings estimates have been revised marginally lower for both years over the past seven days. Expected Earnings Growth Currently, Bank of America carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Morgan Stanley (MS): Free Stock Analysis Report This article originally published on Zacks Investment Research (
