The Federal Reserve announced on Friday that “virtually all” of the nation’s largest banks are meeting expectations for capital planning and have the green light to boost dividends and share buybacks.
Only one of the country’s 18 largest banks is required to address limited weaknesses identified in the second round of the Fed’s annual stress test. Credit Suisse passed the test, but is restricted from raising payouts until the issue is addressed.
"The stress tests have confirmed that the largest banks are both well capitalized and place a high priority on strong capital planning practices," said Vice Chair for Supervision Randal K. Quarles. "The results show that these firms and our financial system are resilient in normal times and under stress."
This was only the second time since the Fed began administering these tests in 2009 that no bank failed. The Fed reports that the firms have significantly increased their capital since the first round of tests, more than doubling their common equity capital from around $300 billion to roughly $800 billion during that time.
A healthy financial system means many of the largest U.S. banks will be giving investors a healthy dividend hike. FOX Business takes a look at some of the pending payouts.
The company will raise dividends to $0.90 from $0.80. In addition, the company has authorized gross common equity repurchases of up to $29.4 billion between July 1, 2019 and June 30, 2020 under a new common equity repurchase program.
Jamie Dimon, chairman and CEO of JPMorgan Chase said: “The strength of our franchise has allowed us to continue to use our capital to grow and invest in our businesses to support our customers, clients and communities around the world. We are pleased to have the capacity and flexibility to return excess capital to our shareholders as we maintain a fortress balance sheet that provides the ability to withstand extreme stress.”
The company expects to maintain its quarterly dividend of $0.40 per share, upon approval from its Board of Directors. In addition, the company’s board of directors have already authorized a repurchase of up to $2.2 billion of shares of the company's common stock beginning in the third quarter of 2019 through the end of the second quarter of 2020.
Bank of America Corporation
The company's dividends will rise by 20 percent, and the company will return as much as $37 billion to common stockholders. Its quarterly common stock dividend will increase to $0.18 per share. It has been authorized to repurchase approximately $30.9 billion in common stock from July 1 through June 30, 2020. The buybacks would include approximately $0.9 billion in repurchases to offset shares awarded under equity-based compensation plans during the same period.
The company's board of directors approved the repurchase of up to $3.94 billion of its common stock starting in the third quarter of 2019 and continuing through the second quarter of 2020, an increase of approximately 20 percent versus the prior four-quarter period. The company also intends to increase its quarterly cash dividend on common stock by approximately 11 percent from $0.28 to $0.31 per share.
The company expects to increase its third-quarter 2019 common stock dividend to $0.51 per share from $0.45 per share, upon the board of directors' approval. In addition, Wells Fargo plans repurchases of up to $23.1 billion for the four-quarter period. The company may also consider redemptions or repurchases of other capital securities.
“Today’s positive CCAR result demonstrates the strength of Wells Fargo’s diversified business model, our sound financial risk management practices, and our strong capital position,” said interim CEO and President Allen Parker. “We continue to return excess capital responsibly to shareholders and remain committed to our goal to be the financial services leader in creating long-term shareholder value.”
The company’s board of directors is expected to consider a recommendation to increase the quarterly cash dividend on common stock by $0.20 cents per share, or 21 percent, to $1.15 per share. The capital plan also included share repurchase programs of up to $4.3 billion for the four-quarter period beginning in the third quarter of 2019.
Citi is looking to increase the quarterly common stock dividend by 13 percent from $0.45 to $0.51 per share as well as a common stock repurchase program of up to $17.1 billion during the four quarters. These planned capital actions will total to $21.5 billion over the four quarters.
“Looking ahead, we are focused on continuing to serve our clients with distinction, improving returns for our shareholders and making the investments necessary to ensure safety and soundness,” Citi CEO Michael Corbat said.
The company will increase dividends by 47 percent from $0.85 to $1.25 per share. The capital plan will provide for up to $7.0 billion in repurchases and $1.8 billion in total common stock dividends.
“The opportunity to increase capital return to our shareholders reflects the financial strength of the firm,” said David M. Solomon, chairman and CEO. “We are pleased to have the ability to increase our common stock dividend while pursuing our strategic growth initiatives. Through our capital plan and the reinvestment in our business, we remain committed to driving long-term shareholder returns.”