Major U.S. banks are increasing capital returns after the Federal Reserve releases the results of its latest stress test. The moves include higher quarterly dividends at several lenders and new or continuing multibillion-dollar share repurchase plans.
Highlights
- Citigroup will raise its quarterly dividend by 12% to 67 cents and maintain its $30 billion common stock repurchase program after the Fed stress test.
- JPMorgan Chase & Co will increase its quarterly dividend to $1.65 per share from $1.50 and launch a new $50 billion share buyback program.
- Morgan Stanley will raise its dividend by 15% to $1.15 per share and authorize a multi-year $20 billion common equity repurchase program.
Capital return plans after test results
As reported by Reuters, banks announce dividend increases and, in some cases, fresh buyback authorizations on Wednesday after the Federal Reserve releases its stress test results.Citigroup says it will raise its quarterly dividend by 12% to 67 cents and will keep its multi-year $30 billion common stock repurchase program. Goldman Sachs says its common dividend will rise 11% to $5.00 per share from $4.50, starting next month.
JPMorgan Chase & Co says it intends to increase its quarterly dividend to $1.65 per share from $1.50 and announces a new $50 billion common share repurchase program. Morgan Stanley says it will increase its dividend by 15% to $1.15 per share, while its board authorizes a multi-year $20 billion common equity share repurchase program.
Implications for bank capital strategy
Bank of America says it will set its quarterly dividend after a board meeting next month and is keeping its $40 billion stock repurchase program.The announcements indicate that large U.S. lenders are using stress test outcomes to support shareholder payouts while maintaining existing capital plans. The actions also highlight how dividend increases and buybacks remain central tools for returning excess capital across the banking sector.
Our earlier article on Barclays’ £500 million share buyback explained how the bank retired more than 110 million shares as part of its multi-year capital return plan combining dividends and repurchases. We also noted that strong earnings supported investor confidence, even as technical indicators pointed to overbought conditions and the risk of a short-term pullback near key resistance levels.
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