Wall Street’s largest banks have increased their dividends after approving this year’s Federal Reserve stress tests, an obstacle that regulators made it easier to soften some of the requirements established in previous years.
JPMorgan Chase, Goldman Sachs, and Bank of America were among the institutions that raised quarterly payments after the annual Fed review last week showed that all 22 examined banks would maintain enough capital to support hypothetical economic recession.
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Citigroup, Wells Fargo and Morgan Stanley, as well as several other big banks, also increased their dividends. In addition, the JPMorgan Council has authorized a $ 50 billion stock repurchase program, and Morgan Stanley has reaised a multi -annual stock repurchase program of up to $ 20 billion, with no expiration date.
The Fed Exam – a result of the 2008 financial crisis – tends to define the tone about how aggressive banks are by returning capital to shareholders through dividends and repurchase. It requires banks to consider hypothetical crisis scenarios and estimate the losses they could face based on their business portfolios.
Last week, all 22 banks passed comfortably after determining that they would support more than $ 550 billion in losses. The results showed that “large banks are well positioned to face a severe recession,” the Fed said.
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This year’s test scenario led to lower loan losses in a less severe scenario due to the moderate deceleration of the US economy in 2024, among other factors. The results were also affected by lower private equity and greater net revenue.
The Fed announced last year that it planned to make changes in its process and, in April, revealed a proposal to make the average results over two years by defining capital requirements. Supervision Fed Vice President Michelle Bowman said potential changes would help the agency deal with “excessive volatility in stress test results and corresponding capital requirements.”
In the same vein, the Fed also revealed plans to reduce the so -called supplementary improved leverage index, which requires banks to maintain a certain amount of capital compared to their assets.
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