① US banking giants announced plans to increase third-quarter dividends on Friday, June 28th. ② Previously, on Wednesday, June 26th, 31 major US banks passed the Federal Reserve's annual stress tests. ③ Overnight on Friday, US bank stocks generally rose.
On June 29th, Caixin reported (edited by Zhou Ziyi) that US banking giant Bank of America announced plans to raise dividends in the third quarter on Friday (June 28th). Previously, these top banks passed the Federal Reserve's annual stress test, proving they have enough capital to withstand severe economic and market turbulence.
On Wednesday (June 26th), all 31 major US banks passed the Federal Reserve's annual stress test. The inspection showed that these banks will have enough capital to continue lending under various circumstances, including a significant rise in unemployment, market turmoil, and a sharp decline in the residential and commercial mortgage markets.
In a statement, the Federal Reserve stated that each company can maintain the minimum capital requirement under an economic recession scenario, demonstrating strong capital strength and risk resilience. This test result also paved the way for higher dividends in the banking industry.
According to a document, the largest bank in the US, JPMorgan, announced that it will increase dividends from $1.15 per share to $1.25 per share. In addition, the board also approved a new share buyback plan of $30 billion, effective from July 1.
Bank of America and Citigroup both stated in the documents submitted to regulatory agencies that Bank of America's dividend will increase from 24 cents per share to 26 cents per share, while Citigroup's dividend will increase from 53 cents per share to 56 cents per share.
Morgan Stanley will raise its dividends from 85 cents per share to 92.5 cents per share; Goldman Sachs' dividend will rise from the previous $2.75 to $3 per share; Wells Fargo & Co.'s dividend will increase to 40 cents, previously 35 cents.
US bank stocks rose generally on Friday overnight, with JPMorgan up 1.55%, Bank of America up 1.32%, Citigroup up 3.1%, Wells Fargo & Co. up 3.43%, Goldman Sachs up 1.43%, and Morgan Stanley up 1.49%.
As an important measure to strengthen financial supervision after the 2008 financial crisis, the Federal Reserve's annual stress test covers banks with assets over $100 billion. The results of the test determine the capital required for banks to operate healthily, as well as the capital that can be returned to shareholders through share buybacks and dividends.
The test results show that under the assumed extremely adverse economic scenario, the average level of the common equity Tier 1 capital ratio (CET1, as the highest quality regulatory capital) of these banks has increased significantly from the minimum requirement of 4.5% to 9.9%, demonstrating a far exceeding standard capital adequacy ratio.