By Nupur Anand
NEW YORK (Reuters) – U.S. banking giants announced plans on Friday to increase their third-quarter dividends after proving they had enough capital to weather severe economic and stock market turmoil in the company’s annual health check. Federal Reserve.
JPMorgan Chase, the largest U.S. bank, increased its dividend from $1.15 to $1.25 per share, according to a board filing. Its board also authorized $30 billion in new stock buybacks, starting July 1.
Bank of America’s dividend will increase from 24 cents to 26 cents per share, and Citigroup’s dividend will increase from 53 cents to 56 cents, the lenders said in separate regulatory filings.
“Banks will remain cautious on capital as long as uncertainty over the Basel proposal remains,” Brian Mulberry, client portfolio manager at Zacks Investment Management, said after the dividend announcement.
Banks have argued that higher capital requirements proposed under the draft rules known as “Basel Endgame” could hamper their ability to lend and could be damaging to the economy.
Morgan Stanley increased its dividend 85 cents to 92.5 cents per share, according to a filing.
The announcements come after banks passed the Fed’s stress test earlier this week, which determines how much capital they must set aside before they can return money to shareholders.
Goldman Sachs’ dividend will rise to $3 per share, up from $2.75.
A bank’s stress test results determine the size of its stress capital buffer (SCB) – an additional capital cushion the Fed requires banks to hold to withstand a hypothetical economic downturn.
Goldman said it would work with its regulator to better understand why its SCB jumped.
“This increase does not appear to reflect the strategic evolution of our business and the continued progress we have made to reduce the intensity of our stress-related losses,” CEO David Solomon said in a statement.
Wells Fargo’s dividend will increase to 40 cents.
This year, 31 major banks were tested, up from 23 last year. The checks showed that banks would have enough capital to continue lending under several scenarios, including a sharp rise in unemployment, high market volatility and a decline in residential and commercial mortgage markets.
Bank New dividend Old dividend
(per share) (per share)
JPMorgan $1.25 $1.15
Bank of America 26 cents 24 cents
Citigroup 56 cents 53 cents
Wells Fargo 40 cents 35 cents
Goldman Sachs3 $2.75
Morgan Stanley 92.5 cents 85 cents
(Reporting by Nupur Anand in New York; additional reporting by Tatiana Bautzer and Saeed Azhar; editing by Lananh Nguyen and Leslie Adler)
