The Federal Reserve's stress test results reveal that major U.S. banks maintain an average Tier 1 capital ratio of 11.6%, significantly exceeding the regulatory requirement of 4.5%. Following these results, six major banks, including JPMorgan Chase (JPM, Financial), Bank of America, and Wells Fargo, have announced dividend increases and new stock buyback plans.
JPMorgan Chase, the largest U.S. bank, raised its quarterly dividend from $1.40 to $1.50 per share and initiated a $50 billion stock repurchase plan. This marks JPMorgan's second dividend increase this year. CEO Jamie Dimon emphasized that this decision reflects sustainable capital distribution supported by strong financial performance.
Bank of America increased its dividend by 8% to $0.28 per share, while Wells Fargo raised its dividend from $0.40 to $0.45 per share. Morgan Stanley approved a $20 billion stock buyback plan and plans to increase its quarterly dividend to $1 per share. Goldman Sachs saw the most significant dividend increase, from $3 to $4 per share, and Citigroup raised its dividend from $0.56 to $0.60 per share.
The Fed is considering reforms to its stress testing mechanism, proposing a two-year average result to reduce volatility. This could impact future capital planning for banks.
