By Nupur Anand and Niket Nishant
NEW YORK (Reuters) -U.S. banking giants announced plans on Tuesday to raise their third-quarter dividends after clearing the Federal Reserve’s annual health check last week.
The moves come after the lenders showed they have enough capital to withstand scenarios including a severe economic downturn, spiking unemployment and market turmoil.
JPMorgan Chase, the nation’s largest bank, raised its dividend to $1.50 a share from $1.40, according to a regulatory filing. It also announced a new $50 billion share repurchase program, effective on Tuesday and with an unspecified end date.
“The board’s intended dividend increase, our second this year, represents a sustainable level of capital distribution to our shareholders and is supported by our strong financial performance,” JPMorgan CEO Jamie Dimon said.
“The new share repurchase program provides the ability to distribute capital to our shareholders over time, as we see fit,” Dimon said, adding that the stress test shows that banks are resilient.
Separately, Bank of America will raise its dividend by 8% to 28 cents per share, while Wells Fargo increased it to 45 cents a share from 40 cents, they said in separate filings.
Morgan Stanley’s board has approved a new $20 billion share repurchase program without specifying an end date and also plans to raise its quarterly dividend to $1 per share.
Goldman Sachs’ dividend will climb to $4 from $3, while Citigroup’s will go up to 60 cents from 56 cents.
On average, the Fed’s stress test found banks retained an average 11.6% ratio of their common equity Tier 1 capital, well above the 4.5% minimum required by regulators. The nation’s six largest banks all retained double-digit capital ratios under the test.
The Fed is in the process of overhauling the way the test is conducted.
The regulator proposed in April that the results should be averaged over two years, which could lead to less volatility in outcomes.
“The Federal Reserve has expressed its intention to institute a more transparent and fair approach to these tests, as it looks to uphold the safety and soundness of our financial system,” Goldman CEO David Solomon said.
JPM’s Dimon also said that the new stress testing models could provide more transparency.
That rule-writing project is still ongoing, but the central bank said on Friday that if the 2025 and 2024 results were averaged, banks would have needed to set aside more capital to meet the requirements.
Bank New dividend (per Old dividend
share) (per share)
JPMorgan $1.50 $1.40
Bank of America 28 cents 26 cents
Citigroup 60 cents 56 cents
Wells Fargo 45 cents 40 cents
Goldman Sachs $4 $3
Morgan Stanley $1 ~93 cents
Source: Regulatory filing
(Reporting by Nupur Anand in New York and Niket Nishant in Bengaluru, Editing by Lananh Nguyen and Matthew Lewis)
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