Summary: After the Fed stress test, JPMorgan will launch a $50 billion buyback and raise its quarterly dividend. Goldman Sachs, Morgan Stanley and others also increased payouts, while all 32 large banks still met capital requirements.
After the Fed Stress Test, JPMorgan Launches a $50 Billion Buyback and Lifts Dividend
JPMorgan Chase on Wednesday disclosed a new $50 billion stock buyback plan and raised its quarterly dividend after the Federal Reserve's annual stress test showed the industry still held ample capital.
The largest US bank by assets said it will increase its quarterly dividend by 10% to $1.65 per share, subject to board approval, and authorized the repurchase plan effective July 1.
JPMorgan CEO Jamie Dimon said in a statement, “The board's proposed dividend increase is supported by our continued investment in the business and strong financial performance. As always, we are prepared for a range of scenarios, including the hypothetical 2026 regulatory 'severely adverse' scenario.”
Goldman Sachs also raised its quarterly payout, saying its dividend will increase 11% to $5 per share, citing strong profitability and capital strength.
Wells Fargo said it expects to raise its dividend 11% to $0.50 per share; Morgan Stanley lifted its dividend 15% to $1.15 per share and simultaneously reauthorized a $20 billion multi-year common stock buyback program.
Bank of America CEO Brian Moynihan said in a statement that the bank will announce its dividend-related plans next month.
The announcements came shortly after the Federal Reserve released its annual stress test results. The test showed that all 32 large banks remained above minimum capital requirements even under a hypothetical scenario in which the industry was projected to lose more than $708 billion.
Unlike in the past, however, the result will not affect banks' capital requirements. The Fed had previously said it would keep the stress capital buffer unchanged through 2027 while it reforms its testing methodology, meaning banks already knew their capital requirements before entering Wednesday's test.
Although analysts had expected the exercise to have little near-term impact, several banks still moved ahead with dividend increases amid regulatory uncertainty, reflecting a degree of confidence.
In a research note ahead of the results, KBW described this year's stress test as a “rubber stamp” and said investors were more focused on the Basel III Endgame proposal expected later this year than on the Fed's annual routine test.
