After passing the Federal Reserve's stress tests, several U.S. big banks announced bigger dividends while bulking up share buyback plans.
The annual stress tests are the Fed’s assessment on whether banks have adequate capital to absorb losses during severe economic downturns. This year, all 18 of the biggest financial institutions tested by the Fed passed the tests, and won the Fed’s nod to boost payouts with the exception of the U.S. division of Credit Suisse.
After clearing this year’s tests, JPMorgan said that it will increase its third quarter dividend by 12.5% to 90 cents a share, and buyback up to $29.4 billion in shares over the next year (compared to last year’s $20.7 billion share repurchase program).
Goldman Sachs hiked its quarterly dividend by nearly 50% to $1.25 a share, and authorized a $7 billion stock repurchase program, up from $5 billion a year ago.
Citigroup boosted its dividend to 51 cents a share, up from 45 cents. It said that it can buyback $21.5 billion in stock.
Morgan Stanley increased its dividend to 35 cents a share from 30 cents, and can buy back $6 billion in stock.
Bank of America raised its dividend to 18 cents a share from 15 cents, and could repurchase up to $30.9 billion of shares.