BANGALURU / NEW YORK (Reuters) -Morgan Stanley, Goldman Sachs (NYSE :), Bank of America (NYSE 🙂 and Wells Fargo (NYSE 🙂 hiked their dividends on Monday while JPMorgan (NYSE 🙂 & Chase kept its payout flat, after the US banks cleared their annual stress test exercise last week.
The US Federal Reserve said on Thursday the country’s largest lenders could easily weather a severe economic downturn, giving them a clean bill of health and paving the way for them to redistribute excess capital to shareholders.
Dividend payouts at most of the big banks rose this year despite the Fed’s test being tougher than in 2021, pushing up some lenders’ required capital buffers more than expected.
Morgan Stanley (NYSE 🙂 hiked its dividend payout by 11% to $ 0.775 per share, while Goldman Sachs said it plans a dividend increase to $ 2.50 per share from $ 2.00. Bank of America hiked its dividend by 5% to $ 0.22 per share and Wells Fargo said it expects to hike its dividend to $ 0.30 from $ 0.25 a share.
JPMorgan, however, decided to maintain its dividend at $ 1.00 a share, citing “higher future capital requirements.”
The test sets each bank’s “stress capital buffer” – an extra capital cushion on top of the regulatory minimum – the size of which is determined by each bank’s hypothetical losses under the test.
Banks announced their new stress capital buffers on Monday, although they do not come into effect until later this year, giving them time to rejig their balance sheets.