JPMorgan Chase & Co., Wells Fargo & Co., Morgan Stanley and Goldman Sachs Group Inc. led US banks in announcing higher dividends after every lender subject to this year’s Federal Reserve stress tests passed the exam.
The banks announced the increases on Friday, with more lenders expected to announce plans as well.
Stress-test results posted by the Fed on Wednesday showed all 23 big US lenders examined can withstand a severe global recession and turmoil in real estate markets. In typical years, clearing the exam sets the stage for banks to return billions of dollars to investors through dividends and buying back stock.
Still, banks are expecting a bevy of additional regulatory scrutiny in the months ahead — from the unveiling of the long-awaited Basel III rules to an an overhaul of the Fed’s supervision efforts in the aftermath of the collapse of four regional banks this year. That’s left most banks warning investors that, beyond bumping up dividends, they may hold off on committing to big share buybacks until they get more clarity on what’s to come.
Shares of JPMorgan and Wells Fargo rose this week after both firms showed an improved resiliency in this year’s test. The criteria for the exam were announced before March’s regional bank turmoil, so it didn’t test banks on the kind of fallout from rising rates that shook midsize lenders just months ago.
(Updates to add Goldman from first paragraph.)
