Goldman Sachs Group Inc. and Morgan Stanley led the banks to give out handsome dividends to investors and boost share buybacks after they cleared this year’s annual stress test for the banks.
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According to Bloomberg News, JPMorgan Chase & Co. maintained its dividend per share to $1, while Goldman Sachs said it would increase its quarterly dividend by 25% from $2 to $2.50. Morgan Stanley increased its dividend payout from 70 cents to 77.5 cents.
David Solomon, CEO and Chairman of Goldman Sachs, said they would continue to diversify the bank’s franchise and provide a strong return profile with their client-oriented strategy.
After passing the Federal Reserve tests, the biggest US banks began to outline their plans to distribute capital to their investors in share buybacks and dividends. All the lenders in the US passed the annual stress test last week, indicating that that enough capital adequacy to handle a severe economic slowdown that saw increasing unemployment, plunging stock values, and collapsing real estate prices.
Morgan Stanley shares gained 2.5%, and Goldman Sachs shares rose 1.7% after an extended New York Trading announcement at 5.20 pm Monday.
JPMorgan kept its dividend payout the same as before, anticipating a higher capital requirement in the future. The New York-based bank shares fell to $115.5, slightly less than 1 %. Citigroup Inc. said that it would keep its dividend stay the same at 51 cents a share.
The Federal Reserve said that more than 30 lenders it examined could maintain the minimum capital requirement during a simulated downturn that would have caused all the lenders a hypothetical total loss of $612 billion. Lenders take this test to assess how much cash they can give back to their investors without going below the stipulated capital required to hold a cushion in any downturn.
The total amount that is said to be returned to the shareholders by the US banking giants this year is $80 billion, according to data compiled by Bloomberg based on the estimates given by Barclays Plc analysts.
Wells Fargo & Co., the retail banking giant from San Francisco, announced an increase of 20% in dividends from 25 cents to 30 cents a share. Bank of America’s payout is expected to increase from 21 cents a share to 22 cents.
Bank of America Chief Financial Officer Alastair Borthwick said in a statement announcing the bank’s results that Bank of America maintains a strong capital position and can serve its clients and customers during the current economy. It has a robust risk discipline that will allow them to prepare for any severe economic stress.
Among the other banks which made announcements include
- Truist Financial Corp to raise the quarterly payout to 52 cents a share
- State Street Corp boosts dividends by 10% to 63 cents.
Fifth Third Bancorp increases dividends by 3 cents a share.
