Wall Street’s largest lenders boosted their dividends after passing this year’s Federal Reserve stress tests, a hurdle that regulators made easier to clear by softening some of the requirements laid out in previous years.
Goldman Sachs Group Inc. and Morgan Stanley were among firms that raised quarterly payouts after the Fed’s annual review last week, and shares of both banks hovered near record highs Wednesday.
JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. also boosted their dividends. In addition, JPMorgan’s board authorized a $50 billion share buyback, and Morgan Stanley reauthorized a multiyear share repurchase program of as much as $20 billion, with no expiration date.
Morgan Stanley advanced as much as 1% to a record $142.43 at mid-morning in New York, while Goldman Sachs rose 1.3% to an all-time high of $715.29. Citigroup was an outlier, dropping 0.2% for the only decline in the 24-company KBW Bank Index.
The Fed’s exam — a product of the 2008 financial crisis — showed that all of the banks examined would maintain enough capital to withstand a hypothetical economic downturn. The review tends to set the tone for how aggressive banks are in returning capital to shareholders through dividends and buybacks. It requires banks to consider hypothetical crisis scenarios and estimate the losses they might face based on their books of business.
All 22 banks comfortably passed last week after determining they would withstand more than $550 billion in losses. The results showed that “large banks are well positioned to weather a severe recession,” the Fed said.
The scenario in this year’s tests led to lower loan losses in a less severe scenario, due to the mild slowing of the US economy in 2024, among other factors. The results were also affected by lower private equity losses and higher net revenue.
The Fed announced last year that it planned to make changes to its process, and in April unveiled a proposal to average results over two years when setting capital requirements. Fed Vice Chair for Supervision Michelle Bowman has said that potential changes would help the agency address the “excessive volatility in the stress test results and corresponding capital requirements.”
In that same vein, the Fed also unveiled plans to decrease what’s called the enhanced supplementary leverage ratio, which requires banks to hold a certain amount of capital relative to their assets.
Retiring RIA seller David Laidlaw alleges the Carnegie valued his stake on $11.7 million EBITA while pitching potential buyers on $21.3 million.
New tool gives RIAs and family offices AI help vetting private market deals, with some users reportedly halving review time.
Investors got projected returns dressed up as real ones, SEC says
Parents must still act to get the $1,000 federal seed and employer contributions, giving financial advisors a role in the rollout.
FINRA booted Rudy Anguiano from the industry for “conversion - the intentional and unauthorized taking of another person’s property.”
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains