Fed stress test prompts JPMorgan to boost buybacks and dividends
JPMorgan Chase on Wednesday unveiled a new $50 billion share buyback program and raised its quarterly dividend after the Federal Reserve’s annual stress test showed the industry remains “well capitalized.”
The largest U.S. bank by assets said its quarterly dividend will rise 10% to $1.65 per share, subject to board approval, and authorized a buyback plan effective July 1.
JPMorgan CEO Jamie Dimon said in a statement: “The board’s plan to increase the dividend is supported by our continued investment in the business and strong financial performance. As always, we are prepared for any scenario, including the hypothetical 2026 regulatory ‘severely adverse’ scenario.”
Meanwhile, Goldman Sachs also raised shareholder returns, saying its quarterly dividend would increase 11% to $5 per share, citing strong earnings and capital strength.
Wells Fargo said it expects its dividend to rise 11% to $0.50 per share, while Morgan Stanley raised its dividend 15% to $1.15 per share and reauthorized a $20 billion multi-year common stock repurchase program.
Bank of America CEO Brian Moynihan said the bank will announce dividend changes next month.
The announcements came after the Fed released the results of its annual stress test. The test showed industry losses of more than $708 billion in a hypothetical recession, while all 32 large banks still remained above minimum capital requirements.
Unlike in prior years, however, the results will not affect capital requirements. Earlier this year, the Fed said it would keep the stress capital buffer unchanged through 2027 while overhauling the stress-test methodology, so banks knew their capital requirements when they entered Wednesday’s test.
Although analysts expected the test to have little short-term impact, banks still moved ahead with dividend increases, reflecting confidence in their capital strength.
In a research note before the results, KBW described this year’s stress test as a “formality,” saying markets would focus more on the Basel III Endgame proposal expected later this year than on the Fed’s annual routine test.
The story is developing. Please check back for updates.
