Morgan Stanley and BofA return cash to shareholders after stress tests

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(Bloomberg) — Morgan Stanley (NYSE:) and Goldman Sachs Group Inc. (NYSE:). led the way as US banks increased dividends and share buybacks in response to their success in this year’s stress tests. JPMorgan Chase & Co. (NYSE:) kept its dividend stable at $1 per share.

Goldman Sachs said its quarterly dividend would jump 25% to $2.50 per share from $2. Morgan Stanley increased its payout to 77.5 cents per share from 70 cents, according to a statement Monday.

“Our customer-focused strategy will continue to diversify the franchise of the business and provide an enhanced return profile,” David Solomon, chairman and chief executive of Goldman Sachs, said in a statement. “We will continue to manage capital aggressively and remain well positioned to support our customers.”

America’s biggest banks have begun rolling out their capital distribution plans after passing the Federal Reserve’s tests, effectively giving them the green light to return billions of dollars to investors in the form of dividends and stock buybacks. All lenders passed the test last week, showing they had enough capital to weather a severe economic crisis with soaring unemployment, collapsing house prices and falling stocks.

Goldman Sachs shares rose about 1.7% after the announcement at 5:20 p.m. in extended New York trading. Morgan Stanley gained about 2.5%.

JPMorgan kept its payment unchanged “in light of higher future capital requirements,” the bank said in a filing. Shares of the New York-based company fell less than 1% to $115.50 immediately after its statement, before regaining most of that ground.

Citigroup Inc. (NYSE:). also said its dividend would remain stable at 51 cents per share.

The Fed said more than 30 lenders it reviewed were able to stay above their minimum capital requirements during the hypothetical downturn, which would have caused them total projected losses of $612 billion. Lenders use the tests to gauge how much capital they can afford to distribute to investors without falling below the amount they are required to hold as a cushion.

In total, US banking giants are expected to return $80 billion to shareholders this year, according to data compiled by Bloomberg based on estimates provided by analysts at Barclays (LON:) Plc.

Wells Fargo (NYSE:) & Co., the San Francisco-based retail banking giant, announced a 20% increase in the dividend, to 30 cents per share from 25 cents. Bank of America Corp’s (NYSE:) payout is expected to climb to 22 cents from 21 cents.

“Bank of America maintains a strong capital position to serve its customers in the current economic environment and our continued risk discipline prepares us well for a severe economic crisis scenario,” Chief Financial Officer Alastair Borthwick said in a statement. announcing the results. .

Among the other banks making announcements:

  • State Street Corp. (NYSE:). increased its dividend by 10% to 63 cents per share
  • The quarterly payout from Truist Financial (NYSE:) Corp. is set to rise 8% to 52 cents per share
  • The dividend from Bank of New York Mellon (NYSE:) Corp. would climb 9% to 37 cents per share
  • Fifth Third Bancorp’s increase could reach 3 cents a share from its current dividend of 30 cents

(Updates with Goldman, Wells Fargo, Citi from the first paragraph.)

©2022 Bloomberg LP

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