Large banks start announcing dividend raises after Fed stress tests

Investing.com -- Large banks are starting to announce their dividend and other capital plans now that the results of the Federal Reserve’s annual stress tests have been announced.

Wells Fargo &Company (NYSE:WFC) is raising its dividend nearly 17% to 35 cents a share in the third quarter. Shares rose 0.1% in after-hours trading. 

Wells said it expects its stress capital buffer to decrease to 2.9%, representing a percentage amount of incremental capital it needs to hold above its minimum requirements. 

The dividend raise, from 30 cents a share, is subject to board approval in July.

Wells also said that for the four-quarter period beginning in the third quarter 2023 and going through second quarter 2024, it has capacity to repurchase common stock.

“This year’s CCAR stress test affirmed that Wells Fargo remains in a strong capital position, reflecting the value of our franchise and benefits of our operating model,” said CEO Charlie Scharf in a statement.

JPMorgan emphasizes 'fortress' balance sheet

JPMorgan Chase&Co (NYSE:JPM) is raising its payout 5%, to $1.05 a share in the third quarter. Its stress capital buffer is 2.9%, down from 4.0%.

JPMorgan added that it has an existing repurchase program previously approved by its board.

CEO Jamie Dimon said in a statement that the bank continues to “maintain a fortress balance sheet with strong capital levels and robust liquidity, and we remain prepared for a broad range of potential outcomes, including potentially higher future capital requirements from the finalization of the Basel III capital rules.”

Shares rose 0.2%.

Morgan Stanley cites transformed business model

Morgan Stanley (NYSE:MS) plans to raise its quarterly dividend 9.6%, to 85 cents a share from 77.5 cents a share. 

Its board reauthorized a share repurchase program of up to $20 billion, beginning in the third quarter. Morgan Stanley expects to be subject to a stress capital buffer of 5.4% from October 1, 2023, to September 30, 2024. CEO James P. Gorman said the results “demonstrate the durability of our transformed business model.”

Shares of Morgan Stanley rose 1.3% in after-hours trading.

US Bank anticipates future changes to capital requirements

U.S. Bancorp (NYSE:USB) expects a stress capital buffer of 2.5% starting in October. It also said its common stock repurchase program remains suspended after the acquisition of Union Bank and in anticipation of future changes to capital requirements. 

“The results of this year’s stress test demonstrate that we are well-capitalized and remain prepared to withstand a severe economic downturn following the acquisition of Union Bank,” said CEO Andy Cecere.

US Bank shares dipped 0.1%.