JPMorgan, Financial institution of America, Citi and Goldman keep dividends post-stress exams, Wells Fargo to chop


Almost all the largest U.S. banks mentioned Monday that they carried out nicely sufficient on the Federal Reserve’s most-recent stress check to keep up their present quarterly dividend.

Goldman Sachs, Financial institution of America, Morgan Stanley, JPMorgan Chase and Citigroup all mentioned they are going to keep their present dividend. Wells Fargo mentioned the Fed’s evaluation of its enterprise will warrant a discount to its quarterly payout

Whereas the nation’s largest banks have been fast to drop inventory buybacks on the onset of the coronavirus pandemic, the group is commonly detest to chop its dividend funds, that are seen as a gentle supply of earnings for traders.

The trade was compelled to slash dividends after the 2008 monetary disaster and has solely slowly constructed them up because the Fed first allowed banks to lift dividends in 2011. Given the unprecedented stress Covid-19 has placed on the American economic system, the Fed final week introduced new restrictions on the U.S. banking trade.

Here is what Goldman Sachs, Financial institution of America, Wells Fargo, Citigroup, JPMorgan and Morgan Stanley mentioned:

Goldman Sachs

  • Per-share dividend for quarter ended March 31: $1.25
  • New dividend: $1.25
  • Notable commentary:

“Our sturdy earnings profile, continued efficiency, and extremely liquid stability sheet permit us to serve our shoppers, keep our dividend, and ship for all our stakeholders,” mentioned Chairman and CEO David Solomon. “We have now a monitor file of rebuilding capital when essential, and have introduced our standardized CET1 ratio above 13% as this quarter involves an in depth. We absolutely intend to proceed this dynamic capital administration whereas serving to our shoppers proceed to navigate difficult markets.”

Citigroup

  • Per-share dividend for quarter ended March 31: 51 cents
  • New dividend: 51 cents
  • Notable commentary:

“Whereas we’ll proceed to judge our deliberate capital actions relative to the newest monetary and macroeconomic situations, we imagine we’re nicely positioned to proceed to assist our clients and the broader economic system, whereas additionally persevering with with our deliberate capital actions,” mentioned CEO Michael Corbat. “The deliberate capital actions embody widespread dividends of $0.51 per share within the third quarter and over the 4 quarters coated by the 2020 CCAR cycle (i.e., 4Q 2020 – 3Q 2021), topic to the most recent monetary and macroeconomic situations.”

Morgan Stanley

  • Per-share dividend for quarter ended March 31: 35 cents
  • New dividend: 35 cents
  • Notable commentary:

The outcomes “affirm our robust capital place and mirror the steadiness of our enterprise mannequin. … We anticipate persevering with to pay our quarterly widespread inventory dividend of $0.35 per share,” mentioned CEO James Gorman. “We voluntarily suspended our share repurchases in March and have continued to accrete capital. The up to date capital guidelines present us flexibility to deploy our extra capital, and we’ll reevaluate our capital actions when we’ve extra confidence within the form and path of the financial restoration.”

Wells Fargo

  • Per-share dividend for quarter ended March 31: 51 cents
  • New dividend: Lowered. Precise payout to be decided.
  • Notable commentary:

“We anticipate our second quarter outcomes will embody a rise within the allowance for credit score losses considerably increased than the rise within the first quarter,” mentioned CEO Charlie Scharf. “Wells Fargo continues to have one of many strongest capital positions relative to regulatory minimums among the many world’s monetary companies corporations as demonstrated by our stress check outcomes. These are actually extraordinarily difficult occasions for a lot of and we stay dedicated to supporting our clients and communities, and we’ll proceed to take applicable measures to keep up robust capital and liquidity ranges and to enhance the earnings capability of the corporate.”

Financial institution of America

  • Per-share dividend for quarter ended March 31: 18 cents
  • New dividend: 18 cents
  • Notable commentary:

“Financial institution of America is dedicated to returning capital to shareholders over time, in extra of what’s wanted throughout financial cycles to develop the corporate and assist shoppers, communities and the worldwide economic system. The corporate intends to keep up the quarterly widespread inventory dividend on the present fee of $0.18 till additional discover, topic to approval by Financial institution of America’s Board of Administrators.”

JPMorgan Chase

  • Per-share dividend for quarter ended March 31: 90 cents
  • New dividend: 90 cents
  • Notable commentary:

“Right now, utilizing each JPMorgan Chase’s and the Federal Reserve’s base case financial outlook, the Agency can proceed to pay its dividend in future quarters whereas sustaining wholesome capital and liquidity positons. If there’s a important deterioration sooner or later outlook, the Agency will, after all, think about lowering dividends,” mentioned CEO Jamie Dimon. “The Agency had already discontinued its inventory repurchase program and has not supposed to renew this system till the precise financial outcomes enhance considerably.”

In an effort to ensure the continued survival of the banks and guarantee sufficient capital within the system, the Fed mentioned it’s capping dividend funds within the third quarter. The regulator mentioned third-quarter financial institution dividends might be capped on the quantity paid within the second quarter and that it might select to cut back the payouts additional primarily based on every agency’s current earnings.

Fed officers, citing an abundance of warning, additionally barred the banks from shopping for again shares within the third quarter and mentioned it would require banks to undergo ongoing quarterly opinions during the disaster. A lot of the nation’s largest banks already agreed to halt share repurchases in the course of the second quarter to shore up their capital positions.

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