Big banks boost dividends after passing stress tests

Goldman, Morgan Stanley and others detailed capital plans Friday.

  • By AnnaMaria Andriotis and Alexander Saeedy,
  • The Wall Street Journal
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Big banks plan to pay out more to shareholders after passing regulators’ annual stress test results earlier this week.

JPMorgan Chase () said it plans to increase its quarterly dividend to $1.25 per share, up from $1.15. The bank had previously raised its dividend in March. JPMorgan also announced a $30 billion share buyback program, effective July 1.

Morgan Stanley () said it plans to increase its quarterly dividend to $0.925 per share, up from $0.85. The bank also said its board approved a multiyear repurchase of up to $20 billion of shares of the company’s common stock, beginning in the third quarter.

Bank of America () said it plans to increase its dividend $0.26 from $0.24, while Goldman Sachs () said it plans to increase its quarterly dividend to $3 per share, up from $2.75.

Goldman also said Friday the Federal Reserve notified the firm following the stress tests that its required common equity Tier 1 ratio—which measures high-quality capital as a share of risk-weighted assets—would increase to 13.9% in October.

“This increase does not seem to reflect the strategic evolution of our business,” Goldman Chief Executive David Solomon said in a company statement, adding that the bank “will engage with our regulator to better understand their determinations.”

The stress-test exercise measured the 31 biggest banks’ ability to maintain strong capital levels in a hypothetical recession. The biggest U.S. banks passed their stress test results on Wednesday, proving that they can withstand a severe downturn while continuing to lend to households and businesses, the Federal Reserve said.

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