The Federal Reserve's publication of its stress test results prompted a wave of shareholder-friendly moves among major U.S. banks on Wednesday. Several institutions moved to raise quarterly dividends and to authorize or confirm large common stock repurchase programs.
Details announced by the firms include:
- Citigroup will raise its quarterly dividend by 12% to 67 cents per share and will maintain its multi-year $30 billion common stock repurchase program.
- Goldman Sachs said its common dividend will increase by 11%, to $5.00 per share from $4.50, with the higher payout beginning next month.
- Bank of America indicated it will set its quarterly dividend after a board meeting next month and confirmed it is keeping its $40 billion stock repurchase program.
- JPMorgan Chase & Co intends to raise its quarterly dividend to $1.65 per share from $1.50 and announced a new $50 billion common share repurchase program.
- Morgan Stanley will increase its dividend by 15% to $1.15 per share, and its board authorized a multi-year $20 billion common equity share repurchase program.
These announcements were made in direct response to the Fed's stress test disclosure and specify both the new dividend levels and the size or status of repurchase programs. The actions differ in timing and certainty: some increases are set to begin next month, some programs are described as multi-year, and one dividend remains to be defined by an upcoming board meeting.
While the disclosures contain clear figures for dividend increases and repurchase program sizes, certain elements remain subject to future execution. For example, Bank of America has not yet defined its quarterly dividend and JPMorgan used the phrasing that it "intends" to increase its payout, indicating that not all measures are immediately finalized. Other banks set explicit increases and authorized multi-year repurchase plans.
The moves collectively represent a coordinated uptick in shareholder returns among large U.S. banks immediately following the Fed's stress test results and identify specific capital return programs by name and dollar amount for each institution listed above.
Sectors impacted: Financials and equity markets focused on large-cap U.S. banks.