UPDATE 4-Major US Banks Increase Dividends After Breaking Through Fed Stress Tests

(Updates to note photo availability) By Saeed Azhar, Tatiana Bautzer and Nupur Anand NEW YORK, June 30 (Reuters) – U.S. banks including JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley have increased their dividends of the third quarter on Friday after sailing thanks to the Federal Reserve’s annual health check, which showed that it had enough capital to weather a severe economic downturn. JPMorgan, the largest US lender, plans to increase its quarterly stock dividend to $1.05 per share from $1.00 currently. Wells Fargo will increase its dividend to 35 cents per share from 30 cents, the companies said. Goldman Sachs’ dividend will drop from $2.50 to $2.75 per share, while Morgan Stanley’s will drop to 85 cents per share from 77.5 cents currently. Citigroup’s dividend will drop from 51 cents to 53 cents per share. The banks announced the dividend hikes after passing the Fed’s stress test, which determines how much capital they must set aside before they can return cash to shareholders. In the Fed’s major economic crisis scenario, the 23 banks tested — including JPMorgan, Bank of America and Goldman Sachs — would suffer combined losses of $541 billion, while holding more than double the amount of capital required. America’s biggest lenders remained resilient despite the bankruptcies of three major regional banks that rocked the sector earlier this year. Big banks remained on solid footing even as the Fed raised interest rates to rein in inflation, which could tip the economy into recession. “The results show that these banks are able to withstand severe stress and maintain a capital cushion above regulatory minima, credit positive,” ratings agency Moody’s Investors Service said in a note. Citigroup repurchased $1 billion of common stock during the second quarter and will continue to value its capital stock quarterly, CEO Jane Fraser said in a statement. Citigroup’s stress capital buffer (SCB) requirement rose to 4.3% from 4.0% currently, unlike major peers whose SCB fell. The size of the SCB, an additional layer of capital introduced in 2020 that is on top of the minimum capital requirements for banks, reflects a bank’s performance on the test. “While we would clearly have preferred not to see an increase in our stress capital cushion, these results still demonstrate Citi’s financial resilience in all economic environments,” Fraser said. Analysts expected banks to remain cautious given the uncertain economic environment as they prepare for international capital rules that could be announced as early as this summer. Bank New Previous JPMorgan Chase $1.05 $1.00 Goldman Sachs $2.75 $2.50 Citigroup $0.53 $0.51 Morgan Stanley $0.85 $0.775 Wells Fargo $0.35 $0.30 male )

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