(LR) Michael Corbat, CEO, Citigroup Inc., Jamie Dimon, CEO, JPMorgan Chase & Co., James Gorman, CEO, Morgan Stanley, Brian Moynihan, CEO, Bank of America Corp., Ron O’Hanley , President and CEO of State Street Corp., Charles Scharf, CEO of Bank of New York Mellon Corp., and David Solomon, CEO of Goldman Sachs & Co., swear before an Audience of the House Financial Services Committee of Representatives on April 10, 2019 in Washington, DC.
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Almost all of the largest banks in the US said Monday that they performed well enough in the most recent Federal Reserve stress test to maintain their current quarterly dividend.
Goldman Sachs, Bank of America, Morgan Stanley, JPMorgan Chase and Citigroup said they will keep their current dividend. Wells Fargo said the Fed’s evaluation of his business will guarantee a reduction in his quarterly payment.
While the country’s largest banks quickly abandoned the share buyback at the start of the coronavirus pandemic, the group often hates to cut its dividend payments, which are considered a constant source of income for investors.
The industry was forced to cut dividends after the 2008 financial crisis and has only slowly accumulated them since the Fed first allowed banks to increase dividends in 2011. Given the unprecedented stress that Covid-19 has placed on In the US economy, the Fed announced last week new restrictions on the US banking industry.
Here is what Goldman Sachs, Bank of America, Wells Fargo, Citigroup, JPMorgan and Morgan Stanley said:
Goldman Sachs
- Dividend per share for the quarter ended March 31: $ 1.25
- New dividend: $ 1.25
- Notable comment:
“Our long-term earnings profile, continued performance and highly liquid balance sheet allow us to serve our clients, maintain our dividend and deliver to all of our shareholders,” said President and CEO David Solomon. “We have a history of capital rebuilding when necessary, and have brought our standardized CET1 index above 13% as this quarter comes to an end. We fully intend to continue this dynamic capital management while helping our clients to continue browsing challenging markets. “
Citigroup
- Dividend per share for the quarter ended March 31: 51 cents
- New dividend: 51 cents
- Notable comment:
“While we will continue to evaluate our planned capital actions against the latest financial and macroeconomic conditions, we believe that we are well positioned to continue supporting our clients and the economy as a whole, while continuing our planned capital actions,” CEO Michael Corbat said. “The planned capital actions include common dividends of $ 0.51 per share in the third quarter and during the four quarters covered by the CCAR 2020 cycle (ie, 4Q 2020 – 3Q 2021), subject to the latest financial and macroeconomic conditions.”
Morgan Stanley
- Dividend per share for the quarter ended March 31: 35 cents
- New dividend: 35 cents
- Notable comment:
The results “affirm our strong capital position and reflect the stability of our business model … We anticipate continuing to pay our quarterly common stock dividend of $ 0.35 per share,” said CEO James Gorman. “We voluntarily suspended our share buybacks in March and have continued to accumulate capital. The updated capital rules give us flexibility to deploy our excess capital, and we will reevaluate our capital stocks when we are more confident in the shape and path of economic recovery. . “.
Wells Fargo
- Dividend per share for the quarter ended March 31: 51 cents
- New dividend: reduced. Exact payment to be determined.
- Notable comment:
“We expect our second-quarter results to include an increase in the credit loss reserve substantially greater than the increase in the first quarter,” said CEO Charlie Scharf. “Wells Fargo continues to have one of the strongest capital positions on regulatory minimums among financial services companies in the world, as evidenced by the results of our stress tests. These are undoubtedly extremely difficult times for many and We remain committed to supporting our customers and communities, and will continue to take appropriate measures to maintain strong capital and liquidity levels and to enhance the company’s earning capacity. “
Bank of America
- Dividend per share for the quarter ended March 31: 18 cents
- New dividend: 18 cents
- Notable comment:
“Bank of America is committed to returning capital to shareholders over time, more than what is needed throughout business cycles to grow the company and support customers, communities and the global economy. The company has Intention to maintain quarterly dividend on common stock at the current time rate of $ 0.18 until further notice, subject to approval of the Bank of America Board of Directors. “
JPMorgan Chase
- Dividend per share for the quarter ended March 31: 90 cents
- New dividend: 90 cents
- Notable comment:
“Right now, using the JPMorgan Chase and Federal Reserve base case economic prospects, the Firm can continue to pay its dividends in future quarters while maintaining a good capital position and liquidity. If there is a significant deterioration in the future outlook The Firm will, of course, consider reducing dividends, “said CEO Jamie Dimon. “The firm had already discontinued its share buyback program and had no intention of resuming the program until actual economic results improve substantially.”
In an effort to ensure the continued survival of banks and ensure adequate capital in the system, the Fed said it is limiting dividend payments in the third quarter. The regulator said third-quarter bank dividends will be limited to the amount paid in the second quarter and that it may choose to further reduce payments based on each company’s recent earnings.
Fed officials, citing great caution, also banned banks from buying back shares in the third quarter and said it will require banks to undergo quarterly reviews underway during the crisis. Most of the country’s largest banks have already agreed to halt share buybacks during the second quarter to shore up their capital positions.
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