JPMorgan Chase on Wednesday disclosed a new $5 billion stock buyback program and raised its quarterly dividend after the Federal Reserve's annual stress test showed the industry still holds ample capital.
The largest U.S. bank by assets said it will lift its quarterly dividend by 10% to $1.65 per share, subject to board approval, and that the repurchase authorization takes effect on July 1.
JPMorgan CEO Jamie Dimon said in a statement: “The board's plan to raise the dividend is supported by our continued investment in the business and strong financial performance. As always, we are prepared for a range of scenarios, including the hypothetical 2026 severely adverse regulatory scenario.”
Meanwhile, Goldman Sachs also boosted shareholder returns, saying its quarterly dividend will rise 11% to $5 per share, citing strong earnings and capital strength.
Wells Fargo said it expects to increase its dividend by 11% to $0.50 per share; Morgan Stanley raised its dividend by 15% to $1.15 per share and also reauthorized a multi-year $20 billion common stock buyback program.
Bank of America CEO Brian Moynihan said in a statement that the bank will make an announcement on dividends next month.
The news came after the Federal Reserve released its annual stress test results. The test showed that 32 large banks remained above minimum capital requirements even under a hypothetical recession scenario, with projected industry losses exceeding $708 billion.
Unlike in previous years, the stress test results will not affect banks' capital requirements. The Fed had previously said it would keep the stress capital buffer unchanged through 2027 while reforming the testing methodology, meaning banks entered Wednesday's test already knowing their capital requirements.
Although analysts had previously believed the test would have limited near-term impact, banks still moved ahead with dividend increases amid regulatory uncertainty, reflecting a degree of confidence.
Before the results were released, KBW described this year's stress test in a report as a “box-ticking exercise” and said investors were more focused on the Basel III endgame proposal expected later this year than on the Fed's annual routine test.
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