Morgan Stanley, Goldman Sachs, Wells Fargo and Bank of America raised their dividends after the Federal ReserveFederal Reserve gave the banks a clean bill of health in its annual stress test, saying they could withstand a severe economic recession.
Goldman Sachs ticker: GS said it would increase its dividend to $2.50 a share from $2. Chief Executive David Solomon said in a regulatory filing on Monday that we will continue to manage capital and be well positioned to support our clients.
According to a statement, Morgan Stanley MS said it plans to increase its shareholder payout by 11% to 77.5 cents ashare, and approved a share buyback program of $20 billion. Bank of America BAC increased its quarterly dividend to 22 cents a share, while Wells Fargo WFC increased its dividend to 30 cents a share from 25 cents. In premarket trading on Tuesday, Goldman Sachs shares increased by 1.4%. The stock of Morgan Stanley gained 3.8%, Bank of America rose 0.8%, and Wells Fargo shares were up 1.52%. JPMorgan Chase JPM said it intends to maintain its dividend of $1 a share for the third quarter because of higher future capital requirements. Citigroup C said it has the capacity to maintain its dividend of 51 cents in a range of stress scenarios. The Fed released the results of its annual bank stress test, which this year measured the ability of more than 30 of the country s biggest banks to maintain strong capital levels in a hypothetical global recession, which included rising unemployment, commercial real estate prices dropping and a sharp decline in stock prices. The Fed said in a statement that all banks tested remained above their minimum capital requirements despite projected losses of $612 billion. The banks' capital ratios, which provide a cushion against losses, would decline to 9.7%, more than double their minimum requirements, the Fed said.