Largest US banks increase payouts to lighter Fed stress test | Company Business News

(Bloomberg) – Some of Wall Street’s largest borrowers boosted their dividends after passing this year’s Federal Reserve Stress Tests, an obstacle that made regulators easier to expose by softening the requirements set out in previous years. JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp. was one of the firms that collected quarterly payouts after the Fed’s annual review showed last week that all 22 banks investigated would maintain enough capital to withstand a hypothetical economic downturn. Wells Fargo & Co. and Morgan Stanley, as well as other major lenders, also increased their dividends. In addition, JPMorgan’s board of directors has a $ 50 billion share, and Morgan Stanley has recreated a perennial repurchase program of up to $ 20 billion, without any expiration. An announcement from Citigroup Inc. was still pending. The Fed’s exam – a product of the financial crisis in 2008 – tends to set the tone for how aggressive banks in return of capital to shareholders are through dividends and repurchase. This requires banks to consider hypothetical crisiscenarios and estimate the losses they face based on their business books. Last week, all 22 banks passed comfortably after determining that they would withstand more than $ 550 billion in losses. The results showed that “large banks are well positioned to defend a serious recession,” the Fed said. The scenario in the tests of this year has led to lower loan losses in a less serious scenario, due to the mild slowdown of the US economy in 2024, among others. The results were also influenced by lower private equity losses and higher net income. The Fed announced last year that it intended to make changes to the process, and in April he revealed a proposal on the average results over two years when capital requirements are set. Michelle Bowman, Vice Chairman of Fed for supervision, said potential changes would help the agency to address the “excessive volatility in the stress test results and corresponding capital requirements”. In the same vein, the Fed also revealed plans to reduce the said supplementary leverage ratio, which requires banks to keep a certain amount of capital in respect of their assets. More stories like these are available on Bloomberg.com © 2025 Bloomberg LP