Goldman and other banks keep dividend stable, Wells Fargo to drop after stress test

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Almost all of the largest US banks said on Monday that they had performed well enough in the Federal Reserve’s last stress test to maintain their current quarterly dividend.Goldman Sachs, Bank of America, Morgan Stanley, JPMorgan Chase and Citigroup have all said they will maintain their current dividend. Wells Fargo said the Fed’s assessment of its business would warrant a cut in its quarterly payment.

While the country’s largest banks quickly abandoned share buybacks at the start of the coronavirus pandemic, the group is often reluctant to cut its dividend payments, which are seen as a regular source of income for investors.

The industry was forced to cut its dividends after the 2008 financial crisis and has only slowly increased them since the Fed authorized banks to increase its dividends in 2011. Given the unprecedented stress that Covid-19 has exerted On the American economy, the Fed announced last week new restrictions on the American banking sector.

Here’s 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 sustainable earnings profile, continuous performance and very liquid balance sheet allow us to serve our customers, maintain our dividend and deliver for all of our stakeholders,” said President and CEO David Solomon. “We have a history of capital replenishment when necessary and brought our standardized CET1 ratio above 13% at the end of this quarter. We fully intend to continue this dynamic capital management while helping our clients to continue to navigate difficult markets. “

Citigroup

  • Dividend per share for the quarter ended March 31: 51 cents
  • New dividend: 51 cents
  • Notable comment:

“While we will continue to assess our planned capital actions against the most recent financial and macroeconomic conditions, we believe we are well positioned to continue to support our customers and the economy as a whole, while continuing our actions in expected capital, “said the CEO. Michael Corbat. “The planned capital shares 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 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 “confirm our solid capital position and reflect the stability of our economic model. … We plan to continue paying our quarterly common share dividend of $ 0.35 per share, ”said CEO James Gorman. “We voluntarily suspended our share buybacks in March and continued to raise capital. The updated capital rules provide us with the flexibility to deploy our excess capital and we will reassess our equity actions when we have more confidence 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 allowance for credit losses significantly greater than the increase in the first quarter,” said CEO Charlie Scharf. “Wells Fargo continues to have one of the strongest capital positions compared to regulatory minimums among the world’s financial services companies, as shown by our stress test results. These are certainly extremely difficult times for many and we remain committed to supporting our customers and our communities, and we will continue to take appropriate measures to maintain solid levels of capital and liquidity and to improve the profitability of the company. ”

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, beyond what is necessary through economic cycles to grow the business and support customers, communities and the global economy . The company intends to maintain the quarterly dividend on common shares at the current rate of $ 0.18 until further notice, subject to approval by the Board of Directors of Bank of America. ”

JPMorgan Chase

  • Dividend per share for the quarter ended March 31: 90 cents
  • New dividend: 90 cents
  • Notable comment:

“Right now, using both the economic outlook of JPMorgan Chase and the Federal Reserve, the firm can continue to pay its dividend over the next few quarters while maintaining healthy capital and liquidity positions. In the event of a significant deterioration in future prospects, the firm will of course consider reducing the dividends, “said CEO Jamie Dimon. “The firm had already halted its share buyback program and had no plans to resume the program until real economic results improved significantly. “

To ensure the banks’ continued survival and ensure adequate capital in the system, the Fed said it capped dividend payments in the third quarter. The regulator said that third quarter bank dividends will be capped at 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, urging caution, also barred banks from buying back stocks in the third quarter and said it would force banks to submit to ongoing quarterly reviews during the crisis. Most of the country’s largest banks have already agreed to suspend share buybacks in the second quarter to consolidate their capital positions.

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