JPMorgan, Citi, Goldman, Bank of America Maintain Dividends After Stress-Test

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Most of the major US banks performed well enough on the Federal Reserve's stress test to maintain current dividends.

Goldman Sachs, Bank of America, Morgan Stanley, JPMorgan Chase and Citigroup announced they will maintain their current dividend, according to CNBC.

Wells Fargo was the outlier, announcing that the Fed's assessment warranted a reduction of its dividend. Although banks did not hesitate to suspend stock buybacks, the sector is typically reluctant to cut dividend payments.

The financial sector was forced to slash dividends after the 2008 financial crisis and has been rebuilding payments since. The Fed first allowed banks to raise dividends in 2011.

Goldman Sachs, Bank of America, Wells Fargo, Citigroup, JPMorgan and Morgan Stanley all released statements regarding the stress test.

Goldman Sachs

  • Per-share dividend for quarter ended March 31: $1.25
  • New dividend: $1.25

“Our durable earnings profile, continued performance, and highly liquid balance sheet allow us to serve our clients, maintain our dividend, and deliver for all our stakeholders,” said Chairman and CEO David Solomon. “We have a track record of rebuilding capital when necessary, and have brought our standardized CET1 ratio above 13% as this quarter comes to a close. We fully intend to continue this dynamic capital management while helping our clients continue to navigate challenging markets.”

Citigroup

  • Per-share dividend for quarter ended March 31: 51 cents
  • New dividend: 51 cents

“While we will continue to evaluate our planned capital actions relative to the most recent financial and macroeconomic conditions, we believe we are well positioned to continue to support our customers and the broader economy, while also continuing with our planned capital actions,” said CEO Michael Corbat. “The planned capital actions include common dividends of $0.51 per share in the third quarter and over the four quarters covered by the 2020 CCAR cycle (i.e., 4Q 2020 – 3Q 2021), subject to the latest financial and macroeconomic conditions.”

Morgan Stanley

  • Per-share dividend for quarter ended March 31: 35 cents
  • New dividend: 35 cents

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 repurchases in March and have continued to accrete capital. The updated capital rules provide us flexibility to deploy our excess capital, and we will reevaluate our capital actions when we have more confidence in the shape and path of the economic recovery.”

Wells Fargo

  • Per-share dividend for quarter ended March 31: 51 cents
  • New dividend: Reduced. Exact payout to be determined.

“We expect our second quarter results will include an increase in the allowance for credit losses substantially higher than the increase in the first quarter,” said CEO Charlie Scharf. “Wells Fargo continues to have one of the strongest capital positions relative to regulatory minimums among the world’s financial services firms as demonstrated by our stress test results. These are certainly extremely challenging times for many and we remain committed to supporting our customers and communities, and we will continue to take appropriate measures to maintain strong capital and liquidity levels and to improve the earnings capacity of the company.”

Bank of America

  • Per-share dividend for quarter ended March 31: 18 cents
  • New dividend: 18 cents

“Bank of America is committed to returning capital to shareholders over time, in excess of what is needed across economic cycles to grow the company and support clients, communities and the global economy. The company intends to maintain the quarterly common stock dividend at the current rate of $0.18 until further notice, subject to approval by Bank of America’s Board of Directors.”

JPMorgan Chase

  • Per-share dividend for quarter ended March 31: 90 cents
  • New dividend: 90 cents

“At this time, using both JPMorgan Chase’s and the Federal Reserve’s base case economic outlook, the Firm can continue to pay its dividend in future quarters while maintaining healthy capital and liquidity positons. 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 stock repurchase program and has not intended to resume the program until the actual economic results improve substantially.”

The Fed did announce that it was capping dividend payments in the third quarter to ensure that banks will survive and maintain adequate capital. Furthermore, banks are forbidden from buying back shares and must submit ongoing quarterly reviews throughout the crisis.

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