UPDATE 4-Top U.S. banks raise dividends after sailing through Fed stress tests

(Updates to notice availability of images) By Saeed Azhar, Tatiana Bautzer and Nupur Anand NEW YORK, June 30 (Reuters) – U.S. banks together with JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley hiked their third-quarter dividends on Friday after crusing by the Federal Reserve’s annual well being verify, which confirmed they’ve sufficient capital to climate a extreme financial downturn. JPMorgan, the largest U.S. lender, plans to extend its quarterly inventory dividend to $1.05 per share from a present $1.00. Wells Fargo will increase its dividend to 35 cents a share from 30 cents, the businesses mentioned. Goldman Sachs’ dividend will rise to $2.75 a share from $2.50, whereas Morgan Stanley’s will improve to 85 cents a share from the present 77.5 cents. Citigroup’s dividend will rise to 53 cents a share from 51 cents. The banks introduced the dividend hikes after passing the Fed’s stress check, which determines how a lot capital they should put aside earlier than they will return cash to shareholders. Underneath the Fed’s state of affairs of a serious financial stoop, the 23 banks examined – together with JPMorgan, Financial institution of America and Goldman Sachs – would undergo a mixed $541 billion in losses, whereas nonetheless holding greater than twice the quantity of capital required. The biggest U.S. lenders stayed resilient regardless of the failures of three massive regional banks that roiled the trade earlier this 12 months. Massive banks stayed on a agency footing even because the Fed raised rates of interest to tame inflation, which might tip the economic system into recession. “The outcomes present that these banks are in a position to face up to a extreme stress and preserve a capital buffer above regulatory minima, a credit score constructive,” score company Moody’s Buyers Service in a word. Citigroup repurchased $1 billon of widespread inventory through the second quarter and can proceed to guage its capital actions each quarter, CEO Jane Fraser mentioned in a press release. Citigroup’s stress capital buffer (SCB) requirement rose to 4.3%, from a present 4.0%, contrasting with massive friends whose SCB dropped. The dimensions of the SCB, an extra layer of capital launched in 2020 that sits on prime of banks’ minimal capital necessities, displays how effectively a financial institution performs on the check. “Whereas we’d have clearly most well-liked to not see a rise in our stress capital buffer, these outcomes nonetheless display Citi’s monetary resilience by all financial environments,” Fraser mentioned. Analysts had anticipated banks to remain conservative given the unsure financial setting whereas they put together for worldwide capital guidelines that might be introduced as early as this summer season. Financial institution New Earlier JPMorgan Chase $1.05 $1.00 Goldman Sachs $2.75 $2.50 Citigroup $0.53 $0.51 Morgan Stanley $0.85 $0.775 Wells Fargo $0.35 $0.30 (Reporting by Saeed Azhar, Nupur Anand and Tatiana Bautzer; Enhancing by Michelle Value, Lananh Nguyen, Richard Chang, Diane Craft and Cynthia Osterman)