After passing the stress tests, Wall Street's major banks have started a dividend feast, with Morgan Stanley exclaiming "beyond expectations."
Several large banks in the United States announced an increase in dividends. Morgan Stanley analyst Betsy Graseck pointed out that the average dividend increase was 7%, exceeding the market expectation of 1%. The dividend increases for Goldman Sachs, Wells Fargo, Citigroup, and State Street were 33%, 13%, 13%, and 11%, respectively. All 22 banks passed the Federal Reserve's stress tests, indicating their capital adequacy. Citigroup has repurchased $3.75 billion in stock, and more banks are expected to increase dividends in the future. As a result of this news, the stock prices of the related banks rose
According to the Zhitong Finance APP, several of the largest banks in the United States announced an increase in dividends after the market closed on Tuesday. Morgan Stanley analyst Betsy Graseck believes that the increase in bank dividends exceeded expectations. Graseck stated that the average dividend increase was 7%, surpassing the market's general expectation of 1%. The largest increases in dividends were from Goldman Sachs (GS.US), Wells Fargo (WFC.US), Citigroup (C.US), and State Street (STT.US), which raised their dividends by 33%, 13%, 13%, and 11%, respectively.
It is understood that all 22 banks passed the Federal Reserve's annual bank stress tests, indicating that they hold sufficient capital to withstand a hypothetical severe economic recession. This allows these financial institutions to return excess capital to shareholders through dividends and stock buybacks.
In addition, Citigroup announced that it has repurchased $3.75 billion of its stock this year under its $20 billion multi-year buyback plan. Morgan Stanley analysts stated that this announcement implies a buyback scale of $2 billion in the second quarter of 2025, higher than the expected $1.75 billion.
Analysts added that more banks are expected to announce dividend increases in the coming days.
Boosted by the news of increased dividends, as of Wednesday's market close, the KBW Bank Index (BKX) rose by 1.5%, and the Bank Index ETF (KBE) increased by 1.6%.
In terms of individual stocks, State Street rose by 2.4%, while Goldman Sachs, Wells Fargo, and Morgan Stanley (MS.US) increased by over 1%, and Citigroup and JP Morgan (JPM.US) rose by nearly 1%
