JPMorgan $50 billion buyback and dividend hike: banks step up after Fed stress tests

JPMorgan Chase announced a new $50 billion share buyback plan on Wednesday and raised its quarterly dividend after the Fed’s annual stress test showed the industry still maintained strong capital levels under a stress scenario.

The largest U.S. bank by assets said it will raise its quarterly dividend 10% to $1.65 per share, subject to board approval, and authorize the buyback plan effective July 1.

JPMorgan CEO Jamie Dimon said in a statement that the proposed dividend increase reflects continued investment in the business and strong financial performance, and that the company is prepared for a range of scenarios, including the hypothetical 2026 regulatory “severely adverse” scenario.

Goldman Sachs also raised its quarterly dividend, saying the payout will rise 11% to $5 per share on the back of strong earnings and capital strength.

Wells Fargo said it expects to raise its dividend 11% to $0.50 per share, and Morgan Stanley raised its dividend 15% to $1.15 per share while reauthorizing a $20 billion multi-year common stock buyback plan.

Bank of America CEO Brian Moynihan said the bank will announce its dividend next month.

The moves came after the Fed released the results of its annual stress test. The Fed said all 32 large banks remained above minimum capital requirements under a recession scenario that would generate expected industry losses of more than $708 billion.

However, unlike in prior years, these results will not affect capital requirements. Earlier this year, the Fed said it would keep the stress capital buffer unchanged until 2027 while it reforms the testing methodology. As a result, banks entered Wednesday’s test with a clear view of their capital requirements.

Although analysts had previously said the stress test would have limited short-term impact, banks still chose to move ahead with dividend increases to signal confidence during a period of regulatory uncertainty.

Before the results were announced, a KBW research note said this year’s stress test was “just going through the motions,” and argued that investors care more about the Basel III Endgame proposal expected later this year than about the Fed’s annual routine test.

News is still developing, please follow for updates.