US Banks pass annual Fed stress tests

Federal Reserve Governor Jerome Powell
Reuters
Federal Reserve Governor Jerome Powell Reuters
Author

30 June, 2017

Citigroup Inc (C.N) won a particularly notable victory, gaining permission to return almost US$19 billion to shareholders, or about 125 per cent of projected earnings over the next four quarters - a big bump from past year, and more than analysts had expected.

The Fed said on Wednesday that all of the 34 banks had passed the second, tougher part of its annual stress test, showing that many have not only built up adequate capital buffers, but improved risk management procedures as well.

The verdict is part of the Fed's yearly financial health checkup on banks like JPMorgan Chase, Bank of America and Wells Fargo to determine if they are strong enough to weather a severe financial crisis while still being able to continue to lend to consumers and businesses. They are: Ally Financial, American Express, BancWest, Bank of America, Bank of New York Mellon, BB&T, BBVA Compass, BMO Financial, Capital One, Citigroup, Citizens Financial, Comerica, Deutsche Bank, Discover, Fifth Third, Goldman Sachs, HSBC, Huntington Bancshares, JPMorgan, KeyCorp, M&T, Morgan Stanley, MUFG Americas Holdings, Northern Trust, PNC, Regions Financial, Santander Holdings, State Street, SunTrust, TD Group, U.S. Bancorp, Wells Fargo and Zions Bancorp.

The Fed found that US firms' common equity capital ratio has more than double, rising to 12.5 percent at the end of Q1 2017 from 5.5 percent in Q1 2009, a total increase of $750 billion to $1.25 trillion.

The timing and amount of common shares purchased under the Company's authorized capital plans will depend on various factors, including the Company's business plans, financial performance and market conditions.

Fed Governor Jerome Powell, who is acting as regulatory lead for the USA central bank, said the process "has motivated all of the largest banks to achieve healthy capital levels and most to substantially improve their capital planning processes".

That in turn hurt sectors such as utilities, which suffer as growing expectations of rate hikes make their constant dividend flows less attractive.

South Korea, US should offer concessions to North: South Korean president
According to the report, the official said there is still a "large gap" in the two countries' trade balance. This is not the first time North Korea has accused its adversaries of attempting to assassinate its leader.

Google issued with record multibillion dollar fine
She said hundreds of companies, including some based in the USA , complained about the way Google displayed its shopping service. According to the report , Google rigged the search results to benefit its product comparison service Google Shopping.

Australian Open: Kidambi Srikanth to take on China's Shi Yuqi in semis
Shi grabbed three straight points but another rally ended with his shuttle going long as Srikanth moved to 16-11. The second game too saw similar start to it as Srikanth was leading by two points at the interval.

On June 28th the Fed said it had approved the dividend and buy-back plans of all 34 banks tested this year-plans which propose handing shareholders a pile of cash. As of the latest earnings report the EPS was $0.86 and is estimated to be $1.33 for the current year with 1,096,107,000 shares now outstanding.

It will now be up to individual banks to disclose their plans to distribute capital - either by buying back shares or distributing dividends - to shareholders.

That led City analysts to forecast massive windfalls to bank shareholders in the form of buybacks and higher dividends in the next two years.

An increase in the quarterly common share dividend from $0.095 per share up to $0.105 per share. The CCAR results follow the Federal Reserve's June 22, 2017 publication of its Dodd-Frank Act Stress Test results. The ex-dividend date was Thursday the 25th of May 2017. The firm's plan also includes an up to $11.5 billion of common stock repurchases, compared to $8.3 billion in share repurchases in the four quarters ended in the first quarter of 2017.

US stock index futures were little changed on Thursday, a day after the benchmark S&P 500 index scored its biggest one-day percentage gain in about two months, as investors awaited GDP and jobs data.

The Fed governor's suggestion comes amid more than 100 recommendations made by the Treasury Department to lessen the burden on banks, including limiting the number of financial firms that must face the annual exams.


More news


  • Trump Calls For Removal Of Barriers For US Exports To India

    This year, India and the Netherlands are celebrating 70 years of diplomatic ties. "Thank you for ordering equipment from the U.S. The highlight of this farewell scene was however the hug between President Trump and the Indian PM.
    Apple acquires German company dedicated to AR and eye tracking

    Apple acquires German company dedicated to AR and eye tracking

    Last month, Apple introduced ARKit , a set of APIs for developers interested in building augmented reality experiences. The technology can analyze the wearer's gaze and help to reduce the effects of motion sickness during VR use.

    Trump transition team ordered to save materials on Russia, Ukraine

    Investigators have also been looking for any evidence of possible financial crimes among Trump associates, officials said. Rosenstein last month appointed former FBI Director Robert Mueller as special counsel overseeing the probe.
  • John Cornyn Says The GOP Health Care Bill Is A Compromise

    John Cornyn Says The GOP Health Care Bill Is A Compromise

    Senate Majority Leader Mitch McConnell is insisting on a vote this week before lawmakers leave town for the July 4th recess. Without the mandate, insurance pools will have fewer healthy, younger individuals in their systems.

    S. Korea keeps close tabs on NK missile development

    According to the channel's sources, the test took place on Wednesday. North Korea's state media has not released a relevant report. Rocket engines are easily re-purposed for use in missiles.

    Seattle police shoot dead pregnant black woman

    There's no way you could've taken a taser and taken her down? "Do our lives really matter to them?" asked Kenny Isabell, a cousin. She reportedly called authorities to report a burglary. #CharleenaLyles was pregnant , called the police to report a burglary.
  • West Indies set target of 184 runs for India

    West Indies set target of 184 runs for India

    Before the third one-day the Indian side took a much-needed break and unwinded themselves in the sands of Antigua. If West Indies managed to cross 180, it was due to Fletcher and her 37-run stand with Anisa Mohammed (11).
    Ewwww! Donald Trump's creepy flirting with Irish TV reporter in Oval Office

    Ewwww! Donald Trump's creepy flirting with Irish TV reporter in Oval Office

    Trump then said: "Caitriona Perry, she has a nice smile on her face". What an inappropriate, disgusting , misogynistic creep. We have all of this attractive Irish press.

    Oilers trade forward Jordan Eberle to Islanders for centre Ryan Strome

    Edmonton will play each divisional opponent four times, with the exception of the Calgary Flames, who they will face five times. A native of Mississauga, Ontario, Strome has accumulated 45 goals and 81 assists for 126 points in 258 career games.
  • SNES Classic Will Have Longer Controller Cord Than NES Classic

    SNES Classic Will Have Longer Controller Cord Than NES Classic

    This is similar to the NES Classic, which Nintendo says that it had only planned to ship for the Christmas 2016 shopping season. This should mean you'll be able to walk into a store or click on a "buy" link without everything going to shit.

    Off-duty cop tackles airline passenger opening emergency exit

    One of the passengers told KHOU a fellow passenger was acting unusual before she even boarded the plane at LAX Sunday morning. Witnesses said the woman "tore off" parts of the emergency exit door when she tried to force it open.
    HWL Semi-Finals: Inconsistent India eye redemption against Pakistan

    HWL Semi-Finals: Inconsistent India eye redemption against Pakistan

    In other quarter finals fixtures, India will face off against Malaysia , Netherlands against China and England against Canada. While the Indians played attacking hockey, the Malaysians preferred to sit back and defend and rely on counter-attacks.