wallstreetexaminer.com / by Anthony Sanders /
(Bloomberg) – The biggest U.S. banks added more than $40 billion in market value after the Federal Reserve’s annual stress tests opened the way to surprisingly big increases in dividends and share buybacks.
Wells Fargo & Co. jumped 4.1 percent while Citigroup Inc. surged as much as 3.8 percent in New York trading Thursday. Regions Financial Corp. and KeyCorp also climbed as the KBW Bank Index rose the most since April.
“The results came in well ahead of both our estimates and consensus estimates as the Fed allowed for a large step-up” in payouts to shareholders, Scott Valentin, an analyst at Compass Point Research & Trading LLC, said in a note titled “Fed Unlocks Treasure Chest of Capital Return.”
JPMorgan Chase & Co., Citigroup and Bank of America Corp. unveiled plans on Wednesday to boost payouts more than analysts had projected, after every lender passed the Fed tests for the first time since the central bank began the reviews in the wake of the 2008 financial crisis.
Capital One Financial Corp. slipped 0.7 percent after it was the lone bank to stumble through the exam, garnering conditional approval to make payouts while it fixes “material weaknesses” in planning. The company reduced its buyback program for the next four quarters 30 percent compared to the previous year’s total.