The biggest U.S. banks, including Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc., rallied to the highest in more than a month on Friday, after the Federal Reserve cleared them to boost payouts.
“Ask and ye shall receive” was the common theme with the results of this year’s Capital Analysis and Review, known as CCAR, Evercore ISI’s Glenn Schorr wrote in a note. Most of the banks he covers beat Evercore ISI’s, and consensus, expectations for total dollars of capital return, and all the banks beat in terms of payout ratios.
The “enormous” capital plans announced by JPMorgan, BofA, Citigroup Inc. and Wells Fargo & Co., amounting to a combined total of over $130 billion, show that “the industry is extremely well capitalized,” RBC’s Gerard Cassidy wrote in a note.
Even so, Morgan Stanley’s Betsy Graseck cautioned that the party won’t last. This year’s results were “the last hurrah,” she wrote in a note, with payouts probably declining 21% in 2020, as “capital is now close to optimized.” Her advice? “Enjoy it while you can.”
- Higher dividends are what investors have been waiting for in the banking sector so this is good news. The biggest question raises in the last paragraph above it where the revenue growth is going to come from to sustain payouts?Click HERE to subscribe to Fuller Treacy Money Back to top