News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • 🇩🇪 Unemployment Rate (JUL) Actual: 5.7% Expected: 5.8% Previous: 5.9% https://www.dailyfx.com/economic-calendar#2021-07-29
  • 🇩🇪 Unemployment Change (JUL) Actual: -91K Expected: -28K Previous: -38K https://www.dailyfx.com/economic-calendar#2021-07-29
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 94.34%, while traders in France 40 are at opposite extremes with 72.28%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/JAiC4NsGWC
  • Heads Up:🇩🇪 Unemployment Rate (JUL) due at 07:55 GMT (15min) Expected: 5.8% Previous: 5.9% https://www.dailyfx.com/economic-calendar#2021-07-29
  • Heads Up:🇩🇪 Unemployment Change (JUL) due at 07:55 GMT (15min) Expected: -28K Previous: -38K https://www.dailyfx.com/economic-calendar#2021-07-29
  • 🇸🇪 GDP Growth Rate YoY Flash (Q2) Actual: 10% Previous: 0% https://www.dailyfx.com/economic-calendar#2021-07-29
  • 🇸🇪 GDP Growth Rate QoQ Flash (Q2) Actual: 0.9% Expected: 0.7% Previous: 0.8% https://www.dailyfx.com/economic-calendar#2021-07-29
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here: https://t.co/vg7w10la3j https://t.co/JOL8rAYFRF
  • Commodities Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Silver: 1.79% Oil - US Crude: 0.89% Gold: 0.68% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/toLClkhHhi
  • Forex Update: As of 07:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.47% 🇨🇦CAD: 0.40% 🇬🇧GBP: 0.33% 🇪🇺EUR: 0.21% 🇨🇭CHF: 0.20% 🇯🇵JPY: 0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/lS2BQ4hFSG
Banks Resume Capital Distribution Following Federal Reserve Stress Test Results

Banks Resume Capital Distribution Following Federal Reserve Stress Test Results

Brendan Fagan,

Bank Dividends, Goldman Sachs, Morgan Stanley, Bank of America - Talking Points

  • Banks to resume dividend and share buyback programs following the recent stress test results
  • Morgan Stanley, Goldman Sachs, Bank of America, and JP Morgan to boost dividends, share buybacks
  • Citi, of note, decided to “continue” its quarterly dividend instead of boosting it along with its peers
Advertisement

Following the closing bell on Monday, major US financial institutions announced resumptions of dividends and share buybacks following the recent Federal Reserve stress test results. Resumption of these programs was contingent on passing the Fed’s examination, which all institutions under observation did. The Federal Reserve stated that all 23 banks under examination remained “well above” the required capital levels during various hypothetical economic downturns. For more on the stress test results, please click here.

Summary of Capital Distribution Announcements

Banks Resume Capital Distribution Following Federal Reserve Stress Test Results

Source: Bloomberg

As a result of the 2008 crisis, banks were mandated to undertake yearly reviews of capital levels in the form of stress tests. With 2020 seeing much of the excess capital held by banks sitting on the sidelines as a result of the pandemic, the ability to return capital to shareholders will delight investors and leaders of major financial institutions. Morgan Stanley, JP Morgan, Bank of America, and Goldman Sachs all elected to boost quarterly dividends, having passed the recent Fed stress test. Citi however, elected to “continue its dividend of at least $0.51 per share” in a move that separates the bank from its peers.

XLF (S&P 500 Financial Sector ETF) vs. S&P 500 YTD

Banks Resume Capital Distribution Following Federal Reserve Stress Test Results

Chart created with TradingView

The laggard for much of 2020, bank stocks have outperformed US equity benchmarks in 2021 by a wide margin. XLF, an ETF tracking financial stocks listed on the S&P 500, has returned 26% YTD. By comparison, the underlying S&P 500 has only returned about 14% so far in 2021. The outperformance has been fueled by reflationary sentiment as economies reopen and yields begin to rise from pandemic lows. The recent stress test results coupled with rampant capital distribution can be added to a long list of tailwinds for the financial services sector. Last year’s laggards have truly become this year’s leaders.

--- Written by Brendan Fagan, Intern for DailyFX

To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES