JPMorgan plans $50 billion buyback after Fed stress test
JPMorgan and Goldman Sachs announced higher shareholder payouts after the Federal Reserve said major U.S. banks cleared its annual stress test.
By Maya Lindqvist · Senior Technology Correspondent
2 min read
JPMorgan Chase said Wednesday it authorized a $50 billion stock repurchase plan and intends to raise its quarterly dividend after the Federal Reserve’s annual stress test found large U.S. banks could withstand a severe downturn. Goldman Sachs also announced a dividend increase, signaling that major banks are moving ahead with shareholder payouts despite pending changes to bank capital rules.
JPMorgan said its new buyback authorization takes effect July 1. The bank said it plans to increase its quarterly dividend by 10% to $1.65 a share, subject to approval by its board.
Jamie Dimon, JPMorgan’s chief executive, said in a company statement that the planned dividend increase was backed by the bank’s investment in its business and financial performance. He also said JPMorgan remains prepared for a range of outcomes, including the Fed’s hypothetical 2026 severely adverse scenario.
Goldman Sachs said it will lift its quarterly dividend by 11% to $5 a share. The firm cited its earnings and capital position in announcing the higher payout.
The announcements came after the Federal Reserve released results from its annual stress test. The Fed said all 32 large banks tested stayed above minimum capital requirements under a hypothetical recession scenario that would produce more than $708 billion in projected losses across the industry.
This year’s test differed from prior rounds because the results will not change banks’ capital requirements. The Fed said earlier this year that stress capital buffers will remain unchanged through 2027 while it revises the test methodology.
That gave banks more certainty about their capital obligations before Wednesday’s results. CNBC reported that analysts had expected the test to have limited near-term effect because the Fed had already said it would leave the buffers in place.
KBW described this year’s stress test in a note before the results as “going through the motions,” CNBC reported. The firm said investors were paying more attention to the pending Basel III Endgame proposal expected later this year than to the Fed’s annual stress-test process.
The stress tests are designed to measure whether large banks could keep lending through a deep economic shock. For JPMorgan and Goldman, the latest results cleared the way for planned capital returns while regulators continue work on broader bank-capital changes.
This story draws on original reporting from CNBC.