JPMorgan $5 billion buyback and dividend hike: Fed stress test passed

JPMorgan Chase announced a new $5 billion share buyback on Wednesday and raised its quarterly dividend after the Federal Reserve’s annual stress test showed the industry remained “well capitalized.”

The nation’s largest bank by assets said its quarterly dividend will rise 10% to $1.65 per share, subject to board approval, and authorized a buyback program effective July 1.

JPMorgan CEO Jamie Dimon said in a statement: “The board’s proposed dividend increase is supported by our continued investment in the business and strong financial performance. As always, we are prepared for all scenarios, including the hypothetical 2026 regulatory ‘severely adverse’ scenario.”

Goldman Sachs also lifted returns to shareholders, saying its quarterly dividend will rise 11% to $5 per share, citing strong earnings and capital strength.

Wells Fargo said it expects to raise its dividend 11% to $0.50 per share; Morgan Stanley lifted its dividend 15% to $1.15 per share and also reauthorized a $20 billion multiyear common stock buyback plan.

Bank of America CEO Brian Moynihan said the bank will announce dividend plans next month.

The announcements followed the Fed’s annual stress test results, which showed 32 large banks remained above minimum capital requirements under a hypothetical scenario that implied industry losses of more than $708 billion.

Unlike in prior years, however, the results will not affect capital requirements. The Fed had previously said it would keep the stress capital buffer unchanged through 2027 while it reforms the test methodology. That meant banks already knew their capital requirements on Wednesday.

Although analysts expected the test to have limited near-term impact, banks still moved ahead with dividend increases amid uncertainty over the regulatory transition, showing some confidence.

Before the results were released, KBW called this year’s stress test a “formality” in a research note, saying the market was more focused on the Basel III Endgame proposal expected later this year than on the Fed’s annual routine test.

This story is developing. Please check back for updates.