By Pete Schroeder
WASHINGTON, June 24 (Reuters) - Financial markets will gain a fresh glimpse into the overall health of the largest U.S. banks on Wednesday when the Federal Reserve releases the results of its latest stress test.
The results will reflect the health of 32 banks, including JPMorgan and Bank of America, but will likely be less dramatic than in prior years. The Fed said in February it would not use this year's results to update each firm's stress capital buffer, an added layer of capital large firms must hold that fluctuates based on how well they perform on the test.
With those buffers now holding steady, firms already have the information they need to make capital plans, including any potential stock buybacks or dividend changes. Raymond James ***** ysts said in a note ahead of the results that they expect most banks to announce moderate dividend and stock buyback plans following the tests, noting that bank executives may opt for a more cautious approach given broader uncertainties.
"Despite the accommodative regulatory backdrop, we believe some management teams could be somewhat conservative given the aforementioned geopolitical/macro uncertainty and inflationary pressures," they wrote.
WASHINGTON, June 24 (Reuters) - Financial markets will gain a fresh glimpse into the overall health of the largest U.S. banks on Wednesday when the Federal Reserve releases the results of its latest stress test.
The results will reflect the health of 32 banks, including JPMorgan and Bank of America, but will likely be less dramatic than in prior years. The Fed said in February it would not use this year's results to update each firm's stress capital buffer, an added layer of capital large firms must hold that fluctuates based on how well they perform on the test.
With those buffers now holding steady, firms already have the information they need to make capital plans, including any potential stock buybacks or dividend changes. Raymond James ***** ysts said in a note ahead of the results that they expect most banks to announce moderate dividend and stock buyback plans following the tests, noting that bank executives may opt for a more cautious approach given broader uncertainties.
"Despite the accommodative regulatory backdrop, we believe some management teams could be somewhat conservative given the aforementioned geopolitical/macro uncertainty and inflationary pressures," they wrote.
4 months ago
