JPMorgan Sparks Payout Wave After All 22 U.S. Banks Pass Fed Stress Test

The Federal Reserve said all 22 U.S. banks subject to its 2025 stress test would remain above required capital thresholds even if the economy plunged into a deep recession. Under the hypothetical scenario—featuring an 8 % drop in GDP, unemployment at 10 %, a 50 % equity-market sell-off and a 33 % slide in home prices—the group’s common-equity Tier 1 ratio would fall to 11.6 %, still more than double the 4.5 % regulatory minimum. Aggregate projected losses exceed $550 billion, yet capital buffers decline by a modest 1.8 percentage points, less than in prior years.

Analysts said the clean sweep, aided by a slightly less severe test and expected cuts to Stress Capital Buffers of roughly one percentage point on average, strengthens the case for the Trump administration’s push to relax bank-capital rules. Vice-Chair for Supervision Michelle Bowman signaled the Fed is considering broader revisions, including averaging results over two years to smooth volatility.

Investor reaction was swift. On 30 June, an index of large U.S. banks outperformed the S&P 500, with Goldman Sachs up 2.7 %, Wells Fargo 2.4 % and Bank of America 1.2 % in pre-market trading, as the results cleared the way for larger capital returns.

Within days, major lenders unveiled new payout plans. JPMorgan Chase authorised a $50 billion share-repurchase program and said it will lift its quarterly dividend to $1.50 a share from $1.40. Morgan Stanley announced a $20 billion multi-year buyback and raised its dividend to $1.00. Bank of America boosted its dividend to $0.28, while Goldman Sachs told investors it intends to raise its payout to $4.00. Additional announcements are expected as banks finalise their capital requirements ahead of the third quarter.