Bank stocks are mostly in the green after investors assess stress tests (NYSE:CFG)

Victorburnside/iStock via Getty Images

Shares of U.S. banks are mostly up on Tuesday after the biggest financial institutions disclosed their dividends and, in some cases, their share buyback plans.

Capital repayment plans were more moderate than in 2021 as required capital buffers increased for some banks, including universal banks. For the most part, that was expected before the earnings release, analysts said.

Last week, the Federal Reserve announced that all 34 banks subject to its 2022 annual stress test had passed. According to results released last week, Bank of America (NYSE: BAC), Citigroup (NYSE:C), and JPMorgan Chase (NYSE:JPM) poorly screened, meaning they would have less ability to increase dividends or stock buyback plans.

As a result of this test, banks received a Preliminary Stress Capital Buffer (“SCB”) from the central bank which determines the amount of capital they must set aside to withstand a potential economic shock.

Credit Suisse analyst Susan Roth Katzke summed up the results: “Lower yield of capital, but still healthy returns on capitalization.” SCB ratios ranged from the lowest permitted level of 2.5% to 6.3% for large-cap banks covered by Roth Katzke.

The average increase in the dividend rate of about 10% met expectations, she said. The largest dividend increase was recorded at Goldman Sachs (NYSE: GS), with a 25% boost, followed by Wells Fargo (NYSE: WFC), which intends to increase its quarterly dividend by 20%. At the other end of the spectrum, Citigroup (C) and JPMorgan Chase (JPM) plan to maintain their current dividend rates.

“Overall, Universal Banks and Trust Banks are clearly cautious on the capital return front given the uncertain macro outlook with most modes announcing dividend increases (~5-10%) and few meaningful comments on future share buybacks,” the Evercore ISI analyst said. Glenn Schorr in a note to clients.

Morgan Stanley (NYSE: MS) was one of the few banks to announce a share buyback program, in its case a $20 billion share buyback authorization. Wells Fargo (WFC) said it has “significant capacity” to buy back stock, which it will assess regularly.

Among the biggest moves in Tuesday’s late morning session, Citizens Financial (NYSE: CFG) is rup 1.7%and Morgan Stanley (MS) is gain 1.5%. Citigroup (C) is down 0.6%.

SA contributor Steven Fiorillo said on Tuesday that Wells Fargo (WFC) has the potential to become a dividend growth company