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Don't expect a lot from bank stress test results this year says Citi

  • With bank capital levels really no longer in question, don't expect any big pops in the banks surrounding the stress tests and CCAR results, says Citi in its "2014 CCAR Playbook." If anything - given that the stress tests are supposedly tougher this year - the risk to banks could be on the downside.
  • The team expects the stress test results - which looks at bank balance sheets under different scenarios - sometime around March 7 and the CCAR results - on which the Fed approves/disapproves capital return plans - about a week later.
  • Look for modestly higher average gross payout ratios of 62% vs. 55% last year. Individual banks: BAC 11% dividend (payout ratio) + 32% buyback for 43%; BBT 33% dividend +19% buyback; FITB 32% dividend + 37% buyback; JPM 27% dividend + 18% buyback; WFC 28% dividend + 43% buyback; GS 14% dividend + 78% buyback for an industry-leading payout ratio of 91%; MTB 34% dividend + 0% buyback; MS 17% dividend + 36% buyback; PNC 31% dividend + 49% buyback; USB 30% dividend +46% buyback.
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Comments (4)
  • DoowopDave
    , contributor
    Comments (204) | Send Message
     
    If the Fed is only going to allow BAC to increase the dividend to 2-1/2 cents, then why bother? Keep it at a penny until q4, then increase to 4 cents.
    25 Feb, 01:56 PM Reply Like
  • Hello Again 83
    , contributor
    Comments (428) | Send Message
     
    I see BAC dividend closer to 8 to 10 cents per quarter.
    25 Feb, 03:05 PM Reply Like
  • DoowopDave
    , contributor
    Comments (204) | Send Message
     
    Hi 83,
    Hope you're right but think you are 2 years too early.
    26 Feb, 08:51 AM Reply Like
  • 808Amigo
    , contributor
    Comments (225) | Send Message
     
    11% of estimated 2014 earnings to dividend would be $1.8Bil so predicting dividend increase to $.04/qtr announcement for BAC and common share buyback about the same as last year - am I understanding this analyst correctly? What about preferreds buyback? Citi analyst sure boosted BAC share price at New Years but I'm not clear exactly what expectation reported here means.
    26 Feb, 01:28 AM Reply Like
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