Seeking Alpha

Investors ratchet down bank capital return outlook

  • It's a slow grind for bank capital returns (at least those subject to the CCAR), notes Goldman' Richard Ramsden, with payout ratios boosted just four percentage points to 62% this year. There are clear winners, he says: The credit card companies led by AXP and COF and the trust banks led by BK. Regional banks (KRE) boosted returns but generally fell short of expectations (with HBAN and PNC being the exceptions). Worst-performing were the TBTFs, though JPM and WFC were positives.
  • "CCAR highlighted the challenges large-caps have in returning excess capital," he says, with Citigroup's (C) failure a reminder the process is unpredictable. With all that excess capital remaining on the balance sheet, Ciit's 2015 goal of a 10% ROTCE appears unlikely to be met.
  • For Bank of America (BAC), it's resubmission - a better outcome than outright failure - reminds that even well-capitalized banks are "bound by stressed capital and could have trouble returning outsized capital."
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Comments (6)
  • bbro
    , contributor
    Comments (9830) | Send Message
     
    Excess capital...doesn't sound like the end of the world does it ??
    27 Mar, 08:38 AM Reply Like
  • db313706
    , contributor
    Comments (213) | Send Message
     
    DFS doesn't get honorable mention? Still waiting to hear confirmation on the divy boost and enhanced buyback.
    27 Mar, 08:40 AM Reply Like
  • tomlos
    , contributor
    Comments (1146) | Send Message
     
    DFS always gets left out when this stuff is talked about but they're the quiet performer... Long DFS!
    27 Mar, 08:56 AM Reply Like
  • db313706
    , contributor
    Comments (213) | Send Message
     
    Speak softly and crush estimates... Probably wouldn't have picked up shares for such a bargain if they were daily headliners. You're definitely right.
    27 Mar, 09:03 AM Reply Like
  • Hello Again 83
    , contributor
    Comments (466) | Send Message
     
    BAC increased the dividend by 400% from the penny so very thankful. While the bank is still below book the stock buy back is more important right now. When the bank is over book value then the dividend becomes more important. That will be another year away. Overall nice job for BAC and CEO Moynihan. "Feel bad for investors of Citi"
    27 Mar, 09:35 AM Reply Like
  • READ THE PAPERS
    , contributor
    Comments (209) | Send Message
     
    The current extreme restrictions on bank capital requirements and capital returns and also "acceptable" activities for banks are likely to be loosened in the years to come. This is still the "post trauma" market from a regulatory standpoint. I also look forward to getting rid of Attorney General Eric " bank shakedown artist" Holder at the end of 2016. His departure alone should raise bank earnings and stock prices significantly.
    27 Mar, 11:50 AM Reply Like
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