Lately, banks have been gearing up to pass their annual stress tests, and have now passed the tests.
In fact, stress tests on 33 banks showed that they could all withstand $526B in losses in the Fed's severely adverse scenario, which tests for a major global recession, a sharp rise in unemployment, heightened financial stress and negative Treasury yields, according to an article by Stephen Alpher, news editor for Seeking Alpha.
Banks have been preparing, especially since Bank of America failed the stress test three times, while Citigroup failed it twice.
In fact, the banks could have paid out a combined total of $24 billion more to shareholders in the past three years if the companies’ level of dividends and share buybacks were similar to those of Wells Fargo.
There has been recent discussion over whether or not these stress tests are bad for lending. Bank of America CEO Brian Moynihan explained that the tests will make banks safer, but may restrict lending as well. After the last round of tests, Bank of America had to resubmit its plan, while others such as JPMorgan Chase and Goldman Sachs adjusted requests to return capital.
Here are all the banks that just passed the stress test, and how they fared, from an article by Alpher:
- Ally Financial: Actual end of 2015 CET1 ratio of 9.2%, Q1 2018 CET1 ratio under severely adverse scenario of 6.1%, minimum 6.1%.
- American Express: Actual 12.4%, Q1 2018 12.3%, minimum 11.4%.
- Bank of America: Actual 11.6%, Q1 2018 8.1%, minimum 8.1%.
- BNY Mellon: Actual 11.5%, Q1 2018 11.2%; minimum 10.5%.
- BB&T: 10.3%, 6.9%, 6.9%
- BBVA Compass: 10.7%, 6.5%, 6.5%.
- BMO Financial: 11.9%, 5.9%, 5.9%.
- Capital One: 11.1%, 8.2%, 8.2%.
- Citigroup: 15.3%, 9.2%, 9.2%.
- Citizens Financial: 11.7%, 8.8%, 8.8%.
- Comerica: 10.5%, 8.3%, 8.3%.
- Discover: 13.9%, 12.4%, 11.9%.
- Fifth Third: 9.8%, 6.8%, 6.8%.
- Goldman Sachs: 13.6%, 10.2%, 8.4%.
- HSBC N.A.: 15.7%, 9.1%, 9.1%.
- Huntington Bancshares: 9.8%, 5%, 5%.
- JPMorgan: 12%, 8.3%, 8.3%.
- KeyCorp: 10.9%, 6.4%, 6.4%.
- M&T: 11.1%, 6.9%, 6.9%.
- Morgan Stanley: 16.4%, 10%, 9.1%.
- Northern Trust: 10.8%, 9.6%, 9.6%.
- PNC Financial: 10.6%, 7.6%, 7.6%.
- Regions: 10.9%, 7.3%, 7.3%.
- Santander Holdings: 12%, 11.8%, 11.8%
- State Street: 13%, 9.6%, 9.6%
- SunTrust: 10%, 7.5%, 7.5%.
- TD Group: 13.1%, 8.4%, 8.4%.
- U.S. Bancorp: 9.6%, 7.5%, 7.5%.
- Wells Fargo: 11.1%, 7.2%, 7.2%.
- Zions: 12.2%, 6.6%, 6.6%.
