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Us Big Banks Raise Dividend Expectations

2012/3/14 10:42:00 16

In March 14th,

Federal Reserve

A 12 day statement said that the final result of the latest round of stress tests in the US banking industry will be released on March 15th, which will show the banking sector's income, capital ratio, profitability or loss under the worst scenario.

Market participants expect big banks to pass pressure tests to further raise dividends or buy back shares.

According to the Fed's statement, the "worst case scenario" set for the new round of bank stress tests includes 13% unemployment rate in the United States, a 50% fall in the stock market, and a 21% drop in housing prices.

The Fed said the stress test will test whether banks still have enough funds to borrow money under severe economic and financing pressures, but the scenario does not reflect the Fed's expectations of the economy.

Since the start of the stress test by the Federal Reserve for the first time in 2009, the level of US banking capital has been rising steadily.

By the end of the fourth quarter of last year, the average level of ordinary capital of 19 major banks in the United States in 2011 and 2012 had increased from 420 billion US dollars in the first quarter of 2009 to US $759 billion, and the average level of ordinary capital ratios at the first level increased from 5.4% to 10.4%.

Last March,

Federal Reserve

After completing the bank stress test in 2011, some banks that passed the test could raise dividend dividends, buy back shares or repay government funds.

Subsequently, Morgan chase, Wells Fargo Bank, Goldman Sachs Group and other banking institutions announced the increase dividend dividends or buy back stocks.

According to the latest Bloomberg survey, analysts predict that if the current round of stress tests is conducted, 13 of the 19 major banks in the United States will take further action, expect to issue an additional dividend of $3 billion 790 million and increase the stock of 5 billion 520 million dollars repurchased.

So far this year, the United States has measured 24 large ones.

Financial institution

The KBW bank index has risen by 16%, partly because investors expect some banks to be allowed to raise dividends after passing the stress test.

Jason Goldberg, an analyst at Barclays Capital senior bank, points out that raising the rate of return of banks may prompt many investors to buy their stocks.