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Bank dividends to hinge on amount of stress in Fed stress tests, KBW says

  • KBW analyst Brian Kleinhanzl analyzes bank dividends in light of the Fed's modified stress tests.
  • Fed Vice Chair Randal Quarles had indicated that the board will modify this year's stress test to include a current-events analysis, which may make the tests more stressful, Kleinhanzl writes in a note to clients.
  • Sees Citigroup (C -2.4%), Goldman Sachs (GS -1.1%), and JPMorgan Chase (JPM -0.8%) most at risk of missing Kleinhanzl's dividend forecast (which assumes dividends staying at current level through Q2 2022), if the test increases stress losses to more than 20%.
  • Sees Bank of New York Mellon (BK -1.1%), State Street (STT -1.8%) and Bank of America (BAC -1.7%) dividends least at risk "even if higher increases of loan losses were to occur."

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SymbolLast Price% Chg
C--
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GS--
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JPM--
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BK--
The Bank of New York Mellon Corporation
STT--
State Street Corporation