Big Bank Stress Tests By the Numbers

As our own Jason Cimpl wrote earlier today, the big banks were put to the test by the Fed recently.  Stress tests, that is.

The purpose of the stress tests was to determine which banks would hold up if the economy goes in the tank again. Of the 19 big banks that were tested, only one – Ally Financial (NYSE: ALLY-PB) – failed. Three years removed from a recession, most big banks appear to now have bottom lines healthy enough to survive a dreaded “double dip” should one occur. This was the first round of stress tests the Fed had performed since 2009.

For those banks that passed the so-called stress tests, dividend increases and share buybacks could be on the horizon.

Here’s a rundown of how the banks performed:

  • Citigroup (NYSE: C) passed the stress test…but barely. The Red rejected the bank’s request to raise its dividend and expand its buyback. The stock fell 3.4% today.
  • Four of the 19 were told to re-submit their capital plans: MetLife (NYSE: MET), SunTrust Banks (NYSE: STI), Citigroup and Ally Financial. Fifteen of the 19 banks now seemingly have the green light to boost their dividends of stock buybacks.
  • The Fed rejected MetLife’s plan to raise its annual cash dividend to $1.10 a share from 74 cents and institute a $2 billion stock-repurchase program. Shares of MetLife were down nearly 6% today.
  • According to the Fed, banks allocated half as much of their net income to dividends last year as they did in 2006.That number is likely to increase now that most of them passed the Fed’s latest stress test.
  • JP Morgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) have already announced plans to raise their dividends and expand buybacks. JP Morgan’s stock has surged 6% in the last two days; Wells Fargo is up 5%.
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