DBRS Morningstar: Stress Tests Passed; Capital Returns Forthcoming

This commentary analyzes the results of the latest round of the Federal Reserve’s Dodd-Frank Act stress testing. The stress testing evaluates the banks' resilience to a severe hypothetical downturn.

Key highlights include:

-- All 23 banks cleared the stress tests and many have announced plans for capital distributions with more expected to be announced with second-quarter earnings.
-- Of the 14 publicly-traded U.S. banking companies participating, ten have announced plans to increase their common stock dividend with both Wells Fargo and Morgan Stanley doubling their quarterly dividend.
-- Preliminary stress capital buffers have been announced with most banks remaining at 2.50%.

“DBRS Morningstar views the U.S banks as remaining strongly capitalized even with higher returns of capital to shareholders.” said John Mackerey, Senior Vice President – Global FIG.