Titans of the US banking industry on Thursday said they would pump out more cash to shareholders after all 18 lenders passed the US Federal Reserve’s annual stress tests. The results were a particular win for Deutsche Bank AG after it repeatedly failed past exams.
A dozen of the nation’s largest lenders said they would boost payouts through dividends and stock buybacks 18 percent to more than US$173 billion, a record for the group.
Shares of lenders including JPMorgan Chase & Co, Bank of America Corp and Goldman Sachs Group Inc advanced in after-hours trading in New York.
The windfall for shareholders was even richer than the US$150 billion foreseen by analysts thanks to the leeway the Fed granted firms to disburse their record profits.
A decade after the annual tests were introduced, the exercise no longer appears to invoke as much anxiety for the industry after executives built up capital and gained experience navigating the exam.
“It’s really a good year for the big banks,” said Adam Gilbert, global regulatory leader of PricewaterhouseCoopers’ financial services advisory practice. “It’s a vote of confidence from the Fed, including for some of the foreign banks which didn’t have it before. We’re seeing increases in payouts from most of them, reflecting the strong capital positions they’re in.”
Overall, the Fed said the review showed that big banks are resilient and managing capital carefully.
Officials said that the approved payouts would slightly exceed the banks’ projected profits for the next four quarters.
Still, the increase this year is smaller than in the past two years, when total dividends and buybacks rose about 30 percent each time.
In passing, Deutsche Bank’s US arm defied analysts’ predictions and scored a much-needed victory for chief executive officer Christian Sewing, who took over the company a year ago and is struggling to turn it around.
The Fed’s endorsement of the bank’s internal oversight — after subsidiaries failed three times in recent years — shows he is making progress in addressing a history of lax controls and misconduct, which have fueled billions of US dollars in legal costs and taken a toll on the balance sheet.
Last year, the Fed faulted the unit for “widespread and critical deficiencies” in capital-planning abilities.
This week’s win comes at a crucial moment, as Sewing develops another turnaround plan, potentially including deep cuts to US operations.
He has repeatedly said that the bank remains committed to having a presence in the US so that it can serve as an alternative to US investment banks for European businesses.
Yet some investors and regulators have criticized the firm’s exposure there.
“Achieving success here was one of the key goals we set a year ago, and it is a huge step forward for our business in the US and globally. A strong operating platform in the Americas is essential to our clients,” Sewing said in a memo to employees.
The bank devoted significant resources to its capital-planning process and stepped up how it has been handling some supervisory issues the Fed raised with the firm, a senior Fed official told reporters.
Two firms — JPMorgan and Capital One Financial Corp — passed after tempering their initial proposals to pay out capital. Credit Suisse Group AG’s US arm also passed on the condition it improves its ability to estimate trading losses in a downturn. The company must address the weaknesses by Oct. 27.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last