Skip to main content

Bank stocks jump on buybacks, dividend hikes


Bank shares continued to trend higher Thursday afternoon following largely successful "stress-test" results on Wednesday — followed by a flood of announcements of higher dividends and share buybacks.

It was the second phase of the Federal Reserve's test of bank's ability to weather a crisis, and resulted in 29 of 31 top lenders getting green lights to spend their cash on shareholders.

Among the gainers;

• Citigroup (C) was up more about 2.7% to $53.74. It had flunked the Fed's stress test last year, but passed with flying colors this year. The bank said Wednesday it is boosting its quarterly dividend by 5 cents a share from one penny, and announced plans to buy back up to $7.8 billion in stock.

• JPMorgan Chase (JPM) was up 70 cents, or 1.2%, after closing Wednesday at $60.24. It said after Wednesday's thumbs-up from the Fed that it will boost its quarterly dividend 4 cents a share to 44 cents and buy back $6.4 billion of common stock.

• Shares of Morgan Stanley (MS) jumped almost 4.5% to $36.51 after it said it would raise its dividend 50% and buy back up to $3.1 billion in shares.

• Bank of America (BAC) was the only large bank to trade down after the Fed gave it an incomplete on its test. BofA lost 1% to trade at $15.94 midday on Thursday, down from Wednesday close at $16.13.

It was the only bank given a just a conditional pass by the Fed. Still, it said Wednesday it would buy back $4 billion in stock through the second quarter of 2016.

BofA said it will retain its dividend at the current rate of $0.05 per share per quarter.