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The Zacks Analyst Blog Highlights: Capital One, Wells Fargo, JPMorgan, Citigroup and Goldman Sachs
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For Immediate Release
Chicago, IL – March 30, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Capital One Financial Corporation (COF - Free Report) , Wells Fargo & Company (WFC - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) , Citigroup Inc.(C - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Restrictions on Major Banks' Dividend & Buybacks to End in June
Last week, the Federal Reserve announced that restrictions imposed on major banks’ capital distributions to shareholders will be lifted after Jun 30, following the completion of this year’s stress test. The test helps evaluate safety and soundness of the banking sector.
The step is a vote of confidence for banks from the Fed, which had restricted payouts last year amid the coronavirus mayhem. This was done to preserve liquidity owing to the economic uncertainty.
The central bank had initially barred banks from repurchasing shares and capped dividends so that it doesn’t exceed the bank's recent profits. As such, few banks like Capital One and Wells Fargo had to cut their quarterly dividends.
Nonetheless, following the second round of stress test in December 2020, the central bank allowed buybacks to resume from this year but still placed dividends under restrictions. Thus, several banks like JPMorgan, Citigroup and Goldman Sachs resumed buybacks effective first-quarter 2021, though total distributions are still limited to bank's trailing four-quarter average net income. Capital One even restored dividend to the pre-COVID-19 level.
Now once this year’s stress test results are out, banks with capital levels exceeding those required by the stress test will no longer be subject to additional restrictions. The banks with capital level lower than the requirement will remain subject to restrictions for another three months.
Vice Chair for Supervision Randal K. Quarles said, “The banking system continues to be a source of strength and returning to our normal framework after this year's stress test will preserve that strength.”
Earlier in February, the Fed had come out with hypothetical scenarios – Baseline and Severely Adverse – with regard to 2021 stress test. It covers 13 quarters through the first quarter of 2024. The banks have to submit their capital plans by Apr 6.
This time 19 major banks, with more than $250 billion in assets, are part of the annual stress test. Of these, 10 with the large trading operations will be tested against a hypothetical global market shock, while 12 of these 19 companies that have significant trading or processing operations will be tested against the failure of their largest counterparty too.
Thus, once this year’s stress test results are out, banks that have piled up huge levels of capital are expected to come up with substantially large capital deployment plans.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Capital One, Wells Fargo, JPMorgan, Citigroup and Goldman Sachs
For Immediate Release
Chicago, IL – March 30, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Capital One Financial Corporation (COF - Free Report) , Wells Fargo & Company (WFC - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) , Citigroup Inc.(C - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Restrictions on Major Banks' Dividend & Buybacks to End in June
Last week, the Federal Reserve announced that restrictions imposed on major banks’ capital distributions to shareholders will be lifted after Jun 30, following the completion of this year’s stress test. The test helps evaluate safety and soundness of the banking sector.
The step is a vote of confidence for banks from the Fed, which had restricted payouts last year amid the coronavirus mayhem. This was done to preserve liquidity owing to the economic uncertainty.
The central bank had initially barred banks from repurchasing shares and capped dividends so that it doesn’t exceed the bank's recent profits. As such, few banks like Capital One and Wells Fargo had to cut their quarterly dividends.
Nonetheless, following the second round of stress test in December 2020, the central bank allowed buybacks to resume from this year but still placed dividends under restrictions. Thus, several banks like JPMorgan, Citigroup and Goldman Sachs resumed buybacks effective first-quarter 2021, though total distributions are still limited to bank's trailing four-quarter average net income. Capital One even restored dividend to the pre-COVID-19 level.
Now once this year’s stress test results are out, banks with capital levels exceeding those required by the stress test will no longer be subject to additional restrictions. The banks with capital level lower than the requirement will remain subject to restrictions for another three months.
Vice Chair for Supervision Randal K. Quarles said, “The banking system continues to be a source of strength and returning to our normal framework after this year's stress test will preserve that strength.”
Earlier in February, the Fed had come out with hypothetical scenarios – Baseline and Severely Adverse – with regard to 2021 stress test. It covers 13 quarters through the first quarter of 2024. The banks have to submit their capital plans by Apr 6.
This time 19 major banks, with more than $250 billion in assets, are part of the annual stress test. Of these, 10 with the large trading operations will be tested against a hypothetical global market shock, while 12 of these 19 companies that have significant trading or processing operations will be tested against the failure of their largest counterparty too.
Thus, once this year’s stress test results are out, banks that have piled up huge levels of capital are expected to come up with substantially large capital deployment plans.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.