re: JPM is easy to like, though I still like both BAC and C better
WSJ blog has an interesting article on the stress test. If I were to put together a basket of 5 or 6 banks betting on the stress test result, which banks I should put it on the list?
BAC, C, PNC, USB, WFC, JPM (in that order??)
Any one?
blogs.wsj.com
The average U.S. banks could double the amount of earnings they are returning to shareholders in dividends and buybacks this year, Credit Suisse analysts say today.
 Bloomberg News
The analysts expect the combined payouts to reach an average of 47% of earnings in 2012, up from 23% last year.
Banks will find out in the coming weeks (likely the middle of March) how they scored on the Federal Reserve’s stress tests this year and learn what the Fed would approve for capital returns.
Last year, several banks were allowed to raise their dividends for the first time since the crisis, providing a boost to investors and the sentiment around bank stocks in general.
This year, Credit Suisse and others expect every bank to pass the stress test, and the majority to be allowed to significantly boost their pay outs. Credit Suisse expects more buybacks than dividends, as the Fed has indicted a preference for them over dividends. (Halting a share buyback if there was an issue of capital would be a lot easier and less disruptive to shareholders than cancelling a dividend payment.)
Of the banks and financial companies to be stress tested, Credit Suisse says the best positioned to increase payouts are American Express, State Street, US Bancorp, J.P. Morgan and Goldman Sachs.
In a separate report, Credit Suisse says it expects the Fed to allow greater payout ratios at regional banks, with Bank of Hawaii getting a 47% payout ratio and Valley National Bancorp getting a 65% ratio.
Meanwhile, the analysts expect Regions Financial and Zions Bancorp to be approved to payback their TARP loans — the two largest loans still outstanding from the crisis — and to be allowed to raise smaller amounts of capital to do so.
With bank stocks already outperforming this year, good news on dividends and buybacks in just a few weeks could make for a stronger rally. |
