Federal Reserve releases bank stress test results

Leslie Picker reports the Federal Reserve's annual stress test results, showing all 32 large U.S. banks remained above minimum capital requirements under a severe hypothetical recession. The aggregate capital decline was modest despite $708 billion in total loan losses. Although this year's results do not affect capital requirements until 2027, the street expects a 6-7% increase in dividends and buybacks, roughly 4-5% of market cap, reflecting a strong banking backdrop. - All 32 banks passed the Fed's stress test, staying above minimum capital requirements. - Hypothetical scenario included 10% unemployment, 39% CRE price drop, and 30% housing decline. - Total projected losses of $708 billion, with credit cards accounting for 29%. - Aggregate capital declined only 1.6 percentage points under the severe scenario. - This year's test does not change bank capital requirements until 2027. - JP Morgan estimates 6-7% increases in dividends and buybacks, ~4-5% of market cap. - Individual banks expected to announce dividend and buyback plans in the coming days.