But analysts remained dubious the strong performance would lead to bigger dividends and share buybacks, citing looming new regulations and economic fears.
“With the recent banking crisis driving banks to be more conservative…, we see share buyback activity as being limited for the remainder of 2023,” RBC Capital Markets analysts wrote.
Some analysts warned the checks, which “stress tested” 23 of the largest lenders, painted an incomplete picture of the country’s vast banking system, noting many mid-sized lenders had liquidity problems this year.
“It’s not the 23 largest banks that were tested that people are worried about. It’s the more than 4,000 smaller banks that people are curious about,” said Brian Jacobsen, Chief Economist, Annex Wealth Management, Menomonee Falls, Wisconsin, US News reported.
Most big bank stocks gained. The S&P 500 Banks index finished up 2.6%, notching its biggest daily percentage gain since June 2, when it rose 3%.
JPMorgan Chase, Wells Fargo and Bank of America gained between 2% and 4.5%. Morgan Stanley rose 1.5% and Goldman Sachs added 3%, respectively. Those two banks are not in the index.
Citigroup shares were flat, trailing peers as the bank is expected to bolster capital, which could reduce profits and dividends. Shares of Charles Schwab, top performer on the test, rose 2.4%.
