Investment Bank News: Fed Stress Test Clears Way for Payout Increases

WASHINGTON — All 32 large banks in the Federal Reserve’s 2026 stress test stayed above their minimum capital requirements under a severe hypothetical recession, the central bank said on June 24, 2026, and within hours the biggest names in investment bank news moved to raise dividends and authorize new share buybacks.

The Fed’s results showed aggregate Common Equity Tier 1 capital falling 1.6 percentage points under the stress scenario, with projected losses totaling $708 billion. That set the stage for capital announcements from JPMorgan Chase and Morgan Stanley later the same day.

Inside the Fed’s scenario

The 2026 scenario assumed unemployment peaking at 10%, a 30% decline in house prices and a 39% fall in commercial real estate prices. The Fed described the severity as comparable to the prior year’s test.

Of the $708 billion in projected losses, about $200 billion came from credit cards, roughly $160 billion from commercial and industrial loans and about $75 billion from commercial real estate.

The Fed said current capital requirements would stay in place until 2027 and that it planned to rerun the test next year with loss models that incorporate public feedback. Vice Chair for Supervision Michelle W. Bowman said the results “underscore the strength of the banking system.”

The Fed’s release did not identify results for individual banks. Those figures came from the banks themselves.

JPMorgan news: a 10% dividend increase and $50 billion buyback

JPMorgan Chase said it planned to raise its quarterly common dividend to $1.65 per share from $1.50, beginning in the third quarter of 2026, subject to board approval. Its board also authorized a new $50 billion common share repurchase program, effective July 1, 2026.

The bank said its stress capital buffer would remain at 2.5% through September 30, 2027, and that its standardized CET1 requirement, including regulatory buffers, would be 11.5%. It reported $4.9 trillion in assets and $364 billion in stockholders’ equity as of March 31, 2026. Chairman and chief executive Jamie Dimon said the bank’s “fortress balance sheet” enables it to be “a pillar of strength.”

Morgan Stanley news: dividend to $1.15

Morgan Stanley said it would raise its quarterly dividend to $1.15 per share from $1.00, beginning in the third quarter, and that it had reauthorized a multi-year share repurchase program of up to $20 billion, with no set expiration, starting in the third quarter.

The firm said its stress capital buffer would remain at 4.3% through October 1, 2027, giving it an aggregate standardized CET1 requirement of 11.8%. Its actual CET1 ratio was 15.1% as of March 31, 2026.

What the capital gap means for investment bank news

The difference between a bank’s required capital and its actual capital is the room it has to return money to shareholders or to grow its balance sheet. Morgan Stanley’s 15.1% ratio against an 11.8% requirement left a buffer of more than three percentage points. JPMorgan’s capital announcement did not restate its current ratio, but its requirement of 11.5% sets the floor against which its buyback capacity is measured.

The size of the buybacks reflects those buffers. A $50 billion authorization at JPMorgan and a $20 billion program at Morgan Stanley are large commitments, though both are spread over time and subject to market conditions.

Why the losses fall where they do

The composition of projected losses says something about how the Fed views risk in bank balance sheets. Credit cards, at roughly $200 billion, accounted for the largest share, reflecting the high loss rates that unsecured consumer lending tends to produce in a downturn. Commercial and industrial loans followed at about $160 billion. Commercial real estate, which drew heavy attention in recent years, contributed about $75 billion despite the scenario’s 39% price decline. For banks with large card portfolios, those assumptions translate directly into a higher stress capital buffer.

What to watch

The Fed’s stated plan to revise its loss models for 2027 means next year’s results could differ even if bank balance sheets do not. In the near term, readers should watch the pace of repurchases in third-quarter results, any further capital announcements from other large banks, and the Fed’s progress on its proposed changes to the stress testing framework.