US banks rise as they pass Fed's annual health checks

PacWest Bancorp

28/06/2023 22:44

(Updates)
    ** Shares of economy-sensitive U.S. banks rise in extended
hours of trading as banks sailed through the Federal Reserve's
annual health check on Wednesday
    ** JPMorgan Chase & Co  JPM.N , Wells Fargo & Co  WFC.N ,
Morgan Stanley  MS.N , and Bank of America Corp  BAC.N  rise
between ~1% and ~2.3%, while Citigroup dipped ~0.9%
    ** Regional lenders: Charles Schwab  SCHW.N , M&T Bancorp
 MTB.N , PNC Financial  PNC.N , PacWest Bancorp  PACW.O  rise
between 1.2% and 7.3%, while Citizen Financial  CFG.N , US
Bancorp  USB.N , KeyCorp  KEY.N  fell between ~0.8% and ~3.2%
    ** The 23 banks tested, which have more than $100 billion in
assets each, would suffer a combined $541 billion in losses
under the Fed's severe downturn scenario, but would still have
over twice the amount of capital required under its rules.
        ** Among the top performers were Charles Schwab Corp and
Deutsche Bank's US operations, while regional lenders Citizens
Financial Corp. and US Bancorp were the laggards of the pack.
  
    ** The stress tests, introduced after the 2008 financial
crisis, dictate how much capital banks need to be healthy and
how much they can return to shareholders
    ** Under the "stress test" exercise, the Fed tests big
banks' balance sheets against a hypothetical severe economic
downturn, the elements of which change annually 
    ** Fed Vice Chair for Supervision Michael Barr said in a
statement the results showed a "strong and resilient" banking
system, but emphasized it was just one measure of the sector's
health.
    ** As of last close, S&P 500 Banks Index  .SPXBK  is down
11.75% YTD, underperforming a 14.04% rise in the benchmark S&P
500 Index  .SPX 
    ** KBW Regional Banking Index  .KRX  has declined 24.5% over
the same period 

 (Reporting by Manya Saini and Jaiveer Shekhawat in Bengaluru)
 ((Manya.Saini@thomsonreuters.com))