Morgan Stanley, Goldman Sachs Boost Shareholder Payouts

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The largest U.S. banks said they would boost payouts to shareholders after the Federal Reserve affirmed they are healthy enough to do so.

Five of the six largest banks lifted their dividends on Monday, collectively raising the per-share payouts 40% from levels they held steady or cut during the coronavirus-induced economic collapse. They also committed to buying tens of billions of dollars of their own stock.

Morgan Stanley led the way, doubling its quarterly dividend to 70 cents a share and announcing plans to buy back up to $12 billion of its stock in the next 12 months. Morgan Stanley shares jumped 2.6% in after hours trading.

Citigroup Inc. was the lone megabank not to increase its dividend, keeping it unchanged at 51 cents but leaving the door open for an increase. It didn’t announce a new buyback plan. Its stock, already trailing the other big bank gains this year, fell after hours nearly 1%.

The Fed last week said 23 of the largest banks had adequate capital to withstand a crisis, a necessary hurdle for banks to pass to return money to shareholders. The central bank had restricted shareholder payouts during the pandemic, asking banks to preserve capital in case the recession led to a wave of soured loans.

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