NEW YORK (AP) — Recently freed from regulators’ coronavirus restrictions, the largest U.S. banks on Monday announced plans to return tens of billions of dollars to their shareholders over the next year in the form of dividends and stock buybacks.
It’s a signal that banks are looking to reward their shareholders after last year’s pandemic-driven losses. But it’s also a sign banks at the moment see few places to put their big profits other than back into the hands of their shareholders.
In an attempt to ensure banks could hold up in the face of a severe pandemic-induced recession, the Federal Reserve last year put into place restrictions on how much banks could pay in dividends or spend on stock buybacks. Banks at the time were reporting tens of billions in losses as businesses were shuttered and Americans were thrown out of work.
But in last week’s “stress tests,” the Fed found that all of the nation’s big banks were healthy enough to withstand a sudden economic catastrophe and ended its restrictions on dividends and buybacks.
Morgan Stanley on Monday said it would double its quarterly dividend, from 35 cents per share to 70 cents per share, with payouts expected to start in the third quarter. The bank will also buy back $12 billion worth of its outstanding shares over the next year. For context, analysts surveyed by FactSet expect Morgan Stanley to make about $15.5 billion in profits this year.
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