Report
Michael Driscoll ...
  • Rebecca Clarke

DBRS Morningstar: U.S. Stress Tests Showcase Banks' Capital Adequacy

This commentary reviews the results of the Federal Reserve’s U.S. stress test, which highlighted banks' capital adequacy despite severe hypothetical economic headwinds.

Key highlights include:
•All 23 banks cleared the Federal Reserve stress tests and many have announced plans for capital distributions, mainly in the form of dividend increases, with more expected to be announced with second-quarter earnings.
•Banks remained sufficiently capitalized in the stress scenario and capital levels were boosted for the GSIBs by declining interest rates which lowered the earnings impact on available for sale (AFS) securities.
•Preliminary stress capital buffers (SCB) have also been disclosed by many banks with several remaining at the floor rate of 2.50%.

“Overall, the stress test results reinforce our view that the banks' capital levels remain resilient in an adversely stressed environment with recovery in earnings and capital generation following the trough of the hypothetical recession,” said Rebecca Clarke, Vice President - North American Financial Institution.
Underlyings
BANK OF AMERICA CORP

Bank of America is a bank and a financial holding company. Through its subsidiaries, the company provides a range of banking, investing, asset management and other financial and risk management products and services. The company's segments include: Consumer Banking, which provides credit, banking and investment products and services; Global Wealth & Investment Management, which provides investment management, brokerage, banking and retirement products; Global Banking, which provides lending-related products and services, integrated working capital management and treasury solutions, and underwriting and advisory services; and Global Markets, which provides sales and trading services and research services.

BANK OF AMERICA CORP GDR

Bank of America Corp. Dep. Pfd. (Rep. 1/1000th Interest in a share of 6.204% Non-Cum Pfd Series D)

Bank of America Corp. Dep. Shs (Rep. 1/1200th interest of a share of Fltg Rate Non-Cum Pfd Series 4)

Bank of America Corp. Dep. Shs (Rep. 1/1200th interest of a share of Non-Cum Pfd Series 5)

Bank of America Dep. Shs (Rep. 1/1000th Interest in a share of Non-Cum Pfd Series E)

Bank of New York Mellon Corporation

Bank of New York Mellon divides its businesses into two business segments, Investment Services and Investment Management. The company also has an Other segment, which includes the leasing portfolio, corporate treasury activities, derivatives and other trading activity, corporate and bank-owned life insurance, renewable energy investments and business exits. The company's two principal United States banking subsidiaries engage in trust and custody activities, investment management services, banking services and various securities-related activities. The company has four other United States bank and/or trust company subsidiaries concentrating on trust products and services across the United States.

Capital One Financial Corporation

Capital One Financial is a financial services holding company. Through its subsidiaries, the company provides an array of financial products and services. The company's segments are: Credit Card, which consists of the company's domestic consumer and small business card lending, and international card businesses in Canada and the United Kingdom.; Consumer Banking, which consists of the company's deposit gathering and lending activities for consumers and small businesses, and national auto lending; and Commercial Banking, which consists of the company's lending, deposit gathering, capital markets and treasury management services to commercial real estate and commercial and industrial customers.

Citigroup Inc

Citigroup Inc

CITIGROUP INC Pfd.

Citigroup Inc.

Citigroup is a financial services holding company whose businesses provide consumers, corporations, governments and institutions with a range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services and wealth management. The company operates via two primary business segments: Global Consumer Banking, which provides banking services to retail customers through retail banking, Citi-branded cards and Citi retail services; and Institutional Clients Group, which includes banking and markets and securities services.

Citizens Financial Group, Inc.

Citizens Financial Group, Inc.

GOLDMAN SACHS GROUP

Goldman Sachs Group Inc

Goldman Sachs Group, Inc., The

JPMorgan Chase & Co.

JPMorgan Chase is a financial holding company. Through its subsidiaries, the company's segments include: Consumer and Community Banking, which provides services through bank branches, ATMs, digital (including mobile and online) and telephone banking; Corporate and Investment Bank, which consists of Banking and Markets and Securities Services, provides a suite of investment banking, market-making, prime brokerage, and treasury and securities products and services; Commercial Banking, which provides financial solutions, including lending, treasury services, investment banking and asset management products; and Asset and Wealth Management, which is engaged in investment and wealth management.

M&T BANK CORPORATION

M&T Bank is a bank holding company. Through its subsidiaries, the company provides individuals, corporations and other businesses, and institutions with commercial and retail banking services, including loans and deposits, trust, mortgage banking, asset management, insurance and other financial services. Banking activities are primarily focused on consumers residing in New York State, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia and the District of Columbia and on small and medium-size businesses based in those areas. Certain subsidiaries also conduct activities in other areas.

Morgan Stanley

Morgan Stanley

MORGAN STANLEY

Morgan Stanley

PNC Financial Services Group Inc.

PNC Financial Services Group is a bank holding company. The company has businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing its products and services nationally. The company's segments are: Retail Banking, which provides deposit, lending, brokerage, insurance services, investment management and cash management products and services; Corporate and Institutional Banking, which provides lending, treasury management, and capital markets-related products and services; Asset Management Group, which provides personal wealth management; and BlackRock, which provides a range of investment and technology services.

PNC Financial Services Group Inc Pfd.

STATE STR ADR

State Street Corp

STATE STREET CORP

State Street Corporation

State Street is a financial holding company. Through its subsidiaries, the company provides a range of financial products and services to institutional investors. The company's clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers. The company's Investment Servicing line of business performs custody and related functions, such as providing institutional investors with clearing, settlement and payment services. The company's Investment Management line of business, through State Street Global Advisors, provides a range of investment management strategies and products for its clients.

The Northern Trust Company

Wells Fargo & Co

Wells Fargo & Co

Wells Fargo & Co

Wells Fargo & Co

Wells Fargo & Co

Wells Fargo & Co.

Wells Fargo & Company

Wells Fargo & Company is a financial and a bank holding company. Through its subsidiaries, the company provides banking, investment and mortgage products and services, as well as consumer and commercial finance. The company provides consumer financial products and services including checking and savings accounts, credit and debit cards, and automobile, student, mortgage and home equity and small business lending, as well as financial planning, private banking, investment management, and fiduciary services. The company also provides financial solutions including commercial loans and lines of credit, letters of credit, asset-based lending, trade financing, treasury management, and investment banking services.

WELLS FARGO ADR

WELLS FARGO CO Pfd.

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Analysts
Michael Driscoll

Rebecca Clarke

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