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TheStreet Open House

'Rich to Get Richer' from 2013 Stress Tests: Credit Suisse

The banks Credit Suisse expects to show the largest increase in capital returns to investors include Bank of America (BAC), Citigroup (C) and Regions Financial (RF), all of which are currently paying nominal quarterly dividends of $0.01 a share, with no share buybacks during 2012.

Orenbuch also includes Morgan Stanley (MS) and SunTrust (STI) -- which are each paying quarterly dividends of $0.05 a share -- among the banks that "will exhibit the most incremental capital return" this year.

Credit Suisse estimates Bank of America will pay total dividends of $0.07 a share during 2013, while being approved for $753 million in share buybacks, for a total capital return of $1.559 billion. For Citigroup, Credit Suisse estimates total 2013 dividends increasing to $0.46 a share, with $1.044 billion in buybacks, for a total capital deployment of $2.459 billion.

For Regions Financial, Credit Suisse estimates total 2013 dividends of $0.13 a share, with $264 million in buybacks, bringing the total capital return to $445 million. For Morgan Stanley, Credit Suisse estimates no dividend increase, but approval for $391 million in buybacks. For SunTrust, the firm estimates total 2013 dividends of $0.59 a share, with $365 million in buybacks, for a total capital return of $677 million.

Orenbuch expects the same companies that "came in at the high end of the past two Fed stress tests" to do so again in 2013, with capital returns "ranging between 70-113% of estimated earnings." Here are the Credit Suisse capital return estimates for this group, for 2013:

  • State Street (STT). Dividends increasing to $1.02 a share from $0.90 in 2012, along with $1.800 billion in buybacks, for total capital deployment of $2.260 billion.
  • KeyCorp (KEY). Dividends increasing to $0.23 a share from $0.18 last year, with $590 million in buybacks bringing the total capital return to $795 million.
  • American Express (AXP). Dividends unchanged at $0.80 a share, with $3.700 billion in buybacks, for a total capital return of $4.560 billion.
  • Comerica (CMA). Dividends increasing to $0.69 a share from $0.55 in 2012, with $322 million in share repurchases bringing the total capital return to $447 million.
  • Discover Financial Services (DFS).Dividends increasing to $0.56 a share from $0.40 last year, with $1.500 billion in buybacks, for a total capital deployment of $1.767 billion.
  • Bank of New York Mellon (BK). Dividends rising to $0.58 from $0.52 in 2012, with $1.400 billion in share repurchases, for a total capital return of $2.058 billion.
  • Northern Trust (NTRS). Dividends increasing to $1.26 a share from $1.18 last year, with $280 million in buybacks brining the capital deployment to $577 million.
  • U.S. Bancorp (USB). Dividends increasing to $0.89 a share from $0.78 in 2012, with $2.542 billion in buybacks, for a total capital return of $4.169 billion.
  • Goldman Sachs (GS). Dividends increasing to $2.00 a share from $1.81, with $3.850 billion in share repurchases, bringing the total capital return to $$4.841 billion.
  • JPMorgan Chase (JPM). Dividends increasing to $1.44 a share from $1.20, with $9.482 billion in buybacks, for total capital deployment of $14.906 billion.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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