Dividend Season for Banks
Two major upcoming regulatory events could serve as a strong catalyst in the continuing recovery for bank stocks. The Federal Reserve on Thursday will announce the results of the 2013 stress tests on the 19 largest U.S. bank holding companies. The tests will gauge the banks' ability to withstand a " severely adverse scenario," that includes a 5% decline in real GDP this year, a 50% drop in equity prices and a 20% decline in property prices through the end of 2014. The banks need to show an ability to withstand a severe and immediate recession, while maintaining Tier 1 common equity ratios of at least 5.0%. All of the banks being stress tested are expected by analysts to pass with flying colors, with most members of the group seeing earnings improve in 2012, with rising capital ratios as well.