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Fed Stress Test: 2019 Capital Plan Results Boost Financial Stocks

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Fed Stress Test: 2019 Capital Plan Results Boost Financial Stocks

The U.S. Federal Reserve said 18 of the largest U.S. banks are healthy and have enough capital to justify paying some of it out to shareholders.

All of the 18 banks reviewed have passed round two of the Federal Reserve’s stress tests, which is an annual test designed to gauge banks’ ability to withstand a recession.

“The stress tests have confirmed that the largest banks are both well-capitalised and place a high priority on strong capital planning practices. The results show that these firms and our financial system are resilient in normal times and under stress,” said Randal Quarles, vice chair of the Federal Reserve.

Last year, Deutsche Bank (NYSE: DB) failed the stress test and has been under scrutiny since but passed without further questions this time. This year, Credit Suisse (NYSE: CS) has been singled out and was the only Wall Street bank that didn’t sail through the Federal Reserve’s stress test. Credit Suisse was given a “conditional approval” and told to address weakness in capital planning.

Credit Suisse shares were trading down 0.67% at $11.94 in Friday's pre-market session.

Deutsche Bank shares were up 2.39%, Goldman Sachs (NYSE: GS) was up 2.22% and JPMorgan (NYSE: JPM) was up 2%.

Bank Of America (NYSE: BAC) made the biggest move higher with a 2.5% gain, while Morgan Stanley (NYSE: MS) traded up about 1.7%.

Related Links:

Deutsche Bank's Coming US Stress Test Results Are Worrying European Regulators

Bearish Deutsche Bank Analyst Says There's No Easy Path Forward

Posted-In: Randal Quarles stress testNews Federal Reserve Best of Benzinga

 

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