(Reuters) - Shares in the S&P 500 bank index <.SPXBK> rose about 2% on Friday after the U.S. Federal Reserve approved the capital plans of the biggest U.S. banks, giving them a clean bill of health.
M&T Bank Corp (N:MTB) was the only one of the index's stocks down slightly as at least one analyst said its payout plan was lighter than expected. JPMorgan Chase & Co (N:JPM), Bank of America (N:BAC) and Citigroup (N:C) were the group's biggest boosts with gains over 2%, followed by advances of about 2% for Wells Fargo & Co (N:WFC).
All 18 banks undergoing the Fed's annual stress test were given the all-clear, although the central bank placed conditions on Credit Suisse's (N:CS) U.S. operations after finding weaknesses in its capital planning processes.
The Fed's stamp of approval for Deutsche Bank (DE:DBKGn) was a major boost since it flunked the test in 2015, 2016 and 2018.
JPMorgan and Capital One (N:COF) passed the test though both had to pare back their capital plans, after initial plans showed that each would see capital levels drop below regulatory minimums under a severe economic downturn, according to a senior Fed official.
Jefferies analyst Ken Usdin estimated that the average bank would be returning about 10.5% of its market capitalization in dividends and buybacks from the third quarter of 2019 to the second quarter of 2020. He said total payout ratios for universals averages at about 125% of net income estimates.
Bank of America, Bank of New York Mellon (N:BK), JPMorgan, and Northern Trust Corp (O:NTRS) had notably larger payouts than Usdin's estimates, while Capital One, Discover Financial Services (N:DFS), and M&T were lightest compared with his estimates.
Goldman Sachs (N:GS), Morgan Stanley (N:MS) and State Street Corp (N:STT), which received conditional passes last year, passed without conditions this year. Goldman Sachs, which is not in the S&P bank index was up more than 3%.