Major U.S. banks are navigating a new wave of market volatility, but confidence in their resilience remains high. This is largely due to their robust capital levels, which have been bolstered by mechanisms that many bankers initially opposed. According to Wells Fargo's senior banking analyst Mike Mayo, banks are experiencing peak capital levels, with resilience at its strongest in decades.
Over the past three years, the largest 20 U.S. banks have increased their capital by more than $175 billion, bringing their Common Equity Tier 1 (CET1) capital to nearly $1.3 trillion as of the end of last month. With ample funds, banks are planning to return more cash to shareholders. Preliminary data shows that in the first quarter, these banks repurchased at least $26.56 billion in stock. JPMorgan Chase (JPM, Financial) led with $7.1 billion, followed by Bank of America (BAC) with $4.5 billion. Citigroup (C) is planning a large-scale buyback of up to $20 billion in the coming years.
This shift comes after banks were compelled to accumulate capital in response to post-global financial crisis regulations and anticipated stricter standards under the Basel III international framework. Some CEOs view the increased capital as beneficial, especially with potential tariffs affecting business activities and loan demands.
