In response to the Federal Reserve’s 2023 Comprehensive Capital Analysis and Review (CCAR) results, Bank of America has provided commentary on the revised outcomes and its impact on the institution. The stress test results have led to important changes in the bank’s capital requirements, which will play a significant role in its future operations and growth.
Stress Capital Buffer and CET1 Ratio Requirement
Based on the revised 2023 CCAR results, Bank of America’s Stress Capital Buffer has been set at 2.5%, which aligns with the minimum requirement. Consequently, the bank’s minimum Common Equity Tier 1 (CET1) ratio requirement will be 9.5%, effective October 1, 2023. As of June 30, 2023, Bank of America’s CET1 ratio stood at an impressive 11.6%, backed by $190 billion of CET1 capital.
In line with the bank’s strategic plans for future growth, it has been previously announced that on January 1, 2024, Bank of America’s minimum CET1 requirement will experience a 50 basis points increase. This change is in tandem with the planned expansion of the global systemically important bank surcharge. The adjustment aims to fortify the bank‘s financial position and enhance its capacity to navigate potential market challenges.
Demonstrating its commitment to shareholder value, the company’s board of directors has declared a quarterly common stock dividend of $0.24 per share. The dividend is scheduled to be paid on September 29, 2023, to shareholders of record as of September 1, 2023. This represents a notable 9 percent increase from the second quarter common stock dividend of $0.22 per share. The decision reflects Bank of America’s confidence in its financial performance and its dedication to rewarding shareholders.
Moreover, as of June 30, 2023, the bank had $14.1 billion remaining in a previously communicated $25 billion share repurchase program, which was authorized in October 2021. Share repurchase programs are one of the mechanisms employed by companies to enhance shareholder value, as they reduce the number of outstanding shares, thereby increasing earnings per share and potentially boosting stock prices.
Bank of America: A Leading Financial Institution
Bank of America stands as one of the world’s preeminent financial institutions, catering to a diverse clientele, including individual consumers, small and middle-market businesses, and large corporations. With a comprehensive suite of banking, investing, asset management, and risk management products and services, the bank ensures that it meets the financial needs of its customers across various sectors.
In the United States, Bank of America offers unmatched convenience to approximately 68 million consumer and small business clients. This extensive reach is facilitated through approximately 3,900 retail financial centers and approximately 15,000 ATMs, making banking accessible to individuals and businesses alike. The bank has also earned recognition for its award-winning digital banking platform, catering to approximately 57 million verified digital users.
The revised stress test results and capital requirements have positioned Bank of America for continued strength and stability in the financial market. With a focus on maintaining adequate capital levels and rewarding shareholders, the bank is poised to navigate challenges and embrace growth opportunities in the ever-evolving financial landscape. As a leading global financial institution, Bank of America remains committed to delivering exceptional banking experiences and financial solutions to its wide-ranging customer base.