Stress Test Results: Dividend Hikes Send Encouraging Sign

Research evidence excerpt

Stress Test Results: Dividend Hikes Send Encouraging Sign

June 24, 2026 | 22:48 ET~

Financial Services

Stress Test Results: Dividend Hikes Send Encouraging Financial Services

Sign Brennan Hawken Analyst

brennan.hawken@bmo.com (646) 648-2408

Marc Palucci VP Associate

Bottom Line: marc.palucci@bmo.com (347) 640-1044

The Federal Reserve’s 2026 stress test results do not impact SCBs (frozen until David Giunta Associate

next year) but the increased dividends reinforced confidence in tailwinds that the david.giunta@bmo.com (332) 257-0570

GSIBs we cover are benefiting from in the current environment. For MS, the results Josh Brechtel, CFA Associate

(hypothetically) suggest an easing capital regime, while GS reflects normalizing trading josh.brechtel@bmo.com (332) 274-9887

results. Legal Entity: BMO Capital Markets Corp.

Key Points Banks

• Stress test results pave the way for higher capital returns: Four of the six 650 600

names we cover announced dividend increases following the release, with BNY 550

(+19%; 63c), MS (+15%; $1.15), GS (+11%; $5), STT (+10%; 92c). These actions 500 500400

came in 4.7% above consensus, on average, reinforcing confidence in earnings 450 300

growth. Buybacks were broadly reaffirmed. 400 100

350 0

• Goldman Sachs counterparty risk normalizing: The $4.4bn increase in LHS: Price / RHS:DecVolume (k) Jun Dec Source: FactSetJun

counterparty stress losses reflects normalization rather than deterioration.

Positions used in the 2025 stress test incorporated atypical pre-election hedging

activity in October 2024, which inflated the baseline for trading exposures. As

those positions roll off, the observed increase in trading and counterparty losses

should be viewed as a reversion toward more typical levels rather than evidence