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 DB failed the stress test and has been under scrutiny since but passed without further questions this time. This year, Credit Suisse 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 GS was up 2.22% and JPMorgan JPM was up 2%.

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

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