BoA to meet Fed over test results

Bank of America Corp (BAC.N) has initiated discussions with the Federal Reserve to gain clarity on the divergent outcomes of the central bank’s stress test and the bank’s own assessment under the Dodd-Frank Act. While the Fed’s latest annual stress test results, unveiled last week, indicated that Bank of America and other lenders possess sufficient capital to endure a severe economic downturn, enabling them to proceed with share buybacks and dividends, the bank desires to comprehend discrepancies in the category labeled “other comprehensive income” during a nine-quarter evaluation period.

Despite the stress test results being made public, Bank of America, the second-largest U.S. bank, has yet to make any official announcements regarding its dividend or share repurchase initiatives. In contrast, rival banks, including JPMorgan Chase, Wells Fargo, Goldman Sachs, and Morgan Stanley, smoothly navigated the health check and responded by increasing their third-quarter dividends on Friday.

Notably, in the previous year, Bank of America had raised its dividend to 22 cents, reaching its highest level since 2008, up from 21 cents in 2021. As the bank seeks to comprehend the discrepancies between its own assessment and the Fed’s stress test results, it aims to address any concerns and ensure regulatory compliance, given the importance of these stress tests in determining a bank’s ability to withstand adverse economic conditions and rewarding shareholders through buybacks and dividends.