Jefferies sees banks shying away returning capital to shareholders for the moment


Jefferies banking analyst Ken Usdin said the U.S.’s largest banks including Bank of America Corp. BAC, -1.29%, JPMorgan Chase & Co. JPM, -0.79%, Goldman Sachs Group Inc. GS, -0.84% and Citigroup Inc. C, -1.13% will retain more capital to build up their balance sheets instead of using it for dividends and stock buybacks, given the current regulatory and economic environment. “We expect minimal capital return near-term given unrealized loss burdens and the uncertain backdrop for ’23,” Usdin said late Thursday in a research note. Fed vice chair Michael Barr’s speech Thursday “seems to indicate a bias toward higher requirements,” Usdin said. The Financial Select Sector SPDR ETF XLF, -0.47% is down 7.6% so far in 2022 compared to a loss of 14.5% by the S&P 500.

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