Due to plunging oil prices, investors hoping to gain more from dividend payments might not fruit this year, not mentioning that the said event would make it harder for banks to pay them out better. The major banks, which are holding more capitals as compared to regulators, revealed that they would need until the end of 2018 for some efforts to materialize.
Starting with Wells Fargo & Co and JPMorgan Chase and Company, reporting has started and from there, the investors could figure out that the major banks are becoming more capitalized in the previous three months. And although hopeful, they know that for capital to find its way to them is unlikely to happen due to loan losses increasing, in particular from the energy sector. In addition, the trading markers are getting weaker making bank capitals riskier. Meanwhile, the regulators are less willing in approving dividend increases and even share buybacks, in times when assets are riskier, analysts added.
Banks have been settling huge legal settlement making them struggle to gain profits, since the financial crisis of 2008 when bad lending and bond underwriting practices happened. Finally, the payout decline happens in large part due to the regulators that began overseeing share buybacks and dividend payments in 2009.