Jul 18, 2022

Is Wall Street Losing Its Appetite for Buybacks?

Buybacks VerityData $JPM

CNN reported on the industry reaction to a surprise statement from JPMorgan CEO Jamie Dimon announcing a temporary suspension of buybacks.

For context on JPMorgan’s historical use of buybacks, CNN reached out to Verity Director of Research Ben Silverman.

“Buybacks have not been a big lever for JPMorgan Chase shares in the recent years,” said Silverman.

The announcement follows recently released results of the Federal Reserve’s annual stress test. The test suggested that JPMorgan, the largest bank in the US by assets, would have to curtail buybacks in the near-term because of an increase in stress capital buffers.

Dimon said that the suspension was implemented to meet capital requirements and “allow us maximum flexibility to best serve our customers, clients and community through a broad range of economic environments,” indicating that inflation and rising interest rates are also causing banks to change their capital allocation.

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