Largest US banks spend record $33bn on share buybacks

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The largest US banks spent a record $33bn on share buybacks in the first quarter, taking advantage of higher profits and the Trump administration’s looser rules to smash market forecasts.

JPMorgan Chase, Goldman Sachs and Citigroup made their biggest ever repurchases, while Bank of America and Morgan Stanley bought the largest amounts in several years.

“In each case, it was, I don’t know, 30, 40, 50 per cent higher than what we were modelling,” said Chris Kotowski, a senior analyst at Oppenheimer covering large-cap bank stocks.

The Trump administration has pursued the most deregulatory policy for Wall Street since the 2008 financial crisis, allowing banks to divert more resources to lending and shareholder returns rather than bolstering their capital cushions.

At the same time, geopolitical tumult, including the US-Israel war with Iran, has allowed banks’ trading divisions to profit from volatile financial markets.

BofA’s chief financial officer Alastair Borthwick said the bank found itself “in a position where we have plenty of capital” and was “encouraged by the work that the administration is doing” on capital rules. BofA bought back $7.2bn of stock in the quarter, the highest in four years.

Last month, the US Federal Reserve top bank supervisor presented plans to cut capital requirements for the biggest Wall Street lenders by almost 5 per cent. Banks have argued that post-crisis rules had become overly onerous and had restricted bank lending.

In addition to the buyback bonanza, banks also deployed capital towards loans and growing their trading books, a business that had fallen out of favour in the 2010s but has become a key driver of earnings in recent years. 

“Everybody increased the amount of capital devoted to trading,” Kotowski said. 

Morgan Stanley finance chief Sharon Yeshaya said: “You had that opportunity both from where the stock actually was, but also where we were from an institutional perspective and the amount of capital that we’re generating to buy back more stock.”

JPMorgan spent $8.33bn on buybacks in the first quarter, narrowly beating its record from six months ago of $8.32bn. But boss Jamie Dimon struck a lukewarm tone on repurchases, saying he preferred “to deploy the capital serving clients”.

“Obviously, we have a lot of excess capital, which today we measure around $40bn,” Dimon said. “Our preferred way of using capital is not buying back stock today. We’re doing it, fair market value and all that. But I’d rather buy back stock when we think it’s a real discount and the ongoing shareholder gets the benefit of buying it cheap.”

At Citi, the $6.3bn the bank spent on buying its own shares was a record for the first quarter period in at least two decades. Goldman spent a record $5bn on stock repurchases. Wells Fargo bought $4bn in the first quarter, while Morgan Stanley spent $1.75bn on share repurchases.

With the increased buybacks and redeployment of financial resources into lending and trading, the banks’ ratio of equity to risk-weighted assets fell in the quarter. The drop was steepest at Goldman, where the ratio fell to the lowest level since 2020.