State Street Corporation, a leading provider of financial services, has announced its preliminary stress capital buffer (SCB) requirement. The SCB will be maintained at 2.5% starting from October 1, 2023. Additionally, the company intends to increase its quarterly common stock dividend by 10% to $0.69 per share in the third quarter, pending approval by its Board of Directors. State Street also plans to continue repurchasing its common shares, with a total authorization of up to $4.5 billion in 2023, subject to market conditions.
State Street’s strong balance sheet and capital position proved to be highly resilient during the 2023 Comprehensive Capital Analysis and Review (CCAR) exam. The company’s calculated SCB, based on the severely adverse economic conditions of the stress test, was well below the minimum requirement, resulting in a continued SCB at the floor level of 2.5%. This ensures that State Street meets the common equity tier 1 (CET1) ratio requirement of 8%.
Ron O’Hanley, Chairman and Chief Executive Officer of State Street, expressed satisfaction with the CCAR results, highlighting the strength and resilience of the company’s franchise. He stated that the results reinforce State Street’s strategy and its ability to support clients and deliver value to shareholders. O’Hanley also announced the planned increase in the quarterly common dividend, aligning with the company’s goal of returning capital to shareholders through meaningful dividends.
The Board of Directors will review the proposal for the common stock dividend in the third quarter of 2023. The timing, amount, and declaration of the third quarter’s common stock and other dividends are subject to consideration and approval by the Board of Directors.
As for stock repurchases, State Street will continue its common share repurchase program, which may involve various types of transactions, including open-market purchases or accelerated share repurchases. The timing and amount of stock purchases may vary, depending on factors such as the company’s capital position, financial performance, market conditions, investment opportunities, and revisions to the Basel III framework.
State Street’s common share repurchase program does not have specific price targets and may be suspended at any time. The company’s commitment to returning capital to shareholders reflects its confidence in its financial strength and ability to generate steady returns.
State Street has also announced the results of its 2023 annual stress test, which can be accessed on the Investor Relations section of its website.
It is worth noting that the results of State Street’s stress tests are based on the supervisory severely adverse scenario and incorporate prescribed Dodd-Frank capital actions, in compliance with section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. As mandated by this provision, State Street conducts company-run stress tests annually using its methodology and discloses summary results of these tests.
To learn more about State Street Corporation and its financial services, visit their website.
Please note that the article has been rephrased and rewritten based on the original information from the provided news release.
