Analysts Expect Increased Share Repurchases by Leading U.S. Banks in 2024

In 2024, share repurchases by top U.S. banks are set to rise following a more modest pace of growth in 2023, which was influenced by the Basel III bank capital reforms proposed in July last year. These reforms aimed to impose higher capital requirements on U.S. banks with assets exceeding $100 billion, designed to safeguard against potential losses from bad loans and other risks. Consequently, major U.S. banks such as Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), Citigroup (NYSE: C), and JPMorgan Chase (NYSE: JPM) began accumulating excess common equity tier 1 (CET1) capital to meet the Fed’s proposed higher capital requirements.

However, in March this year, the U.S. Federal Reserve announced it would significantly revise the initial proposal by year’s end, indicating lower capital requirements than initially expected. This adjustment resulted in a surplus of capital for these banks, thereby increasing their capacity for share buybacks. Consequently, the total amount of share repurchases for these leading banks surged to $11.9 billion in the first quarter of 2024. Analysts anticipate this trend to continue throughout the year, with projected share repurchases for the four banks expected to remain stronger than the levels seen last year. For the upcoming quarter, analysts expect a cumulative $8.9 billion in share repurchases by these banks, marking a 25% decrease from the previous quarter but a 14% increase from $7.8 billion in 2Q 2023.

For the full year, analysts estimate the total amount of share repurchases by these banks will increase by 44%. Among them, Wells Fargo and JPMorgan Chase are expected to be the top repurchasers. Wells Fargo’s buybacks are projected to grow by 43.2% to $17.1 billion, while JPMorgan’s repurchases are anticipated to rise by 24.4% to $12.3 billion. Bank of America and Citi are also expected to significantly increase their repurchases, with projections showing growth rates of 92.6% and 31.3% respectively.