June 27 (Reuters) - Big U.S. banks had enough capital to
weather a potentially severe economic downturn but some of their
risky businesses could hypothetically take a major hit this
year, according to results of the Federal Reserve's annual
stress test.
The 31 banks that participated showed they could withstand a
spike in joblessness and stresses in the commercial real estate
market and still have enough capital available to lend.
Their common equity tier 1 (CET1) ratio, a metric that
gauges high-quality capital, will dip to 9.9% at its lowest,
still far ahead of the 4.5% minimum requirement.
Here is how some of the biggest U.S. banks fared in the
test:
Bank Minimum
common equity tier 1
(CET1) ratio
JPMorgan Chase 12.5%
Bank of America 9.1%
Wells Fargo 8.1%
Citigroup 9.7%
Goldman Sachs 8.5%
Morgan Stanley 10.6%
The Fed also projected losses on loans could reach up to
$571 billion under its severely adverse scenario. Credit card
loans could be tricky, the central bank said.
The corporate credit portfolios of banks have also shifted
towards riskier loans. They now hold a larger share of
non-investment grade corporate credit, which are over three
times more likely to default than investment grade ones, the Fed
said.
Here are the banks with the steepest potential loan losses,
according to the central bank:
COMMERCIAL AND INDUSTRIAL LOANS -
Bank
Projected losses
(as % of average
loan balances)
Discover Financial 21.8%
Barclays US 19.3%
Goldman Sachs 16.2%
CREDIT CARDS -
Bank
Projected losses (as
% of average loan
balances)
Ally Financial 40.6%
Goldman Sachs 25.4%
Capital One 23.2%
COMMERCIAL REAL ESTATE LOANS -
Bank Projected loan
losses (as % of average
loan balances)
Goldman Sachs 15.9%
Royal Bank of Canada USA 15.8%
Capital One 14.6%
(Reporting by Niket Nishant in Bengaluru; Editing by Devika
Syamnath)