Investors had hoped that the biggest U.S. banks would boost dividend payments substantially in 2015, but recent events including slumping oil prices will make it harder for banks to pay out more.
The big banks are already holding more capital than regulators have said they will need by the end of 2018. As banks begin reporting fourth-quarter earnings this week, starting with JPMorgan Chase & Co and Wells Fargo & Co on Wednesday, investors could learn that banks became even more over-capitalized in the last three months.
But hopes that some of that capital will find its way to shareholders seem likely to be unfulfilled. Expected loan losses are rising, especially in the energy sector, and trading markets are becoming more volatile, which makes bank assets riskier. Regulators are less willing to approve big increases in dividends or share buybacks when assets are riskier, analysts said.