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Major Banks Fall Short In Fed's 2024 Stress Test Results: 'The Market Will View The Results As Disappointing'

The largest American banks were less than thrilled with the outcomes of the Federal Reserve’s 2024 Stress Tests, designed to measure the resilience of financial institutions’ capital in the event of a deep recession. Although the 2024 Stress Tests confirmed that all 31 banks analyzed would meet the minimum capital requirements even during a severe crisis, the potential losses these banks would face are projected to be higher than the previous year. Goldman Sachs analyst Richard Ramsden noted that the Stress Test results “were broadly worse than expected for the banks.” Ramsden explained that the year-over-year change in results was largely driven by banks generating much lower pre-provision net revenue (PPNR) during the test period. For the largest banks, PPNR fell by 9% year-over-year. Additionally, there were higher credit losses and provisions, particularly in commercial and industrial loans (C&I) and credit card sectors. Goldman Sachs calculated that Wells Fargo & Co. (NYSE:WFC), Bank of America ...