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Wells, State Street and 7 others report midcycle Dodd-Frank stess-test results

Wells Fargo & Co., State Street and seven other large banks have now reported results of their stress tests as required under the Dodd-Frank Act.

Banks with more than $100 billion in assets are required to stress test their balance sheets twice a year using hypothetical economic scenarios. In 2018, 35 firms reported mid-cycle results. S&P Global Market Intelligence analyzed results for the other 26 banks in two previous articles.

Despite this year's strenuous test scenario — the U.S. unemployment rate hitting 10%, equities dropping 65% and a severe drop in GDP — none of the 35 companies projected a capital ratio falling below the minimum required by regulators.

The stress-testing cycle runs from the third quarter of this year through the third quarter of 2020. All of the results shown are under the "severely adverse" economic scenario.

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Among the nine banks, Wells Fargo reported the highest pretax loss under the severely adverse scenario at $22.4 billion, followed by Santander Holdings, USA Inc. at $7.6 billion. Meanwhile, State Street reported a pretax profit of roughly $200 million. American Express Co. was the only other company that projected a pretax profit during this year's midcycle stress-test cycle.

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Click here to access a template with the midyear company-run 2018 Dodd-Frank Act stress-test results and supplemental data for the participating banks.

To view a video training session on the Comprehensive Capital Analysis and Review and the Dodd-Frank Act stress test, click here.