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.
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.
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