By Saabira Chaudhuri
Goldman Sachs Group Inc. (GS) released new data projecting it
would have slightly higher capital levels, under a hypothetical
economic downturn, than it projected earlier this year.
Under the results of its mid-year stress test, the investment
bank said its minimum threshold for the measure of financial
health--known as a Tier 1 common ratio--would fall to 8.9%, up from
its March projection of 8.6%.
The latest projection is for the nine quarters in the run-up to
the second quarter of 2015, while Goldman's March figure was for
the nine quarters leading up to the fourth quarter of next
year.
Also on Monday, Goldman projected it would log a $6.2 billion
loss on $15.5 billion in pre-provision net revenue in case of a
severely adverse scenario. This compares with the $6.6 billion loss
on revenue of $20.4 billion it projected in March.
Like Citigroup Inc. (C), KeyCorp (KEY) and Capital One Financial
Corp. (COF), Goldman released the updated figures on Monday as part
of a requirement of the Dodd-Frank Act, which calls on large
bank-holding companies to conduct their own so-called stress tests
to help gauge their financial strength.
Eighteen banks released results under an initial round of
Dodd-Frank stress tests in March and were required to conduct a
mid-year version of the tests, the results of which they are
required to release between Sept. 15 and Sept. 30.
The tests are separate from the Federal Reserve's Comprehensive
Capital Analysis and Review stress tests, the results of which were
also released in March.
The CCAR exams help determine whether large banks will be able
to increase capital payouts to investors in the form of share
repurchases and dividends.
In March, the Fed had said it expected Goldman's Tier 1 common
ratio under a stressed scenario would be 5.8%. That put Goldman,
along with peers J.P. Morgan Chase & Co. (JPM) and Morgan
Stanley (MS), close the bottom of the list of the 18 largest U.S.
banks in that metric.
At the time, the Fed didn't object to Goldman Sachs' proposed
capital actions. However, as required by the Fed, the bank will
resubmit its capital plan by the end of this month, incorporating
certain enhancements to its stress test processes.
A representative of Goldman didn't immediately respond to a
request for comment.
Shares of Goldman were up 2.7% in recent trading to $168.37. The
stock is up 32% so far this year.
Write to Saabira.Chaudhuri@wsj.com
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