Bank stocks rose in extended trading on Thursday after the Federal Reserve announced its plan for lifting restrictions on dividends and buybacks from financial companies.
The Fed said it would keep its pandemic-era restrictions on banks in place until June 30. The Fed had previously said that banks could restart their buybacks and dividend hikes in the first quarter, so Thursday’s announcement is a delay but does provide more clarity for investors.
The major U.S. banks announced last March that they would stop buying back stock during the Covid-19 crisis, which had just caused a dramatic sell-off in the equity markets and raised worries about financial stability. The Fed put official restrictions on dividends last June that were tied to a bank’s income, which forced Wells Fargo to cut its payouts.
Bank stocks have performed well in recent months as investors grow more bullish on the prospects of an economic recovery. The SPDR S&P Bank ETF is up more than 20% year to date.