Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Citigroup Inc. (C) Emerges Victorious: JPMorgan Chase & Co. (JPM), Goldman Sachs Group, Inc. (GS)

All eyes have been on bank stocks this week as investors waited to hear of the results of the Fed’s stress test results. While much of the excitement centered on Bank of America Corp (NYSE:BAC) and its nicely padded capital cushion, Citigroup Inc. (NYSE:C) , a stress-test loser last year, surfaced as a clear winner, showing up fellow big banks B of A, JPMorgan Chase & Co. (NYSE:JPM)Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE: MS), and Wells Fargo & Co (NYSE:WFC) in the post-test, Tier 1 common capital category.

Playing it safe
Citigroup Inc. (NYSE:C) came out of the test — which required a minimum post-test 5% capital reserve — with an 8.3% capital ratio, higher than Wells’ 7%, B of A’s 6.8%, and JPMorgan Chase & Co. (NYSE:JPM)’s 6.3%. Both Goldman and Morgan Stanley emerged with ratios under 6%.

JPMorgan Chase & Co (NYSE:JPM)The super-charged stress scenario, reserved for the six largest banks, entailed an economic climate that featured 12% unemployment, a drop in real estate prices of 20%, and a general weakening of GDP by nearly 5%. In other parts of the world, the toughest scenario envisioned nasty recessions in Europe and Japan, with stalled economies in developing nations.

Despite going into the test with a Tier 1 ratio of 12.7% — the highest of any other bank — Citigroup Inc. (NYSE:C) choose to be conservative in its capital requests from the Fed. In an early release of this information, the bank revealed that it had asked for a $1.2 billion stock repurchase, and the maintenance of its current $0.01 per share quarterly dividend.

While some analysts expected Citi to increase its shareholder payout, it appears that new CEO Michael Corbat elected to play it safe. Along with SunTrust Banks, Inc. (NYSE: STI) and Fifth Third Bancorp (NASDAQ: FITB), Citigroup Inc. (NYSE:C) was stung last year by having its capital plan denied by the Fed. Although it submitted a revision that was eventually accepted, this particular incident has been considered key in the downfall of Vikram Pandit last fall.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.