Results of the Federal Reserve's stress test show US banks are well prepared for a severe recession, suffering losses of more than $550bn but maintaining a CET1 ratio of 11.6%, well above the 4.5% minimum. These results could allow banks to increase capital distributions to shareholders. The test scenario for 2025 included a severe global recession, and banks performed better than the previous year. JPMorgan Chase had the highest capital ratio, and stress test reform will introduce a more transparent methodology.
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