Bank of America announced that its board has authorized a $40 billion stock repurchase program, set to take effect on August 1. This new buyback will replace the current authorization, which had approximately $9.1 billion remaining as of June 30. The Federal Reserve indicated last month that the largest U.S. banks have sufficient capital to withstand severe economic and market turmoil scenarios.
The newly approved buyback program will commence when the existing repurchase authorization expires. The previous $25 billion buyback plan, established in 2024, still had around $9.1 billion left as of June 30. Bank of America emphasized that this initiative reflects its commitment to returning excess capital to shareholders while balancing investments in future growth and stability. The announcement also included an 8 percent increase in the quarterly dividend to $0.28 per share, further demonstrating the bank’s robust capital position.
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Stress test confirms bank resilience
The Federal Reserve’s 2025 annual stress test revealed that major U.S. banks, including Bank of America, possess enough capital to endure severe economic downturns. In the test, Bank of America showed an improved capital depletion rate, with its CET1 ratio dropping 170 basis points, better than the previous year. The required minimum CET1 capital ratio will be 10.0 percent starting October 1, 2025. All 22 banks assessed passed the test, even under challenging scenarios, maintaining capital levels well above regulatory thresholds.
Historically, Bank of America’s buyback authorizations include a $25 billion plan in 2021, marking its first major post-COVID repurchase effort, and another $25 billion plan in 2024. The upcoming $40 billion authorization will be the largest in the bank’s history. Following the announcement, Bank of America shares rose about 1 percent in after-hours trading, as analysts noted increased shareholder return flexibility and a demonstration of surplus capital.
This trend of large-scale buybacks is not exclusive to Bank of America; other major banks like JPMorgan Chase and Wells Fargo have also initiated substantial repurchase programs following strong stress test results and earnings, often aligned with regulatory guidance and capital return strategies.
