The Zacks Analyst Blog Highlights: Zions Bancorporation, Citigroup, JPMorgan Chase, Goldman Sachs Group and State Street

CHICAGO, March 24, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Zions Bancorporation (Nasdaq:ZION-Free Report), Citigroup Inc. (NYSE:C-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report), Goldman Sachs Group, Inc. (NYSE:GS-Free Report) and State Street Corp. (NYSE:STT-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

Stress Test Results: Banks Healthier

At present, American banking giants are better positioned to withstand an economic downturn. This was disclosed by the Federal Reserve while releasing the Dodd-Frank Act Stress Test 2014 (DFAST 2014) results.

All the bank holding companies (BHCs) with $50 billion or more in total consolidated assets are part of DFAST 2014. Among 30 BHCs that submitted their capital plans to the Fed in Jan 2014, UT-based Zions Bancorporation (Nasdaq:ZION-Free Report) with Tier 1 common capital ratio of 3.5% failed to meet the minimum requirement of 5%. Further, these 30 banks altogether account for approximately 80% of total banking assets in the country.

Overall, under the most extreme stress scenario, the banks' aggregate Tier 1 common capital ratio will decrease to 7.6% in the first quarter of 2015 from 11.5% in the third quarter of 2013. Conversely, the ratio is significantly higher than 30 banks' actual ratio of 5.5% in the beginning of 2009.

Moreover, an extreme recession is expected to lead to $501 billion of losses. These included anticipated loan losses of $366 billion as well as $98 billion losses in trading and counterparty at the eight banks that have substantial trading or custodial operations.

Nevertheless, the clearance of stress test does not automatically lead to the conclusion that the banks qualify for additional capital deployment. The banks will have to wait till March 26 for approval of their capital plans.

Successful Banks

History repeated itself. In similarity to last year's stress test, smaller banks fared better in comparison to Wall Street biggies like Citigroup Inc. (NYSE:C-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report) and The Goldman Sachs Group, Inc. (NYSE:GS-Free Report). With 13.3% capital ratio, State Street Corp. (NYSE:STT-Free Report) topped the list.

Notably, in its latest capital plan, Discover Financial has asked for additional $1.6 billion worth of share repurchase through the first quarter of 2015 and a 20% rise in its quarterly cash dividend. Currently, the company has $2.4 billion share repurchase authorization (remaining $1.1 billion as of Dec 31, 2013) and pays quarterly cash dividend of 20 cents per share.

Among other major banks, Goldman with 6.8% capital ratio performed well in comparison to the 2013 stress test while Citigroup's ratio fell to 7% from the prior-year test results. Further, JPMorgan held a steady capital ratio of 6.3%.

Additionally, Ally Financial Inc. (majority-owned by U.S. taxpayers) which had failed to clear the stress test last year, recorded Tier 1 common capital ratio of 6.3%.

2014 Stress Test Scenarios

The Fed had three stress test scenarios – baseline (based on expectations of private economists), adverse and severely adverse – to test the banks' capital strength under stressful situations. These included 26 different variables such as employment and exchange rates, the anticipated changes in GDP, economic activity, prices, interest rates and a substantial weakness in emerging economies.

Further, the Fed tested the banks' balance sheet under the impact of slowdown across economies and severe recession in the U.S., Europe and Japan, leading to about 50% fall in equity prices. Other stressful circumstances comprised unemployment rate reaching 11.25%, home prices declining nearly 25% and the U.S. GDP decreasing 4.75%.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on ZION - FREE

Get the full Report on C - FREE

Get the full Report on JPM - FREE

Get the full Report on GS - FREE

Get the full Report on STT - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Logo -  http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.