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(Bloomberg) -- Fed stress tests results under Dodd-Frank Act (DFAST), released Thursday post-market, showed all 34 banks exceeded minimum projected capital and leverage ratios under severely adverse scenarios. That’s good news for banks, which can probably meet high expectations for payouts with next week’s Comprehensive Capital Analysis & Review (CCAR) -- the Fed test phase that dictates whether lenders can increase dividends and buy back stock. Strong DFAST results may also bolster Donald Trump’s push for easier bank rules.

• DFAST winners cited by analysts include: Citigroup, BofA, Zion, and Wells Fargo, while questions were raised about State Street, Discover, AmEx, and Morgan Stanley
• Banks stocks are gaining pre- market, with BAC up 0.4%, C +0.6%, JPM +0.4%, WFC +0.8%, GS +0.7%; MS little changed; STT down 0.1%

COWEN (Jaret Seiberg)

• Results are positive for Trump administration efforts to deregulate banks, especially by letting them expand commercial real estate (CRE) and leveraged lending.
• Industry is strong even in a severe downturn; that makes it hard to push back against efforts to ease rules

CAPITAL ALPHA (Ian Katz)

• Results are a thumbs-up for the banking system; Trump administration will likely use the findings to support push for deregulation., which should be good for banks and investors
• Treasury Secretary Steven Mnuchin, NEC’s Gary Cohn, Republican lawmakers can suggest that even Fed’s "stern taskmasters" think everything is okay, regulators and members of Congress should get on board and start deregulating

BARCLAYS (Jason Goldberg)

• $325b of excess capital supports elevated payouts
• Fed made it easier, and took much less harsh view on HELOCs, mortgages; even so, expected losses increased for credit card, other consumer, and C&I, while commercial real estate (CRE) was unchanged
• MS, STT skated closer to required minimums than expected; relative to last year, HBAN, KEY, MTB, WFC, BBT appeared better, while MS, GS, STT, CFG, COF seemed to get treated tougher

GOLDMAN (Richard Ramsden)

• Every bank passing stress test quantitatively for third year should support higher capital returns, with relative winners: BAC, WFC, C, ZION, NTRS
• Banks that appear closest to capital cushion: STT, DFS, AXP, MS, with MS seeming to have highest probability of using mulligan
• Sees consistent strength within regionals, with ZION, BBT having most room to exceed expectations; KEY, CFG have less room to surprise to upside
  • Tougher test for cards vs 2016; est. payouts for DFS/AXP appear aggressive
  • Trust banks BK, NTRS solid, though STT constrained

MORGAN STANLEY (Betsy Graseck)

• DFAST much better than expected, with excess capital up 17%, or $53b y/y to $357b; sees no risk to est. 30% y/y increase in capital payouts to be announced next week; expects to raise 2018 CCAR payouts as banks likely to get more aggressive as excess capital remains elevated and we have more clarity on regulatory changes
  • Notes Fed plans to disclose more information about qualitative assessment at next week’s CCAR, is considering removing qualitative test entirely for all banks
• Lists large-caps that may beat in next week’s CCAR: NTRS, WFC, C, BAC, JPM
  • WFC screens well, but may have relatively conservative ask, given recent sales practices issues, risk of qualitative failure
  • AXP, STT most at risk
  • Midcaps look well-positioned to meet or exceed expectations; HBAN stands out
• Top pick going into CCAR: C

RBC (Gerard Cassidy)

• Believes Fed has shown U.S. banking industry is very well capitalized, positioned to handle adverse economic scenarios
• Continues to recommend investors overweight bank stocks
• Favorite names going into next week’s CCAR: BAC, C, BBT, FITB, HBAN, JPM, KEY, PNC, USB, WFC, ZION

GUGGENHEIM (Eric Wasserstrom)

• Better industry-wide regulatory capital ratios under severely adverse scenario affirms U.S. banking system’s well capitalized condition 
• ALLY, AXP stressed CET1 ratios beat Guggenheim est.; C, JPM, WFC ratios were "optically worse" because of higher- than-est. RWAs, but demonstrated stronger stressed net income; BAC, COF, DFS, GS, MS trailed on weaker stressed net income; stressed loss rates at COF, DFS substantially worse than ests.
• Looking ahead to next week’s CCAR results, sees downside risk to consensus forecasts of capital return at C, COF, DFS, upside potential at AXP, BAC, JPM; sees downside risk to Guggenheim capital return outlook for MS; still sees WFC as being at significant risk of qualitative failure; though didn’t forecast for CIT (first DFAST cycle), says had strong results

NOMURA INSTINET (Steven Chubak)

• Universal, regional banks payouts not at risk, with money centers BAC, C, JPM results more positive than brokers GS, MS (higher minimum ratios, more positive PPNR trends)
• Focus was on GS, MS, as minimum SLRs indicated very little capacity for capital return; at the same time, notes minimum ratios for GS, MS tend to occur near beginning of stress period (as result of global market shock, which occurs at onset of stress); that means it may be more reasonable to look at brokers’ end-of- period ratios; sees limited risk of mulligan usage, particularly for MS
  • If GS, MS shares lag in light of investor concerns on payout risk, would accumulate on weakness
• Results less robust for Cards, as stressed CET1 ratios declined meaningfully across; DFS appears more at risk of having to utilize mulligan/lower payouts

JEFFERIES (Ken Usdin)

• All banks’ stressed capital ratios exceeded minimums, with avg bank showing better minimum ratios, more favorable stress deltas vs 2016 (BBT, MTB, WFC, ZION), though DFS, STT could potentially breach minimum thresholds
• Several showed stress deltas of 50bp or worse y/y: AXP, CFG, DFS, SC, STT
• Overall credit losses were more favorable this year, led by lower residential mortgage, home equity loss rates 
  • DFS, COF, AXP, SC showed the highest loss rates (card/auto), while HBAN, STI, PNC, and CMA were the lowest (ex trust banks)

EVERCORE ISI (Glenn Schorr)

• Most of the CCAR banks have enough post-stress capital capacity to pay out expected dollar amounts, though STT came up a little short, may take modest mulligan; regionals, cards fared well, likely to meet payout ests.
• MS, GS leverage ratio looks low, though they likely have enough capacity to hit est. payouts
• Universals appear to have "a good amount" of excess capital; watching whether they ask for the large returns they’ve been talking about (particularly C)

REGIONAL BANKS: PIPER (Kevin Barker)

• 2017 is "the year of the regionals," as higher interest rate assumptions across the curve helped several notch meaningful increases in CET1 minimums
• ZION, RF, HBAN stand out as their CET1 minimums jumped considerably, while CFG’s CET1 minimum fell due to larger-than-est. provision expense
• Came away from results more positive on capital return profiles of most regionals; believes bullish expectations will come to fruition

SUNTRUST (Jennifer Demba)

• Results largely as expected
• Median minimum tier 1 common ratio in severely adverse scenario 8.6%, with a low of 6.5% by ALLY; that’s solidly above the regulatory minimum standard of 4.5%
• Covered banks subject to DFAST: BBT, CMA, RF, ZION; doesn’t see downside to capital return expectations; sees capital returns rising for ZION, RF

BAIRD (David George)

• "No news is good news" as all banks pass
• High-quality regionals PNC, BBT, WFC, MTB reported best results, with y/y improvement in stressed losses and PPNR; ZION, WFC, CMA passed with the most implied excess capital relative to deployment expectations, have most flexibility to positively surprise
• More confident WFC won’t get qualitative objection

CARD ISSUERS: RBC (Jason Arnold)

• AXP, COF, DFS remain strong, substantially exceeding Fed’s minimum 4.5% tier 1 common equity ratio
  • AXP: Tier 1 common severely adverse minimum ratio 10.6% vs co. calculated 11.2%; sees AXP asking for ~$5.5b buyback, modest dividend hike, representing payout ratio of ~120%
  • COF: Tier 1 common severely adverse minimum ratio came 7.0%, vs co. calculated 6.4%; sees COF asking for ~$3.5b buyback, modest dividend hike, representing payout ratio of >90%
  • DFS Tier 1 common ratio severely adverse minimum ratio 10.4% vs co. calculated 11.4%; sees DFS asking for ~$2.6b buyback, dividend hike to 32c, representing payout ratio of ~113%

Related June 22 stories:

• Biggest Banks Clear Their First Hurdle in Fed’s Stress Test
• Bank Investors Are One Step Closer to a Payout Bonanza: Gadfly
• Fed Tests Show Better Real Estate Credit Quality, Cards Stress
• DFAST/CCAR PREVIEW: Expectations High; Watch Wells Fargo
• NOTE: Fed releases Comprehensive Capital Analysis and Review (CCAR) results on June 28, 4:30pm 
• Feb. 3, Fed released scenarios for 207 CCAR, listed CCAR banks: 
  • U.S. firms: ALLY, AXP, BAC, BK, BBT, COF, CIT, C, CFG, CMA, DFS, FITB, GS, HBAN, JPM, KEY, MTB, MS, NTRS, PNC, RF, STT, STI, USB, WFC, ZION
  • Non- U.S. firms/private cos.: BancWest Corporation, BBVA Compass Bancshares, BMO, Deutsche Bank Trust Corp., HSBC North America Holdings, MUFG Americas Holdings, Santander Holdings USA, TD Group US Holdings

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net Steven Fromm