Expect an 'exciting dividend announcement' from JPMorgan, says UBS's Erika Najarian

We're more stressful for some. She says JPM stands out among money centers again. Erica Najarian, UBS senior equity research analyst, managing director for large cap bank and consumer finance, joins us now. She's got a buy rating on JPM price target of 224. What kind of capital return programs do you expect? How big for investors out of this stress test result? So it's going to be really mixed and JP Morgan sticks out because the amount of excess capital that they have even relative to that potentially bigger buffer that Leslie mentioned is absolutely head and shoulders above peers. So we're thinking that they have excess capital after this test of about 26 billion and over the next four quarters, the Street has a buybacks of about 16 billion. So they can well afford to afford what the Street expects in terms of buyback activity. Now in terms of their announcement last night about a miscalculation in their stress capital buffer, I mean, even if that stress capital buffer goes from 30 to 20 and the language from their press release did say modest, then that takes down your excess capital to 20 billion. Regardless of what it is, I think that JP Morgan is still head and shoulders above its peers in terms of how much it has to return back to its shareholders. And so while we do not expect buyback plan announcements Friday after the close, we do expect perhaps maybe a more exciting dividend announcement from JP Morgan. Jamie did hint at the potential special dividend at a recent conference in May. What about for the rest of the group as far as buybacks and dividends? Yeah, I think that's where we have to sort of temper expectations. So you know, even though City did better year over year, it just implies excess capital of 5 billion. That may not be enough for them to move away from their language of saying that they're going to evaluate buybacks on 1/4 to quarter basis, especially given that Basel 3 end game is still outstanding and the real unlocking of capital at City will come when the IPO Banamex. And obviously we've talked about Wells. Wells didn't do so hot in the stress test relative to expectations. And you know essentially it implies that they have just two billion of excess capital. They produce about that much organically every quarter. And so there could be a little bit of disappointment relative to consensus buybacks of 3 1/2 billion per quarter and be is just going to be fine. You know, As for the regionals, let's talk about the outliers. Truist is doing well today because they sold their insurance company to a private equity firm. They have lots of capital to return and the results support that. On the less positive side, we have you know, Key Corp and 5th, 3rd that have had a little bit of a surprise in terms of higher stress capital buffers, which could mean impeding growth or buybacks or both. Erica, Goldman Sachs down 2% today. You indicated in looking at the the stress test results that might be the reaction based on, you know, the need for this, this greater buffer. Obviously that's been a very hot stock in the group, but people excited about the idea of capital markets business coming back. Where does it leave Goldman at this point? I think this is just a blip. So I think that for Goldman, keep in mind that there was that Article 2 days ago that the capital increases from Basel 3 end game could go from 20% increase to 5% and the phrase market risk getting softened was mentioned maybe three times in that article. And so clearly they would be ultimately the winner there if we don't have that kind of, you know, risk weighted asset inflation, therefore greater capital need. So I think that this could be just a, you know, a blip in what could be a pretty decent longer term story.