Big banks are spiking after the Fed approves their plans to return capital to shareholders

Mark Lennihan/AP

• Bank stocks are rallying Friday morning after the Fed approved their plans to return capital to shareholders.
• Only Deutsche Bank's US operations failed.
• Wells Fargo is a big gainer so far.
• Banks are on track to getting to pre-crisis dividend ratios.
• Watch JPMorgan Chase, Citi Group, Bank of America, and Wells Fargo trade in real time here.

One week after all US banks passed the Federal Reserve's stress test, the central bank approved plans of 34 large banks to return capital to shareholders. Only Deutsche Bank's US operations failed. Bank stocks are rallying on the news.

Here's the scoreboard:

• JPMorgan Chase: +3.03%
• Citigroup: +1.97%
• Bank of America: +1.71%
• Wells Fargo: +4.96%
• Deutsche Bank: +1.51%

After news of them passing the second leg of the Fed's test, the big banks are moving forward with share buyback programs and increased dividend payouts, and the rate of capital returns to shareholders is exceeding expectations.

• JPMorgan announced plans to raise its dividend 43% to $0.80 a share, and buy back up to $20.7 billion of its stock.
• Citigroup will hike its dividend to $0.45 cents a share, and buy back $17.6 billion of its stock.
• Bank of America will raise its dividend 25% to $0.15 a share, and buy back $20.6 billion of stock.
• Wells Fargo is doubling its stock buyback program to $24.5 billion and raising its dividend 10% to $0.43 a share.

"These higher capital return asks translated to an effective yield (dividends + buybacks) of 8.8%," Goldman Sachs analyst Richard Ramsden wrote in a note out to clients. "We believe the market will be focused on banks' 25% dividend growth announcements, given that dividend payout ratios beat consensus expectations by 400 basis points," he added.

Perhaps more importantly, "This suggests that banks are on track for eventually returning to historic (pre-Crisis) dividend payout ratios," Ramsden said.