June 29 (Reuters) - Shares of the top six U.S. banks rose in premarket trading on Thursday, a day after the Federal Reserve approved the banks' plans to raise dividend payouts and share buybacks under its annual stress test program.
Morgan Stanley was up 2.7 percent, Citigroup Inc 2.6 percent, Bank of America Corp 2.4 percent, JPMorgan Chase & Co 2 percent, Wells Fargo & Co 1.7 percent and Goldman Sachs Group Inc 1.3 percent.
The Fed said on Wednesday that all of the 34 banks had passed the second, tougher part of its annual stress test, showing that many have not only built up adequate capital buffers, but improved risk management procedures as well.
The verdict marks a significant victory for the banking industry, which has worked for years to regain its stature.
Altogether, banks that went through the tests will be able to pay out 100 percent of their projected net income over the next four quarters, compared with 65 percent after last year's results, a senior Fed official said.
It would be the first time since the 2008 financial crisis that banks return at least as much money to shareholders as they produce in annual profit.
Except Goldman Sachs, all other big U.S. banks announced share buyback programs and raised dividends. (Reporting By Aparajita Saxena in Bengaluru; Editing by Anil D'Silva)