NEW YORK (Reuters) - Goldman Sachs Group Inc offered investors a window into its capital plans for the first time, detailing the bank’s regulatory allowances for buybacks and dividends on Tuesday.
The U.S. Federal Reserve granted Goldman permission this year to spend $8.7 billion repurchasing shares from investors, and to raise its quarterly dividend by 5 cents per share, by the middle of next year, Chief Financial Officer R. Martin Chavez said on an earnings conference call.
Major banking rivals announced their own capital plans in June after passing the Fed’s annual stress test, but Goldman has historically kept its plans private. The new buyback and dividend disclosures are part of a broader strategy to disclose more to investors, who were frustrated by a lack of clarity into the bank’s business plans.
Last month, management announced a $5 billion revenue growth plan to give investors “a sense of what’s happening under the hood,” Chief Operating Officer Harvey Schwartz said at the time.
As of the third quarter, Goldman was already spending more than 100 percent of its net income on buybacks, JPMorgan analyst Kian Abouhossein said in a note to clients.
Buying back stock can help lift earnings per share, but can also signal that management does not see more attractive opportunities to invest those funds in businesses. Goldman shares were down 0.8 percent at $240.51 in morning trading.
Reporting by Olivia Oran; Writing by Lauren Tara LaCapra; Editing by Susan Thomas