Will Wells Fargo Repurchase More Stock in 2022?
Wells Fargo (NYSE: WFC) paused share repurchases in the second quarter of the year after buying back $18 billion of stock in the preceding three quarters. However, the decision caught some by surprise, considering that Wells Fargo has a lot of excess capital and the credit quality at the bank is still quite healthy.
Now the question is, will the hiatus last a long time, or could the bank resume share repurchases later this year? Let's take a look.
If you want to evaluate where a bank stands in its ability to return capital to shareholders through repurchases or dividends, one important ratio to look at is the common equity tier 1 (CET1) capital ratio, which measures a bank's core capital as a percentage of its risk-weighted assets such as loans. CET1 capital is replenished each quarter by retained earnings. It also gets depleted through distributions such as dividends and repurchases, as well as loan growth because banks must set aside capital to reserve for loan losses.
Source Fool.com
