Earnings fuel capital build at systemic US banks
Aggregate CET1 capital hits $1.1 trillion in Q2 2019, of which 86% is retained earnings
To plump their capital cushions, US global systemically important banks (G-Sibs) have sharply increased the amount of earnings they hold back in recent years.
In aggregate, the eight G-Sibs disclosed Common Equity Tier 1 (CET1) capital of $1.1 trillion at end-June. Of this amount, 86% was in the form of retained earnings. Five years prior, retained earnings made up 56.8% of CET1 amounting to $992.6 billion.
Over the same period, CET1 capital in the form of common stock has fallen to 18.8% of
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