Banks Lag S&P as Slow Loan Growth Eclipses Higher Dividends

Bank stocks are underperforming the Standard & Poor’s 500 Index, even after Federal Reserve stress tests showed some financial institutions have regained enough strength to boost dividends and buy back their shares.

Sluggish loan growth and increased costs from new regulations plague the industry, according to Paul Miller, a former examiner for the Fed Bank of Philadelphia and a bank analyst at FBR Capital Markets in Arlington, Virginia. He maintains a “neutral-to-negative” outlook for the sector.