Wells Fargo announces $30 billion buyback, shares rise

Wells Fargo shares popped Tuesday after the bank said it would buy back $30 billion in stock.

The company also said its board of directors approved a previously announced dividend increase, to 35 cents per share from the previous 30 cents. The sum is payable on Sept. 1 to shareholders of record on Aug. 4.

Wells Fargo’s stock rose more than 3% in extended trading Tuesday.

The moves come after the bank beat second-quarter earnings and revenue expectations, driven by a 29% increase in net interest income. A flurry of rate increases by the Federal Reserve since last year has boosted key financial institutions — as borrowers face a larger interest burden.

The central bank is expected to hike rates again Wednesday as it tries to rein in elevated inflation.

Democratic lawmakers have introduced multiple bills that aim to curb stock buybacks by major corporations. They say the businesses are passing the profits onto wealthier shareholders instead of increasing their employees’ pay.

The largest U.S. banks have announced plans to raise their quarterly dividends after they cleared the Federal Reserve’s annual stress test last month.

“Even with these significant investments, our capital levels are strong and we expect them to remain so, allowing us to return excess capital to our shareholders,” Wells Fargo CEO Charlie Scharf said in a statement accompanying the bank’s announcement.