Bloomberg News

JPMorgan Sets $15B Buyback, Boosts Dividend

March 13, 2012

A JPMorgan Chase & Co. bank branch in New York. Photographer: Guy Calaf/Bloomberg

A JPMorgan Chase & Co. bank branch in New York. Photographer: Guy Calaf/Bloomberg

JPMorgan Chase & Co. (JPM), the biggest U.S. bank, raised its dividend and authorized a share-repurchase plan as banks respond to the Federal Reserve’s tests of how lenders would fare in an economic decline.

JPMorgan’s quarterly dividend will rise 20 percent to 30 cents a share, payable on April 30, the New York-based company said today in a statement. It authorized a $15 billion stock- repurchase program, with $12 billion approved for 2012. U.S. Bancorp, Minnesota’s largest bank, also boosted its payout and announced a buyback.

“We expect to generate significant capital and deploy that capital to the benefit of our shareholders,” JPMorgan Chairman and Chief Executive Officer Jamie Dimon said in the statement.

The Fed is requiring the nation’s largest lenders to show they have credible plans for maintaining capital and continuing lending in an economic downturn. JPMorgan said the Fed told the company it completed its review and “did not object” to the bank’s capital plans.

JPMorgan rose 7 percent, the most since November, to $43.39 at 4:10 p.m. in New York.

The bank didn’t disclose how it performed on the stress test. Joe Evangelisti, a spokesman for JPMorgan, declined to comment beyond the statement.

The $15 billion would be enough for JPMorgan to buy back 370 million shares at yesterday’s closing price of $40.54. That represents about 9.7 percent of shares outstanding.

The new dividend level is in line with the $1.15 to $1.25 a share annual dividend estimated by Charles Peabody, a Portales Partners analyst, in a March 1 report. He expected a share buyback program of $7 billion to $9 billion.

U.S. Bancorp

U.S. Bancorp said today it was increasing the quarterly dividend 56 percent to 19.5 cents a share. The bank, based in Minneapolis, will buy back as much as 100 million shares, it said in a statement distributed by Business Wire.

Morgan Stanley, owner of the world’s biggest brokerage, said today it received no objection from the Fed to its dividend payments. The firm said the Fed also didn’t object to its capital plan, including the potential purchase of an additional piece of the Smith Barney retail brokerage joint venture with Citigroup Inc.

To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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