JPMorgan Chase & Co., the biggest U.S. bank, raised its dividend 20 percent and authorized a $15 billion share repurchase plan after the Federal Reserve tested its capital against a severe economic downturn.
The quarterly dividend will rise to 30 cents a share from 25 cents, payable on April 30, the New York-based company said today in a statement. JPMorgan also authorized a $15 billion stock repurchase program, with $12 billion approved for 2012.
“We expect to generate significant capital and deploy that capital to the benefit of our shareholders,” 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 $2.63, or 6.5 percent, the most since December, to $43.16 at 3:23 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 the firm 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 Portales Partners analyst Charles Peabody in a March 1 report. He expected a share buyback program of $7 billion to $9 billion.
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