(UPDATE: The Federal Reserve released stress-test results Tuesday afternoon — 4 of 19 banks failed the tests.)
JPMorgan Chase (NYSE: JPM), parent company of Chase retail banking and JPMorgan investment banking, jumped ahead of the Federal Reserve’s release of bank stress test results on Thursday with an optimistic move — increasing dividends and authorizing a stock buyback program.
Payable starting April 30, 2012, the bank will dole out a quarterly common stock dividend of 30 cents per share, up from 25 cents. Additionally, JPMorgan Chase has authorized a $15 billion equity repurchase program — $12 billion for 2012 and $3 billion for the first quarter of 2013.
“We are pleased to be in a position to increase our dividend and to establish a new equity repurchase program,” said Jamie Dimon, CEO of JPMorgan Chase, in a prepared statement. “We expect to generate significant capital and deploy that capital to the benefit of our shareholders.”
The announcement comes prior to the Fed’s official release of the results of its annual Comprehensive Capital Analysis and Review, which examines financial institutions’ ability to weather a variety of tough economic conditions.
It’s a signal that JPMorgan Chase has passed its stress test. Other big banks that beat the stress tests are likely hike dividend payouts and buy back stock as well.
After passing the Fed’s stress test in 2011, Bank of America®, JPMorgan Chase, Wells Fargo and Citigroup boosted dividends.
In October, Chase dethroned Bank of America® to become the largest bank in the country.
The sign of confidence follows Chase’s string of changes to its retail banking arm. Recently, Chase reduced fees on many account services while also eliminating fees on others.
Last year, Chase said that it plans to add 1,500 to 2,000 branches, mainly in California and Florida.