(Reuters) - JPMorgan Chase & Co became the first bank on Tuesday to say regulators have completed stress tests of its balance sheet and approved a dividend increase and stock buybacks.
The bank said it will raise its quarterly dividend by a nickel to 30 cents and buy back as much as $12 billion of stock this year.
The announcement came two days before the Federal Reserve was originally scheduled to announce results of stress tests for 19 U.S. bank holding companies.
JPMorgan shares surged on the news and closed up more than 7 percent at $43.39.
The bank said in a statement that the Federal Reserve has informed the company that it did not object to its plans to distribute capital.
“We are pleased to be in a position to increase our dividend and to establish a new equity repurchase program,” chief executive Jamie Dimon said in the announcement. “We expect to generate significant capital and deploy that capital to the benefit of our shareholders.”
Dimon has said in the past that many banks will have more capital than they need as customers pay back loans and losses from the financial crisis subside. While his view would seem to contradict requirements that banks meet higher capital thresholds by 2019, the approval of JPMorgan’s distributions indicates regulators decided the bank has enough capital to make the payouts and meet the new thresholds.
The bank said it may not buyback all of the stock approved, depending on market conditions.
Reporting by David Henry in New York; editing by Andre Grenon