NEW YORK — JPMorgan Chase & Co. led a flurry of the biggest U.S. banks in announcing dividend raises and stock buybacks, two days before the Federal Reserve was set to release the results of this year's stress tests.
JPMorgan's surprise announcement Tuesday, that it would increase its dividend by a nickel and launch a new $15 billion stock repurchase program, sent rival banks scrambling to make their own announcements. The Fed moved up the release of the results to 4:30 EDT on Tuesday.
Bank of America has also passed the Fed's stress tests, according to people familiar with the matter, but it did not seek to raise dividends or a new buyback authorization.
Morgan Stanley said Tuesday it received no objection from the Fed for its 2012 capital plan, including the potential cash acquisition of an additional 14% of Morgan Stanley Smith Barney and ongoing payment of current common and preferred dividends.
USBancorp boosted its dividend by 56%, and PNC Financial Corp. said it passed the stress test, according to a person familiar with the matter. BB&T Corp. said the Fed had no objection to it raising its dividend by 4 cents.
JPMorgan said on Tuesday "we are pleased to be in a position to increase our dividend and to establish a new equity repurchase program."
Several bankers said they are pleased with their banks' results but weren't willing to give out specifics before the Fed's own statement.
The Fed had planned to release the results of this year's Comprehensive Capital Analysis and Review, or stress tests, on Thursday afternoon. It decided to move up the timing after some banks had disclosed their results, the Fed said. The tests look at how the 19 biggest U.S. banks would fare in a severe downturn, including an unemployment rate of 13%, a 21% decline in housing prices and a 50% drop in equity prices.
Many banks are expected to raise dividends and increase share buybacks four years after the financial crisis as capital levels have improved and losses from bad loans continued to abate. Last year was the first time since the crisis that several banks were allowed to raise dividends.
In a report last month, Credit Suisse analysts estimated U.S. banks could double their capital payouts to shareholders, projecting an average of 47% of their earnings in 2012, up from 23% last year.
Of the 19 banks subject to this year's test, Regions Financial Corp. is the only one left that hasn't repaid funds received under the Troubled Asset Relief Program, the crisis-year emergency fund used to shore up bank capital levels. Analyst expect the bank to raise capital to repay TARP.
Bank stocks jumped in afternoon trading on the stress test results. JPMorgan's shares surged 7.03%, to $43.43 and Bank of America shares rose 6.26%, to $8.49. Morgan Stanley rose 4% to $18.93. USBank rose 4.8%, to $31.01, while PNC rose 4.1%, to $61.94. BB&T rose 3.7% to $30.40.