JPMorgan Chase & Co., the largest U.S. bank, asked regulators to approve a higher quarterly dividend and reduced stock buyback after suffering its biggest trading loss ever last year.
“We know that we would like to increase our dividend,” Chief Financial Officer Marianne Lake told investors during a Boston investor conference sponsored by Citigroup Inc. “We did ask for buybacks, but lower than last year.”
The Federal Reserve forced JPMorgan to suspend a $15 billion share repurchase program last year after the lender disclosed derivatives losses that eventually swelled to more than $6.2 billion. JPMorgan’s board of directors cut Chief Executive Officer Jamie Dimon’s pay for 2012 in half after a review of the so-called London Whale episode held him partly responsible for the botched trades.
Dimon previously told analysts that JPMorgan reduced its 2013 buyback target by at least 20 percent to less than $3 billion per quarter. The bank is projected to raise its 30-cent quarterly dividend to 35 cents a share, according to analysts surveyed by Bloomberg.
The entire capital plan needs Fed approval as part of the central bank’s annual review of the biggest U.S. lenders, with an answer expected by mid-March.
“We’re going to find out over the course of the next week or so whether or not we get our capital plan approved,” Lake said today.
While JPMorgan executives want to return more capital to shareholders, next year’s payouts will depend on new international capital rules and how they affect the Fed’s so-called stress test, Lake said.
“We’ll make our decision when we know how things shake out toward the end of this year,” Lake said. “And we’d like to return capital back to shareholders. So we hope to have a chance to do that.”
JPMorgan purchased $1.6 billion shares before its buyback program was shut down last year. The Fed later approved the repurchase of $3 billion in additional shares in this year’s first quarter, leaving $10.4 billion of the original amount still unused.
Dimon has said he’s inclined to buy back shares when the price falls below tangible book value, a theoretical measure of what the company would be worth in a liquidation.