JPMorgan Chase’s Board of Directors has reduced the company’s quarterly common stock dividend from $0.38 to $0.05 per share, effective for the dividend payable 30 April 2009, to shareholders of record on 6 April 2009. The Board anticipates maintaining this level for the time being. This action will enable the company to retain an additional $5 billion in common equity per year.
First-quarter 2009 financial performance quarter-to-date is solidly profitable even after significant additions to reserves, and the outlook for the quarter is roughly in line with analyst expectations.
“While we recognize our tremendous obligation to shareholders to maintain dividend levels, we also understand that extraordinary times require extraordinary measures,” says Jamie Dimon, chief executive officer. “Our action today is being done as a strong precautionary measure to help ensure that our fortress balance sheet remains intact – even if conditions worsen significantly. As always, our highest obligation during an economic crisis is to keep our company and franchise healthy, vibrant and strong for the future.
“While our performance and capital are already strong, today’s action provides us with maximum flexibility to protect our company in a more highly stressed environment and to continue to build and invest in our market-leading businesses. Today’s capital action is not directly related to TARP. Our reason for accepting TARP capital still holds – namely to help stabilize the banking system and economy. The decision to retain additional common equity does, however, help position our company to repay TARP as soon as is prudent – and still maintain a strong capital position. Our repayment of TARP will ultimately be worked out in consultation with the US Treasury and other regulators, and in consideration of the best interests of the banking system overall.”
D.C.