JPMorgan Chase & Co. pleased investors Friday with news that it will raise its dividend soon, pending approval from the Federal Reserve. The bank also reported that its income jumped 47 percent in the final three months of 2010 as fewer customers defaulted on their loans.
JPMorgan's CEO Jamie Dimon has suggested that the bank could raise its annual dividend from 20 cents per share to as much as $1 if the Fed allows.
The New York bank earned $4.83 billion, or $1.12 per share, as the company set aside less money to cover loan losses. That compares with $3.28 billion, or 74 cents a share, during the same quarter last year. Analysts surveyed by FactSet forecast the bank would earn $1 per share.
Investors liked what they heard. JPMorgan's shares gained 1 percent, or 46 cents, to $44.91. Other bank stocks also rose on hopes that dividend increases could be on the way. Wells Fargo & Co. rose 2.7 percent, or 86 cents, to $32.55 and Citigroup Inc. rose 1.7 percent, or 9 cents, to $5.13.
Income from JPMorgan's investment banking unit fell 21 percent from last year, but was up 17 percent from the third quarter on higher fees from underwriting debt. However, the widely watched salary and bonuses in that division increased over three times to $1.8 billion in the fourth quarter, compared with $549 million in the same quarter last year.
The bank increased the amount set aside for litigation by $1.5 billion. In the fourth quarter, several private investors sent letters or sued banks and tried to get them to buy back bad home loans, saying they were improperly written. Dimon said he believed the hurdles for investors to force banks to buy back such loans are high. He said the bank would fight the claims in court.
For the full year, JPMorgan had net income of $17.37 billion, or $3.96 a share, up 48 percent from $11.73 billion, or $2.26 a share.