JPMorgan Chase Slashes Dividend 87 percent

JPMorgan Chase  the second largest U.S. bank, slashed its common stock dividend 87 percent Monday, a surprise move by a lender considered among the strongest in the U.S. financial sector.

The decision to cut the quarterly dividend to 5 cents per share from 38 cents will save $5 billion a year.

"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," said Chief Executive Jamie Dimon.

JPMorgan also said it is turning a profit this quarter, and that its outlook for the quarter is "roughly in line" with analyst expectations.

Analysts, on average, expected a profit of 35 cents per share on revenue of $21.96 billion, according to Reuters Estimates. JPMorgan received $25 billion in capital from the government's Troubled Asset Relief Program (TARP).

Dimon said the dividend cut "is not directly related to TARP.

Our reason for accepting TARP capital still holds—namely, to help stabilize the banking system and economy." The bank said it hopes to return to a "more normalized" dividend as soon as feasible once the environment stabilizes.

Bank of America and Citigroup , JPMorgan's largest rivals, have slashed their dividends to a penny per share since November.

Shares of JPMorgan fell 30 cents to $19.21 in after-hours trading following the dividend cut, which was announced after markets closed. They fell 39 cents to $19.51 in regular trading.

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