Bank of America Corp., the second-biggest U.S. bank by assets, eclipsed $10 a share for the first time since July 2011, cementing its status as this year’s best performer in the Dow Jones Industrial Average.
Bank of America climbed 2.7 percent to $10.17 at 10:11 a.m. in New York, bringing its gain for 2012 to 82 percent. The Dow Jones benchmark rose 6.3 percent, with Home Depot Inc. in second place showing a 52 percent advance.
Bank stocks rallied Wednesday as Citigroup Inc., the third-biggest U.S. lender, announced plans to cut more than 11,000 jobs and pull back in some markets, saving more than $1.1 billion annually.
Brian T. Moynihan, Bank of America’s chief executive officer, has boosted capital, sold more than $60 billion in assets and set a target of $8 billion a year in expense cuts. Last year, speculation that Bank of America didn’t have an adequate cushion against losses prompted a $5 billion investment from billionaire Warren Buffett’s Berkshire Hathaway Inc., and the lender’s stock dipped below $5 in December.
Bank of America said capital under the latest guidelines increased to almost 9 percent as of September, which exceeds requirements under coming international rules. Moynihan said he’s confident the company will pass new U.S. stress tests. Chances for a dividend increase in 2013 are “much better,” Ed Najarian, an analyst at International Strategy & Investment Group Inc., wrote in an October note.
The lender’s quarterly dividend remains stuck at a token 1 cent, where it has been since early 2009 after Bank of America took $45 billion in federal bailouts. The U.S. was repaid at the end of that year. JPMorgan Chase & Co., the biggest bank by assets, and Wells Fargo & Co., the biggest home lender, offer dividends of more than 2.6 percent annually.
Boosting the dividend “will be on the table” after the Federal Reserve stress tests in March, Moynihan told employees in October. Regulators run the tests to see how well banks can withstand recessions and economic shocks, and the results help determine whether banks get permission for dividend increases and stock buybacks.
© Copyright 2014 Bloomberg News. All rights reserved.