Wells Fargo & Co cut its dividend 85 percent on Friday , a widely expected move that the fourth-largest U.S. bank said will save $5 billion a year.

Wells Fargo lowered its quarterly payout to 5 cents per share from 34 cents. The reduction follows similar-sized cuts in the last two weeks by JPMorgan Chase & Co , PNC Financial Services Group Inc

and US Bancorp .

Dozens of lenders are reducing or eliminating dividends to preserve capital needed to cover rising credit losses. Bank of America Corp has cut its quarterly dividend to a penny per share, and Citigroup Inc eliminated its payout.

John Stumpf, Wells Fargo's chief executive, in a statement called the reduction absolutely right for our company and our shareholders because it will boost the bank's ability to boost market share.

He said the bank will return to a more normalized dividend level as soon as practical, and hopes to repay the $25 billion it took from the government's Troubled Asset Relief Program at the earliest practical date.

Wells Fargo also said its integration of Wachovia Corp, which it bought for about $12.5 billion on Dec 31, is on track, and that it still expects $5 billion of annual cost savings. It also said merger-related costs should be lower than expected.

Shares of Wells Fargo rose 63 cents to $8.75 in premarket trading. They began the year at $29.48.

(Reporting by Jonathan Stempel; Editing by Derek Caney)