KEY-PJ — KeyCorp

Key Financial Results and Metrics:

• Earnings Per Share (EPS): $0.43 for Q4 2025, $0.41 adjusted.
• Revenue: Exceeded $2 billion, up 12% year-over-year on an adjusted basis.
• Net Interest Income (NII): Increased 15% year-over-year; tax-equivalent NII up 3% sequentially.
• Expenses: Grew 2% year-over-year; total non-interest expenses were $1.3 billion.
• Net Charge-Offs: $104 million, down 9% sequentially; annualized net charge-off ratio at 39 basis points.
• Common Equity Tier 1 (CET1) Ratio: 10.3% at quarter-end, with plans to manage it down to the higher end of the 9.5% to 10% target range by 2026.
• Tangible Book Value: Increased 3% sequentially and 18% year-over-year.

Strategic Updates and Business Highlights:

• KeyCorp repurchased $200 million of common stock in Q4, doubling its initial commitment.
• Loan growth was strong, particularly in Commercial & Industrial (C&I) loans, which grew 9%.
• Investments in technology increased to $1 billion, focusing on enhancing customer-facing capabilities.
• Wealth management assets reached a record $70 billion, with significant growth in mass affluent segment sales.
• The bank is focused on organic growth in middle market, payments, investment banking, and wealth management.

Forward Guidance and Outlook:

• 2026 Revenue Growth: Expected to increase by about 7%, with NII growth of 8% to 10%.
• Loan Growth: Anticipated at 1% to 2% overall, with commercial loans expected to grow by about 5%.
• Expense Growth: Forecasted at 3% to 4%, indicating substantial operating leverage.
• Return on Tangible Common Equity (RoTCE): Aiming for 15% or higher by year-end 2027, with potential to reach 16% to 19% in the longer term.

Bad News, Challenges, or Points of Concern:

• Market Uncertainty: Concerns about macroeconomic conditions and geopolitical risks could impact future performance.
• Credit Quality Monitoring: While overall credit quality is improving, areas such as consumer discretionary, healthcare, and agriculture are being closely watched for potential risks.
• Investment Banking Visibility: Limited visibility beyond Q1 2026 for investment banking activity, despite historically high backlogs.
• Conservative Guidance: Some analysts perceive the growth guidance as conservative, potentially limiting upside expectations.

Notable Q&A Insights:

• Strategic Focus: CEO Chris Gorman emphasized organic growth in middle market, payments, and investment banking, alongside a commitment to return on capital.
• Hiring Impact: The bank has added frontline bankers, with expectations that their productivity will ramp up over time.
• Investment Banking Fees: CFO Clark Khayat noted that while investment banking fees are expected to grow, the guidance reflects a cautious approach due to market volatility.
• Credit Quality: Chief Risk Officer Mohit Ramani highlighted ongoing improvements in credit metrics but acknowledged specific sectors that require monitoring.

Overall, KeyCorp's Q4 2025 results reflect strong financial performance and strategic initiatives aimed at sustainable growth, although there are challenges and uncertainties that could impact future results.