KEY — KeyCorp

Summary of KeyCorp Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): $0.41
• Return on Assets (ROA): Exceeded 1%
• Pre-Provision Net Revenue (PPNR): Increased by $33 million (5%) quarter-over-quarter, marking six consecutive quarters of growth.
• Revenue Growth: Adjusted revenues up 17% year-over-year, driven by net interest income (NII) and fee income.
• Net Interest Margin (NIM): Achieved 2.75%, surpassing year-end target one quarter early.
• Capital Ratios: Common Equity Tier 1 (CET1) ratio at 11.8%, with a marked CET1 ratio of 10.3%.
• Loan Loss Provision: $107 million, with net charge-offs at $114 million (42 basis points of average loans), within target range of 40-45 basis points.

2. Strategic Updates and Business Highlights

• Loan Portfolio: Shift from low-yielding consumer mortgages to higher-yielding commercial and industrial (C&I) loans, with C&I loans growing by 8% year-over-year.
• Deposit Growth: Total deposits increased by 2%, with a notable rise in non-interest-bearing deposits.
• Investment Banking: Strong performance with $184 million in fees, up 8% year-over-year; robust capital raising efforts with $50 billion raised for clients.
• Wealth Management: Assets under management reached a record $68 billion, with significant growth in the mass affluent segment.
• Hiring Initiatives: Aiming for a 10% increase in frontline staff, with early signs of productivity from new hires.

3. Forward Guidance and Outlook

• NII Growth: Full-year growth expected to be at the high end of 20-22% range, with fourth-quarter NII anticipated to grow 13% or more compared to 2024.
• Fee Income Growth: Projected to increase by 5-6% in Q4, contingent on favorable market conditions and M&A activity.
• Long-term Targets: Aiming for a return on tangible common equity (RoTCE) of 15% or better by 2027, with a focus on improving NIM to 3.25% and maintaining expense discipline.

4. Bad News, Challenges, or Points of Concern

• Credit Quality: While metrics are stable, there are ongoing concerns about potential risks related to non-depository financial institutions (NDFIs) and market volatility.
• Market Conditions: The investment banking environment remains uncertain, particularly in the middle market M&A space, which has seen low activity.
• Expense Growth: Non-interest expenses increased by 7% year-over-year, driven by personnel costs and technology investments, with expectations for continued expense growth in Q4.

5. Notable Q&A Insights

• M&A Strategy: KeyCorp remains cautious about bank acquisitions, emphasizing a high bar for any potential deals, focusing instead on organic growth.
• Capital Management: Plans to repurchase approximately $100 million of common stock in Q4, with discussions around future buybacks contingent on market conditions and performance.
• Deposit Strategy: The bank is strategically managing deposit growth, focusing on maintaining a healthy mix of commercial and consumer deposits while being selective about rates offered.
• Regulatory Environment: Positive changes in regulatory oversight are noted, with a shift towards a focus on safety and soundness rather than excessive procedural requirements.

This summary encapsulates KeyCorp's performance and strategic direction for Q3 2025, highlighting both achievements and areas of caution as the company navigates a dynamic financial landscape.