KeyCorp Q4 2025 Earnings Call Summary

1Key Financial Results and Metrics

Earnings Per Share (EPS): Reported at $0.43; adjusted EPS at $0.41.

Revenue: Exceeded $2 billion, up 12% year-over-year on an adjusted basis.

Net Interest Income (NII): Increased by 15% year-over-year; net interest margin (NIM) at 2.82%, above the target range of 2.75% to 2.8%.

Expenses: Grew by 2% year-over-year, totaling $1.3 billion for the quarter.

Loan Growth: Commercial and industrial (C&I) loans grew by 9%, while consumer loans were intentionally reduced.

Capital Ratios: Marked CET1 ratio at 10.3%; targeted to manage down to the higher end of 9.5% to 10% by 2026.

Share Repurchases: $200 million repurchased in Q4, with plans for at least $300 million in Q1 2026.

2Strategic Updates and Business Highlights

Organic Growth Focus: KeyCorp is prioritizing growth in middle market, payments, investment banking, and wealth management, with significant investments in technology and talent.

Investment Banking: Strong pipelines with nearly $140 billion raised in 2025; expectation for improved middle market M&A activity in 2026.

Wealth Management: Assets under management reached a record $70 billion, with strong sales production in the mass affluent segment.

Technology Investments: Continued investment in technology, with an additional $100 million allocated to enhance customer-facing capabilities.

3Forward Guidance and Outlook

2026 Revenue Growth: Expected to grow by approximately 7%, with NII growth of 8% to 10% and non-interest income growth of 3% to 4%.

Loan Growth: Anticipated to be 1% to 2% overall, with commercial loans projected to grow at about 5%.

Expense Management: Expenses expected to rise by 3% to 4%, indicating substantial operating leverage.

Long-Term Goals: Aiming for a 15%+ return on tangible common equity by year-end 2027, with potential to reach 16% to 19% thereafter.

4Bad News, Challenges, or Points of Concern

Consumer Loan Runoff: Continued runoff of lower-yielding consumer loans, with expectations of about $600 million per quarter.

Market Uncertainty: Concerns regarding macroeconomic conditions and geopolitical risks could impact growth and credit quality.

Investment Banking Visibility: Limited visibility beyond Q1 2026 for M&A activity, with a cautious approach to growth in investment banking fees.

Credit Quality Monitoring: While overall credit quality is improving, specific sectors such as consumer discretionary, healthcare, and agriculture are being closely monitored for potential risks.

5Notable Q&A Insights

Strategic Priorities: CEO Chris Gorman emphasized organic growth in key areas and the importance of leveraging new hires and technology to enhance efficiency and client experience.

Investment Banking Outlook: CFO Clark Khayat noted that while there is optimism for growth in investment banking, the guidance reflects a conservative approach due to market unpredictability.

Expense Growth: The company aims for long-term expense growth of 2% to 3%, with current expectations for 2026 set at 3% to 4%.

Credit Quality: Chief Risk Officer Mohit Ramani highlighted a generally benign credit environment but acknowledged specific sectors that require close monitoring. This summary encapsulates the key points from KeyCorp's Q4 2025 earnings call, providing a balanced view of the company's performance, strategic direction, and outlook.