KeyCorp ((KEY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for KeyCorp revealed a blend of challenges and achievements, painting a nuanced picture of the company’s current financial standing. While the company faced obstacles like an EPS loss and declining loans, significant strides in revenue and client deposit growth, coupled with impressive gains in investment banking and technology, suggest a positive trajectory. The strong credit performance and robust capital position further bolster the outlook.
Positive Adjusted EPS
Despite reporting an initial EPS loss of $0.28 per share, KeyCorp adjusted for strategic securities repositioning, resulting in a positive EPS of $0.38. This adjustment highlights the company’s ability to mitigate losses through strategic financial maneuvers.
Revenue Growth
KeyCorp reported a notable 11% sequential and 16% year-over-year revenue growth after adjusting for securities repositioning. This increase underscores the company’s effective revenue generation strategy amidst a challenging economic environment.
Client Deposit Growth
The company saw a 1.5% sequential and 4% year-over-year growth in client deposits, reflecting growing customer trust and a stable deposit base.
Strong Credit Performance
For the fourth consecutive quarter, KeyCorp improved its credit migration, with criticized loans decreasing by $500 million and net charge-offs down by $40 million sequentially, showcasing effective credit risk management.
Record Assets Under Management
KeyCorp achieved a milestone with assets under management reaching a record $61.4 billion, indicating strong asset growth and management capabilities.
Investment Banking Success
Investment banking fees reached $221 million in the fourth quarter, marking it the second strongest year in KeyCorp’s history, which highlights the bank’s prowess in capital markets.
Technological Advancements
Significant progress was made in core modernization projects and cloud migration, with plans to increase tech spending by 10% in 2025, demonstrating KeyCorp’s commitment to technological innovation.
Strong Capital Position
KeyCorp’s capital position is robust, with a CET1 ratio of 12%, placing it in the top quartile of its peer group, indicating strong capital management and readiness for future growth.
Forward-Looking Guidance
Looking ahead, KeyCorp provided optimistic guidance for 2025, projecting a 20% increase in net interest income and a net interest margin improvement to 2.8% by year-end. The company anticipates commercial loan growth of 2-4%, offset by a $3 billion reduction in consumer loans, and a 5% rise in noninterest income. The focus on technology and workforce expansion in wealth and investment banking sectors further underscores KeyCorp’s strategic priorities.
In summary, KeyCorp’s earnings call presented a mixed yet forward-looking narrative. Despite facing certain financial challenges, the company demonstrated resilience through strategic revenue adjustments and strong credit management. With an optimistic outlook for 2025, bolstered by technological advancements and robust capital positioning, KeyCorp is well-placed to navigate future opportunities and challenges.
