KeyCorp shares rise as Q3 earnings beat expectations on higher revenue

NEW YORK - On Thursday, KeyCorp (NYSE:KEY) reported third-quarter earnings that exceeded analyst expectations, driven by strong revenue growth and improved net interest margin.

The bank’s shares rose 1.52% in pre-market trading after the release.

The Cleveland-based bank reported net income of $454 million, or $0.41 per diluted common share, beating analyst estimates of $0.38 per share. Revenue reached $1.9 billion, slightly above the consensus estimate of $1.88 billion and up 17% YoY when adjusted for last year’s securities portfolio repositioning.

KeyCorp’s net interest income increased 4% from the previous quarter, with net interest margin expanding to 2.75%, up 9 basis points sequentially. The improvement was supported by average deposit growth of 2% quarter-over-quarter, while total deposit costs declined by 2 basis points to 1.97%.

"Our third quarter results demonstrate continued strong momentum," said Chairman and CEO Chris Gorman. "Adjusted revenue was up 17% year-over-year, and we generated more than 1,000 basis points of operating leverage again this quarter."

Credit quality showed improvement as nonperforming assets decreased 6% sequentially, while net charge-offs remained stable at 42 basis points, within the bank’s full-year guidance range of 40 to 45 basis points.

The bank’s Consumer Bank segment reported net income of $152 million, more than double the $75 million from the same quarter last year. Meanwhile, the Commercial Bank segment delivered $367 million in net income, up 22.7% YoY.

KeyCorp maintained its quarterly dividend of $0.205 per share. The bank’s Common Equity Tier 1 ratio stood at 11.8% at quarter-end, up 10 basis points from the previous quarter.

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