Core Viewpoint - KeyCorp (KEY) is well-positioned for growth due to strategic acquisitions, restructuring initiatives, solid loan and deposit balances, and higher interest rates, although funding costs and elevated expenses pose challenges [1] Group 1: Growth Catalysts - KeyCorp has experienced solid loan growth contributing to top-line expansion, with a compound annual growth rate (CAGR) of 0.3% in tax-equivalent revenues over the last six years ending in 2023 [2] - Loans and deposits recorded a CAGR of 4.3% and 6.8% respectively over the four years ending in 2023, with deposits showing year-over-year growth in the first half of 2024 [3] - Management anticipates gradual stabilization and potential growth in loans in the second half of 2024, supported by decent loan demand and initiatives to boost fee income [3] - Total revenues are projected to dip marginally in 2024 but are expected to rebound with growth rates of 11.2% and 6% in 2025 and 2026 respectively [3] Group 2: Interest Margin and Funding - The Federal Reserve is likely to maintain high interest rates, which may enhance KeyCorp's net interest margin (NIM) despite rising funding costs [4] - NIM is expected to improve in the near term, with estimates of 2.18%, 2.52%, and 2.60% for 2024, 2025, and 2026 respectively [4] - The acquisition of a 14.9% stake by the Bank of Nova Scotia is anticipated to enhance capital availability, aiding loan portfolio restructuring and NIM expansion [4] Group 3: Business Restructuring and Expansion - KeyCorp's restructuring initiatives include acquisitions such as GradFin in 2022 and XUP Payments in 2021, aimed at enhancing digital capabilities and revenue diversification [5][6] - The company is consolidating its branch network to meet the rising demand for digital banking services, with a projected CAGR of 3.8% for total non-interest income by 2026 [7] Group 4: Challenges - KeyCorp faces challenges from an escalating expense base, which has seen a CAGR of 3.6% over the past five years, primarily due to higher personnel costs [8] - Although total non-interest expenses are expected to decline by 5.4% in 2024, they are projected to rise by 4.8% and 2.6% in 2025 and 2026 respectively [8] - Weak asset quality is a concern, with provisions expected to decline in 2024 while net charge-offs (NCOs) are projected to rise by 48.6% year-over-year [9]

ab 13 August 2024 Global Research and Evidence Lab KeyCorp BNS stake supports KEY shares, but greater visibility needed to determine upside Capital injection solves for near term capital, earnings headwinds KEY shares handily outperformed today (+9.1% vs. -0.5% for the BKX) after announcing a $2.8bn strategic investment in the bank by Scotiabank (14.9% pro forma ownership) at a premium to recent its valuation, though retreated from early trading levels that neared the $17.17 price implied by the deal. We th ...

Shares of KeyCorp (KEY) touched a 52-week high of $17.09 yesterday before closing the session at $15.94 (marking a jump of 9.1%). The surge was driven by the news of an investment of $2.8 billion by The Bank of Nova Scotia (BNS) in KeyCorp. Canada's BNS will acquire approximately a 14.9% stake in KeyCorp for a fixed price of $17.17 per share, representing a premium of 7.7% at the previous day's closing price. For BNS, the step marks a massive advancement as it tries to expand operations in North America. De ...

Key Takeaways The S&P 500 was flat on Monday, Aug. 12, 2024, ahead of key data points this week that could offer insight into the uncertain economic environment. KeyCorp shares took off after the regional bank announced a $2.8 billion investment from Bank of Nova Scotia. Shares of Albemarle tumbled amid an ongoing slump in lithium prices. Major U.S. equities indexes were little changed on Monday. Fresh off a week of volatile trading driven by economic concerns, key data on inflation, retail sales, and the h ...

KeyBank (NYSE:KEY) is among today's biggest movers, with KEY stock surging by as much as 14% this morning. This is in response to news that Canadian lender Bank of Nova Scotia (NYSE:BNS), also known as Scotiabank, has acquired 14.9% of the regional U.S. lender for $2.8 billion. At this valuation, Scotiabank has paid a premium for KEY stock, pricing the company at a valuation of around $18.8 billion. Accordingly, the market has been quick to reprice shares of KEY stock, with the stock still reflecting a disc ...

Canadian bank Scotiabank plans to acquire a 14.9% stake in Cleveland-based KeyCorp, which operates about 1,000 KeyBank branches in 15 U.S. states and provides corporate and investment banking products. Pending regulatory approval, Scotiabank expects to close the initial investment of 4.9% in the fourth quarter of fiscal 2024 and an additional investment of 10% in fiscal 2025, the bank said in a Monday (Aug. 12) press release. The total cash consideration amounts to $2.8 billion. "We believe that this transa ...

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, The ...

Opportunistic capital raise on attractive terms Accelerates capital and earnings improvement; capital raise estimated to result in pro forma CET1 of 12.4% Further strengthens Key's capacity for growth CLEVELAND, Aug. 12, 2024 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced it has reached an agreement under which The Bank of Nova Scotia ("Scotiabank") (TSX: BNS) (NYSE: BNS) will make a strategic minority investment in KeyCorp of approximately $2.8 billion, representing approximately 14.9% pro forma commo ...

TORONTO, Aug. 12, 2024 /PRNewswire/ - Scotiabank announced today that it has entered into an agreement to acquire an approximate 14.9% pro-forma ownership stake in KeyCorp through an issuance of common shares at a price of $17.17 per share, representing an 11% premium to the volume weighted average price for the last 20 trading days. The total cash consideration is approximately US$2.8 billion (the "Investment"). KeyCorp is a premier U.S. based financial services company operating across 15 states, with US$ ...

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