KeyCorp Eyes Embedded Banking Expansion as Deposits Climb in Q4

Deposit Growth and Embedded Banking Opportunities - Overall average deposits reached $149.7 billion in Q4, up from $145.1 billion YoY and 1.3% higher than Q3 levels, driven by growth in both consumer and commercial deposits [1] - Growth opportunities lie within embedded banking offerings, with commercial payments-related revenues growing in the mid-single digit percentage points [1][3] - The company plans to continue investing in embedded banking capabilities, including software advisors, relationship bankers, digital and analytics tools [4] Credit Quality and Consumer Segment Performance - Credit card charge-offs were 4.5% in Q4 [2] - Non-performing assets are peaking, with non-performing loans expected to decline by midyear assuming a constructive macro environment [2] - The company grew its number of relationship households by over 3% for the second consecutive year, with 5-8% growth in Western markets and continued growth in Eastern markets [2] Loan Outlook and Lending Environment - Average loans are expected to decline 2-5% by the end of 2025, with balances flat compared to 2024 [4] - 80% of middle-market clients surveyed are confident in their growth prospects and plan to invest in property, plants, and equipment [5] Regulatory Environment and Investment Roadmap - The regulatory environment around M&A has been challenging, but there is potential for improvement and significant opportunities in the future [6] - The company has been migrating to the cloud, replacing 2 core systems annually, and will continue to invest in the business, hire talent, and pursue bolt-on acquisitions [6] Consumer Lending Strategy - Consumer lending is an important element of the balance sheet, with plans to further expand into personal lending over time [7]