KeyCorp Q3 Earnings Beat Estimates on Higher Revenues, Stock Gains

Core Insights - KeyCorp's third-quarter 2025 adjusted earnings per share from continuing operations reached 41 cents, exceeding the Zacks Consensus Estimate of 38 cents, marking a 36.7% increase from the prior-year quarter [1][10] - The company's shares rose by 1.4% in early trading following the announcement of better-than-expected results [1] Financial Performance - KeyCorp's total revenues increased significantly year over year to $1.89 billion, surpassing the Zacks Consensus Estimate of $1.88 billion [3] - Net interest income (NII) on a tax-equivalent basis rose 23.8% year over year to $1.19 billion, with the net interest margin (NIM) expanding 58 basis points to 2.75% [4] - Non-interest income was reported at $702 million, a substantial increase driven by a significant reduction in net securities losses, which fell to $6 million from a $918 million loss in the prior-year quarter [6] - Non-interest expenses increased by 7.4% year over year to $1.18 billion, attributed to rising costs across nearly all components [7] Loan and Deposit Trends - Average total loans at the end of the third quarter were $106.23 billion, a slight increase from the previous quarter, while average total deposits rose by 2% to $150.37 billion [8] Credit Quality - The provision for credit losses was $107 million, reflecting a 12.6% year-over-year increase, while net loan charge-offs as a percentage of average total loans decreased by 16 basis points to 0.42% [9][11] Capital Ratios - KeyCorp's tangible common equity to tangible assets ratio improved to 8.1% as of September 30, 2025, up from 6.2% a year earlier, with the Tier 1 risk-based capital ratio rising to 13.5% [12] Strategic Outlook - The company is expected to benefit from decent loan balances, balance sheet repositioning efforts, strategic buyouts, and relatively higher interest rates, although concerns remain regarding weakening asset quality amid a challenging macroeconomic environment [13]