KeyCorp Stock Gains 3% on Record 2025 Revenue Growth Projection

Core Insights - KeyCorp (KEY) shares increased by 3% following a positive revenue growth outlook for 2025, presented at the Goldman Sachs Financial Services Conference [1] - The management's updated outlook indicates confidence in achieving record revenues driven by strong fee income and disciplined expense management [1] Revenue Expectations - KeyCorp anticipates a 15% increase in adjusted total revenues for 2025 compared to the previous year, supported by robust fee income and net interest income (NII) [2] - The bank expects fee income to exceed $750 million in Q4 2025, with investment banking (IB) fees projected to be $10-20 million higher than the same quarter last year [4] Investment Banking and Fee Growth - Management expects improvement in investment banking activity as M&A normalizes, with a goal of approaching $1 billion in fees as activity recovers [3] - Full-year 2025 fee growth guidance has been raised to comfortably above 6.5%, up from the earlier range of 5-6% [4] Net Interest Income and Expenses - KeyCorp projects NII (TE) growth to exceed 22%, consistent with prior guidance [5] - The bank expects expenses to grow slightly above 4% year-over-year, reflecting higher compensation costs associated with increased fee income [5] Loan Growth and Capital Management - Overall loan growth is expected to remain healthy, primarily driven by a 9% year-over-year increase in commercial and industrial (C&I) lending [6] - Management clarified a focus on organic growth and capital return, planning to direct excess capital towards share buybacks rather than pursuing depository acquisitions [7][8] Share Buybacks and Capital Optimization - KeyCorp plans to repurchase $200 million worth of shares in Q4 2025, an increase from the previous outlook of $100 million [10] - The common equity tier 1 ratio stands at 10.3%, providing room for capital optimization and supporting higher returns on tangible common equity over time [10] Operating Leverage and Charge-Offs - KeyCorp anticipates 250 basis points of fee-based operating leverage, with full-year 2025 net charge-offs expected to remain within the earlier guidance of 40-45 basis points [11]