Core Insights - KeyCorp (KEY) is expected to report second-quarter 2025 results on July 22, with solid improvements in lending activities noted during the quarter [1] - The demand for commercial and industrial (C&I) loans, which make up about 50% of KeyCorp's average loan balances, was strong, alongside an increase in consumer loan demand [1] Loan Balances and Earnings Estimates - The average loan balance for KeyCorp is projected to be $105.5 billion, reflecting a 3.2% year-over-year decline [2] - The Zacks Consensus Estimate for average earning assets is $171.2 billion, indicating a slight increase from the previous year, while the estimate is $173.5 billion [2] Net Interest Income and Margin - The Federal Reserve maintained interest rates at 4.25%-4.5%, which is expected to support KeyCorp's net interest income (NII) and net interest margin (NIM) through higher yields on interest-earning assets [3] - The consensus estimate for NII on a fully tax-equivalent basis is $1.14 billion, suggesting a year-over-year increase of 26.5% [4] Non-Interest Income Factors - Despite interest rate cuts in 2024, mortgage rates remained stable, leading to decent refinancing and origination volumes, which is expected to improve income from KeyCorp's mortgage banking business [5] - The consensus estimate for commercial mortgage servicing fees is $72.1 million, indicating an 18.2% year-over-year increase, while consumer mortgage income is estimated at $14.7 million, reflecting an 8% decline [6] Trading and Investment Banking - Increased client activity and market volatility are anticipated to positively impact KeyCorp's trading business, with a resurgence in the IPO market and decent bond issuance volumes [7] - The consensus estimate for investment banking and debt placement fees is $167.4 million, indicating a 32.9% surge, while the estimate is $178.4 million [7] Total Non-Interest Income and Expenses - The consensus estimate for total non-interest income is $671.9 million, suggesting a year-over-year increase of 7.2% [9] - Total non-interest expenses are estimated at $1.16 billion, reflecting a 7.9% year-over-year rise due to operational efficiency initiatives and investments in technology [10] Asset Quality and Credit Losses - KeyCorp is expected to build reserves for credit losses, with an estimated provision of $120.2 million, indicating a 20.2% rise year-over-year [11] - The consensus estimate for non-performing assets (NPAs) is $744.9 million, suggesting a 2.5% increase, while non-performing loans (NPLs) are estimated at $738.5 million, reflecting a 4% increase [12] Earnings Predictions - The Zacks Consensus Estimate for KeyCorp's second-quarter earnings is pegged at 34 cents, indicating a 36% jump from the prior year, with sales estimated at $1.80 billion, reflecting an 18.9% rise [15]