KeyCorp (NYSE:KEY) Conference Transcript

KeyCorp Conference Call Summary Company Overview - Company: KeyCorp (NYSE: KEY) - Event: Conference Call on December 09, 2025 - Speaker: Chris Gorman, Chairman and CEO Key Accomplishments and Goals - KeyCorp celebrated its 200th anniversary in 2025, emphasizing a focus on customer engagement and sales organization transformation [3][4] - The company achieved significant margin expansion and fee growth, leading to best-in-class operating leverage [1] - Aiming for a 15% Return on Tangible Common Equity (ROTCE) by year-end 2027, with share repurchase as a capital return strategy [1][6] Financial Performance - Revenue Growth: Expected to be a record year with revenue growth exceeding 22% [19] - Fee Growth: Anticipated to exceed $750 million in Q4, with full-year fees projected to be comfortably above 6.5%, up from prior guidance of 5%-6% [18] - Loan Growth: Commercial and Industrial (C&I) loans grew by approximately 9%, with total commercial growth at 5% [14][15] - Charge-offs: Consumer charge-offs remained stable at 27 basis points over the last decade [10] Economic and Market Outlook - Positive consumer sentiment with consumers holding 20% more money in accounts compared to pre-COVID levels, and spending increasing by 2%-3% year-over-year [10] - Commercial clients are optimistic, with 60% expecting benefits from recent tax legislation [11] - The bank is well-positioned for middle-market transactions, with a strong credit book and capital position [9] Strategic Focus for 2026 - Continued investment in sales forces, particularly in fee-based areas, with a 10% increase achieved in 2025 [4] - Emphasis on organic growth rather than acquisitions, specifically in the Pacific Northwest [46][49] - Plans to maintain high single-digit revenue growth and improve ROTCE from 12% to 15% by 2027 [28][59] Capital Management - KeyCorp plans to buy back $200 million in stock in Q4, with an additional $800 million available for future buybacks [31][55] - The company is not pursuing any depository acquisitions and is focused on organic growth and stock repurchases [49][50] - The current CET1 ratio is at 10.3%, with potential to reduce capital levels to enhance ROTCE [58][60] Credit Quality and Risk Management - Strong credit posture with a focus on consumer and commercial credit quality [80] - Monitoring healthcare sector closely due to potential government reimbursement changes [81] - NDFI portfolio primarily consists of investment-grade assets, with a strong track record of low charge-offs [82] Misunderstandings and Market Perception - KeyCorp's unique business model and growth trajectory are often misunderstood by investors, leading to undervaluation [86] - The company emphasizes its ability to return capital to investors while maintaining strong credit quality and growth potential [87] Conclusion - KeyCorp is positioned for continued growth with a focus on organic expansion, strong financial performance, and effective capital management strategies. The company aims to enhance its ROTCE while maintaining a robust credit profile and returning capital to shareholders.