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KeyCorp Shares Dip on Q1 Earnings Miss, Deposits Down Y/Y

KeyCorp (NYSE:KEY) reported Q1 revenues increased 1.1% Y/Y to $1.71 billion, missing the consensus of $1.79 billion.  Consumer Bank revenues…
byLekha Gupta
April 20, 2023
2 minute read
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  • KeyCorp (NYSE:KEY) reported Q1 revenues increased 1.1% Y/Y to $1.71 billion, missing the consensus of $1.79 billion. 
  • Consumer Bank revenues rose 5.4% Y/Y to $842 million, while Commercial Bank revenues increased 4.1% Y/Y to 841 million in the quarter.
  • Net interest income (NII; on a tax-equivalent basis) grew 8.4% Y/Y to $1.11 billion, with net interest margin of 2.47% (+1 basis points), led by higher earning asset balances and a rise in interest rates. 
  • Non-interest expenses rose 9.9% Y/Y to $1.18 billion on higher personnel expenses. 
  • Net income from continuing operations declined 34.5% Y/Y to $275 million, including $126 million from allowance build and expense initiative.
  • EPS of $0.30 missed the consensus of $0.44.
  • KEY has $752 million shares remaining under repurchase authorization through Q3 2023.
  • Average deposits fell 4.5% Y/Y to $143.4 billion, reflecting high inflation-related spending, the normalization of pandemic-related deposits and changing customer behaviour due to increased interest rates. 
  • Average total loans rose 15.5% Y/Y to $119.8 billion, reflecting a rise in commercial and industrial loans and commercial mortgage real estate loans.
  • Provision for credit losses was $139 million compared with $83 million on the uncertain economic outlook and higher net loan charge-offs (+36.4% Y/Y).
  • Common Equity Tier 1 ratio was 9.1%, down from 9.4% as of March 31, 2022.
  • Assets under management stood at $53.7 billion, flat Y/Y.
  • “The successful de-risking of our loan portfolios over the last decade positions Key to outperform, from a credit perspective. In the first quarter, we added to our allowance for credit losses to reflect changes in our economic outlook, with our allowance now representing over 7 years of annualized net charge-offs. Additionally, we delivered another quarter of strong credit performance, with net charge-offs of 15 basis points.” Chris Gorman, Chairman and CEO.
  • Price Action: KEY shares are trading lower by 7.19% at $11.49 premarket on the last check Thursday.
 
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