Release Date: April 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• KeyCorp (KEY, Financial) reported a 16% increase in revenues year-over-year, with expenses remaining flat, indicating strong financial performance.
• The company achieved a pre-provision net revenue increase of over $90 million from the previous quarter.
• KeyCorp (KEY) ended the quarter with a CET1 ratio of 11.8%, positioning it at the high end of its peer group.
• The company reported record first-quarter investment banking fees, with pipelines remaining at historically elevated levels.
• KeyCorp (KEY) announced a $1 billion share repurchase authorization, expected to commence in the second half of the year, reflecting confidence in its financial position.

Negative Points

• The macroeconomic environment remains uncertain, with inflation and geopolitical risks potentially impacting client sentiment and market conditions.
• KeyCorp (KEY) noted a pause in transactional activity from clients due to recent tariff announcements and market uncertainty.
• The company is performing a name-by-name review of its largest clients to assess exposure to tariffs, indicating potential risks in its loan portfolio.
• Despite strong performance, KeyCorp (KEY) acknowledged that future charge-offs will depend on the path of the economy, reflecting ongoing credit risk concerns.
• The company expects expenses to increase throughout the year due to investment spend, salary increases, and other personnel costs, which could impact profitability.

Q & A Highlights

Q: Chris, given the macro issues and uncertainty, how do you reconcile maintaining your guidance with the current economic environment? A: Christopher Gorman, CEO: The economy is indeed uncertain, but our credit book, clients, and backlogs are in good shape. We run various scenarios, including stagflation, and we hold up well. Our clients remain cautiously optimistic, and many have adjusted their supply chains to be less impacted by trade issues.

Q: How are you thinking about C&I loan growth given the current client sentiment and market conditions? A: Christopher Gorman, CEO: We saw strong C&I loan growth later in the quarter, driven by broad-based regional traction and specific sectors like affordable housing and renewables. Utilization rates increased slightly, and we expect this trend to continue with the current 90-day tariff reprieve.

Q: Can you elaborate on the potential impact of tariffs on your reserving and credit exposure? A: Christopher Gorman, CEO: We've conducted a first cut of analysis on tariff impacts, but tariffs are dynamic. We've estimated potential exposure, but responses from trading partners are uncertain. We have incorporated a severe downturn scenario with a 20% probability into our reserves.

Q: What are the main drivers for achieving your 20% NII growth guidance, and what risks could impact this target? A: Clark Khayat, CFO: The 20% NII growth is largely driven by actions taken last year, including restructuring. We have strong loan and deposit performance. Risks include a significant pullback in C&I loans, a lower and flatter yield curve, and rapid economic changes. However, we have offsets to manage these risks.

Q: How do you plan to manage capital and share repurchases given the current economic uncertainty? A: Christopher Gorman, CEO: We target a CET1 ratio of 9.5% to 10% on a marked basis. Our priority is to support clients and invest in the business. We will consider share repurchases in the second half of the year, depending on economic clarity and Basel III developments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.