Keycorp
Q1 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +5.27%.
Did KEY Beat Earnings? Q1 2026 Results
KeyCorp opened 2026 on solid footing, posting first-quarter earnings per share of $0.44 against a consensus estimate of $0.41, an 8.03% beat, while revenue of $1.95 billion edged past the $1.94 billion estimate by 0.75%. The headline EPS figure represented 33% year-over-year growth, even as reported revenue reflected a 27.6% year-over-year decline tied to prior-period comparisons. The clearest engine behind the quarter's strength was net interest margin expansion, with NIM widening 29 basis points year-over-year to 2.87%, driven by falling deposit costs, the reinvestment of maturing low-yielding securities, and a deliberate pivot toward higher-yielding commercial and industrial loans, which grew 10.1% on average year-over-year. Fee-based businesses added further lift, with investment banking and debt placement fees rising 13% to $197 million. Looking ahead, management raised its full-year net interest income growth outlook to 9-10% and lifted its average loan growth forecast to 2-4%, while targeting at least $1.30 billion in share repurchases for 2026.
- Net interest income growth of 11% YoY driven by lower deposit costs, reinvestment of maturing low-yielding securities and swaps into higher-yielding investments, and favorable balance sheet mix shift to C&I loans
- Net interest margin expansion of 29 bps YoY to 2.87%
- Priority fee-based businesses (investment banking, commercial payments, wealth management) collectively grew 12% YoY
- Commercial loan growth of $3.3 billion QoQ (4%), with C&I line utilization rising ~100 bps to 31.5%
- Total deposit cost declined 16 bps QoQ to 1.65%, with cumulative down interest-bearing deposit beta of ~56%
- Revenue growth of 10% YoY outpaced expense growth of 4% YoY, generating 5.73% positive adjusted operating leverage
- Cash efficiency ratio improved to 60.4% from 63.5% a year ago
“Our strong first quarter performance demonstrates disciplined execution and significant momentum as we continue to deliver on our commitments. Revenue grew 10% year-over-year, growing at more than double the rate of expenses. We grew net interest income and net interest margin sequentially and year-over-year. Our priority fee-based businesses - investment banking, commercial payments, and wealth management - collectively grew 12% year-over-year. Return on tangible common equity exceeded 13%, reflecting significant progress toward achieving our goal of 15%+ return on tangible common equity by year-end 2027.”
KeyCorp CEO, on the earnings call
Forward Guidance & Outlook
For FY2026 vs. FY2025: Total revenue (TE) expected up ~7% (baseline $7,513M). Net interest income (TE) up 9-10% (raised from 8-10%; baseline $4,671M), with Q4 NIM exit rate of ~3.05% (raised from 3.00-3.05%). Average earning assets stable to 1Q26 levels. Noninterest income up 3-4% (adjusted up 5-6%). Adjusted noninterest expense up 3-4% (baseline $4,729M). Average loans up 2-4% (raised from 1-2%; baseline $105.7B), with average commercial loans up 6-8% (raised from ~5%). Net charge-offs expected at 40-45 bps. GAAP tax rate of ~22%. Q4 2027 targets: NIM 3.25%+ and ROTCE 15%+. Long-term ROTCE target of 16-19%. Plans to repurchase at least $1.3 billion of common shares in 2026, with $300M+ per quarter for the remainder of the year.
KEY YoY Financials
KEY Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.