KeyCorp Stock Gains 3% on Record 2025 Revenue Growth Projection

KeyCorp KEY shares jumped 3% on Tuesday on a record revenue growth outlook for 2025. This was revealed at the Goldman Sachs Financial Services Conference.

KeyCorp’s updated outlook reflects a management team leaning confidently into 2025, with expectations of record revenues on stronger fee income momentum and disciplined expense control. The emphasis on organic growth, improving credit trends and accelerated capital return signals a focus on driving higher, more sustainable profitability.

Highlights from KeyCorp’s Updated Guidance

Revenues: KeyCorp anticipates 2025 adjusted total revenues (tax equivalent or TE) to be up 15% from the prior year, reflecting record revenue growth on the back of robust fee income and net interest income (NII).

Management expects investment banking (IB) activity to improve as M&A normalizes, noting that deal flow drives broader revenues across financing, hedging and payments. With M&A volumes still roughly 20% below typical levels, KEY is still on track for its second-best year, reinforcing its view that the franchise can approach the about $1 billion fee aspiration as activity recovers.

Hence, KEY expects fee income to exceed $750 million in the fourth quarter of 2025, with IB fees coming in $10-20 million higher than the prior-year quarter. Previously, IB fees were expected to be flattish. 

Further, the bank projects a high single-digit fee growth in priority businesses such as wealth management and commercial payments. As such, management now anticipates full-year 2025 fee growth to be comfortably above 6.5%, raising guidance from the earlier 5-6% range.

Additionally, KeyCorp expects NII (TE) growth to be better than 22%, consistent with the prior guidance. 

Expenses: KeyCorp expects 2025 expenses to grow slightly above 4% year over year, reflecting higher compensation costs tied to stronger fee income. This is modestly higher than the earlier guidance of roughly 4% expense growth.

Loans: KeyCorp expects overall loan growth to remain healthy, driven primarily by strong momentum in commercial and industrial (C&I) lending, which is growing around 9% year over year. C&I balances are projected to end the year roughly $1 billion higher than the prior quarter’s reported figure.
 
While commercial real estate (CRE) balances remain slightly lower and the consumer mortgage portfolio continues to run off by $0.5–0.6 billion per quarter, management anticipates continued loan growth in 2025 as C&I strength persists, mergers & acquisitions (M&A) activity normalizes, CRE transactions pick up, and home-equity lending ramps up with improved digital processes.

Capital: Management clarified that it is not pursuing depository acquisitions and will focus on organic growth and capital return.

Chris Gorman, CEO of KeyCorp, stated, “I think there will be consolidation in our industry for a long time, we are not participating.”

Management plans to direct excess capital toward share buybacks, viewing these as more value-accretive than balance-sheet restructuring, and emphasized that the stock is undervalued. 

“We are an undervalued stock. We believe that strongly, and we're going to spend our capital buying our stock”, Gorman stated. Thus, management expects to repurchase $200 million worth of shares in the fourth quarter of 2025, higher than the previous outlook of $100 million.

With the common equity tier 1 ratio at 10.3% versus a 9.5–10% target, KEY has room to optimize capital, supporting higher return on tangible common equity over time while maintaining prudent buffers.

Others: KEY anticipates 250 basis points (bps) of fee-based operating leverage with full-year 2025 net charge-offs to be within the earlier guidance of 40-45 bps.

KeyCorp’s Zacks Rank & Price Performance

Year to date, shares of KeyCorp have gained 16.6% compared with the industry’s growth of 16.3%.

KeyCorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

KEY Peer Stocks Worth Considering

Some better-ranked peers of KeyCorp worth considering are BNY Mellon BK and U.S. Bancorp USB, each carrying a Zacks Rank #2 (Buy). 

Estimates for BK’s current-year earnings have remained unchanged in the past month. The company’s shares have risen 29.4% in the past six months.

Estimates for USB's current-year earnings have been revised marginally upward in the past 30 days. The company’s shares have risen 16.7% in the past six months.

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This article originally published on Zacks Investment Research (zacks.com).

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