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Regional banking company KeyCorp (NYSE:KEY) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 15.9% year on year to $1.76 billion. Its non-GAAP profit of $0.34 per share was 7.2% above analysts’ consensus estimates.
Is now the time to buy KEY? Find out in our full research report (it’s free).
KeyCorp's first quarter results were shaped by robust revenue growth and resilient fee-based businesses, but the market responded negatively as adjusted operating income fell short of Wall Street expectations. Management discussed continued strength in commercial loan pipelines and highlighted that sequential credit quality improvements were partially offset by a cautious reserve build, reflecting an uncertain economic outlook. CEO Chris Gorman acknowledged, “Recent events are clearly having an impact on markets and client sentiment as the outlook for the economy is becoming more uncertain.” The company emphasized its efforts to navigate macro volatility with a strong balance sheet and targeted lending strategies.
Looking ahead, management reaffirmed its guidance for the year, underpinned by structural tailwinds in net interest income and ongoing investments to support client growth. CFO Clark Khayat stated that much of the expected income growth is "already in from actions we took last year" and emphasized flexibility to manage expenses if deal activity remains muted. However, both Gorman and Khayat noted increased risks from persistent inflation, evolving tariffs, and pauses in client activity, with Gorman adding, “We are currently managing Key to an even broader range of potential scenarios.” Management remains focused on disciplined capital deployment and maintaining capacity for opportunistic share repurchases, pending greater economic clarity.
Management attributed first quarter momentum to commercial loan growth, proactive deposit management, and strong performance in countercyclical fee businesses, while acknowledging that market and client uncertainty led to a pause in some transactional activity.
KeyCorp’s outlook is shaped by expectations for net interest income growth, expense flexibility, and prudent risk management, with uncertainties around economic conditions and client activity.
As we look ahead, the StockStory team will be watching (1) whether commercial loan pipelines continue to convert into funded balances, (2) the pace of recovery in investment banking and capital markets activity amid ongoing client caution, and (3) management’s ability to manage expenses and deploy excess capital through share buybacks as regulatory and economic clarity improve. Asset quality trends and evolving deposit dynamics will also be important indicators of success.
KeyCorp currently trades at $16.35, up from $14.07 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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