KeyCorp ((KEY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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KeyCorp’s recent earnings call painted a largely positive picture, highlighting strong revenue growth and improved credit metrics. The company expressed confidence in its strategic goals, such as commercial loan growth and asset management, despite facing challenges like increased operating expenses and uncertainties requiring higher loan loss reserves. Overall, the sentiment was optimistic, with a focus on achieving full-year targets and leveraging growth opportunities.
Strong Revenue Growth
KeyCorp reported a remarkable 21% increase in revenues year-over-year, showcasing significant growth in a challenging macroeconomic environment. This growth underscores the company’s ability to navigate market challenges and capitalize on opportunities.
Pre-Provision Net Revenue Increase
The company achieved a $44 million sequential increase in pre-provision net revenue, marking the fifth consecutive quarter of growth. This consistent performance highlights KeyCorp’s effective financial management and strategic execution.
Commercial Loan Growth
KeyCorp successfully met its full-year plan of $3 billion growth in commercial loans by June 30, 2025. The strong backlog indicates continued momentum in this area, reinforcing the company’s growth strategy.
Record Assets Under Management
Assets under management reached a record $64 billion, reflecting KeyCorp’s robust asset management capabilities and its ability to attract and retain client investments.
Improvement in Credit Metrics
The company reported improved credit metrics, with declines in net charge-offs and criticized loans, alongside stable non-performing assets. These improvements demonstrate KeyCorp’s effective risk management practices.
Increased Earnings Guidance
Reflecting strong performance and client activity, KeyCorp raised its net interest income growth guidance to 20%-22%. This adjustment underscores the company’s confidence in its financial outlook.
Successful Hiring and Retention
KeyCorp is on track to increase its frontline bankers and client advisers by 10% in 2025, with strong retention rates. This focus on human capital is crucial for sustaining growth and enhancing client services.
Loan Loss Reserve Build
The company added $36 million to its loan loss reserves due to macroeconomic uncertainty and loan growth. This prudent measure ensures that KeyCorp is well-prepared for potential future challenges.
Higher Operating Expenses
Operating expenses rose by 7% year-over-year, driven by personnel costs and technology investments. While this increase poses a challenge, it also reflects KeyCorp’s commitment to investing in its workforce and technological infrastructure.
Market Uncertainty and Deposit Management
Due to macroeconomic uncertainty, KeyCorp maintained $4-$5 billion more in cash and short-term liquidity, impacting its net interest margin. This cautious approach highlights the company’s focus on maintaining financial stability.
Forward-Looking Guidance
In the second quarter of 2025, KeyCorp reported strong financial results despite a dynamic macroeconomic environment. The company achieved an earnings per share of $0.35, supported by a 21% year-over-year revenue increase. KeyCorp’s strategic investments in technology and personnel, along with improved credit metrics, position it well for future growth. The company has raised its net interest income and loan growth guidance, projecting a 20-22% increase in net interest income for the year.
In conclusion, KeyCorp’s earnings call revealed a positive outlook with strong revenue growth and strategic achievements. Despite challenges like increased expenses and economic uncertainties, the company remains confident in its ability to meet full-year targets and capitalize on growth opportunities. Investors can take away a sense of optimism from KeyCorp’s robust performance and forward-looking strategies.