Keycorp /New/ (KEY) Stock Analysis and Metrics

Keycorp

NYSE: KEY

$22.65 ▼ -0.07 (-0.31%)

At close: Jul 24, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap24.60 Bn

P/E13.64

P/S-4.95

Div. Yield0.04

Total Debt (Qtr)34.00 Mn

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About

KeyCorp is a bank holding company organized in 1958 under the laws of Ohio and headquartered in Cleveland Ohio. It is the parent holding company for KeyBank National Association its principal subsidiary through which most banking services are provided. Through KeyBank and certain other subsidiaries KeyCorp offers a wide range of retail and commercial banking commercial leasing investment management consumer finance student loan refinancing commercial mortgage servicing and investment banking products and services to individual corporate and institutional clients.

The company generates revenue primarily from interest income on loans and investments. Additional revenue comes from fees for deposit services wealth management investment banking and other financial services provided to its customers.

The company operates through the following segments: Consumer Bank and Commercial Bank.

• The Consumer Bank serves individuals and small businesses throughout the company's 15 state branch footprint and through its digital brand offering deposit and investment products personal finance and financial wellness services lending student loan refinancing mortgage and home equity credit card treasury services and business advisory services.

• The Commercial Bank consists of the Commercial and Institutional operating segments with the Commercial segment focusing on borrowing cash management and capital markets needs of middle market clients within the company's 15 state branch footprint and the Institutional segment providing lending equipment financing and banking products and services to large corporate and institutional clients nationally.

KeyCorp is one of the nation's largest bank based financial services companies with consolidated total assets of approximately 184.4 billion at December 31 2025. It competes with other bank holding companies commercial banks savings associations credit unions mortgage banking companies finance companies mutual funds insurance companies investment management firms private credit funds investment banking firms broker dealers financial technology companies and other local regional national and global institutions offering financial services. KeyCorp's competitive advantages include its diversified product suite extensive branch network digital banking capabilities and strong relationships with corporate and institutional clients.

The company serves individuals small businesses middle market clients large corporate and institutional clients non profit organizations high net worth individuals and multi employer trust funds.

Investment Thesis

▲ Bull case

KeyCorp is positioned to capture significant upside from its structural shift toward higher-yielding commercial and industrial (C&I) loans, which grew by $1.5 billion or 3% sequentially and are driving net interest margin expansion. This portfolio remix, achieved by intentionally running off low-yielding consumer loans while maintaining disciplined underwriting, directly lifted net interest margin by 17 basis points sequentially to 2.58% and supports management’s confidence in reaching 2.7% or better by year-end 2025. The benefit is structural and self-reinforcing: as C&I loans now constitute a larger share of the earning asset base, they generate inherently higher returns without requiring additional balance sheet growth, and the company’s ability to redeploy capital from runoff consumer loans into C&I avoids the need for new deposit funding or increased leverage. This dynamic is further amplified by the company’s marked CET1 ratio of 10%, which places it at the upper end of its peer group and provides ample capacity to absorb risk while continuing to grow the high-margin loan book. Unlike temporary cyclical tailwinds, this shift reflects a deliberate, multi-year strategy to optimize asset yield, and its impact is already visible in the 25% year-over-year growth in net interest income, which management views as largely in place due to 2024 actions like the Scotiabank investment and securities repositioning. The market may be underestimating the durability of this tailwind, particularly as the company continues to benefit from the reinvestment of maturing low-yielding securities and swaps at around 2.7%, creating a natural floor for margin expansion even in a sideways or slightly declining rate environment.
KeyCorp’s fee-based businesses are exhibiting resilient, countercyclical strength that could drive sustained operating leverage beyond current expectations, particularly in commercial mortgage servicing and investment banking. Commercial mortgage servicing fees reached a record high, growing approximately 36% year-over-year, with the company now serving as named primary or special servicer on $710 billion in CRE loans and holding $12 billion in special servicing assets—an all-time high—indicating deepening expertise in a business that thrives during periods of real estate stress. This is not merely a revenue line but a strategic franchise that provides natural hedges against loan book volatility, as special servicing activity tends to rise when CRE performance deteriorates, creating a countercyclical revenue stream. Similarly, investment banking and debt placement fees hit a first-quarter record of $175 million, up 3% year-over-year, with pipelines remaining at historically elevated levels and roughly flat to year-end despite near-term client pausing on transactional activity. Management explicitly noted that fee growth excluding operating lease income was closer to 6%, and the business model’s diversification across wealth management, commercial payments, and advisory services reduces reliance on any single fee line. The company’s belief that it can deliver fee-based operating leverage even if deal activity remains paused into the second half of 2025—citing flexibility in the expense base—suggests the market may be overlooking the structural profitability of these franchises, which are less tied to interest rate cycles and more to long-term client relationships and market share gains in niche areas like middle-market M&A, where the recent acquisition of Clearwater UK expands their European reach and cross-border deal flow potential.
The company’s liquidity fortress and disciplined capital management provide underappreciated optionality to capture value during market dislocations, a benefit that is not fully reflected in current valuations. With over 30% of the balance sheet held in cash and cash equivalents and wholesale funding reduced to 10% of earning assets (down from 15% a year ago), KeyCorp possesses both the liquidity and the low-cost funding base to opportunistically deploy capital when others are constrained. This was evidenced in the quarter where the company raised roughly $25 billion of capital for clients, retaining 17% on its balance sheet while distributing the remainder through its Capital Markets platform—a demonstration of its ability to intermediate flows and earn spread income without increasing risk. Management’s repeated emphasis on using the balance sheet to support clients during market dislocations, combined with its strong deposit growth (up 4% year-over-year) and improving deposit beta (now near 50%), indicates a self-funding engine that can grow loans organically while maintaining margin discipline. The new $3.0 billion share repurchase authorization, while contingent on macro clarity, represents a significant potential capital return that could be deployed rapidly if conditions stabilize, and the company’s history of returning capital through buybacks—coupled with its tangible book value per share increasing roughly 26% year-over-year—suggests that any pause in repurchases is temporary and not reflective of fundamental weakness. The market may be treating this liquidity as idle or defensive, when in fact it is a strategic asset that enables both offense (loan growth during dislocations) and defense (reserve building without forcing earnings volatility), creating a dual advantage that peers with tighter liquidity constraints cannot replicate.

KeyCorp is positioned to capture significant upside from its structural shift toward higher-yielding commercial and industrial (C&I) loans, which grew by $1.5 billion or 3% sequentially and are driving net interest margin expansion. This portfolio remix, achieved by intentionally running off low-yielding consumer loans while maintaining disciplined underwriting, directly lifted net interest margin by 17 basis points sequentially to 2.58% and supports management’s confidence in reaching 2.7% or better by year-end 2025. The benefit is structural and self-reinforcing: as C&I loans now constitute a larger share of the earning asset base, they generate inherently higher returns without requiring additional balance sheet growth, and the company’s ability to redeploy capital from runoff consumer loans into C&I avoids the need for new deposit funding or increased leverage. This dynamic is further amplified by the company’s marked CET1 ratio of 10%, which places it at the upper end of its peer group and provides ample capacity to absorb risk while continuing to grow the high-margin loan book. Unlike temporary cyclical tailwinds, this shift reflects a deliberate, multi-year strategy to optimize asset yield, and its impact is already visible in the 25% year-over-year growth in net interest income, which management views as largely in place due to 2024 actions like the Scotiabank investment and securities repositioning. The market may be underestimating the durability of this tailwind, particularly as the company continues to benefit from the reinvestment of maturing low-yielding securities and swaps at around 2.7%, creating a natural floor for margin expansion even in a sideways or slightly declining rate environment.
KeyCorp’s fee-based businesses are exhibiting resilient, countercyclical strength that could drive sustained operating leverage beyond current expectations, particularly in commercial mortgage servicing and investment banking. Commercial mortgage servicing fees reached a record high, growing approximately 36% year-over-year, with the company now serving as named primary or special servicer on $710 billion in CRE loans and holding $12 billion in special servicing assets—an all-time high—indicating deepening expertise in a business that thrives during periods of real estate stress. This is not merely a revenue line but a strategic franchise that provides natural hedges against loan book volatility, as special servicing activity tends to rise when CRE performance deteriorates, creating a countercyclical revenue stream. Similarly, investment banking and debt placement fees hit a first-quarter record of $175 million, up 3% year-over-year, with pipelines remaining at historically elevated levels and roughly flat to year-end despite near-term client pausing on transactional activity. Management explicitly noted that fee growth excluding operating lease income was closer to 6%, and the business model’s diversification across wealth management, commercial payments, and advisory services reduces reliance on any single fee line. The company’s belief that it can deliver fee-based operating leverage even if deal activity remains paused into the second half of 2025—citing flexibility in the expense base—suggests the market may be overlooking the structural profitability of these franchises, which are less tied to interest rate cycles and more to long-term client relationships and market share gains in niche areas like middle-market M&A, where the recent acquisition of Clearwater UK expands their European reach and cross-border deal flow potential.
The company’s liquidity fortress and disciplined capital management provide underappreciated optionality to capture value during market dislocations, a benefit that is not fully reflected in current valuations. With over 30% of the balance sheet held in cash and cash equivalents and wholesale funding reduced to 10% of earning assets (down from 15% a year ago), KeyCorp possesses both the liquidity and the low-cost funding base to opportunistically deploy capital when others are constrained. This was evidenced in the quarter where the company raised roughly $25 billion of capital for clients, retaining 17% on its balance sheet while distributing the remainder through its Capital Markets platform—a demonstration of its ability to intermediate flows and earn spread income without increasing risk. Management’s repeated emphasis on using the balance sheet to support clients during market dislocations, combined with its strong deposit growth (up 4% year-over-year) and improving deposit beta (now near 50%), indicates a self-funding engine that can grow loans organically while maintaining margin discipline. The new $3.0 billion share repurchase authorization, while contingent on macro clarity, represents a significant potential capital return that could be deployed rapidly if conditions stabilize, and the company’s history of returning capital through buybacks—coupled with its tangible book value per share increasing roughly 26% year-over-year—suggests that any pause in repurchases is temporary and not reflective of fundamental weakness. The market may be treating this liquidity as idle or defensive, when in fact it is a strategic asset that enables both offense (loan growth during dislocations) and defense (reserve building without forcing earnings volatility), creating a dual advantage that peers with tighter liquidity constraints cannot replicate.

▼ Bear case

KeyCorp’s net interest income guidance of 20% year-over-year growth for 2025 appears increasingly reliant on non-recurring tailwinds from prior-year balance sheet restructuring, and the sustainability of this pace is questionable given the slowing momentum in core loan growth and deposit beta dynamics. While net interest income rose 25% year-over-year in Q1, this was driven largely by the 2024 actions—specifically the Scotiabank strategic minority investment and securities repositioning—which management acknowledged are “largely in place” and thus provide diminishing incremental benefit as the year progresses. The sequential growth in net interest income was only 4%, and net interest margin expansion of 17 basis points was partially attributed to seasonally lower deposits and two fewer days in the quarter, suggesting that the underlying organic driver of margin improvement may be weaker than headline numbers imply. Furthermore, C&I loan growth, while up $1.5 billion sequentially, was offset by intentional runoff in low-yielding consumer loans and paydowns in commercial real estate, resulting in only $0.5 billion of net total loan growth on a period-end basis, indicating that the core engine of asset expansion is losing steam. Deposit betas, though improving to near 50% in March, remain vulnerable to a potential reversal if clients begin to demand higher rates for their deposits in a persistently uncertain environment, which would compress margins even if loan growth holds. The company’s assertion that it can still hit its 20% NII guide even with weaker C&I loan growth relies on offsets like optimizing funding or benefiting from a flattening yield curve—but the latter would actually hurt NII in a low-rate scenario, and the former has limits. This creates a fragile path to guidance that assumes either continued structural tailwinds (which are fading) or favorable market moves (which are uncertain), making the guide vulnerable to downside revision if macro conditions do not improve as expected.
The company’s credit quality metrics, while showing improvement in the quarter, may be masking emerging risks tied to its growing exposure to commercial real estate (CRE) through its record-high special servicing assets, which could turn from a strength into a liability if macroeconomic stress intensifies. Although criticized loans decreased approximately 1% driven by CRE and nonperforming loans fell 9% sequentially, the $12 billion in active special servicing assets—an all-time high—represents a growing contingent exposure to distressed CRE loans that are not yet classified as nonperforming but could deteriorate rapidly if property values decline or tenant vacancies rise due to economic slowdown. Management acknowledged that CRE servicing would strengthen in a downturn, but this confuses revenue generation with actual credit risk: while fees may rise as more loans enter special servicing, the underlying collateral risk increases, and the company’s reserve build of only $8 million—despite explicitly citing macro uncertainty and having elected to add reserves in excess of $100 million to reflect potential economic weakness—appears insufficient given the scale of its CRE servicing book. The net charge-off rate of 43 basis points annualized, while down 4% sequentially, remains elevated relative to historical lows for the peer group, and the decision to add reserves rather than release them, while prudent, signals that management sees material downside risk in the portfolio that is not yet reflected in delinquency or charge-off data. This discrepancy between reported credit quality and forward-looking reserve behavior suggests the market may be complacent about the true vulnerability of the loan book, particularly in CRE and leveraged corporate lending, where stress could emerge with a lag.
KeyCorp’s expense discipline and operating leverage ambitions are overly optimistic given the persistent inflationary pressures on personnel and technology costs, and the company’s ability to deliver fee-based operating leverage may be compromised if fee income fails to rebound as expected. Although noninterest expenses were up only 1% year-over-year on an adjusted basis, this was achieved despite inflationary pressures, and management acknowledged that expenses are expected to increase throughout the year due to anticipated pickup in investment spend, salary increases effective in March, and other personnel costs—factors that are not temporary but structural. The belief that the company can maintain positive fee-based operating leverage even if deal activity remains paused into the second half of 2025 hinges on the ability to cut expenses without harming long-term franchise value, yet the company simultaneously cites the need to invest in technology, hiring, and niche acquisitions to remain competitive, creating a tension between cost control and growth investment. Furthermore, wealth management fees grew only 2% year-over-year with assets under management stable at $61 billion, and commercial payments revenue growth, while in the low teens, is dependent on transaction volumes that could remain subdued if business confidence does not recover. The company’s reliance on a “rubber-band like snapback” in fee income assumes a swift and constructive resolution to macro uncertainty, but if the pause in client transactional activity persists—as evidenced by clients “waiting to see how things play out” after tariff announcements—then fee lines could remain flat or decline, forcing the company to choose between cutting expenses (which may impair future growth) or accepting lower operating leverage. This creates a scenario where the base case for fee growth of 5% or better is predicated on a recovery that is not yet visible in the data, and the market may be underestimating the duration and depth of the current client sentiment-driven slowdown.

KeyCorp’s net interest income guidance of 20% year-over-year growth for 2025 appears increasingly reliant on non-recurring tailwinds from prior-year balance sheet restructuring, and the sustainability of this pace is questionable given the slowing momentum in core loan growth and deposit beta dynamics. While net interest income rose 25% year-over-year in Q1, this was driven largely by the 2024 actions—specifically the Scotiabank strategic minority investment and securities repositioning—which management acknowledged are “largely in place” and thus provide diminishing incremental benefit as the year progresses. The sequential growth in net interest income was only 4%, and net interest margin expansion of 17 basis points was partially attributed to seasonally lower deposits and two fewer days in the quarter, suggesting that the underlying organic driver of margin improvement may be weaker than headline numbers imply. Furthermore, C&I loan growth, while up $1.5 billion sequentially, was offset by intentional runoff in low-yielding consumer loans and paydowns in commercial real estate, resulting in only $0.5 billion of net total loan growth on a period-end basis, indicating that the core engine of asset expansion is losing steam. Deposit betas, though improving to near 50% in March, remain vulnerable to a potential reversal if clients begin to demand higher rates for their deposits in a persistently uncertain environment, which would compress margins even if loan growth holds. The company’s assertion that it can still hit its 20% NII guide even with weaker C&I loan growth relies on offsets like optimizing funding or benefiting from a flattening yield curve—but the latter would actually hurt NII in a low-rate scenario, and the former has limits. This creates a fragile path to guidance that assumes either continued structural tailwinds (which are fading) or favorable market moves (which are uncertain), making the guide vulnerable to downside revision if macro conditions do not improve as expected.
The company’s credit quality metrics, while showing improvement in the quarter, may be masking emerging risks tied to its growing exposure to commercial real estate (CRE) through its record-high special servicing assets, which could turn from a strength into a liability if macroeconomic stress intensifies. Although criticized loans decreased approximately 1% driven by CRE and nonperforming loans fell 9% sequentially, the $12 billion in active special servicing assets—an all-time high—represents a growing contingent exposure to distressed CRE loans that are not yet classified as nonperforming but could deteriorate rapidly if property values decline or tenant vacancies rise due to economic slowdown. Management acknowledged that CRE servicing would strengthen in a downturn, but this confuses revenue generation with actual credit risk: while fees may rise as more loans enter special servicing, the underlying collateral risk increases, and the company’s reserve build of only $8 million—despite explicitly citing macro uncertainty and having elected to add reserves in excess of $100 million to reflect potential economic weakness—appears insufficient given the scale of its CRE servicing book. The net charge-off rate of 43 basis points annualized, while down 4% sequentially, remains elevated relative to historical lows for the peer group, and the decision to add reserves rather than release them, while prudent, signals that management sees material downside risk in the portfolio that is not yet reflected in delinquency or charge-off data. This discrepancy between reported credit quality and forward-looking reserve behavior suggests the market may be complacent about the true vulnerability of the loan book, particularly in CRE and leveraged corporate lending, where stress could emerge with a lag.
KeyCorp’s expense discipline and operating leverage ambitions are overly optimistic given the persistent inflationary pressures on personnel and technology costs, and the company’s ability to deliver fee-based operating leverage may be compromised if fee income fails to rebound as expected. Although noninterest expenses were up only 1% year-over-year on an adjusted basis, this was achieved despite inflationary pressures, and management acknowledged that expenses are expected to increase throughout the year due to anticipated pickup in investment spend, salary increases effective in March, and other personnel costs—factors that are not temporary but structural. The belief that the company can maintain positive fee-based operating leverage even if deal activity remains paused into the second half of 2025 hinges on the ability to cut expenses without harming long-term franchise value, yet the company simultaneously cites the need to invest in technology, hiring, and niche acquisitions to remain competitive, creating a tension between cost control and growth investment. Furthermore, wealth management fees grew only 2% year-over-year with assets under management stable at $61 billion, and commercial payments revenue growth, while in the low teens, is dependent on transaction volumes that could remain subdued if business confidence does not recover. The company’s reliance on a “rubber-band like snapback” in fee income assumes a swift and constructive resolution to macro uncertainty, but if the pause in client transactional activity persists—as evidenced by clients “waiting to see how things play out” after tariff announcements—then fee lines could remain flat or decline, forcing the company to choose between cutting expenses (which may impair future growth) or accepting lower operating leverage. This creates a scenario where the base case for fee growth of 5% or better is predicated on a recovery that is not yet visible in the data, and the market may be underestimating the duration and depth of the current client sentiment-driven slowdown.

Consolidation Items Breakdown of Revenue (2025)

Peer Comparison

Companies in the Banks - Regional

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	KB	KB Financial Group Inc.	42,090.38 Bn	0.00 Bn	0.01 Mn	56.66 Bn
2	SHG	Shinhan Financial Group Co Ltd	33,919.15 Bn	0.00 Bn	0.00 Mn	40.46 Bn
3	BCH	Bank Of Chile	4,123.52 Bn	368.17 Bn	1.57 Mn	0.00 Bn
4	LYG	Lloyds Banking Group plc	360.83 Bn	0.00 Bn	0.00 Mn	42.37 Bn
5	FCAP	First Capital Inc	204.17 Bn	0.00 Bn	0.03 Mn	-
6	LARK	Landmark Bancorp Inc	187.97 Bn	0.00 Bn	0.00 Mn	0.00 Bn
7	NWG	NatWest Group plc	144.82 Bn	0.00 Bn	0.00 Mn	94.66 Bn
8	PNC	Pnc Financial Services Group, Inc.	101.80 Bn	0.00 Bn	0.00 Mn	21.42 Bn

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Investment Thesis

Segments Breakdown of Revenue (2025)

Consolidation Items Breakdown of Revenue (2025)

Peer Comparison

Research Tools

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Investment Thesis

Segments Breakdown of Revenue (2025)

Consolidation Items Breakdown of Revenue (2025)

Peer Comparison

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