KeyCorp’s KEY first-quarter 2026 earnings from continuing operations of 44 cents per share outpaced the Zacks Consensus Estimate of 41 cents. The bottom line reflected a 33.3% rise from the prior-year quarter.
Results primarily benefited from higher net interest income (NII) and non-interest income. Higher average loan balances, along with lower provisions, were other tailwinds. However, higher expenses hurt the results to some extent.
Net income from continuing operations attributable to common shareholders was $486 million, up from $370 million in the prior-year quarter.
KEY’s Revenues Improve, Expenses Rise
Total revenues (taxable-equivalent or TE) increased 10.2% year over year to $1.95 billion. Also, the top line beat the Zacks Consensus Estimate of $1.92 billion.
NII (TE basis) jumped 11.3% from the prior-year quarter to $1.23 billion. The net interest margin (NIM) (TE basis) from continuing operations expanded 29 basis points (bps) to 2.87%. Both metrics benefited from lower deposit costs as a result of declining interest rates and proactive deposit beta management, the reinvestment of proceeds from maturing low-yielding investment securities and fixed-rate swaps into higher-yielding investments, and a shift in the balance sheet composition to a more favorable mix of higher-yielding commercial and industrial loans, partially offset by the impact of lower interest rates on variable-rate earning assets.
Non-interest income was $723 million, up 8.2% year over year. The rise was mainly driven by higher investment banking and debt placement fees, service charges on deposit accounts, trust and investment services income, and other income.
Non-interest expenses increased 4.4% to $1.18 billion. The rise was due to an increase in personnel expenses, net occupancy costs and computer processing costs.
At the end of the first quarter, average total loans were $107.74 billion, up 1.3% from the previous quarter. Average total deposits were $147.30 billion, down 2.3% sequentially.
KEY’s Credit Quality: A Mixed Bag
The provision for credit losses was $106 million, down 10.2% from the prior-year quarter. Net loan charge-offs, as a percentage of average total loans, declined 5 bps year over year to 0.38%.
Also, non-performing assets, as a percentage of period-end portfolio loans, other real estate-owned property assets, and other non-performing assets, were 0.63%, down 4 bps.
However, the allowance for loan and lease losses was $1.45 billion, up 1.4% year over year.
KeyCorp’s Capital Ratios Mixed
KEY's tangible common equity to tangible assets ratio was 8% as of March 31, 2026, up from 7.4% in the corresponding period of 2025.
The Tier 1 risk-based capital ratio was 13%, down from 13.3%. The Common Equity Tier 1 ratio was 11.4%, down from 11.6% as of March 31, 2025.
Update on KEY’s Share Repurchases
In the reported quarter, KeyCorp repurchased shares worth $389 million.
Our Take on KEY
Robust loan balances, balance sheet repositioning efforts, strategic buyouts and stabilizing funding costs will likely support KeyCorp’s revenues in the near term. Weak asset quality amid a tough macroeconomic backdrop is concerning.
KeyCorp Price, Consensus and EPS Surprise
KeyCorp price-consensus-eps-surprise-chart | KeyCorp Quote
KeyCorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Major Banks
Bank of America’s BAC first-quarter 2026 earnings of $1.11 per share handily surpassed the Zacks Consensus Estimate of $1.00. The bottom line grew 24.7% year over year.
Improvement in the trading and investment banking (IB) business, along with higher NII, drove Bank of America’s total revenues. While provisions declined in the quarter on a year-over-year basis, non-interest expenses increased, which hurt the results to some extent.
JPMorgan JPM posted first-quarter 2026 earnings of $5.94 per share, up 17.2% from $5.07 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $5.49.
JPMorgan reported net revenues of $49.8 billion, which increased 10% year over year. The metric also topped the consensus mark of $48.6 billion. JPM’s quarterly results were powered by a record Markets performance, a robust IB business and higher NII.
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