KeyCorp KEY is slated to announce second-quarter 2026 results on July 21, before the opening bell. The overall impressive lending scenario in the quarter is likely to have supported the company’s net interest income (NII).
Per the Fed’s latest data, the demand for commercial and industrial (C&I) loans (accounting for roughly 50% of KeyCorp’s average loan balances) was robust in the to-be-reported quarter, while the demand for consumer loans was comparatively modest. Thus, this is likely to have supported the company’s overall loan growth in the second quarter.
The Zacks Consensus Estimate for KEY’s average earning assets is pegged at $172.2 billion, indicating a 1.3% rise from the prior-year quarter.
After cutting rates in 2025, the Federal Reserve has paused interest rate cuts and signaled a hike later in the year. This, along with a solid lending scenario, decent economic growth and stabilizing funding/deposit costs, is expected to have supported KEY’s NII.
The consensus estimate for NII (on a fully tax-equivalent basis) is pegged at $1.26 billion, indicating a year-over-year jump of 10%.
Other Factors to Influence KeyCorp’s Q2 Earnings
Non-Interest Income: The second quarter was challenging for the mortgage banking business. It was characterized by elevated mortgage rates, hovering at mid-6% range, and low affordability. While purchase volumes faced pressure from inventory constraints, refinancing activity saw a slight boost as rates were lower than the prior-year quarter level. Given this, income from KEY’s mortgage banking business is less likely to have recorded much improvement.
The Zacks Consensus Estimate for commercial mortgage servicing fees of $58 million implies a 17.1% year-over-year decline. Likewise, the consensus estimate for consumer mortgage income of $13.26 million indicates an 11.6% fall. Management projects commercial mortgage servicing fees of $50-$60 million for the second quarter.
As the quarter witnessed a solid increase in asset inflows, the consensus estimate for KEY’s trust and investment services income of $160.9 million indicates a 10.2% rise from the prior-year quarter.
Higher client activity and volatility in the capital markets, along with industry-wide decent deal-making activities, an impressive IPO market and solid bond issuances, are expected to have supported KeyCorp’s corresponding fee income in the to-be-reported quarter. The consensus estimate for investment banking and debt placement fees of $181.2 million indicates a 1.8% rise. The company projects the metric between $175 million and $180 million.
Management anticipates average deposit balances to be stable to slightly up, with June 30 ending balances expected to be higher. As such, the Zacks Consensus Estimate of $78.9 million for service charges on deposit accounts implies 8.1% year-over-year growth. With an improvement in consumer spending in the to-be-reported quarter, the consensus estimate for cards and payments income of $87.5 million indicates growth of 3%.
Overall, the consensus estimate for KeyCorp’s total non-interest income of $709.4 million suggests an improvement of 2.8% from the prior-year quarter.
Expenses: KeyCorp’s efforts to reorganize operations and exit unprofitable/non-core businesses have helped it save costs in the past. Also, the company’s initiatives to drive operational efficiency are likely to have curbed expense growth in the to-be-reported quarter. Yet, investments in franchises and technological upgrades are expected to have resulted in a rise in total non-interest expenses.
Asset Quality: KEY is unlikely to have set aside a substantial amount for potential loan delinquencies in the second quarter, given the modest improvement in the operating environment, supported by resilient economic growth, broadly stable credit conditions and the announced ceasefire in the Middle East. However, robust lending and persistently higher inflation are likely to have weighed on provision numbers.
What the Zacks Model Predicts for KeyCorp
Per our proven model, the chances of KeyCorp beating the Zacks Consensus Estimate for earnings are low this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for KeyCorp is -0.34%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Q2 Earnings & Sales Growth Expectations for KeyCorp
The Zacks Consensus Estimate for KEY’s earnings is pegged at 42 cents per share, which has been unchanged over the past week. The figure indicates a 20% rise from the prior-year quarter.
KeyCorp Price and EPS Surprise
KeyCorp price-eps-surprise | KeyCorp Quote
The consensus estimate for quarterly sales is pegged at $1.98 billion, indicating a year-over-year increase of 8%.
KeyCorp’s Peer Stocks Worth Considering
Here are a couple of KEY’s peers that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Truist Financial TFC is scheduled to announce second-quarter 2026 results tomorrow. The company has a Zacks Rank #3 at present and an Earnings ESP of +0.23%.
Quarterly earnings estimates for Truist Financial have been unchanged at $1.08 per share over the past week.
The Earnings ESP for Regions Financial RF is +0.25% and it carries a Zacks Rank of 3 at present. The company is slated to report second-quarter 2026 results tomorrow. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past seven days, the Zacks Consensus Estimate for Regions Financial’s quarterly earnings has been unchanged at 64 cents.
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This article originally published on Zacks Investment Research (zacks.com).