KeyCorp KEY is slated to announce first-quarter 2026 results on April 16, before the opening bell. In the to-be-reported quarter, lending activities witnessed robust improvement.
Per the Federal Reserve’s latest data, the demand for commercial and industrial loans (accounting for roughly 50% of KeyCorp’s average loan balances) and consumer loans was solid in the quarter, which is expected to have supported the company’s overall loan growth.
The Zacks Consensus Estimate for KEY’s average earning assets for the first quarter is pegged at $170.36 billion, indicating a marginal rise from the prior-year quarter’s actual.
After cutting rates in 2025, the Federal Reserve kept interest rates unchanged in the January-March quarter. This, along with a solid lending scenario and stabilizing funding/deposit costs, is expected to have offered the much-needed support to KEY’s net interest income (NII).
The consensus estimate for first-quarter NII (on a fully tax-equivalent or FTE basis) is pegged at $1.22 billion, indicating a year-over-year jump of 10.4%.
Other Factors Likely to Have Impacted KEY’s Q1 Earnings
Non-Interest Income: The first quarter was challenging for the mortgage banking business. It was characterized by elevated mortgage rates, hovering at 6-6.5% and low affordability. While purchase volumes faced pressure from inventory constraints, refinancing activity saw a slight boost from the 2025 lows. Thus, income from KEY’s mortgage banking business is not expected to have recorded significant improvement.
The Zacks Consensus Estimate for commercial mortgage servicing fees of $58 million implies a 23.7% year-over-year decline, while consumer mortgage income of $15.83 million indicates a 21.8% rise.
The consensus estimate for KEY’s trust and investment services income is pegged at $157 million, which indicates a 12.9% increase from the prior-year quarter’s actual.
Client activity and market volatility were solid in the quarter. Major factors that impacted trading business included shifting expectations around AI, rising geopolitical tensions, particularly concerns over the Middle East and the risk of an oil shock, persistent inflation concerns and uncertainty around the Fed’s monetary policy stance. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Thus, increased trading activities are expected to have favorably impacted KeyCorp’s related business in the to-be-reported quarter.
Deal-making activity was impressive in the quarter despite the Middle Eastern conflict and the ensuing uncertainty about its impact on the economy. The IPO activity was decent, with issuance volumes improving despite fewer companies getting listed. Bond issuance volumes were solid. Thus, KEY’s investment banking (IB) business performance is expected to have improved. The consensus estimate for investment banking and debt placement fees of $207 million indicates an 18.3% year-over-year rise.
The Zacks Consensus Estimate of $77 million for service charges on deposit accounts implies an 11.6% year-over-year rise.
With an improvement in consumer spending in the to-be-reported quarter, the Zacks Consensus Estimate for cards and payments income of $84 million indicates growth of 2.4% from the prior-year quarter’s actual.
Thus, the consensus estimate for KeyCorp’s total non-interest income, which is pegged at $726 million, indicates an improvement of 8.7% 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: KeyCorp is likely to have set aside a huge amount of money for potential delinquent loans amid a challenging operating backdrop, marked by the Middle East conflict and the apprehensions surrounding the private credit markets.
What the Zacks Model Predicts for KeyCorp
Per our proven model, the chances of KeyCorp beating the Zacks Consensus Estimate for earnings are high this time. This is because it has 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 +0.03%.
Zacks Rank: The company currently carries a Zacks Rank #3.
KeyCorp Price and EPS Surprise
KeyCorp price-eps-surprise | KeyCorp Quote
Earnings & Sales Growth Expectations for KeyCorp
The Zacks Consensus Estimate for KEY’s first-quarter earnings is pegged at 41 cents per share, which has been unchanged over the past week. The figure indicates a 24.2% rise from the prior-year quarter.
The consensus estimate for quarterly sales is pegged at $1.92 billion, indicating a year-over-year rise of 8.6%.
Other Finance Stocks Worth Considering
Here are a couple of finance stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time:
State Street STT is scheduled to announce first-quarter 2026 results on April 17. The company has a Zacks Rank #3 at present and an Earnings ESP of +2.61%.
Quarterly earnings estimates for State Street have been revised upward to $2.54 per share over the past week.
The Earnings ESP for Prosperity Bancshares PB is +3.45% and it carries a Zacks Rank of 3 at present. The company is slated to report first-quarter 2026 results on April 29. 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 Prosperity Bancshares’ quarterly earnings has been revised lower to $1.41.
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State Street Corporation (STT): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).