KeyCorp Beats Q3 EPS Estimates, Provision For Credit Losses Down 26%

KeyCorp KEY reported third-quarter (Q3) FY23 revenues of $1.566 billion, down 17.0% Y/Y, in line with the consensus.

Net interest income was down 23.3% Y/Y to $923 million, with net interest margin of 2.01% (-73 basis points Y/Y), due to higher interest-bearing deposit costs and a shift in funding mix to higher cost deposits and borrowings.

Consumer Bank revenue fell 9.8% Y/Y and Commercial Bank was down 10% Y/Y in the quarter.

EPS of 29 cents, beating the street view of 27 cents.

Provision for credit losses fell 25.7% Y/Y to $81 million, reflecting a more stable economic outlook and balance sheet optimization efforts.

The Common Equity Tier (CET) 1 ratio exceeded its targeted capital range, expanding 50 basis points Q/Q to 9.8%.

Average loan rose 2.8% Y/Y to $117.6 billion, led by commercial loans, which increased by $3.2 billion, primarily on growth in commercial and industrial loans of $3 billion.

As of Sept. 30, nonperforming loans stood at $455 million, accounting for 0.39% of period-end portfolio loans. 

Average deposits rose 0.4% Y/Y to $144.8 billion, aided by higher wholesale and public sector deposits, partly offset by changing client behavior amid higher interest rates environment and a normalization of the pandemic-related deposits.

Price Action: KEY shares are trading higher by 1.59% at $10.85 premarket on the last check Thursday.