KeyCorp Posts Sluggish Q4 Results, CEO Says FY23 Balance Sheet Optimization Goal Exceeded

KeyCorp KEY shares are trading lower after the company reported fourth-quarter FY23 earnings.

Revenues of $1.538 billion, down 19.0% Y/Y, slightly topped the consensus of $1.532 billion.

Taxable-equivalent net interest income was down 24.4% Y/Y to $928 million, with a net interest margin of 2.07% (vs. 2.73% a year ago) due to higher interest rates, partly offset by a favorable earning asset mix.  

Consumer Bank revenue fell 8.6% Y/Y, and Commercial Bank was down 11.2% Y/Y in the quarter.

Provision for credit losses fell 61.5% Y/Y to $102 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 90 basis points Y/Y to 10.0%. Adjusted EPS of $0.25 topped the street view of $0.23.

Average loan fell 3.2% Y/Y to $113.9 billion, led by a decline in commercial and industrial loans, which decreased $1.5 billion.

Average deposits fell 0.4% Y/Y to $145.1 billion due to changing client behavior amid higher interest rates environment.

As of December 31, nonperforming loans stood at $574 million, accounting for 0.51% of period-end portfolio loans. The bank declared a dividend of $0.205 per common share for the first quarter of 2024.

Chris Gorman, Chairman and CEO, said, “In 2023, we grew relationship deposits, improved balance sheet resiliency, exceeded our goal of reducing risk-weighted assets, maintained expense discipline, and benefited from our de-risked loan portfolio and distinctive underwrite-to-distribute model.” 

Also Read: KeyCorp Gets Analyst Upgrade Due To Superior Balance Sheet, Net Interest Income

Price Action: KEY shares are trading lower by 2.89% at $13.44 premarket on the last check Thursday. 

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