greeksoup/ stock research
Stock research / United States / KEY / Q2 FY2026 / Earnings call

Keycorp: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 21 July 2026: press release. Guidance figures: 1 kept. The quarter’s numbers.

Key takeaways

  • Net income up year over year: Income from continuing operations attributable to Key common shareholders was $472 million, or $0.44 per diluted share, down 2.9% from $486 million in the first quarter and up 22.0% from a year earlier. The headline gives 26% year-over-year growth. Source
  • Revenue grew 7% year over year: Total taxable-equivalent revenue was $1,964 million, up 6.7% from a year earlier and 0.6% from the first quarter. Noninterest income fell 2.4% sequentially to $706 million. Source
  • About 130 basis points operating leverage: Management said revenue grew 7% and generated about 130 basis points of operating leverage year over year. The supplement shows adjusted operating leverage of 1.28. Source
  • Reserve release of $23 million: Management attributed the $23 million reserve release to economic scenario assumptions and the mix shift in commercial loans. The allowance for credit losses was 1.56% of period-end loans, down from 1.60%. Source
  • Margin rose on deposit costs: Net interest margin rose 2 basis points sequentially and 23 basis points year over year. Management cited deposit cost reductions, securities and swap reinvestment, and a shift toward commercial and industrial loans, partly offset by lower rates on repricing assets. Source
  • CET1 ratio eased to 11.2%: Estimated CET1 ratio was 11.2% at June 30, 2026, down 20 basis points from March 31 and 50 basis points from a year earlier. Tier 1 was 12.8% and total risk-based capital 14.8%. Source

“Our second quarter results reflect the strength of our franchise, disciplined execution, and sustained momentum across our businesses.”

Chris Gorman, Chairman and CEO

Guidance

AreaPeriodFigureAgainst last quarter
Return on tangible common equity Sourceyear-end 2027exceeding 15%Kept

Results and growth drivers

  • Net income up year over year: Income from continuing operations attributable to Key common shareholders was $472 million, or $0.44 per diluted share, down 2.9% from $486 million in the first quarter and up 22.0% from a year earlier. The headline gives 26% year-over-year growth. Source
  • Revenue grew 7% year over year: Total taxable-equivalent revenue was $1,964 million, up 6.7% from a year earlier and 0.6% from the first quarter. Noninterest income fell 2.4% sequentially to $706 million. Source
  • About 130 basis points operating leverage: Management said revenue grew 7% and generated about 130 basis points of operating leverage year over year. The supplement shows adjusted operating leverage of 1.28. Source
  • Pipelines and commercial payments grew: Management cited 9% sequential growth in investment banking pipelines and double-digit year-over-year growth in commercial payments fees. Source
  • Assets under management reached record: Assets under management were $74.2 billion at period end, up 6.4% from March 31 and 15.5% from a year earlier, per the Consumer Bank table. Source

Segments and businesses

  • Consumer Bank net income rose: Consumer Bank net income rose to $203 million from $174 million in the first quarter. Taxable-equivalent net interest income was 3.6% higher year over year, and the provision was $29 million lower than a year earlier. Source
  • Commercial Bank profit flat year over year: Commercial Bank net income was $423 million, down from $452 million in the first quarter and flat with a year earlier, while average loans rose 10.3% year over year. Source
  • Commercial Bank expenses climbed: Commercial Bank noninterest expense was $503 million, up 6.1% sequentially and 11.5% year over year. The release attributes the year-over-year increase to personnel and support and overhead expense. Source
  • Other segment loss widened sequentially: The Other segment recorded a $118 million loss, against $104 million in the first quarter and $165 million a year earlier. Total segment income was $508 million, down 2.7% sequentially. Source

“We are operating from a position of strength, supported by a resilient balance sheet, a diversified business model, and strong capital generation.”

Chris Gorman, Chairman and CEO

Loans and deposits

  • Commercial and industrial loans grew: Period-end commercial and industrial loans were $62.7 billion, up 3.4% from March 31 and 11.9% from June 30, 2025. Commercial real estate loans were down 0.6% sequentially. Source
  • Consumer loans kept declining: Average consumer loans fell $576 million from the first quarter and $2.3 billion from a year earlier. Period-end total consumer loans were $28.9 billion. Source
  • Average deposits essentially flat: Average deposits were $147.6 billion, up $131 million from a year earlier and $278 million from the first quarter, led by noninterest-bearing balances. Source
  • Time deposits shrank, non-time grew: Time deposits fell 24.7% from a year earlier to $11.7 billion, while non-time deposits rose 3.0% to $135.8 billion. Source

Credit quality and provisions

  • Reserve release of $23 million: Management attributed the $23 million reserve release to economic scenario assumptions and the mix shift in commercial loans. The allowance for credit losses was 1.56% of period-end loans, down from 1.60%. Source
  • Commercial nonperforming loans rose: Nonperforming commercial loans were $620 million, up from $480 million at March 31. Commercial and industrial nonperforming loans were $358 million. Source
  • Loans placed on nonaccrual increased: Loans placed on nonaccrual status were $365 million, up from $253 million in the first quarter and $233 million a year earlier. Source

“We remain committed to delivering attractive returns to shareholders through both the return on and the return of capital.”

Chris Gorman, Chairman and CEO

Margin, costs and efficiency

  • Margin rose on deposit costs: Net interest margin rose 2 basis points sequentially and 23 basis points year over year. Management cited deposit cost reductions, securities and swap reinvestment, and a shift toward commercial and industrial loans, partly offset by lower rates on repricing assets. Source
  • Extra day lifted interest income: The additional day added to net interest income in the second quarter compared with the first quarter. Source
  • Personnel expense drove costs higher: Personnel expense totaled $786 million, up $43 million from the first quarter and $81 million from a year earlier. Management cited employee benefits, incentive pay tied to fee growth, and continued investment in people. Source
  • Other expense fell on lower charity: Other expense fell $21 million sequentially to $158 million, mainly on lower charitable contributions. Business services and professional fees rose $10 million. Source

Fee income lines

  • Trust income up year over year: Trust and investment services income was $159 million, up 8.9% year over year and 1.3% sequentially. Other income also rose $14 million from a year earlier. Source
  • Investment banking fees fell sequentially: Investment banking and debt placement fees were $169 million, down $28 million or 14.2% sequentially and 5.1% year over year. Source
  • Cards and payments income rose: Cards and payments income reached $94 million, up 9.3% sequentially and 10.6% year over year. Commercial Bank cards income was up 38.1% year over year. Source
  • Commercial mortgage servicing fees fell: Commercial mortgage servicing fees were $49 million, down 21.0% sequentially and 30.0% from a year earlier. Source

Capital and shareholder returns

  • CET1 ratio eased to 11.2%: Estimated CET1 ratio was 11.2% at June 30, 2026, down 20 basis points from March 31 and 50 basis points from a year earlier. Tier 1 was 12.8% and total risk-based capital 14.8%. Source
  • Marked CET1 reflects AOCI loss: Marked CET1, which includes AFS and pension AOCI, was 9.8% against 10.0% in the first quarter. The AFS and pension AOCI loss was $2.2 billion. Source
  • Buybacks cut share count: Shares outstanding fell to 1,072.0 million from 1,087.3 million after 15.5 million shares were repurchased in the quarter. Source
  • Quarterly dividend held at $0.205: The quarterly dividend stayed at $0.205 per common share. Cash dividends paid for the first half were $0.41 per share. Source

Returns, strategy and people

  • Return on tangible equity 12.89%: Return on average tangible common equity from continuing operations was 12.89%, down 13 basis points from the first quarter and up 180 basis points from a year earlier. Source
  • Relationship-driven model cited: Management said it is deepening client relationships and attracting new clients across its markets, describing a relationship-driven model. Source
  • Three priority growth businesses named: Management named investment banking, commercial payments and wealth management as its priority growth businesses. Source

Coming up, as management said on 21 July 2026

  • Investment in differentiating capabilities: Management said it will stay focused on organic growth and invest in capabilities that will further differentiate the franchise. Source

Figures management reported

FigureReported
Net interest margin Source2.89%
Net interest income Source$1,258 million (TE)
Loans SourcePeriod-end loans up $1.2 billion sequentially
Cost of deposits Source1.63%
Provision for credit losses Source$92 million
Net charge-offs Source0.42% of average total loans
Nonperforming assets Source$818 million
CET1 ratio Source11.2% (estimated)
Efficiency ratio Source61.9% (cash efficiency ratio)

Risks management discussed

  • External: Management said the operating environment remains dynamic. Source
  • External: Management said lower interest rates reduced income on repricing earning assets, partly offsetting deposit cost and mix benefits. Source

Earlier plans management reported on

  • Not stated: The earlier release set a goal of 15%+ return on tangible common equity by year-end 2027; the current release reaffirms it.
  • Not stated: Management said it repurchased more than $340 million of shares, linking this to its commitment to long-term shareholder value. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.