Strong results and clear 2026 guidance: KeyCorp reported Q4 EPS of $0.43 (adjusted $0.41) and >$2 billion revenue (+12% YoY), with NII up 15% and NIM 2.82%; management expects ~7% revenue growth in 2026 driven by NII up 8–10% and expenses up 3–4% (positive operating leverage).
Improving credit and balance-sheet remix: Provision for credit losses was $108 million in Q4 with a net charge-off ratio of 39 bps (FY 41 bps), non-performing assets fell 6% sequentially, and the bank is intentionally running off lower-yielding consumer loans while growing relationship-based commercial loans.
Capital returns and strategic investment ramp: KeyCorp repurchased $200 million in Q4 and plans at least $1.2 billion of buybacks in 2026 while managing CET1 toward the high end of its 9.5%–10% target, and is increasing tech/AI and frontline hiring with technology spend rising to about $1 billion.
KeyCorp (NYSE:KEY) executives highlighted improved profitability, strengthening credit trends, and an accelerated capital return plan during the company’s fourth-quarter 2025 earnings call on Jan. 20, 2026. Management also outlined 2026 financial guidance and discussed continued investments in hiring, technology, and artificial intelligence, alongside several board changes announced the same morning.
Chairman and CEO Chris Gorman said fourth-quarter and full-year results reflected progress on KeyCorp’s “organic path to achieving consistently higher returns on capital.” The company reported fourth-quarter earnings of $0.43 per share, while CFO Clark Khayat noted earnings were $0.41 per share on an adjusted basis. Revenue exceeded $2 billion, growing 12% year-over-year on an adjusted basis, while expenses grew 2%.
Khayat said tax-equivalent net interest income rose 15% year-over-year and net interest margin (NIM) ended the quarter at 2.82%, up 7 basis points sequentially and above the company’s previously indicated target range of 2.75% to 2.8%. He attributed sequential NII growth to commercial client deposit growth and balance sheet optimization, including running off lower-yielding consumer loans and allowing higher-cost brokered CDs and borrowings to roll off.
Non-interest income increased 8% year-over-year on an adjusted basis, which management described as broad-based across priority fee businesses. Fourth-quarter investment banking and debt placement fees were $243 million, up 10% year-over-year, driven by debt capital markets and commercial mortgage debt placement. Trust and investment services income rose 10%, supported by record positive net flows and higher market values, while assets under management reached a record $70 billion.
Khayat said fourth-quarter non-interest expense totaled $1.3 billion, up 7% sequentially and 2% year-over-year, but included roughly $30 million of “unusually elevated expenses,” which he cautioned should not be treated as a run rate.
Management said KeyCorp met or exceeded the financial targets it provided at the beginning of 2025. Gorman described 2025 as a “substantial year of progress,” including record full-year revenue that increased 16% from the prior year. Expenses rose 4.6%, which the company said translated into approximately 1,200 basis points of operating leverage and PP&R growth of about 44%.
Khayat said net interest income increased 23%, outperforming the company’s original expectation for 20% growth, aided by stronger commercial loan growth and deposit performance. Fees grew 7.5% versus an original expectation of “5%-plus,” with investment banking fees up 13% despite muted middle-market M&A activity for much of the year. Gorman said the company added nearly 10% to frontline banker staff across wealth management, commercial payments, middle market, and investment banking, and invested an additional $100 million in technology focused on customer-facing capabilities.
Both Gorman and Khayat emphasized improving asset quality metrics. The fourth-quarter provision for credit losses was $108 million, including $104 million of net charge-offs and a $4 million reserve build. The net charge-off ratio was 39 basis points in the quarter, and full-year net charge-offs were 41 basis points, which Khayat said was toward the better end of the company’s 40 to 45 basis point target range. Non-performing assets declined 6% sequentially, criticized loans fell by $500 million (down 8% sequentially), and delinquencies also improved, according to management.
On the balance sheet, KeyCorp said average loans were relatively flat sequentially. Khayat pointed to a $1 billion increase in C&I loans, offset by the intentional runoff of $550 million of lower-yielding consumer loans and some paydowns in commercial real estate. Spot commercial loan growth was about $1.2 billion, with growth in both C&I and CRE, which Khayat said was driven primarily by the power and utility sector and broad-based middle-market growth across regions.
Deposit trends were described as favorable. Average deposits increased by about $300 million sequentially, with $2 billion of commercial client deposit growth offset by a decline of $1.3 billion in higher-cost brokered CDs. Total deposit costs declined 16 basis points to 1.81%, and the cumulative interest-bearing deposit beta declined modestly to 51% through the fourth quarter. In Q&A, Khayat said the company expects a “low-to-mid 50s” beta in 2026 on a relatively stable deposit base.
Management also discussed the continued runoff of the consumer loan portfolio, which Gorman described as largely super-prime mortgages to doctors and dentists yielding about 3.3%. He said KeyCorp expects roughly $600 million per quarter of runoff and that it could bottom out “in the next couple of years,” while the bank builds home equity capabilities and maintains its student loan refinancing platform for when vintages and rates align.
Gorman said KeyCorp began a “more meaningful return of capital” in the fourth quarter, repurchasing $200 million of common stock—double the original commitment announced in October—at an average price of $18 per share. The company ended the quarter with a 10.3% marked CET1 ratio, which management described as peer-leading, and said it intends to manage the ratio down toward the higher end of its 9.5% to 10% targeted range by the end of 2026.
Khayat said CET1 was 11.7% on a reported basis and reiterated plans to repurchase at least $300 million of shares in the first quarter and at least $1.2 billion for the full year 2026. Gorman added the company anticipates similar quarterly repurchase levels through 2026, supported by ongoing capital generation.
For 2026, KeyCorp’s guidance included:
Revenue up about 7%, driven by NII growth of 8% to 10% and non-interest income growth of 3% to 4%. Adjusting for business decisions described as net neutral to earnings, non-interest income is expected to grow 5% to 6%.
Expenses up 3% to 4%, implying positive operating leverage of roughly 300 to 400 basis points.
Average loans up 1% to 2%, with commercial loans up about 5% as consumer runoff continues and the bank remixes into higher-yielding relationship-based commercial loans.
Net charge-off ratio stable at 40 to 45 basis points.
Tax rate of approximately 22% to 23% on a taxable equivalent basis.
In Q&A, Gorman said the company’s organic focus remains on three areas: middle market and payments, investment banking, and wealth—particularly mass affluent. He also emphasized ongoing investments in AI and technology, noting tech and ops investments increased from $800 million to $900 million last year and to $1 billion this year, with a goal of improving processes such as loan underwriting and processing.
On M&A, Gorman said the company is “not focused on” bank acquisitions, reiterating that position when asked directly. However, he said KeyCorp is interested in “complementary fee-based and capability-enhancing acquisitions,” including group hires or boutiques, particularly in knowledge-worker-heavy businesses.
Separately, management detailed board changes, including planned nominations of Tony DeSpirito (most recently Global CIO for Fundamental Equities at BlackRock) and Chris Henson (former head of banking and insurance at Truist and former president/COO/CFO at BB&T). The lead independent director role transitioned from Sandy Cutler to Todd Vassos, CEO of Dollar General. The company also said Carlton Highsmith and Ruth Ann Gillis plan to retire from the board at the annual meeting, and David Wilson retired immediately due to health considerations.
KeyCorp is a bank holding company headquartered in Cleveland, Ohio, that operates through its primary banking subsidiary, KeyBank. It provides a broad range of banking and financial services to individual consumers, small businesses, middle-market companies and large corporations. KeyBank’s offerings span traditional deposit and lending products as well as more specialized financial solutions designed for commercial and institutional clients.
The company’s product and service mix includes retail banking products such as checking and savings accounts, consumer and residential mortgage lending, and auto financing.
