KeyCorp Q3 Earnings Beat Estimates on Higher Revenues, Stock Gains

KeyCorp’s KEY third-quarter 2025 adjusted earnings per share from continuing operations of 41 cents surpassed the Zacks Consensus Estimate of 38 cents. The bottom line reflected a 36.7% jump from the prior-year quarter.Shares of KeyCorp gained 1.4% in the early-market trading on better-than-expected results. A full day’s trading session will depict a clearer picture.Results primarily benefited from higher net interest income (NII) and a substantial rise in non-interest income. The average loan balance increased sequentially, which was another positive. However, higher expenses and a rise in provisions were the undermining factors.Net income from continuing operations attributable to common shareholders was $454 million, against a net loss of $447 million in the prior-year quarter.KEY’s Revenues Improve, Expenses RiseTotal revenues increased significantly year over year to $1.89 billion. Moreover, the top line beat the Zacks Consensus Estimate of $1.88 billion.NII (on a tax-equivalent or TE basis) increased 23.8% on a year-over-year basis to $1.19 billion. The net interest margin (NIM) (TE basis) from continuing operations expanded 58 basis points (bps) to 2.75%. Both metrics benefited from lower deposit costs, the reinvestment of proceeds from maturing low-yielding investment securities, fixed-rate loans and swaps repricing into higher-yielding investments, and the repositioning of the available-for-sale portfolio during the third and fourth quarters of 2024.These benefits were partially offset by the impacts of lower interest rates on variable-rate earning assets. Our estimates for NII (TE) and NIM were $1.17 billion and 2.71%, respectively.Non-interest income was $702 million, up significantly from the prior-year quarter. The rise was primarily driven by a 99.4% decline in net securities losses. In the third quarter of 2024, the company recorded a $918 million loss on the sale of securities as part of the strategic repositioning of portfolio, which had drastically hurt fee income. In the reported quarter, net securities losses were only $6 million. Our estimate for total non-interest income was $710.1 million.Non-interest expenses increased 7.4% year over year to $1.18 billion. The rise was due to an increase in almost all cost components except for operating lease expenses and net occupancy costs. We projected the metric to be $1.20 billion.KeyCorp’s Loans & Deposits RiseAt the end of the third quarter, average total loans were $106.23 billion, up marginally from the previous quarter. We had anticipated average total loans of $106.19 billion.Average total deposits were $150.37 billion, up 2% from the prior-quarter end. Our estimate for the metric was $148.31 billion.KEY’s Credit Quality: A Mixed BagThe provision for credit losses was $107 million, up 12.6% year over year. Our estimate for provision for credit losses was $105.7 million.However, net loan charge-offs, as a percentage of average total loans, declined 16 bps year over year to 0.42%. The allowance for loan and lease losses was $1.44 billion, down 3.3% from the prior-year quarter. Non-performing assets, as a percentage of period-end portfolio loans, other real estate-owned property assets, and other non-performing assets, were 0.63%, down 7 bps year over year.KeyCorp’s Capital Ratios ImproveKEY's tangible common equity to tangible assets ratio was 8.1% as of Sept. 30, 2025, up from 6.2% in the corresponding period of 2024. The Tier 1 risk-based capital ratio was 13.5%, up from 12.6%. The Common Equity Tier 1 ratio was 11.8%, up from 10.8% as of Sept. 30, 2024.Our Take on KEYDecent loan balances, balance sheet repositioning efforts, strategic buyouts and relatively higher interest rates will likely support KeyCorp’s revenues in the near term. Weakening asset quality amid a tough macroeconomic backdrop is concerning.KeyCorp Price, Consensus and EPS Surprise  KeyCorp price-consensus-eps-surprise-chart | KeyCorp QuoteKeyCorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other Major BanksImpressive trading and investment banking (IB) performance drove JPMorgan’s JPM third-quarter 2025 earnings of $5.07 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.83.JPM’s markets revenues exceeded management's expectations of growth in the high-teens percentage rate. The metric grew 25% year over year to $8.9 billion. Specifically, fixed-income markets’ revenues jumped 21% to $5.6 billion, while equity markets’ numbers increased 33% to $3.3 billion.Also, the IB business performance was far stronger than that expected by management.JPMorgan recorded an increase in NII, driven by higher yields and a 7% year-over-year jump in total loans.Citigroup Inc. C reported third-quarter 2025 adjusted net income per share of $2.24, up 48.3% from the year-ago period. The metric also surpassed the Zacks Consensus Estimate by 17.3%.Citigroup’s results benefited from an increase in NII and non-interest revenues, alongside lower provisions. The company also registered a year-over-year increase of 17% in IB revenues, reflecting growth in advisory and equity capital markets. However, increased expenses and a weak capital position were the undermining factors for Citigroup.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report KeyCorp (KEY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks