The following is a summary of the KeyCorp (KEY) Q3 2024 Earnings Call Transcript:
Financial Performance:
KeyCorp reported Q3 2024 earnings per share (EPS) of negative $0.47, impacted negatively by $0.77 from securities portfolio repositioning. Excluding this, EPS was $0.30.
Revenue was significantly affected by the securities repositioning, showing a decrease of approximately 55% sequentially and year-over-year, although excluding repositioning impacts, revenue was up 6% sequentially and 3% year-over-year.
Net Interest Income (NII) increased by $65 million or 7% from the previous quarter, and Net Interest Margin (NIM) increased by 13 basis points due to proactive management despite Fed rate cuts.Operating expenses were well controlled, decreasing by 1% compared to the previous year, reflecting positive operating leverage.
Business Progress:
KeyCorp successfully completed significant portions of its securities portfolio repositioning with favorable timing, which is expected to increase quarterly net interest income in the future.
Continued strong performance in fee-based services, particularly in investment banking and debt placement, with third-quarter fees totaling $171 million.
The wealth management segment saw assets under management reach an all-time high of $61 billion.
The commercial real estate special servicing business saw record activity, and commercial deposits increased by 5% year-over-year.
Opportunities:
Anticipate additional benefits to net interest income and margins from the second tranche of Scotiabank's minority investment, subject to regulatory approval.
Pipeline levels in fee-based revenue streams such as investment banking and debt placement remain historically high, suggesting potential revenue growth from these activities.
Risks:
Net charge-offs increased due to specific consumer goods and equipment manufacturing credits, suggesting potential vulnerabilities in these sectors.
Future loan growth could be hampered by tepid client demand and cautious credit approaches.
Tips: For more comprehensive details, please refer to the IR website. The article is only for investors' reference without any guidance or recommendation suggestions.
