KeyCorp (KEY) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $237 million, or $0.25 per share, up from Q1 2024 but down from Q2 2023, reflecting lower net interest income and higher funding costs, partially offset by higher noninterest income and strong deposit growth.

• EPS was $0.25, up 25% sequentially but down 7.4% year-over-year; expenses declined 6% sequentially and remained stable year-over-year.

• CET1 ratio improved to 10.5%, up 20 bps sequentially and 120 bps year-over-year, reflecting enhanced capital strength.

• Credit quality remained solid, with net charge-offs to average loans at 0.34%.

• Continued progress on strategic initiatives, especially in wealth management, commercial payments, and balance sheet optimization.

Financial highlights

• Net interest income (TE) was $899 million, up 1.5% sequentially but down 8.8% year-over-year; net interest margin at 2.04%, up 2 bps sequentially.

• Noninterest income was $627 million, up 3% year-over-year, representing 41% of total revenue, driven by trust, investment services, and commercial mortgage servicing fees.

• Total revenue (TE) was $1.53 billion, down 0.5% sequentially and 4.3% year-over-year.

• Noninterest expense was $1.08 billion, flat year-over-year and down 5.6% sequentially; included a $5 million pre-tax FDIC special assessment.

• Provision for credit losses was $100 million, down from $167 million in Q2 2023.

Outlook and guidance

• FY2024 average loans expected down 7–8% vs. FY2023; ending loans down 4–5%.

• Average deposits expected to remain relatively stable, with client deposits up low single digits.

• Net interest income (TE) projected down 2–5% for FY2024; noninterest income up low-single digits to 5%+ vs. 4Q23 annualized exit rate.

• Noninterest expense expected to be relatively stable, excluding FDIC special assessments.

• Net charge-offs to average loans targeted at 30–40 bps for FY2024.