U.S. Stock Earnings Reports & Market News
KeyCorp (KEY) Fiscal Year 2024 Analysis Report
Executive Summary
For fiscal year 2024, KeyCorp demonstrated resilience amidst a challenging macroeconomic environment characterized by elevated geopolitical tensions and fluctuating interest rates. The bank reported total revenues of approximately $4.62 billion, reflecting a decline in net interest income (NII) to $3.76 billion from $3.91 billion in 2023, primarily due to rising funding costs and repositioning in the bond portfolio. Noninterest income declined significantly to $809 million from $2.47 billion, impacted by net securities losses of $1.86 billion amid strategic repositioning. Net loss attributable to shareholders was approximately $161 million, contrasting with net income of $967 million in 2023, driven by substantial securities impairments and nonrecurring expenses. The balance sheet remained solid, with total assets at $187.17 billion, and capital ratios comfortably exceeding regulatory requirements, with a total risk-based capital ratio of 16.15%. The company’s strategic focus on risk management, digital transformation, and capital optimization positions it well for future growth, albeit with caution due to ongoing market volatility and credit quality challenges.
Key Metrics
| Metric | 2024 | 2023 | 2022 | Change 2024-2023 | Change % |
|---|---|---|---|---|---|
| Total Revenue (USD millions) | 4,619 | 6,413 | 7,272 | ||
| Net Interest Income (USD millions) | 3,765 | 3,913 | 4,527 | ||
| Noninterest Income (USD millions) | 809 | 2,470 | 2,718 | ||
| Net Income (USD millions) | -161 | 967 | 1,917 | ||
| EPS (USD) | -0.32 | 0.89 | 1.94 | ||
| Total Assets (USD billions) | 187.17 | 188.28 | 188.28 | ||
| Total Capital Ratio (%) | 16.15 | 14.15 | Not available | ||
| Return on Assets (ROA %) | -0.09% | 0.51% | 1.02% | ||
| Return on Equity (ROE %) | -0.88% | 5.61% | 11.45% | ||
| Loan Portfolio (USD billions) | 104.26 | 112.61 | 112.61 | ||
| Loan Loss Allowance (USD millions) | 1,409 | 1,508 | 1,358 | ||
| Tier 1 Capital Ratio (%) | 11.92 | 10.02 | Not available | ||
| Leverage Ratio (%) | 10.03 | 9.03 | Not available | ||
| Stock Price (USD) | – | – | – |
Management Discussion and Analysis (MD&A)
Revenue and Profitability
KeyCorp’s total revenue declined by approximately 28% year-over-year, primarily driven by a significant reduction in noninterest income due to securities impairments and strategic repositioning. Net interest income experienced a modest decrease of 3.8%, reflecting higher funding costs and asset mix adjustments. Despite the revenue pressures, the company maintained a strong capital position, with Tier 1 capital ratio above regulatory minimums.
Balance Sheet and Liquidity
The balance sheet remained robust with total assets at approximately $187.17 billion. Loan portfolios declined by 7.2%, mainly due to loan runoff and portfolio repositioning. Cash and equivalents increased to $1.74 billion, bolstered by proceeds from the Scotiabank investment of approximately $2.77 billion. The bank’s liquidity position remains solid with unused secured borrowing capacity exceeding $55 billion, ensuring adequate liquidity for ongoing operations and strategic initiatives.
Credit Quality and Risk Management
Loan quality metrics showed a slight deterioration, with nonperforming loans at 0.79% of total loans, and allowance for loan and lease losses (ALLL) at $1.4 billion. The company’s risk management framework effectively mitigates market, credit, operational, and regulatory risks. Elevated geopolitical tensions and economic uncertainties continue to influence risk appetite and credit provisioning strategies.
Capital Adequacy
KeyCorp’s capital ratios remain well above the minimum regulatory requirements, with a total risk-based capital ratio of 16.15%. The company actively manages capital through dividend policies and share repurchases, which totaled $28 million in 2024. The Scotiabank minority investment significantly enhances the capital base and strategic positioning.
Outlook and Strategic Initiatives
Looking ahead, KeyCorp aims to leverage digital transformation, optimize its capital structure, and strengthen risk controls. While near-term earnings may remain under pressure due to securities impairments and market volatility, the long-term outlook remains cautiously optimistic. The bank’s focus on customer-centric solutions and prudent risk management positions it for sustainable growth in a complex economic environment.
Income Statement Analysis
Revenues declined sharply from $6.41 billion in 2023 to $4.62 billion in 2024, mainly due to securities impairments. Net interest income fell slightly from $3.91 billion to $3.76 billion, reflecting higher funding costs and loan runoff. Noninterest income dropped from $2.47 billion to $809 million, impacted by net securities losses of $1.86 billion. The net loss attributable to shareholders was about $161 million compared to a profit of $967 million last year. Earnings per share dropped from $0.89 to -$0.32, indicating significant challenges but also potential for recovery with improved risk management and market conditions.
Balance Sheet Analysis
The balance sheet shows total assets of $187.17 billion, with loans at $104.26 billion, down 7.2%. Cash and due from banks increased to $1.74 billion. Total deposits rose to $149.76 billion, supporting liquidity. Capital ratios remain strong, with a Tier 1 ratio of 11.92% and a leverage ratio of 10.03%. Loan loss reserves are maintained at $1.41 billion, reflecting prudent provisioning amid economic uncertainties.
Cash Flow Analysis
Operating cash flows were positive at $664 million, driven by working capital adjustments despite net loss. Investing activities included a net outflow of $69 million, primarily from loan and securities runoff. Financing activities generated $2.82 billion, mainly from the Scotiabank investment and bond issuances, offset by dividend payments and share repurchases. The company’s cash position remains healthy, supporting strategic flexibility.
Ratios & DuPont Analysis
Return on assets (ROA) was negative at -0.09%, primarily due to securities impairments, while ROE was -0.88%. Asset turnover is approximately 0.025, and the equity multiplier stands at 10.3. The DuPont analysis reveals that profitability was significantly impacted by nonrecurring securities losses, but core operational metrics remain solid, and long-term return prospects depend on market recovery and portfolio management.
Risk Factors
Key risk factors include regulatory changes, market volatility, credit risk from loan portfolio deterioration, operational risks from cybersecurity threats, and macroeconomic uncertainties. Elevated geopolitical tensions and interest rate fluctuations pose ongoing challenges. The bank actively manages these risks through diversified portfolios, strong capital buffers, and robust risk governance frameworks.
Notes & Additional Commentary
Unusual items impacting 2024 include securities impairment losses of $1.86 billion, which significantly affected earnings. Strategic repositioning in bond markets aimed to optimize liquidity and risk profile but resulted in impairments. The bank’s disposal of certain non-core assets and reinvestment in growth initiatives are ongoing. No material legal proceedings are currently expected to materially impact financials.
Investment Implications
Short-term prospects are cautious, with earnings under pressure due to market conditions. Long-term, KeyCorp’s strong capital base, strategic investments, and focus on digital banking support a resilient outlook. Investors should monitor credit quality trends and market recovery signals. The bank’s prudent risk management and capital strength provide a foundation for potential rebound and value creation in the coming years.