KeyCorp Exceeds Expectations in Q1 2026 with Strong Earnings and Growth Momentum

KeyCorp, a leading financial institution, has reported impressive results for its first quarter of 2026. In a recent conference call, the company's executives highlighted several key highlights from the quarter, demonstrating disciplined execution and significant momentum.

The company's earnings per share rose by 33% year-over-year, reaching $0.44 per share. This achievement is all the more remarkable given the challenging macroeconomic environment. Return on tangible common equity exceeded 13%, with the company continuing to make progress towards its goal of 15%+ return on tangible common equity by year-end 2027.

Revenue grew by a substantial 10% year-over-year, outpacing expenses and driving adjusted pre-provision net revenue up $29 million sequentially. This marks the eighth consecutive quarter of adjusted PPNR growth, underscoring KeyCorp's commitment to delivering strong financial performance.

Net interest margin expanded by 5 basis points sequentially to 2.87%, putting the company on track to exceed 3% net interest margin by year-end. Commercial loan growth was robust and broad-based across industries and geographies, increasing $3.3 billion or 4% sequentially on a period-end basis.

KeyCorp's funding cost management remained disciplined, with total funding costs declining by 15 basis points during the quarter. Interest-bearing deposit costs decreased by 22 basis points, resulting in a cumulative through-the-cycle down beta of 56%. Asset quality metrics remained strong, with a net charge-off ratio of just 38 basis points.

In addition to improving its return on capital, KeyCorp remains committed to substantial return of capital to shareholders. During the quarter, the company took advantage of the pullback in regional bank stock prices and repurchased nearly $400 million of common stock, well in excess of the $300 million commitment made in January.

The company's executives also expressed enthusiasm for the latest Basel III endgame proposal. KeyCorp's preliminary estimate shows a 100+ basis point benefit to its marked CET1 ratio under the revised standardized approach if implemented as currently proposed. This would imply a fully phased-in ratio of around 11%, higher than peers and higher than needed to operate the business in the ordinary course.

Chris Gorman, Chairman and Chief Executive Officer, noted that KeyCorp's capital position gives the company flexibility to continue leaning in aggressively this year and in the coming years. This includes supporting clients, driving organic growth, and repurchasing shares. The company expects to buy back at least $1.3 billion of its shares in 2026, up from the previously communicated $1.2 billion.

KeyCorp's focus on delivering differentiated capabilities has resulted in continued growth in key areas. Commercial clients were up 3%, and relationship households were up 2% from the prior year in the first quarter. The company gained share across its priority fee-based businesses, including wealth, investment banking, and commercial payments. These businesses collectively grew by 12% compared to the prior year.

KeyCorp raised nearly $47 billion of capital on behalf of clients during the past quarter, retaining 19% on its balance sheet. Investment banking pipelines remain elevated, with M&A pipelines at record levels. While investment banking fees are expected to decline in the second quarter compared to the record first quarter, the company remains confident that it can grow investment banking fees in the mid-single digits for the full year.