KeyCorp's Q2 Momentum Continues: Strong Earnings, Robust Growth, and Strategic Expansion
KeyCorp, a leading financial institution, has once again demonstrated its resilience and growth potential with impressive second-quarter 2026 earnings. The company reported $0.44 per share earnings, up 26% year-over-year, reflecting strong business momentum and continued progress against its strategic and financial commitments.
Revenue grew 7% year-over-year, with pre-provision net revenue increasing 9%. Notably, the net interest margin expanded sequentially to 2.89%, setting the company on track to meet or exceed 3% by year-end, driven by several tailwinds that are expected to contribute to accelerated margin expansion in the second half of the year.
Commercial loan growth remains strong, with period-end C&I loans increasing $2.1 billion, or 3%, sequentially. This reflects continued success in attracting new clients across KeyCorp's markets while deepening existing relationships. The company's deposit franchise continues to perform well, with total deposit costs declining two basis points during the quarter.
Asset quality remains strong, with non-performing loans increasing modestly during the quarter, reflecting idiosyncratic items. However, broader portfolio performance remains stable, tightly managed, and consistent with expectations. The net charge-off ratio was 42 basis points during the quarter, with year-to-date charge-offs remaining at the low end of KeyCorp's 40-45 basis point full-year outlook.
Chris Gorman, KeyCorp's Chairman and Chief Executive Officer, expressed confidence in the company's ability to generate a return on tangible common equity exceeding 15% by the end of 2027. This is part of its path to achieving a long-term target of 16-19%. Importantly, the company continues to deploy capital in a disciplined manner, supporting client growth, investing in the franchise, and returning capital to shareholders through ongoing share repurchases.
During the quarter, KeyCorp announced an agreement to acquire Clearwater U.K., representing a strategic extension of its leading middle-market advisory franchise. This expansion will enhance the company's ability to serve M&A clients and prospects internationally. The transaction is expected to close in the second half of 2026.
The macroeconomic environment remains uncertain, but KeyCorp's momentum continues to be strong. The company is seeing healthy client engagement, solid activity levels across its businesses, and remains well-positioned to perform through a range of potential economic scenarios. Relationship households increased 3%, and commercial clients rose 2% from the prior year.
Priority fee-based businesses, including investment banking, commercial payments, and wealth, continue to perform exceptionally well. In the first half of the year, these businesses collectively grew 8% compared to the first half of 2025. Investment banking pipelines remain at historically elevated levels, supported by record M&A and DCM pipelines.
