Cleveland-based KeyCorp reported second-quarter net income totaling $237 million Thursday, up 30% from the quarter ending March 31. The result, which was in line with analysts expectations, reflects modest net interest income growth, continued strong performance by fee-income business lines and tight control over expenses.
“This was a solid quarter for Key as we continued to execute on our clearly defined path to enhanced profitability,” CEO Chris Gorman said in a press release. “Sequentially, net interest income grew as we benefited from fixed asset repricing and continued to grow client deposits while the pace of deposit repricing slowed.”
At $899 million, second-quarter net interest income ticked up 1.5% on a linked-quarter basis. The $186.9 billion-asset Key experienced what Gorman described as “tepid” loan demand. Loans totaled $109 billion on June 30, a 2% linked-quarter decline. Fee income of $627 million declined 3% in the same period, but the first-quarter numbers were driven by historically strong investment banking results. On a year-over-year basis, Key’s second-quarter noninterest income was up 3%.
While second-quarter investment-banking revenue failed to match the first-quarter level, deal pipelines are “meaningfully higher than prior periods,” Gorman said.
Second-quarter operating expenses of $1.08 billion, were down 6% on a linked quarter basis and level with the second quarter of 2023. “Expenses continue to be well-managed,” Gorman said.
Key reported increases in both net charge-offs and nonperforming assets, but its credit quality issues played out against a backdrop of industry-wide normalization. Second-quarter net charge-offs of $91 million totaled 0.34% of total loans.
This is a developing story. Check back for updates.
