KeyCorp reported a third-quarter 2024 net loss of $447 million, or negative $0.47 per diluted share, on 17 October 2024, after the Cleveland-based regional bank executed a large-scale securities portfolio repositioning that generated a pre-tax loss of $918 million. Excluding the repositioning charge, adjusted net income came in at $290 million, equivalent to $0.30 per diluted share.
Management framed the securities repositioning as a step to replace lower-yielding bonds with higher-yielding assets.
SCOTIABANK INVESTMENT AND FEES
Alongside its earnings release, KeyCorp disclosed that it had received an initial $821 million tranche from Bank of Nova Scotia as part of a previously announced strategic minority investment agreement between the two institutions. The Common Equity Tier 1 ratio reached 10.8% at quarter end.
Investment banking and debt placement fees rose 36% quarter-on-quarter to $171 million, reflecting stronger syndication and equity underwriting fees, according to the bank. Assets under management rose to $61 billion at quarter end, representing a 16% increase year-on-year.
NET INTEREST INCOME AND MARGIN
Net interest income on a taxable-equivalent basis rose 7% quarter-on-quarter to $964 million, a sequential improvement that management attributed to the maturity of substantial portions of low-yielding securities and swaps, with the benefits of the repositioning expected from the fourth quarter. The net interest margin expanded to 2.17% from 2.04% in the second quarter, with management saying the repositioning would lift earnings from the fourth quarter.
KeyCorp said the repositioning would enhance future earnings, capital and liquidity starting in the fourth quarter.