KeyCorp reported second-quarter net income of $472 million and diluted earnings per share of $0.44, up 26% year on year, on 7% revenue growth to $1.96 billion, and raised its full-year 2026 guidance for revenue, net interest income and loan growth.
Net interest income rose 9% year on year and 2% sequentially, the Cleveland-based regional lender said in its quarterly release on Tuesday. The net interest margin rose 2 basis points from the first quarter to 2.89%.
NET INTEREST INCOME LEADS THE WAY
KeyCorp said the year-on-year rise in net interest income was driven by lower deposit costs, the reinvestment of maturing low-yielding securities and swaps into higher-yielding investments, and a shift towards higher-yielding commercial and industrial loans. The 2% sequential increase reflected growth in commercial and industrial loans, reinvestment into higher-yielding investments and one additional day in the quarter.
Total revenue rose 7% year on year to $1.96 billion, while noninterest income rose 2% to $706 million as higher trust and investment services income offset lower commercial mortgage servicing fees.
GUIDANCE RAISED FOR THE FULL YEAR
KeyCorp now expects 2026 revenue to rise 7-8% (previously about 7%), net interest income to increase 9-11% (previously 9-10%) and average loans to grow 4-5% (previously 2-4%).
Chairman and CEO Chris Gorman said the bank generated approximately 130 basis points of operating leverage on a year-over-year basis.
Net charge-offs were 42 basis points, and KeyCorp repurchased $341 million of common shares during the quarter.