KeyCorp (NYSE:KEY) reported third-quarter results on Thursday that surpassed analyst expectations, supported by higher revenue and an improved net interest margin. The bank’s shares rose 1.52% in pre-market trading following the earnings release.
Net income for the quarter came in at $454 million, or $0.41 per diluted share, beating the consensus estimate of $0.38. Total revenue reached $1.9 billion, just ahead of expectations of $1.88 billion and up 17% year over year when adjusted for last year’s securities portfolio repositioning.
Net interest income increased 4% from the prior quarter, with the net interest margin improving to 2.75%, up 9 basis points sequentially. The gain was supported by a 2% quarter-over-quarter increase in average deposits, while total deposit costs edged down 2 basis points to 1.97%.
“Our third quarter results demonstrate continued strong momentum,” said Chairman and CEO Chris Gorman. “Adjusted revenue was up 17% year-over-year, and we generated more than 1,000 basis points of operating leverage again this quarter.”
Credit quality strengthened during the quarter. Nonperforming assets declined 6% sequentially, and net charge-offs remained stable at 42 basis points — within the bank’s full-year guidance range of 40 to 45 basis points.
In terms of business segments, the Consumer Bank generated $152 million in net income, more than double the $75 million reported a year earlier. The Commercial Bank segment delivered $367 million in net income, a 22.7% year-over-year increase.
KeyCorp also maintained its quarterly dividend of $0.205 per share. The bank ended the quarter with a Common Equity Tier 1 ratio of 11.8%, up 10 basis points from the prior quarter.
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