Back to top

Image: Bigstock

KeyCorp (KEY) Q4 Earnings Beat, Revenues & Expenses Rise Y/Y

Read MoreHide Full Article

KeyCorp’s (KEY - Free Report) fourth-quarter 2020 earnings of 56 cents per share surpassed the Zacks Consensus Estimate of 43 cents. Also, the figure was 24.4% higher than the prior-year quarter number.

Results for the reported quarter benefited from a rise in revenues, robust loan and deposit balances, and drastically lower provisions. However, lower rates and a rise in operating expenses were the undermining factors.

Net income from continuing operations attributable to common shareholders was $549 million, up 25.1% year over year.

For 2020, earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.14 per share. However, the figure was 21.7% lower than the prior year’s reported number. Net income from continuing operations was $1.22 billion, down 24.1% year over year.

Revenues Improve & Expenses Increase

Total revenues in the reported quarter grew 12.7% year over year to $1.84 billion. Also, the figure surpassed the Zacks Consensus Estimate of $1.71 billion.

For the year, total revenues of $6.69 billion increased 5% year over year. The figure surpassed the Zacks Consensus Estimate of $6.58 billion.

Quarterly tax-equivalent net interest income increased 5.7% year over year to $1.04 billion. The rise was attributed to higher earning asset balances and loan fees, partially offset by lower net interest margin (NIM).

Taxable-equivalent NIM from continuing operations decreased 28 basis points (bps) year over year to 2.70%.

Non-interest income was $802 million, increasing 23.2% year over year. The rise was due to an increase in almost all fee income components except for service charges on deposit accounts, corporate services income and corporate-owned life insurance income.

Non-interest expenses rose 15.1% from the prior year to $1.13 billion. The increase was due to a rise in all cost components except for net occupancy expenses and costs related to intangible asset amortization.

At the fourth quarter end, average total deposits were $135.72 billion, up marginally from the prior quarter. Average total loans were $101.71 billion, down 3.1% on a sequential basis.

Credit Quality: Mixed Bag

Net loan charge-offs, as a percentage of average loans, increased 11 bps year over year to 0.53%. Allowance for loan and lease losses was $1.63 billion, surging 80.7%. Further, non-performing assets, as a percentage of period-end portfolio loans, other real estate owned properties assets and other non-performing assets were 0.92%, up 17 bps.

However, provision for credit losses fell 81.7% year over year to $20 million.

Capital Ratios Mixed

KeyCorp's tangible common equity to tangible assets ratio was 7.9% as of Dec 31, 2020, down from 8.6% in the corresponding period of 2019. Also, Tier 1 risk-based capital ratio was 11.1%, up from 10.9% in the prior-year quarter.

Our Take

Solid loans and deposit balances along with a focus on fee income are likely to continue supporting KeyCorp’s revenues amid low interest rates. However, deteriorating asset quality and economic slowdown remain near-term concerns.

KeyCorp Price, Consensus and EPS Surprise


KeyCorp Price, Consensus and EPS Surprise

KeyCorp price-consensus-eps-surprise-chart | KeyCorp Quote

KeyCorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2021 (ended Dec 31) earnings of 51 cents per share surpassed the Zacks Consensus Estimate of 42 cents. However, the figure reflects a year-over-year decline of 40.7%.

Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2020 adjusted earnings per share of 96 cents were 5% lower than the prior-year quarter’s level. The Zacks Consensus Estimate for earnings was 93 cents.

Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2020 net earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.01. Moreover, the reported figure represents a rise of 71.1% from the year-ago quarter’s number.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>