A month has gone by since the last earnings report for KeyCorp (KEY Quick QuoteKEY - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is KeyCorp due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

KeyCorp’s Q4 Earnings Beat as NII Jumps, Rise in Provisions

KeyCorp’s fourth-quarter 2025 adjusted earnings per share from continuing operations of 41 cents outpaced the Zacks Consensus Estimate of 38 cents. The bottom line reflected a 7.9% rise from the prior-year quarter.

Quarterly results primarily benefited from higher NII and non-interest income. The rise in average loans and deposit balances was another positive. However, higher expenses and a jump in provisions were the undermining factors.

Results excluded non-recurring items. Including these, net income from continuing operations attributable to common shareholders was $474 million or 43 cents per share against a net loss of $279 million or 28 cents per share in the prior-year quarter.

For 2025, adjusted earnings from continuing operations were $1.50 per share, which beat the consensus estimate of $1.48 and grew 29.3% year over year. Net income from continuing operations attributable to common shareholders (GAAP) was $1.69 billion or $1.52 per share against a net loss of $306 million or 32 cents per share in 2024.

Revenues Improve, Expenses Rise

Total revenues (taxable-equivalent or TE) increased 12.5% year over year to $2 billion. Also, the top line beat the Zacks Consensus Estimate of $1.94 billion.

For 2025, total revenues (TE) were $7.51 billion, up 16.4% from the prior year. The top line surpassed the consensus estimate of $7.43 billion.

NII (TE basis) jumped 15.3% from the prior-year quarter to $1.22 billion. NIM (TE basis) from continuing operations expanded 41 basis points (bps) to 2.82%. Both metrics benefited from lower deposit costs, the reinvestment of proceeds from maturing low-yielding investment securities, fixed-rate loans and swaps repricing into higher-yielding investments, and the repositioning of the available-for-sale portfolio during the fourth quarter of 2024. These were partly offset by the impact of lower interest rates on variable-rate earning assets.
 
Adjusted non-interest income was $782 million, up 8.3%. The rise was mainly driven by higher investment banking and debt placement fees, corporate services income and trust and investment services income.

Non-interest expenses increased almost 1% to $1.24 billion. The rise was due to an increase in almost all cost components except for operating lease expenses, marketing and other expenses. Adjusted expenses rose 2.4% to $1.26 billion.

At the end of the fourth quarter, average total loans were $106.32 billion, up marginally from the previous quarter. Average total deposits were $150.71 billion, up slightly.

Credit Quality: A Mixed Bag

The provision for credit losses was $108 million, significantly up from $39 million in the prior-year quarter. The allowance for loan and lease losses was $1.43 billion, up 1.3%.

However, net loan charge-offs, as a percentage of average total loans, declined 4 bps year over year to 0.39%. Also, non-performing assets, as a percentage of period-end portfolio loans, other real estate-owned property assets, and other non-performing assets, were 0.59%, down 15 bps.

Capital Ratios Strong

KEY's tangible common equity to tangible assets ratio was 8.4% as of Dec. 31, 2025, up from 7% in the corresponding period of 2024. The Tier 1 risk-based capital ratio was 13.4%, down from 13.7%. The Common Equity Tier 1 ratio was 11.7%, down from 11.9% as of Dec. 31, 2024.

2026 Outlook

Management expects total revenues (TE) to be up almost 7% on a year-over-year basis. In 2025, the metric was $7.51 billion. 

Management expects the average loan balance to grow 1-2% on a year-over-year basis from $105.7 billion in 2025.

Average commercial loans are projected to rise about 5%.

Management expects investment banking (IB) fees to rise roughly 5% on a year-over-year basis. Previously, IB fees were expected to rise by $10-$20 million on a year-over-year basis.

NII (TE) is expected to be up roughly 8-10% in 2026 from $4.67 billion in 2025. Also, management expects NII to be $1.3 billion in the fourth quarter of 2026. 

NIM is expected to be in the range of 3.00%-3.05% by the end of the fourth quarter. Management anticipates average earning assets to be approximately $170 billion by the end of 2026.

Adjusted non-interest income is expected to grow in the range of 5-6% on a year-over-year basis from $2.5 billion in 2025, driven by high single-digit fee growth in priority businesses such as wealth management and commercial payments. 
 
Adjusted non-interest expenses (excluding notable charges) are anticipated to be up 3- 4% on a year-over-year basis from $4.7 billion in 2025. 

NCOs to average loans are expected to be in the 40-45 bps range.

KeyCorp anticipates 300-400 bps of fee-based operating leverage in 2026.

The GAAP tax rate is expected to be roughly 22% in 2026. Also, the effective tax rate will likely be about 23%.

Long-term Outlook

Management expects NIM to be above 3.25% by the fourth quarter of 2027.

Management anticipates return on Tangible Common Shareholders' Equity (ROTCE) to be in the range of 16-19% and it is also expected to grow above 15% by the fourth quarter of 2027.

Marked Common Equity Tier 1 (CET1) is expected to be in the range of 9.5-10%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

VGM Scores

Currently, KeyCorp has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, KeyCorp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

KeyCorp belongs to the Zacks Banks - Major Regional industry. Another stock from the same industry, M&T Bank Corporation (MTB Quick QuoteMTB - Free Report) , has gained 5.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

M&T Bank reported revenues of $2.48 billion in the last reported quarter, representing a year-over-year change of +3.8%. EPS of $4.72 for the same period compares with $3.92 a year ago.

M&T Bank is expected to post earnings of $4.03 per share for the current quarter, representing a year-over-year change of +19.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for M&T Bank. Also, the stock has a VGM Score of F.