We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
KeyCorp expects 2026 revenues to rise about 8%, with average loans growing 4-5%.
NII is projected to grow 9-11%, while NIM is expected to reach 3.00-3.05% by year-end.
KeyCorp sees fee income gains from payments, wealth management and stronger investment-banking activity.
At the Barclays 24th Annual Global Financial Services Conference, KeyCorp’s (KEY - Free Report) chief financial officer (CFO) Clark Khayat highlighted a constructive growth outlook, with 2026 revenues now expected to increase about 8%, up from the prior guidance of 7-8% growth. He highlighted resilient client activity, strong loan growth, and continued momentum across fee-based businesses as major driving factors.
KEY’s Higher Fee Income & Clearwater Buyout to Support Growth
Fee businesses remain a key growth opportunity for KeyCorp. Management expects 2026 non-interest income to grow 4-5%, up from the prior outlook of 3-4% growth. Additionally, adjusted non-interest income is now projected to increase 6-7%, higher than the previous target range of 5-6% increase. Khayat mentioned completion of the Clearwater Corporate Finance LLP acquisition in August as the primary reason for raising 2026 fee income guidance.
The Clearwater acquisition will strengthen KeyCorp’s presence in the United Kingdom and Europe. Khayat noted that the deal is expected to be roughly pre-provision net revenue (PPNR) neutral in the second half of 2026 before contributing approximately $60-$70 million of revenues in 2027.
Additionally, investment banking activity is also strengthening. The company affirmed that third-quarter investment-banking fees will rise more than 20% sequentially. This will be supported by strong client activity and record merger and acquisitions (M&A) pipelines, while management noted that M&A and financial-sponsor activity has not fully normalized.
KEY’s Loan Growth and NIM Expansion Strengthen 2026 Outlook
Khayat stated that the economy remains resilient despite uncertainty surrounding interest rates, tariffs, and geopolitical developments. Client activity remains constructive, with strong loan demand, growing client relationships, and healthy fee-based business pipelines.
KeyCorp expects average loans to grow 4-5% in 2026, with average commercial loans projected to rise 8-10%. While growth is expected to moderate in the second half from strong first-half levels, demand remains broad-based across middle-market clients and industries such as utilities, power, renewables and technology.
Deposit trends are also improving, with average client deposits expected to increase more than 2% in the second half of 2026. Deposit growth is currently outpacing loan growth, while new client relationships are generating operating deposits at attractive pricing.
Driven by these factors, the company reiterated its net interest income (NII) and net interest margin (NIM) outlook for 2026. NII is expected to increase in the range of 9-11%, with NIM likely to reach 3.00-3.05% by year-end. The growth will be supported by the repricing of approximately $9 billion of fixed-rate assets in the second half, along with solid loan demand and deposit trends.
KeyCorp’s Other Line Items
On the expense front, adjusted non-interest expenses are now expected to increase about 4% in 2026, higher than the prior increase in the 3-4% range. Despite the company raising its expense guidance, it expects positive operating leverage as revenue growth outpaces expense growth, with AI emerging as a source of efficiency. KeyCorp has been using tools such as Copilot and evaluating end-to-end processes where AI can improve productivity, potentially allowing the bank to support additional revenue without proportional staffing growth.
Credit quality remains favorable. Credit metrics improved in the second quarter, while charge-offs are tracking below full-year guidance of 40-45 basis points. Although commercial real estate, agriculture, and consumer goods remain areas of focus, management characterized overall credit quality as benign.
Our Take on KeyCorp
KeyCorp appears well positioned to sustain its growth momentum as improving business conditions and strategic investments strengthen its franchise. The company remains focused on NIM expansion, fee income growth, and disciplined expenses to drive operating leverage and support its longer-term return targets.
The company’s diversified revenue base and continued investments in technology and client capabilities should support earnings resilience and create additional long-term growth opportunities. However, an uncertain interest-rate environment and potential pressure across select credit-sensitive sectors remain key risks to the outlook.
KEY’s Price Performance & Zacks Rank
Shares of KeyCorp have gained 16.4% in the past year compared with the industry’s growth of 31.4%.
How Are Other Banks Likely to Fare in Terms of Revenue Growth?
PNC Financial Services (PNC - Free Report) expects strong 2026 revenue growth, supported by higher loan balances, NII growth, and continued fee-income momentum. Average loan growth is projected at approximately 12.5%, while NII is expected to increase more than 15%, with management expecting NIM to exceed 3% by year-end. This will be supported by asset repricing and loan growth. The FirstBank acquisition is also expected to contribute to NII growth.
Fee businesses, including capital markets, treasury management, cards and asset management, are expected to support growth. Hence, PNC projects total revenues to increase approximately 13% in 2026, while non-interest expenses are expected to rise about 8.5%, supporting positive operating leverage as revenue growth outpaces costs.
Citizens Financial Group (CFG - Free Report) expects 2026 revenue growth to benefit from NII growth above its initial 10-12% target, while fee income is tracking toward the upper end of its 6-8% range. Loan growth is tracking toward the upper end of 3-5% growth, while NIM is expected to be in the range of 3.22-3.27% in the fourth quarter. Moreover, capital markets, wealth management and payments are expected to drive fee-income growth.
Investments in technology, digital capabilities and AI are aimed at improving customer retention, deepening product relationships and boosting efficiency. CFG expects expenses to rise 4.5% in 2026, with a mid-50% efficiency ratio.
View the Zacks #1 Rank List
Image: Bigstock
KeyCorp Raises 2026 Revenue Outlook: What's Driving It?
Key Takeaways
At the Barclays 24th Annual Global Financial Services Conference, KeyCorp’s (KEY - Free Report) chief financial officer (CFO) Clark Khayat highlighted a constructive growth outlook, with 2026 revenues now expected to increase about 8%, up from the prior guidance of 7-8% growth. He highlighted resilient client activity, strong loan growth, and continued momentum across fee-based businesses as major driving factors.
KEY’s Higher Fee Income & Clearwater Buyout to Support Growth
Fee businesses remain a key growth opportunity for KeyCorp. Management expects 2026 non-interest income to grow 4-5%, up from the prior outlook of 3-4% growth. Additionally, adjusted non-interest income is now projected to increase 6-7%, higher than the previous target range of 5-6% increase. Khayat mentioned completion of the Clearwater Corporate Finance LLP acquisition in August as the primary reason for raising 2026 fee income guidance.
The Clearwater acquisition will strengthen KeyCorp’s presence in the United Kingdom and Europe. Khayat noted that the deal is expected to be roughly pre-provision net revenue (PPNR) neutral in the second half of 2026 before contributing approximately $60-$70 million of revenues in 2027.
Additionally, investment banking activity is also strengthening. The company affirmed that third-quarter investment-banking fees will rise more than 20% sequentially. This will be supported by strong client activity and record merger and acquisitions (M&A) pipelines, while management noted that M&A and financial-sponsor activity has not fully normalized.
KEY’s Loan Growth and NIM Expansion Strengthen 2026 Outlook
Khayat stated that the economy remains resilient despite uncertainty surrounding interest rates, tariffs, and geopolitical developments. Client activity remains constructive, with strong loan demand, growing client relationships, and healthy fee-based business pipelines.
KeyCorp expects average loans to grow 4-5% in 2026, with average commercial loans projected to rise 8-10%. While growth is expected to moderate in the second half from strong first-half levels, demand remains broad-based across middle-market clients and industries such as utilities, power, renewables and technology.
Deposit trends are also improving, with average client deposits expected to increase more than 2% in the second half of 2026. Deposit growth is currently outpacing loan growth, while new client relationships are generating operating deposits at attractive pricing.
Driven by these factors, the company reiterated its net interest income (NII) and net interest margin (NIM) outlook for 2026. NII is expected to increase in the range of 9-11%, with NIM likely to reach 3.00-3.05% by year-end. The growth will be supported by the repricing of approximately $9 billion of fixed-rate assets in the second half, along with solid loan demand and deposit trends.
KeyCorp’s Other Line Items
On the expense front, adjusted non-interest expenses are now expected to increase about 4% in 2026, higher than the prior increase in the 3-4% range. Despite the company raising its expense guidance, it expects positive operating leverage as revenue growth outpaces expense growth, with AI emerging as a source of efficiency. KeyCorp has been using tools such as Copilot and evaluating end-to-end processes where AI can improve productivity, potentially allowing the bank to support additional revenue without proportional staffing growth.
Credit quality remains favorable. Credit metrics improved in the second quarter, while charge-offs are tracking below full-year guidance of 40-45 basis points. Although commercial real estate, agriculture, and consumer goods remain areas of focus, management characterized overall credit quality as benign.
Our Take on KeyCorp
KeyCorp appears well positioned to sustain its growth momentum as improving business conditions and strategic investments strengthen its franchise. The company remains focused on NIM expansion, fee income growth, and disciplined expenses to drive operating leverage and support its longer-term return targets.
The company’s diversified revenue base and continued investments in technology and client capabilities should support earnings resilience and create additional long-term growth opportunities. However, an uncertain interest-rate environment and potential pressure across select credit-sensitive sectors remain key risks to the outlook.
KEY’s Price Performance & Zacks Rank
Shares of KeyCorp have gained 16.4% in the past year compared with the industry’s growth of 31.4%.
One-Year Price Performance
Image Source: Zacks Investment Research
KeyCorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..
How Are Other Banks Likely to Fare in Terms of Revenue Growth?
PNC Financial Services (PNC - Free Report) expects strong 2026 revenue growth, supported by higher loan balances, NII growth, and continued fee-income momentum. Average loan growth is projected at approximately 12.5%, while NII is expected to increase more than 15%, with management expecting NIM to exceed 3% by year-end. This will be supported by asset repricing and loan growth. The FirstBank acquisition is also expected to contribute to NII growth.
Fee businesses, including capital markets, treasury management, cards and asset management, are expected to support growth. Hence, PNC projects total revenues to increase approximately 13% in 2026, while non-interest expenses are expected to rise about 8.5%, supporting positive operating leverage as revenue growth outpaces costs.
Citizens Financial Group (CFG - Free Report) expects 2026 revenue growth to benefit from NII growth above its initial 10-12% target, while fee income is tracking toward the upper end of its 6-8% range. Loan growth is tracking toward the upper end of 3-5% growth, while NIM is expected to be in the range of 3.22-3.27% in the fourth quarter. Moreover, capital markets, wealth management and payments are expected to drive fee-income growth.
Investments in technology, digital capabilities and AI are aimed at improving customer retention, deepening product relationships and boosting efficiency. CFG expects expenses to rise 4.5% in 2026, with a mid-50% efficiency ratio.