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NII Growth & Fee Income Strength Likely to Aid KeyCorp Q3 Earnings
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Key Takeaways
KeyCorp's Q3 earnings are projected to rise 12.2% y/y, with revenues expected to grow 7.6%.
KEY's NII is expected to climb 8.4%, aided by stabilizing funding costs and steady loan demand.
KEY's fee income is expected to rise 5.3%, while higher provisions and expenses may weigh on results.
KeyCorp (KEY - Free Report) is slated to announce third-quarter 2026 results on Oct. 20, before the opening bell. Following robust lending activity in the first half of 2026, loan growth appears to have moderated somewhat in the to-be-reported quarter amid persistent inflationary pressures and economic uncertainties.
Nonetheless, per the Fed’s latest data, the demand for commercial and industrial (C&I) loans, which account for a significant portion of KeyCorp’s loan portfolio, has remained resilient, supported by corporate borrowing needs and steady business activity. Consumer lending demand also provided some support. The Zacks Consensus Estimate for KEY’s third-quarter average earning assets is pegged at $174 billion, which indicates a 2.1% rise from the prior-year quarter.
Meanwhile, the interest rate environment and evolving monetary policy expectations are likely to have influenced KeyCorp’s net interest income (“NII”) performance. Stabilizing funding costs, a favorable shift in the deposit mix and steady loan demand are expected to have supported interest income generation. However, competitive deposit pricing and continued pressure on loan yields might have partially offset these benefits.
The Zacks Consensus Estimate for NII (on a fully tax-equivalent basis) is pegged at $1.29 billion, suggesting an 8.4% year-over-year increase.
Other Factors to Influence KeyCorp’s Q3 Earnings
Non-Interest Income: The third quarter was challenging for the mortgage banking business as mortgage rates hovered around 7% and affordability was low. Both origination volume and refinance activity faced persistent headwinds from inventory constraints and a higher-for-longer rate regime. Given this, income from KEY’s mortgage banking business is less likely to have recorded much improvement.
The Zacks Consensus Estimate for commercial mortgage servicing fees of $53 million implies a 27.4% year-over-year decline. The consensus estimate for consumer mortgage income of $16.92 million indicates a 20.9% rise.
As the quarter witnessed a decent increase in asset inflows, the consensus estimate for KEY’s trust and investment services income of $161 million indicates a 7.3% rise from the prior-year quarter.
IPO activity remained healthy in the to-be-reported quarter. However, global bond issuance moderated following a record-setting first half, while merger and acquisition activity slowed considerably amid geopolitical uncertainties, persistent inflationary pressures and shifting interest rate expectations. These factors are likely to have weighed on investment banking activity and deal execution.
Nonetheless, elevated market volatility and robust client trading activity, driven by changing expectations surrounding artificial intelligence (AI), geopolitical tensions and the Federal Reserve’s monetary policy stance, are likely to have supported trading revenues. The Zacks Consensus Estimate for KEY’s investment banking (“IB”) and debt placement fees is pegged at $207 million, indicating a 12.5% year-over-year increase.
The consensus estimate of $79 million for service charges on deposit accounts implies 5.3% year-over-year growth. With an improvement in consumer spending in the to-be-reported quarter, the consensus mark for cards and payments income of $93 million indicates growth of 8.1%.
Overall, the consensus estimate for KeyCorp’s total non-interest income of $739 million suggests an improvement of 5.3% from the prior-year quarter.
Expenses: KeyCorp’s efforts to reorganize operations and exit unprofitable/non-core businesses have helped it save costs in the past. Also, the company’s initiatives to drive operational efficiency are likely to have curbed expense growth in the to-be-reported quarter. Yet, investments in franchises and technological upgrades are expected to have resulted in a rise in total non-interest expenses.
Asset Quality: KEY is expected to have stepped up reserve building in the third quarter, reflecting heightened credit risks stemming from the Middle East conflict, volatile oil prices, persistent inflation and elevated interest rates. Consequently, the company’s provisions for credit losses are likely to have increased in the to-be-reported quarter.
Major Q3 Development for KEY
In August, KeyCorp completed the acquisition of Clearwater Corporate Finance LLP (Clearwater UK), a UK-based middle-market IB advisory firm, marking another step in expanding the advisory business and establishing its presence in the Western European market.
Building on a collaboration between KeyBanc Capital Markets and Clearwater UK that began in 2020, the acquisition strengthens KeyCorp's middle-market M&A capabilities and enhances opportunities to serve U.S. and European corporate and private equity clients.
What the Zacks Model Predicts for KeyCorp
Per our proven model, the chances of KeyCorp beating the Zacks Consensus Estimate for earnings are high this time. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for KeyCorp is +0.44%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Q3 Earnings & Sales Growth Expectations for KeyCorp
The Zacks Consensus Estimate for KEY’s earnings is pegged at 46 cents per share, which has been unchanged in the past week. The figure indicates a 12.2% rise from the prior-year quarter.
The consensus estimate for quarterly sales is pegged at $2.03 billion, indicating a year-over-year increase of 7.6%.
Other Stocks Worth Considering
Here are a couple of other finance stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time around:
Associated BancCorp (ASB - Free Report) is scheduled to announce third-quarter 2026 results on Oct. 22. The company currently has a Zacks Rank #3 and an Earnings ESP of +1.71%.
Quarterly earnings estimates for ASB have been unchanged at 76 cents per share over the past week.
View the Zacks #1 Rank List
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NII Growth & Fee Income Strength Likely to Aid KeyCorp Q3 Earnings
Key Takeaways
KeyCorp (KEY - Free Report) is slated to announce third-quarter 2026 results on Oct. 20, before the opening bell. Following robust lending activity in the first half of 2026, loan growth appears to have moderated somewhat in the to-be-reported quarter amid persistent inflationary pressures and economic uncertainties.
Nonetheless, per the Fed’s latest data, the demand for commercial and industrial (C&I) loans, which account for a significant portion of KeyCorp’s loan portfolio, has remained resilient, supported by corporate borrowing needs and steady business activity. Consumer lending demand also provided some support. The Zacks Consensus Estimate for KEY’s third-quarter average earning assets is pegged at $174 billion, which indicates a 2.1% rise from the prior-year quarter.
Meanwhile, the interest rate environment and evolving monetary policy expectations are likely to have influenced KeyCorp’s net interest income (“NII”) performance. Stabilizing funding costs, a favorable shift in the deposit mix and steady loan demand are expected to have supported interest income generation. However, competitive deposit pricing and continued pressure on loan yields might have partially offset these benefits.
The Zacks Consensus Estimate for NII (on a fully tax-equivalent basis) is pegged at $1.29 billion, suggesting an 8.4% year-over-year increase.
Other Factors to Influence KeyCorp’s Q3 Earnings
Non-Interest Income: The third quarter was challenging for the mortgage banking business as mortgage rates hovered around 7% and affordability was low. Both origination volume and refinance activity faced persistent headwinds from inventory constraints and a higher-for-longer rate regime. Given this, income from KEY’s mortgage banking business is less likely to have recorded much improvement.
The Zacks Consensus Estimate for commercial mortgage servicing fees of $53 million implies a 27.4% year-over-year decline. The consensus estimate for consumer mortgage income of $16.92 million indicates a 20.9% rise.
As the quarter witnessed a decent increase in asset inflows, the consensus estimate for KEY’s trust and investment services income of $161 million indicates a 7.3% rise from the prior-year quarter.
IPO activity remained healthy in the to-be-reported quarter. However, global bond issuance moderated following a record-setting first half, while merger and acquisition activity slowed considerably amid geopolitical uncertainties, persistent inflationary pressures and shifting interest rate expectations. These factors are likely to have weighed on investment banking activity and deal execution.
Nonetheless, elevated market volatility and robust client trading activity, driven by changing expectations surrounding artificial intelligence (AI), geopolitical tensions and the Federal Reserve’s monetary policy stance, are likely to have supported trading revenues. The Zacks Consensus Estimate for KEY’s investment banking (“IB”) and debt placement fees is pegged at $207 million, indicating a 12.5% year-over-year increase.
The consensus estimate of $79 million for service charges on deposit accounts implies 5.3% year-over-year growth. With an improvement in consumer spending in the to-be-reported quarter, the consensus mark for cards and payments income of $93 million indicates growth of 8.1%.
Overall, the consensus estimate for KeyCorp’s total non-interest income of $739 million suggests an improvement of 5.3% from the prior-year quarter.
Expenses: KeyCorp’s efforts to reorganize operations and exit unprofitable/non-core businesses have helped it save costs in the past. Also, the company’s initiatives to drive operational efficiency are likely to have curbed expense growth in the to-be-reported quarter. Yet, investments in franchises and technological upgrades are expected to have resulted in a rise in total non-interest expenses.
Asset Quality: KEY is expected to have stepped up reserve building in the third quarter, reflecting heightened credit risks stemming from the Middle East conflict, volatile oil prices, persistent inflation and elevated interest rates. Consequently, the company’s provisions for credit losses are likely to have increased in the to-be-reported quarter.
Major Q3 Development for KEY
In August, KeyCorp completed the acquisition of Clearwater Corporate Finance LLP (Clearwater UK), a UK-based middle-market IB advisory firm, marking another step in expanding the advisory business and establishing its presence in the Western European market.
Building on a collaboration between KeyBanc Capital Markets and Clearwater UK that began in 2020, the acquisition strengthens KeyCorp's middle-market M&A capabilities and enhances opportunities to serve U.S. and European corporate and private equity clients.
What the Zacks Model Predicts for KeyCorp
Per our proven model, the chances of KeyCorp beating the Zacks Consensus Estimate for earnings are high this time. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for KeyCorp is +0.44%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Q3 Earnings & Sales Growth Expectations for KeyCorp
The Zacks Consensus Estimate for KEY’s earnings is pegged at 46 cents per share, which has been unchanged in the past week. The figure indicates a 12.2% rise from the prior-year quarter.
KeyCorp Price and EPS Surprise
KeyCorp price-eps-surprise | KeyCorp Quote
The consensus estimate for quarterly sales is pegged at $2.03 billion, indicating a year-over-year increase of 7.6%.
Other Stocks Worth Considering
Here are a couple of other finance stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time around:
Associated BancCorp (ASB - Free Report) is scheduled to announce third-quarter 2026 results on Oct. 22. The company currently has a Zacks Rank #3 and an Earnings ESP of +1.71%.
Quarterly earnings estimates for ASB have been unchanged at 76 cents per share over the past week.
The Earnings ESP for Ameriprise Financial (AMP - Free Report) is +0.35% and it carries a Zacks Rank of 3 at present. The company is slated to report third-quarter 2026 results on Oct. 29. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past seven days, the Zacks Consensus Estimate for AMP’s quarterly earnings has been unchanged at $11.60 per share.