Why did KEY's earnings drop sharply in Q3 2024?

The significant drop in KeyCorp's earnings in Q3 2024 can be attributed to **Strategic Moves and Portfolio Restructuring**.

1. **Strategic Investment and Portfolio Restructuring**: KeyCorp's recent strategic moves, including a significant investment of $2.8 billion from Scotiabank, are aimed at repositioning its securities portfolio and bolstering its Common Equity Tier 1 (CET1) capital. While this investment might initially dilute earnings per share (EPS) due to the capital raise, the long-term goal is to make the investment and subsequent portfolio repositioning accretive to EPS.
2. **Economic Conditions and Asset Quality**: The bank's earnings are also influenced by the economic environment and the quality of its assets. KeyCorp has forecasted a bigger drop in annual average loans due to tepid demand, which could impact income. Additionally, the bank sold approximately $7 billion of low-yielding investments, resulting in an expected after-tax loss of approximately $700 million. Such actions indicate a proactive approach to managing risks but can temporarily affect profitability.

In conclusion, KeyCorp's Q3 2024 earnings drop is primarily a result of strategic initiatives aimed at strengthening the company's financial position and adapting to current economic conditions, despite the short-term impact on profitability.

|code|Ticker|Name|Date|Net Income YoY|Net Income|market_code|
|---|---|---|---|---|---|---|
|KEY|KEY.N|Keycorp|2023 Q4|-83.50253807106598|6.5E7|169|
|KEY|KEY.N|Keycorp|2024 Q1|-29.807692307692307|2.19E8|169|
|KEY|KEY.N|Keycorp|2024 Q2|-4.529616724738676|2.74E8|169|
|KEY|KEY.N|Keycorp|2024 Q3|-235.31353135313532|-4.1E8|169|