KeyCorp Q2 Earnings Surpass Expectations with 21% Revenue Growth, Upward Revision of 2025 Guidance

KeyCorp (KEY) reports Q2 2025 earnings of $0.35 per share, a 21% revenue increase, and a $36 million loan loss reserve boost. Analysts see stock price potential with a mixed outlook, averaging a $19.86 target price and a "Outperform" recommendation from 24 brokerage firms. The GF Value estimate predicts a $15.85 future value, indicating a potential downside of 15.29% from the current price.

Title: KeyCorp Reports Strong Q2 2025 Earnings, Boosts Loan Loss Reserve

KeyCorp (KEY), a leading financial institution, reported robust earnings for the second quarter of 2025, with earnings per share (EPS) reaching $0.35, marking a 21% increase in revenue compared to the same period last year. The company also boosted its loan loss reserve by $36 million. Analysts are cautiously optimistic about the stock price, with a mixed outlook and a target price of $19.86, as predicted by 24 brokerage firms. The GF Value estimate predicts a future value of $15.85, indicating a potential downside of 15.29% from the current price.

KeyCorp's CEO, Christopher Gorman, highlighted the company's strong performance, noting that pre-provision net revenue (PPNR) increased by $44 million sequentially, marking the fifth consecutive quarter of growth. The PPNR has grown over 60% since the first quarter of 2024. Gorman also emphasized the company's achievement in commercial loan growth and its robust backlog in both institutional and middle-market segments.

The company's noninterest income reached $690 million, up 10% year-over-year, driven by strong performance in investment banking and debt placement fees, which totaled $178 million, a 41% increase from the same period last year. The CEO also noted that the company's investment in technology and talent is on track to increase frontline bankers and client advisers by approximately 10% this year.

The company's outlook for 2025 was revised, with the CFO, Clark Khayat, stating that net interest income growth is expected to be between 20% and 22%, compared to the previous guidance of approximately 20%. Khayat also expects fourth-quarter net interest income to grow by 11% or better compared to the fourth quarter of 2024 and a fourth-quarter net interest margin of approximately 2.75%. The company expects average loans for the full year to be down 1% to 3%, with commercial loans growing about 5%.

During the earnings call, analysts inquired about client sentiment, investment banking outlook, deposit pricing strategy, and capital deployment. Gorman responded that clients are cautiously optimistic, and the company continues to invest in technology and talent. Khayat explained that the loan-to-deposit ratio stands at 70%, and the company has flexibility due to excess liquidity. Gorman also mentioned that share repurchases are expected in the third quarter, with a potential increase later in the fourth quarter.

The company's strong performance and positive outlook suggest that KeyCorp is well-positioned to achieve its full-year 2025 targets. However, investors should remain vigilant about potential changes in the interest rate environment and evolving economic conditions.

References:
[1] https://za.investing.com/news/company-news/keycorp-q2-2025-slides-eps-jumps-40-yoy-as-nim-expands-93CH-3798455
[2] https://seekingalpha.com/news/4470362-keycorp-raises-2025-net-interest-income-growth-outlook-to-22-percent-amid-robust-commercial