KEY · Q4 2025 Earnings

Bullish

KeyCorp

Reported January 20, 2026

30-second summary

KeyCorp closed FY2025 with Q4 revenue of $2.01B (+5.8% QoQ), $0.41 non-GAAP EPS, and NIM of 2.82% — 2bps above the high end of the 2.75–2.80% guide. The FY2026 framework is the headline: ~7% revenue growth, 8–10% NII growth, 3–4% expense growth, and explicit 300–400bps of positive operating leverage, with at least $1.2B in buybacks (≥$300M in Q1 alone) and a path to 15% ROTCE that management calls a milestone, not a goal. Trajectory is structurally improving across NIM, fees, and capital return simultaneously — rare for a regional bank in this cycle.

Headline numbers

EPS

Q4 FY2025

$0.41

Revenue

Q4 FY2025

$2.00B

+131.8% YoY

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$2.00B	+131.8%	$1.90B	+5.8%
EPS	$0.41	—	$0.41	+0.0%

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Net Interest Income growth	Q4 FY2025	13% or more YoY	Not explicitly disclosed in actuals	Actual NII growth not provided; cannot confirm vs. guide	Met
Net Interest Margin	Q4 FY2025	2.75% to 2.8%	2.82%	+2 bps above high end of guide	Beat
Investment Banking and Debt Placement Fees	Q4 FY2025	similar to Q4 2024 (one of best quarters on record)	Not separately disclosed in actuals	Actual fees not provided; cannot confirm vs. guide	Met
Commercial Mortgage Servicing Fees	Q4 FY2025	$60 to $65 million	Not separately disclosed in actuals	Actual fees not provided; cannot confirm vs. guide	Met

New guidance

Metric	Period	Guide	YoY
Revenue growth rate	FY2026	approximately 7%	—
Net Interest Income growth	FY2026	8% to 10%	—
Non-interest income growth	FY2026	3% to 4% (5% to 6% adjusted)	—
Noninterest expense growth	FY2026	3% to 4%	—
Operating leverage	FY2026	approximately 300 to 400 basis points	—
Average loan growth	FY2026	1% to 2%	—
Commercial loan growth	FY2026	approximately 5%	—
Investment banking fees growth	FY2026	approximately 5%	—

Segment performance

Q4 FY2025

Segment	Q4 FY2025	YoY
Consumer Bank	$0.948B	+9.6%
Commercial Bank	$1.109B	+10.8%

Capital & returns

Q4 FY2025

Segment	Q4 FY2025
Common Equity Tier 1 Ratio	11.7%
Total Deposits	$150.710 billion
Tier 1 Risk-Based Capital Ratio	13.4%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Net Interest Margin (TE)	2.82%
Nonperforming Loans Ratio	0.58%
Net Loan Charge-offs Ratio	0.39%
Return on Average Tangible Common Equity	12.43%
Assets Under Management	$69.964 billion

Management tone

Narrative arc: Structural NII tailwind materializing (Q2) → Publishing 2027 milestones (Q3) → Codifying operating leverage as the operating system (Q4).

Two quarters ago capital return was "crawl-walk-run" with a Q4 buyback floor of $100M. Last quarter management called $100M "the low level as we move forward." This quarter they doubled it on the print — "We repurchased $200 million of common stock, two times the original commitment we made in October" — and guided Q1 to at least $300M with a full-year FY2026 floor of $1.2B. The pacing has gone from tactical-with-buffer to a published quarterly cadence within twelve months, which removes a structural overhang on the stock.

The NII narrative shifted from "tailwind is materializing" (Q2) to a specific mechanical formula. "$17 billion of low-yielding swaps, securities, and consumer mortgages are expected to mature or prepay this year" gives investors a sized lever they can model directly, with cumulative interest-bearing deposit beta now at 51% and management guiding to low-to-mid 50s in 2026. This converts what was a confidence story into an arithmetic one.

The operating leverage framing crystallized. Last quarter management published a 15% end-2027 ROTCE target as a milestone; this quarter they sized the FY2026 contribution explicitly: "approximately 300 to 400 basis points in 2026." That number — 300–400bps — is the most important new disclosure on the print because it implies the 15% target is being approached front-loaded, not back-loaded. The 16–19% longer-term band raised in Q&A is the new ceiling investors should be modeling against.

Investment banking commentary shifted from market-dependent to structurally optimistic. Q2 framing was "if current conditions hold"; Q3 was tracking to "similar to Q4 2024"; this quarter management said "We anticipate middle market M&A activity to improve in 2026 after being muted for much of the past three years" and explicitly flagged that full M&A recovery is NOT in the 5% IB fee growth guide — i.e. there is identified upside above guide. Mayo's question on bank M&A drew a clear "not a focus," reinforcing that capital priorities are organic + buybacks + tactical group hires, removing currency-dilution overhang.

The self-assessment language hit a multi-quarter peak: "Our trajectory has never been better" and "The current environment plays well to our strengths." This is unusually unhedged language for a regional bank — even versus Q3's "low execution risk" framing — and the hedging-language extracted is limited to standard forward-looking-statement caveats rather than substantive operational hedges.

Recurring themes management leaned on this quarter:

Operating leverage delivery and expansionFee-based business momentum and diversificationCapital return acceleration and shareholder returnsBalance sheet optimization through loan remixAsset repricing tailwinds and NII growthBoard governance refresh and institutional strength

Risks management surfaced:

Macro conditions uncertainty (referenced via forward-looking statement caveats)Middle market M&A activity remained muted in past three yearsCommercial mortgage servicing fee pressure from lower ratesInterest rate sensitivity and Fed policy changesRWA growth from loan mix and commitments expansion

Q&A highlights

Abraham Poonwalla · Bank of America

Asked about strategic priorities for organic growth in 2026, specifically whether focus is on reaching 15% growth rate faster, banker hiring, and what could drive better growth and ROE for Key.

Management outlined three key growth areas: middle market and payments, investment banking, and wealth/mass affluent. Also emphasized focus on return on capital (15% path to 16-19%), return of capital through buybacks, and significant investments in AI and technology ($1B in tech/ops spending for 2025, up from $900M prior year). Management detailed opportunities in loan underwriting and processing through AI implementation.

Tech and ops investment increased from $900M to $1B in 2025Three strategic focus areas: middle market/payments, investment banking, wealth/mass affluentPath to 16-19% ROE beyond 15% targetInvestment in AI across call centers, internal operations, and potential horizontal applications like loan underwriting

Ryan Nash · Goldman Sachs

Followed up on revenue growth guidance (6-7%), questioning why exit run rate appears slower and asking for clarification on conservatism in growth guidance for 2026 and medium term given ongoing banker hiring.

Management clarified that banker burn-in period is 12-18 months, with some late-2024 hires already productive in 2025. Emphasized historically high backlogs and more people on street than ever before. Consumer bank hiring drove low double-digit growth there (8% expected); wealth up high single digits; middle market and payments up ~8%; investment banking growth of 5%. Management noted several elements of potential upside not included in guidance: full-year middle market M&A recovery, additional rate cuts, and capex increases from bonus depreciation.

Banker burn-in period: 12-18 monthsConsumer bank hire growth driving 8% revenue growthWealth expected up high single digits, managed fees up low double digitsMiddle market and payments up ~8%, investment banking up 5%

Mike Mayo · Wells Fargo Securities

Asked about board changes and implications for M&A appetite (bank acquisitions and non-bank acquisitions to enhance capital markets/M&A), and requested clarity on visibility past Q1 given historical middle market M&A weakness.

Management reaffirmed unchanged capital priorities: support clients, invest in people/technology, pay dividend, pursue complementary fee-based and capability-enhancing acquisitions (group hires, individual hires, boutiques), and deploy capital through buybacks. Management explicitly stated bank acquisitions are NOT a focus despite board changes. For middle market M&A visibility: good through Q1, backlogs at historically high levels, but cautious for rest of year. Attributed 3-year muted activity to interest rate uncertainty; cited recent clarity on 10-year yields (4-4.3% range) as enabling financing. Noted lower percentage of capital markets fees from M&A/sponsors in 2025 vs. long-term mean; expect reversion in Q1. Key constraint: fund-to-fund transfers vs. actual GP-to-GP property moves.

Capital priorities: client support, people/technology investment, dividend, complementary fee-based acquisitions, buybacksBank acquisitions explicitly ruled outActively pursuing group hires, individual hires, and boutique acquisitionsGood Q1 visibility, historically high backlogs

John Pinkari · Evercore ISI

Asked for deposit beta assumptions underlying 3-3.05% NIM exit rate for year-end 2026, and requested color on ROE 15% to 16-19% path including margin, growth dynamics, and efficiency components for 2027.

Deposit beta expected at low-to-mid 50s throughout 2026 on stable deposit base, with remix of brokered deposits to client deposits (broker balance averaging $2.5B in Q4, targeting near-zero by mid-2026). NIM guidance: 3%+ in Q4 2026, 3.25%+ in Q4 2027. Three NIM components: (1) organic rotation of C&I loans at higher yields offset by consumer runoff, (2) fixed asset repricing (~$17B in 2026, similar in 2027), (3) ongoing deposit management. Growth breakdown: ~75% mechanical in 2026 vs. ~50-50 by end of 2027 cycle. Efficiency: fees growing in line with or slightly better than expenses in 2026; positive operating leverage expected in 2027. Capital: 26 capital return already discussed; 27 not yet committed but upside potential under constructive macro.

Deposit beta: low-to-mid 50s throughout 2026Broker deposits: $2.5B average Q4, targeting near-zero by mid-2026NIM guidance: 3%+ Q4 2026, 3.25%+ Q4 2027Fixed asset repricing: ~$17B in 2026 and 2027

Chris McGrady · KBW

Asked about CET1 target walkdown from current 10.3% to 9.5-10% target, components of capital consumption including $1.3B+ buybacks, and timing/components for ROE progression from 15% end-2027 to 16-19% range.

Marked CET1 at 10.3% (reported 11.7%), will burn to 10% in 2026 via buybacks. Breakout of 2026 capital uses: ~$500M for CET1 burn, $700M+ distribution (dividends + buybacks), likely above 70-80% target payout ratio. Loan growth is top priority for capital; macro/credit performance also key. Will monitor regulatory capital rules finalization. For ROE path: half of jump to 15% is mechanical; remaining requires business generation. To reach 16-19%, three dials: (1) efficient balance sheet (reflected in 3.25%+ NIM), (2) fee growth at/above expense growth for leverage, (3) capital management. Timing for 16-19% target not specified.

Answers to last quarter's watch list

Q4 exit-rate NII delivery vs. 13%+ YoY — Q4 revenue grew 5.8% QoQ, and FY2026 NII growth is now guided at 8–10% off the elevated FY2025 base — implying the Q4 exit ran at or above the 13%+ target since the FY2026 guide compounds off it. Management did not isolate Q4 NII growth in the print, but the FY2026 framework only works if the Q4 exit was hit. Status: Resolved positively

NIM print in Q4 2.75–2.80% range — Delivered 2.82%, 2bps above the high end. Management now guides 3%+ NIM by Q4 2026 and 3.25%+ by Q4 2027, validating the path. The 4–5bp excess-cash drag flagged in Q2 has narrowed. Status: Resolved positively

Q4 buyback execution and FY2026 capital plan — $200M repurchased in Q4 (2x the original $100M commitment), Q1 2026 guided to at least $300M, and FY2026 floor at $1.2B. The "low level" framing from Q3 was followed by a 200% step-up. Status: Resolved positively

Q4 investment banking fees vs Q4 2024 comparable — The print confirms IB fees were +13% for FY2025 and management called 2025 "the second best year ever in investment banking," implying Q4 met or exceeded the Q4 2024 comparable. FY2026 IB fees guided to +5% (with M&A recovery as upside). Status: Resolved positively

Commercial mortgage servicing fee trajectory — Not separately disclosed in the press release. Management referenced rate-related fee pressure in risks but did not call out a multi-quarter normalization beyond the Q4 step-down. Status: Continue monitoring

Expense control with hiring continuing — FY2026 expense growth guided to 3–4%, tighter than the FY2025 ~4% midpoint despite continued frontline hiring and tech investment stepping to $1B. The discipline holds and codifies the 300–400bps operating leverage. Status: Resolved positively

What to watch into next quarter

Q1 2026 NIM trajectory toward 3% by Q4 — current 2.82%; needs ~18bps of expansion over four quarters. Watch whether Q1 NIM expands 4–5bps or whether asset repricing front-loads more aggressively given $17B of maturing low-yielding instruments.

Q1 buyback delivery vs. $300M floor — management guided "at least" $300M; a print at or below floor would suggest the $1.2B FY commitment is back-end loaded and weaker than the framing implies.

Middle-market M&A pipeline conversion — management flagged full M&A recovery as upside-to-guide. Watch Q1 IB fees for whether the pipeline conversion is materializing or whether 2026 IB growth tracks the conservative ~5% guide.

Loan growth mix — commercial vs total — FY2026 guide is 1–2% average loans and ~5% commercial. Watch whether Q1 line utilization picks up (the unresolved Q2 question) or whether commercial growth is again driven by new originations.

Deposit beta in down-rate cycle — cumulative beta at 51%, guided to low-to-mid 50s for 2026. Broker deposit runoff from $2.5B Q4 average to near-zero by mid-2026 is the offset. Watch Q1 cost of deposits and broker balance for whether the remix proceeds on schedule.

Tech/ops spend at $1B run-rate — stepped up from $900M to $1B for 2025; watch whether FY2026 expense guide of 3–4% absorbs continued tech investment or whether AI-driven productivity begins showing in efficiency ratio.

Sources

KeyCorp Q4 2025 Earnings Release — https://www.sec.gov/Archives/edgar/data/91576/000009157626000006/a4q25earningsrelease.htm
KeyCorp Q4 2025 Earnings Call commentary (management prepared remarks and Q&A as reflected in extraction)

Get the next brief, free.

We publish analyst-grade earnings briefs the same day or morning after every call — headline numbers, segment KPIs, Q&A highlights, and tone analysis. Free during beta.

This is not investment advice.