KeyCorp (KEY)

Regional banking company KeyCorp (NYSE:KEY) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 12.5% year on year to $2.01 billion. Its non-GAAP profit of $0.41 per share was 6.3% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1849 during the California Gold Rush era, KeyCorp (NYSE:KEY) operates KeyBank, a full-service regional bank providing retail and commercial banking, wealth management, and investment services across 15 states.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

KeyCorp competes with other regional banks like Fifth Third Bancorp (NASDAQ:FITB), Huntington Bancshares (NASDAQ:HBAN), and Citizens Financial Group (NYSE:CFG), as well as larger national institutions including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Wells Fargo (NYSE:WFC).

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Unfortunately, KeyCorp’s 2% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks and is a tough starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. KeyCorp’s annualized revenue growth of 8.2% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, KeyCorp reported year-on-year revenue growth of 12.5%, and its $2.01 billion of revenue exceeded Wall Street’s estimates by 1.8%.

Net interest income made up 59.9% of the company’s total revenue during the last five years, meaning KeyCorp’s growth drivers strike a balance between lending and non-lending activities.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Topline growth alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Markets emphasize efficiency ratio trends over static measurements, recognizing that revenue compositions drive different expense bases. Lower efficiency ratios signal superior performance by indicating that banks are controlling costs effectively relative to their income.

Over the last five years, KeyCorp’s efficiency ratio has increased by 2.1 percentage points, going from 60.1% to 62.4%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

KeyCorp’s efficiency ratio came in at 61.6% this quarter, beating analysts’ expectations by 197 basis points (100 basis points = 1 percentage point).

For the next 12 months, Wall Street expects KeyCorp to rein in some of its expenses as it anticipates an efficiency ratio of 61%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

KeyCorp’s weak 3.7% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For KeyCorp, its two-year annual EPS growth of 29.8% was higher than its five-year trend. This acceleration made it one of the faster-growing banking companies in recent history.

In Q4, KeyCorp reported adjusted EPS of $0.41, up from $0.38 in the same quarter last year. This print beat analysts’ estimates by 6.3%. Over the next 12 months, Wall Street expects KeyCorp’s full-year EPS of $1.50 to grow 20.5%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

KeyCorp’s TBVPS was flat over the last five years. However, TBVPS growth has accelerated recently, growing by 19.5% annually over the last two years from $9.65 to $13.77 per share.

Over the next 12 months, Consensus estimates call for KeyCorp’s TBVPS to grow by 4.6% to $14.41, lousy growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, KeyCorp has averaged a Tier 1 capital ratio of 11.3%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, KeyCorp has averaged an ROE of 8.7%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

It was encouraging to see KeyCorp beat analysts’ revenue expectations this quarter. We were also happy its tangible book value per share outperformed Wall Street’s estimates. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 1.4% to $20.87 immediately following the results.

Updated: January 20, 2026 at 7:12 AM EST

Are you wondering whether to buy KeyCorp or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

KeyCorp isn’t a terrible business, but it doesn’t pass our quality test. To kick things off, its revenue growth was weak over the last five years. And while its expanding net interest margin shows its loan book is becoming more profitable, the downside is its net interest margin limits its operating profit potential compared to other banks that can earn more, all else equal.. On top of that, its net interest income growth was weak over the last five years.

KeyCorp’s P/B ratio based on the next 12 months is 1.3x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $23.96 on the company (compared to the current share price of $20.87).