KeyCorp: 3 Key Takeaways for Long-Term Investors

On its third quarter 2026 earnings call, held on Oct. 20, 2026, KeyCorp (NYSE:KEY) reported third quarter earnings of $0.51 per share, up 24% year over year. The bank generated return on tangible common equity (ROTCE), a key measure of profitability, of 15.1%, up 260 basis points year over year. It expanded net interest margin (NIM), the difference between interest earned and paid, by six basis points sequentially to 2.95%. Three takeaways from management explain this performance.

1. Commercial Borrowers Are Increasing Line Utilization To Invest In Growth

Commercial and industrial (C&I) loan balances expanded as commercial clients drew down credit lines for capital expenditures and small acquisitions.

Period-end C&I loans increased 5% sequentially, reflecting both new client acquisition and a 200 basis point increase in line utilization to 33%, the highest level in over three years.
-- Chris Gorman, Chairman and Chief Executive Officer

2. Strong Client Deposit Growth Is Replacing Wholesale Funding

Client deposit growth outpaced loan expansion in the third quarter, allowing KeyCorp to reduce wholesale borrowing and contain funding costs.

Last quarter, we communicated expectations for $3 billion or more of client deposit growth in the second half of 2026, and based on the growth in the third quarter, we have nearly achieved that. While we continue to monitor deposit dynamics in a higher rate environment, we now expect incremental client deposit growth beyond the original $3 billion, and we expect our loan growth for the remainder of 2026 to be fully client deposit funded.
-- Clark Khayat, Chief Financial Officer and Head of Technology

3. Artificial Intelligence Deployment Targets Core Operational Processes

KeyCorp is deploying artificial intelligence (AI) tools across commercial onboarding, originations, consumer servicing, and software engineering to boost productivity.

The confluence of well-understood processes with supporting data and an opportunity to reimagine client and employee experiences is proving to be a valuable recipe for AI tools. We are still early in the process but are optimistic that we can generate growth and efficiency while improving risk and controls.
-- Clark Khayat, Chief Financial Officer and Head of Technology

Looking Ahead

Revenue and pre-provision net revenue (PPNR), which measures earnings before taxes and credit loss provisions, are on pace for record levels in 2026. Management relies on fixed-asset repricing and core deposit growth to maintain long-term top-line momentum.

With our strong trajectory and healthy pipelines, I believe we are well positioned to drive another year of outsized revenue and earnings growth in 2027.
-- Chris Gorman, Chairman and Chief Executive Officer

Fixed-asset repricing and deposit gathering remain the primary drivers for achieving KeyCorp's long-term profitability targets.

The most important target we have out there for the fourth quarter 2027 is delivering 15%+ ROTCE. Based on what we are seeing today and the performance we are delivering, we remain highly confident we are going to achieve that.
-- Clark Khayat, Chief Financial Officer and Head of Technology

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