Executive Summary

Q1 2025 delivered positive operating leverage with net income of $370M and diluted EPS of $0.33 from continuing operations; total revenue (TE) rose 15.7% YoY to $1.77B and NIM improved 17 bps QoQ to 2.58% .
Versus S&P Global consensus, EPS modestly beat ($0.33 vs $0.317*) while revenue came in below ($1.646B actual vs $1.748B estimate*); estimates are based on S&P Global’s revenue definition, which differs from company TE disclosures. Values retrieved from S&P Global*.
Credit trends improved: nonperforming loans declined 9% QoQ and NCOs were stable at 0.43% of average loans; allowance coverage ratios increased QoQ .
Guidance unchanged: management reiterated FY2025 NII up ~20%, exit-Q4 NIM ≥2.70%, adjusted fees +5%+, GAAP tax rate ~21–22%, NCOs ~40–45 bps, and announced a $1.0B share repurchase program intended to begin in 2H 2025 .
Strategic catalysts: record first-quarter investment banking fees ($175M), deposit betas improving (~46% cumulative through Q1), and countercyclical CRE servicing momentum support near-term earnings trajectory amid macro uncertainty (tariffs-driven pause) .

What Went Well and What Went Wrong

What Went Well

Net interest income and margin expanded: NII (TE) +4% QoQ to $1.105B; NIM up 17 bps to 2.58%, driven by portfolio repositioning, lower funding costs, and redeployment into higher-yielding assets .
Fee momentum and diversification: record first-quarter investment banking fees ($175M); service charges +10% YoY; commercial mortgage servicing fees +36% YoY, reflecting targeted-scale, countercyclical businesses .
Credit quality improved: NPLs down to $686M (0.65% of loans) from $758M; allowance coverage to NPLs rose (ACL/NPLs 249% vs 224% in Q4) .

Management quotes:

“We enjoy strong earnings and business momentum and clearly defined net interest income tailwinds.” — CEO Chris Gorman .
“Deposit betas continue to come in stronger than expected, reaching 46% through the first quarter and closer to 50% through March.” — CFO Clark Khayat .
“Commercial mortgage servicing fees were a record and grew approximately 36% year-over-year… an excellent example of our targeted scale strategy.” — CFO Clark Khayat .

What Went Wrong

S&P Global revenue miss: actual revenue $1.646B* versus $1.748B* consensus; note S&P’s definition differs from company TE reporting. Values retrieved from S&P Global*.
Investment banking sequential decline from Q4: IB fees fell to $175M from $221M QoQ amid market pause tied to tariff uncertainty .
Provision increased QoQ to $118M (vs $39M), reflecting qualitative reserve build for macro uncertainty despite improving migration; NCOs remained 0.43% .

Analyst concerns:

Macro/tariff uncertainty versus unchanged 20% NII guide; management emphasized built-in tailwinds, balanced sheet actions, and scenario planning, but acknowledged near-term fee softness risk if pause persists .
CRE charge-offs elevated on two names; management noted portfolio health improving overall, but single-name resolution can distort quarterly ratios .

Financial Results

Core P&L and Margin Metrics (Continuing Operations)

Metric	Q1 2024	Q4 2024	Q1 2025
Total Revenue (TE) ($USD Billions)	$1.533	$0.865	$1.773
Net Interest Income (TE) ($USD Billions)	$0.886	$1.061	$1.105
Noninterest Income ($USD Billions)	$0.647	$(0.196)	$0.668
Provision for Credit Losses ($USD Billions)	$0.101	$0.039	$0.118
Noninterest Expense ($USD Billions)	$1.143	$1.229	$1.131
Diluted EPS – Continuing Ops ($USD)	$0.20	$(0.28)	$0.33
Net Interest Margin (TE) (%)	2.02%	2.41%	2.58%
ROTCE from Continuing Ops (%)	7.87%	(9.69)%	11.24%

Notes: TE = Taxable Equivalent.

Balance Sheet and Credit KPIs

KPI	Q1 2024	Q4 2024	Q1 2025
Average Loans ($USD Billions)	$111.034	$104.711	$104.354
Average Deposits ($USD Billions)	$142.878	$149.733	$148.542
Cost of Total Deposits (%)	2.20%	2.18%	2.06%
Net Loan Charge-offs ($USD Millions)	81	114	110
NCOs / Avg Loans (%)	0.29%	0.43%	0.43%
Nonperforming Loans ($USD Millions)	658	758	686
ACL / Period-end Loans (%)	1.66%	1.63%	1.63%
CET1 Ratio (%)	10.3%	11.9%	11.8%

Segment Breakdown

Metric	Q1 2024	Q4 2024	Q1 2025
Consumer Bank Revenue (TE) ($USD Millions)	757	872	874
Commercial Bank Revenue (TE) ($USD Millions)	798	999	942
Other Revenue (TE) ($USD Millions)	(22)	(1,006)	(43)
Consumer Bank Net Income ($USD Millions)	41	88	118
Commercial Bank Net Income ($USD Millions)	205	379	321
Other Net Income ($USD Millions)	(27)	(711)	(33)

Actual vs Wall Street Consensus (S&P Global)

Metric	Consensus (Q1 2025)	Actual (Q1 2025)	Surprise
EPS ($USD)	0.317*	0.33*	+$0.013 (Beat)*
Revenue ($USD Billions)	1.748*	1.646*	-$0.102 (Miss)*

Values retrieved from S&P Global*. S&P “Revenue” definition may differ from company TE totals.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Income (TE) growth	FY2025	~+20% vs FY2024	~+20% vs FY2024	Maintained
NIM (TE)	Q4 2025 exit	≥2.70%	≥2.70%	Maintained
Adjusted Fees	FY2025	+5% or better	+5% or better	Maintained
NII Q4 exit vs Q4 2024	Q4 2025	≥+10%	≥+10%	Maintained
NCOs / Avg Loans	FY2025	~40–45 bps	~40–45 bps	Maintained
GAAP Tax Rate	FY2025	~21–22%	~21–22%	Maintained
TE Effective Rate	FY2025	~23–24%	~23–24%	Maintained
Share Repurchases	Program	Not in prior quarter	$1.0B authorization; intends to begin in 2H 2025	New program

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Portfolio repositioning/NII tailwinds	Executed $7B AFS repositioning in Q3 and $3B in Q4; NII up QoQ; CET1 improved	Continued tailwinds: NII +4% QoQ; NIM +17 bps; guidance unchanged	Positive, sustained
Investment banking pipelines	Near-record pipelines; Q4 IB fees strong ($221M)	Record Q1 IB fees ($175M), but tariff-related pause may impact Q2 timing	Mixed near-term; robust medium-term
Deposit betas/funding mix	Deposit growth and reduced wholesale borrowings	Interest-bearing deposit costs -18 bps QoQ; cumulative beta ~46% through Q1, ~50% in March	Improving
Credit quality/CRE exposure	NPLs/NCOs up in Q3; stabilization noted in Q4	NPLs down 9% QoQ; NCOs steady; reserve build for macro uncertainty	Stabilizing to improving
Tariffs/macro uncertainty	Not a driver in 2024 narratives	Clients pausing transactional activity; scenario planning; targeted exposure review	Heightened uncertainty
Capital/Buybacks	CET1 strengthened; Scotiabank minority investment completed	CET1 11.8%; $1B buyback intended 2H25; marked CET1 ~9.9% target 9.5–10%	Supportive for capital returns

Management Commentary

“Sequentially, net interest income grew 4% and the net interest margin increased by 17 basis points to 2.58%… Credit quality remained strong.” — Chris Gorman (CEO) .
“Provision… included $110M of net charge-offs and an $8M reserve build… we added reserves to account for… macro uncertainty.” — Clark Khayat (CFO) .
“Our 2025 guidance remains unchanged… we continue to expect to deliver 20% net interest income growth this year.” — Clark Khayat (CFO) .
“Having excess capital is a luxury… It enables us to support clients and take advantage of dislocations.” — Chris Gorman (CEO) .

Q&A Highlights

Macro/tariff vs guidance: Analysts questioned maintaining +20% NII amid uncertainty; management cited hardwired NII actions in 2024, balanced sheet neutrality, and robust pipelines; acknowledged Q2 fee softness risk if pause persists but reiterated base case avoids recession .
Reserve build and stress assumptions: Management incorporated ~20% probability of a severe downturn; reserve build of $8M net despite improving migration .
C&I loan growth/utilization: Broad-based C&I growth late in quarter; utilization up ~92 bps; potential to opportunistically grow on-balance sheet amid market dislocations .
NIM path toward 3%: Drivers include commercial loan growth, remix from low-yield consumer, deposit management; risks include flat/inverted curve; 18-month horizon to approach 3% .
CRE charge-offs: Elevated due to two specific names; portfolio health improving overall .
Capital returns: Target marked CET1 9.5–10%; buybacks likely commence 2H25 subject to macro and Basel III clarity .

Estimates Context

EPS beat: $0.33 actual vs $0.317 consensus* (+$0.013).
Revenue miss: $1.646B actual vs $1.748B consensus*. Note S&P’s revenue construct for banks can differ from TE totals disclosed by the company. Values retrieved from S&P Global*.
Estimate breadth: ~16 EPS estimates and ~11 revenue estimates for Q1 2025*.
Implication: Modest EPS beat with revenue below consensus may lead to mixed revisions; management’s unchanged guidance and NIM/NII tailwinds could support EPS estimate resilience if macro conditions stabilize.

Key Takeaways for Investors

Earnings quality improved with positive operating leverage, NIM expansion, and stabilized credit; NPLs and criticized loans trended lower QoQ .
Guidance durability: Reiterated NII and NIM targets signal confidence in balance sheet actions; watch Q2 fee timing given tariff-related pause .
Capital return catalyst: $1.0B buyback slated for 2H 2025 contingent on macro/regulatory clarity; tangible book up 26% YoY provides balance sheet support .
Countercyclical fee hedge: CRE servicing strength and deposit beta improvements underpin fee and funding stability even if deal activity pauses .
Credit watch: Despite improved migration, management added qualitative reserves; monitor single-name CRE resolutions and NCO trajectory vs 40–45 bps guidance .
Segment mix: Consumer net income up materially YoY; Commercial strong but sequentially lower revenue vs Q4; ongoing remix from low-yield consumer to C&I enhances NIM .
Trading stance: Near-term volatility around macro/tariffs may affect fee cadence; medium-term setup (NII tailwinds, buybacks, credit stability) constructive if pause resolves.

Additional relevant press releases: KeyCorp announced a $1.0B share repurchase authorization (intended 2H25) ; a structured credit facility anchored by KeyBank supporting late-stage tech lending (indicative of specialty finance breadth) .

KEYCORP /NEW/ (KEY)·Q1 2025 Earnings Summary