KeyCorp Tracking (mostly) as expected

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KeyCorp Tracking (mostly) as expected

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KeyCorp

Tracking (mostly) as expected

Reiterate Rating: BUY | PO: 26.00 USD | Price: 22.95 USD

NIM compression weighs, FY27e EPS $2.15 unchanged 22 July 2026

KEY reported 2Q26 EPS of $0.44, beating BofA/cons est of $0.42, as lower credit Equity

provisions and strong expense discipline more than offset slightly softer revenues. NIM

+2bp QoQ to 2.89%, well below BofA/cons +8bp/+7bp, which likely drove today's stock

Key Changesunderperformance in a quarter dominated by margin sensitivity. However, management

raised FY26 avg loan growth guidance to 4-5% (vs 2-4% prior) and increased its FY26 (US$) Previous Current

NII growth outlook to 9-11% (vs 9-10% prior), highlighting stronger commercial activity 2026E Rev (m) 8,065.6 8,044.6

and confidence in NII despite weaker margin expansion. No material changes to our EPS 2027E Rev (m) 8,586.8 8,640.2

forecast for FY26/27e at $1.82/$2.15 respectively. 2028E Rev (m) 8,923.5 8,885.4

2026E EPS 1.83 1.82

Capex momentum surfacing, but tempered 2028E EPS 2.50 2.40

We view KEY as one of the better positioned regional banks to benefit from improving

commercial activity and middle-market capital formation. Some of this is evident in the Ebrahim H. Poonawala

reported results and management’s 2H26 outlook, highlighting robust commercial ResearchBofAS Analyst

pipelines, and broad-based commercial loan demand. This drove an increase in FY26 avg +1 646 743 0490

loan growth guidance to 4-5% vs 2-4% previously. However, slower middle-market ebrahim.poonawala@bofa.com

investment banking (IB) activity is tempering fee revenue growth (IB fees -5% YoY) as BrandonResearch AnalystBerman

sponsor-exits remain muted (accounts for 40% of its business). This has taken away a BofAS

+1 646 855 3933