KeyCorp (KEY) Stock Forecast & Price Target

KeyCorp reported a 3.7% quarter-over-quarter increase in net interest income, rising to $1.193 billion, aided by a 9 basis point improvement in the net interest margin, demonstrating effective balance sheet management. The bank also experienced a notable 19% year-to-date increase in investment banking revenues, reaching $353 million, highlighting its strong performance in capital markets despite muted M&A activity. Additionally, KeyCorp's tangible common equity (TCE) ratio increased to 8.06%, and its common equity tier 1 (CET1) ratio improved to 10.3%, signaling a strengthened capital position that supports continued growth prospects.

KeyCorp's financial performance indicates concerns, particularly with significant declines in key segments such as Consumer, Commercial Real Estate (CRE), and lease financing, which collectively reduced revenues by over $1 billion, although marginal growth was observed in Commercial and Industrial (C&I) lending. The company's projected total revenue for 2026 has been slightly lowered to $7.933 billion, reflecting a reduction in expected average loan growth and fee income, which highlights potential challenges in maintaining revenue streams. Additionally, a downside scenario raises the risk of lower earnings, increased credit losses, and slower loan growth, particularly if a recession occurs in 2026, underlining the potential vulnerabilities in KeyCorp's financial outlook.