KeyCorp reported its financial performance for the third quarter of 2024, highlighting a mixed outlook amid strategic repositioning and market challenges. The company experienced a 4% year-over-year increase in client deposits, reaching $150.4 billion, while net new relationship household growth was 3.5% annualized year-to-date. However, average loans for the full year are projected to decline by 7% to 8% compared to 2023, primarily due to a significant decrease in commercial and consumer loans.
Net interest income on a taxable-equivalent basis (TE) for Q3 2024 was $964 million, reflecting a $41 million increase from the previous year, with a net interest margin of 2.17%, up 16 basis points. This increase was attributed to the reinvestment of proceeds from maturing securities into higher-yielding investments and a shift from higher-cost wholesale borrowings to lower-cost deposits. However, for the nine months ended September 30, 2024, net interest income (TE) decreased by $266 million to $2.7 billion, driven by lower loan balances and higher deposit costs.
KeyCorp's noninterest income for Q3 2024 reported a net loss of $269 million, a stark contrast to the $643 million in net income for the same period in 2023. This decline was significantly impacted by a $918 million loss on the sale of securities as part of a strategic repositioning of its investment portfolio, which involved selling approximately $7 billion in low-yielding mortgage-backed securities.
The company’s total assets as of September 30, 2024, were $187.9 billion, down from $192.7 billion a year earlier. The Common Equity Tier 1 ratio improved to 10.8%, up 100 basis points from the previous year, indicating a stronger capital position. KeyCorp's net income attributable to common shareholders for Q3 2024 was $86 million, compared to $65 million in Q3 2023.
Strategically, KeyCorp entered into an Investment Agreement with Scotiabank, which involved a minority investment of approximately $2.8 billion, representing about 14.9% pro forma common stock ownership. The initial purchase of approximately $821 million was completed on August 30, 2024, with the final purchase expected in Q1 2025, pending regulatory approval.
Overall, while KeyCorp has made strides in deposit growth and capital ratios, it faces challenges with declining loan balances and significant losses in noninterest income due to strategic repositioning efforts.
About KEYCORP /NEW/
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