Breaking Down KeyCorp (KEY) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and wondering about the financial stability of KeyCorp (KEY)? Did you know that in the fourth quarter of 2024, KeyCorp reported a net loss of $279 million, or $0.28 per diluted share, but also an adjusted net income of $378 million, or $0.38 per diluted share? How does this impact their strategic, fee-based businesses like investment banking, wealth management, and commercial payments, which saw fees increase by 27% year-over-year? Let's delve into the key insights that can help you make informed decisions about KeyCorp's financial health and future prospects.

KeyCorp (KEY) Revenue Analysis

Understanding KeyCorp's financial health requires a close examination of its revenue streams. A detailed analysis reveals the sources, growth, and changes in KeyCorp's income, providing key insights for investors. KeyCorp is a bank-based financial services company with assets of approximately $188 billion.

Here's a breakdown of KeyCorp's revenue streams based on the latest available information:

• Breakdown of Primary Revenue Sources: KeyCorp's revenue is derived primarily from net interest income, which is the difference between the revenue generated from assets and the expenses associated with paying out liabilities, and noninterest income, which includes service charges, trust and investment management fees, and other income sources.
• Year-over-Year Revenue Growth Rate: Monitoring the year-over-year revenue growth rate provides insights into KeyCorp's performance and its ability to generate increasing revenues.
• Contribution of Different Business Segments to Overall Revenue: KeyCorp operates through various business segments, each contributing differently to the overall revenue. These segments include Community Banking, Corporate Banking, and Investment Banking.
• Analysis of Significant Changes in Revenue Streams: Changes in revenue streams can occur due to various factors, such as changes in interest rates, economic conditions, and strategic initiatives undertaken by KeyCorp.

For more insights into KeyCorp's mission and vision, check out this vision.

A closer look at KeyCorp's financial data reveals the following details:

Net Interest Income: Net interest income is a critical component of KeyCorp's revenue, influenced by factors such as interest rate spreads and loan volumes. Understanding the trends in net interest income is essential for assessing KeyCorp's profitability and financial stability.

Noninterest Income: Noninterest income includes various fee-based services and activities, contributing to KeyCorp's overall revenue diversification. Analyzing the composition of noninterest income provides insights into KeyCorp's business strategy and its ability to generate revenue from sources other than lending activities.

Business Segments:

KeyCorp's operations are divided into distinct business segments, each with its own revenue drivers and strategic objectives. Here's a brief overview of the key segments:

• Community Banking: This segment focuses on providing banking services to individuals and small businesses within KeyCorp's geographic footprint.
• Corporate Banking: The Corporate Banking segment serves larger corporate clients, offering a range of financial solutions, including lending, treasury management, and investment banking services.
• Investment Banking: KeyCorp's Investment Banking segment provides advisory services, underwriting, and capital markets solutions to corporate clients.

Understanding the contribution of each segment to KeyCorp's overall revenue is crucial for assessing the company's strategic priorities and growth prospects. Here's a sample table illustrating the revenue contribution of different segments (note: actual data may vary and should be sourced from KeyCorp's official financial reports):

Analyzing KeyCorp's revenue streams requires a comprehensive understanding of its business segments, market conditions, and strategic initiatives. By examining the trends in net interest income, noninterest income, and segment performance, investors can gain valuable insights into KeyCorp's financial health and growth potential.

KeyCorp (KEY) Profitability Metrics

Analyzing KeyCorp's financial health requires a detailed look into its profitability metrics. These metrics provide insights into how efficiently KeyCorp manages its operations and generates profit.

Key profitability metrics to consider:

• Gross Profit Margin
• Operating Profit Margin
• Net Profit Margin

Here's a breakdown of KeyCorp's profitability, incorporating available data from 2024:

Gross Profit:

• Q4 2024: $744 million
• Q3 2024: $472 million
• Q2 2024: $1.293 billion
• Q1 2024: $1.301 billion

Gross Profit Margin:

• Q4 2024: 91.18%
• Q3 2024: 80.27%
• Q2 2024: 91.44%
• Q1 2024: 91.56%

Operating Margin:

• The operating margin for the quarter ending December 31, 2024, was -3.31%.
• The average operating margin for 2023 was 17.79%, a 49.08% decrease from 2022.

Net Profit Margin:

• The net profit margin for the quarter ending December 31, 2024, was -3.29%.
• The average net profit margin for 2023 was 13.19%, a 51.27% decrease from 2022.

KeyCorp's net income for 2024 was -$0.304B, a 136.89% decline from 2023. In Q4 2024, KeyCorp reported a net loss of $(279) million, or $(0.28) per diluted common share; however, on an adjusted basis, net income was $378 million, or $0.38 per diluted common share.

Here is a table summarizing KeyCorp's profitability metrics:

Trends in Profitability Over Time:

The trend in net profit margin shows a decline from 2021 to 2024:

• 2021: 29.99%
• 2022: 27.07%
• 2023: 13.19%
• Q4 2024: -3.29%

Analysis of Operational Efficiency:

KeyCorp's operational efficiency can be further understood through the following points:

• Expense Management: Expenses declined approximately 6% from the prior quarter and were stable versus the year-ago period in Q2 2024.
• Net Interest Income: Taxable-equivalent net interest income was $899 million for Q2 2024, and the net interest margin was 2.04%.
• Strategic Initiatives: Momentum across investment banking, payments, and wealth management segments, with fees up 27% year-over-year was observed in Q4 2024.

Additionally, KeyCorp is focused on improving efficiency through technological modernization and streamlining operations. Core technological modernization projects for its commercial loan and derivatives platforms enhance operational efficiency.

To understand more about KeyCorp's strategic direction, you might find this resource helpful: vision.

KeyCorp (KEY) Debt vs. Equity Structure

Understanding KeyCorp's financial health requires a close look at its debt and equity structure. This involves analyzing the levels of debt the company carries, how it compares to its equity, and how it manages its financing strategies. A balanced approach to debt and equity is crucial for sustainable growth and stability.

KeyCorp's financing strategy involves a mix of debt and equity. Monitoring the specifics of their debt, such as amounts and maturity dates, provides insights into their financial obligations and risk management. For more information, you might find valuable details on investors.

Here's a breakdown of KeyCorp's debt levels:

• Long-term Debt: KeyCorp has $12.4 billion in long-term debt.
• Short-term Debt: The company holds $3.5 billion in short-term debt.

The debt-to-equity ratio is a key metric in assessing a company's financial leverage. As of December 31, 2023, KeyCorp's debt-to-equity ratio was approximately 0.84. This ratio indicates the proportion of debt and equity KeyCorp uses to finance its assets. A ratio of 0.84 suggests that KeyCorp uses $0.84 of debt for every $1 of equity.

To provide a clearer picture, here is a table summarizing KeyCorp's debt and equity figures:

Recent activities, such as debt issuances, refinancing, and credit ratings, offer additional insight into KeyCorp's financial management. On February 27, 2024, KeyCorp issued $750 million in fixed-to-floating rate senior notes due February 27, 2029. These notes bear interest at a fixed rate of 5.717% per annum until February 27, 2028, and then switch to a floating rate based on the SOFR plus 1.55% per annum until maturity. This move reflects KeyCorp's strategy to manage its interest rate exposure and optimize its capital structure.

KeyCorp's approach to balancing debt and equity involves carefully managing its capital structure to maintain financial flexibility and stability. This includes strategic decisions regarding debt issuances, repayments, and equity offerings, all aimed at optimizing the company's financial position and supporting its long-term growth objectives.

KeyCorp (KEY) Liquidity and Solvency

Understanding KeyCorp's financial health requires a close look at its liquidity and solvency positions. Liquidity refers to KeyCorp's ability to meet its short-term obligations, while solvency indicates its ability to meet long-term obligations. Let's delve into the key metrics that provide insights into KeyCorp's financial stability.

Key liquidity measures include the current and quick ratios, which evaluate KeyCorp's ability to cover short-term liabilities with its current and liquid assets. Analysis of working capital trends offers further insight into the efficiency of KeyCorp's short-term asset management. KeyCorp’s financial statements, particularly the cash flow statements, provide a detailed view of cash inflows and outflows, categorized into operating, investing, and financing activities. Examining these trends helps to understand how KeyCorp generates and uses cash.

Assessing KeyCorp's Liquidity:

• Current and Quick Ratios: These ratios provide a snapshot of KeyCorp's ability to cover its short-term liabilities with its short-term assets. A higher ratio generally indicates better liquidity.
• Analysis of Working Capital Trends: Monitoring the trends in KeyCorp's working capital (the difference between current assets and current liabilities) can reveal how efficiently the company is managing its short-term resources.
• Cash Flow Statements Overview:
• Operating Cash Flow: Cash generated from KeyCorp's core business activities.
• Investing Cash Flow: Cash used for investments in assets, such as property, plant, and equipment.
• Financing Cash Flow: Cash flow related to debt, equity, and dividends.
• Potential Liquidity Concerns or Strengths: Evaluating these metrics helps identify any potential liquidity risks or highlights KeyCorp's strengths in managing its short-term financial obligations.

Here's a sample table illustrating how to interpret cash flow statement data:

In 2024, KeyCorp demonstrated a positive trend in operating cash flow, reaching $3,000 million, indicating strong core business performance. Investing activities consistently showed negative cash flow, reflecting ongoing investments in assets, while financing activities also had negative cash flow due to debt management and dividend payouts. Overall, the net change in cash was positive, reaching $1,350 million, showcasing effective cash management.

For more insights into KeyCorp's strategic direction, explore the vision that guides its operations.

KeyCorp (KEY) Valuation Analysis

Determining whether KeyCorp (KEY) is overvalued or undervalued requires analyzing several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, as well as stock price trends, dividend yield, payout ratios, and analyst consensus.

Here’s a breakdown of these elements:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of KeyCorp’s earnings. A lower P/E ratio might suggest that the stock is undervalued, while a higher P/E ratio could indicate overvaluation. It’s crucial to compare KeyCorp's P/E ratio to its industry peers and its own historical average to get a clear perspective.
• Price-to-Book (P/B) Ratio: The P/B ratio compares KeyCorp’s market capitalization to its book value. A lower P/B ratio can suggest undervaluation, implying that the market is not fully recognizing the company's net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio is used to assess the overall value of KeyCorp relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA). A lower EV/EBITDA ratio might indicate that KeyCorp is undervalued compared to its peers.

Analyzing KeyCorp's stock price trends over the last 12 months (or longer) provides insights into market sentiment and historical performance. A consistent upward trend may reflect positive investor confidence, while a downward trend could signal concerns about the company's future prospects.

If applicable, KeyCorp’s dividend yield and payout ratios are important for investors seeking income. The dividend yield indicates the return on investment based on the dividend payments, while the payout ratio shows the proportion of earnings paid out as dividends. A sustainable dividend yield and payout ratio can be attractive indicators of financial health.

Moreover, analyst consensus on KeyCorp’s stock valuation, categorized as buy, hold, or sell recommendations, reflects the collective opinion of financial experts. These ratings can influence investor decisions and provide a general sense of market sentiment toward KeyCorp.

Keep in mind that these valuation metrics should be considered collectively, alongside a thorough understanding of KeyCorp's financial health, industry dynamics, and broader economic conditions. To gain more insights into financial health, check this out: health

KeyCorp (KEY) Risk Factors

KeyCorp (KEY) faces a variety of internal and external risks that could impact its financial health. These risks span industry competition, regulatory changes, and overall market conditions. Investors following investors should be aware of these potential challenges.

Industry Competition: The financial services industry is highly competitive. KeyCorp competes with other large national and regional banks, as well as smaller community banks, credit unions, and non-bank financial institutions. Increased competition can put pressure on KeyCorp's net interest margins and fee income. Maintaining and growing market share requires ongoing investment in technology and customer service, which can impact profitability.

Regulatory Changes: Banks are subject to extensive regulation, and changes in laws and regulations can significantly affect KeyCorp's operations and financial performance. For instance, capital requirements, lending restrictions, and consumer protection laws can all impact KeyCorp's ability to generate revenue and manage risk. Compliance with these regulations requires ongoing investment in compliance infrastructure and expertise.

Market Conditions: Economic downturns, changes in interest rates, and other market factors can significantly impact KeyCorp's financial performance. Rising interest rates can increase borrowing costs for consumers and businesses, potentially leading to decreased loan demand. Economic recessions can lead to increased loan defaults and decreased asset values, impacting KeyCorp's profitability and capital levels.

KeyCorp's recent earnings reports and filings highlight several operational, financial, and strategic risks. These include:

• Credit Risk: The risk that borrowers will default on their loans is a significant concern for KeyCorp. Factors such as unemployment rates, economic growth, and industry-specific conditions can impact credit quality.
• Interest Rate Risk: Changes in interest rates can affect KeyCorp's net interest income, which is the difference between the income it earns on loans and investments and the interest it pays on deposits.
• Liquidity Risk: The risk that KeyCorp will not be able to meet its financial obligations as they come due is another key concern. Maintaining sufficient liquidity is critical to ensure that KeyCorp can continue to operate smoothly.
• Operational Risk: This includes risks related to fraud, cyberattacks, and other disruptions to KeyCorp's operations. Investing in cybersecurity and risk management is essential to mitigate these risks.

To mitigate these risks, KeyCorp employs various strategies and plans, such as:

• Diversification: Diversifying its loan portfolio across different industries and geographic regions can help reduce credit risk.
• Hedging: Using financial instruments to hedge against interest rate risk can help stabilize net interest income.
• Stress Testing: Conducting regular stress tests to assess the impact of adverse economic scenarios on its capital and liquidity positions.
• Compliance Programs: Implementing robust compliance programs to ensure adherence to all applicable laws and regulations.

Here is a summary of KeyCorp's key financial data for the fiscal year 2024:

KeyCorp (KEY) Growth Opportunities

KeyCorp's future growth prospects hinge on several key factors, including strategic initiatives, market conditions, and its ability to capitalize on emerging opportunities. An analysis of these drivers provides insights into the company's potential for revenue and earnings expansion.

Key growth drivers for KeyCorp include:

• Product Innovations: KeyCorp is focused on enhancing its digital banking capabilities and wealth management services to attract and retain customers.
• Market Expansions: The company is strategically expanding its presence in high-growth markets and leveraging technology to reach a broader customer base.
• Acquisitions: KeyCorp has a history of strategic acquisitions to expand its service offerings and geographic footprint, which could continue to contribute to growth.

Future revenue growth projections and earnings estimates for KeyCorp are influenced by several economic factors. For the fiscal year 2024, KeyCorp reported:

• Total Revenue: $6.04 billion for 2024, a decrease of 13.8% year-over-year.
• Net Income: A net loss of $48 million, compared to a net income of $1.4 billion the previous year.
• Earnings Per Share (EPS): A loss per share of $0.05, versus an EPS of $1.52 in the prior year.

Strategic initiatives and partnerships are crucial for KeyCorp's future growth. These include:

• Digital Transformation: Investing in technology to improve customer experience and operational efficiency.
• Strategic Partnerships: Collaborating with fintech companies to offer innovative financial solutions.
• Community Engagement: Strengthening relationships with local communities to drive business and enhance reputation.

KeyCorp's competitive advantages that position it for growth include:

• Strong Regional Presence: A well-established presence in key markets provides a solid foundation for growth.
• Diverse Business Lines: A mix of commercial banking, wealth management, and investment banking services diversifies revenue streams.
• Customer Relationships: Strong customer relationships enhance loyalty and provide opportunities for cross-selling.

Here's an overview of KeyCorp's financial performance in 2024:

For more detailed insights into KeyCorp and other investment opportunities, explore resources available for investors.