KeyBank Reports Record Revenue and Expects Further Loan Growth

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CLEVELAND, Ohio — KeyBank on Thursday reported record full-year and fourth-quarter revenue and beat analysts’ expectations.

The Cleveland-based bank reported annual revenue of $7.29 billion, down from $6.72 billion in 2020. Net income was $2.63 billion, down from $1.34 billion dollars in 2020. The company said annual revenue was a record.

Fourth quarter revenue was $1.95 billion, compared to $1.85 billion in the last quarter of 2020.

Earnings per share in the fourth quarter were 64 cents, beating analysts’ expectations of 56 cents, according to the stock analyst website. Looking for Alpha.

CEO Chris Gorman said on an investor call Thursday morning that there had been strong momentum – in both consumer and commercial lending.

The company is also seeing growth among those under 30, and its digital banking brand, Laurel Road, is doing well, Gorman said. And the company is also seeing growth in its investment banking business and the fees it generates, said Don Kimble, vice president and chief financial officer.

Key benefited from less bad debt and less bad credit, likely because consumers saved more money from COVID-19 stimulus. Non-performing loans, which are loans that are unlikely to be repaid in full, are down 42% from the same period last year. Net write-offs, which are debts that are unlikely to be collected, now represent less than a tenth of a percent of average loans.

Both types of bad debt represent small parts of the bank’s portfolio.

Gorman said the bank expects consumer trends to normalize in 2022 or later, with delinquency rates returning to normal. The bank now has $5 billion more in consumer deposits than before the pandemic, showing that consumers still have cash.

He added that the bank also expects an increase in commercial lending. Right now, companies are using 27% of their allocated credit, historically they’re using about 35%, he said. Gorman said he expects companies to use more credit as supply chain issues ease, predicting they will fill inventory when possible.

KeyBank is also targeting renewable energy and affordable housing as areas for more commercial lending.

In its 2022 forecast, the company said it expects lending to grow in the double digits, excluding the impact of paycheck protection loans that are being forgiven.

Deposits will grow by around 1% to 3%, the bank predicts. It also predicts that revenue will grow at a slow and steady pace.

KeyBank, like many other companies, is seeing increased expenses due to rising salaries. Gorman said starting salaries were on average 40% higher than five years ago and the company had 10% more senior bankers than a year ago.

Asked by an analyst, Gorman said KeyBank would continue to invest profits in the business, rather than just increasing the bottom line.

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