KeyCorp (KEY) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 20, 2023 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to KeyCorp's Second Quarter 2023 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to the Chairman and CEO, Chris Gorman. Please go ahead.

Chris Gorman

Thank you for joining us for KeyCorp's Second Quarter 2023 Earnings Conference Call. Joining me on the call today are Clark Khayat, our Chief Financial Officer; and Mark Midkiff, our Chief Risk Officer.

On Slide 2, you will find our statement on forward-looking disclosure and certain financial measures, including non-GAAP measures. These statements cover our presentation materials and comments as well as the question-and-answer segment of our call.

I am now moving to Slide 3. Before Clark covers our quarterly earnings results, I want to discuss our strategic priorities and cover the fundamental strengths of our businesses, which continue to perform well despite the challenging operating environment.

In our Consumer Bank, we're growing relationship households at an annualized rate of 5%, consistent with our Investor Day target. Our strongest growth continues to be in the West, driven by younger clients. We have also experienced strong growth in wealth management with double-digit year-over-year growth in asset management sales.

In our Commercial business, we continue to add and expand relationships through our integrated commercial and investment bank. Our ability to distribute risk serves us well and importantly, serves our clients well through all market conditions. This quarter, we raised $25 billion of capital for our clients, placing 18% of the capital raised on our balance sheet. This is down significantly from the 30% we placed on our balance sheet last quarter. Although capital markets remain challenged, our pipelines are solid. On a year-to-date basis, our M&A revenue is up from the first half of 2022. We expect investment banking fees to be up in the second half of the year.

One common theme across our franchises are long-standing strategic commitment to Primacy, having our clients' primary operating account, whether it's an individual or a business. Our focus on primacy is reflected in the quality and diversity of our deposit base. Nearly 60% of our deposits are from retail, small business, wealth and escrow accounts. 80% of our commercial balances are core operating accounts. Further, 97% of our total commercial deposits are from our relationship clients. Importantly, these are long-standing relationships. On average, our retail clients have been clients of key for over 20 years and on average, our commercial clients for over 15 years.