KeyCorp (NYSE:KEY) Q2 2024 Earnings Conference Call July 18, 2024 9:00 AM ET

Company Participants

Brian Mauney – Director, IR
Christopher M. Gorman – Chairman and CEO
Clark H. I. Khayat – CFO

Conference Call Participants

Ebrahim Poonawala - Bank of America Securities
Robert Siefers - Piper Sandler
Kenneth Usdin - Jefferies
Erika Najarian - UBS
Gerard Cassidy - RBC Capital Markets
John Pancari - Evercore ISI
Matthew O'Connor - Deutsche Bank
Manan Gosalia - Morgan Stanley
Steven Alexopoulos - J.P. Morgan
Michael Mayo - Wells Fargo Securities
Peter Winter - D.A. Davidson

Operator

Good morning and welcome to KeyCorp’s Second Quarter 2024 Earnings Conference Call. As a reminder this conference is being recorded. I would now like to turn the conference over to the Head of Investor Relations Brian Mauney. Please go ahead.

Brian Mauney

Thank you, operator, and good morning, everyone. I’d like to thank you for joining KeyCorp’s second quarter 2024 earnings conference call. I’m here with Chris Gorman, our Chairman and Chief Executive Officer; and Clark Khayat, our Chief Financial Officer.

As usual, we will reference our earnings presentation slides, which can be found in the Investor Relations section of the key.com website. In the back of the presentation, you will find our statement on forward-looking disclosures and certain financial measures, including non-GAAP measures. This covers our earnings materials as well as remarks made on this morning’s call. Actual results may differ materially from forward-looking statements and those statements speak only as of today, July 18, 2024, and will not be updated. With that, I will turn it over to Chris.

Christopher M. Gorman

Thank you, Brian. I'm on Slide 2. This morning, we reported earnings of $237 million or $0.25 per share, which is down $0.02 from the year ago quarter, but up $0.05 sequentially. On a quarter-over-quarter basis, revenue was essentially flat as we offset the expected pullback in investment banking fees from a record-first quarter with growth across the balance of the franchise. Expenses remained well-controlled, and credit costs were stable. Importantly, we continued to deliver on our clearly defined path to enhanced profitability as we detailed a little over a year ago.

Net interest income grew from what we continue to believe will be this cycle's low in the first quarter, and we remained confident in our ability to deliver on our NII commitments for both the full year 2024, as well as the fourth quarter exit rate. Deposit value creation continues to be a positive story for Key. This quarter deposits grew by 1% sequentially, while the pace of increase in deposit costs continued to decelerate. Additionally, non-interest bearing deposits stabilized at 20% of total deposits. We were also pleased to see client deposits up 5% year-over-year. Consumer relationship households are up 3.3% annualized year-to-date. Finally, we continue to be very disciplined with respect to pricing. Our cumulative deposit data stands at 53% since the Fed began raising interest rates.