Should Improved Credit Quality and Earnings Recovery Require Action From KeyCorp (KEY) Investors?

• KeyCorp reported strong third-quarter 2025 results, with net interest income rising to US$1.18 billion and net income reaching US$489 million, compared to a net loss a year earlier.
• Lower net loan charge-offs for the quarter highlighted an improvement in credit quality, supporting the company's overall financial recovery.
• We'll now explore how the improved loan charge-off figures may affect KeyCorp's investment narrative and earnings outlook.

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KeyCorp Investment Narrative Recap

To be a shareholder in KeyCorp, you need to believe in the company’s ability to maintain improving credit quality and grow its earnings primarily through higher net interest income, even as competition and fluctuating loan demand remain inherent risks. This quarter’s drop in net loan charge-offs signals better asset quality, but it does not fundamentally change the fact that the most important short-term catalyst is still the sustainability of margin improvement, and the biggest risk continues to be the threat of weakening loan demand in a competitive market.

The most relevant recent announcement is the reported decline in net loan charge-offs to US$114 million in Q3 2025, down significantly from US$154 million a year ago. This improvement in credit costs directly supports the positive earnings recovery and underpins optimism around asset quality, which will be key if net interest income tailwinds continue to drive profitability higher over the near term.

In contrast, investors should also be aware of potential risks associated with tepid loan demand and pressure on net interest income in the quarters ahead if …

Read the full narrative on KeyCorp (it's free!)

KeyCorp's narrative projects $7.7 billion revenue and $2.4 billion earnings by 2027. This requires 10.5% yearly revenue growth and a $1.68 billion earnings increase from $716.0 million today.

Uncover how KeyCorp's forecasts yield a $21.65 fair value, a 24% upside to its current price.

Exploring Other Perspectives

Three Simply Wall St Community fair value estimates for KeyCorp range from US$21.58 to US$32.31 per share, illustrating varied market outlooks. Keep in mind, these opinions contrast with ongoing concern about lower loan demand potentially pressuring earnings, so it is wise to review several viewpoints before making a decision.

Explore 3 other fair value estimates on KeyCorp - why the stock might be worth just $21.58!

Build Your Own KeyCorp Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your KeyCorp research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free KeyCorp research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate KeyCorp's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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