Earnings call transcript: KeyCorp tops profit forecasts in Q3 2026 as shares rise

KeyCorp reported third-quarter 2026 earnings that exceeded profit forecasts, sending shares higher in premarket trading. The Cleveland-based bank posted adjusted earnings of $0.51 a share, surpassing the $0.46 expected by analysts. Revenue for the quarter reached $2.04 billion, slightly below the $2.05 billion forecast. In preprovision net revenue, the bank reached record levels, up $60 million sequentially.

Return on tangible common equity increased to 15.1%, showing stronger profitability. Net interest margin expanded to 2.95%, driven by higher asset yields and deposit management. KeyCorp repurchased $320 million of common stock during the quarter. The bank attributed its success to its relationship-based banking model and growth across commercial lending, deposits, and fee businesses.

The quarter reflected solid activity in investment banking, commercial payments, and wealth management, which grew 12% from the previous year. KeyCorp's stock is currently undervalued, with a Fair Value estimate indicating potential upside. Trading at a P/E ratio of 11.64, the stock is positioned among undervalued financial stocks.

The results suggest KeyCorp benefits from a mix of loan growth, stable credit quality, and disciplined funding. Revenue for the quarter grew 8% year-over-year, slightly below the $2.05 billion forecast, while earnings per share increased 24% year-over-year and beat forecasts. The bank's outlook remains positive, with expectations of record revenue and earnings growth in 2027.