KeyCorp (KEY): Strategic NIM Expansion—Will Weak Loan Demand Be the Achilles’ Heel in 2025?

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KeyCorp’s Q4 2024 results showcased strong execution, with Adjusted EPS of $0.38 rising 52% YoY, driven by a 14% increase in net interest income (NII) to $1.06 billion and a 34-basis-point NIM expansion to 2.41%. Strategic repositioning, including the Scotiabank $2 billion investment and reduction of low-yielding assets by 50%, positions the bank for sustained growth, with management guiding 20% NII growth in 2025. Investment banking fees surged 60% YoY to $221M, while record wealth AUM of $61.4B and accelerated client acquisitions in the mass affluent segment underscore Key’s ability to scale fee-based revenues. However, persistent soft loan demand remains a headwind, with average loans down 8% YoY in Q4 and 2025 guidance forecasting a 2%-5% decline in loan balances, primarily from consumer loan runoff. Tailwinds include proactive credit migration, disciplined deposit cost management, and progress in tech modernization, with a planned 10% increase in tech spend to $900M in 2025. While KeyCorp’s top-quartile CET1 ratio of 12% provides flexibility for capital allocation, risks tied to muted loan demand and deposit competition could weigh on near-term growth. Can KeyCorp’s strategic focus on fee-based revenues and balance sheet optimization offset weak loan demand to drive long-term growth and profitability?

Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures

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