Introduction#
KeyCorp (NYSE: KEY recently displayed a striking financial contrast in its latest fiscal results, revealing a sharp reversal from prior profitability to a net loss of $161 million in 2024. This shift marks a significant pivot from the $967 million net income reported in 2023, underscoring the challenges facing the regional banking sector and the importance of strategic initiatives such as KeyCorp's recent technological investments. Despite this setback, KeyCorp maintains a market capitalization near $19.6 billion and a stable share price around $17.91, reflecting cautious investor confidence ahead of its next earnings announcement scheduled for July 22, 2025.
Professional Market Analysis Platform
Unlock institutional-grade data with a free Monexa workspace. Upgrade whenever you need the full AI and DCF toolkit—your 7-day Pro trial starts after checkout.
The timing of this financial downturn coincides with KeyCorp's launch of KeyTotal AR™, a predictive accounts receivable platform powered by Versapay, signaling a strategic pivot towards leveraging technology to enhance operational efficiencies and revenue streams in a competitive banking environment.
Financial Performance Overview#
KeyCorp’s financial trajectory from 2021 through 2024 reveals a marked decline in profitability and revenue, with revenue dropping from $10.23 billion in 2023 to $9.05 billion in 2024, a decrease of approximately -11.48% (Monexa AI). This revenue contraction was accompanied by a gross profit margin decline from 55.98% in 2023 to 44.82% in 2024, reflecting pressures on cost of revenue and operational efficiency.
Monexa for Analysts
Go deeper on KEY
Open the KEY command center with real-time data, filings, and AI analysis. Upgrade inside Monexa to trigger your 7-day Pro trial whenever you’re ready.
Operating income swung from a positive $1.16 billion in 2023 to a loss of $306 million in 2024, with the net income ratio turning negative at -1.78% in 2024 compared to 9.45% the previous year. These figures highlight the significant operational challenges KeyCorp is facing, including increased operating expenses and possibly higher credit costs or loan loss provisions, common in the current economic climate for regional banks.
Key Financial Metrics (FY 2024 vs FY 2023)#
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Revenue | $9.05B | $10.23B | -11.48% |
| Gross Profit | $4.06B | $5.73B | -29.11% |
| Operating Income | -$306MM | $1.16B | Negative |
| Net Income | -$161MM | $967MM | Negative |
| Gross Profit Margin | 44.82% | 55.98% | -11.16 pts |
| Operating Margin | -3.38% | 11.34% | -14.72 pts |
| Net Margin | -1.78% | 9.45% | -11.23 pts |
Source: Monexa AI
Dividend Sustainability Amid Profitability Challenges#
Despite the recent net loss, KeyCorp continues to maintain its dividend payments, currently yielding approximately 4.58% with a payout ratio exceeding 3800%. This unusually high payout ratio signals a disconnect between earnings and dividend distributions, raising questions about long-term dividend sustainability if profitability does not rebound.
Historically, KeyCorp has shown a more balanced dividend payout approach. For context, its five-year dividend growth rate stands at 0%, indicating a pause in dividend increases despite earnings volatility. This conservative stance contrasts with peers like Regions Financial, which has demonstrated more aggressive dividend growth.
The bank's capital adequacy remains robust, with a total stockholders' equity of $18.18 billion and strong liquidity positions, including $1.74 billion in cash and cash equivalents and $22.51 billion in cash and short-term investments as of year-end 2024. This liquidity cushion supports ongoing dividend payments and operational needs despite earnings pressure.
Strategic Investment: KeyTotal AR and Tech-Driven Growth#
A notable development is KeyCorp’s launch of KeyTotal AR™, a predictive accounts receivable platform powered by Versapay. This initiative aims to modernize cash flow management for middle-market clients by automating invoicing and cash application, potentially reducing operational costs by up to 50% for customers.
By integrating AI and machine learning capabilities, KeyTotal AR enhances accuracy and efficiency in accounts receivable processes, positioning KeyCorp to attract and retain a tech-savvy client base and diversify its revenue streams beyond traditional lending. This aligns with broader industry trends where regional banks are investing in fintech solutions to remain competitive against larger institutions and non-bank fintech entrants.
Earnings Outlook and Analyst Projections#
Looking forward, analysts forecast a recovery in KeyCorp's earnings with estimated revenues growing from $7.37 billion in 2025 to $8.27 billion by 2027. Correspondingly, EPS is projected to increase from $1.44 in 2025 to nearly $1.99 in 2027, reflecting expected margin improvements and operational efficiencies from strategic initiatives like KeyTotal AR.
KeyCorp’s recent earnings beats, including a 3.1% upside in Q1 2025 EPS ($0.33 actual vs. $0.32 estimate), reinforce confidence in the bank’s ability to execute its turnaround strategy amid challenging macroeconomic conditions.
Analyst EPS and Revenue Estimates#
| Year | Estimated Revenue | Estimated EPS | Analysts Covering |
|---|---|---|---|
| 2025 | $7.37B | $1.44 | 10 (Revenue), 16 (EPS) |
| 2026 | $7.88B | $1.74 | 12 (Revenue), 17 (EPS) |
| 2027 | $8.27B | $1.99 | 7 (Revenue), 9 (EPS) |
Source: Monexa AI
Competitive Landscape and Market Position#
KeyCorp holds a significant position in the regional banking sector, leveraging its extensive branch network and diversified loan portfolio concentrated in the Midwest and Northeast. Compared to peers like Huntington Bancshares and Regions Financial, KeyCorp’s moderate dividend yield (~4.58%) and strategic tech investments distinguish it as a hybrid between traditional banking and fintech innovation.
The bank’s debt-to-equity ratio remains moderate at 0.78x, signaling prudent leverage management, while its current ratio of 0.15x suggests a low level of current assets relative to current liabilities, a common characteristic in banking given the nature of their balance sheets.
What Does This Mean for Investors?#
KeyCorp's recent financial results reveal a temporary setback in profitability but also highlight a strategic pivot towards technology-driven solutions aimed at enhancing operational efficiency and client service. The sustained dividend payments amid net losses suggest management’s commitment to shareholder returns, supported by strong capital reserves.
Investors should monitor upcoming earnings announcements and the impact of KeyTotal AR adoption on revenue diversification and margin expansion. The bank’s ability to improve profitability while maintaining dividend sustainability will be critical for its valuation and market positioning.
Key Takeaways#
- KeyCorp reported a net loss of $161 million in 2024, marking a significant earnings decline from 2023.
- Revenue decreased by -11.48% in 2024, with gross and operating margins contracting notably.
- Dividend yield remains attractive at 4.58%, but the payout ratio is unsustainably high at over 3800%, reflecting the earnings shortfall.
- Strong liquidity and capital adequacy support dividend payments and operational flexibility.
- Launch of KeyTotal AR represents a strategic investment in technology to boost revenue and operational efficiency.
- Analysts forecast EPS growth to nearly $2.00 by 2027, signaling expected financial recovery.
- Competitive positioning balances traditional banking strengths with fintech innovation, differentiating KeyCorp in the regional banking space.
Conclusion#
KeyCorp’s latest financial update underscores the challenges regional banks face amid economic headwinds but also illustrates management’s strategic response through innovation and technology. The bank’s ability to navigate profitability pressures while maintaining shareholder returns and investing in growth initiatives will be pivotal in defining its future trajectory. Investors should weigh the current earnings volatility against the promising outlook driven by KeyTotal AR and anticipated earnings recovery.
Sources: