Keycorp · NYSE:KEY
Keycorp — Investor Presentation (February 2024)
24 slides from Keycorp's investor presentation, Feb 23, 2024
Slide 1: KeyCorp Investor Meetings: Europe
KeyCorp Investor Meetings: Europe February / March 2024 Clark Khayat Tim Schmidt Brian Mauney Vern Patterson Chief Financial Officer Corporate Treasurer Head of Investor Relations Head of Investor Relations (Retiring)
Slide 2: Forward-looking Statements and Additional Information
Forward-looking Statements and Additional Information This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, KeyCorp’s expectations or predictions of future financial or business performance or
Slide 3: Key: Strong, Resilient, and Well Positioned
Key: Strong, Resilient, and Well Positioned Strong foundation positions Key to execute on its targeted scale strategy to deliver sound, profitable growth Fundamental Strengths and Priorities 2023 Results Distinctive Strong foundation Positioned for future Business Model 10.0% +$3Bn Common Equity Inc
Slide 4: Strong Foundation: Positioned for the Future
Strong Foundation: Positioned for the Future Made significant progress in 2023 to position Key for the future and for the new environment Repositioned Company in 2023 Focused on Driving Sound, Profitable Growth ✓ Positioned balance sheet to be more resilient to changes in interest rates Earnings Pow
Slide 5: Strong Foundation: Strengthened the Balance Sheet
Strong Foundation: Strengthened the Balance Sheet Significantly Improved Funding Cost and Quality Optimized RWAs to Bolster Capital ~$12Bn Reduction in Highest-cost Funding Sources ~90 bps CET1 Build in 9 Months $ in billions 50bps 20bps 20bps Avg Cost: 6.5% (1) (1) ~$5B Remix into Core Customer Dep
Slide 6: Strong Growth Opportunities Across the Franchise
Strong Growth Opportunities Across the Franchise We have a relationship-focused business model with unique, targeted capabilities to best serve consumer and commercial clients Strong Consumer Foundation A differentiated commercial platform… Regional Trillionaire/ Boutiques Banks Global Banks 5x cumu
Slide 7: Meaningful Investment Opportunities
Meaningful Investment Opportunities We will lean into our growth opportunities across Wealth Management, Payments, Investment Banking and Business Banking Creating Investment Capacity Investment Focus Areas Capital Markets ▪ 2 Consecutive Positioned to add high-quality bankers in targeted areas as m
Slide 8: Strong Credit Quality
Strong Credit Quality Credit quality remains a clear strength Prudent Risk Culture and Portfolio Discipline ✓ Credit quality metrics outperformed the market in 2023 ✓ Improved credit risk profile with strategic exits and growth in targeted client segments ✓ Relationship business model with strong di
Slide 9: Capital
Capital Strong regulatory capital position with our primary ratio up 90 basis points YoY, well above our targeted range Common Equity Tier 1(1) Common Stock Dividend Target operating range: 9% - 9.5% 10-year CAGR: 14% Dividend Yield: 5.7%(1) $0.82 10.0% 9.8% 9.3% 9.1% 9.1% 4Q22 1Q23 2Q23 3Q23 4Q23 2
Slide 10: Positioned for the Future
Positioned for the Future Actions taken in 2023 position us to play more offense moving forward Franchise Momentum New Environment Core Funded NII Opportunity High-quality Portfolio Relationship household, client Strengths play to new regulatory Core-funded balance sheet Clearly defined net interest
Slide 11: Appendix
Appendix
Slide 12: 2024 Outlook
2024 Outlook FY 2024 Growth (vs. FY 2023) • Average Loans: down 5 - 7% | EOP Loans: relatively stable vs. YE23 balances Balance Sheet • Average Deposits: flat to down 2% • Net interest income: down 2 - 5% Net Interest Income (TE) ➢ Up low-single digits vs. 4Q23 annualized exit rate ➢ 10%+ 4Q24 vs. 4
Slide 13: Net Interest Income Outlook
Net Interest Income Outlook Tailwinds from Short-term Swaps & Treasuries Maturities(1) Maturities Schedule $ in millions; cumulative view $ in billions $219 $180 $4.9 $4.5 $140 $3.1 $3.0 $2.7 $112 $78 $1.7 $1.1 0.37% 0.33% 0.54% 0.49% 0.50% 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 2Q23 3Q23 4Q23 1Q24 2Q24
Slide 14: Net Interest Income Outlook
Net Interest Income Outlook NII & NIM Outlook Other Key Inputs & Assumptions ▪ Interest Rates: Blend of 12/31/23 and 1/5/24 forward curves ▪ Loan Balances 10%+ growth $1Bn+ − Period-end loans relatively stable (12/31/24 vs 12/31/23) 2.40 – ▪ Deposit Costs 2.50% − Deposit costs peak in 1H24 − Lag in
Slide 15: Commercial Business Loan Detail
Commercial Business Loan Detail Total Commercial Loans Targeted Industry Verticals $ in millions 12/31/23 % of total loans Commercial and industrial $ 55,815 50% Consumer Healthcare Technology Energy Commercial real estate (nonowner-occupied CRE) 14,458 13 Commercial real estate (owner-occupied CRE)
Slide 16: Consumer Business Detail
Consumer Business Detail Total Consumer Loans Wealth Management $ in billions 12/31/23 % of total loans WA FICO at origination ▪ Assets under management of $54.9Bn in 4Q23, up $3.6Bn from the year-ago period Consumer mortgage $ 20,958 19% 753 ▪ Collaborating with businesses across Key, representing
Slide 17: Commercial Real Estate
Commercial Real Estate High-quality CRE portfolio has relatively limited exposure and is diversified by property type and geography Nonowner-Occupied CRE Loan Portfolio Composition As a % Total Loans As a % Total Loans Office Highlights All banks • $0 nonowner-occupied construction >$10Bn assets All
Slide 18: Commercial Real Estate: Multifamily
Commercial Real Estate: Multifamily Business leverages our originate-to-distribute model and is a mixture of market rate and affordable housing Multifamily Portfolio Highlights Affordable Housing Loan Portfolio Highlights ▪ Diversified - no more than 4% of Multifamily Loans concentrated in any marke
Slide 19: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan charge- Allowance / Period-end Average Net loan Nonperforming Ending Allowance / offs(3) / average period-end $ in millions loans loans charge-offs loans allowance NPLs (%)(4) loans (%)(4) loans (%)(4) 12/31/23 4Q23 4Q23 4Q23 12/31/23 12/31/23 12/3
Slide 20: Deposits: A Diverse Core Base
Deposits: A Diverse Core Base Our deposit base is made up of over 3.5 million retail, small business, private banking, and commercial clients, with two-thirds of balances covered by FDIC insurance or collateralized 4Q23 Mix by Client Highlights(2) As of 12/31/2023 ▪ $13.1Bn of uninsured deposits are
Slide 21: Balance Sheet Management Detail
Balance Sheet Management Detail 4Q23 Balance Sheet Mix and Trends Highlights Loan Composition(1) Deposit Mix(2) ▪ Attractive business model with relationship-oriented lending franchise Other 2% Noninterest- bearing 22% − Over 60% of loans are floating rate(1) 1M SOFR Fixed 21% − Core-funded franchis
Slide 22: Investment Portfolio
Investment Portfolio Existing Portfolio Repricing Characteristics Highlights $ in billions ▪ Portfolio used primarily for liquidity and interest rate risk $21.9 management $14.5 $13.2 ‒ Portfolio composed primarily of agency MBS and CMOs ‒ Agency MBS/CMO investments constructed to limit extension ri
Slide 23: Environmental, Social, and Governance Highlights
Environmental, Social, and Governance Highlights Our ESG initiatives are foundational to our business and central to how we deliver value for every stakeholder Our ESG Priorities ESG Highlights Environmental Social Governance ✓ Climate stewardship ✓ Financial inclusion Nearly completed goal of Since
Slide 24: Selected Items Impact on Earnings
Selected Items Impact on Earnings Selected Items Impact on Earnings (a) (Dollars in millions, except per share amounts) (b) (b) Pretax After-tax at marginal rate Quarter to date results Amount Net Income EPS(c) Three months ended December 31, 2023 (d) Efficiency related expenses $ (67) $ (51) $ (0.0