KeyCorp Earnings: Reduced Net Interest Income Pressure Should Materialize in the Second Half of 2024

No-moat-rated KeyCorp’s adjusted fourth-quarter earnings were not too far off the FactSet consensus of $0.23 per share and our estimate of $0.19 per share. Reported earnings per share were adjusted to $0.25 per share primarily due to the impact of some notable items: an FDIC special assessment charge of $190 million for uninsured deposits of certain failed banks during the banking turmoil in March 2023, efficiency-related expenses of $67 million, and a pension settlement charge of $18 million. Fourth-quarter revenue was in line with consensus and our estimates. We do not plan to materially change our $20 fair value estimate for KeyCorp and believe that the market is punishing Key for its fourth-quarter results without fully considering 2024 guidance.