KeyCorp at Bank of America Financial Services Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Ebrahim Poonawala - Bank Of America - Analyst : <_ALACRA_META_ABSTRACT>So maybe just to kick it off, in terms of the macro, and it's only been a few weeks since we've had the new administration in place, but I feel like we've gone through waves of emotion in terms of the optimism and we've seen some of the volatility that's going to come along with it in terms of the risks around tariffs, et cetera. Give us a sense of your view, one, from a big picture standpoint, how you think about the next year playing out, the puts and takes, and we'll take it from there.

Question: Ebrahim Poonawala - Bank Of America - Analyst : Got it. I'd like to follow up on a few of those things, but sure. Just let's -- if we can take a step back in Key, I mean I think for those of us who follow the company closely, I think the last couple of years have been a bit interesting to navigate a rate shock that we got from the Federal Reserve. Give us a sense of, in terms of how you've navigated the bank, a frame of mind in terms of what the employee morale looks like, what the defense versus offense. We talked about this a little bit on the earnings call, but I would love to hear and get a status check on the health of the franchise.

Question: Ebrahim Poonawala - Bank Of America - Analyst : All right. I guess maybe sticking with the business. As we think about -- you spent the last year talking about loan growth and line utilization being very low, policy uncertainty. I guess the question is, do we -- do your customers have enough certainty today, knowing what we know, to actually draw down on those lines where loan growth for the industry, for Key, could actually do better than expected? Are we there yet or are we still in a wait and watch mode?

Question: Ebrahim Poonawala - Bank Of America - Analyst : Let's follow up on a few things you said. I think you made an interesting point around folks were borrowing and transacting. You're not seeing it in loan growth. And I think when you talk to investors, there's a narrative around banks kind of being disintermediated, be it capital markets, be it the evolution of private credit direct lenders. Like if you work on both sides of this in terms of markets, the business you all have, just talk to us in terms of, I guess starting with private credit, is that a risk? Is it hyped? Just kind of your assessment of how bank shareholders should think about it.

Question: Ebrahim Poonawala - Bank Of America - Analyst : That's helpful. I guess maybe just switching to consumer. You talked about the natural runoff of the consumer book this year. Has there been a rethink in terms of the strategy on the consumer side? Like how should we think about the runoff that's happening this year? Is that going to continue for the next few years? Just give us a status check there.

Question: Ebrahim Poonawala - Bank Of America - Analyst : You mentioned rates. I guess the other debate around this, whether the Fed is going to hike, not hike, whether that's 10-year. Just give us a sense of if the rate backdrop remains relatively unchanged and the Fed's don't pause all. One, do you agree? Do you believe that's going to happen. But what does this current rate backdrop mean for Key and for your clients?

Question: Ebrahim Poonawala - Bank Of America - Analyst : So it sounds like, I mean, obviously, I think your NII guidance is about up 20% year-over-year. And it could be, for Key, for the industry, a multiyear tailwind in terms of what we think about NII. You mentioned deposit costs and deposit betas. How is that trending? At what point do you think deposit costs stop going down?

Question: Ebrahim Poonawala - Bank Of America - Analyst : Sounds like the NII story sounds pretty constructive when we think about lending, what's happening with deposit costs. So well, that's good. I guess maybe switching gears, sensitive to the time, let's spend some time around expenses, tax spend, I think, given what banks have had to navigate. I think maybe you've delayed some investments. Just give us a sense of where you see the franchise in terms of tech infrastructure from a competitive standpoint. What are the big projects that are underway?

Question: Ebrahim Poonawala - Bank Of America - Analyst : And I guess tied to that, when we think about the investment spend, how do you think about just constant efficiencies? Like are there opportunities within the bank where you're getting 100 to 200 basis points of efficiencies each year or is that maxed out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 11, 2025 / 1:00PM, KEY.N - KeyCorp at Bank of America Financial Services Conference

Question: Ebrahim Poonawala - Bank Of America - Analyst : I guess maybe switching gears. The other area that's in big focus is the regulatory backdrop as it pertains to banks. Give us your sense, one, the magnitude or the type of changes you expect from banking regulations. We've seen a lot of new appointments over the last few weeks. And then maybe bring it to Key around what will be most impactful as you think about day-to-day. Is it more flexibility on capital, liquidity or from a supervisory perspective?

Question: Ebrahim Poonawala - Bank Of America - Analyst : I guess just on debt, I think M&A -- I saw some investors on the sidelines yesterday around, is this just too much macro noise for businesses to feel confident in making big CapEx investments, engaging in M&A? Like do you need some stability in the macro and what's coming out of DC? Or do you think there's enough year for businesses to actually move on with their plans?

Question: Ebrahim Poonawala - Bank Of America - Analyst : Got it. I guess maybe on capital. I think you mentioned marked CET1 of 9.8%. Just talk to us, I mean capital is king if you're running a bank and now you have a lot of excess capital. Just talk to us in terms of prioritization, the decision tree, how you're allocating capital, how we should think about it?

Question: Ebrahim Poonawala - Bank Of America - Analyst : Got it. But it looks like right now, you'd rather have some dry powder for all these things that you mentioned as opposed to buying back.

Question: Ebrahim Poonawala - Bank Of America - Analyst : And you mentioned, I mean, I think the other investor focus has been around bank M&A, right? You mentioned all types of M&A has been kind of clogged bank M&A. I think you could put that in that same bucket. Give us a sense of, one, do you think whether or not we see a pickup in -- like is the environment right for a pickup in bank M&A? And would some kind of a strategic acquisition at some point make sense for Key or not?

Question: Ebrahim Poonawala - Bank Of America - Analyst : Fair. And I guess the other component on capital means Key announced, obviously, a very unique transaction with Scotia last year. Give us a sense of, if you can go back kind of, the thought process behind that and how we should think about that relationship evolving from here?

Question: Ebrahim Poonawala - Bank Of America - Analyst : Definitely could be. I know we have a couple of minutes. I just wanted to open it up and see if anyone in the room had any questions for Chris? If not, I have a couple of last questions. One, I think you and I talked about this, I think, two, three years ago when the CRE concerns were at its peak back in -- when the Fed started hiking. Given your exposure and experience for the CMBS business, are we out of the woods on commercial real estate?

Question: Ebrahim Poonawala - Bank Of America - Analyst : I guess we are out of time, but one last question for you. I guess to wrap up, your message for Key shareholders I guess as you think about what's in store for them over the next year or two?

Question: Ebrahim Poonawala - Bank Of America - Analyst : Chris, thank you so much.