KeyCorp Q1 2025 Earnings Call Transcript

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

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Chris, kind of trying to reconcile your comments at the start about all the macro issues from markets to client uncertainty to geopolitical risks and all the stuff that we all know about. And I know you said you think we'll avoid a recession this year, but reconciling that with your guide, so the world is a lot more risky and worse, and you've lost $7 trillion of stock market wealth out there. But at the same time, the curve isn't as good, and you're still reiterating 20% NII guide. GDP doesn't seem so good, but you're not building reserves. Markets are choppy, but you still expect 5% growth and inflation is sticky in your own words and (inaudible) guiding kind of the same ballpark. So how do I reconcile a world that seems so much more problematic with your guide that isn't changing?

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : What does that mean, pulled in supply chain?

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Yes. I interrupted your flow, but that was an important point.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Well, just one follow-up there would be the tariffs, you're going name by name, I assume you have not finished that. You've got a top-down review of reserving, but not your name by name. And it was interesting, I guess, pandemic has kind of addressed rehearsal for some of that, but you still have to go through the whole portfolio? And do you know when that will be done? And is that a risk to your reserving where you are today?

Question: Manan Gosalia - Morgan Stanley - Analyst : Chris, given what you said at the start of the call on some of this uncertainty impacting client sentiment, how are you thinking about C&I loan growth from here? So utilization rates were up in the first quarter. Can you talk about what drove that? And can you talk about the interplay between debt capital markets and loan growth? Are you seeing some refis out of loan growth in the first quarter? And how do you expect that to be here for the rest of the year?

Question: Manan Gosalia - Morgan Stanley - Analyst : Got it. Very helpful. And then maybe just a follow-up to the broad line of questioning. Can you just talk about some of the puts and takes in that 20% NII guide. So if the belly of the curve starts to come back down, maybe if you see weaker C&I loan growth, just a sentiment weakens, what other flexibility do you have in that guide to still hit that 20% number?

Question: Ebrahim Poonawala - BofA Global Research - Analyst : I guess maybe just one to follow up, Chris, I think in your prepared remarks and then you answered some of this to Mike's question. But you mentioned project loans will continue to fund throughout the year. I guess part of the concern is there's just so much uncertainty CapEx projects REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 12:00PM, KEY.N - Q1 2025 KeyCorp Earnings Call are on the sidelines. Some of these tariff negotiations may take months if not longer, do you think when you talk to these customers who want to make CapEx decisions, like what's your sense of the amount of clarity they need on this front before they can pull the trigger?

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Understood. And on the buyback authorization, so $1 billion pretty meaningful, remind us what you're targeting on the CET1? How much of a ramp-up should we expect and think about when we are forecasting earnings as far as the pace of buybacks is concerned, starting, I guess, with third quarter?

Question: Peter Winter - D.A. Davidson & Company - Analyst : Clark, last quarter, you talked about the margin hitting 3% plus at some point next year. What are the main drivers to get there versus [258] currently? And what are some of the potential risks we should watch out for? So the margin may be falling short of that medium-term target? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 12:00PM, KEY.N - Q1 2025 KeyCorp Earnings Call

Question: Peter Winter - D.A. Davidson & Company - Analyst : Got it. And then Chris, if I could follow up on your comment with capital management. You talked about maybe tweaking the balance sheet. I was just curious why not reposition some of the securities portfolio now and pull forward some of that benefit and lock it in?

Question: Nathan Stein - Deutsche Bank - Analyst : You talked about how dislocation in the markets gives you opportunities to maybe gain share. Can you just elaborate more on what kinds of markets and customers you're targeting? And how would you gain share during periods of volatility when people are pushing back new CapEx plans like you said?

Question: Nathan Stein - Deutsche Bank - Analyst : Great. And then separately, could you talk briefly about the commercial real estate gross charge-offs, which were a little elevated in the first quarter. Can you just talk about the drivers of that?