The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst
: I wanted to follow up on Peter's question, Don, on net interest income sensitivity. I just wanted to clarify that $50 million to $60
million for each 25 basis points does include a 30% beta, and therefore, what you're telling us is in reality, there's going to be -- the
first few rate hikes should be, in theory, higher than this $50 million to $60 million?
Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst
: Got it. And what -- can you remind us of the $25 billion you have in A/LM swaps? What the maturity profile looks like? And given
expectations for a tightening cycle that goes through 2023, what are your plans to replace maturing swaps the debate in terms of
capturing more of the rate sensitivity versus replacing the swaps for -- to protect your NII in the future?
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JANUARY 20, 2022 / 1:00PM, KEY.N - Q4 2021 KeyCorp Earnings Call
Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst
: Got it. And if I could sneak one last one for Chris. So Chris, I feel like during this earnings season, CEOs are in 2 camps: those that are
letting the rate hikes fall to the bottom line and those that are investing the rate hikes. The way Don explained your expense outlook,
clearly, there are Key-specific idiosyncrasies. Your strategy is loud and clear that you invest back in the franchise and you pay for
increased client activity.
But as we think about a year without PPP noise and good loan growth and rate hikes, how should we think about positive operating
leverage at Key? In other words, are you going to allow more of those rate hikes to drop to the bottom line and therefore, positive
operating leverage actually widens as we get further into the rate cycle? Or do you feel like you can keep positive operating leverage
stable and take that opportunity to invest?
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