KeyCorp beats estimates amid 'remarkable' regulatory changes

• Key Insight: KeyCorp CEO Chris Gorman welcomed the Trump administration's deregulation of the banking industry.
• Expert Quote: "I've been really pleased with what has been a pretty dramatic change," Gorman said.
• Forward Look: KeyCorp aims to raise its return on tangible common equity, which was 12.5% in the third quarter, to 15% by the end of 2027.

After a quarter in which KeyCorp surpassed Wall Street's expectations, CEO Chris Gorman took a moment to praise the new regulatory landscape for banks.

"It's a remarkable change," CEO Chris Gorman said during a call with analysts on Thursday. "It's been really encouraging to see the shift."

KeyCorp, the Cleveland-based parent company of KeyBank, reported earnings per share of $0.41 in the third quarter, beating S&P analysts' consensus estimate of $0.38. Net income for the quarter was $453 million, well above the consensus forecast of $419.8 million.

Gorman made clear that President Trump's push to deregulate the banking industry has made it much easier to do business.

The CEO applauded the shift away from the regulatory environment that grew out of the Great Recession, which he said focused heavily on process, procedure and documentation. More recently, he said, regulators have concentrated more on liquidity, capital and earnings.

"From the global financial crisis [onward], it became sort of a layering of regulation on regulation," the CEO said. "And I've been really pleased with what has been a pretty dramatic change: just a refocusing on safety and soundness."

Gorman also extolled what he called a new approach to cybersecurity examinations by agencies like the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. In recent months, he said, regulators have been coordinating to conduct some of those tests at the same time rather than sequentially, saving bank employees valuable time.

"I want our cyber team thinking about all the risks and looking around the corner, as opposed to preparing for exams," Gorman said.

The time Gorman spent on deregulation was in some ways a measure of how much the dust has settled on another Trump policy priority: tariffs.

Back in April, after the president unveiled new tariffs on almost 90 countries, Gorman lamented that uncertainty over U.S. trade policy was causing many commercial clients to hold off on long-term decisions, lowering the demand for loans.

"Recent events are clearly having an impact on markets and client sentiment," he said at the time. "So far in the second quarter — that is, since the tariff announcements — we have seen our clients pause transactional activity, waiting to see how things play out."

Now, with the tariff question more settled, Gorman seemed more focused on the deregulatory side of the Trump agenda.

During the third quarter, the $187-billion-asset KeyCorp posted a solid performance. Total revenue was $1.90 billion, beating S&P estimates of $1.88 billion.

"Overall this was a strong result and near-term outlook update," Steven Alexopoulos, an analyst for TD Cowen, wrote in a research note.

One highlight was fee income. Investment banking and debt placement fees reached $184 million in the third quarter, up 7.6% from the same period last year.

The bank also benefited from a jump in net interest income, which rose 24% from the prior year to $1.18 billion in the third quarter.

For KeyCorp's leaders, one particularly important number was the bank's return on tangible common equity. Gorman repeatedly said during the earnings call that KeyCorp's goal is for ROTCE to reach at least 15% by the end of 2027.

This measure has been a weak point for KeyCorp in the past. In the fourth quarter of 2023, when KeyCorp was being hurt by the rapid rise in interest rates, the bank's ROTCE was 1.46%.

In the third quarter of 2025, KeyCorp's ROTCE reached 12.5%. Gorman and Chief Financial Officer Clark Khayat expressed confidence that the 15% target was coming into range, but emphasized that they would not stop there.

"The 15% is a stop and not the destination," Khayat said.