KeyCorp in Cleveland beat earnings forecasts on the strength of increased fee income.

The $94 billion-asset company reported a profit of $246 million in the fourth quarter, up 7% from the same period in 2013, it announced Thursday. Earnings per share of 28 cents were 3 cents higher than the average estimate of analysts polled by Bloomberg.

Higher fee income more than made up for a slight dip in KeyCorp's revenue from loans.

Noninterest income of $490 million was 8% higher than a year ago and was driven by a 50% increase in fees from investment banking and debt placement, which totaled $126 million. Income from trust fees and company-owned life insurance also rose, offsetting a decline in revenue from mortgage servicing, deposit service charges and investments.

KeyCorp's net interest income fell $1 million, to $588 million, as its net interest margin tightened by 7 basis points, to 2.94%. Lower yields counteracted a 6% increase in average loans, to $56.5 billion, which was led by increased commercial and financial lending.

Cost cuts also helped KeyCorp's quarter, as noninterest expenses ticked down by 1%, to $704 million. The decline was due to lower pension costs and efficiency initiatives, partially offset by higher compensation costs, KeyCorp said.

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