KeyCorp Leads Bank Stocks Higher as Profit Gains Top EstimatesElizabeth Dexheimer
KeyCorp, Ohio’s second-largest lender, led bank stocks higher after posting fourth-quarter profit that beat analysts’ estimates.
KeyCorp rose 5.8 percent to $13.04 at 12:37 p.m. in New York, the most intraday since October 2012 and the best performance in the KBW Bank Index. Fourth-quarter net income increased 7.4 percent to $246 million, or 28 cents a share, the Cleveland-based firm said Thursday in a statement. That compares with analysts’ estimates of 26 cents a share, adjusted for one-time items.
KeyCorp’s stock has rebounded after touching a one-year low in October, when the bank said third-quarter revenue fell short of expectations and expenses climbed. That prompted the company to offer new guidance for the last three months of the year, boosting investor confidence, Chief Executive Officer Beth Mooney said.
“People are looking back and seeing that we delivered on our commitments,” Mooney said Thursday in an interview. “Investors are seeing that they perhaps punished us a little bit and there was a pressure that was probably outsized.”
Fourth-quarter revenue increased 3.5 percent from a year earlier to $1.08 billion, driven by gains in investment banking and debt-placement fees. Expenses fell 1.1 percent to $704 million, while the bank’s cash efficiency ratio, a measure of how well management controls cost, improved to 64.4 percent from 67.4 percent.
“We are very pleased to see management deliver, meet expectations,” R. Scott Siefers, an analyst at Sandler O’Neill & Partners LP, wrote in a research note. “Considering the stock’s rough start to the year, we expect the shares to respond well.”
The 24-company KBW Index climbed 2.3 percent, with Capital One Financial Corp. the only firm not showing a gain.