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KeyCorp - Stock Quote KEY

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Morningstar's KeyCorp Stock Analysis

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Bank Stress Tests 2022; Higher Stress Capital Buffers Likely Loom

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

We went into this year’s Federal Reserve bank stress tests expecting a bit more pressure on stress capital buffers as multiple banks had warned in the preceding quarter that their SCB was likely to increase. This is indeed what played out, as we estimate that roughly seven of the 20 U.S. banks we cover that participated this year are likely to see a higher SCB once the assigned SCBs become official. It appears that JPMorgan, Bank of America, and Citigroup are all likely to see increases to their SCBs of close to 1% each. The biggest increase seems likely to come from M&T Bank, which we expect to increase close to 2.2%, going from 2.5% to roughly 4.7%. Meanwhile, we expect the SCB for 11 of the 20 U.S. banks we cover to remain stable, including for Wells Fargo, which had previously warned that their SCB could go up, so this is a slight positive surprise for the bank in our view. Finally, we think Goldman Sachs could see a slight decrease to its current SCB of 6.2%, potentially declining to 6%, while Discover could see a more material decline, going from 3.6% to 2.5%.

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KeyCorp's Company Profile

Business Description

With assets of over $170 billion, Ohio-based KeyCorp's bank footprint spans 16 states, but it is predominantly concentrated in its two largest markets: Ohio and New York. KeyCorp is primarily focused on serving middle-market commercial clients through a hybrid community/corporate bank model.

Contact
127 Public Square
Cleveland, OH, 44114-1306
T +1 216 689-3000
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Cyclical
Employees 17,110

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