Moody’s trims KeyCorp

Moody's Investors Service said it downgraded all the long-term ratings of KeyCorp, including its long-term senior unsecured to Baa2 from Baa1.

“The action today reflects challenges that Key faces with respect to its core profitability and capitalization that have in part been driven by weaknesses in managing interest rate risk through the current cycle. Key's ratings continue to be supported by the benefits to creditors from its conservative credit risk profile and sizable liquid resources, consisting primarily of U.S. Treasury and agency securities.

“Key's profitability has weakened considerably in 2023 as a result of net interest margin compression driven by higher funding costs, low asset yields and weaker fee income driven by a sustained period of weak capital markets activity. Specifically, net income to tangible assets declined to 0.54% in the first half of 2023 compared to 0.90% for the full year in 2022. Key's net interest margin of 2.01% in Q3 2023 is significantly below its pre-pandemic (2019) level of 3.04%,” Moody’s said in a press release.

The outlook remains negative.

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