Will KeyCorp's Revenue Growth Trend Gain Further Momentum in 2026?

KeyCorp’s KEY organic growth has been supported by steady lending activity and a growing fee-income base. Though tax-equivalent revenues declined in 2022, 2023, and 2024, the metric witnessed a five-year (2020-2025) compound annual growth rate (CAGR) of 2.3%. The metric rose 8.4% year over year to $3.92 billion in the first six months of 2026, reflecting improving asset yields, lower funding costs, and continued commercial loan growth. The Zacks Consensus Estimate for 2026 revenues of $8.03 billion implies 7.4% growth from 2025, while the 2027 estimate of $8.49 billion suggests another 5.7% increase. 

Sales Estimates

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KEY’s Strong NII Growth and Commercial Lending Momentum

KeyCorp's revenue growth in the first half of 2026 was primarily supported by strong net interest income (NII) growth and continued momentum in commercial lending. The company also continued to reposition its balance sheet by reinvesting proceeds from maturing low-yielding investment securities and fixed-rate swaps into higher-yielding assets, improving overall earning-asset yields. Further, steady growth in commercial and industrial loans expanded KeyCorp's interest-earning asset base. At the end of the first half of 2026, average loans were $217.8 billion, up 3.7% year over year, primarily driven by an increase in average commercial loans, while average deposits totaled $294.9billion, down marginally. Taxable-equivalent (TE) NII increased 10.3% year over year to $2.49 billion in the first six months of 2026, benefiting from lower deposit costs and proactive deposit pricing, which reduced funding costs. TE NIM expanded to 2.88% in the first half of 2026 from 2.62% in the prior-year period, reflecting the benefits of improving earning-asset yields and lower funding costs.

KeyCorp's NII and NIM Continue to Expand

Image Source: KeyCorp

Following an impressive first-half performance, management now expects 2026 average loans to grow in the range of 4-5%, up from the prior 2-4% growth range. The company projects average commercial loans to increase 8-10% this year, supported by broad-based commercial lending growth, stronger pipelines and higher line utilization.

Hence, driven by favorable loan and deposit trends and a strong start to the year, management expects NII (TE) to rise 9-11% in 2026, while targeting a 3.00-3.05% NIM exiting the year and average earning assets growing $1-$2 billion from the second quarter level.

KEY's Expansion of Priority Fee-Based Businesses

KeyCorp's continued investment in priority fee-generating businesses supported revenue growth in the first half of 2026. Wealth management, commercial payments, and other corporate and consumer fee businesses benefited from continued client activity and the expansion of product offerings. Higher trust and investment services income was supported by growth in client assets and favorable market conditions. Cards and payments and corporate services generated additional transaction- and service-based revenues. Investment banking also remained an important contributor to fee-based revenue growth, with investment banking and debt placement fees increasing 4% year over year to $366 million in the first half of 2026, despite a 5.1% decline in the second quarter. Investment banking pipelines increased 9% sequentially in the second quarter and remained at historically elevated levels, supported by record M&A and debt capital markets pipelines.

The acquisition of Clearwater UK further strengthens KeyCorp's middle-market M&A advisory capabilities and expands its ability to serve U.S. and European corporate and private equity clients. Improving deal activity, strong client engagement, and contributions from Clearwater UK are expected to support investment banking revenues going forward, with management expecting third-quarter investment banking fees to increase more than 20% sequentially.

These businesses helped offset the cyclicality of traditional lending revenues and contributed to the 5.2% year-over-year increase in non-interest income to $1.43 billion in the first half of 2026. Growth in KeyCorp's priority fee businesses highlights their increasing contribution to a more diversified revenue mix.

Management expects investment banking fees to grow at a mid-single-digit rate in 2026, with quarterly fees expected at $175-$180 million for the remainder of the year. Also, adjusted non-interest income is expected to increase 5-6% in 2026, reflecting continued momentum across its priority businesses and supporting a more diversified and recurring revenue base.

KEY’s Price Performance & Zacks Rank

In the past year, KEY shares have rallied 14.0% compared with the industry’s 30.7% growth.

One-Year Price Performance

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Currently, KeyCorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

How Are KEY’s Peers Faring in Terms of Revenues?

Fifth Third Bancorp FITB has been expanding and diversifying its revenue base through strategic acquisitions and growth in fee-based businesses. The acquisition of Comerica in February 2026 broadened its presence across 17 of the 20 fastest-growing large U.S. markets, while DTS Connex and the Eldridge partnership strengthened its commercial payments and private credit offerings. Historically, Fifth Third's non-interest income recorded a three-year CAGR of 3.1% during 2022-2025, reflecting the company's continued focus on building its fee-based businesses.

Going forward, growth in wealth and asset management, commercial payments and capital markets is expected to support fee income. Management expects 2026 non-interest income of $4.06-$4.16 billion, compared with $3.06 billion in 2025, supporting continued revenue growth. Meanwhile, the expanded presence, broader deposit base, and lending opportunities resulting from the Comerica acquisition, along with expansion in high-growth markets, are expected to support NII and overall top-line growth.

M&T Bank MTB has demonstrated solid revenue growth, with total revenues recording a 7.8% CAGR during 2018-2025. NII and non-interest income also grew at CAGRs of 7.9% and 3.9%, respectively, over the same period, with the positive trend continuing in the first half of 2026. 

Going forward, higher NII, supported by loan growth and stable funding costs, along with growth in treasury management, capital markets, mortgage banking and trust services, is expected to support revenues. Management expects 2026 NII of $7.2-$7.35 billion and fee income of $2.8-$2.85 billion. Continued growth in lending and fee-based businesses is expected to support M&T Bank’s top-line performance.

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This article originally published on Zacks Investment Research (zacks.com).

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