[ad_1]
April 20 (Reuters) – U.S. regional lender KeyCorp (KEY.N) on Thursday missed profit expectations for the first quarter as higher provisions set aside to cover bad loans offset gains from its interest income.
Fears of a slowdown have surged in recent months, with banks building up rainy-day funds following the Federal Reserve’s aggressive interest rate hikes, as well as the recent turmoil in the banking sector fueled by the failures of two mid-sized U.S. banks.
Average deposits – a key metric on every investor’s radar – fell 1.6% to $143.4 billion from December-quarter numbers. Deposits dropped 4.5% year-on-year.
Peers Charles Schwab (SCHW.N), M&T Bank Corp (MTB.N) and Citizens Financial Group Inc (CFG.N) have seen their deposits taking a hit due to the lack of investor confidence among local lenders.
KeyCorp reported a profit of 30 cents per share, below analysts’ average estimate of 44 cents apiece, according to Refinitiv IBES data.
Shares of the company fell more than 2% in premarket trading.
The Cleveland-based company had set aside $139 million as credit loss provisions, compared with $83 million from a year ago, as the recent banking crisis prompted regional lenders to be overly cautious.
The U.S. Fed has been on a rate-hike spree since early last year in an attempt to tame decades-high inflation in the world’s largest economy. Still, banks have been the biggest beneficiary of Fed’s decisions as they see continued surge in their interest income.
KeyCorp’s net interest income for the quarter jumped 8.4% to $1.1 billion, compared with $1 billion a year earlier.
Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Sherry Jacob-Phillips
Our Standards: The Thomson Reuters Trust Principles.
[ad_2]
Source link