KeyBank remained focused on expense management and improving its technology to stay competitive in the third quarter.
The Cleveland-based bank’s noninterest expense increased to $1.1 billion in the quarter, up by 0.4% year over year, driven by an increase of $12 million in tech spend, according to its quarterly earnings report.
“Expense management remains a priority,” Chief Executive Chris Gorman said during KeyBank’s earnings call Thursday. “We are continuing our efficiency journey by further simplifying and streamlining our businesses.”
PNC is also looking to keep its expenses low to save money to reinvest in the business. The bank aims to save $325 million in 2024 by its expense management initiatives like trimming the workforce.
THE BIG PICTURE: KeyBank’s equipment costs increased to $20 million, up by 3% YoY as it looks to improve its tech stack, Gorman said.
Other industry peers including Citibank, JPMorgan and Wells Fargo are also upping their tech investments as they look to improve their offerings and remain competitive.
NOTEWORTHY: The $190 billion bank has been working to provide embedded payments on its platform, as their adoption increases, Bennie Pennington, vice president of embedded banking and integrated payments, previously told Bank Automation News.
BY THE NUMBERS: In Q3, KeyBank reported;
- Net interest income of $923 million, down 23.3% YoY;
- Total revenue of $1.5 billion, down 17% YoY; and
- Average deposits of $144 billion, up by 0.4%.
FLASHBACK: Since the start of the year, KeyBank has been focused on expense management to weather harsh economic conditions, according to the bank’s Q1 earnings reports.
In August, KeyBank rolled out Early Pay, a tool that allows clients with direct deposit access to their wages up to two days early.
FUTURE LOOK: Higher interest rates and geopolitical events are a challenge in the medium term, but the bank feels “good about the business” and expects capital to start flowing again in 2024, Gorman said.
MARKET REACTION: Shares of KeyBank [NYSE: KEY] were down 6.3% from market open to $9.89 as of market close today. KeyBank has a market capitalization of $9.3 billion.
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