(Reuters) – KeyCorp on Thursday reported a lower-than-expected drop in its quarterly profit as smaller rainy-day funds cushioned a hit from a decline in its net interest income.
Shares of the lender rose about 2% in premarket trading after the company reported a profit of 29 cents per share in the third-quarter ended Sept. 30, down from 55 cents a year earlier, but beat analysts’ average estimate of 27 cents, according to LSEG IBES data.
Some banks have cautioned about a weakness in net interest income (NII) growth as a high interest rate environment dissuades people from taking loans and forces lenders to pay more on deposits to keep customers from moving to higher-yielding products.
A decrease in NII reflects “higher interest-bearing deposit costs and a shift in funding mix to higher cost deposits and borrowings due to the higher interest rate environment”, KeyCorp said.
The lender’s average deposits rose 1.3% to $144.8 billion on sequential basis, and increased marginally compared to year-ago quarter.
Its net interest income fell 23.3% to $923 million for the quarter from $1.2 billion a year earlier.
KeyCorp’s provisions for credit losses fell 25.7% to $81 million from $109 million.
(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Shinjini Ganguli)
