Research · Sep 3, 2026
[KEY] KeyCorp Thesis 2026: Scotiabank Repositioning Builds NII Recovery Runway
KeyCorp executed the first full year of its Scotiabank-enabled NII recovery in FY2025, with NII of ~$4.42B, NIM expanding from 2.18% to ~2.45%, and adjusted EPS of ~$1.50. The $7B securities repositioning (sold at ~2.2%, reinvested at ~5.3%) generates approximately $210M in annualized NII benefit that flows through FY2025-FY2026. Management's FY2027 target of $5.0B+ NII and 15-16% ROTCE represents significant upside if executed on schedule. Credit quality held with NCO ratio ~55bp.