KeyCorp. (NYSE:KEY) Q4 2015 Earnings Conference Call - Final Transcript

Jan 21, 2016 • 10:00 am ET


KeyCorp. (NYSE:KEY) Q4 2015 Earnings Conference Call - Final Transcript


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Don Kimble

share repurchases and an increased dividend to be included in our upcoming 2016 CCAR submission. Now moving on to slide 14. For our 2016 outlook, we're providing guidance on standalone Key operations. In 2016 we expect to continue to drive positive operating leverage. Average loans should grow in the mid single-digit range as we benefit from the strength in our commercial businesses.

We anticipate the net interest income growth in the low single-digit percentage range compared to 2015 without any benefit from higher interest rates. With the benefit of future rate increases, we would anticipate net interest income to be up in the mid single-digit range. It is also important to note that we have assumed that deposit rates will increase with future rate increases. Noninterest income is expected to be up in mid single-digit percentage range for the year. This assumes continued strong improvement in investment banking and debt placement fees as well as continued growth in cards and payments income. We are also assuming very modest levels of principal investing gains for 2016. Full-year reported expenses should be relatively stable to 2015.

We would expect to see normal seasonal trends in expenses with first quarter expenses down significantly from the fourth quarter level. Credit quality should remain a good story with net charge-offs below our targeted range of 40 basis points to 60 basis points. We also expect provision levels to maintain a stable level of allowance to total loans. And finally, we expect our dividend to increase in the second quarter to $0.085 per share and the 2016 CCAR plan to include both common share repurchases and an increased dividend. Our guidance excludes the impact of merger related charges as well as the acquisition of First Niagara. If the acquisition closes in the third quarter as planned, we would expect EPS impact to be a slight dilution of 1% to 2% in 2016 and accretive in 2017.

With that, I'll close and turn the call back over to the operator for instructions for the Q&A portion of our call. Operator?