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CLEVELAND — The banking company KeyCorp said Wednesday its loss widened in the third quarter as it set aside more money for possible loan losses as borrowers are having a tough time repaying debts amid the recession.
The Cleveland-based company said its results also reflected write-downs on real estate-related investments, higher costs of other real estate it owns and write-offs of intangible assets.
CEO Henry L. Meyer III said "aggressive actions" the company has taken to improve credit quality, strengthen capital, expand its retail network and other moves will help it become more competitive.
At the same time, he added "we are encouraged by the continuation of deposit growth and the improvement in our net interest margin."
"We are continuing to strengthen our business mix and to concentrate on the areas in which we believe we can be the most competitive," he said in a statement.
KeyCorp lost $438 million, or 52 cents per share, compared with a loss of $48 million, or 10 cents per share, during the same quarter a year ago.
Analysts in a Thomson Reuters survey had expected on average a loss of 41 cents per share. Such estimates generally exclude one-time charges or gains.
Key said its Tier 1 capital ratio, a key measure of financial strength, improved to 12.6 percent, up from 8.55 percent a year ago. Meyer said in a conference call that raising new capital had provided the bank with strong ratios amid a tough economy.
"We are encouraged that the pace of the deterioration in the economy appears to have slowed," he said. "However, we remain conservative on our outlook and expect conditions to remain challenging into next year."
Key took a third-quarter provision of $733 million for loan losses. As of Sept. 30, its allowance for loan losses was $2.5 billion, or 4 percent of loans, up from $1.4 billion, or 1.90 percent, for the same time last year.
Key's average deposits grew by $3.6 billion, or 6 percent, over the July-September 2008 period. It opened 32 new branches, including relocations, this year and expects to open six more by Dec. 31.
KeyCorp is the holding company for KeyBank National Association that provides various retail and commercial banking services, with about 1,000 branches and other offices in 14 states.
Key shares dropped 26 cents, or 4 percent, to $6.28 in Wednesday trading. Its shares have traded in a 52-week range of $4.40 to $17.30.
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