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Published: Tuesday, 10/26/2010

Bailout repayment by KeyCorp predicted

ASSOCIATED PRESS

NEW YORK — KeyCorp, Ohio's second-largest bank, is “well positioned” to repay $2.5 billion in U.S. bailout funds in the second quarter of next year as the bank returns to profitability, Morgan Stanley said Tuesday.

KeyCorp will make the payment “given sharp improvement in credit trends, ability to grow capital organically, and solid capital position,” analysts Betsy Graseck and Peter Newman wrote in a research note.

In the third quarter, the lender reduced loan-loss provisions by 87 percent from a year ago, and earnings of 19 cents a share exceeded the average forecast of 3 cents.

KeyCorp is the third-best-performing U.S. bank stock this year. The bank became profitable in the second quarter after eight consecutive losses.



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