July 19 (Bloomberg News) -- KeyCorp (KEY:US), Ohio’s second-largest bank, may close 5 percent of its branches during the next 18 months as it cuts costs, said William Koehler, president of the company’s community bank.
KeyCorp, which has 1,059 branches, is targeting $150 million to $200 million of expense reductions by December 2013, the Cleveland-based lender said today in a statement.
KeyCorp is cutting costs amid slow U.S. gross domestic product growth and uncertainties over regulatory changes, targeting an efficiency ratio of 60 percent to 65 percent, Chief Executive Officer Beth Mooney said on a conference call. The bank is realigning its business plan to reflect a “new normal” in the financial industry, she said.
“Extended low interest rates, slow GDP, cautious sentiment among American businesses, specifically in our client base, and then you add the increasing cost of regulation that is impacting us as well,” Mooney said. “We needed to be purposeful and proactive in addressing our cost base and our plans for revenue.”
Second-quarter operating net income fell 9.1 percent to $221 million, or 23 cents a share, from $243 million, or 26 cents, in the same period last year, the bank said. today in the statement. That beat by 5 cents the average estimate (KEY:US) of 25 analysts surveyed by Bloomberg.
KeyCorp gained 1 percent to close at $7.91 in New York. The shares have climbed 2.9 percent this year, compared with a 16 percent increase in the 24-company KBW Bank Index.
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