A price target boost at RBC Capital for Buy-rated KeyCorp (KEY -3.9%) to $15 from $13 is of no help to the stock which suffers its 2nd consecutive big decline after earnings on Thursday morning.
Among the issues (in addition to the broad market selloff) is some concern over a stall in progress on the efficiency ratio which in Q4 rose above the top end of the 60-65% target (earnings presentation slides)
Acknowledging on the earnings call (transcript) all management has done to get down to this area, Mike Mayo reminds 65% is still a "really lousy" efficiency ratio (competitors are around 60%), and wonders where improvement is going to come from. "Point us in some direction, which business lines? Anything else we can sink our teeth into?"
There's a "long list" of initiatives, says CFO Don Kimble. Among them is space in the bank's corporate center. Savings there could be $4M-$5M per year, but won't kick in until leases expire in 2015.
"Strong balance sheet growth isn't necessarily translating into top line revenue growth in this particular environment," says CEO Beth Mooney.