(Reuters) - KeyCorp (KEY.N) reported a lower-than-expected quarterly profit on higher costs and tightened the range of its full-year loan growth forecast, sending its shares down 5 percent.
The bank now expects total loans to be between $87 billion and $87.5 billion for 2017. It had previously forecast total average loans of $87 billion to $88 billion.
“That’s lower than we originally expected at the beginning of the year but reflective of the environment and consistent with our moderate risk profile,” Chief Executive Beth Mooney said on a conference call.
U.S. lenders have been facing sluggish loan growth as interest rates come off their historic lows, increasing the cost of borrowing. The U.S. Federal Reserve has raised rates three times since the second quarter of last year, including the latest one in June.
Cleveland-based KeyCorp said net income attributable to common shareholders more than doubled to $350 million.
Earnings per share rose to 32 cents, but fell short of average analyst estimate of 35 cents, according to Thomson Reuters I/B/E/S.
Total noninterest expense, excluding merger-related charges, rose 7 percent to $956 million.
Reporting by Roopal Verma in Bengaluru; Editing by Anil D'Silva