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KeyCorp second-quarter profit halves on higher loan loss provisions

The logo Key Corp. is displayed on a screen on the floor at the NYSE in New York

(Reuters) - KeyCorp reported on Thursday a bigger-than-expected 50% fall in quarterly profit, as it set aside more rainy day funds amid growing economic uncertainties.

Shares of the company fell nearly 3% in premarket trading.

The lender's provisions for credit losses jumped by 271% to $167 million at the quarter end, compared with $45 million in a year-ago quarter.

Banks have started to raise their provisions for loan losses as high borrowing costs threaten to cripple the banking sector from the risk of defaults.

The company's net interest income fell nearly 11% to $986 million for the quarter ended June 30, compared with $1.1 billion, a year earlier.

Net income from continuing operations attributable to the company's common shareholders came in at $250 million, or 27 cents per share, compared with $504 million, or 54 cents a share, a year earlier.

Analysts on average had expected 31 cents per share, according to Refinitiv IBES data.

The downbeat results follow a tumultuous first quarter in which a global banking crisis - triggered by the collapse of three U.S. regional banks - led panicked consumers to pull out billions in deposits.

Lender's average deposits fell 0.4% sequentially as customers continue to chase higher yielding options for better returns. On year-on-year basis, deposits were down 3.1% in the second quarter.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Shweta Agarwal)