(Adds details, shares)
By Diptendu Lahiri
July 20 (Reuters) - U.S. regional bank KeyCorp said it expects average loans at the end of 2017 to be at the low end of its previous forecast, sending shares down as much as 4.7 percent.
The muted loan growth forecast overshadowed the lender’s quarterly profit that more than doubled, boosted by its acquisition of First Niagara Financial Group.
KeyCorp expects full-year average loans to be at the lower end of its $87 billion to $88 billion forecast. Total loans at the end of the second quarter were $86.50 billion.
“The stocks had a pretty good run going into the quarter but the guidance of the second half of the year is mixed,” Wedbush Securities analyst Peter Winter said.
Loan growth has been sluggish at most U.S. lenders as interest rates have come off historic lows increasing the cost of borrowing.
The U.S. Federal Reserve has raised rates three times since the second quarter of last year, with the latest increase coming in June.
Cleveland-based KeyCorp’s net income attributable to common shareholders more than doubled to $398 million in the second quarter ended June 30.
Excluding items, the bank earned 34 cents per share, brushing past average analyst estimate of 33 cents, according to Thomson Reuters I/B/E/S.
KeyCorp’s total revenue rose 52.1 percent to $1.64 billion.
Total interest income jumped to $1.12 billion, while non-interest expenses rose 32.5 percent.
The lender’s shares were down 3.5 percent at $18.38 in morning trading on the New York Stock Exchange. (Writing by Sweta Singh; Editing by Maju Samuel and Shounak Dasgupta)