April 16 (Reuters) - U.S. lender KeyCorp posted a rise in first-quarter profit on Thursday, helped by strong lending and dealmaking activity that boosted its interest income and investment banking fees.
Interest rate cuts by the Federal Reserve have lifted demand for new borrowing from consumers and businesses, buoying lending across the banking industry.
The Cleveland, Ohio-based lender's net interest income - the difference between what it earns on loans and pays out on deposits - rose 11.3% to $1.23 billion for the quarter ended March 31, driven by lower deposit costs and higher yields on reinvested assets.
CEO Chris Gorman said that a U.S. proposal to reduce the amount of capital that banks must hold would imply a more than 100 basis point benefit for the lender's marked common equity tier 1 ratio, a key measure of financial strength.
The lender's total loans rose more than 3% to $107.7 billion, underpinned by strength in commercial and industrial lending, which surged 10.1% during the quarter.
KeyCorp's investment banking and debt placement fees 12.6% to $197 million as ample cash on corporate balance sheets and a softer stance on regulations fueled dealmaking activity and pushed up advisory fees across Wall Street.
"We are successfully navigating the dynamic macroeconomic environment and are prepared to manage through a broad range of potential scenarios," Gorman said in a statement.
KeyCorp's first-quarter income from continuing operations rose to $486 million, or 44 cents per share, from $370 million, or 33 cents per share, in the year-ago period.
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Diti Pujara)
