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Derivatives and Hedging Activities (Tables)
 12 Months Ended
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair Values, Volume of Activity and Gain (Loss) Information Related to Derivative Instruments
The following table summarizes the fair values of our derivative instruments on a gross and net basis as of December 31, 2017, and December 31, 2016. The change in the notional amounts of these derivatives by type from December 31, 2016, to December 31, 2017, indicates the volume of our derivative transaction activity during 2017. The notional amounts are not affected by bilateral collateral and master netting agreements. The derivative asset and liability balances are presented on a gross basis, prior to the application of bilateral collateral and master netting agreements. Total derivative assets and liabilities are adjusted to take into account the impact of legally enforceable master netting agreements that allow us to settle all derivative contracts with a single counterparty on a net basis and to offset the net derivative position with the related cash collateral. Where master netting agreements are not in effect or are not enforceable under bankruptcy laws, we do not adjust those derivative assets and liabilities with counterparties. Securities collateral related to legally enforceable master netting agreements is not offset on the balance sheet. Our derivative instruments are included in “derivative assets” or “derivative liabilities” on the balance sheet, as indicated in the following table:
 
 
December 31, 2017
 
December 31, 2016
 
 
Fair Value
 
 
Fair Value
in millions
Notional
Amount
Derivative
Assets
Derivative
Liabilities
 
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate
$
26,176

$
81

$
46

 
$
24,237

$
189

$
94

Foreign exchange
302

1

4

 
282

6

4

Total
26,478

82

50

 
24,519

195

98

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate
61,390

641

474

 
55,315

741

643

Foreign exchange
8,317

129

120

 
6,230

117

109

Commodity
1,687

255

246

 
1,474

176

165

Credit
315

1

4

 
360

1

4

Other (a)
2,006

4

13

 
390

4

1

Total
73,715

1,030

857

 
63,769

1,039

922

Netting adjustments (b)
—

(443
)
(616
)
 
—

(431
)
(384
)
Net derivatives in the balance sheet
100,193

669

291

 
88,288

803

636

Other collateral (c)
—

(5
)
(84
)
 
—

(21
)
(97
)
Net derivative amounts
$
100,193

$
664

$
207

 
$
88,288

$
782

$
539

 
 
 
 
 
 
 
 
 
(a)
Other derivatives include interest rate lock commitments and forward sale commitments related to our residential mortgage banking activities, forward purchase and sales contracts consisting of contractual commitments associated with “to be announced” securities and when issued securities, and when-issued security transactions in connection with an “at-the-market” equity offering program.
(b)
Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.
(c)
Other collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The other collateral consists of securities and is exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral. The application of the other collateral cannot reduce the net derivative position below zero. Therefore, excess other collateral, if any, is not reflected above.
Pre-Tax Net Gains (Losses) on Fair Value Hedges
The following table summarizes the pre-tax net gains (losses) on our fair value hedges for the years ended December 31, 2017, and December 31, 2016, and where they are recorded on the income statement.
 
 
Year Ended December 31, 2017
in millions
Income Statement Location of
Net Gains (Losses) on Derivative
 
Net Gains
(Losses) on
Derivative
 
Hedged Item
 
Income Statement Location of
Net Gains (Losses) on Hedged Item
 
Net Gains
(Losses) on
Hedged Item
Interest rate
Other income
 
$
(103
)
 
Long-term debt
 
Other income
 
$
107

(a) 
Interest rate
Interest expense – Long-term debt
 
49

 
 
 
 
 
 
 
Total
 
 
$
(54
)
 
 
 
 
 
$
107

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2016
in millions
Income Statement Location of
Net Gains (Losses) on Derivative
 
Net Gains
(Losses) on
Derivative
 
Hedged Item
 
Income Statement Location of
Net Gains (Losses) on Hedged Item
 
Net Gains
(Losses) on
Hedged Item
Interest rate
Other income
 
$
(95
)
 
Long-term debt
 
Other income
 
$
97

(a) 
Interest rate
Interest expense – Long-term debt
 
96

 
 
 
 
 
 
 
Total
 
 
$
1

 
 
 
 
 
$
97

 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
Net gains (losses) on hedged items represent the change in fair value caused by fluctuations in interest rates.
Derivative Instrument Cash Flow Hedge Earning Recognized by Income Statement Location
The following table summarizes the pre-tax net gains (losses) on our cash flow and net investment hedges for the years ended December 31, 2017, and December 31, 2016, and where they are recorded on the income statement. The table includes the effective portion of net gains (losses) recognized in OCI during the period, the effective portion of net gains (losses) reclassified from OCI into income during the current period, and the portion of net gains (losses) recognized directly in income, representing the amount of hedge ineffectiveness.
 
 
Year Ended December 31, 2017
in millions
Net Gains (Losses)
Recognized in OCI
(Effective Portion)
Income Statement Location of Net Gains (Losses) Reclassified From OCI Into Income (Effective Portion)
Net Gains
(Losses) Reclassified
From OCI Into Income
(Effective Portion)
Income Statement Location of Net Gains (Losses) Recognized in Income (Ineffective Portion)
Net Gains
(Losses) Recognized
in Income (Ineffective
Portion)
Cash Flow Hedges
 
 
 
 
 
Interest rate
$
(59
)
Interest income –Loans
$
19

Other income
—

Interest rate
—

Interest expense –Long-term debt
(4
)
Other income
—

Interest rate
(1
)
Investment banking and debt placement fees
—

Other income
—

Net Investment Hedges
 
 
 
 
 
Foreign exchange contracts
(17
)
Other Income
—

Other income
—

Total
$
(77
)
 
$
15

 
—

 
 
 
 
 
 

 
Year Ended December 31, 2016
in millions
Net Gains (Losses)
Recognized in OCI
(Effective Portion)
Income Statement Location of Net Gains (Losses) Reclassified From OCI Into Income (Effective Portion)
Net Gains
(Losses) Reclassified
From OCI Into Income
(Effective Portion)
Income Statement Location of Net Gains (Losses) Recognized in Income (Ineffective Portion)
Net Gains
(Losses) Recognized
in Income (Ineffective
Portion)
Cash Flow Hedges
 
 
 
 
 
Interest rate
$
29

Interest income – Loans
$
85

Other income
—

Interest rate
—

Interest expense – Long-term debt
(4
)
Other income
—

Interest rate
1

Investment banking and debt placement fees
—

Other income
—

Net Investment Hedges
 
 
 
 
 
Foreign exchange contracts
(2
)
Other Income
—

Other income
—

Total
$
28

 
$
81

 
—

 
 
 
 
 
 
After-Tax Change in AOCI Resulting from Cash Flow Hedges
The after-tax change in AOCI resulting from cash flow and net investment hedges is as follows:
 
 
December 31,
2016
2017 Hedging Activity
Reclassification of Gains to Net Income
Reclassification to retained earnings resulting from new federal income tax rate
December 31,
2017
in millions
AOCI resulting from cash flow and net investment hedges
$
(14
)
(48
)
(10
)
(14
)
$
(86
)
Pre-Tax Net Gains (Losses) on Derivatives Not Designated as Hedging Instruments
The following table summarizes the pre-tax net gains (losses) on our derivatives that are not designated as hedging instruments for the years ended December 31, 2017, December 31, 2016, and December 31, 2015, and where they are recorded on the income statement.
 
2017
 
2016
 
2015
Year ended December 31,
in millions
Corporate
Services
Income
Consumer Mortgage Income (a)
Other
Income
Total
 
Corporate
Services
Income
Consumer Mortgage Income(a)
Other
Income
Total
 
Corporate
Services
Income
Other
Income
Total
NET GAINS (LOSSES)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate
$
29

—

$
(1
)
$
28

 
$
30

—

$
1

$
31

 
$
28

—

$
28

Foreign exchange
41

—

—

41

 
40

—

—

40

 
36

—

36

Commodity
6

—

—

6

 
4

—

—

4

 
5

—

5

Credit
2

—

(21
)
(19
)
 
1

—

(16
)
(15
)
 
(1
)
$
(15
)
(16
)
Other
—

$
(1
)
(6
)
(7
)
 
—

$
1

—

1

 
—

—

—

Total net gains (losses)
$
78

$
(1
)
$
(28
)
$
49

 
$
75

$
1

$
(15
)
$
61

 
$
68

$
(15
)
$
53

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(a)
As a result of the First Niagara acquisition, we began recognizing net gains (losses) on other derivatives related to our residential mortgage banking activities in “consumer mortgage income” in 2016.
Fair Value of Derivative Assets by Type
December 31,
in millions
2017
2016
Interest rate
$
401

$
782

Foreign exchange
77

62

Commodity
163

110

Credit
1

—

Other
4

4

Derivative assets before collateral
646

958

Less: Related collateral
(23
)
155

Total derivative assets
$
669

$
803

 
 
 
Fair Value of Credit Derivatives Purchased and Sold
The following table summarizes the fair value of our credit derivatives purchased and sold by type as of December 31, 2017, and December 31, 2016. The fair value of credit derivatives presented below does not take into account the effects of bilateral collateral or master netting agreements.
December 31,
in millions
2017
 
2016
Purchased
Sold
Net
 
Purchased
Sold
Net
Single-name credit default swaps
$
(1
)
—

$
(1
)
 
$
(2
)
—

$
(2
)
Traded credit default swap indices
(2
)
—

(2
)
 
(1
)
—

(1
)
Other(a)
—

—

—

 
—

—

—

Total credit derivatives
$
(3
)
—

$
(3
)
 
$
(3
)
—

$
(3
)
 
 
 
 
 
 
 
 
(a)
As of December 31, 2017 and December 31, 2016, the fair value of other credit derivatives purchased and sold totaled less than $1 million.
Credit Derivatives Sold and Held
The following table provides information on the types of credit derivatives sold by us and held on the balance sheet at December 31, 2017, and December 31, 2016. The notional amount represents the maximum amount that the seller could be required to pay. The payment/performance risk assessment is based on the default probabilities for the underlying reference entities’ debt obligations using a Moody’s credit ratings matrix known as Moody’s “Idealized” Cumulative Default Rates. The payment/performance risk shown in the table represents a weighted-average of the default probabilities for all reference entities in the respective portfolios. These default probabilities are directly correlated to the probability that we will have to make a payment under the credit derivative contracts.
 
 
2017
 
2016
December 31,
dollars in millions
Notional
Amount
Average
Term
(Years)
Payment /
Performance
Risk
 
Notional
Amount
Average
Term
(Years)
Payment /
Performance
Risk
Other
$
15

3.08

6.64
%
 
$
4

6.49

17.93
%
Total credit derivatives sold
$
15

—

—

 
$
4

—

—

 
 
 
 
 
 
 
 
Credit Risk Contingent Feature
The following table summarizes the additional cash and securities collateral that KeyBank would have been required to deliver under the ISDA Master Agreements had the credit risk contingent features been triggered for the derivative contracts in a net liability position as of December 31, 2017, and December 31, 2016. The additional collateral amounts were calculated based on scenarios under which KeyBank’s ratings are downgraded one, two, or three ratings as of December 31, 2017, and December 31, 2016, and take into account all collateral already posted. A similar calculation was performed for KeyCorp, and no additional collateral would have been required at December 31, 2017, or December 31, 2016.

December 31,
in millions
2017
 
2016
Moody’s
S&P
 
Moody’s
S&P
KeyBank’s long-term senior unsecured credit ratings
A3

A-

 
A3

A-

One rating downgrade
$
2

$
2

 
$
2

$
2

Two rating downgrades
2

2

 
2

2

Three rating downgrades
2

2

 
2

2