Banker & Tradesman file photo

KeyBank’s credit rating was downgraded by Standard & Poors, from BBB+ to BBB, citing “constrained profitability” amid higher interest rates.

Despite a downgraded rating, the large regional bank was still assigned a “stable” outlook by S&P.

“While S&P’s view of the macro-economic environment for regional banks played a large part in their decision to downgrade Key’s long-term ratings by a single notch, we were pleased that they updated Key’s outlook to ‘stable.’ This reflects the strength and stability of our diversified deposit base and excellent asset quality,” KeyBank spokesperson Karen Crane said in an email.

“We believe that our durable, relationship-based business model, our strong balance sheet, and strong risk management practices combine to position us well to drive sound, profitable growth and to serve all of our stakeholders throughout the economic cycle,” she added.

Together with KeyBank, four more regional banks were downgraded but had stable outlooks including California’s Comerica Bank, New Jersey’s Valley Bank, Missouri’s UMB Bank and Wisconsin’s Associated Bank.

S&P said “tough operating conditions” are working against US banks, affecting their profitability. Funding costs increase as depositors shift their funds into higher-interest-bearing accounts, and banks increasingly rely on higher-cost wholesale funding and brokered deposits.

Cleveland, Ohio-based KeyBank has six branches in Massachusetts and 42 in Connecticut. The bank has over 1,000 branches in over 15 states, with about $195 billion in assets.