NEW YORK ( TheStreet) -- KeyCorp ( KEY) swung to profit in the second quarter helped by reserve releases and lower provisions for loan losses. Net income for the three months ended June 30 rose to $29 million, or 3 cents per diluted share, compared with a loss of $390 million, or 68 cents, in the year-ago quarter. Net income from continuing operations was at 6 cents a share. Analysts were expecting a loss of 11 cents. Revenue declined 13 percent to $1.12 billion from $1.28 billion. Interest income rose 8.3% to $623 million from $575 million, with net interest margins expanding to 3.2% from 2.7% a year ago. Management expects interest margins to improve further in the second half as CDs mature and reprice to lower interest rates. Non-interest income declined to $492 million compared with $706 million for the year-ago quarter. The company returned to profitability in large part due to a marked decline in its provision for loan losses, which fell more than 70% to $228 million from $823 million year-on-year and from $413 million in the first quarter. Net loan charge-offs declined by 13% to $435 million or 3.2% of average loans, led by improving credit quality in the real estate construction portfolio. Nonperforming assets declined to $2.08 billion from $2.5 billion in the linked quarter. CEO Henry Meyer said that while credit quality continued to improve in most of Keycorp's businesses,"uncertainty remains in the market and consumer and business loan demand is soft." -- Reported by Shanthi Venkataraman in New York. Follow TheStreet.com on Twitter and become a fan on Facebook.