KeyCorp, parent company of Key Bank of Utah, reported net income for the third quarter of $30.94 million, up 14.2 percent from $27.09 million, reported for the same period in 1987 -equivalent to 82 cents in 1988 vs. 78 cents last year, an increase of 5.1 percent.

For the nine months of 1988, net income rose 13.2 percent to $81.36 million, up from $71.86 million -equivalent to $2.19 per common share, up 6.8 percent from the $2.05 per share for the period a year earlier.KeyCorp officials cited a number of reasons for the growth:

- Continued strong consumer and small business loan demand. Overall loan growth for the quarter was 8.7 percent on an annualized basis led by the Northeast Bank Group which experienced 10.5 percent growth. Further reduction in KeyCorp's expense ratio to 3.01 percent, down from 3.18 percent reported in the second quarter of 1988.

- An upward trend in KeyCorp's net interest margin, a leading indicator of strong earnings performance. Net interest margin for the third quarter was 5.09 percent, up from 5.02 percent reported for the first and second quarters of the year.

- Non-performing loans to total loans declined to the lowest level in 1988 (1.31 percent). Non-performing loans in Key Bank of Alaska declined 60 basis points since June 30.