“Rates, with the market implied suggesting approximately three hikes later this year and the reason steepening of the yield curve, we would expect to see about $2.5 billion more NII from that effect.”

In context

“level is worth about 150 basis points of ROTCE. And to be clear, for simplicity, we’ve assumed a normal credit environment in the analysis on the page. So, when we take a step back, 17% remains our central case in the medium term. But over the next one to two years, we expect to earn modestly below that target. In light of all that, let’s talk about near-term guidance on page 16. We expect NII, excluding Markets, to be roughly $50 billion in 2022, up approximately $5.5 billion from 2021. As I mentioned upfront, this is a change relative to how we’ve previously guided as we feel that the ups and downs of Markets’ NII can be a distraction when the vast majority of that variation is likely to be bottom line neutral. Looking at the key drivers of that for 2022, there are a few major factors. Rates, with the market implied suggesting approximately three hikes later this year and the reason steepening of the yield curve, we would expect to see about $2.5 billion more NII from that effect. You can see at the bottom right, we’ve shown you the third quarter earnings at risk and an estimate of what we would expect to disclose in the 10-K, reflecting the year-end rate curve and changes in the portfolio composition. And as we note in our quarterly filings, there are lots of reasons to be careful in trying to use EAR to predict NII changes under real-world conditions. But at a high level, if you look at the numbers on the bottom right and what’s happening to the yield curve recently, you should find the $2.5 billion increase relatively intuitive. Then, balance sheet growth and mix, where we are expecting higher spend and new originations to drive revolving balances back to 2019 levels, and also benefiting from securities deployment towards the end of 2021 and into 2022. And parti”