“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.”

In context

“e 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 partially offsetting both of those factors is the roll-off of PPP. So, while we do expect NII to increase year-on-year, depending on the path of rates, it may take a couple of years to return to the full NII generating capacity of the Company. Turning to page 17. As we said at the outset of this section, we are in for a couple of years of sub-target returns. Despite this, we are going to continue to invest and we’re not going to let temporary headwinds distract us from critical strategic ambitions. And so, looking at adjusted expenses, we expect roughly $77 bil”