“Assuming the Fed follows through as the market predicts with a Fed funds rate exiting 2022 at 3.5%, we'd expect to produce an 11% to 13% year-over-year increase in revenue despite the market downturn.”

In context

“usted expense growth of 2% year-over-year, all of which helped produce an adjusted pretax margin of 49.5%, a record $2 billion in adjusted net income and a record $0.97 in adjusted EPS. That was the income statement. Let's turn our attention briefly to the balance sheet. Our balance sheet assets declined 4% year-to-date due mostly to those record tax payments in April as well as some sorting activity in the second quarter that was consistent with our expectations given the rate environment. Our strong earnings, combined with that slight decrease in assets, boosted our capital ratios to the highest level we've seen in roughly 2.5 years. Despite the challenging equity markets, we feel very confident about our ability to drive strong revenue growth and resume a higher pace of capital return. Assuming the Fed follows through as the market predicts with a Fed funds rate exiting 2022 at 3.5%, we'd expect to produce an 11% to 13% year-over-year increase in revenue despite the market downturn. That reflects continued expansion of our net interest margin to just over 2% by Q4. Deposit betas that we expect to continue to run a bit lower than the last rising rate cycle and a continuation of clients moving some of their investment cash off our balance sheet in search of higher yields. But remember, when they do that, it frees up capital that we can return to our stockholders. We continue to thoughtfully and responsibly manage our expenses, navigating this inflationary environment, driving efficiency throughout our business and prioritizing our investments to advance the strategic agenda that Rick discussed. Controlling for an increase in the pass-through fee that boosts both revenue and expense and which we do not control, our full year expense outlook remains the same as what we s”