So it’s a little bit of all of it that brings you to the point at, which it starts to trough and inflect. But again, exactly when that’s going to happen, we’ll sort of leave, we’ll leave till later in the year, but we do expect that’ll happen as we get closer to the end of the year.
John McDonald: Understood. Thanks.
Operator: The next question will come from Ken Houston of Jefferies. Your line is open.
Ken Houston: Hi, thanks. I’m sorry if I’m going to stay on theme, but just as you start to the beginning of the year and deposit price continues to flow through and the mix continues to change. As far as the DDAs, I’m wondering if you could just help us understand, how do you expect that trajectory? DDAs definitely still out flowing, which is expected, but in terms of mix and then just how you expect the deposit rate of change or the downside beta to act through the cycle. Can you help us understand that, Mike? Thanks.
Mike Santomassimo: Sure. When you look at what’s happening just on deposits, the trend that we’ve been seeing now on the mix shift has been pretty consistent for the last two or three quarters at least. And so – so at some point that’ll moderate more, but it’s been pretty consistent. And so that’s probably a decent assumption as you sort of go into the first part of the year at least. When you start looking at deposit pricing can later in the year, as rates start to move. On the commercial side, rates and betas have been competitive now and pretty high for a while, and they’ll be just as rate sensitive on the way back down. That’s part of the bargain on the commercial side is, you get good competitive betas on the way up and you also get them on the way down.
On the consumer side, there’s been less movement on standard pricing across many of the products, but you’ve had the introduction of CDs and promo rates and all that stuff will start to move down pretty quickly as the expectation for rates do as well.
Ken Houston: Okay. So, if I think about that, then would you imply that the first quarter starting point, we see a little bit more of an NII step down and then as you get to that hopeful stabilization in the back half, like just because of how that moves?
Mike Santomassimo: Well. I think based on what we gave you, right? So we are expecting a full year NII to be down 7% to 9% hopefully. And if it starts to stabilize as you get to the end of the year, then that implies a step down in the beginning of the year. Exactly, we’re not going to give you a number by quarter, but I – you would – you should expect to step down as you go in the beginning part of the year.
Ken Houston: Right. Okay. I understand. Okay. Thanks, Mike.
Operator: The next question will come from Scott Siefers of Piper Sandler. Your line is open.
Scott Siefers: Good morning, everyone. Thanks for taking the question. I was hoping you might be able to spend just another moment on the longer-term cost opportunity. I guess, I’m just curious if there’s a point where some of the investment spending pressures ease and there might still be an opportunity for costs to decline more visibly on an underlying basis or by contrast, is this level of investment spending, is that something that’ll just be sort of pretty consistent year in and year out?
Charlie Scharf: Yes, Scott, it really is going to depend. I will highlight one thing though. In the slide that we have there, we – I noted that part of what’s driving the investment spend this year is the tech and equipment line moving up. And so that won’t continue to move up at that pace forever. And so that does start to moderate as you go out into the future. But as you look at the other investments we’re making, we’re going to try to be very thoughtful about looking at the opportunities that we have across each of the businesses, thinking about short, medium, long-term results and making sure that we’re sort of calibrating all that, right? But I would expect us to continue to make investments in each of the businesses. And I think that ultimately that’s what’s going to drive great returns and better performance over time.
Scott Siefers: Perfect. Thank you. And then maybe just a question on credit. You all have been very proactive in dealing with sort of the office CRE situation. Just curious to hear how your, what your thoughts are on how this cycle, that asset class sort of plays out from here. Does it just remain a long slog? Or is there perhaps a point where your conservatism has sort of gotten ahead of issues and you might actually be able to relieve a bit of that really healthy double-digit reserve?
Charlie Scharf: Yes. Look, as we look at the reserve, and then I’ll come back to the broader point there, at some point we’ll start using the reserve more fully and then that allowance coverage ratio will come down. No doubt. I mean, that’s the way it should work when you think about CECL and the way the accounting should work. I think, in terms of your broader point, it’s a long movie. We’re still – we’re not – we’re past the opening credits, but we’re still in the beginning of the movie. And so it’s going to take some time for this to play out. And as I noted, it’ll be somewhat of an uneven and episodic sort of nature to the charge offs and as you work through this, because every property has a different timeline in terms of events that it needs to sort of work through. So I do think that we’ve got a while for this to play out through the system.
