Operator: And our next question comes from Ebrahim Poonawala with Bank of America.
Ebrahim Poonawala: Hi, good afternoon. Just one quick question, Mark, for you. On the consumer cards book, you gave some metrics. One, remind us what you reserved for in terms of unemployment rate, macro? And if we do — and whether if we do [indiscernible] market does that necessarily in that we’ll see big lacing up of credit reserves where you already are? Just some color around that would be helpful.
Mark Mason: Sorry, just the last part of your question, I’m sorry, if we do see what?
Ebrahim Poonawala: Yes. So one, like where are you in terms of your unemployment rate assumption? And if the unemployment outlook worsens, let’s say, over the next six to 12 months, does that mean that you are already reserved? Or will we see another big pickup in provisioning as a result of that?
Mark Mason: Got it. Thank you. Look, our current reserves, as you know, as we think about CESL, we’ve got three different scenarios. We’ve got a base case in upside, a downside. Our current reserves are based on the mix of those three macroeconomic scenarios. It reflects about a 5.1% unemployment rate on a weighted basis over the eight quarters, and it’s roughly flat to what it was last quarter. What that means is, obviously, our downside scenario has unemployment that’s much higher than that, closer to 7% or call it 6.8% or so. But that’s kind of how we’ve thought about unemployment. As we think about the reserves each quarter, obviously, we take a look at the macroeconomic factors and how they’re evolving. Our base case today assumes a mild recession and reserves in the future will consider how are weighting towards downside, upside and baseline may more subject to our outlook and volumes.
Those are the two factors that influence whether we’re increasing reserves or not. I would point out though that in addition to unemployment and because unemployment has been as stubborn as it has been, if you will, we also look at debt service coverage ratio as an important factor as we think about our consumers, as we think about their balance sheet, as we think about the risk that they may or may not be facing. So unemployment is an important factor. But we’ve flexed our thinking in light of the environment and in light of how behaviors have been shifting, and that’s an important factor in how we think about our reserves as well. I feel very good about the level of our reserves. You heard us mention earlier, we’ve got $20 billion of reserves, we’re well reserved across the portfolio, but those are all important elements to it.
Ebrahim Poonawala: That’s helpful. And just one very simplistic question. When you talk to some of your largest shareholders, those who are optimistic think you can hit your ROTCE target medium term by 2025. Is that a realistic expectation given, I appreciate Basel changes, you answered like 10 questions on expenses. But should we expect the groundwork through 2024 that we hit that medium-term target in 2025 or just your degree of confidence.
Mark Mason: Yes. Again, the thing I’d point out and Jane, feel free to chime in here, is that what we talked about was getting to our medium-term returns, 11% to 12% and the medium term is 25% to 26%, right? So it’s not just 25%, just to be clear. And we do continue to feel very confident around our ability to do that. You heard us mention the levers that we think will contribute to that. Obviously, capital is important and how that evolves and we continue to kind of work to optimize the balance sheet while serving our clients effectively and importantly, growing the strong businesses that we have that are high returning as well.
