Our guidance of 1% to 3% underlying core growth includes those actions. And I think just back to the sort of strategic intent of it, as we’ve said for a while, we are very intense on driving a low level of overall expense growth and really leveraging our ongoing program of efficiency initiatives to do that even while we continue to drive outsized growth and self-fund investments within that overall low growth framework. And so as we came into this updated guidance period, and we saw somewhat lower revenue trajectory. For us, it was important and to kind of continue to execute on the discipline of driving the positive operating leverage to also ratchet down expenses. I think the kind of things that we do, we always enter the year with a contingent set of expense management options menu, you could think about it as a different kind of options we could undertake if we need to.
And that’s essentially what we’re going to go through now. We’ll modulate the pace of hiring. We’ll be very judicious in the discretionary expense categories, and we will look at sort of every possible area of expense control to ratchet back expenses and offset a good amount of what was otherwise profit and revenue pressure. So that’s the playbook, and we — that’s something we’ve done numerous signs over the course of the years. And so we feel really good about our ability to do it again now.John Pancari Okay. Great. All right. And then on the — back to the balance sheet. Can you just give us your expectation in terms of an updated through cycle deposit beta? I believe you had expected 35% previously. But if you can update us there on what you’re thinking, and also what net interest margin outlook is baked into your up 6% to 9% net interest income projection?
Thanks.Zach Wasserman You got it. Let me elaborate more on that. Overall, pulling back, overall, the strategy we have is to continue to drive sustained growth in net interest income on a dollar basis, and to do that, driving continual growth in higher-term loan categories coupling that with the management of NIM around in a tight corridor as we can, where the top end benefits from our continued asset sensitivity and we stand to really benefit if rates do stay a lot higher for longer, but also at the lower end, protected with our hedge portfolio. And all that adds up to the 6% to 9% NII growth that we’re guiding to.On beta, in particular to your question, it clearly is a market-positive environment, and, hence, it’s realistic to expect some higher beta and, frankly, an earlier impact than we had previously seen.
I do expect now a few percentage points higher than the original — than the prior guidance of 35% beta. I will note that we provide a guidance on beta because we want to give you an indication of where we think that’s going. But for us, the most important thing is the execution day-to-day of driving the deposit growth and staying incredibly disciplined in terms of the overall funding mix as I noted in my prior response.How beta ultimately plays out here over the end game is going to be clearly a function of where the yield curve goes. But I do think that a few — a few percent higher than 35% is a reasonable range based on the new scenarios I laid out. In terms of overall spread, as we noted, we’ve moved the guidance range from what was previously 8% to 11% to 6% to 9%, so down about 2% in terms of that guidance range.
About 40% of that is just slightly lower loan growth and the rest is spread. As I think about the kind of the way the year plays out, I would expect that kind of a more front-loaded impact of spreads than we were previously expecting. So we would expect to see $1 decline in NII, in Q2 about the same as we saw in Q1, but then growing from there. And I think the NIM range that we have there is sort of consistent with that dollar trends.John Pancari Great. Thanks, Zach. Zach Wasserman Thank you. Operator Thank you. And our next question comes from Ebrahim Poonawala with Bank of America. Please state your question.Ebrahim Poonawala Hey, good morning. Zach Wasserman Good morning, Ebrahim. Ebrahim Poonawala Two questions. One, in terms of the deposit growth outlook, I think you mentioned it’s expected to be more consumer-led.
Just give us a sense of strategically how either the interest rate environment or the events of the last month have changed how you’re thinking about deposit acquisition? And has it materially changed the pricing on new deposit growth relative to the how you thought about it back in January?Rich Pohle Yeah. Thanks, Ebrahim. Overall, I would say, as we noted, tighten the range with a kind of a lower top end but still expect growth and pretty consistent with what we had thought before in terms of the overall amount growth. So we still see nice traction — and I think we’ve seen that a little bit in some of the disclosures we’ve given just in the first month of the first week of into, for example. With that being said, I think the mix will be different.
And we now expect commercial to be largely flat from here. And really the growth to be consumer-led. Frankly, from our perspective, it’s a great highlight of the strength of the consumer franchise that we’ve got that we can lean in now and continue to support high profit loan growth with that consumer funding. I think the dust has not fully settled in terms of all of the competitive and customer behavioral impacts of the last month, but I think one of them will clearly be more moderated commercial growth that will just be leveraging off-balance sheet structures that much more. So I’m sure that what we do have on sheet is incredibly stable.And on the consumer side, it’s just running the same playbook that we have. And we have invested so much over the last few years and capabilities to build our marketing technology and customer targeting capability with the consumer that we really have the opportunity to optimize and to drive incremental consumer-oriented acquisition, not only of higher rate categories, but just fundamentally, we’re growing — we noted 2% growth in primary bank relationships on the Consumer side, 4% growth in business banking.
And so it’s a very balanced source of growth, and we just going to lead into it at this point to continue to grow overall balances.Ebrahim Poonawala Got it. And just as a follow-up, I guess, on the lending side. So I appreciate your comments in terms of where the growth has been in the outlook. But if you could give us a sense of just customer sentiment, given your business mix, some of the legacy TCF businesses, just the health of the economy in terms of when you speak to your customers, are you seeing a slowdown in demand also occurring at the same time, which increases the likelihood of a potential downturn and a recession based on what you’re saying?Steve Steinour Ebrahim, this is Steve, and thank you for the question. We are seeing customers become more cautious, in some cases, deferring investments and/or postponing on acquisitions or other transactions.
And this has increased during the quarter, it’s one of the reasons we’ve sort of guided without changing the loan range to the lower end of that low range from where we would have been at the upper end of that loan rate at the end of ’22. There’s a clear — clearly more angst about, is there a recession, and what 2024 looks. Having said that, many of these customers are doing quite well in ’23 thus far and remain optimistic. But again, there’s been a lot of media, a lot of headline noise and it’s having an impact in addition to what the Fed’s doing.Ebrahim Poonawala Thanks, Steve. Thanks for taking my questions. Steve Steinour Thanks, Ebrahim. Operator Thank you. Next question comes from Scott Siefers with Piper Sandler. Please state your question.Scott Siefers Good morning, everyone.
Thank you. Hey, Zach, I was hoping you could expand upon some of the NII comments from a question or so ago. So I think if I interpreted you correctly, I guess, NII will take a step down in the second quarter. What would cause that margin or NII to start expanding from there in light of, I guess, fairly limited overall balance sheet growth through the remainder of the year? Just curious about the nuances as you see them.Zach Wasserman Yeah. I mean, mainly, it’s going to be volume from there, Scott, just continue to sequentially grow loans from second into the third and third into the fourth quarter is the primary driver. We see the spreads much more flat in the back half than kind of accelerated impact. What I — just to make elaborating a little bit on kind of the NIM trajectory that we see overly precise.
