After a 2020 of hunkering down to sustain possible credit losses, the nation’s largest banks are now shifting their focus to ramping up lending activity.

In earnings reports this week, the big four banks — JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) — reduced the amount of reserves set aside last year to absorb any loan losses.

Allowance for loan losses at the four banks totaled $78 billion as of the first quarter of 2021, a decline from the nearly $97 billion amassed in the middle of last year. Still, those reserves are almost double pre-pandemic levels, illustrating the room that banks have to release more in coming quarters.

But the banks said this week that reserve releases are likely to continue as the firms prepare to lend into what could be one of the fastest economic recoveries in history.

“We remain optimistic about loan growth as the economy expands and companies step up borrowing and rebuild inventory,” Bank of America CFO Paul Donofrio told reporters Thursday morning.

Loan growth at the big four banks remained depressed as Americans broadly used federal stimulus to pay down debt. Average loans in the consumer and community bank at JPMorgan Chase, the largest firm, were down 7% in the quarter.

“This isn’t entirely unusual coming out of a recession,” RBC Capital Markets bank analyst Gerard Cassidy told Yahoo Finance Wednesday. “Loan growth normally takes about 18 months to get into gear after a recession.”

Guidance

But Cassidy said that if U.S. GDP continues to snapback with strong growth this year, loan growth could come as soon as the end of the year.

Bank of America, for example, told analysts that it sees net interest income in the fourth quarter coming in $1 billion higher than the first quarter of this year. Citigroup similarly said it expects net interest revenues to improve “in the back half” of the year.

“As we look at profitability this year relative to last, when we were building high reserves, we are seeing signs of the recovery and improvement as it relates to consumer spending,” Citigroup CFO Mark Mason told reporters Thursday morning.

Wells Fargo faces a balancing act due to the growth restrictions that have been in place since 2018, a regulatory penalty following its fake accounts scandal. But the bank told analysts Wednesday that growth in its consumer business will be managed with more restraint on its investment banking arm to stay below the asset cap.

The banking industry at large has performed well as of late. In 2021, shares of all four big banks have outperformed the S&P 500, with some analysts arguing ahead of earnings that there could be more room to run for the sector.