American banking major Citigroup has released $1.5bn from its reserve build, which was earlier set aside to cover for Covid-19-related bad loans.

According to the Financial Times (FT), the bank is optimistic about the loan loss recovery in the country despite the new rise in coronavirus cases.

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The move was unveiled in the bank’s Q4 2020 results, announced last week.

Citigroup made a net income of $11.3bn in 2020, a 41% slump from $19.4bn in the prior year.

In Q4 2020, the lender reported a net income of $4.63bn, a 7% drop on a year-on-year basis. However, the figure was a 47% surge from Q3 2020.

Revenues for the group stood at $16.5bn in the quarter, down 10% from a year ago. This was said to be driven by lower revenues in global Consumer Banking (GCB), Institutional Clients Group (ICG), and corporate/other.

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Citigroup CEO Mike Corbat said: “We ended a tumultuous year with a strong fourth quarter. Before the pandemic slowed our progress, we had steadily improved our returns and dramatically increased the return of capital to our shareholders.”

Citi’s fourth quarter results echoed the results from rival lender JPMorgan Chase.

JPMorgan reported a Q4 2020 net income of $12.1bn, or $3.79 per share. This compares with net income of $8.5bn, or $2.57 per share, in the fourth quarter of 2019.

The bank also released $2.9bn of credit reserves, which was built up for Covid-19-related loan losses.

JPMorgan CEO Jamie Dimon said that the decision to release the funds was based on “positive vaccine and stimulus developments”.

He also said that “significant near-term economic uncertainty” remains and added that the bank has set aside over $30bn of additional reserves to cover for potential sour loans.

Additionally, Wells Fargo released $757m of loan loss reserves in Q4 2020.