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Despite rising earnings in the fourth quarter of 2020, many large U.S. banks will likely see their profits under pressure in the year ahead, Fitch Ratings says.

In a new report, the rating agency noted that a number of the big banks saw net income rise in the fourth quarter as reserves taken against future credit losses were released.

“Further reserve releases are possible if economic forecasts continue to improve from banks’ current models, which could stem from additional stimulus or reduced downside risk in the economic outlook, and may continue to boost reported earnings throughout 2021,” Fitch said.

However, at the same time, the report said that the banks’ core profitability “will likely remain challenged” in the year ahead, “given the expectation for persistently low interest rates, continued soft commercial and consumer loan demand and further subdued mortgage banking revenue.”

Fitch also noted that non-performing loans have risen, “led by commercial real estate and loans to sectors negatively impacted by regional virus-related shutdowns.”

On the upside, regulatory capital ratios and credit quality remained strong in the fourth quarter, Fitch said.

However, given the continued economic uncertainty, Fitch said that highly rated banks are expected to remain “measured” in making capital distributions in 2021.