TORONTO -- Canada's big banks are seeing their first glimmers of hope that an economic rebound is on its way, but their leaders say there's still plenty to be wary of.

As the year winds to a close with three potential COVID-19 vaccines on the horizon, the chief executives of Canada's major banks were predicting the unemployment rate will remain higher than it was before the pandemic and economic growth will be hard-earned.

But they also say they are seeing consumer spending return to pre-pandemic levels, resilience in some housing markets and improved auto sales.

"While there continues to be uncertainty around the trajectory of the economic recovery, economic activity has recovered from its lows -- and given recent developments -- we expect a gradual improvement of the Canadian and Quebec economy in 2021," National Bank of Canada chief executive Louis Vachon said.

Vachon's remarks came as Canada's most prominent banks known as the Big Six reported their fourth-quarter financial results over the past week.

They all acknowledged that much of the country is plunging into a second wave of the deadly COVID-19 virus and temporary lockdowns in several provinces are battering holiday sales.

Holding the economy together, they said, is billions in government relief, low interest rates, loan deferrals and the hope that Pfizer, Moderna and AstraZeneca vaccines will be approved soon.

"Policy actions by governments and central banks across our footprint have been numerous, decisive and powerful," Bank of Nova Scotia chief executive Brian Porter said.

"We are seeing clear evidence that the stimulus is having the desired impact across our footprint."

However, the banks need to be prepared for a vastly different recovery than the ones they've predicted.

Many said they were integrating several different pandemic scenarios into their outlooks and preparing new digital products to support extended lockdowns or for customers who prefer to continue banking remotely after COVID-19 subsides.

"Clearly, the world is in a much different place today than it was a year ago," said Darryl White, BMO's chief executive.

The banks all managed to beat analyst expectations and report a profit, but only half -- Royal Bank of Canada, TD Bank Group and BMO -- earned more this quarter then they had during the same period a year ago.

The quarter also signalled a change in strategy. While the banks spent much of the second and third quarters putting money aside as protection from customers that will default on loans and payments, they eased up on that practice this quarter.

The banks collectively marked about $3.2 billion in provisions for credit losses -- a more modest amount when compared with the $16.5 billion they allocated towards protection against bad loans in the second and third quarters of the year.

The banks took a deep look at expenses and found ways to slash them.

"We're trying to keep them into low single-digits to reflect the economic reality, but if things recover, we'll grow with that economy and maintain our capture of the upside," said Canadian Imperial Bank of Commerce chief executive Victor Dodig.

Meanwhile, BMO's look at expenses resulted in the winding down of its non-Canadian investment and corporate banking business in the energy sector -- a move it claimed would help better allocate resources in places where they can deliver strong returns now and in the future.

The quarter also raised questions from analysts about whether the banks would have liked to raise dividends or conduct share buybacks.

Both tactics have been restricted since early March when they were temporarily banned by the Office of the Superintendent of Financial Institutions.

Asked whether it's time for those restrictions to be eased, RBC's chief executive Dave McKay said, "caution still should rule the day."

"I wouldn't push the regulator right now, but as things progress, as we start to see more stability and clarity in a normalized world, then it would be appropriate."

This report by The Canadian Press was first published Dec. 3, 2020.