Banks were the most optimistic in years as 2011 began that they will not have to write off as many bad business and consumer loans this year, a survey issued by the Federal Reserve showed on Monday.

Some U.S. and foreign-controlled banks continued easing terms for commercial and industrial loans but they kept standards and terms for others like consumer loans and mortgages largely unchanged, the Fed said.

The survey, conducted in January, covered 57 domestic banks and 22 U.S. branches and agencies of foreign banks that do the great majority of lending in U.S. markets.

In the January survey, expectations were significantly more upbeat than in past years, the Fed said. Moderate to large net fractions of banks reported that they expected improvements in delinquency and charge-off rates during 2011 in every major loan category.

Some 80 percent of survey respondents anticipated improvements in the quality of commercial and industrial loans to large and middle-market firms this year and 70 percent expected improvements in the quality of loans to small firms.

The improved outlook made banks somewhat more willing to give better loan terms and standards.

The Fed said a modest net fraction of banks continued easing terms for business loans over the fourth quarter last year though there was little change in terms for consumer loans.

Similarly, the respondents reported a moderate increase in demand for commercial and industrial loans but little change, on balance, in demand for other types of loans, the Fed said.

The January survey found that standards for prime closed-end home mortgage loans were little changed. By contrast, though, standards for nontraditional mortgage loans were toughened for a second consecutive quarter.

Nontraditional mortgages include interest-only loans and adjustable-rate mortgages with payment options.

(Reporting by Glenn Somerville, Editing by Chizu Nomiyama)

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