(Reuters) -Citigroup beat estimates for fourth-quarter profit, fueled by strength in trading and dealmaking, and announced a $20 billion buyback program as it cut a closely watched return target.

Shares of the third-largest U.S. lender were last up 5% in premarket trading on Wednesday after Citigroup said its board has authorized a new share repurchase program.

“2024 was a critical year and our results show our strategy is delivering as intended and driving stronger performance in our businesses,” said Citi CEO Jane Fraser.

“While we now expect our 2026 ROTCE to be between 10% and 11% in order to make additional investments in our businesses and transformation, this level is a waypoint, not a destination,” Fraser said. ROTCE is a measure of company performance.

Citi reported a net income of $2.9 billion, or $1.34 per share, for the three months ended Dec. 31. That compares with a loss of $1.8 billion, or $1.16 per share, a year earlier.

Total revenue rose to $19.6 billion, compared with $17.4 billion a year earlier.

Trading desks benefited from a banner year in U.S. equities, with the S&P 500 touching record-high levels in the fourth quarter.

Markets revenue at Citi jumped 36% to $4.6 billion in the quarter, with fixed income and equity markets logging a jump of 37% and 34%, respectively.

Wall Street’s dealmakers have also cashed in on a revival in mergers, acquisitions and initial public offerings after an almost three-year-long dry spell. Banks’ capital markets businesses got a boost in the second half of 2024 as corporate clients issued more debt and equity.

Industry executives expect the momentum to continue this year as the Federal Reserve cuts interest rates and President-elect Donald Trump takes office. He has vowed to implement more pro-business policies.

Citi’s investment banking revenue jumped 35% to $925 million in the fourth quarter.

Global investment banking revenue jumped 26% in 2024 to $86.8 billion, according to data from Dealogic. Citi earned the fifth-highest fees across banks, over the same period.

Overall banking revenue came in at $1.2 billion, up 27% from a year earlier.

On an adjusted basis, Citi reported a profit of $1.34 per share in the fourth quarter, compared with analysts’ average estimate of $1.22, according to data compiled by LSEG.

TRANSITION YEAR ENDS

Citi’s stock surged 37% in 2024, outperforming the broader banking index and the equity markets, as investors cheered CEO Jane Fraser’s efforts to transform the bank.

Fraser laid out a plan in late 2023 to grow profits, streamline operations and fix long-standing deficiencies in the bank’s risk management and data governance, and much of the reorganization was carried out through last year.

Revenue in Citi’s wealth management division, a key part of Fraser’s growth strategy, climbed 20% to $2 billion.

Investors are now assessing whether Fraser and her team can meet growth targets and make progress on addressing regulatory punishments imposed on the bank in the last few years.

In 2020, the Office of the Comptroller of the Currency and the Federal Reserve fined Citi $400 million for some risk and data failures. Last year in July, regulators fined Citi $136 million for insufficient progress in tackling those issues.

However, the bank received some relief when the Federal Reserve terminated a 2013 enforcement action related to its anti-money laundering programs in October.

(Reporting by Tatiana Bautzer in New York and Manya Saini in Bengaluru; Editing by Lananh Nguyen and Shinjini Ganguli)

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