Jan 17 (Reuters) - Citizens Financial's profit beat expectations in the fourth quarter on Friday, as investment bankers cashed in on a rebound in capital markets activity.

Wall Street got a leg-up last year as dealmaking activity recovered from a decade-low in 2023, while improving confidence spurred companies to issue debt and equity.

Bankers expect global deal volumes to surpass $4 trillion in 2025, fueled by optimism around interest rate cuts and less regulation under the incoming Donald Trump administration.

Citizens' capital market fees soared 39% to $121 million, driven by higher loan syndication and mergers and acquisitions fees.

The upbeat results mirror those of Wall Street's biggest banks, whose quarterly earnings were also bolstered by a rebound in dealmaking activity.

Citizens CEO Bruce Van Saun said last month the bank's capital markets pipelines were strong.

NII SET TO GROW IN 2025

Citizens' net interest income — the difference between what banks pay customers on deposits and earn as interest on loans — fell 5% over the year earlier to $1.41 billion.

But it climbed 3% over the third quarter and beat analysts' estimate of $1.40 billion, according to data compiled by LSEG.

The Providence, Rhode Island-based bank expects its underlying NII to rise between 3% and 5% this year from the 2024 level of $5.63 billion. Analysts expect a 4% increase.

The bank's NII forecast factors in 25-basis-point rate cuts in the second and fourth quarters.

Citizens' profit was $401 million, or 83 cents per share, for the three months ended Dec. 31, compared with $189 million, or 34 cents per share, a year earlier.

Excluding one-time costs, it earned 85 cents per share, beating analysts' expectations of 83 cents per share.

Shares of the company had risen 32% in 2024, compared with a 32.8% gain in the KBW Bank index.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ A glance at Citizens' capital markets fees in recent quarters

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(Reporting by Ateev Bhandari and Arasu Kannagi Basil in Bengaluru; Editing by Shilpi Majumdar)

((ArasuKannagi.Basil@thomsonreuters.com))