LONDON (Reuters) - Barclays raised its 2025 performance targets on Thursday after reporting a better-than-expected 24% rise in annual pretax profit driven by investment banking income growth and strength in its domestic lending business.

The bank's shares - which had hit their highest levels since March 2011 on Wednesday - fell as much as 5.5% in early trading, which analysts said could be a bout of profit-taking linked to the lender's rising costs and UK impairments which both missed forecasts.

Barclays is the first major UK bank to report earnings for 2024, a year when Britain regained domestic political stability but lost the confidence of some international investors after the new Labour government brought in tax hikes it said were needed to fix the country's public finances.

CEO C.S. Venkatakrishnan last February laid out a three-year plan to revive the bank's share price, which included cutting costs, returning billions of pounds in excess capital to shareholders and investing in its higher-returning UK business.

The bank reported profit before tax for the year to December 31 of 8.1 billion pounds ($10.12 billion), slightly above the 8.07 billion pounds average of analysts' forecasts and higher than the 6.6 billion pounds it reported for the year prior.

Barclays said it met its performance targets for 2024, including a return on tangible equity of 10.5% in line with guidance for greater than 10%. Return on equity is a key measure of profitability.

"Our new guidance for 2025, including Group RoTE of around 11%, represents an important next step in the journey towards our 2026 targets, including Group RoTE of greater than 12%," Venkat said in a statement.

Analysts at Citi described the results as solid, but said there was not much new to excite shareholders either.

"...the strong run-up in the share price over the past year may temper any initial reaction, but the stock still appears inexpensive in our view," Citi said in a note to clients.

Barclays said it had extended the chairmanship of Nigel Higgins for another three years, as it looks to push ahead with its turnaround plan.

INVESTMENT BANK BOUNCE

Barclays' total income in its investment bank reached 11.8 billion pounds, just above analysts' forecasts for 11.6 billion pounds, as dealmaking and trading activity increased.

U.S. bank bosses have also expressed optimism for the year ahead, expecting that tax cuts and deregulation by President Donald Trump will energise businesses and capital markets as well as the economy.

Revenue from Barclays' traditional powerhouse trading business of fixed income, currencies and commodities (FICC) rose 29% to 934 million pounds in the final quarter of 2024, compared with an average of 29% among Wall Street's top 5 players, based on a Reuters calculation from earnings reports.

Barclays' equities revenue rose 40% to 604 million pounds over the same period, outpacing the average 29% gain at its U.S. rivals Bank of America, Citi, Goldman Sachs, JPMorgan and Morgan Stanley.

But for investment banking fees from M&A deals and fundraising, Barclays reported an 11% increase in income compared with a 35% average at its Wall Street rivals.

"Barclays is ... now beginning to deliver a reassuring level of consistency that it hadn't necessarily been known for in the past," RBC Brewin Dolphin investment manager Zoe Gillespie said, referring to the group as a whole.

($1 = 0.8004 pounds)