(Reuters) -Citigroup ( C/PN ) beat Wall Street expectations for second-quarter profit on Friday, boosted by a 60% jump in investment banking revenue and gains in its services division, sending the company's shares up 3% before the bell.

The third largest U.S. lender reported a profit of $1.52 per share in the three months ended June 30. That compares with analysts' expectations of $1.39, according to LSEG data.

"Our results show the progress we are making in executing our strategy and the benefit of our diversified business model," Citi CEO Jane Fraser said in a statement.

The upbeat results come two days after U.S. regulators fined Citi $136 million for making "insufficient progress" in fixing data management problems identified in 2020. Regulators also required the lender to demonstrate it was putting enough resources toward those efforts.

Citi had already booked the penalties and additional investments on the data work in the second quarter.

Fraser is carrying out a sweeping overhaul in an effort to improve the bank's performance, cut costs and simplify its sprawling businesses. As part of the turnaround, Citi aims to shrink its workforce by 20,000 over the next two years.

Revenue in the second quarter came in at $20.1 billion, up 4% from a year earlier, buoyed by a $400 million gain from the conversion and partial sale of Visa stock in May.

Citi now breaks out earnings individually for its five businesses - services, markets, banking, U.S. personal banking and wealth, which were previously housed under broader divisions.

The new structure is part of Fraser's efforts to cut bureaucracy and increase profits. Under it, the leaders of the segments report directly to the CEO.

Investment banking fees jumped 60% in the second quarter to $853 million. The surge comes as a prolonged industry-wide slump in deals finally shows signs of a meaningful recovery. The gains fueled a 38% climb in broader revenue for the banking division to $1.6 billion, which also includes corporate lending.

Citi hired JPMorgan Chase ( JPM ) veteran Viswas Raghavan as head of banking earlier this year. Fraser has expressed high hopes for Raghavan, who is tasked with revitalizing the division catering to multinational corporations.

Services revenue increased 3% to $4.7 billion. The unit houses Citi's treasury and trade solutions business, which the company touts as its crown jewel. The business had flat revenue this quarter, at $3.4 billion. It processes $5 trillion of payments a day for multinational corporations across 180 countries.

Fraser and other leaders highlighted their strategy for the services business at an investor day held at the bank's New York headquarters last month.

Markets revenue climbed 6% to $5.1 billion, lifted by a 37% jump in equities trading revenue.

Operating expenses fell 2% to $13.4 billion in the reported quarter, as the bank saved money from the reorganization that simplified its structure.

But the lower expenses were offset by the fines for failing to comply with regulatory punishments known as consent orders dating back to 2020, and investments for the remediation work.

Citi expects full-year expenses to be at the high end of its previously forecast range of $53.5 billion to $53.8 billion.

Rival JPMorgan Chase ( JPM ) reported a rise in second-quarter profit on Friday, while Wells Fargo's ( WFC ) net income declined and it missed estimates for interest income.

The wealth management division, a key part of Fraser's growth strategy, has yet to grow significantly, with revenue up 2% this quarter to $1.8 billion.

Citi's U.S. personal banking revenue grew 6%, reaching $4.9 billion, mainly due to growth in branded cards.

TURNAROUND IN FOCUS

Analysts have called 2024 a transitional year for Citi as it becomes leaner under Fraser's turnaround.

Investors have also cheered the efforts and rewarded Fraser with a 28% jump in the bank's stock this year, far outperforming closest rivals JPMorgan ( JPM ) and Bank of America, as well as the broader equity markets.

Still, Citi has recently faced regulatory challenges tied to its so-called living will, which details how it would be unwound in the event of bankruptcy.

Citi is also working through two 2020 consent orders, in which the U.S. Federal Reserve and the Office of the Comptroller of the Currency directed it to fix longstanding and widespread deficiencies in its risk management, data governance and internal controls.