Citigroup reported a 7% decline in fourth-quarter profit but beat Wall Street expectations, as an improving economic outlook allowed it to release cash it had previously set aside for bad loans.

The $900 billion stimulus package passed in December and the incoming Biden administration's plan to inject $1.9 trillion to support households and small businesses has boosted confidence that banks will be able to ride out the Covid-19 pandemic without widespread losses.

Citi, which named Jane Fraser as chief executive, the first woman CEO for a Wall Street bank, released $1.5 billion from its loan loss reserves, to which it had added more than $10 billion earlier this year.

Overall, the New York-based bank reported profit of $4.63 billion, or $2.08 a share, down from $5 billion, or $2.15 a share, a year earlier. Analysts on average had expected profit of $1.34 per share, according to Refinitiv data.

Outgoing Chief Executive Officer Michael Corbat said the bank intended to resume buybacks in the first quarter on 2021.

Citi's peer JPMorgan Chase & Co, the first of the major banks to report earnings this season, reported a much better-than-expected quarterly profit earlier in the day, as it too released some of the reserves it had built up against loan losses.