The New York bank says losses from bad loans fell 35 percent during the quarter to $5.4 billion. That allowed the bank to release $2 billion from its loan loss reserves and count it as income. More of the bank's credit card and mortgage loan customers also paid on time. Consumer loans that were delinquent by 90 days or more stood at $9.9 billion, down 46 percent compared with the same period last year.
Net income rose 24 percent to $3.3 billion, or $1.09 cents per share, on revenue of $20.6 billion. That compares to net income of $2.7 billion, or 90 cents per share, during the same quarter last year. Citigroup's earnings per share was adjusted to account for a reverse split, where 10 Citi shares were exchanged for one this May.
Analysts surveyed by FactSet had predicted Citigroup would earn 96 cents per share.
"We produced growth in both loans and deposits in Citicorp," said CEO Vikram Pandit.
Consumer loans increased 11 percent to $244 billion. Corporate loans grew 22 percent to $197 billion compared to last year. Much of the growth came from emerging markets, the bank said.
Citigroup's investment banking and trading income fell 29 percent, to $1.2 billion. Investment banking revenue fell by 8 percent, to $5.5 billion. Much of the decline came from an 18 percent drop in fixed income trading. However, revenue from debt and equity underwriting and its mergers and acquisition advisory grew 61 percent year-over-year, to $1.1 billion.
The bank's chief financial officer John Gerspach noted in a conference call with journalists that in the closely watched ranking of investment banking activity, Citi ranked third in IPO issuance.
The results are an improvement for Citigroup, which was one of the hardest-hit banks during the financial crisis. The bank received $45 billion in government aid, $25 billion of which was converted to stock.
Pandit has been trying to grow profits ever since the company emerged from government ownership last December. But so far, to accomplish that, Citigroup has relied more heavily than other banks on money being released from reserves.
Shares of Citi are up nearly 1 percent, to $39.35 in morning trading.