The No 3 US bank said on Monday that net income rose to USD 3.8 billion, or USD 1.23 per share, in the period -- the first full quarter under chief executive Michael Corbat -- from USD 2.9 billion, or 95 cents per share, a year earlier.
"During the quarter, we benefited from seasonally strong results in our markets businesses, sustained momentum in investment banking, continued year-over-year growth in loans and deposits in Citicorp, and a more favorable credit environment," Corbat said in a statement.
Under Corbat Citigroup partly recovered from its embarrassing failure last year under former CEO Vikram Pandit to win approval from the Federal Reserve after a stress test for its plan to distribute capital.
The company scored higher capital levels on a new test and received approval in March for its cautious application to spend USD 1.2 billion on stock buybacks. Citigroup has not asked to raise its quarterly dividend from its nominal level of one cent per share.
Excluding certain accounting adjustments, net income rose to USD 4.0 billion, or USD 1.29 per share, in the latest quarter, from USD 3.4 billion, or USD 1.11 per share, a year earlier.
Analysts on average had forecast earnings of USD 1.17 per share before the certain accounting adjustments.
Total revenue rose 6 percent to USD 20.5 billion. Expenses fell 10 percent to USD 12.4 billion from the fourth quarter.
The bank said its net interest margin for the first quarter was 2.94 percent, up marginally from 2.93 percent in the fourth quarter.
Citigroup, which is reviewing some of its weaker operations around the world, said revenue from its securities trading and investment banking business rose 31 percent to USD 6.98 billion.
The results were also lifted by the release of USD 652 million in loss reserves, of which USD 351 million was from the Citi Holdings portfolio that is largely composed of mortgage assets. These assets are tied to US house prices, which have been rising.
Under Corbat, who took over October, Citigroup took a more cautious approach on loan loss reserves in the fourth quarter, releasing just USD 86 million. The profit contributed to an increase in Citigroup's Basel III Tier 1 common equity ratio, a key regulatory measure of capital, to 9.3 percent at the end of March from 8.7 percent three months earlier, the company said.
"All they have to do is a get a little better, and they can get back to a valuation closer to their competitors," said Mark Mandell, portfolio manager at Dalton Investments in Santa Monica, California, which owns Citigroup shares.
Citigroup's adjusted results exclude the impact of changes in value of debt and obligations of its trading partners.
Citigroup shares rose 13.2 percent this year through Friday. In the same period, the KBW Bank stock index rose 9.6 percent and Standard & Poor's 500 stock index rose 11.4 percent.
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