Citigroup Inc reported a higher-than-expected 31 percent rise in first-quarter profit on Monday as it drew down loss reserves for mortgage loans, and revenue from its securities and investment banking business swelled.
The No. 3 U.S. bank's said net income rose to $3.8 billion, or $1.23 per share from $2.9 billion, or 95 cents per share, a year earlier.
Excluding certain accounting adjustments in both periods, net income rose to $4.0 billion, or $1.29 per share, from $3.4 billion, or $1.11 per share.
Analysts on average had forecast earnings of $1.17 per share before the certain accounting adjustments.
Citigroup shares were up 2 percent at $45.60 before the bell.
The results were lifted by the release of $652 million in loss reserves, of which $351 million was from the Citi Holdings portfolio that is largely composed of mortgage assets. These assets are tied to U.S. house prices, which have been rising.
The bank, 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 $6.98 billion.
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.
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 KWB Bank stock index rose 9.6 percent and Standard & Poor's 500 stock index rose 11.4 percent.
(Reporting by David Henry in New York and Tanya Agrawal in Bangalore; Editing by Supriya Kurane)