Trouble at Home for Citigroup

Updated from 6:40 a.m. EDT

Citigroup's(C Quote) first-quarter earnings rose a modest 4% from a year ago as strong results in investment banking, especially overseas, helped offset a small decline in revenue from its consumer segment.

The company also authorized a $10 billion stock repurchase program. Citigroup shares closed at $48.05 on Thursday, up 3 cents since the start of the year and 11.3 times the 2006 consensus earnings estimate of $4.06 a share.

Citigroup earned $5.64 billion, or $1.12 a share, in the quarter compared with $5.44 billion, or $1.04 a share, a year ago. On a continuing-operations basis, the bank earned $5.55 billion, or $1.11 a share, including a $550 million stock-options expense and a $657 million tax-related gain.

Analysts had been forecasting net earnings of $1.02 a share in the latest quarter, according to Thomson Financial.

Total revenue rose 5% to $22.18 billion, missing the Thomson Financial estimate of $23.20 billion. Revenue included a gain of $136 million from the sales of investments in the quarter.

In premarket trading, shares of Citi were up 41 cents to $48.46.

Revenue from global consumer lending, the bank's biggest division, fell 1% from a year ago to $11.96 billion, although earnings in the division rose 8% to $3.07 billion. Citi had lower revenue in credit cards and loans, reflecting the narrowing spread between short- and long-term bond yields.

The performance of the bank's U.S. consumer-side business, which posted a 4% slide in earnings to $2 billion, was troubling. The weakness in domestic retail banking could be an indication that U.S. consumers are pulling back a bit on spending in light of the rise in short-term interest rates -- something that has immediate impact on credit card rates and interest payments on home equity loans.

But Citi's international consumer business was a strong performer in the quarter. The world's biggest financial services firm generated $1.1 billion in earnings from its overseas retail operation, a 21% gain over the prior year.