This article, originally published at 8:20 a.m. on Oct. 15, 2015, has been updated with commentary from the company's earnings call.

NEW YORK (TheStreet) -- Citigroup (C) - Get Report expects to sell by the end of this year another $31 billion of loans that it decided to get rid of after the financial crisis, Chief Financial Officer John Gerspach said.

That will pare the assets of Citi Holdings, the unit where the fourth-largest U.S. bank grouped businesses that lost value during the crisis and other "non-core" segments, to $70 billion to $75 billion, Gerspach said.

"We've continued to make great progress in winding down Citi Holdings," he said on the bank's third-quarter earnings call with analysts. The unit's assets, which dropped 20% in the third quarter to $110 billion, had amounted to $888 billion at the end of 2007, when subprime mortgage defaults were beginning to curb the value of related securities and hurt the broader economy.

That progress reflects CEO Michael Corbat's efforts to rebuild the bank, which accepted a $45 billion government bailout after the crisis and struggled with low interest rates and regulatory issues including a probe of currency-market rigging. Citigroup beat analysts' estimates for the three months through September as declining operating expenses and a lower tax rate bolstered its bottom line.

"This quarter had more than its fair share of volatility," Corbat, who succeeded Vikram Pandit in October 2012, said on the call. "I feel good about the quality and consistency of the earnings that we've demonstrated in the course of the year."

The bank is continuing "to improve the quality of our balance sheet by replacing legacy assets from Citi Holdings" with higher-quality loans from its main businesses, he said.

The parent company's third-quarter profit of $1.31 a share, excluding adjustments to the value of outstanding loans, was higher than the average estimate of $1.27 a share from analysts in a Bloomberg survey. Net income rose 51% to $4.3 billion.

"Citi's quarter continued the streak of better than expected results," said TheStreet's Jim Cramer, portfolio manager of the Action Alerts PLUS charitable trust. "I like the mix, and I like the commentary from CEO Michael Corbat about how despite the headwinds, the company performed well."

Total revenue fell 5% to $18.7 billion, Citigroup said, and it had an effective tax rate of 30%, down 11 percentage points from a year earlier. Operating expenses dropped 18% to $10.7 billion, driven mostly by lower legal bills. 

Citigroup shares climbed 4.2% to $52.87 early Thursday afternoon. The New York bank's shares previously dropped 6.1% to $50.72 this year, a better performance than both the KBW Bank Index, which fell 6.7%, and the S&P 500 Financials Index, which declined 7.5%.


The banking firm is positioned to deliver on a "longer-term goal of strengthening its global presence in consumer and corporate lending while returning meaningful levels of capital to shareholders," S&P Capital IQ analyst Erik Oja said in a note to clients before earnings were announced. He has a "buy" rating on the stock and a 12-month price target of $65.

Oja predicted that legal expenses would moderate this year, leading to total costs of about 65% of core revenue, significantly below last year's 75% and in line with comparable rivals. "Further settlements may occur," he noted, "but we think they will be well below amounts paid in previous years."

Net interest margin, which gauges the profitability of a bank's lending operations, climbed 3 basis points to 2.94% from a year earlier, even as total loans declined 5% to $622 billion. The interest margin is likely to improve once the Federal Reserve raises interest rates, which it has held near zero since the financial crisis.

Fed Chair Janet Yellen indicated in late September that a rate increase is likely before the end of 2015.

Ongoing speculation to the contrary, however, "casts a pall" on all banks, Cramer noted. Citigroup "is a bank and right now, the banks are not where people want to be because of the newfound expectations of no rate hikes this year," he said.

In Citigroup's core businesses, global consumer banking revenue dropped 4% to $8.46 billion, as credit card balances slid 4% to $132 billion and retail banking loans fell to $147 billion.

In the institutional clients group, which includes investment banking, corporate lending and trading businesses, total revenue climbed 3% to $8.6 billion. Growth in stock trades helped make up for declines in bond markets, mirroring the pattern at Goldman Sachs, as clients parked their cash amid a slowdown in China that roiled global markets in late August.

"As we look to the end of the year, we still don't have clarity on many important issues," Corbat said. "Predictions on the timing of an interest rate increase seem to change every day. We don't yet know the long-term impact of recent volatility on consumer and business sentiment, and in many large markets there are high degrees of political risk which have economic ramifications."