Updated from 9:20 a.m. EDT





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beat analyst expectations by a penny reporting first-quarter earnings of $3 billion, or 10 cents a share.

A survey of analysts polled by

Thomson Reuters

expected the bank to earn 9 cents a share. Citigroup reported net income of $4.4 billion, or 15 cents a share, a year earlier.

"Today's results are the fifth consecutive quarter of profitability. First quarter showed the continuing execution of our strategy," said Citigroup Chief Financial Officer John Gerspach on a conference call Monday. Gerspach said the bank hopes to begin

returning profitability to shareholders

in 2012.

Citigroup revenue in the first quarter was $19.7 billion, 22% below revenue of $25.4 billion a year earlier. The year-over-year decline was due to lower revenue in fixed income markets and regional consumer banking, and securities and banking revenue.


significantly boosted

its first-quarter earnings performance by releasing $3.3 billion in credit reserves. Citigroup also got a boost from its

international regional consumer banking.

Revenue from international banking was $4.6 billion was 8 percent higher than in the first quarter of 2010, while North American regional consumer banking revenue of $3.3 billion was down from $3.8 billion in the first quarter of 2010.

In addition, Citigroup's expenses increased to $12.3 billion from higher legal and related costs, and the impact of foreign exchange and investment spending, partially offset by a decline in Citi Holdings.

Some of the expenses included repurchase reserves of $122 million that the bank built up to repurchase loans from the GSEs, according to Gerspach. Unlike

Bank of America

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that took larger mortgage servicing charges, Citigroup said it would wait until regulators decide if there would be a cash penalty and gradually apply those toward the balance sheets.

Gerspach said that the cash penalty could be a one-time charge of $40 million to $50 million that will drag over a couple of quarters. Overall, the repurchase reserve losses could have a $25 million to $30 million annual impact as Citigroup enhances its mortgage business, Gerspach said on the call. The bank is currently hiring a consultant for foreclosures and is also in the process of hiring 500 mortgage banking staff.

Citi Holdings

revenues declined 50 percent

from last year to $3.3 billion

"Citi Holdings losses continued to decrease; we are investing in our core businesses in Citicorp; our capital strength improved; and the mix of revenues reflects the diversity of our businesses and our depth in both the emerging and developed markets," said Vikram Pandit, CEO of Citigroup, in a press release Monday.

Citigroup was rising 6 cents tp $4.48 on Monday.

--Written by Maria Woehr in New York.

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